(19HS1MG04) PRINCIPLES OF MANAGEMENT AND

ORGANIZATIONAL BEHAVIOUR
UNIT-I: INTRODUCTION TO MANAGEMENT
By
Dr Gampala Prabhakar
MBA, M.Com, UGC JRF&NET(Management), UGC NET (Commerce),
PhD
Assistant Professor
H&S Department
VNR VJIET, Hyderabad
https://sites.google.com/view/dr-gampala-prabhakar/home
 UNIT - I
Concepts of Management: Nature, Importance, and
Functions of management; Taylor’s Scientific Management
Theory; Fayol’s Principles of Management; Social
Responsibilities of Management; Planning-definition and
types of plans; decision making-definition and process
Organizing: Definition and Principles of Organization;
Organization chart; Types of mechanistic and organic
structures of organization - Line Organization, Line And Staff
Organization, Functional Organization, Committee
Organization, Matrix Organization, Virtual Organization,
Cellular Organization, Team Structure, Boundaryless
Organization, Inverted Pyramid Structure, And Lean And Flat
Organization Structure; features and suitability.
Dr GP, H&S Dept,. VNRVJIET

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CONCEPT AND FOUNDATIONS OF
MANAGEMENT
“Management is the social process, which is helpful
to achieve institutional goals in a dynamic
environment.”
⚫ Management as an Activity

⚫Interpersonal activities
⚫Decisional activities
⚫Informative activities
⚫ Management as a Process

⚫(i) Social Process

⚫(ii) Integrated Process
⚫(iii) Continuous Process
Dr GP, H&S Dept,. VNRVJIET

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⚫ Management as an Economic Resource

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⚫ Management as a Team
⚫ Management as an Academic Discipline
⚫ Management as a Group
 Nature and Characteristics of Management
• (i) Management is goal-oriented
• (ii) Management is universal
• (iii) Management is an Integrative Force
• (iv) Management is a Social Process
• (v) Management is multidisciplinary
• (vi) Management is a continuous Process
• (vii) Management is Intangible
• (viii) Management is an Art as well as Science
Dr GP, H&S Dept,. VNRVJIET

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 Objectives Of Management
• (i) Organisational objectives:
• (a) Reasonable profits so as to give a fair return
on the capital invested in business
• (b) Survival and solvency of the business, i.e., continuity.
• (c) Growth and expansion of the enterprise
• (d) Improving the goodwill or reputation
of the enterprise.
• (ii) Personal objectives:
• (a) Fair remuneration for work performed
• (b) Reasonable working conditions
• (c) Opportunities for training and development
• (d) Participation in management and prosperity
of the enterprise
• (e) Reasonable security of service.
Dr GP, H&S Dept,. VNRVJIET

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⚫(iii) Social objectives:
⚫(a) Quality of and services at fair price to
goods consumers.
⚫(b) Honest and prompt payment of taxes to
the Government.
⚫(c) Conservation of environment and natural resources.
⚫(d) Fair dealings with suppliers, dealers and competitors.
⚫(e) Preservation of ethical values of the society.
 IMPORTANCE OF MANAGEMENT
• (i) Achievement of group goals
• (ii) Optimum utilization of resources
• (iii) Minimisation of cost
• (iv) Survival and growth
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•
 DEFINITION OF MANAGEMENT
⚫Management is the art of knowing what you want to do and
then seeing that it is done in the best and cheapest way. —
F.W. Taylor
⚫To manage is to forecast and to plan, to organise to
command, to coordinate and to control. —Henry Fayol
⚫Management is guiding human and physical resources into
dynamic organisational units which attain their objectives to
the satisfaction of those served and with a high degree of
morale and sense of attainment on the part of those
rendering service. —American Management Association
⚫Management is a multipurpose organ that manage a business
and manages Managers and manages Workers and work. —
Peter Drucker 8
LEVELS OF MANAGEMENT

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 FUNCTIONS OF MANAGEMENT
 Management has been described as a social process involving responsibility for
economical and effective planning & regulation of the operation of an enterprise in
the fulfillment of given purposes.
 It is a dynamic process consisting of various elements and activities. These
activities are different from operative functions like marketing, finance, purchase
etc. Rather these activities are common to each and every manager irrespective of
his/her level or status.
 Different experts have classified functions of management.
 According to George & Jerry, “There are four fundamental functions of
management i.e. planning, organizing, actuating and controlling”.
 According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, & to control”.
 Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for
Planning, O for Organizing, S for Staffing, D for Directing, Co for
Coordination, R for reporting & B for Budgeting.
 But the most widely accepted are functions of management given by KOONTZ
and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.
 For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.
 EVOLUTION OF MANAGEMENT THOUGHTS
⚫ The need to study management arose with the industrial
revolution in Europe (more specifically, England).
⚫ The industrial revolution and the systematic study of
management are the result of a remarkable confluence of
ideas and events.
⚫ Management and organizations are products of their
historical and social times and places.
⚫ This evolution of management thought can be studied in the
following broad stages:
⚫ a. Classical School/thought: 1900 to 1930
⚫ b. Neo-classical School/thought: 1930 to 1960.
⚫ c. Modern School/thought: 1960 onwards

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 CLASSICAL THEORIES
⚫ Scientific Management:

Scientific management is almost synonymous with the

teachings and practices of Frederick Winslow
Taylor (1850-1915). Throughout his life Taylor
struggled to
increase efficiency in production, not only to lower costs and raise profits
but also to make possible increased pay for workers through higher
productivity.

Dr GP, H&S Dept,. VNRVJIET 15

emphasizes scientifically determined jobs and management
practices as the way to improve efficiency and labor
productivity. Taylor proposed that workers “could be retooled
like machines, their physical and mental gears recalibrated for
better productivity.”
He insisted that management itself would have to change and
emphasized that decisions based on rules of thumb and
tradition should be replaced with precise procedures
developed after careful study of individual situations.
To use this approach, managers develop precise, standard
procedures for doing each job, select workers with appropriate
abilities, train workers in the standard procedures, carefully
plan work, and provide wage incentives to increase output.
⚫ Taylor’s approach is illustrated by the unloading of iron from
railcars and reloading finished steel for the Bethlehem Steel plant
in 1898. Taylor calculated that with correct movements, tools,
and sequencing, each man was capable of loading 47.5 tons per
day instead of the typical 12.5 tons.
⚫ He also worked out an incentive system that paid each man $1.85
per day for meeting the new standard, an increase from the
previous rate of $1.15. Productivity at Bethlehem Steel shot up
overnight.
⚫ These insights helped to establish organizational assumptions
that the role of management is to maintain stability and
efficiency, with top managers doing the thinking and workers

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⚫ Administrative management:
Henri Fayol pioneered the concept of management
as coordinated functions and a comprehensive
framework from which management could be
studied and developed.
As one of the oldest and most popular approaches to management
thought; Henri Fayol’s (29 July 1841–19 November 1925) theory
holds that administration of all organizations—whether “public or
private”, or “large or small” requires the same rational process or
functions.
This school is based on two assumptions; first, although the
objective of an organization may differ; for example, business,
government, education, or religion, yet there is a core management
process that remains the same for all institutions. Successful
managers, therefore, are interchangeable among organizations of
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Dr GP, H&S Dept,. VNRVJIET
Second, the Administrative management process can
be reduced to a set of separate functions and
related principles.
⚫Fayol identifies the following six major activities
of any industrial or business organization:
1.Technical (production and manufacturing);
2.Commercial (buying, selling and
exchanging); 3.Financial (search for optimum
use of capital); 4.Security (safeguarding
property and people); 5.Accounting (including
statistics); and 6.Managerial.
Dr GP, H&S Dept,. VNRVJIET 23
 Henry Fayol’s 14 Principles of Management

1. Division of work •Work should be divided among individuals and groups so

that they can focus on their portion of the task, build up
skills, and become more productive. ( Specialization)

2. Authority •Fayol defined it as the right to give orders and the power
to exert obedience.
• With authority comes responsibility and accountability.

3.Discipline •For the best interest of an organization there should be

complete obedience, diligence, effort and outward marks
of respect which are equally applicable to everybody
regardless of rank. To establish and maintain discipline
there must be clearly defined roles, rules and regulations
for individuals and groups e.g code of conduct and ethics.

4.Unity of •An employee should only receive commands from one

Command superior. Violation of this principle creates confusion in
reporting lines. 24
 Henry Fayol’s 14 Principles of Management

5.Unity of Direction •An organization should be moving towards a common objective

. This brings about harmony of effort towards the mission and
vision .
6. Subordination of •The interests of one employee should not be allowed to become
individual interests more important than those of the organization. An organization
to the General should come up with approaches that ensure personal interests
interests and organizational interests are aligned as closely as possible.

7. Remuneration •Payment should be fair proper and satisfactory to the employee.

This in turn creates a harmonious relationship and a pleasing
atmosphere for work.
• It should include financial and non financial compensation.
8.Centralization •Decision making is made at top management level while in
decentralization decision making is distributed downwards
among all levels of an organization.
•Fayol recommended an appropriate balance of the two
depending on size, nature of work, situation and weight of
decision. 25
 Henry Fayol’s 14 Principles of Management

9. Scalar chain •Every organization has a hierarchy and employees

should be aware of where they stand in the
organization’s hierarchy or chain of command. E.g.
Subordinates report to superiors
10. Order •Systematic ,orderly , equal management and
distribution of people , places and materials.
Everything should have its place.
11. Equity •Management should treat all its employees in a fair
and just manner at all levels.
12. Stability •The principle states that an organization cannot run
of tenure of smoothly if it suffers from constant employee
personnel attrition, and organizations should make an effort to
retain employees. A high attrition rate will cost an
organization time, resources and perhaps some
crucial organizational memory. 26
 Henry Fayol’s 14 Principles of Management

13. Initiative •Management should provide opportunity or

freedom to employees to suggest new ideas ,
experiences and more convenient methods of work
to ensure effectiveness in the organization.
14.Espirit De •Organizations should harness harmony, team spirit
Corps (Team work) and unity among personnel.

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 Social Responsibilities of Management
Social Responsibility

• Obligation of Management towards Society.

• To maintain balance between economics and the
ecosystem.
• Ethical accountability.
• Profit is not the primary concern.
• Social responsiveness.
• Long-term welfare. Welfare towards

• Shareholders or Investors
• Employees or Workers
• Customers or Consumers
• Government or Administrative Bodies
• General Public
• Environment
• Local Community
 General
Local Public
Environment
Community

Government
Social Shareholder
or it’s
Responsibilities s or
Administrati
of Management Investors
ve Bodies

Consumers
or Employees
Customers or Workers
 PLANNING
 It is the basic function of management. It deals with sketching out a
future course of action & deciding in advance the most appropriate
course of actions for achievement of pre-determined goals.
 According to KOONTZ, “Planning is deciding in advance – what to
do, when to do & how to do. It bridges the gap from where we are &
where we want to be”.
 A plan is a future course of actions. It is an exercise in problem
solving & decision making. Planning is determination of courses of
action to achieve desired goals. Thus, planning is a systematic
thinking about ways & means for accomplishment of predetermined
goals.
 Planning is necessary to ensure proper utilization of human & non-
human resources. It is all pervasive, it is an intellectual activity and it
also helps in avoiding confusion, uncertainties, risks, wastages etc.
 Definitions of Planning
 According to Henry Fayol, “Planning is deciding the best alternative among
others to perform different managerial operations in order to achieve the
predetermined goals.”
 According to Urwick, “Planning is a mental predisposition to do things in
orderly way, to think before acting and to act in the light of facts rather than
guess.”
 Rudyard Kipling explained planning in following assertion:
I keep six honest serving men, They taught me all I Know Their names
are what, where and when, And how, and why, and who.
 So planning is concerned with deciding:
 What to do?
 How to do?
 When to do?
 Where to do?
 Why is to be done?
 Who will do it?
 Features of Planning
1. Planning is an Intellectual Process
2. Planning is Goal Oriented
3. Planning is a Primary Function
4. Planning is Pervasive
5. Planning is a Continuous Process
6. Planning is Forward Looking
7. Planning Involves Choice
8. Planning Minimizes Risk
 Importance of Planning
 1. Planning Helps in Achieving the Business Objectives
 2. Optimum Utilization of Resources
 3. Planning Reduces Uncertainty and Change
 4. Planning Helps in Decision-making
 5. Planning Makes Employees Conscious of the
Organisational Objectives
 6. Help in Coordination
 7. Facilitates Control
 8. Economy
 Steps in Planning Process
 1. Establishing verifiable goals
 2. Establishing Planning Premises
 3. Deciding the Planning Period
 4. Finding an alternative course of action
 5. Evaluating and selecting a course of action
 6. Implementing the Plan
 7. Measuring and Controlling the Programme
 Types of Plans
1. Standing Plans
Objectives
Strategies
Policies
Procedures
Rules
2. Single-use Plans
Programmes
Budgets
DECISION MAKING
 ORGANISING
 It is the process of bringing together physical, financial, and human resources
and developing productive relationships amongst them for the achievement of
organizational goals.
 According to Henry Fayol, “To organize a business is to provide it with
everything useful or its functioning i.e. raw material, tools, capital and
personnel’s”.
 To Organizing a business involves determining & providing human and non-
human resources to the organizational structure. Organizing as a process
involves:
Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.
 Importance of Organising
 1. It facilitates efficient management
 2. It facilitates coordination and
 3. It facilitates growth and
 4. It ensures optimum use of resources
 5. It provides for optimum use of technological
 6. It facilitates specialization
 Organising thus can be understood in two ways
 1. Organising as a process
 2. Organising as a structure
Organising as a process: It refers to the way in which the work of
a group is arranged and distributed among members to efficiently
achieve the objectives. It creates a relationship of one job to another
and lays down the scope of authority and responsibility. The duties
are fixed in such a manner so that the work is performed with
speed, accuracy and economy.
1. Determination of objectives
2. Identification and grouping of activities
3. Assignment of duties
 4. Establishing relationship among individuals and group
 ORGANISATION
 Definitions:

Louis 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.”
In the words of Allen, organization is an instrument for
achieving organizational goals. The work of each and
every person is defined and authority and responsibility is
fixed for accomplishing the same.
Koontz and O’Donnell, ‘The establishment of authority
relationships with provision for co-ordination between
them, both vertically and horizontally in the enterprise
 CHARACTERISTICS OF ORGANISATION
 1. Division of Work
 2. Co-Ordination
 3. Common Objectives
 4. Co-operative Relationship
 5. Well-Defined Authority-Responsibility Relationships
• PRINCIPLES OF ORGANISATION o 9. Principle of Uniformity
o 1. Principle of Objective o 10. Principle of Unity of
o 2. Principle of Specialisation Command
o 11. Principle of Exception
o 3. Principles of Co-ordination
o 12. Principle of Simplicity
o 5. Principle of Definition o 13. Principle of Efficiency
o 6. Span of Control o 14. Scalar Principle
o 7. Principle of Balance
o 8. Principle of Continuity
 organizational structures
 Organizations are set up in specific ways to
accomplish different goals, and the structure
of an organization can help or hinder its
progress toward accomplishing these goals.
Organizations large and small can achieve
higher sales and other profit by properly
matching their needs with the structure they
use to operate. There are four main types of
organizational structure: simple, functional
structure, divisional structure and a blend of
the two, called matrix structure.
Simple organisation structures:
 Flat and Tall organizations

Flat organization:- Which have

relatively few or even one level of management.
Flat is also known as wider span of control
 Tall organizations
Tall organizations have many levels of management
Tall organization involves narrow span of management
 Functional Structure of an Organization
Functional structure is set up so that each portion of the
organization is grouped according to its purpose. In this type
of organization, for example, there may be a marketing
department, a sales department and a production department.
The functional structure works very well for small businesses
in which each department can rely on the talent and
knowledge of its workers and support itself.
However, one of the drawbacks to a functional structure is that
the coordination and communication between departments can
be restricted by the organizational boundaries of having the
various departments working separately.
 WORKS MANAGER

PLANNING FUNCTION CONTROL FUNCTION

RC TCC GB RB

IC SD SB INSP.

WORKERS

TAYLOR’S FUNCTIONAL ORGANISATION

RC = ROUTE CLERK SD = SHOP DISCIPLINARIAN GB = GANG BOSS INSP. = INSPECTOR

IC = INSTRUCTION CLERK TCC = TIME & COST CLERK RB = REPAIR BOSS

Divisional Structure of an Organization
Divisional structure typically is used in larger companies that operate in
a wide geographic area or that have separate smaller organizations
within the umbrella group to cover different types of products or market
areas. For example, the now-defunct Tecumseh Products Company was
organized divisionally – with a small engine division, a compressor
division, a parts division and divisions for each geographic area to
handle specific needs.
The benefit of this structure is that needs can be met more rapidly and
more specifically, as each division can operate more or less
independently for the other divisions in the company. However, a
divisional arrangement can also be cumbersome, as communication is
inhibited because employees in different divisions are not working
together. Divisional structure is costly because of its size and scope.
Small businesses can use a divisional structure on a smaller scale, having
different offices in different parts of the city, for example, or assigning
different sales teams to handle different geographic areas.
Matrix Structure of an Organization
The third main type of organizational structure,
called the matrix structure, is a hybrid of
divisional and functional structure. Typically
used in large multinational companies, the matrix
structure allows for the benefits of functional and
divisional structures to exist in one organization.
This can create power struggles because most
areas of the company will have a dual
management – a functional manager and a
product or divisional manager working at the
same level and covering some of the same
 PRESIDENT

VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT

(PRODUCTION) (MARKETING) (FINANCE)

PROJECT A W W W
MANAGER

PROJECT B W W W
MANAGER

MATRIX ORGANISATION
Other Types of Organizations

Line organizations:- This is also called military or scalar

organization. is said to be the oldest and most traditional type of
organizations. Managers in this organizations have direct responsibility for
the results.
Line organization

Engineer

Draughtsman1
Draughtsman 2 Draughtsman 3
(Design &
(plans) (specifications)
Drawings)
Line and Staff Organization:-
 Drawn from earlier civilization and armies.
 Staff managers support the functions of the line
managers.
 Line and staff organization is a service organization.
 Line and staff organization in a manufacturing unit.
 Line and staff in the armed forces.
 Line relationships in staff positions.
 ENGINEER LINE AUTHORITY
STAFF AUTHORITY

ADMN. OFFICER ACCOUNTANT

DRAUGHTSMAN I DRAUGHTSMAN II DRAUGHTSMAN III

(DESIGN & DRAWING) (PLANS) (SPECIFICATIONS)

LINE & STAFF STRUCTURE IN A SERVICES ORGANISATION

 GENERAL LINE AUTHORITY

MANAGER STAFF AUTHORITY

ADVISOR

MANAGER MANAGER MANAGER MANAGER

(PERSONNEL) (PRODUCTION) (MARKETING) (FINANCE)

LINE & STAFF STRUCTURE IN A MANUFACTURING UNIT

COMMITTEE ORGANISATION
EXECUTIVE COUNCIL VICE CHANCELLOR ACADEMIC SENATE

FINANCE COMMITTEE RECTOR BOARD OF STUDIES

REGISTRAR

SELECTION PURCHASES CONVOCATION

COMMITTEE COMMITTEE COMMITTEE

COMMITTEE ORGANISATION IN A UNIVERSITY

 VITUAL ORGANISATION
 Also known as network or modular organization.
“ Virtual corporation is a temporary network of
independent companies, suppliers, customers,
even erstwhile rivals linked by information
technology to share skills, costs, and access to
one another’s markets. It will have neither a
central office nor an organization chart. No
hierarchy and no vertical integration.
INVERTED PYRAMID STRUCTURE
Review Questions:
1. Define management. Explain functional relationships among
functions of management.
2. Define management. Explain levels of management.
3. Explain the contribution of Henry fayol to administrative
management thought.
4. Explain the contribution of F.W. Taylor to scientific management
thought.
5. Discuss Social Responsibilities of Management in detail.
6. What is decision-making? Explain the process.
7. What is planning? Explain steps in the planning process.
8. Define organisation. Explain principles of organisation.
9. Explain types of organisation structures with appropriate examples.
 End of UNIT – I

Thank You

Dr GP, H&S Dept,. VNRVJIET 61