Principles of Management

MODULE - 2 Introduction and Evolution of Management: Concept, Definition ,Skills, organization, Scientific Management, Fayols 14 Principles, Hawthorne Experiment, Systems Approach, Contingency Approach

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Concept & Definition of MGMT

The term management have different meanings . And it is important to understand different definitions, like MANAGEMENT as a PROCESS MANAGEMENT as a DISCIPLINE MANAGEMENT as PEOPLE MANAGEMENT as a CAREER
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MANAGEMENT as a PROCESS
Management is a process involving certain functions and activities that managers must perform. Managers also use principles in managing which are generally accepted tenets that guide their thinking and action. This is what managers do.
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MANAGEMENT as a DISCIPLINE
Classifying Mgmt as a discipline implies that it is an accumulated body of knowledge that can be learned. Thus Mgmt is a subject with principles, concepts and theories.

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MANAGEMENT as PEOPLE
It implies people who guide, direct, and thus manage organizations. The perspective of management as people refers to, and emphasizes the importance of the employees who managers work with and manage in accomplishing an organization's objectives.
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MANAGEMENT as a CAREER
People who devote their working lives to the process of management actually pursue management as career.

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The different meanings can be related as .

People who wish to have a career as a manager must study the discipline of management as a means toward practicing the process of management.

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MANAGEMENT is a process undertaken by one or more persons to coordinate the activities of other persons to achieve results not attainable by any one person acting alone.

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Organizations and Principles of Management

What is management? Combine the function of management with other resources to achieve organizational objectives. Four functions of Management: - Planning - Organizing - Directing/Leading - Controlling
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Planning
Setting goals: long-term goals, intermediate goals, short-term goals Developing strategies: how to reach the goals? Determining resources: capital & manpower Setting standards: target, e.g. save $1million.

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Organizing
Allocating resources, assign tasks, establish procedures Preparing organization chart Recruiting, selecting, training & developing employees Matching the job with employees: effectiveness & efficiency
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Directing/Leading
Guiding & motivating Giving assignments Explaining routines Clarifying policies Providing feedback

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Controlling
Establish standards Measuring results Monitoring performance Taking corrective action

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Integration of Management Functions

Every function is important 4 functions must be cocoordinated to achieve the optimum level of performance.

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Levels of Management
Top management: responsible for overall performance & effectiveness, formulate strategies, set polices, CEO( Strategic Planning &Long-term goals)

Middle management: implement strategies, policies, decision made by top management, Plant Manager, Division head( Tactical Planning, Intermediate goals)
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Levels of Management
Supervisory (first-level): Working & supervising worker, interact with suppliers, Foreman, Section leader( Operational, Planning & Short-term goals)

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Managerial Skills
Conceptual skills: mental ability to think & see beyond the present situation, Top management Technical skills: ability to use the knowledge, tools & techniques, help employees solve work-related problems accounting, engineering, sales, First-line management Human relations skills: able to understand and interact with people, all level management
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Managerial Skills
Decision-making skills: ability to define problems & selecting the best courses of action. Time management skills: efficient and productive use of time

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Levels of Management
Strategic Planning & Long-term goals Top Managers
Tactical Planning & Intermediate goals Middle Managers Operational Planning & Short-term goals
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First-line/Front-line Managers
Chapter 5
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Basic Management Skills

Human Relations Skills
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Top Level Management

Middle Level Management

First/Front Line Management

Chapter 5

Basic Skills Cont.

Time Management Skills Decision-making Skills
Top Level Management

Middle Level Management

First/Front Line Management

Chapter 5

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Global & Technology Management Skills

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Critical Challenges to Management

Globalization of competition: how to gain advantage Increasing emphasis on quality: ISO 9000 Ethics and social responsibility: more sensitive to legal & social expectations.

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Critical Challenges to Management

Challenge of empowerment: give employees more decision-making freedom Changing organization hierarchy: downsizing, re-structuring

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Flat organization structure instead of tall, wide span of control Departmentalization: replaced by matrix organization Decentralization rather than centralization.

More Responsive Organization

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Early thinking about Management

Another classic work that offers insights to modern managers is The Art of War written by the Chinese philosopher Sun Tzu more than 2000 years ago. Sun Tzus dictums are as follows: When the enemy advances, we retreat! When the enemy halts, we harass!
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Sun Tzus dictums contd..

When the enemy seeks to avoid battle, we attack! When the enemy retreats, we pursue! Although these rules were meant to guide military strategy, they have been used when planning a strategy to engage business competitors
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Evolution of Management Theory

This theory arose in part from the need to increase productivity. In the US especially, skilled labour was in short supply at the beginning of the 20th century. The only way to expand productivity was to raise the efficiency of workers. Therefore, Frederick Taylor, Henry L. Gantt, & Frank and Lillian Gilbreth devised the body of principles known as Scientific Management Theory.
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Frederick W. Taylor (1856-1915)

Frederick W. Taylor rested his philosophy on four basic principles:

The development of a true science of management, so that the best method for performing each task could be determined. The scientific selection of workers, so that each worker would be given responsibility for the task for which he or she was best suited. The scientific education and development of the worker. Intimate, friendly cooperation between management and labour.
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Frederick W. Taylor Contd..

He contended that the success of these principles required a complete mental revolution on the part of management and labour. Taylor based his management system on production-line time studies. He believed that management and labour had a common interest in increasing productivity. He also devised a compensation system called the differential rate system involving the Payment of higher wages to more efficient workers.

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Contributions of Scientific Management Theory

The efficiency techniques of scientific management theory have been applied to modern assembly line & to many tasks in non-industrial organizations (e.g., fast-food service) and increased their efficiency.

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Limitations of Scientific Management Theory

Workers & unions began to oppose this approach because they feared that working harder or faster would exhaust whatever work was available causing layoffs. His critics objected to the speed up conditions that placed undue pressures on employees to perform at faster & faster levels. The emphasis on productivity and by extension profitability led some managers to exploit both workers and customers.
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Henry L. Gantt (1861-1919)

He worked with Taylor but began to reconsider Taylor's incentive system as having too little motivational impact. He came up with a new idea: every worker who finished a days assigned work load Would win a 50-cent bonus. Further, the supervisor would earn a bonus for each worker who reached the daily standard, plus an extra bonus if all the workers
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Henry L. Gantt Contd

He also originated a charting system for production scheduling: the Gantt chart, still in use today. It also formed the basis for two charting devices which were developed to assist in planning, managing and controlling complex organizations: the Critical path Method (CPM), originated by Du Pont & Program Evaluation and Review Technique (PERT), developed by the Navy. Lotus 1-2-3 is also a creative application of the Gantt Chart.

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The Gilbreths: Frank B. & Lillian M. Gilbreth (1868-1924 & 1878-1972)

They collaborated on fatigue and motion studies and focussed on ways of promoting the individual workers welfare. To them, the ultimate aim of scientific mgmt was to help workers reach their full potential as human beings. In their conception, motion & fatigue were intertwined-every motion that was eliminated reduced fatigue. They argued that motion study would raise worker morale because of its obvious physical benefits & because it demonstrated managements concern for the worker.
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Classical Organization Theory School

Henri Fayol (1841-1925)

He is generally hailed as the founder of the classical management school not because he was the first to investigate managerial behaviour, but because he was the first to systematize it.

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1. Division of Labour: The most people specialize, the more efficiently they can perform their work, e.g., modern assembly line. 2. Authority: Besides formal authority, managers musty have personal authority to compel obedience. 3. Discipline: Members in an org. need to respect the rules & agreements that govern the org. 4. Unity of Command: Each employee must receive instructions from only one person. 5. Unity of Direction: Operations within the org. having the same objective should be directed by only one manager.
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Fayols 14 Principles of Management

6. Subordination of individual interest to the common good. 7. Remuneration: Compensation for worm done should be fair to both employees and employers. 8. Centralization: decreasing the role of subordinates in decision making is centralization; increasing their role is decentralization. He believed that managers should retain final responsibility but at the same time give the subordinates enough authority to do their jobs properly. The problem is to find the proper degree of centralization in each case. 9. Hierarchy: The line of authority in an org. runs in order of rank from top management to the lowest level of the enterprise. 10. Order: Materials & people should be in the right place at the right time.COURSE : PPM 37 BIMTECH FOUNDATION
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11.Equity: managers should be both friendly and fair to their subordinates. 12.Stability of Staff: A high employee turnover rate undermines the efficient functioning of an org. 13.Initiative: Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result. 14.Esprit de Corps: Promoting team spirit will give the org. a sense of unity.
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Max Weber (1864-1920)

He developed a theory of bureaucratic management that stressed the need for a strictly defined hierarchy governed by clearly defined regulations & lines of authority. He considered the ideal organization to be a bureaucracy whose activities & objectives were rationally thought out & whose divisions of labour were explicitly spelled out. We should be careful to apply our negative connotations of the word bureaucracy to the term as Weber used it. Weber sought to improve the performance of socially important organizations by making their operations predictable and productive.
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Mary Parker Follett (1868-1933)

She introduced many new elements in the classical school in the area of human relations & organization structure. She called management the art of getting things done through people. She was a great believer in the power of the group, where individuals could combine their diverse talents into something bigger. Her holistic model of control took into account not just individuals and groups, but the effects of environmental factors also.
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Chester I. Barnard (1886-1961)

According to him, people come together in formal organizations to achieve ends they cannot accomplish working alone. An enterprise can operate efficiently & survive only when the organizations goals are kept in balance with the aims & needs of the individuals working for it. His recognition of the importance & universality of the informal organization was a major contribution to management thought. He proposed concept of zone of indifference, i.e., what the employee would do without questioning the managers authority. The more activities that fell within this, the smoother & more cooperative an organization would be.
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The Behavioural School

The Human Relations Movement
It is a general term to describe the ways in which managers interact with their employees. It is effective when employee management stimulates more and better work.

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The Hawthorne experiments: The Human Relations movement grew out of a famous series of studies conducted at the Western Electric companys Hawthorne plant near Chicago from 1924 to 1933. These studies attempted to investigate the relationship between level of lightning in the workplace& worker productivity.

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The Hawthorne experiments Contd

Employees divided into two groups (test group & control group) & manipulated level of lightning. The results were ambiguous showing that something other than lighting was influencing the workers performance. In a new set of experiments, a small grp. of workers was placed in a separate room & a no. of variables were altered: wages, rest periods, were increased; performance tended to increase over time, but it also rose & fell erratically. It was inferred that workers who receive special attention will perform better simply because they received that attention, which acted as a motivator. A phenomenon labeled as the Hawthorne effect. The researchers also concluded that informal work groups-the social environment of employees-have a 44 BIMTECH positive influence onFOUNDATION COURSE : PPM . productivity 2011 JUN

The Behavioral Science Approach

McGregor: He distinguished 2 alternate basic assumptions about people & their approach to work- Theory X and Theory Y. Theory X is the traditional view of motivation which holds that work is distasteful to employees, who must be motivated by force, money or praise. The roots of this theorycan be traced to the days of scientific management & the factories based on these principles. Theory Y takes the opposite view & assumes that people are inherently motivated to work & do a good job.
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The Management Science School

1. Mixed team of specialists from relevant disciplines are called in to analyze a problem & propose a course of action to management. The team constructs a mathematical model that shows in symbolic terms all relevant factors bearing on the problem & how they are interrelated. By changing the values of the variables in the model & analyzing the different equations of the model, with a computer, the team can determine the effects of each change. It however, promotes an emphasis on only the aspects of the organization that can be captured in numbers missing the importance of people and relationships. : PPM 46 BIMTECH FOUNDATION COURSE
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Recent Developments in Management Theory

The Systems Approach It views the organization as a unified, directed system of interrelated parts. It tells us that the activity of any segment of an organization affects in varying degrees the activity of every other segment. According to this approach, managers cannot function wholly within the confines of the traditional organization chart. They must mesh their department with the whole enterprise
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Some key concepts of SYSTEMS Approach:

Subsystems: parts making up the whole system Synergy: Situation in which the whole is greater than its parts. In organizational terms, synergy means that departments that interact cooperatively are more productive than they would be if they operated in isolation. Open System: A system that interacts with its environment. A closed system: A system that does not interact with its environment. System boundary: The boundary that separates each system from its environment. It is rigid in a closed system, flexible in an open system. Flow: Components such as information, material & energy that enter leave a system. Feedback: The part of system control in which the results of actions are returned to the individual allowing work BIMTECH FOUNDATION COURSEto be analyzed and procedures : PPM 48 2011 JUN corrected

The Contingency Approach

The view that the management technique that best contributes to the attainment of organizational goals might vary in different types of situations or circumstances; also called the situational approach. This approach was developed by managers, consultants & researchers who tried to apply the concepts of the major schools to real-life situations
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Dynamic Engagement Approach

It emphasizes the intensity of modern mgmt relationships & the intensity of time pressures that govern these relationships. This term best expresses the vigorous ways todays most successful managers focus on human relationships and quickly adjust to changing conditions over time. 6 different themes of mgmt theory are emerging under the umbrella of dynamic engagement.
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6 different themes of mgmt theory

New Organizational environments: This approach recognizes that an organizations envt. is a complex dynamic web of people interacting with each other. Thus, managers must not only pay attention to their own concerns but also understand what is important to other managers both within their org. & at other organizations. e.g., Porters theory of competitive strategy. Ethics & Social Responsibility: This approach moves ethics from the fringe of management theory to the heart of it. Globalization & Management: Acc. To this approach, managers facing the 21st century must think of themselves as global citizens. Ohmae makes this point as he describes a borderless world where managers treat all customers as equidistant from 51 BIMTECH their organizations FOUNDATION COURSE : PPM 2011 JUN

Inventing & Reinventing organizations: It advocates the ways to unleash the creative potential of their employees & themselves. For e.g., Peters concept of liberation management challenges the kind of rigid organization structures that inhibit peoples creativity. Hammer & Champsy proposed reengineering the corporation, i.e. when an org. conducts a significant reassessment of what it is all about. Cultures & Multiculturalism: Various perspectives & values that people of different cultural backgrounds bring to their organizations are not only a fact of life but a significant source of contributions Quality:, TQM should be in every managers vocabulary
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