IEng 2024- Introduction to Principles of

Management

Melkamu Ambelu (Lecturer)

Industrial System Design & Operations Management Chair
School of Mechanical and Industrial Engineering
Dire Dawa Institute ofTechnology
Dire Dawa University
 Out line of presentation
Chapter-I
sic Management Concepts and Industrial Organization:
 Introduction to management;
 Functions of management;
 Organizational structure;
 Basics of productivity.
Management- Definition

Management is the process of achieving goals and

1
objectives effectively and efficiently through and
with the people.

"Management is a process of designing and

2
maintaining an environment in which individuals
work together in groups to effectivelyand
efficiently accomplish selected aims“.
 Management- Definition

Management is the process of achieving

organizationalgoals and objectives
3
effectively and efficientlyby using
management functions i.e. Planning –
Organizing – Staffing – Controlling

Management is a set of activities directed at an

organization's
4
resources with the aim of
achieving organizational goals in an efficient
and effective manner.
These definitions when expanded have these implication

gement is thus a continuous effort aimed at shaping an organizat

contributing to its overall growth.
functions of managers include planning, organizing, staffing, leadi
controlling.
ese functions are essential to any kind of organization.
applies to managers at all hierarchical levels.
aim of managers is to increase productivity, effectiveness and efficiency.
 Elements of definition
ocess - represents ongoing functions or
imary activities engaged in by managers

ciency - getting the most output from the

ast amount of inputs. “doing things right” •
ncerned with means • Achieving the objectives
time.

ectiveness - completing activities so that

ganizational goals are attained • “doing the
ght things” • concerned with ends • Achieving
e objectives on time
Efficiency and Effectiveness in Management
 Management: Science or Art?
Management Science:
e is a collection of systematic knowledge, collection of truths and inference
uous study and experiments.It has fundamental principles discovered.
ManagementArt :
s the known rules and principles and uses the skill, expertise, wisdom, expe
to achieve the desired result.
Management Science &Art :
ment is both art and science. Management has got two faces like a coin; on
and on the other it is science. Management has got scientific principles whi
ute the elements of Science and Skills and talent which are attributes of Art.
 Fayol’s Principles of Management
Henri Fayol (1841-1925)

He has proposed that there are six primary
unctions of management and 14 principles of
management, Forecasting, Planning, Organizing,
Commanding, Coordinating, controlling. There are
4 Principles of Management described by Henri
ayol.
14 Principles of Henri Fayol
1.Division of Labor
ork of all kinds must be divided & subdivided and
lotted to various persons according to their expertise in
particular area.
2.Authority & Responsibility
uthority refers to the right of superiors to get exactness
om their sub-ordinates. Responsibility means obligation
r the performance of the job assigned. Note that
sponsibility arises wherever authority is exercised
3.Unity of Command
sub-ordinate should receive orders and be accountable
one and only one boss at a time. He should not receive
structions from more than one person
14 Principles of Henri Fayol
4.Unity of Direction
ople engaged in the same kind of business or same kind
activities must have the same objectives in a single plan.
thout unity of direction, unity of action cannot be
hieved.
uity
quity means combination of fairness, kindness & justice.
he employees should be treated with kindness & equity if
evotion is expected of them.
6.Order
his principle is concerned with proper & systematic
rangement of things and people. Arrangement of things
called material order and placement of people is called
cial order.
 14 Principles of Henri Fayol
7.Discipline
scipline means sincerity, obedience, respect of authority
observance of rules and regulations of the enterprise.
ubordinate should respect their superiors and obey their
der
8.Initiative
tiative means eagerness to initiate actions without being
ked to do so.Management should provide opportunity to
employees to suggest ideas, experiences& new method
work.
9.Remuneration
muneration to be paid to the workers should be fair,
asonable, satisfactory & rewarding of the efforts. It
ould accord satisfaction to both employer and the
mployees
 14 Principles of Henri Fayol
10.Stability ofTenure
mployees should not be moved frequently from one job
osition to another i.e. the period of service in a job should
e fixed.
11.Scalar Chain
alar chain is the chain of superiors ranging from the
imate authority to the lowest. Communications should
low this chain. However, if following the chain creates
lays,cross-communications can be allowed if agreed to by
parties and superiors are kept informed.
Sub-ordination of Individual Interest to common goal
n organization is much bigger than the individual it
nstitutes therefore interest of the undertaking should
evail in all circumstances. The interests of any one
mployee or group of employees should not take
ecedence over the interests of the organization as a
hole.
 14 Principles of Henri Fayol
13.Espirit De‟Corps
t refers to team spirit i.e. harmony in the work
roups and mutual understanding among the
members. Espirit De‟ Corps inspires workers to work
arder.
14.Centralization
entralization refers to the degree to which
bordinates are involved in decision making.Whether
cision making is centralized (to management) or
centralized (to subordinates) is a question of proper
oportion. The task is to find the optimum degree of
ntralization for each situation.
 Levels of management
1.Top Level:
nagement sets the mission and goals, develops policies,evaluates the overall perfo
departments, responsible for the business as a whole and is concerned mainly wit
anning
2.Middle Level:
evel management develops departmental goals, executes the policies, plans and
ned by top management, develops medium- term plans and supervises and
vel managers‟activities
3.Lower (Supervisory,frontline) Level:
level management takes charge of day-to-day operations, is involved in preparing
range plans, is responsible for smaller segments of the business, executes plans o
gement,guides staff in their own subsections and keep close control over their acti
Levels of management
Why Study Management?

Universality of Management
–The reality that management is needed
• in all types and sizes of organizations
• at all organizational levels
• in all organizational areas
• in all organizations,regardless of location
Universal Need for Management
Important of management
tific management is most essential as it fulfills the following necessitie
It maintains discipline by keeping proper control
distributes the work and machine among the workers to get
maximum output
It keeps co-ordinations among the staff
It improves efficiencies
It suggests new idea and improvements
It develops means of marketing and publicity
Important of management
ss designed to achieve an organization’s objectives by
its resources effectively & efficiently in a changing
onment
e decisions – utilization of resources – achieve
objectives:
• Planning
• Organizing
• Staffing
• Directing
• Controlling
New Product Development
Areas of Management

• Finance
• Production
• Operations
• Human Resources
• Marketing
• Administration
eas of Management
ancial Management –
ocus on obtaining money necessary for the
uccessful operations and using funds to
rther organizational goals

duction & Operations Management–

Develop & administeractivities to
ransform resources into goods, services,
nd ideas for the marketplace.
reas of Management
uman Resources Management –
Handle staffing function and deal with
mployees in a formalized manner

arketing Management –
esponsible for planning, pricing, and
romoting products and making them
vailable to customers
 nager
A manager is someone whose primary responsibility is to
carry out the management process within an organization
o achieve the organizational goals.

hanging nature of organizations and work has blurred the

lear lines of distinction between managers and non-
managerial employees
Managerial skills
 Managerial skills
Conceptual skills:

s refers to the ability to think and conceptualize

stract situations. These abilities are required for
aking complex decisions.
In short it is:

mental capacity to develop plans, strategies and

on Changing nature of organizations and work has
rred the clear lines of distinction between managers
d non-managerial employees
 Managerial skills
uman or interpersonal skills:

s includes the ability to understand other people and

eract effectively with them.The human skills are also
portant in creation of an environment in which
ople feel secure and free to express their opinions.
In short it is:

he ability to work with other people in teams

 Managerial skills
Technical skills:

ese skills include the knowledge, abilities of and

ficiency in activities involving methods, processes
d procedures in the relevant fields as accounting,
gineering,manufacturing etc.
Or in short:

e ability to use the knowledge or techniques of a

particular discipline to attain ends
 Managerial skills
Design skills:

ese skills enable a manager to handle and solve any

d of unforeseen or actual problems, that may crop
in the organization. Such problems could arise due
nternal factors or external factors and/or both.
In short it is:

•The problem solving skill

 Managerial skills
Communication skills:

e abilities of exchanging ideas and information

ctively. To understand others and let others
erstand comprehensively.
Leadership skills
he abilities to influence other people to achieve the
common goal.
Roles of manager
es of manager
ter-personal Role
rehead:
presents the company on social occasions. Attendinghosting
the flagceremony,
ving visitors or taking visitors for dinner etc.

e role of a leader, the manager motivates, encourages, and builds enthu

g the employees. Training subordinates to work under pressure, forms part
nsibilities of a manager.
:
sts of relating to others outside the group or organization. Serves a
een people, groups or organization. The negotiation of prices with the
ding raw materials is an example for the role of liaison.
 Roles of manager
B:Decisional Role:
1.Entrepreneur:
as an initiator and designer and encourage changes and innovation, ide
s,delegate idea and responsibility to others.
2.Disturbance handler:
corrective action during disputes or crises; resolves conflicts among subo
to environmental crisis.
3.Resource allocator:
des distribution of resources among various individuals and groups
nization.
 Roles of manager
Informational role:
nitor:1.
Emerges as nerve center of internal and external information about Informa
seminator:
2.
Transmits information received from other
employees to members of the
organization.
kesperson:
Transmits information to the people who are external to the organization, i.e
government, media etc. For instance, a manager addresses a press con
announcing a new product launch or other major deal.
ions of management
or attainment of objectives,every organization has a group of person for man
s affairs.
is concerned with productivity,effectiveness and efficiency by performing v
managerial functions.
enry Fayol, the father of principles of management described various functio
management as :
Forecasting
1. and planning
Organizing
2.
Staffing
3.
Controlling
4. and
Coordinating.
5.
 Planning

anning is the process of establishing goals and suitable courese of act

achieving those goals.

lanning involves setting the „right‟ goals and then choosing the „right‟ mea
attaining those goals

Planning is necessary to ensure proper utilization of resources (men, mater

machine,time,and money) to achieve the objectives.

Planning is performed by the managers at all levels.
 Steps in Planning
lowing steps are taken by the planning manager for the purpous of planning

1.Recognition of the need for planning

2.Establishing objectives
3.Building the premises for planning

4.Identifying alternative course of action

6.Selecting a best course of action
Advantages of Planning
1.Planning gives direction

2.Planning helps of at least changes and uncertainty

3.Planning helps in economic operation

4.Planning focuses attention of important activities

5.Planning helps in controlling
6.Planning helps in growth
Types of Planning

Plan

Standing
Single –use plan Kinds of Enterprise Time plans
or plan
Repeated use plan
 nizing

Organising is providing everything essential for proper functioning and comb

the human power with other resources to give desired output
rganising involves the following:
Identification
1. and classification or required activities
Grouping
2. of activities necessary to attain objectives
Assignment
3. of each group to a manager
delines for Good organisation
good organizing should have the following:
i)Allotment of work
ii) Grant of necessary authority
iii) Distribution of work in different departments
iv) Coordination among different department
v)Able to avoid wastage of labour,money and materials
ypes of Organisation
ne or scalar
1. organisation 2.Functional organisation 3.Line and staff organisa
 Staffing

Staffing, now-a-days, also termed as human resources management is defin

filling and keeping filled positions in the organisation structure.

Staffing function involves recruiting selecting, placing, promoting, appra

carrier planning,training etc.
ntrolling

Controlling function of management can be defined as :

Controlling
1. is a continuous process of measuring actual results in relatio
those planned
Controlling
2. is a process which sets standards, measures job performance
takes corrective action,if required
Controlling
3. ,find out the deviation and take corrective actions.
Techniques of management control

1.Budget and budgetary control

2.Cost control and cost accounting
3.Inventory control
4.Quality control
5.Production control
6.Network techniques
 Coordinating
bjectives of coordination:
ollowing objectives are sough through coordination's:
i) Reconciliation of goals
ii) Economy and efficiency
iii) Good personal relations
iv) Helps in keeping high moral of employees
echniques of effective coordination
1. Clearly defined goals
2.Clear lines of authority and responsibility
3.cooperation 4.Effective leadership and supervision
The following are the key of functions of management
Selection of injection machine
Functions of management
Organizational structure

Organizational structure refers to the
way in which a group is formed, its lines of
communication, and its means for channeling
authority and making decisions.
It clarifies the formal relationships of
individuals in the various positions within the
organization
Why do we need an Organizational Structure ?
 All Organizations have a

management structure that determines

he relationships b/w functions and
positions and subdivides and delegates
oles, responsibilities and authority to
carry out defined tasks.
Organizational structure-Purpose
Divides work to be done in specific jobs & dept.

signs tasks and responsibilities associated with individual jobs.

ordinates diverse organizational tasks.

stablishes relationship b/w individuals,groups and departments.

stablishes formal lines of authority.
locates organizational resources.
usters jobs into units.
MPORTANCE OF ORGANIZATIONAL STRUCTURE

enables members to know what their responsibilities

es the manager and the individual workers to concentrate on their respectiv

and responsibilities
ordinates all organization activities so there is minimal duplication of eff
conflict.

ids overlapping of function because it pinpoints responsibilities.

ws to whom and for whom they are responsible
ORGANIZATIONAL RELATIONSHIP

ORGANIZATIONAL RELATIONSHIP

FORMAL STRUCTURE INFORMAL STRUCTURE

 FORMAL STRUCTURE
 structure, through departmentalization and work division, prov
rmal
work for defining managerial authority,responsibility and accountability.
FORMAL STRUCTURE
INFORMAL RELATIONS
Informal
 structure is generally social,
with blurred or shifting lines of authority and
accountability.
It
 also has its own channels of

communication,which may distribute

nformation more broadly and rapidly than
he formal communication system.
Informal Structure
Types of Organizational Structure

Organizational Structure

Tall Flat
Or or
Centralized Organizational Decentralized Organizational
Structure Structure.
Centralized Organizational Structure
 Large, complexorganizationsoften

equire a taller hierarchy.

 its simplest form,a tall structure results
In
n one long chain of command similar to the
military.
 an organization grows, the number of
As
management levels increases and the structure
rows taller. In a tall structure, managers form
many ranks and each has a small area of control
entralized Organizational Structure
ADVANTAGES: DISADVANTAGES:
1. The quality of performance will improve due to close 1. Tall Organization creates many levels of management.
supervision. 2. There are many delays and distortion in

2. Discipline will improve. communication.

3. Decisions and actions are delayed.
3. Superior - Subordinate relations will improve.
4. It is very costly because there are many managers. The
4. Control and Supervision will become easy and
managers are paid high salaries.
convenient.
5. It is difficult to coordinate the activities of different
5. The manager gets more time to plan and organize the levels.
future activities. 6. There is strict supervision. So the subordinates do not
6. The efforts of subordinates can be easily coordinated. have any freedom.
7. Tall Organization is not suitable for routine and
7. Tall Organisation encourages development of staff.
standardized jobs.
8. There is mutual trust between superior and
8. Here, managers may became more dominating.
subordinates
ecentralized Organizational Structure.
 Flat structures have fewer
management levels, with each level
controlling a broad area or group.
 Flatorganizationsfocus on
empowering employees rather than
adhering to the chain of command.
 encouraging autonomy and self-
By
direction, flat structures attempt to tap
nto employees‟ creative talents and to
solve problems by collaboration.
Decentralized Organizational Structure.
ADVANTAGES DISADVANTAGES
1. Flat Organization is less costly because it has 1. There are chances of loose control because there are
only few managers. many subordinates under one manager.
2. It creates fewer levels of management. 2. The discipline in the organization may be bad due to loose
3. Quick decisions and actions can be taken control.
because it has only a few levels of 3. The relations between the superiors and subordinates may
management. be bad. Close and informal relations may not be possible.
4. Fast and clear communication is possible 4. There may be problems of team work because there are
among these few levels of management. many subordinates under one manager.
5. Subordinates are free from close and strict 5. Flat organization structure may create problems of
supervision and control. coordination between various subordinates.
6. It is more suitable for routine and standardized 6. Efficient and experienced superiors are required to
activities. manage a large number of subordinates.
7. Superiors may not be too dominating because 7. It may not be suitable for complex activities.
of large numbers of subordinates. 8. The quality of performance may be bad
Productivity -Introduction
oductivity is the output of any production process,per unit of input
increase productivity means to produce more with less.

ctories and corporations, productivity is a measure of the ability to create g

services from a given amount of labour, capital, materials, land, resou
wledge,time or any combination of those.
Output per unit of input employed.

ncrease productivity on the part of capital and labour.

Measurement of productivity
Productivity can be measured,The amount of output per unit of input.

n a factory, it might be measured based on the number of hours it tak

produce a good.
While in service industry,might be measured based on the income generated
employee divided by his/her salary.
roductivity -Definition and Equation
ductivity is the ratio of output and input in any organization.
Productivity = Output / Input
tput is in the form of product quantity and input is in the form of resources. T
resources are in the form of
• Land acquired
• Salaries paid to employees
•Amount paid to purchase material
•Amount spent in infrastructure
Types Of Productivity
 Partial Productivity
The resources of productivity when measured separately are called partial
productivity.
•“Apple toApple”comparison.
Partial Productivity
Total Productivity
method of calculating productivity considering all the resources is called
productivity.
• Innovated by David j.Sumanth.
systematic and qualitative approach to compete in quality,price andTime.
productivity provides systematic framework and structure to an organizatio
increase profitability.
roductivity Benefits
Increase in income/profitability.

Lowering running cost/operational costs.

 Maximising
the use of all of the company‟s resources such as l
uipments/machineries,factory,workers,and etc.
ning a greater share of the market.
e cash flows mean more opportunity for the company to expand and grow.