The Nyeri National Polytechnic

Computer Science & Networking Department

Diploma in Information Communication Technology (DICT)
Module III – Principles and Practice of Management (PPM - 2920/303) Class Notes
INTRODUCTION TO MANAGEMENT
Definition
➢ “Management is getting things done through other people”.
➢ William Spriegel “Management is that function of an enterprise which concerns itself with
the direction and control of the various activities to attain business objectives.”
➢ Sir Charles Reynold “Management is the process of getting things done through the agency
of a community. The function of management is the handling of a community with a view
to fulfill the purpose for which it exists.
➢ James D. Mooney and Alan C. Reiley “Management is the art of directing and inspiring
people”.
➢ Lawrence A. Appley “Management is the art of getting things done through the efforts of
other people”.
➢ Dalton E. McFarland “Management is the process by which managers create, direct, maintain
and operate purposive organizations through systematic, co-ordinated, co-operative human
effort”.
➢ J. L. Massie “Management is defined as the process by which a co-operative group directs
action towards common goals. This process involves techniques by which a distinguishable
group of people (managers) coordinate activities of other people. Managers seldom actually
perform the activities themselves.

There is not a single universally accepted definition of management. Different scholars have
different definitions of management. However, they all agree that management refers to all those
activities which are concerned with:
❖ Formulation of objectives/goals, plans and policies for the whole organization.
❖ Assembling men, money, materials, machines and methods to be used in order to
accomplish the goals.
❖ Directing and motivating the human resource.
❖ Coordinating both the physical and human resources
❖ Supervising and controlling performance.

PPM Notes 2018

Page 1 of 39
 ❖ Securing maximum satisfaction for both employer and employee and providing the
public with the best services possible.
NB. The definition of management cannot be adequate unless it states the functions performed by
the managers. Management may therefore be defined as the process of guiding, directing and
unifying human efforts and activities for the realization of definite results. The process of
management comprises several interlinked elements or functions. These elements are planning
(preparing for the future), organizing and staffing (assembling resources) directing (guiding,
supervising and inspiring people), and controlling (keeping activities on the right track)
Management is a logical, intellectual and continuous process. Management creates a link between
the allocation of resources and the objectives of the organization (An organization – a group of
people formed to accomplish some common objectives)

CHARACTERISTICS OF MANAGEMENT
Management is purposeful – all activities of management are goal oriented. The success of
management is measured by the extent to which the desired goals are achieved. Management exists
for the achievement of specific goals.
Management is a continuous process – the cycle of management continues to operate as long as
there is organized action for the attainment of group goals. Management is a dynamic and an on-
going process.
Management is universal - the basic principles of management are universal in character. They
are applicable in different organizations, businesses, government etc. The functions of management
are required at all levels of organizations and in all areas of business.
Management is a social process – management is done by people, through people and for people.
It is concerned with interpersonal relations. According to Appley, Management is the development
of people, not the direction of things”. A good manager is a leader, not a boss.
Management is an integrative force – the essence of management lies in the coordination of
individual efforts into a team effort. Management integrates human and physical resources. It
reconciles individual goals with organizational goals.
Management is intangible – it is an invisible force. It cannot be seen but its effects can be felt in
form of results.
Management is multi-disciplinary – management draws heavily upon other fields of study. It
depends upon a wide range of knowledge derived from several disciplines as it deals with human
behaviour under dynamic conditions.

PPM Notes 2018

Page 2 of 39
Management is both an art and a science – it contains a systematic body of knowledge
(theoretical) and a practical application of such knowledge.
Management as an Art
Art is a skill/knowledge in a particular field of activity or a method of doing something. It involves
the practical application of theoretical knowledge/skill to achieve the desired results. Management
is considered an art because of the following:
1. The process of management involves the use of knowledge and skills while dealing with
people.
2. Management seeks to achieve concrete practical results
3. Management is creative like any other art. It involves moulding the attitude and behaviour
of people at work towards accomplishing the set organizational goals.
4. Management is a personalized process just like any art. Every manager has his own
technique and approach to a situation depending on his/her perception and the prevailing
conditions.
5. The art of management can be refined with continuous practice. The success of a manager
is measured by the effective realization of the desired goals.
Management as a Science
Science may be defined as “representing knowledge gathered by observation and experiments,
critically tested, systematized and brought under general principles. Such systematized body of
knowledge contains concepts, principles and theories which help to explain events and to predict the
outcome of specific actions. Management is considered a science because of the following:
1. Management comprises a systematized body of knowledge. Principles are available which
help improve managerial effectiveness e.g. there are principles which serve as guidelines for
delegating authority and thereby designing an effective organization structure. There are
techniques (ways of doing things) which facilitate better management.
2. The principles of management have been developed through continuous observation.
3. The principles of management are capable of universal application.
4. Scientific techniques are being increasingly applied to solve business problems.
Management theory helps to examine and evaluate alternative courses of action to resolve a
given problem.
NB: Management as a science should be differentiated from the term ‘management science’ which
is used to refer to the application of quantitative techniques in solving managerial problems.

PPM Notes 2018

Page 3 of 39
Good to know: Distinction between an Entrepreneur and a Manager
An entrepreneur is the person(s) at the top of any business concern who undertakes financial and
legal responsibility for the success/failure of the concern. He sets the goals and policies of the
enterprise. A manager is an employee of the entrepreneur. His job is to work for the accomplishment
of the set goals by directing and coordinating the available resources.

LEVELS OF MANAGEMENT
The number of levels of management differs from one organization to another. This is determined
by the size, technology and diversity in the range of products of an organization. A large
organization will need a large number of levels so that activities at different stations are properly
planned, organized, directed and controlled. A firm that uses complex technology of manufacture
in which a product passes through several stages to become a final product will need several levels
of management. A firm that produces a large number of diverse products will also need several
levels of management. In order to ensure greater efficiency and productivity, the levels of
management should be kept to a minimum. An unnecessary increase in the number of levels will
increase costs and create problems in communication between the various levels. This could lead
to difficulties in the coordination and control of activities.
Level so management could be classified into 4 categories:
1. Top management
2. Intermediate/upper middle management
3. Middle management
4. Supervisory/operating management
Top Management
Top management of a company consists of the board of directors and the chief executive. The chief
executives are known by different titles such as managing directors, general managers, president,
chairman etc. Top management is the overall source of management authority and is accountable
to the shareholders. The main functions of the top management include:
1. Establishing the long-term goals and policies of the company and prepare the master budget.
2. Analyze, evaluate and deal with the environmental forces
3. Appoint departmental and other key executives.
4. Represent the company to the outside world e.. trade unions, government, trade associations
etc.
5. Coordinate the activities and efforts of the various departments.

PPM Notes 2018

Page 4 of 39
 6. Exercise overall review and control on the company’s operations.
Intermediate /Upper Middle Management
This level comprises departmental/divisional heads e.g. production manager, sales manager,
marketing manager etc. Each one is responsible for the efficient and coordinated functioning of his
department/division in accordance with the basic goals and policies laid down by the top
management. At this level, departmental operational plans are established and targets to be achieved
set. Departmental heads plan operations, issue instructions, assemble the required resources,
evaluate results of their departments and control the work of people in the departments.

Middle Management
This level links the top management with the operating management. It consists of the deputy heads
of departments and sectional heads e.g. branch managers, area sales managers etc. They perform
the following functions:
1. Interpret and explain the policies framed by the top and intermediate management.
2. Compile and issue detailed instructions regarding operations
3. Cooperate among them so as to integrate various parts of a division/department
4. Motivate supervisory personnel to work for organizational goals
5. Develop and train supervisory and operative personnel.
Supervisory/Operating Management
This is the lowest level of management. They consist of foremen, sales officers, supervisors etc.
They serve as the link between management and workers. The functions of supervisory management
include:
1. Plan the day to day running of the organization
2. Assign jobs to the workers and organize for their training
3. Supervise and control workers (maintain personal contact with them)
4. Arrange for materials and tools and maintain machinery
5. Advice and assist workers by explaining work procedures and solving problems
6. Maintain discipline and good human relations among workers
7. Report feedback information and worker’s problems which cannot be solved at the
supervisory level.

SKILLS OF MANAGEMENT

PPM Notes 2018

Page 5 of 39
For effective management of an organization, a manager requires certain skills. These skills can be
classified into three categories namely, technical, human and conceptual.
Technical Skills – refer to the ability and knowledge in using the equipment, techniques and
procedures involved in performing specific tasks. These skills are most important at the
supervisory/operating level where close understanding of job techniques is necessary while guiding
workers. As one moves up the management hierarchy, technical skills become less important.
Higher level managers’ deal with subordinate managers and specialized technical knowledge is less
important to them.
Human Skill – consists of the ability to work effectively with other people both as individuals and
as a group. This skill is necessary to win cooperation of others and to build effective work teams.
This skill involves feeling for others and capacity to look at things from others point of view. This
skill is reflected in the way a manager perceives his superiors, subordinates and peers. While
technical skills involve mastery of “things”, human skills are concerned with understanding of
“people”.
Conceptual Skills – refers to the ability to visualize the entire picture or to consider a situation in
its totality. These skills help the manager to conceptualize the environment, analyze the forces
working in a situation and take a broad view of the organization. Conceptual skills are necessary in
rational decision making as they include the competence to understand a problem in all its aspects.
Conceptual skills are important for the top management in formulating long range plans, making
broad policy decisions and relating the business enterprise to its industry and the economy. The
importance of conceptual skill increase as we move to higher levels of management. Human skills
are equally important at all levels of management.
Diagnostic Skills
Used to define and understand situations and events. They are mainly directed at problem solving
e.g. if a manager notices that there is too much waste in production, the first step would be to define
the problem, next determine what is causing the problem and lastly identify ways of solving it.

ROLES OF MANAGEMENT
Essentially, the role of managers is to guide the organizations toward goal accomplishment. All
organizations exist for certain purposes or goals, and managers are responsible for combining and
using organizational resources to ensure that their organizations achieve their purposes.
The role of the Management is to move an organization towards its purposes or goals by assigning
activities that organization members perform.

PPM Notes 2018

Page 6 of 39
If Management ensures that all the activities are designed effectively, the production of each
individual worker will contribute to the attainment of the organizational goals.
Management strives to encourage individual activity that will lead to reaching organizational goals
and to discourage individual activity that will hinder the accomplishment of the organization
objectives.
There is no idea more important than managing the fulfillment of the organizational goals and
objectives. The meaning of the Management is given by its goals and objectives.
All managers, must have a single minded focus on the fulfillment of the organizational goals.

Mintzberg’s 10 Managerial Roles

Management expert Professor Henry Mintzberg has argued that a manager’s work can be boiled
down to ten common roles. According to Mintzberg, these roles, or expectations for a manager’s
behavior, fall into three categories: informational (managing by information), interpersonal
(managing through people), and decisional (managing through action).

This chart summarizes a manager’s ten roles:

Mintzberg’s Managerial Roles

Category Role Activity Examples

Informational Monitor Seek and acquire work- Scan/read trade press, periodicals,
related information reports; attend seminars and
training; maintain personal contacts
Communicate/ disseminate Send memos and reports; inform
Disseminator information to others staffers and subordinates of decisions
within the organization
Communicate/transmit Pass on memos, reports and
Spokesperson information to outsiders informational materials; participate in
conferences/meetings and report
progress
Interpersonal Figurehead Perform social and legal Greet visitors, sign legal documents,
duties, act as symbolic attend ribbon cutting ceremonies,
leader host receptions, etc.
Direct and motivate Includes almost all interactions with
Leader subordinates, select and subordinates
train employees

PPM Notes 2018

Page 7 of 39
 Establish and maintain Business correspondence, participation
Liaison contacts within and outside in meetings with representatives
the organization of other divisions or organizations.
Identify new ideas and Implement innovations; Plan for the
Decisional Entrepreneur initiate improvement future
projects
Deals with disputes or Settle conflicts between subordinates;
Disturbance problems and takes Choose strategic alternatives;
Handler corrective action Overcome crisis situations
Decide where to apply Draft and approve of plans, schedules,
Resource resources budgets; Set priorities
Allocator

Negotiator Defends business interests Participates in and directs negotiations

within team, department, and
organization

In the real world, these roles overlap and a manager must learn to balance them in order to manage
effectively. While a manager’s work can be analysed by these individual roles, in practice they are
intermixed and interdependent. According to Mintzberg: “The manager who only communicates or
only conceives never gets anything done, while the manager who only ‘does’ ends up doing it all
alone.”

Interpersonal Category

The roles in this category involve providing information and ideas.

1. Figurehead – As a manager, you have social, ceremonial and legal responsibilities. You're
expected to be a source of inspiration. People look up to you as a person with authority,
and as a figurehead.
2. Leader – This is where you provide leadership for your team, your department or perhaps
your entire organization; and it's where you manage the performance and responsibilities
of everyone in the group.
3. Liaison – Managers must communicate with internal and external contacts. You need to
be able to network effectively on behalf of your organization.

Informational Category

The roles in this category involve processing information.

1. 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.

PPM Notes 2018

Page 8 of 39
 2. Disseminator – This is where you communicate potentially useful information to your
colleagues and your team.
3. Spokesperson – Managers represent and speak for their organization. In this role you're
responsible for transmitting information about your organization and its goals to the people
outside it.

Decisional Category

The roles in this category involve using information.

1. Entrepreneur – As a manager, you create and control change within the organization. This
means solving problems, generating new ideas, and implementing them.
2. Disturbance Handler – When an organization or team hits an unexpected roadblock, it's
the manager who must take charge. You also need to help mediate disputes within it.
3. Resource Allocator – You'll also need to determine where organizational resources are
best applied. This involves allocating funding, as well as assigning staff and other
organizational resources.
4. Negotiator – You may be needed to take part in, and direct, important negotiations within
your team, department, or organization.

BASIC CONCEPTS OF MANAGEMENT

Firstly it considers management as a "process" i.e. a systematic way of doing things. Secondly it
states four management activities: Planning, organizing, actuating, and controlling. Planning is
thinking of an actions in advance. Organizing is coordination of the human and material resources
of an organization.

Principle of Management
A Principle is a fundamental truth or proposition that serves as the foundation for a system of belief
or behaviour or for a chain of reasoning.
1. a general or basic truth on which other truths or theories can be based scientific principles
2. a rule of conduct based on beliefs of what is right and wrong
3. a law or fact of nature which makes possible the working of a machine or device : the
principle of magnetism
Practice of Management
Practice is the actual application or use of an idea, belief, or method, as opposed to theories relating
to it. Eg. "the principles and practice of teaching"
1. A method, procedure, process, or rule used in a particular field or profession; a set of these
regarded as standard.

PPM Notes 2018

Page 9 of 39
 2. A business in which a professional or number of associated professionals offer services, such
as a law practice or a medical practice.
THEORIES OF MANAGEMENT
1. A theory as a noun is a supposition or a system of ideas intended to explain something,
especially one based on general principles independent of the thing to be explained.
"Darwin's theory of evolution"
- A set of principles on which the practice of an activity is based. "a theory of education"
- An idea used to account for a situation or justify a course of action. "my theory would be
that the place has been seriously mismanaged"
2. A theory is a set of accepted beliefs or organized principles that explain and guide analysis and
one of the ways that theory is defined is that it is different from practice, when certain
principles are tested.
- theory is an idea to explain something, or a set of guiding principles
3. A formal statement of the rules on which a subject of study is based or of ideas that are
suggested to explain a fact or event or, more generally, an opinion or explanation: e.g.
economic theory, scientific theory, Darwin's theory of evolution

Management theories are implemented to help increase organizational productivity and service
quality. Not many managers use a singular theory or concept when implementing strategies in the
workplace: They commonly use a combination of a number of theories, depending on the workplace,
purpose and workforce. Contingency theory, chaos theory and systems theory are popular
management theories. Theory X and Y, which addresses management strategies for workforce
motivation, is also implemented to help increase worker productivity
Contingency Theory
This theory asserts that managers make decisions based on the situation at hand rather than a "one
size fits all" method. A manager takes appropriate action based on aspects most important to the
current situation. Managers in a university may want to utilize a leadership approach that includes
participation from workers, while a leader in the army may want to use an autocratic approach.
Systems Theory
Managers who understand systems theory recognize how different systems affect a worker and how
a worker affects the systems around them. A system is made up of a variety of parts that work
together to achieve a goal. Systems theory is a broad perspective that allows managers to examine
patterns and events in the workplace. This helps managers to coordinate programs to work as a

PPM Notes 2018

Page 10 of 39
collective whole for the overall goal or mission of the organization rather than for isolated
departments.
Chaos Theory
Change is constant. Although certain events and circumstances in an organization can be controlled,
others can't. Chaos theory recognizes that change is inevitable and is rarely controlled. While
organizations grow, complexity and the possibility for susceptible events increase. Organizations
increase energy to maintain the new level of complexity, and as organizations spend more energy,
more structure is needed for stability. The system continues to evolve and change.

Theory X and Theory Y

The management theory an individual chooses to utilize is strongly influenced by beliefs about
worker attitudes. Managers who believe workers naturally lack ambition and need incentives to
increase productivity lean toward the Theory X management style. Theory Y believes that workers
are naturally driven and take responsibility. While managers who believe in Theory X values often
use an authoritarian style of leadership, Theory Y leaders encourage participation from workers.

THE EARLY CONTRIBUTION TO MANAGEMENT

Evolution of Management Thought - Pre-scientific Management Period
Pre-scientific management era refers to the period immediately preceding the Scientific
Management started by F.W.Taylor and his associates. Prominent among the pioneers who made
significant contributions to management thought were
1. Robert Owen (1771-1858)
He believed workers performance was influenced by the total environment in which they worked.
Throughout his life Owen worked for the building up of a cooperation between the workers and the
management. He believed and practised the idea that the worker should be treated as human beings.
Owen suggested that investment in human beings is more profitable than investment in machinery
and other physical resources. He introduced new ideas of human relations, e.g. shorter working
hours, housing facilities, education of children, provision of canteen, rest pauses, training of workers
in hygiene etc.
Owen is known as the father of personal management. His ideas and philosophy may be considered
as a prelude to the development of behaviour approach to management
2. Charles Babbage (1792-1891)

PPM Notes 2018

Page 11 of 39
Babbage was a professor of mathematics at Cambridge University from 1828 to 1839. Babbage
perceived that the methods of science and mathematics could be applied to operations of factories.
He made several contributions expounding his ideas and theories.
Babbage was a pioneer of operations research and industrial engineering techniques. He laid
considerable emphasis on specialisation, work measurement, optimum utilisation of machines, cost
reduction and wage incentives. His emphasis on the application of science and mathematics laid the
foundation for the formulation of a science of management.
3. Henry Vamun Poor
Poor advocated a "managerial system" with a clear organization structure in which people could be
held completely accountable and the need for a set of operating reports summarising costs, revenues
and rates. He recognised the danger such a system might make people feel like cogs in a machine.
To overcome this, he suggested a kind of leadership, beginning at the top of an enterprise that would
overcome routine and dullness by instilling in the organization a feeling of unity, an appropriation
of the work, and an esprit de corps. Thus Poor called for a system before Taylor. He called for the
recognition of human factor before Mayo. He also suggested leadership to overcome the rigidities
of the formal organization much before Chris Argyris.
4. Henry Robinson Towne (1844-1924)
H.R.Towne was president of the famous 'Yale and Towne', a lock manufacturing company. He took
particular interest in studying about efficient management of the business. He applied his ideas
successfully in his own company. In 1886, he presented a paper the "Engineer as an Economist",
wherein he urged the association of engineers and economists as industrial managers. The
combination of the knowledge along with at least some skill as an accountant is essential for the
successful management of industry. He suggested organised exchange of experience among
managers and an organised effort to pool accumulated knowledge in the art of workshop
management.
5. James Watt (1796-1848) and Mathew Robinson Boulton (1770-1842)
They were the sons of the distinguished inventor of the steam engine. They applied a number of
management techniques in their Engineering Factory at Soho (Birmingham, U>K). These techniques
were:
i. market research & forecasting
ii. standardization of components and parts,
iii. production planning
iv. planned machine for better workflow,

PPM Notes 2018

Page 12 of 39
 v. elaborate statistical records
vi. maintenance of advance control reports and cost accounting procedures
vii. provision of employee welfare with sickness benefit scheme administered by an
elected committee of employees, and
viii. scheme for developing executives
6. Captain Henry Metcalfe (1847-1917)
Metcalfe published a famous book "The Cost of Manufacture and Administration of Workshop:
Public and Private" in 1882. Metcalfe suggested "new systems control" covering the following
1. The science of management is based on principles that are evolved by recording observations
and experiences.
2. The art of management should be based on several recorded and accumulated observations,
which are presented systematically
3. The management should make certain cost estimates on the basis of these observations
4. However management should maintain only relevant and crucial information. A manager
should prepare the details of work which will then be communicated to foreman and workers.
Metcalfe suggested a system of cards. Under this system managers prepare two type of cards,
i.e., time cards and material cards. This system is intended to assure the workers that good
work done by them would be known to management. It also provides a method for gauging
their work. The American Management Association has put Metcalfe's system of
management on record.
NB
Systems of management were practised in one form or other ever since men started forming groups
and living in civilised society.
- The Sumerian civilisation dating back to 300 B.C. had an efficient system of tax collection.
- The pyramids of Egypt, The Chinese Civil Service, the Roman Catholic Church and military
organizations also offer good examples of early application of management.
However a systematic study and analysis of management as a science began only in the twentieth
century after the industrial revolution.

By far the most influential person of the time and someone who has had an impact on management
service practice as well as on management thought up to the present day, was F. W. Taylor. Taylor
formalized the principles of scientific management, and the fact-finding approach put forward and
largely adopted was a replacement for what had been the old rule of thumb.

PPM Notes 2018

Page 13 of 39
He also developed a theory of organizations, which served as the forerunner for many subsequent
writers on management science.

THE CLASSICAL THOUGHT MANAGEMENT

Classical Management Theory
Classical management theory involves creating multiple levels of workers to improve productivity.
Employees at the lowest levels find their tasks overseen by supervisors who, in turn, are overseen
by managers. At every level, employees are expected to perform tasks according to specific
procedures designed to maximize productivity. In addition, this theory focuses on an impersonal
side of business. Employees and managers should not allow friendliness and personal interactions
to become involved with the organization. Rules must be followed exactly, and the hiring and firing
of employees must relate only to the skills they possess.
Hierarchical Structure
One of the advantages of the classical management structure is a clear organizational hierarchy with
three distinct management levels. Each management group has its own objectives and
responsibilities. The top management is usually the board of directors or the chief executives who
are responsible for the long-term goals of the organization. Middle management oversees the
supervisors, setting department goals according to the approved budget. At the lowest level are the
supervisors who oversee day-to-day activities, address employee issues and provide employee
training. The levels of leadership and responsibilities are clear and well defined. While the three-
level structure may not be suitable for all small businesses, it can benefit those that are expanding.
Division of Labor
One of the advantages of classical management approach is the division of labor. Projects are broken
down into smaller tasks that are easy to complete. Employees' responsibilities and expectations are
clearly defined. This approach allows workers to narrow their field of expertise and to specialize in
one area. The division of labor approach leads to increased productivity and higher efficiency, as
workers are not expected to multitask. Small-businesses owners can benefit from taking this
approach if they are looking to increase production with minimal expense.
Monetary Incentive
According to classical management theory, employees should be motivated by monetary rewards.
In other words, they will work harder and become more productive if they have an incentive to look
forward to. This gives management easier control over the workforce. Employees feel appreciated

PPM Notes 2018

Page 14 of 39
when being rewarded for hard work. A small-business owner can take this approach to motivate the
employees to achieve production goals.
Autocratic Leadership
The autocratic leadership approach is the central part of classical management theory. It states that
an organization should have a single leader to make decisions, to organize and direct the employees.
All decisions are made at the top level and communicated down. The autocratic leadership approach
is beneficial in instances when small-business decisions need to be made quickly by a leader, without
having to consult with a large group of people, such a board of directors. Small businesses, especially
sole proprietorships, can have an advantage in taking this approach, as they need a strong leader to
grow.
i) Frederick Taylor and Scientific Management
Frederick Winslow Taylor (1856-1915) was an American inventor and engineer that applied his
engineering and scientific knowledge to management and developed a theory called scientific
management theory. His two most important books on his theory are Shop Management (1903) and
The Principles of Scientific Management (1911).
Frederick Taylor's scientific management theory can be seen in nearly all modern manufacturing
firms and many other types of businesses. His imprint can be found in production planning,
production control, process design, quality control, cost accounting, and even ergonomics. If you
understand the principles of scientific management, you will be able to understand how
manufacturers produce their goods and manage their employees. You will also understand the
importance of quantitative analysis, or the analysis of data and numbers to improve production
effectiveness and efficiency.

Principles of Scientific Management Theory

In broad terms, scientific management theory is the application of industrial engineering principles
to create a system where waste is avoided, the process and method of production is improved, and
goods are fairly distributed. These improvements serve the interests of employers, employees, and
society in general. Taylor's theory can be broken down into four general principles for management:
1. Actively gathering, analyzing, and converting information to laws, rules, or even
mathematical formulas for completing tasks.
2. Utilizing a scientific approach in the selection and training of workers.
3. Bringing together the science and the worker so that the workers apply the scientifically
developed techniques for the task.

PPM Notes 2018

Page 15 of 39
 4. Applying the work equally between workers and managers where management applies
scientific techniques to planning and the workers perform the tasks pursuant to the plans.

Frederick Taylor is often called the “father of scientific management.” Taylor believed that
organizations should study tasks and develop precise procedures. As an example, in 1898, Taylor
calculated how much iron from rail cars Bethlehem Steel plant workers could be unloading if they
were using the correct movements, tools, and steps. The result was an amazing 47.5 tons per day
instead of the mere 12.5 tons each worker had been averaging. In addition, by redesigning the
shovels the workers used, Taylor was able to increase the length of work time and therefore decrease
the number of people shoveling from 500 to 140. Lastly, he developed an incentive system that paid
workers more money for meeting the new standard. Productivity at Bethlehem Steel shot up
overnight. As a result, many theorists followed Taylor's philosophy when developing their own
principles of management.
ii) Henry Gantt
Henry Gantt, an associate of Taylor's, developed the Gantt chart, a bar graph that measures planned
and completed work along each stage of production. Based on time instead of quantity, volume, or
weight, this visual display chart has been a widely used planning and control tool since its
development in 1910.
iii) Frank and Lillian Gilbreth
Frank and Lillian Gilbreth, a husband‐and‐wife team, studied job motions. In Frank's early career
as an apprentice bricklayer, he was interested in standardization and method study. He watched
bricklayers and saw that some workers were slow and inefficient, while others were very productive.
He discovered that each bricklayer used a different set of motions to lay bricks. From his
observations, Frank isolated the basic movements necessary to do the job and eliminated
unnecessary motions. Workers using these movements raised their output from 1,000 to 2,700 bricks
per day. This was the first motion study designed to isolate the best possible method of performing
a given job. Later, Frank and his wife Lillian studied job motions using a motion‐picture camera and
a split‐second clock. When her husband died at the age of 56, Lillian continued their work.
Thanks to these contributors and others, the basic ideas regarding scientific management developed.
They include the following:
• Developing new standard methods for doing each job
• Selecting, training, and developing workers instead of allowing them to choose their own
tasks and train themselves

PPM Notes 2018

Page 16 of 39
 • Developing a spirit of cooperation between workers and management to ensure that work is
carried out in accordance with devised procedures
• Dividing work between workers and management in almost equal shares, with each group
taking over the work for which it is best fitted
Whereas scientific management focused on the productivity of individuals, the classical
administrative approach concentrates on the total organization. The emphasis is on the development
of managerial principles rather than work methods.
Contributors to this school of thought include Max Weber, Henri Fayol, Mary Parker Follett, and
Chester I. Barnard. These theorists studied the flow of information within an organization and
emphasized the importance of understanding how an organization operated.

iv) Mary Parker Follett

Mary Parker Follett stressed the importance of an organization establishing common goals for its
employees. However, she also began to think somewhat differently than the other theorists of her
day, discarding command‐style hierarchical organizations where employees were treated like robots.
She began to talk about such things as ethics, power, and leadership. She encouraged managers to
allow employees to participate in decision making. She stressed the importance of people rather than
techniques — a concept very much before her time. As a result, she was a pioneer and often not
taken seriously by management scholars of her time. But times change, and innovative ideas from
the past suddenly take on new meanings. Much of what managers do today is based on the
fundamentals that Follett established more than 80 years ago.

THE HUMAN RELATIONS SCHOOL OF THOUGHT

Human Relations Theory (Behavioral Management theory)
Human relations theory, also known as behavioral management theory, focuses more on the
individuals in a workplace than the rules, procedures and processes. Instead of directives coming
directly from management, a human relations theory provides communication between employees
and managers, allowing them to interact with one another to help make decisions. Instead of giving
workers quotas and requiring certain procedures, workers are exposed to motivational and emotional
tactics to get them to increase productivity. The focus of this style is creating fulfilled, productive
workers and helping workers invest in a company.

a) Theories on Motivation in Organizations and Management

PPM Notes 2018

Page 17 of 39
Businesses with unmotivated employees often face low productivity and high turnover rates.
Multiple theories help explain how workers are motivated and provide suggestions for how to
increase motivation in the workplace. Understanding which theory best fits your employees may
help improve your small business by increasing employee retention rates and improving worker
productivity

i) Theory X and Theory Y by Douglas McGregor.

The management theory an individual chooses to utilize is strongly influenced by beliefs about
worker attitudes. Managers who believe workers naturally lack ambition and need incentives to
increase productivity lean toward the Theory X management style. Theory Y believes that workers
are naturally driven and take responsibility. While managers who believe in Theory X values often
use an authoritarian style of leadership, Theory Y leaders encourage participation from workers.

In the 1960s, Douglas McGregor proposed two theories related to employee motivation and
management. His theories divided employees into two categories. Theory X employees avoid work
and dislike responsibility. In order to motivate them, employers need to enforce rules and implement
punishments. Theory Y employees enjoy putting forth effort at work when they have control in the
workplace. Employers must develop opportunities for employees to take on responsibility and show
creativity as a way of motivating Theory Y employees. A third theory, Theory Z, was developed by
Dr. William Ouchi. It encourages group work and social interaction to motivate employees in the
workplace.

ii) Henry Fayol

Henri Fayol, a French mining engineer, developed 14 principles of management based on his
management experiences. These principles provide modern‐day managers with general guidelines
on how a supervisor should organize her department and manage her staff. Although later research
has created controversy over many of the following principles, they are still widely used in
management theories.
i) Division of work: Division of work and specialization produces more and better work with the
same effort.
ii) Authority and responsibility: Authority is the right to give orders and the power to exact
obedience. A manager has official authority because of her position, as well as personal authority
based on individual personality, intelligence, and experience. Authority creates responsibility.

PPM Notes 2018

Page 18 of 39
iii) Discipline: Obedience and respect within an organization are absolutely essential. Good
discipline requires managers to apply sanctions whenever violations become apparent.
iv) Unity of command: An employee should receive orders from only one superior.
v) Unity of direction: Organizational activities must have one central authority and one plan of
action.
vi) Subordination of individual interest to general interest: The interests of one employee or
group of employees are subordinate to the interests and goals of the organization.
vii) Remuneration of personnel: Salaries — the price of services rendered by employees — should
be fair and provide satisfaction both to the employee and employer.
viii) Centralization: The objective of centralization is the best utilization of personnel. The
degree of centralization varies according to the dynamics of each organization.
ix) Scalar chain: A chain of authority exists from the highest organizational authority to the lowest
ranks.
x) Order: Organizational order for materials and personnel is essential. The right materials and the
right employees are necessary for each organizational function and activity.
xi) Equity: In organizations, equity is a combination of kindliness and justice. Both equity and
equality of treatment should be considered when dealing with employees.
xii) Stability of tenure of personnel: To attain the maximum productivity of personnel, a stable
work force is needed.
xiii) Initiative: Thinking out a plan and ensuring its success is an extremely strong motivator.
Zeal, energy, and initiative are desired at all levels of the organizational ladder.
xiv) Esprit de corps: Teamwork is fundamentally important to an organization. Work teams and
extensive face‐to‐face verbal communication encourages teamwork.

iii) Hierarchy of Needs by Abraham Maslow

Maslow's Hierarchy of Needs contains five levels that often shape motivation styles in an
organization. To motivate employees, an organization must move up the pyramid of needs to ensure
all of an employee's needs are met. The bottom of the pyramid contains physiological needs such as
food, sleep and shelter. Safety makes up the second level and belonging the third. The top two levels
of the pyramid include esteem and self-actualization. Successful organizations focus on the top two
levels of the pyramid by providing employees with the necessary recognition and developing
opportunities for employees to feel they are doing valuable work and reaching their potential with
the company.

PPM Notes 2018

Page 19 of 39
Advantages
• Managers can/should consider the needs and aspirations of individual subordinates.
Disadvantages
• The broad assumptions in 2 above have been disproved by exceptions e.g. hungry, ill artist
working in a garret.
• Empirical research over the years has not tended to support this theoretical model.
Regarding monetary reward, sometimes beyond certain level of pays (e.g. consultant) other things
become more important than another £1000 a year
e.g. working conditions, boss, environment etc.

a) Industrial Psychology, sociological Approach

i) Hawthorne Effect by Elton Mayo
Through a series of experiments in the late 1920s, Elton Mayo developed the Hawthorne Effect.
This effect theorizes that employees are more productive when they know their work is being
measured and studied. In addition to this conclusion, Mayo realized that employees were more
productive when provided with feedback related to the studies and allowed to provide input into the
work process. Workers need recognition for a job well done and reassurance that their opinion
matters in the workplace to be motivated to perform.

ii) Bureaucracy

PPM Notes 2018

Page 20 of 39
At a time when organizations were run like families, Max Weber looked for ways to bring a more
formalized structure to organizations. Weber created the idea of bureaucratic management where
organizations are more authoritative, rigid and structured.
In the late 1800s, Max Weber criticized organizations for running their businesses like a family, or
what some of us might refer to as 'mom and pop'. Weber believed this informal organization of
supervisors and employees inhibited the potential success of a company because power was
misplaced. He felt that employees were loyal to their bosses and not to the organization.

Weber believed in a more formalized, rigid structure of organization known as a bureaucracy. This
non-personal view of organizations followed a formal structure where rules, formal legitimate
authority and competence were characteristics of appropriate management practices. He believed
that a supervisor's power should be based on an individual's position within the organization, his or
her level of professional competence and the supervisor's adherence to explicit rules and regulations.
Weber believed that all bureaucracies have the following characteristics:
i) A well‐defined hierarchy. All positions within a bureaucracy are structured in a way that
permits the higher positions to supervise and control the lower positions. This clear chain of
command facilitates control and order throughout the organization.
ii) Division of labor and specialization. All responsibilities in an organization are specialized
so that each employee has the necessary expertise to do a particular task.
iii) Rules and regulations. Standard operating procedures govern all organizational activities
to provide certainty and facilitate coordination.
iv) Impersonal relationships between managers and employees. Managers should maintain
an impersonal relationship with employees so that favoritism and personal prejudice do not
influence decisions.
v) Competence. Competence, not “who you know,” should be the basis for all decisions made
in hiring, job assignments, and promotions in order to foster ability and merit as the primary
characteristics of a bureaucratic organization.
vi) Records. A bureaucracy needs to maintain complete files regarding all its activities.

To better understand the idea of bureaucracy, let's look at some of its characteristics.
Characteristics of Bureaucratic Organizations
a) A well-defined formal hierarchy and chain of command distinguishes the level of authority
within an organization. Individuals who hold higher positions will supervise and direct lower

PPM Notes 2018

Page 21 of 39
 positions within the hierarchy. For example, Megan the Manager supervises a team of four sales
representatives. Megan's position within the organization as a supervisor gives her authority
over those four sales representatives to direct and control their actions to ensure organizational
goals are met.
b) Management by rules and regulations provides a set of standard operating procedures that
facilitate consistency in both organizational and management practices. For example, when an
employee is sick and cannot make it into work that day, he or she must call out to their direct
supervisor. If one of Megan's sales reps is sick, they are expected to call her directly to inform
her of their absence. Any employee who fails to do this will be subject to termination. All of
Megan's employees are expected to follow this rule, and Megan is expected to enforce this rule
equally among her employees.
c) Division of labor and work specialization are used to align employees with their organizational
tasks. This way, an employee will work on things with which he or she has experience and
knows how to do well. For example, let's say two of Megan's sales reps are experienced in
selling products to vendors in the western region of the state due to their extensive experience
working in that area. Megan would then put those two employees in charge of that specific
region and would place the other two sales reps in the eastern region.

iii) Equity Theory by John Stacey Adams

John Stacey Adams' Equity Theory argues that employees are motivated when they perceive their
treatment in the workplace to be fair and unmotivated when treatment is perceived to be unfair. In
an organization, this involves providing employees with recognition for the work they are doing and
giving all employees the chance to advance or earn bonuses and other awards. Managers who play
favorites or single out employees for recognition may face a largely unmotivated group of employees

Pros and Cons of Human Relations Theory

While many companies operate based on the human relations theory, this type of management has
dangers. Companies risk workers becoming too social or easily swayed by personal emotions and
opinions when making decisions, rather than relying on hard data. It may be more difficult to
reprimand employees for poor performance or dismiss them once they have become invested in the
company. Despite these risks, human relations theory has the potential to increase employee
retention rates and productivity. As employees feel more valued by a company, they invest in that
company and its greater good.

PPM Notes 2018

Page 22 of 39
The Difference between a Classical Management Theory & a Human Relations Theory
Classical management theory and human relations theory represent two views of management on
the opposite ends of the spectrum. One view focuses on looking at workers solely as a means to get
work done, while the other focuses on developing an organization and the behaviors and motivations
of employees. Most managers find that a combination of the two theories serves them best in their
businesses.

THE SYSTEM APPROACH TO MANAGEMENT THOUGHT

Systems Theory
Managers who understand systems theory recognize how different systems affect a worker and how
a worker affects the systems around them. A system is made up of a variety of parts that work
together to achieve a goal. Systems theory is a broad perspective that allows managers to examine
patterns and events in the workplace. This helps managers to coordinate programs to work as a
collective whole for the overall goal or mission of the organization rather than for isolated
departments.
i) Chester Barnard
Chester Barnard, who was president of New Jersey Bell Telephone Company, introduced the idea
of the informal organization — cliques (exclusive groups of people) that naturally form within a
company. He felt that these informal organizations provided necessary and vital communication
functions for the overall organization and that they could help the organization accomplish its goals.
Barnard felt that it was particularly important for managers to develop a sense of common purpose
where a willingness to cooperate is strongly encouraged. He is credited with developing the
acceptance theory of management, which emphasizes the willingness of employees to accept that
managers have legitimate authority to act. Barnard felt that four factors affected the willingness of
employees to accept authority:
i) The employees must understand the communication.
ii) The employees accept the communication as being consistent with the organization's purposes.
iii) The employees feel that their actions will be consistent with the needs and desires of the other
employees.
iv) The employees feel that they are mentally and physically able to carry out the order.

PPM Notes 2018

Page 23 of 39
Barnard's sympathy for and understanding of employee needs positioned him as a bridge to the
behavioral school of management, the next school of thought to emerge.
Chester Barnard’s contribution to management is important. His book ‘The Functions of the
Executive’ is the most influential book on the management during the pre-modern management era.
He analyzed management as a social system. His analysis of the executives based on the major tasks
in the system in which they operate. He also stated the co-operative social system. He also found
non-logical factors influencing human behaviour in the organization.
The major contributions of Chester Barnard is as follows:
1. Concept of Organization: According to Barnard, an organization exists when the following three
conditions are fulfilled.
a) There are persons able to communicate with each other
b) They are willing to contribute to the action and
c) They are willing to accomplish a common purpose.
2. Formal and informal organizations: There can be two types of organizations. They are formal
and informal. In the formal organization there are co-ordinated interaction, which are deliberate and
have common object. On the other hand the informal organization refers to those social interactions,
which do not have deliberate joint object. Informal organizations overcome the problems of formal
organization. Both the formal and informal organizations depend on each other and there is
continuous interaction between the two.
3. Elements of Organization: Barnard had suggested four elements of a formal organization. They
are:
a) a system of fictionalization (specialization)
b) a system of effective and efficient incentives
c) a system of power to accept the decision of the executives
d) a system of logical decision-making.
4. Authority: in the classical view authority comes from the top. Bernard has given a new concept
of authority, which is called ‘Acceptance Theory of Authority’ or ‘Bottom-up authority’.
In his opinion person should obey an order not because it has given by the superior but he will take
it as a communication. This is possible only when
i) he can understand the communication
ii) he believes that it is not contradictory with the organizational purpose
iii) it is compatible with his personal interest as a whole and
iv) he is mentally and physically able to obey with it.

PPM Notes 2018

Page 24 of 39
5. Functions of the executives: According to Barnard there are three types of functions, which an
executive performs. They are:
a) maintenance of organization communication through a system of organization
b) the securing of essential services from individuals in the organizations to achieve
organizational purpose
c) the formulation and definition of organizational purpose.
6. Motivation: Apart from financial incentives Barnard has suggested a number of non-financial
techniques for motivating people. They are:
• opportunity of power and distinction,
• pride of workmanship,
• pleasant organization participation,
• mutual supporting personal attitudes,
• feeling of belongings, etc.
7. Executive Effectiveness: Responsible leadership is required to make the executive effective.
Leadership is the most strategic factor in securing co-operation from the people. Executive
leadership demands high caliber, technological competence and social skills. It should be above
personal preference and prejudices.
8. Organizational Equilibrium: This means the matching of the individual efforts and
organizational efforts to satisfy individuals. The organization must afford satisfaction to individuals.
This requires the equilibrium in the organization.
The above contributions of Barnard indicate how he was concerned for the development of the
organization through social system.

THE MODERN SCHOOL OF MANAGEMENT THOUGHT

Contingency Theory
This theory asserts that managers make decisions based on the situation at hand rather than a "one
size fits all" method. A manager takes appropriate action based on aspects most important to the
current situation. Managers in a university may want to utilize a leadership approach that includes
participation from workers, while a leader in the army may want to use an autocratic approach.
Chaos Theory
Change is constant. Although certain events and circumstances in an organization can be controlled,
others can't. Chaos theory recognizes that change is inevitable and is rarely controlled. While
organizations grow, complexity and the possibility for susceptible events increase. Organizations

PPM Notes 2018

Page 25 of 39
increase energy to maintain the new level of complexity, and as organizations spend more energy,
more structure is needed for stability. The system continues to evolve and change.

Management science or mathematical approach management

Management science theory is a contemporary approach to management that focuses on the use of
rigorous quantitative techniques to help managers make maximum use of organizational resources
to produce goods and services. It is also known as the mathematical or quantitative approach. In
essence, this theory is a contemporary extension of scientific management, which, as developed by
Taylor, also took a quantitative approach to measuring the worker–task mix in order to raise
efficiency. This theory has many branches; each of them deals with a specific set of concerns:
i) Quantitative management utilizes mathematical techniques – such as linear and nonlinear
programming, modelling, simulation, queuing theory, and chaos theory – to help managers
decide, for example, how much inventory to hold at different times of the year, where to locate
a new factory, and how best to invest an organization’s financial capital.
ii) Operations management (or operations research) provides managers with a set of techniques
that they can use to analyze any aspect of an organization’s production system to increase
efficiency.
iii) Total quality management (TQM) focuses on analyzing an organization’s input, conversion,
and output activities to increase product quality.
iv) Management information systems (MIS) help managers design information systems that
provide information about events occurring inside the organization as well as in its external
environment-information that is vital for effective decision making.
All these subfields of this provide tools and techniques that managers can use to help improve the
quality of their decision making and increase efficiency and effectiveness.
The scientific method works as an objective, fact-based method for making new discoveries and
learning new ways of doing things. Management science attempts to apply this same approach in
dealing with problems that arise within business operations. Its use as a problem-solving approach
finds applications in areas such as decision-making, design processes and strategic planning.
The various branches of this theory provide rigorous quantitative techniques that give managers
more control over their organization’s use of resources to produce goods and services.
History

PPM Notes 2018

Page 26 of 39
The management science approach originated during World War II as a means for making the best
use of available resources within military operations, according to the Encyclopedia of Business. By
studying existing strategies and tactics, the military hoped to gain a better perspective on where
resources could best be used. The success of this approach soon found its way into the business
world after World War II. Technological advances and economic growth saw business managers
wanting to make the most of their available resources. The management science approach proved an
effective means for maximizing resources and reframing large operational problems into
manageable scenarios.
Approach
Management science also goes by the name operations research, which pretty much explains the
approach management scientists take when working in a business setting. Just like the scientific
method, the management science approach identifies a problematic issue or process within a
business’ operations. It then develops possible theories for how the problem developed and designs
possible solutions. Scientists develop models from which to test proposed theories and gather data
from the results. Analysis of the data then provides practical solutions for solving a problem.
Effects
The management science approach uses mathematical models of analysis to apply the scientific
method to business operations or processes. Mathematical models uncover relationships between
related and unrelated variables, such as number of employees versus number of products produced
within a manufacturing environment. A mathematical model can uncover unknown problem areas,
such as equipment designs that slow the overall production process. The results obtained from
mathematical models enable decision-makers to develop solutions based on the resulting data.
Applications
The use of management science within business operations can translate systems and processes into
measurable terms. In effect, the approach brings a new and practical perspective on how different
areas of an organization work together and affect its overall output or effectiveness. Measurable
results provide opportunities for decision-makers -- who work in seemingly unrelated processes,
systems or departments -- to work toward a common end goal. As a result, the management science
approach plays a vital role within large, complex operations such as government organizations, mass
transit planning and criminal analysis and investigations

Under this approach, decision-making is considered to be the essence of management and, therefore,
this approach is also known 'decision theory approach'.

PPM Notes 2018

Page 27 of 39
In order to analyze and solve complex proems facing management, mathematical techniques are
used. The quantitative approach to management makes use of scientific tools of several disciplines
(engineering, mathematics, statistics, economics, etc in order to provide a quantitative base for
managerial decisions. This approach is also called 'management science approach or 'operations
research' or 'mathematical approach’. The essential characteristics of this approach are as follows:
i) Management is essentially decision-making and an organization is a decision-making unit.
ii) Organizational efficiency depends upon the quality of managerial decisions.
iii) A problem is expressed in the form of a quantitative or mathematical model containing
mathematical symbols and relationships.
iv) The different variables in management can be quantified and, expressed in the form of an
equation.
The model used to simulate the problem shows in symbolic form all the relevant factors that bear on
the problem and the interrelationship between them.

Operations research began to be used in military operations during the Second World War. The
quantitative approach began with model building and later on several sophisticated techniques like
games theory, queuing theory, sampling theory, simulation theory, computerized management
information system and linear programming were developed for making rational decisions.

Herbert A, Simon, the noble laureate has made notable contribution in the field of decision theory.
He published several famous books 'Administrative Behavior', The New Science of Management
Decision', 'Public Administration', etc.

Simon defined organization as 'complex network of decisional process' and considers decision-
making synonymous with management. He also paves the concepts of bounded rationality and
administrative man. James G. March, Cyber, Forester and Robert Schaefer, have also contributed to
this approach.

The quantitative approach has provided sharp tools for rational decision-making. The mathematical
formulation enables practicing managers to discover significant relationships that they could control.
This approach provides a rational base for making decisions with precision and perfection.

It has been widely used in planning and control activities. But it is not common in organizing,
staffing and leadership where problems are more human than technical in nature. This approach does
not take the total view of management.
PPM Notes 2018
Page 28 of 39
Management is much more than decision-making. Moreover. Operations research cannot take final
decisions. It can merely suggest best possible alternatives. In the final analysis, human judgment and
experience is required. Quantitative techniques can be valuable supplements rather than a substitute
for management.

Social technical systems

Sociotechnical systems (STS) in organizational development is an approach to complex
organizational work design that recognizes the interaction between people and technology in
workplaces. The term also refers to the interaction between society's complex infrastructures and
human behaviour.
Within a socio-technical systems perspective, any organisation, or part of it, is made up of a set of
interacting sub-systems, as shown in the diagram below. Thus, any organisation employs people
with capabilities, who work towards goals, follow processes, use technology, operate within a
physical infrastructure, and share certain cultural assumptions and norms.

Socio-technical theory has at its core the idea that the design and performance of any organisational
system can only be understood and improved if both ‘social’ and ‘technical’ aspects are brought
together and treated as interdependent parts of a complex system.
Organisational change programmes often fail because they are too focused on one aspect of the
system, commonly technology, and fail to analyse and understand the complex interdependencies
that exist.

PPM Notes 2018

Page 29 of 39
This is directly analogous to the design of a complex engineering product such as a gas turbine
engine. Just as any change to this complex engineering system has to address the knock-on effects
through the rest of the engine, so too does any change within an organisational system.
There will be few, if any, individuals who understand all the interdependent aspects of how complex
systems work. This is true of complex engineering products and it is equally true of organisational
systems. The implication is that understanding and improvement requires the input of all key
stakeholders, including those who work within different parts of the system. ‘User participation’
thereby is a pre-requisite for systemic understanding and change and, in this perspective, the term
‘user’ is broadly defined to include all key stakeholders.
The potential benefits of such an approach include:
• Strong engagement
• Reliable and valid data on which to build understanding
• A better understanding and analysis of how the system works now (the ‘as is’)
• A more comprehensive understanding of how the system may be improved (the ‘to be’)
• Greater chance of successful improvements
The socio-technical perspective originates from pioneering work at the Tavistock Institute and has
been continued on a worldwide basis by key figures such as Harold Leavitt, Albert Cherns, Ken
Eason, Enid Mumford and many others.
Our use of the hexagon draws heavily on the work of Harold, J. Leavitt who viewed organisations
as comprising four key interacting variables, namely task, structure, technology and people (actors).

We have used this systems approach in a wide range of domains including overlapping projects
focused on:
• Computer systems • Behaviour change
• New buildings • Safety and accidents
• New ways of working • Crowd behaviours
• New services • Organisational resilience

PPM Notes 2018

Page 30 of 39
 • Sustainability (energy, water and • Social networks
waste) • Organisational modelling and
• Green behaviours at work and in the simulation
home • Supply chain innovation
• Engineering design • Risk analysis
• Knowledge management • Performance and productivity
• Tele-health • Process compliance
A systems perspective is an intellectually robust and useful way of looking at organisations. It speaks
well to our clients and provides a coherent vehicle for collaboration with other disciplines, most
obviously with our engineering colleagues. Our experience is that most of the difficult problems and
exciting opportunities we face in the world lie at the intersections between human behaviour and
engineering innovation. Systems theory provides a useful tool to help us understand and address
these challenges.

What Is the Importance of Studying Management Theories & Practice?

People who create management theories rely upon observation and mathematics in order to construct
a model for business activities. Management practice relies upon case studies and the individual
experiences of managers when dealing with workplace situations. Since both schools of management
have flaws and benefits, a business owner should study both styles of management in order to
improve profitability.
Benefits
Employees most commonly leave their jobs due to poor management practices, a situation that
increases costs and lowers the talent present in a business, according to the University of Vermont.
Business owners should understand good management practices through personal research or formal
education in order to create a business model that can improve employee productivity, eliminate
redundancy in processes and increase retention rates.
Considerations
Management theories face limitations, because models of human behavior in a business do not
consider all of the variables that can impact profitability. Different businesses face different issues
with employees, financial resources and the use of technology. For example, a workplace of single
mothers requires a company to focus more on family leave, a consideration that a theorist might not
work into a general business model. Management practice can also result in flawed management
behavior, because managers cannot see the business as a whole and instead rely solely upon their
own experience.
PPM Notes 2018
Page 31 of 39
Uniformity
Management theories work best from a macro perspective, such as when a business determines the
appropriate model for management as a whole or starts a large project that it has never attempted
before. The formal structure of this type of management works best for large corporations that have
a top-down management structure which requires uniformity in order to accomplish goals, even if
this model slightly decreases productivity.

Personalization
Since management practices rely upon the opinions of managers and employees or a case study in a
particular area of business, they work best for informal organizations. Little doubt exists as to
whether a management model will work, because the track record of the model speaks for itself.
Management practices focus more on dynamics between groups, which allows managers more
flexibility in making decisions and helps employees function together as a unit when they work
together on a project.
Application
Business owners should mix management practices and theories together based upon their business
model. A small business owner will usually study and implement management practices, because he
requires flexibility to sustain his business mode. As his business grows, he may add some elements
of management theory in order to formalize the decision making and leadership qualities of
management.

PPM Notes 2018

Page 32 of 39
MANAGERIAL FUNCTIONS
Management process consists of various inter related activities. These activities are the ones known
as functions of management. There is no universally accepted classification of management
functions. According to Koontz and O’Donnel, “The most useful method of classifying managerial
functions is to group them around the activities of planning, organizing, staffing, directing and
controlling”. In practice, it is not always possible to clearly separate the various functions of
management from one another. The functions are intertwined with each other that none can be
performed without the other.
Managerial functions are different from operative functions. Operative functions include
production, marketing, finance, personnel etc. They are also known as the functional areas of
business. Operative functions differ from one business to another depending on its nature and size.
Managerial functions are essential in all organizations irrespective of their nature or size. Every
operative function in a business requires planning, organizing, staffing, directing and controlling.

Differences between managerial and operative functions

Managerial Functions Operative Functions
Planning Production
Organizing Marketing
Staffing Purchasing
Directing Financing
Controlling Personnel
Managerial functions are necessary at all levels. However, the time spent on various functions differ
from one level to another. Planning and organizing are more significant at the higher levels of
management. Lower level management spends comparatively a greater part of their time on
directing and controlling functions. At higher levels, planning is long term and strategic. While
lower levels engage in short term and operational planning.
Planning – this is the basic function of management. It precedes other functions because a manager
plans before acting (taking action). Planning involves determining the objectives and selecting a
course of action in order to achieve them. It involves looking ahead and deciding in advance what
is to be done, when and where it is to be done, how and by whom it is to be done. It involves the
use of intellectual faculties, foresight, imagination and sound judgement. A plan is a predetermined
future course of action. It is today’s design for tomorrow and an outline of steps to be taken in

PPM Notes 2018

Page 33 of 39
future. Planning helps activities to be carried out in an orderly and efficient manner. This process
of planning is continuous and it consists of:
1. Determination of objectives
2. Forecasting and choice of course of action
3. Formulation of policies, programmes, budgets, schedules etc to achieve the objectives
4. Laying down of procedures and standards of performance

Organizing – it is the function of creating a structure of duties and responsibilities. Organizing is

the process of establishing harmonious authority-responsibility relationship among the members of
an organization. Organizing is important because it is through organizing that a manager brings
together the material and human resources required for the achievement of the set goals. According
to Fayol, ‘to organize a business is to provide it with everything useful to its functioning – raw
materials, tools, capital and personnel’. Sound organization helps to avoid duplication of work and
overlapping of effort. Organizing process consists of the following steps:
1. Identifying and defining other activities required for the achievement of desired goals
2. Grouping the activities into logical and convenient units
3. Assigning the duties and activities to specific positions and people
4. Delegating authority to these positions and people
5. Defining and fixing responsibility for performance
6. Establishing horizontal and vertical authority relationships throughout the organization.
Staffing – process of filling all positions in the organization with adequate and qualified personnel.
According to Koontz and O’Donnel, ‘the management function of staffing involves manning the
organizational structure through proper and effective selection, appraisal and development of
personnel to fit the roles designed into the structure’. Staffing involves man power planning,
recruitment, selection, training, compensation, integration and maintenance of employees.

Directing – is concerned with the execution of plans and policies. It deals with guiding, supervision,
motivating and leading people towards the achievement of the desired goals. In the process of
directing, the manager takes an active part in ensuring that the employees accomplish their tasks
according to the established plans. Directing embraces the following activities:
1. Issuing orders and instructions
2. Supervising people at work
3. Motivating employees (creating willingness to work)

PPM Notes 2018

Page 34 of 39
 4. Communication i.e. establishing understanding with employees regarding plans and their
implementation
5. Leadership (influencing the behaviour of employees)
Controlling – process of ensuring that the organization is moving in the desired direction and that
progress is being made toward the achievement of the goals. The process includes:
1. Establishing standards for measuring work performance
2. Measuring of actual performance against the set standards
3. Finding variances between the two and the reasons
4. Taking corrective action for deviations so as to ensure attainment of objectives.
Co-ordination – this is the unification, integration, synchronization of the efforts of group members
so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all
the other functions of management. According to Mooney and Reelay, “Co-ordination is orderly
arrangement of group efforts to provide unity of action in the pursuit of common goals” and
According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole
to achieve the purpose of understanding”.
Management seeks to achieve co-ordination through its basic functions of planning, organizing,
staffing, directing and controlling. That is why, co-ordination is not a separate function of
management because achieving of harmony between individuals efforts towards achievement of
group goals is a key to success of management. Co-ordination is the essence of management and is
implicit and inherent in all functions of management.

The process of management can be analyzed by describing the various functions performed by
management. Fig. 1.13 shows some aspects of the various managerial functions.

PPM Notes 2018

Page 35 of 39
PRINCIPLES OF MANAGEMENT
A principle is a statement that provides a guide to thought and action. The principles of management
lay down guidelines for improving management practice.
Need for Principles of Management
To increase efficiency – a manager who understands the principles of management takes a more
realistic view of organizational problems and their solutions. Managerial problems are solved more
systematically and economically. Application of management principle avoids the need for trial and
error method and improves the quality of managerial practice.
To crystallize the nature of management job – principles help in analyzing the management job
and defining the exact scope of management process. The theory of management provides a broad
framework of training and education in management. Principles help to better understand the role
of management.
To improve research in management – management principles serve as the focal point for useful
research in group dynamics both to ascertain their validity and to improve their applicability.
Research helps to improve systematic theory and hence develop the science management.
To attain social goals – the quality of management determines the standards of living of the people
in a society. Development of management principles enables more efficient utilization of human
and material resources. Management provides social satisfaction and improves the quality of people.
Thus management principles are helpful in the attainment of social and cultural goals.

CHARACTERISTICTS OF PRINCIPLES OF MANAGEMENT

Universality of Principles – management principles are fundamental truths of general validity. The
principles can be used in different types of organizations e.g. businesses, governments etc. The
principles embody organized knowledge attained through experience and analysis.
Dynamism – management principles are flexible rather than hard and rigid rules. Management
situations are seldom the same in all respects and therefore management principles have to be
modified according to changes in the environment of the organization. Nothing is permanent in the
landslide of management.
Relativity – management principles are relative rather than absolute. The principles should be
applied according to the need of the organization and demands of the situation. According to Fayol,
“principles of management are flexible, not absolute but must be utilized in the light of changing
and special conditions. There is nothing rigid or absolute in management affairs, it is all a question
of proportion. Therefore, principles are flexible and capable of adoption to every need. It is a matter

PPM Notes 2018

Page 36 of 39
of knowing how to make use of them, which is a difficult art requiring intelligence, experience and
proportion.
Human Limitations – management deals with human behaviour. Human behaviour is very
complex and unpredictable and in order to understand and influence it, various principles developed
in other disciplines are being increasingly applied in the field of management.

LIST OF PRINCIPLES
There is no exhaustive list of management principles but a list as given by Henry Fayol is widely
accepted. They are:
Division of Work – helps a person to acquire the ability and accuracy with which he can perform
more and better work with the same effort. Therefore, every person in the organization should be
limited as far as possible to the performance of a single function. This principle can be applied at
all levels of the organization.
Unity of Command – every subordinate should receive orders and be accountable to only one
superior. According to Fayol, “as soon as two superiors wield their authority over the same person
or department, uneasiness makes itself felt”. Dual or multiple command is a perpetual source of
conflict. Unity of command avoids conflicting orders and ensures order and stability in the
organization.
Unity of Direction – each group of activities having the same objectives must have one head and
plan. This principle seeks to ensure unity of action. All employees should work to achieve the same
objectives.
Authority and Responsibility – authority is the power to command others to act of not to act in a
manner deemed by the possessor of the authority to further enterprise. It is the power to make
decisions which guide the actions of others. The person making decisions is called the superior and
the one who accepts them is the subordinate. Responsibility is the obligation of a subordinate to
whom a duty has been assigned to perform the duty. The essence of responsibility is then obligation.
Authority should not be conceived of apart from responsibility. Whenever authority is exercised,
responsibility arises.
Discipline – “respect for agreements which are directed at achieving obedience, application, energy
and outward marks of respect”. It must prevail throughout the organization as it is essential for the
smooth running of the firm. The rules and regulations of the organization must be observed by all.
Remuneration of Personnel – the amount of remuneration and the methods of payment should be
fair and just and should provide satisfaction to both the employer and employee.

PPM Notes 2018

Page 37 of 39
Scalar Chain – this principle means that someone must have ultimate authority. The orders must
come from top to bottom. Every subordinate must know who his superior is and to whom policy
matters beyond his own authority should be referred for decision. The chain of command should be
short-circuited only in special cases when it is absolutely necessary to make the communication fast
and effective. To prevent the scalar chain bogging down, Fayol gave the concept of “gang-plank”.

P U
Q
V
R W

S X

Y
T

The scalar chain and gang-plank

In the figure above, if T wants to communicate with Y, usually the message will flow from T to O
via S, R, Q and P. From O, it will come down to Y through U, V, W and X. But when it is necessary
to communicate immediately, a gang-plank (dotted line) may be created between T and Y without
weakening the chain of command. This gang-plank allows the two employees to deal directly with
each other but each must inform his superior of any action taken by him.
Order – this principle is concerned with the arrangement of things and placement of personnel.
There should be a place for everything and everything should be in its proper place. In social order,
there should be an appointed place for every employee and every employee should be in his/her
appointed place.
Equity – it implies that employees should be treated with kindness and justice. Managers should be
fair and impartial when dealing with subordinates. Equity helps create cordial relations between
management and workers which is essential for the smooth running of every enterprise.
Stability of Tenure of Personnel – assurance of job security is necessary if the employees are to
perform their tasks efficiently. An employee requires time to get used to the work and succeed in
doing it well. An employee cannot render worthwhile service if he is removed from the job before
he gets accustomed to it.

PPM Notes 2018

Page 38 of 39
Initiative - the freedom to think for one self and use of discretion in doing work. Employees at all
levels should be given the opportunity to take initiative and exercise judgement in the formulation
and execution of plans. This helps develop the interest of employees in their jobs and provides job
satisfaction to them.
Esprit de Corps – management should not follow the policy of divide and rule, rather it should
strive to maintain team spirit and cooperation among employees so that they can work together as a
team for the accomplishment of the set goals. Unity among the employees can be developed through
proper communication and coordination.

PPM Notes 2018

Page 39 of 39