Principles of Management

BCH-201

UNIT-1: INTRODUCTION
ORGANIZATION…..?
Organization?

“It’s a deliberate arrangement of people to accomplish

some specific purpose/goal.”

“An organization is a goal-directed and deliberately structured

social entity.”
 Characteristics of Organization
1. Goal-directed means designed to achieve some outcome
2. Social entity means being made up of two or more people.
3. Deliberately structured means that tasks are divided to organization
members.
Which of the following is an organization?
1. IMS Unison University
2. A Church
3. Indian Cricket Team
4. Your Neighborhood Grocery Store
5. Amazon.com

Exam Question: What is an Organization? Explain its Characteristics? ( * )

Efficiency & Effectiveness……..?
Efficiency & Effectiveness
The Organizational Goals should be Achieved in an Efficient & Effective Manner

“Efficiency is concerned with the means (resource usage) of getting

things done, whereas, Effectiveness is concerned with the ends, or
the attainment of organizational goals”

Efficiency refers to the amount of resources used to achieve a goal.

Effectiveness is the degree to which a stated goal is achieved.
Combinations of Effectiveness and Efficiency
CONSEQUENCES:
At Delta Airlines,
Former CEO Ronald Allen dramatically started cutting spending on personnel,
food, cleaning, and maintenance. Allen believed the moves were needed to
rescue the company from a financial tailspin, but Delta fell to last place among
major carriers in on time performance, the morale of employees sank, and
customer complaints about dirty planes and long lines at ticket counters increased
by more than 75 percent.
What’s Your Point of View?

University XYZ, by using computer assisted learning and internet-

based course material, long-distance learning classes, large lecture
classes and heavy reliance on part-time sessional staff,
administrators have significantly cut the cost of educating each
student. Yet students, alumni and companies have questioned
whether students are being educated properly.

Exam Questions: What is the difference between efficiency and effectiveness?

Which is more important? (***)
Manager…….. ?
Who is a Manager?
“A manager is a person who plans and take decisions, is
responsible for the work performance of group members
(subordinates) and has the formal authority to commit
organizational resources

For instance, the manager of Administrative Block has the authority

to order the repainting of the reception area.
Resources Used by Managers

1. Human resources--- are the people needed to get the job done (Effort)
2. Financial resources--- are the money the managers use (Expense)
3. Physical resources--- are a firm’s tangible goods and real estate, office space,
equipment, and vehicles etc. (Equipment)

Exam Question: List the types of resources which managers use and explain. (*)
Microsoft hires many software engineers.
Initially these people are recruited for their
ability to write computer code; but if they
succeed at this job, they may find themselves
in charge of other software engineers,
becoming development leads (a frontline
position at Microsoft). At this point their
management skills are just as important as
their technical skills in fulfilling their
responsibilities.
(Frontline managers manage employees who
themselves are NOT managers)
Is Albert really a manager?
‘Albert is the Dispatch Manager of a small
stationery wholesaling company. Each day he
analyses the orders scheduled for delivery that
day, removes the stock from the warehouse
and assembles it for collection by drivers
employed by a local contractor.’
Exam Question: Who is a manager? (**)
What types of skills do managers
need?
Managerial skill-- is the ability to work with and through people and
other organizational resources.

Robert L. Katz proposed that managers need three critical skills in

managing: technical, human, and conceptual
 Skill-1 (Hard Skills)
Technical skills--- Technical skill includes mastery of the methods,
techniques, and equipment involved in specific functions such as
engineering, manufacturing etc.

--- First-line managers typically manage employees who use tools and techniques to
produce the organization’s products.

E.g.-- A production supervisor at ‘Toyoto Motor Corporation (Aichi, Japan)’

manufacturing plant.
Skill-2 (Soft Skills)

Interpersonal skills/Human Skills--- involve the ability to work well

with other people both individually and in a group.

‘Managers with good human skills get the best out of their people.
They know how to communicate, motivate, lead, and inspire
enthusiasm and trust.‘
Consequences: Organizations frequently lose good people because of managers who fail to
show respect and concern for employees
Skill-3
Conceptual skill-- is the ability to see the
organization as a total entity…It includes…

---- recognizing how the various units of the organization depend on one another
---- how changes in any one part affect all the others
---- visualizing the relationship of the individual business to the industry, the
community; and the political, social, and economic forces of the nation as a whole.
Discussion

In recent years, many employers seek out technically trained

job candidates who also have studied management. What
advantages do you think employers see in a technical person
studying management?

Exam Questions: Explain managerial skills proposed by Katz/ Define the

skills you need to be an effective manager? (***)
Managerial Roles
‘A role is a set of expectations for a manager’s behavior’

--- Henry Mintzberg in his book The Nature of Managerial Work

defines ten roles for managers

--- Three categories: interpersonal, informational, and decisional

 Interpersonal Roles
Interpersonal roles pertain to relationships with others (both inside and outside organization) and
are related to the human skills.

Figurehead Role--- Performs ceremonial and symbolic duties like

entertaining visitors, attending a subordinate’s wedding, represent the
company at community events ETC.
Leader Role--- Encompasses relationships with subordinates, including
motivation, communication, and influence.
Liaison Role--- Focuses on contacts with people outside the immediate
unit. (internal liaison relationship/outside liaison relationship)
Which Role is Dan Cathy Playing?

Dan Cathy, the president and

COO of Atlanta-based Chick-fil-A
restaurants, blows his trumpet to
signal a new store opening. He
particularly enjoys participating
in the grand opening of a new
store.
 Informational Roles
Informational roles--- are concerned with collecting, processing, and
disseminating information from various sources both inside and outside the
organization.
Monitor Role--- constantly monitoring the environment to determine what is going on… accessing
information using websites, reports and chance conversations – such as with customers or new
contacts at an exhibition.
Disseminator Role--- the manager shares information by forwarding reports, passing on rumours or
briefing staff.
Spokesperson Role--- the manager transmits information to people outside the organization –
speaking at a conference, briefing the media.
Which Role is Satya Nadella Playing?

Microsoft CEO Satya Nadella is constantly

reviewing competitive, technological, and
regulatory trends in the markets in which
Microsoft competes. He is also assessing
the performance of the different units
within Microsoft, for example, how well the
Windows, Office, and Xbox businesses are
performing against targets.
 Decisional Roles
In playing the decisional roles, managers make decisions to solve problems or
take advantage of opportunities

Entrepreneur Role--- Sharing and initiating new ideas or methods that may improve the
operations /performance
“Whole Foods Market, was the top and only organic grocery retailer in Canada. When
traditional chains, such as Kroger and Walmart, began offering organic produce for
cheaper prices, Whole Foods due to its high prices, became vulnerable and earnings
plummeted. Co-CEO of the company Walter Robb cut prices, launched its first national
advertising campaign, started a customer loyalty program, and partnered with Instacart to
deliver groceries at home”
Disturbance handler--- As a disturbance handler, a manager deals with
schedule problems, equipment failure, strikes, and any other feature of the
work environment that decreases productivity

Resource Allocator Role--- A manager determines who in the work unit gets
what resources—money, facilities, equipment, and access to the manager

Negotiator Role--- Managers negotiate schedules, projects, goals,

outcomes, resources, and employee raises etc.

Exam Question: Explain the three categories of management roles

proposed by Mintzberg? (***)
Which Role is Michael O’Leary Playing?

Ryanair, Europe’s low-cost airline, was

shopping for 200 new planes in 2014,
CEO Michael O’Leary pressed Boeing
and Airbus to add an extra eight to
eleven seats per plane. Doing so it cuts
costs by 20 percent and earns an extra 1
million euros per plane each year.
Management……?
 Management….?
Management--- is defined as the pursuit of organizational goals efficiently and effectively
by integrating organization’s resources. (Kinicki & Williams)
Management--- is the process of reaching organizational goals by working with and
through people and other organizational resources. (Certo & Certo)
Characteristics:
1. It concentrates on reaching organizational goals.
2. It reaches these goals by working with and through people and other organizational
resources.
3. The attainment of goals in an effective and efficient manner.
Additional Reading……
Many of the writers on management have their own point of view
about management. Find out how they have defined management.

Exam Question: What is management (***)

Functions of Management..
(Management Process)
Planning (& Decision Making)
Organizing (& Staffing)
Leading
Controlling
‘P-O-L-C’ FRAMEWORK
Planning (& Decision Making)

Planning--- When planning, managers begin by identifying goals and

alternative ways of achieving them
In its simplest sense, Decision-Making--- is the act of choosing
between two or more courses of action.
 Goal- Your University was established for the purpose of educating students.
Present managers, or administrators, now must decide the best way to accomplish this.
1. Which of several possible degree programs should be offered?
2. Should the college be a residential or a commuter campus?
3. What sort of students should be recruited and admitted?
4. What kind of faculty should be hired?

5. What kind of buildings and equipment are needed? Etc.

Organizing (& Staffing)
Organizing--- is deciding where decisions will be made, who will do
what tasks, and who will work for whom in the company (Chain of
Command-Reporting Relationship)
Staffing--- Staffing consists of recruiting, training, and developing
people. (Putting Right People on Right Jobs)– Final Stage of
Organizing Function
E.g.--- Should the university be organized into schools with departments (subject
umbrella), with department chairpersons reporting to deans who in return
report to vice chancellor, who in return report to chancellor…
Leading…
Leading--- is defined as motivating, directing, and otherwise
influencing people to work hard to achieve the organization’s goals.

E.g.-- At your university, leadership begins, of course, with the head (who
would be the president/Chancellor/Vice Chancellor). He or she is the one who
must inspire faculty, staff, students, alumni etc. to help realize the college’s
goals.
Controlling….
Controlling--- In controlling, the task of managers is to evaluate how well an
organization has achieved its goals and to take any corrective actions needed
to maintain or improve performance.

E.g.-Is the university discovering that fewer students are passing. Is the fault with the
quality of instruction? with the kind of curriculum? Or student selection process not
going well?

Exam Question: Explain four primary functions of management/P-O-L-C

framework/Process of Management (***)
 Co-ordination
Co-ordination is the synchronization of the efforts of group
members so as to provide unity of action in the pursuit of
common goals.

For E.g.--- When a sales manager is making a plan to increase his sales target, he also
consults the production manager, the finance manager, etc. in order to avoid any
problem that may arise in future.
Functions Of Management - POSDCoRB
Planning- Organizing-Staffing-Directing-Coordinating-Reporting-Budgeting

POSDCoRB is an acronym widely used in the field of Management that reflects the classic
view of administrative management. Largely drawn from Henri Fayol’s work, it first
appeared in a 1937 staff paper by ‘Luther Gulick’ and ‘Lyndall Urwick’.
Reporting: “Keeping those to whom the executive is responsible informed as to what is
going on, which thus includes himself and his subordinates, through records, research and
inspection”.
Budgeting: All that goes with budgeting is fiscal planning.
 Updated Definition
Management--- is defined as the pursuit of organizational goals efficiently
and effectively by integrating organization’s resources.

Management--- then, is the planning, organizing, leading, and controlling of

human and other resources to achieve organizational goals efficiently and
effectively. (Jones & George)
 Purpose of Management (**)
Purpose-The reason for which something is done

1. Optimum utilization of resources: The available resources are put to use in such a way that all
sort of wastage and inefficiencies are reduced to a minimum.

2. To avoid conflicts: Management establishes proper organization structure and avoids conflict
between the superiors and subordinates

3. Attainment of Goals: It is only through proper management – by well thought of planning, good
direction and proper coordination and control that effectiveness to the efforts to achieve given
goals can be ensured
 Nature of Management (**)
1. Management is Universal (Universality of Management) (***)
Management is required by a school or a college or university or a hospital or
a big firm like Reliance Industries Limited or a small variety store in your
locality

2. Management is Goal Directed : Every organization is created to achieve

certain goals. Management of an organization is always aimed at
achievement of the organizational goals.

3. Management is an Integrative Force: The essence of management is

integration of human and other organizational resources to achieve the
desired goals.
 Nature of Management …. Contd.
4. Management is Multi-disciplinary: The principles and techniques of
management are mostly drawn from almost all fields of study like – Engineering,
Economics, Commerce, Psychology, Mathematics, Statistics etc.

5. Management is a Social Process : All managerial actions are primarily

concerned with relations between people, developing and motivating people at
work and taking care of their satisfaction

6. Management is Intangible (unable to be touched; not having physical presence)

Management (Science or Art)….?
Science….
Science is a systematic body of knowledge which has--Universally
accepted ---verifiable principles---derived from Experimentation &
Observation and It establishes--Cause & Effect Relationship
between two variables
 Management as Science
Universally Accepted Principles: These principles may be applied in all
situations, at all time & at all places. E.g. - law of gravitation

Management also contains some fundamental principles which can be

applied universally like the Principle of Unity of Command i.e. one man,
one boss.
Management as Science….. Contd.
Test of Validity (verifiable/reproducible)- Scientific principles stand the test of
time. Each time these tests will give same result. E.g. H2 & O2 will always give
H2O

Principles of management can also be tested for validity. E.g. principle of unity of
command can be tested by comparing two persons - one having single boss and
one having 2 bosses. The performance of 1st person will be better than 2nd.
Management as Science….. Contd.
Experimentation & Observation - Scientific principles are derived through
Experimentation & Observation E.g. the principle that earth goes round the sun
has been scientifically proved. (Nicolaus Copernicus, 1543)

Management principles are also based on scientific enquiry & observation. E.g.
it is observed that fair remuneration to personal helps in creating a satisfied
work force.
Management as Science….. Contd.
Cause & Effect Relationship - Principles of science lay down cause
and effect relationship between various variables. E.g. when metals
are heated, they are expanded. The cause is heating & result is
expansion.

The same is true for management, it also establishes cause and

effect relationship. For e.g. if workers are given bonuses, fair wages
they will work hard and vice-versa.
Art…

Art is, skillful---application of knowledge--- which entirely

depends on the inherent capacity of a person
(personalized)---and is learned from practice and
experience.
Management as an Art…
Application of Knowledge--- Every art requires application of knowledge
therefore learning of theory is not sufficient. To become a good painter, the
person may not only be knowing different color, brushes, different designs etc.
but also to use them appropriately.

Similarly, applying various principles of management, learnt while

obtaining degree in management, in real situations by functioning
in capacity of manager is an art
Management as an Art… Contd.
Personalized: Although theoretical base may be same for every
artist, but each one has his own skill level. For example, all musicians
learn same ragas but they apply these ragas according to their
personal skill which makes them different.

Similarly management as an art is also personalized. Every manager

has his own way of managing things based on his/her skill level.
Management as an Art… Contd.
Perfection through practice: The artist requires regular practice of art to become
more fine and perfect. Same way with experience managers also improves their
managerial skills and efficiency. So this feature of art is also present in
management.

Exam Question: Explain, management is both science as well as art. (***)

 Evolution of Management Thought
The different theories of management can be divided into three broad categories:
--- Classical Theory- Scientific Management (Taylor), Administrative Management
(Fayol), Bureaucracy (Weber)
--- Neo-classical Theory- Human Relations Movement (Follet & Mayo)
--- Modern Theory
(a) System Theory
(b) Contingency Theory
Evolution of Management Thought
Frederick W. Taylor (1856–1915)

--- Frederick W. Taylor (The father of scientific management-an engineer by

background)
--- Scientific Management- An approach that involves using the scientific method to
find the one best way for a job to be done.
-- Taylor’s scientific management efforts was the
pig iron experiment.
 Pig-Iron Experiment
Taylor worked at the Midvale and Bethlehem Steel Companies in Pennsylvania
--- Taylor’s scientific management efforts was the pig iron experiment. Workers loaded/uploaded iron-
pigs/steel onto rail cars with an average output was 12.5 tons.
--- by scientifically analyzing determined the “one best way” to load and upload
--- put the right person on the job with the correct tools and equipment and trained them
--- motivated the worker with an economic incentive of a significantly higher daily wage.
(ALL THREE WERE A RARE PRACTICE AT THAT TIME-1898)
--- The output was increased to 47 or 48 tons per day.
Taylor’s Four Principles of
Scientific Management (***)
--- First, develop precise, standardized procedures for doing each job (science not rule of
thumb)
--- Second, scientifically select, train, and develop workers to help them reach their full
potential.
--- Third, Give workers incentives to do the task with the proper work methods/tools.
(Taylor’s work on linking workers’ incentives to their performance provided an important
base for motivation theory applied to the workplace)
--- Fourth, Divide work and responsibility almost equally between management and
workers.
 Some Key Concepts (Taylor)
Time and Motion Studies:
The Time study would indicate the minimum time required to do a job. (Time Standard)
The Motion study is to find the best sequence of motion to do a job.
Differential piece rate system:
Wages linkage with performance of employees.
Functional Foremanship:
It is an extension of principle of division of labor, resulting in specialization. According to Taylor, a single
supervisor cannot be expected to be an expert in all aspects. (he advocated the appointment of eight
foremen to guide workers, under planning and production departments)
Evolution of Management Thought…… Contd.
Henri Fayol (1841–1925)
-- Fayol was an engineer and a successful administrator in a large
French mining and metallurgical Company.
-- Pioneered Administrative Management
-- Administrative management-- focusses more on what managers do
and what constituted good management practice
--- Fayol was the first who identified five functions that managers
perform: planning, organizing, commanding (Leading), coordinating,
and controlling.
 14 Principles of Management that Constitute Good Practices
(***)
1. Division of Work- Specialization of labor (focused on special portions of the
task) is necessary for organizational success
2. Authority- Authority was defined by Fayol as the right to give orders and the
power to exact obedience. However, organizations should enact controls to
prevent managers from abusing their authority
3. Discipline- Clearly defined rules and procedures are needed at all organizational
levels to ensure order and proper behavior. Penalties should be applied judiciously
to encourage this.
4. Unity of command- To avoid confusion and conflict, each employee should
report to and receive orders from just one boss
 14 Principles of Management… Contd.
5. Unity of direction- The efforts of everyone in the organization should be
coordinated and focused in the same direction
6. Subordination of individual interests to the general interests- The interests of
one person/group should not take priority over the interests of the organization
as a whole
7. Remuneration- Employees should be paid fairly in accordance with their
contribution
8. Centralization- Fayol defined centralization as lowering the importance of the
subordinate role. Decentralization is increasing the importance. A balance should
be there.
 14 Principles of Management… Contd.
9. Scalar chain- Managers in hierarchies are part of a chainlike authority
scale. Each manager, from the first-line supervisor to the president,
possesses certain amounts of authority.
10. Order- For the sake of efficiency and coordination, all materials and
people related to a specific kind of work should be assigned to the same
general location in the organization.
11. Equity- All employees should be treated as equally as possible.
12. Stability of tenure of personnel- Retaining productive employees
should always be a high priority of management.
14 Principles of Management… Contd.
13. Initiative- Management should take steps to encourage worker initiative,
which is defined as new or additional work activity undertaken through self-
direction
14. Esprit de corps- Management should develop a strong sense of morale and
unity among workers
 Taylor VS. Fayol
Basis of Comparision Taylor Fayol
Perspective Shop Floor Level Top Level
Focus/Attention Technical side of work, Increasing productivity Administrative side of work,
through work simplification, time and motion improving overall administration by
studies observing certain principles
Techniques used Scientific measurement of work through Personal experience passed on in the
experimentation and observation form of universal principles of
management
Personality Scientist Practitioner
Major Contribution Provided a major basis for accomplishment at the Produced a systematic theory of
shop floor management which can be studied
analyzed and applied

Exam Question: Explain Henri Fayol’s fourteen principles. How Fayol’s

approach was different from that of Frederick W. Taylor’ Approach?
 Evolution of Management Thought… Contd.
Mary Parker Follett (1868–1933)
Mother of Modern Management Thought
-- Pioneered Human Relations Approach
-- scientific management focuses on improving efficiency, administrative
management focuses on how and what managers should do in their jobs,
human relations approach to management focuses on people
--- This approach to management sees people not as just extensions of machines but
as valuable organizational resources.
 Mary Parker Follett Ideas…. (***)
Integration and treating employees as partners
1. Organizations should be operated as “communities,” with managers and
subordinates working together in harmony (Working WITH and through people)

2. Conflicts should be resolved by having managers and workers talk over differences
and find solutions that would satisfy both parties—a process she called INTEGRATIVE
CONFLICT RESOLUTION

3. The work process should be under the control of workers with the relevant
knowledge, rather than of managers, who should act as facilitators (SELF-MANAGED
TEAMS/WORKER EMPOWERMENT-- AUTHORITY SHOULD GO WITH KNOWLEDGE . . .)
Evolution of Management Thought… Contd.
Elton Mayo (1880–1948)

--- Also a Pioneer of Human Relations Approach

--- is best known for his role in the famous Hawthorne Studies at
the Western Electric Company (Hawthorne plant in Chicago)
 Hawthorne Studies (***)
--- To Study the effect of lighting levels, financial incentives, and rest pauses (work
breaks) on worker productivity
--- Two groups of six experienced female workers, were separated from the main
part of the factory
--- Over the next five years, the experimenters introduced various levels and
combinations of lighting, financial incentives, and rest pauses (work breaks) to
study the effect on productivity
--- Curiously, however, production levels increased whether the experimenters
increased or decreased the lighting, paid workers based on individual production or
group production, or increased or decreased the number and length of rest pauses.
WHY……….?
Findings of the Hawthorne Studies
It was NOT the amount of lighting levels/financial incentives/ rest pauses, but rather the relations
among the workers and between them and their supervisors

TWO THINGS ACCOUNTED FOR THE RESULTS:

First, substantially more attention was paid (Consulted/discussed/suggestion) to these workers than
to workers in the rest of the plant--developed a sense of participation
Hawthorne Effect--- that employees work harder if they think that managers cared about their
welfare and paid special attention to them

Second, the development of a cohesive work group led to significantly higher level of productivity
Systems Approach (**)
The systems viewpoint regards the organization as a SYSTEM

A system is a set of interrelated and interdependent parts arranged in a manner that produces a
unified whole.
--- A systems approach emphasizes the links between sub-systems, and reminds managers that a
change in one will have consequences for others (SYNERGY)
--- the systems approach also encourages managers to look for connections between the organization
and the different parts of its environment (the competitive, economic, social, technological, and
legal/regulatory forces in their environments)- (OPEN/CLOSED)
The Four Parts of a System
1. Inputs are the people, money, equipment, and materials required to produce an organization’s
goods or services.
2. Transformational processes are the organization’s capabilities in management, internal processes,
and technology that are applied to converting inputs into outputs.
3. Outputs are the products, services, profits, losses, employee satisfaction or discontent etc.
Whatever comes out of the system is an output.
4. Feedback is information about the reaction of the environment to the outputs.
Are the customers buying or not buying the product? That information is feedback.