PRINCIPLES OF MANAGEMENT

MODULE – 1
INTRODUCTION

By: Prof. Sridevi D A

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Learning Outcomes
Tell who managers are and where they work.
Define Management.
Describe what managers do.
Explain why its important to study management.
Functions of Management.
Roles of managers
Management Thoughts

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 Tell
Who managers
are and where
they work

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Who are Managers?
Where Do They Work?
Organization

A deliberate arrangement of people brought together to accomplish a specific

purpose.

According to L. Allen, “Organization is the process of identifying and grouping

work to be performed, defining and delegating responsibility and authority and
establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.”

Common Characteristic of Organization

- Goal
- People
- Structure

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 Three Characteristics of Organisation

Structure
Goal

People Page 5
 What is Management?
Management is the process of reaching organizational goals by working with and
through people and other organizational resources.

Management has the following 3 characteristics:

•It is a process or series of continuing and related activities.
•It involves and concentrates on reaching organizational goals.
•It reaches these goals by working with and through people and other organizational
resources.

Harold Koontz
"Management is the art of getting things done through and with people in formally
organised groups.“

According to Henri Fayol,

"To manage is to forecast and to plan, to organise, to command, to co-ordinate and to
control."

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Importance of Management

1) Optimum use of resources

2) Competitive strength
3) Cordial industrial relations
4) Motivates employees
5) Reduce cost
6) New techniques
7) Effective management
8) Team spirit
9) Effective use of managers

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Management Levels

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 What Titles Do Managers Have?

•Top Managers
- Make decisions about the direction of the organization
Eg: President, Chief Executive Officer, Vice President

•Middle Managers
- Manage the activities of other managers
Eg: District Manager, Division Manager

•First-Line Managers
- Direct non – managerial employees
Eg: Supervisor, Team leader

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MANAGEMENT
Management is the process of getting things done
effectively and efficiently, with and through people.

Effectiveness
“Doing the right things” the task that help an
organization reach its goals

Efficiency
“Doing things right” the efficient use of such
resources as people, money and equipment.

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 What Do Managers Do

In the functions approach purposed by French

industrialist Henri Fayol, all managers perform certain
activities or functions.
Planning
Organizing
Directing
Controlling

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 Four Management Functions

• Planning
The process of assessing an organization's goals and creating a
realistic, detailed plan of action for meeting those goals.
•Organizing
It is a function in which the synchronization and combination of
human, physical and financial resources takes place. All the three
resources are important to get results
•Directing
A process in which the managers instruct, guide and oversee the
performance of the workers to achieve predetermined goals.
•Controlling
Controlling consists of verifying whether everything occurs in
conformities with the plans adopted, instructions issued and principles
established.

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According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, & to control”.

Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning,
O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for
reporting & B for Budgeting.

Most widely accepted are functions of management given by KOONTZ and

O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

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 WHAT ARE MANAGER ROLES
1. Interpersonal Roles

Figurehead - performs symbolic legal or social duties

Leader - Leader builds relationships with employees and communicates with,

motivates, and coaches them.

Liaison - maintains a network of contacts outside the work unit to obtain information.

2. Informational Roles

Monitor - seeks internal and external information about issues that can affect the
organization.

Disseminator - transmits information internally that is obtained from either internal

or external sources.

Spokesman - transmits information about the organization to outsiders.

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3. Decisional Roles

Entrepreneur - acts as an initiator, designer, and encourager of change and

innovation.

Disturbance Handler - takes corrective action when the organization faces

important, unexpected difficulties.

Resource Allocator - distributes resources of all types, including time, funding,

equipment, and human resources.

Negotiator - represents the organization in major negotiations affecting the

manager’s areas of responsibility

Minzberg’s Manager role: Update

Managers role is to influence action by
• Managing actions directly
• Managing people who take action
•Managing information that propels people to take action
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 WHAT SKILLS DO MANAGERS NEED?
1. Conceptual Skills
– Used to analyze and diagnose complex situations

2. Technical Skills
- involve job specific knowledge and techniques required to perform
tasks.

3. Human relations Skills

- Used to work with understand, and motivate individuals and groups

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

• Political Skills - Used to build a power base and establish connection.

• Communication Skills - able to communicate the plans and policies to the workers
• Administrative Skills - Top-level managers should know how to make plans and
policies.
• Leadership Skills - A manager requires leadership skills to motivate the workers.
• Decision Making Skills - A manager must be able to take quick and correct
decisions.

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MANAGEMENT – A Science or an Art

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Management as an Art:
Art can be defined as systematic body of knowledge which requires skill,
creativity and practice to get perfection.
• The manager who has personal skills that translate into better motivation of
employees is successful that produces profitable results.
• The artistic manager creates a very positive morale in the work place as
imaginative ideas that produce results are encouraged as well as rewarded.

Management as Science:
•The most effective system of management involves one boss and an
established chain of command within a positive and healthy environment.
•Providing employees with absolutes also inspires confidence.
•Experiments and new ideas must be allowed and practical experience
appreciated.

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 Management can be understood as the skill of getting the work done from
others.
Administration is a process of effectively administering the entire organization.
Management Administration

An organized way of managing The process of administering an

people and things of a business organization by a group of people is
organization is called the known as the Administration.
Management.

Middle and Lower Level Top level

Executive Decisive

Policy Implementation Policy Formulation

It works under administration. It has full control over the activities

of the organization.
Profit making organizations Government offices, military, clubs,
business enterprises, hospitals

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Development of Management Thought!

The management thinkers have been contributing to management thought and

have been defining structures, systems and relationships in terms of power,
authority, leadership, accountability and responsibility thereby shaping and
reshaping organizations for centuries.

The development of it was gradual and it has passed through various distinct
time periods. Herbert G. Hicks has divided the period into four distinct stages.

Evolution of management are three periods

(1) The classical Period the neoclassical period (1900-1930)

(2) The Neo-classical classical Period (1930-1950) and
(3) The Modern Period (1950 to present).

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STAGES OF MANAGEMENT THOUGHT
I. The Classical Theory of Management
1. Bureaucratic Model
2.Scientific Management
3. Administrative Management

II. The Neo-Classical Theory

1. Human Relations Movement
2. Behavioral Sciences Movement

III. The Modern Management Theories

1. Quantitative Approach
2. Systems Approach
3. Contingency Approach

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 Various Approaches to Management
• The Classical Approach (Traditionally accepted views):
This approach emphasizes organizational efficiency to increase
organizational success. It believes in functional relationship, following
of certain principles based on experience, a bureaucratic structure and
reward-punishment nexus.
• The Neo- classical Approach :
It emphasize human relations, individual as well as group
relationships, and social aspects. This approach was pioneered by
Mayo and his associates. This was further extended to behavioral
science approach pioneered by Maslow, Chris Argyis , Douglas
McGregor and Rensis Likert.
• Modern Management Thought:
It combines concepts of the classical school with social and natural
science,. It basically emerged from systems analysis
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 Bureaucratic theory
At the end of the 19th century, it was German sociologist and author Max
Weber who was the first to use and describe the term bureaucracy. This is also
known as the bureaucratic theory of management, bureaucratic management
theory or the Max Weber theory.

He believed bureaucracy was the most efficient way to set up an organisation,

administration and organizations. Max Weber believed that Bureaucracy was a
better than traditional structures. In a bureaucratic organisation, everyone is
treated equal and the division of labour is clearly described for each employee.

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Administrative Management Theory
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.

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.

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 14 Principles of management

1. Division of labour : Division of work leads to specialization

resulting in higher output. This principle recommends grouping of
people as per their area of specialization. If people are specialized
at their work, they can perform their task better.

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2.Authority & Responsibility: Management has the authority to give
orders to the employees. Of course with this authority comes
responsibility. the accompanying power or authority gives the
management the right to give orders to the subordinates. The
responsibility can be traced back from performance and it is therefore
necessary to make agreements about this. In other words, authority
and responsibility go together and they are two sides of the same coin.

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3. Discipline : Discipline means respect for rules and
agreements. People working in an organization need to comply
with rules and agreements that govern the organization. Without
discipline results cannot be achieved.

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4. Unity of Command: The management principle ‘Unity of command’
means that an individual employee should receive orders from one
manager and that the employee is answerable to that manager. If tasks
and related responsibilities are given to the employee by more than
one manager, this may lead to confusion which may lead to possible
conflicts for employees.

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5. Unity of Direction: All operations in an organization need to be
directed towards one objective. Without this achievement of goal
cannot be ensured.
6. Subordination of Individual Interest to General Interest: If
there is a conflict between the individual goals and organizational
goals, preference should be given to organizational goals, i.e.,
individual goals should not supersede the goals of the organization.

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7. Remuneration: Motivation and productivity are close to one another
as far as the smooth running of an organization is concerned. The 14
principles of management argues that the remuneration should be
sufficient to keep employees motivated and productive. There are two
types of remuneration namely non-monetary (a compliment, more
responsibilities, credits) and monetary (compensation, bonus or other
financial compensation).

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8. Centralization & Decentralization: It refers to declining role of
subordinates in the decision making. Though major decisions are taken
by the managers at the top level, but at the same time enough authority
should be given to the subordinates to do the jobs properly .
9. Scalar Chain: This the line of authority running from top level to lower
level of management. It is also known as hierarchy of authority. It
illustrated in the form of an organizational chart clearly showing the
structure of authority from the top management to employees down
the line.

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10. Order: employees in an organization must have the right resources at
their disposal so that they can function properly in an organization.

11. Equity: Managers should be fair to their subordinate. Employees must

be in the right place in the organization to do things right.

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12. Stability of Tenure of Personnel: Employee turnover should be less
to ensure efficiency of an organization

13. Initiative: Subordinates should have the freedom to conceive new

ideas and do their task, even though they commit mistakes .

14. Esprit de corps: ‘ Unity is strength’. People should work as a team to

enjoy the benefits of synergy.

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 Neo-classical theory

A. ELTON MAYO: He is recognized as the father of human

relations approach. Mayo and his associates conducted
their study at Western Electric's Hawthorne Plant
between 1927-1932, to evaluate the attitude and
psychological reaction of workers in on-the-job situation.
Hawthorne effect — workers’ attitudes toward their
managers affect the level of workers’ performance.
Demonstrated the importance of understanding how the
feelings, thoughts, and behavior of work-group members
and managers affect performance. 1. Human Relations
Movement

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B. ABRAHAM MASLOW:
• An eminent U.S. psychologist, gave a general theory of
motivation known as Need Hierarchy Theory. Human
behavior is goal-directed.
• The needs of individual serves as a driving force in human
behaviour. Therefore, a manager must understand the
“hierarchy of needs”. Maslow has proposed “The Need
Hierarchy Model

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 C. DOUGLAS- McGregor: He was a social psychologist and professor at
Massachusetts Institute of Technology, U.S.A.

Theory X Theory Y

Most people dislike work Work is a naturally activity like play

Most people must be forced with the People will apply self-control and
threat of punishment to work self-direction in the pursuit of
towards organizational objectives. organizational objectives

The average person prefers to be People usually accept and often seek
directed; to avoid responsibility; is responsibility
relatively unambitious, and wants
security above all else

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D. PETER F. DRUCKER: He was born in Vienna in 1909 and has varied
experience. He served as newspaper correspondent, an economist, a
management consultant in different countries and was a Professor of
Philosophy and Politics, Professor of Management and Professor of
Sciences.
Some of his most important contributions are as follows:
I. Nature of Management
II. Organisation
III. Federalism
IV. Functions of Management
V. Management by Objectives
VI. Futurity and Organizational Change

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 THE MODERN MANAGEMENT THEORIES

1. QUANTITATIVE OR MATHEMATICAL APPROACH:

This theory became an acceptable theory during world war II , when
Britain wanted to solve the problem of war. The problem was that the
radar system did not perform well at field sites as it performed at the
testing stations. During the war managers, government officials , and
scientists are brought together to help the army to utilize the resources
effectively. The experts solved many logistic problems in the war. After the
war, such techniques were used by the organizations to solve their
business problems. This school of thoughts uses statistics, optimization
models, information models, and computer simulation to solve business
problems. It has various branches , such as
a) Management science b) Operations Management c) Management
information system
Management Science approach: Also known as the operation research
approach, which is applied in the areas like capital budgeting, production
scheduling, product strategy management, human resource planning and
inventory management. Page 44
• The operations management approach: is primarily concerned with
production management and its related areas. This approach is helpful
in decision making in the functional areas like finance, marketing and
human resource management.
• The management information system approach focuses on designing
and implementing computer based information systems for use by
management .
2. THE SYSTEMS THEORY APPROACH
The systems approach defines a system as a set of interrelated and
interdependent parts arranged in a manner that produces a unified
whole. Societies are systems and so, too, are computers, automobiles,
organizations, and animal and human bodies.
Open System
• A system that takes resources for its external environment and
transforms them into goods and services that are then sent back to that
environment where they are bought by customers.

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• THE OPEN SYSTEM VIEW
Inputs : the acquisition of external resources to produce goods and
services
Conversion : transforms the inputs into outputs of finished goods and
services.
Output : the release of finished goods and services to its external
environment.
• Closed System A self-contained system that is not affected by changes
in its external environment . The organisation provides a boundary or
a closes subset which separates it from other systems.

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 3. CONTINGENCY OR SITUATIONAL APPROACH
This was developed by J.W. Lorsch and P.R. Lawrence in 1970 who
were critical of other approaches presupposing ‘one best way to
manage’. Management problems are different under different
situations and need to be tackled as per the demand of the situation.
One best way of doing may be useful for repetitive things but not for
managerial problems.
A manager should study to find out the method that fits into the situation
and helps in precise realization of goals of the enterprise.
• There is no one best way to organize”
• The idea that the organizational structures and control systems
manager choose depend on —are contingent on—characteristics of the
external environment in which the organization operates.

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