Principles of management

UNIT I
 Management is a discipline of getting individuals together to achieve a
desired common goal, by efficiently deploying resources.
Various Definitions:
Harold Koontz defined as “Management is the art of getting things done
through and with people in formally organized groups.”
O’Donnell defined as “ Management is the creation and maintenance of
an internal environment in an enterprise where the individuals working in
groups, can perform efficiently towards the attainment of group goals.”
Henry Fayol defined as “ To manage is to forecast and to plan, to
organize, to command, to coordinate and to control.”
Peter Drucker defined as “ Management is a multi-purpose organ that
manages business and manages managers and manages workers and
work.”
Nature of Management
• Innovative
• Coordination of activities
• Universal and all pervasive
• Involves achieving results through the efforts of others
• Dynamic
• Science as well as art
• Targets at attaining prearranged objectives
• Group activity
Different levels of Management
• Operational level management
• Middle level management
• Top level management
Operational level management
• They assign task to employees
• Guide and supervise subordinates on daily basis
• Responsible for quality and quantity of production
• Give suggestions to the middle level managers
• Help in execution of various policies and programmes formulated at
higher levels
• Lower level managers are the actual executors, hence they must acquire
technical skills, having in charge of operations and executions, they
must know how to make the subordinates work on technical grounds
Middle level management
• They are subordinate to the top level management, however they are
superior to the lower level management
• Accountable to higher level managers
• They guide and lead supervisory level (lower level) managers
• Communicate the policies formulated at the upper level to the lower level
managers
• They form a link b/w upper and lower level managers
• Middle level manager must posses human relation skills as he is a
communicator b/w the top level and lower level management. He discloses
top level strategies to lower level and gives feedback to the top level
Top level management
• Responsible for organizing, strategizing and controlling the entire firm
• Policy formulation, setting up of goals
• Making decisions on long term issues
• Answerable to various stakeholders such as general public,
shareholders, government etc.
• Top level management require conceptual skills as they devote their
time in problem solving, organizing and planning
Management Vs Administration
• Administration is concerned with laying down suitable policies for the
whole concern
• Wheareas management will simply execute these,
• Administrators are the owners of the business
• Managers on the other hand, are the salaried employees of the
concern
Contd…..

Administration Management
All policy decision are made by the administration It is concerned with the implementation of the policies
Are the owners of the concern Are the paid employees of the concern
They are basically interested in results, i.e., They direct their efforts towards the attainment of the
profitability, sales, furutre prospects and so on goal set by the administration.
Donot take part in the daily activities of the concernManagers are responsible to the administrators on the
daily work done in the concern
Decisions made by the administrators are influenced Are empowered to take decisions only on routine
by the availability of capital, govt. regulations and matters. They are usually guided by opinions, values
other factors and beliefs in making decisions. They also act based
on precednts, i.e., past happenings
Administration is a permanent body. No major change, Management is not a static body. They can redesign,
therefore takes place in it retire or may even be removed from service
Top level function It is a lower level function
Management both a science and an art
• Science establishes cause effect relationships b/w different variables
• Scientific principles have universal relevance
• Management is a social science like sociology, psychology, economics
and so on.
• Managemnet scientists have developed many theories and
formulated several principles that guide managers in performing their
functions
• There are theories on motivation, principles governing delegation of
authority and they are the essential management concepts
Contd…
• Physics & chemistry where cause effect relationship is certain & definite, but in
the case of social science it is not definite
• For ex., it cannot be said with defenite ness that financial rewards will motivate
all the employees
• Social sciences focuses on the behavior of individuals which is a complex affair
• Other physics and chemistry focus on the intimate objects the behavior of which
can be accurately predicted
• In fact performance in art will vary from individual to individual in view of
differences in skill
• And performance mainly influenced by the factors such as skill, technical
knowledge, creativity and so on
Contd…
• To be a successful manager an individual has to apply knowledge, skill
and creative ability
• Knowledge of the theory and principle of management alone cannot
help a manager in performing his/her duties
• It is clear from above discussion management is both a science and an
art
Functions of Management
• Planning
• Organising
• Staffing
• Directing
• Coordinating
• controlling
Planning
--planning is deciding in advance what should be done in future.
--it helps to work in a systematic manner
--with proper planning of the activities of the enterprise, it is
possible to make up an optimum use of the available resources and
--weekly & monthly targets are set for all and this avoids work
pressure particularly towards the end of the plan period
--it focusses on the objectives
Planning
• It is goal oriented
• It is an intellectual activity
• It is the primary function of management
• It is all pervasive, i.e., present at all levels
• It is a continuous process
• It is forward looking
Contd….
• The process of planning consists of the following steps
Anaysing the environment
Colle ction & analysis of the necessary information
Determination of objectives
Knowledge of the planning premises or assumptions
Knowledge of the alternative courses of action
Evaluation of the alternative courses of action
Selecting a particular course
Preparation of derivative plans
Participation of the subordinate staff
Devising a mechanism of continuous evaluation
Contd…
• Plans are two types
Single use plans – programmes and budgets
Repeated use plans – objectives, procedures, rules & strategies
 Organising is the process of bringing together the necessary
resources for the accomplishment of the objectives of the enterprise
organising is also concerned with the grouping of the activities of
the enterprise into various types, e.g., production, marketing and so on
Organizing
The characteristics are stated as follows
i) It is concerned with the accomplishment of the enterprise goal
ii) It divides the total work into different parts for better performance. This is
known as division of labour
iii) Provides for authority-responsibility relationships
iv) Its activities totally depend on a suitable system of communication
v) Delegations of authority by a supervisor to his subordinate is another
notable feature of organisation
vi) Answerability or accountability on the part of a subordinate to his superior
for the work done is also an important characteristic of organisation
Organising process steps
• Identification of the activities to be performed for the
accomplishment of the organisation goal
• Grouping of activities line departments or divisions based on their
nature
• Assignment of duties to the subordinates by the superiors
• Delegation of authority by the superiors to their subordinates to
enable the latter to carry out the task
• Creation of accountability to make the subordinates answerable for
the use of authority
Staffing
The staffing function is concerned with the following activities
i) Recruitment and selection of employees
ii) Training
iii) Wage and salary administration
iv) Performance appraisal
v) Employee transfer, promotion, demotion and termination
Contd…
--if more employees are employed on the basis of right candidate
recruitment than the required number, the cost of operation will be more
--Recruitment done from both internal and external sources. Transfer
from branches having surplus staff, promotion are internal sources.
Newspaper advertisements, employment exchanges, campus interviews
are the external sources
--selected candidates need to be trained to enable them to perform
their jobs effectively. They are on-the job and off-the job training methods
--Determination of the correct renumerations for the employees and
payment of financial incentives are also part and of the staffing function
Contd…
--performance of the employees appraised/evaluated for their
efficiency and effective performance. If they are inefficient they may be
terminated
--Eligible for promotion based on their experiences, merit and
performance
--employees are also liable for transfer from one place to another if
their service conditions so provide
Directing
It concerned with the following activities
Undertaking supervision
Issuing orders and instructions pertaining to work
Proper communication relationship b/w management and the
employees
Leadership- to guide employees
Contd…
• The manager has to supervise the work done by the subordinates and
offer the help when they needed is possible only when the right
number of employees under him
• Known as span of control/span of management
• Communication may be oral as well as written and also it may be
formal or informal…
Contd..
Leadership has certain qualities to possess:
i) Physical fitness
ii) Mental vigour
iii) Sense of judgement
iv) Ability to motivate
v) Communication skill, etc
Contd..
Leadership has different type of styles are as:
i) Autocratic
ii) Democratic
iii) Laiseez faire
iv) functional
v) Institutional
vi) paternalistic
Controlling
The process of control involves the following stages:
(i) Establishment of standards
(ii) Measurement of actual performance
(iii) Making a comparison b/w the actual performance and the standard
set
(iv) Finding out deviations and taking corrective actions
Contd….
Standard may be both tangible as well as intangible
A standard is nothing but a basis against the actual performance may
be measured
Quantity of o/p to be produced or sold, production cost, turnover in
terms of money are the example of tangible standards
Consumer satisfaction, employee attitude are the examples of
intangible standards
 Kinds of managers
• Corporate level managers
• Business level managers
• Functional level managers
• Front-line managers
Corporate level managers

• These managers are responsible for controlling and

overseeing the entire organization. They develop goals,
strategic plans, company policies, and make decisions on the
direction of the business. In addition, top-level managers play a
significant role in the mobilization of outside resources.
Business level managers:
 Business level managers are the managers for a particular business line in the
organization example finance, marketing and production departments
 The General managers at business level or the business managers are the head
of their division.
 Business level managers translates the strategies from corporate level
management into actions at the business level.
 Business level managers are responsible for formulating the strategies to
achieve the organizational goals, for example at GE organizational goal is to
achieve the first or second position in the business they are participating in, it
is the responsibility of the General Managers in each division to formulate the
strategies at business level to reach the GE’s goal.
Functional level managers:
• Managers that oversee a function in a business, example product
development, purchasing, customer service etc.
• Functional managers formulate strategies to maximize the performance at
each individual functional level and manage that function whereas
business level managers manage the entire division. Example at GE’s
aerospace business, manufacturing managers are responsible for
formulating strategies that can optimize the production costs and
maximize the profits
• Functional manager will have better outlook at individual functions of the
business, so they can make better decisions of the strategies over the
Business level managers or the corporate level managers.
Frontline managers
• Frontline managers and supervisors develop operational plans that focus on specific tasks and processes and that help
meet tactical and strategic goals.
• A frontline leader makes decisions, develops policies, uses their judgment and discretion and
oversees implementation of improvements.
• frontline manager is defined as a manager that is directly involved with non-management employees, implementing
the specific plans developed with middle management.
• A major aspect of being a frontline manager is the control of the flow of information that goes from upper
management to the employees. One can find that the upper level of management has more general ideas of how the
organization is to be run.
• frontline managers as those who are responsible for the critical, day-to-day operations of a business.
•  They are directly responsible for making sure that organizational objectives and plans are
implemented effectively.
•  First-line managers are focused almost exclusively on the internal issues of the organization and are the first to see
problems with the operation of the business, such as untrained labor, poor quality materials, machinery breakdowns,
or new procedures that slow down production. It is essential that they communicate regularly with middle
management.
1.The Route Clerk: To lay down the sequence of operations and instruct the workers
concerned about it.
2.The Instruction Card Clerk: To prepare detailed instructions regarding different aspects
of work.
3.The Time and Cost Clerk: To send all information relating to their pay to the workers and
to secure proper returns of work from them.
4.The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
5.The Gang Boss: To assemble and set up tools and machines and to teach the workers to
make all their personal motions in the quickest and best way.
6.The Speed Boss: To ensure that machines are run at their best speeds and proper tools
are used by the workers.
7.The Repair Boss: To ensure that each worker keeps his machine in good order and
maintains cleanliness around him and his machines.
8. strong>The Inspector: To show to the worker how to do the work.
Division of work: Work should be divided to small tasks. Each task should be assigned to specific
employee

Authority & Responsibility: Authority means right to give orders to subordinates. Responsibility
means obligation to perform the work in the manner desired and directed by the authority

Discipline: It is essential for smooth running all organisations. It means respects for authority.

Unity of command: It states that an employee should receive orders from one superior only.

Unity of direction: It states that the activities which have a common objective must be grouped
together and must be under one head

Subordination of individual interest to general interest: The business enterprises is

superior to individuals. When individuals work in a group, group interest should prevail
over that of each individual.
Renumeration of personnel: Renumeration of work done must be fair and responsible.
Employees should be honest and sincere.
Centralisation & Decentralisation:
Centralisation refers to concentration of authority at one place or one level in the organisation.
Decentralization means dispersal of authority to the lower levels in the organisation
Scalar chain: It refers to the authority or the chain of superiors starting from the highest and
moving towards the lowest rank.
Order: It means have a place for everything and keep everything in its place.
 Order has two components:
 i) Material order: It means having place for all materials and keeping them in their right place.
 ii) Social order: It means right man is assigned for the right job
• Equity: It implies being just and loyal to all concerns and superiors should be impartial while
dealing with their subordinates.

• Stability of tenure of the personnel: This principles states that employees should not be removed
from their positions frequently.

• Initiative: Employees at all levels should be allowed to take initiative in work related matters

• Espirit de corps: “Union is Strength” is well accepted principle. The contribution of a team is far
better than that of individuals.
Basis Taylor
Human aspect Taylor disregards human elements
and there is more stress on
improving men, materials and
methods
Status Father of scientific management
Efficiency & administration Stressed on efficiency
Approach It has micro-approach because it is
restricted to factory only
Scope of principles These principles are restricted to
production activities
Achievement Scientific management
Fayol
Fayol pays due regards on human
element. E.g. Principle of initiative,
Espirit De’ Corps and Equity
recognizes a need for human
relations
Father of management principles
Stressed on general administration
It has macro-approach and discuses
general principles of management
which are applicable in every field
of management.
These are applicable in all kinds of
organization regarding their
management affairs
Administrative management
• Books by mayo
a) ‘The Human problem of an Industrial Civilization’
b) ‘Management & Morale’
c) ‘The Social problems of an industrial organization’

----Elton mayo was the leader of the team that conducted the famous
Hawthorne experiments.
It conducted in four stages:
1. Illumination Experiments
2. Relay assembly test room experiments
3. Interview programme
4. Bank wiring group observations
• Relay assembly Test room experiments :
The object of the experiments was to ascertain the relationship b/w
working conditions and productivity where the telephone relay units
were assembled for conducting the experiment
Those employed in department as all women and then six women
are allotted to do work in separate room
A series of changes was introduced during the period of investigation
in terms of full day holiday of Saturday, leave one hour before, new
financial incentive plan like renumeration for additional work
Then the study revealed that output of the each individual increased
due to the changes introduced
• Bank wiring group observations:
The main aim of the study here is to findout the influence of the
group on a worker to restrict his output in spite of the existence of
incentives for higher output
The group was consisted of fourteen workers and its task was to
attach wires to the telephone equipment, soldering and to check the
quality of work
The incentives were given for the work were attractive. But the result
there is no improvement in their outputs
Findings of Hawthorne experiments
• Social factors such as recognition, sense of belonging etc., influence more
production more than physical factors
• Monetary incentives donot induce a worker, work9ing in agroup, to increase
output. He cares more for the friendship and respect of his coworkers
• Workers donot act as individuals but as members of a group. No worker
wants to incur the ill will or displeasure of his co-workers
• An individual in a group is accepted as its leader by the other menbers. Such
an informal leader is able to guide and influence the co-workers
• What encourages a worker more is the feeling that his views and
sugggestions are heard by the management
Criticisms:
• The study is confined to a particular company. The findings therefore lack
universal applicability
• The study has desired only the internal environment and has ignored the
external environment completely
• There was no basis for the selection of the workers, the physical environment
etc., The study therefore was unscientific
• The view that satisfied workers produce more output has also not been accepted
• Undue importance has been given to social factors like affection, sense of
belonging etc., in determining the quantum of ouput. Trhe fear of loss of job in
the event of a deliberate attempt to restrict output must also be there in every
worker
Trends of management in global scenario
Methods or Modes of International Business
Exporting
Licensing
Franchising
Joint ventures
Foreign subsidiary
Management contracts
Local warehousing and selling
Local assembly and packaging
Contd…
• Multinational or transnational corporations
• Instead of aiming for maximization of their profits from one or two
products, the business strategy of multinational corporations extends
over a number of products and over a number of countries
• Types of Multinational companies
i) Ethnocentric companies
ii) Polycentric companies
iii) Regiocentric companies
iv) geocentric companies
Characteristics of MNC
• An MNC can get materials and parts from anywhere in the world
where it is cheaply available
• An MNC is controlled by a single management. Hence better decisions
can be possible
• MNC views the entire world as one market
• MNC hires managers of different nations and cultures for its key
positions
Contd..
Reasons for MNC growth
• Expanison of market territory
• Maarketing superiorities
• Financial superiorities
• Technological superiorities
• Product innovations
Advantages:
--Lower Labour costs
--Potential for High Rate of Return on investment
--expanded markets
--capital resources
--Availabilty of natural resources
--Increase employment generation
Contd…
Harmful effects of Multinational corporations
• Distortion of economic structure
• Political interferences
• Technology transfer not conducive to development
• Payments of dividend and royalty
Contd…
International management in other conutries
• Australia:
--Achievement oriented
--Give more importance to social and political values
--Take more risk in their work
• India:
--Take only low risk
• Italian:
--Italian managers encourage group decision making
-- More competitive
• Britain:
--More importance for individualism
--Logic oriented
Challenges of Management in global scenario
• Economic crisis in other countries
• Balance of trade problems
• Human rights Violations
• Culture shock
• Differences in negogiating style
• Piracy of intellectual property rights
• Managing people in mulatinational firm
• Problems in locating activities of the enterprise
• Choosing a best mode for entering a foreign market