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NATURE AND CONCEPT OF MANAGEMENT

1.1. MANAGEMENT CONCEPT

The application of Management practices is not limited to business activities. Every

day, we face different situations that require us to make smart choices and decisions so we can
effectively execute our plans and accomplish our goals. Mothers plan menus and prepare the
ingredients that will make healthy meals for their families. Teachers prepare lessons, make
tests, grade papers, make report cards, and meet with parents to ensure that their students
finish school with necessary skills. These actions are at the heart of management.

Management can be applied in many activities, particularly in the conduct of our jobs
and responsibilities. Business establishments, government agencies, private organizations, and
even small social groups of friends and neighbors employ people, resources and equipment to
conduct various activities that need to be coordinated to ensure a smooth and successful flow
of activities. Learning the important concepts in management can help us understand more
fully what it take to make a business or any activity successful.

Welcome to the world of management!

Nature of Management
Management is a science as well as an art. It is a body of knowledge whose ideas and
principles have become the basis of organizational frameworks employed by many businesses
or organizations. It is considered a science because it evolved from a number of theories that
involved extensive studies and experiments and it is a systematic body of knowledge. It gathers
and analyzes facts and formulates general laws or principles from these facts.

A good manager must be able to look at situations and use creativity and imagination
in coming up with solutions to problems. It is in this aspect that one can consider management
as an art. Creativity and ingenuity are important traits of managers that enable them to
effectively use business strategies in any situation, and make innovations, that result in new
products, services and processes. It result in the accomplishment of objectives through the use
of human efforts.

Meaning and Importance of Management

Management is the process of planning, organizing, staffing, directing and controlling
(POSDICON) the activities of an organization effectively and efficiently to achieve its goals. It
plays a crucial role in every organization, especially in today’s world that is much more complex
and where constant is the norm. Organizations, therefore, need to keep abreast of all these
changes and managers need to be dynamic and flexible to address the challenges that
changes bring.

Management also provides the means to maintain a firm’s competitive advantage. It

lays out the foundation of successful operations that lead to efficiency and profitability and
establishes the link between the development of strategies and their implementation and
control. The effective application of plans requires skilled managers who are able to combine
resources and capital in executing strategies and sustaining the operations of their
organizations.

1.1.1. Efficiency and Effectiveness

Efficiency is the ability to maximize output with minimum input. It is often referred to as “doing
things right” and seeks to limit the wasted input which is costly for a business. There is an
element of speed in efficiency since it requires things to be done quickly to avoid wasting time
and effort.

Effectiveness, meanwhile, is the capacity to attain an intended objective or result. It is often

called “doing the right thing”. The intention is to meet the desired goal regardless of the amount
of input required. Careful analysis and critical thinking are present in effectiveness. If there is a
goal that needs to be achieved, the things that need to be done are prioritized to achieve that
goal.

Self Check:
Answer briefly the following questions.
1. What important role does management play in organization?
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2. Should one be effective first before being efficient or is it the other way around? Justify
your answer.
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 1.2. Functions of Management

The key management functions are planning, organizing, staffing, directing and controlling.
Each function blends into the other and each affects the performance of others.

Figure 1. Main Functions of Management

Planning is the basic function of management. It deals with chalking out a future
course of action & deciding in advance the most appropriate course of actions for achievement
of pre-determined goals. It is where manager identify and select the company’s goals and
determine the corresponding courses of action in order to achieve them. As planners, the goal
for managers is to improve company’s overall performance by formulating strategies to be
implemented.

Organizingis the process of bringing together physical, financial and human resources
and developing productive relationship amongst them for achievement of organizational goals.
The organization ensures that the employees are able to perform efficiently and coordinate
effectively to achieve the company’s goals. Each group of employees is assigned a manager
who oversees the employees as they perform their assigned tasks.

Staffing is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of
technology, increase in size of business, complexity of human behavior etc. The main purpose
o staffing is to put right man on right job.

Directing is that part of managerial function which actuates the organizational methods
to work efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of
management which deals directly with influencing, guiding, supervising, motivating sub-
ordinate for the achievement of organizational goals.

Controlling it implies measurement of accomplishment against the standards and

correction of deviation if any to ensure achievement of organizational goals. The purpose of
controlling is to ensure that everything occurs in conformities with the standards. An efficient
system of control helps to predict deviations before they actually occur.

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Self Check:
Answer briefly the following questions

1. What are the importance and limitations of planning as a function of management?

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2. A manager's most basic responsibility is to focus people toward performance of work activities
to achieve desired outcomes." Is this an accurate statement?

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3. What are the functions of management? How it is important in today’s organization?

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1.3. Evolution of Management Theories

Managers today are wrestling with the same problems and issues that confronted business
people and leaders many years ago. Management skills have been utilized since ancient times,
when tirbal leaders organized hunting and gathering groups to acquire resources from nature.
The emergence of capitalism during the 17th century inspired entrepreneurs to establish
guiding principles and develop means to ensure the success of any busniess venture. Theories
and views regarding management soon developed and grew into an organized field of study
ideas are applied not only in busniess but also in other aspects of life.

[Link] Classical theory of management

a) Scientific Management
b) Bureaucratic Management
c) Administrative Management

[Link]-Classical Theory
a) Human Relations
b) Behavioral Science Approach

[Link] Modern Management Theories

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a) Quantitative Approach
b) System Approach
c) Contingency Approach

Classical management theory is based on the belief that workers only have physical and
economic needs. It does not take into account social needs or job satisfaction, but instead
advocates a specialization of labor, centralized leadership and decision-making, and profit
maximization.

[Link] management is a management theory that analyzes work flows to improve

economic efficiency, especially labor productivity. This management theory, developed by
Frederick Winslow Taylor, was popular in the 1880s and 1890s in U.S. manufacturing
[Link] the terms “scientific management” and “Taylorism” are often treated as
synonymous, a more accurate view is that Taylorism is the first form of scientific management.
Taylorism is sometimes called the “classical perspective,” meaning that it is still observed for its
influence but no longer practiced exclusively. Scientific management was best known from
1910 to 1920, but in the 1920s, competing management theories and methods emerged,
rendering scientific management largely obsolete by the 1930s. However, many of the themes
of scientific management are still seen in industrial engineering and management today.

Scientific Management has at its heart four core principles that also apply to organizations
today. They include the following:
 Look at each job or task scientifically to determine the “one best way” to perform the
job. This is a change from the previous “rule of thumb” method where workers devised
their own ways to do the job.
 Hire the right workers for each job, and train them to work at maximum efficiency.
 Monitor worker performance, and provide instruction and training when needed.
 Divide the work between management and labor so that management can plan and
train, and workers can execute the task efficiently.

B. Bureaucratic management theory developed by Max Weber, contained two essential

elements, including structuring an organization into a hierarchy and having clearly defined rules
to help govern an organization and its members.

Max Weber (1864-1920), a German sociologist; described a theory to operate an

organization in an effective way which is known as the Bureaucratic management approach or
Weberian bureaucracy.

Max Weber’s work was oftentimes interpreted as a caricature of modern bureaucracies

with all of their shortcomings.

He found different characteristics in bureaucracies that would effectively conduct

decision-making, controlling resources, protecting workers and accomplishment of
organizational goals.
Bureaucratic management approach developed by Max Weber is not suitable for business
organizations but may be suitable for government organizations.

C. Administrative management theory attempts to find a rational way to design an organization

as a whole. The theory generally calls for a formalized administrative structure, a clear division
of labor, and delegation of power and authority to administrators relevant to their areas of
responsibilities.

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 Henri Fayol (1841-1925): Fayol was born in France, where he worked for a coal-mining
business. He developed 14 administrative principles for organizational structure and
management.

14 Principles of Management of Henri Fayol

14 principles of Management are statements that are based on a fundamental truth. These
principles of management serve as a guideline for decision-making and management actions.
They are drawn up by means of observations and analyses of events that managers encounter
in practice.

1. Division of work into specialized tasks, with specific duties and responsibilities given to
individuals. According to Henri Fayol specialization promotes efficiency of the
workforce and increases productivity.
2. Authority of managers to delegate work and tasks to the employees. The employers, in
turn, are expected to comply and exercise their tasks responsibly. According to Henri
Fayol, the accompanying power or authority gives the management the right to give
orders to the subordinates.
3. Discipline where expectations should be clearly set and violators of rules must be
punished.
4. Unity of Command where an employee should only report to one supervisor.
5. Unity of Direction which means that the efforts of the employees are guided toward the
attainments of the organizational objectives.
6. Predominance of the general interest of the organization over the individual interests of
employees.
7. Remuneration of the efforts of the employees which should be systematically rewarded
in line with the organization’s vision and mission.
8. Centralization where the roles of all employees which should be systematically
rewarded in line with the organization’s vision and mission.
9. Scalar Chain which means the communication should be open within the chain of
command
10. Order where the organization of jobs and materials must be done in an orderly fashion.
11. Equity which means that fairness and order must be practices to maintain employee
commitment.
12. Stability and tenure of personnel to actively promote employee loyalty to the
organization
13. Initiative to encourage employees to act on their own in support of the organization’s
objectives.
14. Esprit de corps to promote teamwork and the unity of interest between the employees
and the management.

2. NEO-CLASSICAL THEORY is the extended version of the classical theory wherein the
behavioral sciences gets included into the management. According to this theory, the
organization is the social system, and its performance does get affected by the human
actions.

The basic features of neoclassical approach are:

(i) The business organisation is a social system.
(ii) Human factor is the most important element in the social system.

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(iii) It revealed the importance of social and psychological factors in determining worker
productivity and satisfaction.
(iv) The behaviour of an individual is dominated by the informal group of being a member.
(v) The aim of the management is to develop social and leadership skills in addition to technical
skills. It must be done for the welfare of the workers.
(vi) Morale and productivity go hand-to-hand in an organization

a. Human Relation Theory

Hawthorne experiment led to the development of human relations approach. It revealed the
importance of social and psychological factors in determining workers, productivity and
satisfaction. This movement is marked by informal grouping, informal relationship and
leadership Pattern of communication and philosophy of industrial [Link] relation
approach is a social psychological approach and suggests business enterprise is a social
system in which group norms play a significant role.

Financial incentive was less of a determining factor on a workers output than were group
pressure and acceptance and the concomitant security.

b. Behavioural Science Approach

Mayo and his colleagues pioneered the use of the scientific method in their studies of
people in the work environment. Later researchers were more rigorously trained in the social
sciences (psychology, sociology, and anthropology) and used more sophisticated research
[Link] knowledge was drawn from behavioural sciences. It focuses on human behaviour
in organizations and seeks to promote verifiable propositions for scientific understanding of
human behaviour in organisation behaviour and stresses the development of human beings for
the benefit of both the individual and the organization.

Modern Management theory was started after 1950s. Modern management theory focuses
the development of each factor of workers and organization. Modern management theory
refers to emphasizing the use of systematic mathematical techniques in the system with
analyzing and understanding the inter-relationship of management and workers in all aspect.
[Link] Approach also called Operation Research. Quantitative approach is a scientific
method. It emphasizes the use of statistical model and systematic mathematical techniques to
solving complex management problems. Its helps the management to making decisions in
operations. It can only suggest the alternatives based on statistical data. It cannot take final
decision.

It helps the management for improving their decision making by increasing the number
of alternatives and giving faster decisions on any problem. Management can easily calculate
the risk and benefit of various actions.

[Link] Approach was developed inlate1960s. Herbert A. Simon is the father of system
theory. A System is defined as a set of regularly interacting or inter - dependent components
that create as a whole unit. The system concept enables us to see the critical variables and
constraints and their interactions with one another.

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Characteristics of system approach:
 A system must have some specific components, units or sub units.
 A Change in one system affects the other subsystems.
 Every system is influenced by super system.
 All systems along their subsystem must have some common objectives.
 A system is a goal-oriented.
 A system cannot survive in isolation

[Link] Approach also knows as situational approach. In 1980s, it is recognized as a

key to effective management. This approach accepts the dynamics and complexities of the
organization structure. An organization is affected by its environment and environment is
composed by physical resources, climate, persons, culture, economic and market conditions
and their [Link] approach argues that there is no one universally applicable set of rules by
which to manage organization.

Self Check:

Answer briefly the following questions;

1. According to the human relations theory? why is it important to nurture employee

welfare?

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2. Select one of the four principles of scientific management. How is this principle
relevant in the business environment at the present?

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1.4 Levels of Management and skills of managers

Managers perform the main managerial functions in the organization and assume
different roles in the performance of their duties. This results in the assignment of diverse
responsibilities to managers which in turn create the different levels of organizational hierarchy.
That is why they should be equipped with the skills needed to manage the organization well

The manager is an employee who is responsible for planning, directing and overseeing
the operations and fiscal health of a business unit, division, department, or an operating unit
within an organization. The manager is responsible for overseeing and leading the work of a
group of people in many instances.

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Levels of Management
Managers an be classified into different levels of management

Figure 2. Levels of Management

Top-Level Management/Upper
Top-level managers determine broad strategic strokes for the organization in general,
and focus on the big picture. The primary role of the executive team, or the top-level managers,
is to look at the organization as a whole and derive broad strategic plans. The managers in this
level have titles such as Managing Director, Chief Executive Officer, Chief Operating Officer,
Executive Vice President, and Chairman of the Board.

Middle-Level Management
Middle management is the intermediate management level accountable to top
management and responsible for leading lower level managers. They are assigned to
supervise specific units or departments with the company and are highly specialized in
managing the tasks and operations of their assigned units. Middle level managers have titles
like Department Head, Plant Manager, and Division Manager, among others.

Low-level managers
Managers in the lower-level management are also called “front managers” or
“supervisor”. These managers usually directly oversee employees or workers and are tasked
with carrying out the decisions communicated by middle managers. They also oversee daily
operations.
Supervisors, section leads, and foremen are examples of low-level management titles.
These managers focus on controlling and directing.

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Different Types of Managers
The Problem solving Manager focuses on providing solution to every problem of the
company. This boss is task-driven and focused on achieving goals. These problem solvers are
constantly putting out fires and leading by chaos. Mangers of this type sometimes tend to
overdo the task or solving every problem which affects his or her overall performance.

The Pitchfork Manager threatens employees to work towards a goal. This manager
employs fear tactics and uses an iron hand to push employees for results to avoid
consequences. People who manage by a pitchfork are doing so with a heavy and often
controlling hand: demanding progress, forcing accountability, prodding and pushing for results
through the use of threats and fear tactics.

The Pontificating Manager neither follows any strategy nor prepares for any situation or
task and usually ends up with inconsistent results. The strength of this manager is his or her
ability to make people feel at ease when he or she is around since listening to others is second
nature to him or her. However, this overfriendliness usually hinders his or her leadership
decisions and results in a less systematic approach to problems therefore affecting his or her
oveall performance.

Presumptuous Manager focuses more on themselves than anything else. To them,

their personal production, recognition, sales quotas, and bonuses take precedence over their
people and the value they are responsible for building within each person on their team.
Presumptuous Managers often put their personal needs and objectives above the needs of
their team.

The Perfect Manager is open to change and personal growth. However, he or she can
be very mechanical and may lack the interpersonal skills ot interact more closely with his or her
team members. He or she just concentrates on facts and figures. These managers are open to
change, innovation, and personal growth with the underlying commitment to continually
improve and evolve as sales managers almost to a fault. This wonderful trait often becomes
their weakness.

The Passive Manager wants to please everyone and make the team members happy.
However, being a crowd pleaser becomes a hindrance because of his or her lack of drive and
assertiveness to manage the team. This type of manager is describe as very timid in his or her
approach to avoid any conforntation with anyone especially from the members of his or her
team.

While this is certainly an admirable trait, it can quickly become a barrier to leadership
efforts if not managed [Link] wholesome and charming, this type of boss is
viewed as incompetent, inconsistent, and clueless, often lacking the respect they need from
their employees in order to effectively build a championship team.

The Proactive Manager possesses the good qualities of the other types of managers.
He or she has the drive of the problem solving manager to spearhead solutions, the
persistence of the pitchfork manager, the enthusiam of the pontificating manager, the
confidence of the presumptuous manager, the passion of the perfect manager for continued
growth, and the desire of the passive manager to serve.

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Everybody strives to become a proactive manager who empbodies the true traits of an
outstanding manager.

Management Skills
Whether are the top, in the middle, or low level management, managers should
possess the following key management skills:

1. Conceptual skills refer to the manager’s ability to anaylze a particular situation, identify
new opportunities and resources and decide on the best strategies and courses of
action.

2. Human skills include the manager’s capacity to motivate and control the behavior of his
or her subordinates. A manager should know how to effectively communicate,
coordinate and relate with his or her employees.

3. Technical skills are the compentencies that a manager should have in relation to the
type of task assigned to him or her. It is also related to the specializzation of a
manager needed in a particular department, unit, or area where he or she is assigned.

Self check:
Answer briefly the following questions:

1. What critical role do middle managers play in an organization?

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2. Among the key management skills, which do you think is the most important skill that a
manager should possess? Why do you think so?

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Case Study
Read the article below and answer the questions that follow:

STEVE JOB AND MANAGEMENT

Apple’s beginnings can be traced to Steve Job’s garage which housed the first circuit
board that later on became the Apple ll personal computer (PC) in 1976. That year, Steve Jobs
and Steve Wozniak established Apple Computer, Inc. a company that produces affordable
personal computers. The growing popularity of
personal computers and increased sales of Apple
computers enabled Apple Computer to grow into
a highly profitable business. In 1984, the Apple
Macintosh computer was introduced and it
became popular in certain industries like
publishing, advertising, cinema and the arts.
Sales of Apple computers eventually grew to
almost 2 billion in 1985.

Despite being one of the forces that drove Apple’s success, Steve jobs management
style soon brought about difficulties for his company. For one, he played favorites among his
project teams and this sparked conflicts for his company. For one, he played favorites among
his project teams and this sparked conflicts and understandings among the members. he was
also no tin good terms with John Sculley, Apple’s Chief Executive Officer (CEO). Sculley and
Jobs were at odds regarding the best marketing strategy for Apples computers. Sculley favored
selling Apple computers to wider public, while Jobs preferred to focus on industries. The two
also clashed over control in the company, as Sculley was CEO but Job’s had unlimited control
over the product development division of apple. The employees were confused as to who was
actually leading the company. While Jobs and Sculley were fighting it out for the company’s
contro, Apple’s efficiency suffered; cost soared to high proportions and profits fell. Apple’s
decline was furthered hastened by the entry of a new computer company, IBM, and its
introduction of theIBM PC which soon surpassed the Apples ll in sales.
In 1985, amidst plans for the reorganization of Apple Computer, Inc. Steve Jobs
resigned. He founded Next and developed powerful PC’s which would outperform Apple PCs.
He lso founded Pixar, the computer animation company that made blockbuster movies such as
Toy Story and Finding Nemo.
With these two companies, he was the exact opposite of his Apple’s days. Jobs
developed a vision for managers and empowered his project teams to put his vision into
practice. He allowed collaboration and innovation to work together. Jobs developed a team of
managers who can perform on their own even without his supervision. With these, he
encouraged his people to love what they do and be passionate about their work.
In the meantime, Apple was suffering heavily with the introduction of Micheal Dell’s low
prices PC’s loaded with Microsoft Windows software. Jobs came to the rescue and convinced
Apple to buy his company Next for 400 million and use its own operating system in 1996. Job’s
worked for Apples tuenaround and in 1997, Jobs was appointed its new CEO.
One of the first things he did when he came back to Apple was define the values of the
company and did it with two words: “think different” . He just didn’t stick with hiring people who
were technically equipped but also hired poets, musicians, artist, biologist, creative people who
were also computer experts. their only qualification was that they believe they can change the
world. For Job’s, that was for Apple to take the risk of hiring them.

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 For Job’s, software, hardware, and content must be intuitively connected. He also
believed that one must have intuition and foresight to be successful. One result of his vision
was the new line of iMac PC’s which were then followed by more stylish and modern Pc’s. In
2003, Apple announced an online music store called iTunes. Then, the iPod, a device which
can store thousands of downloaded songs, was also introduced to complement iTunes.

There are two days to run the business; focus on profits or focus on products. Job’s
focused on the products, believing that profits eventually follow. he focused single-mindedly on
the development of three products: iPod, iPad, iPhone. The iPhone was developed to compete
with Blackberry. Job’s led his project teams to develop the iPhone which can download
applications in the Web. 2010, over 2 million iPhone applications could be downloaded by
iPhone users, making tablet which became another convenient was to surf the Web, send
emails, take photos, and share content online. With these new products, Apple once again
regained its distinction as the most profitable computer company in the world.

1. What changes and developments brought about the emergence of Apple Computer,
Inc. as a leading computer company during the 1980’s?
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2. Describe Steve Job management style during the early years of Apple. How did this
affect the company?
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3. Describe Job’s management style when he came back to Apple. How did this new
management style benefit Apple?

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4. What do you think influenced the changes in Steve Job’s management style?

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