Principles of Management

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Major Corporate Social Responsibility | Principles of Management

downloadMajor Corporate Social Responsibility

Organizations have great responsibility for the welfare of the society and the environmental protection. The major corporate social responsibility are as follows:

Responsibility towards Shareholders:

Shareholders invest capital in the business and bear risks .They want return of their investment from the business.So,they have interest in the development and prosperity of their business.Therefore,the business organization has responsibility toward them as they invest money and grow business.The amin responsibilities of business towars shareholders are proper utilization of investment ,fair dividends,fair interest,providing up-to-date information of financial transactions,maximize value of investment ,allowing them to participate in planning and policy making,etc.

Responsibility toward customers:

Customer satisfaction is the ultimate goal of business organization.They are the key source of earnings.Business organization need to satisfy their customers by producing goods and services of their choice and demand .Business cannot be successful unless customers are satisfied.The responsibilities of business toward customers are providing quality products at reasonable price,adequate quantity when needed,good behaviour,avoid unfair practices like black marketing,provide after-sales service ,etc

Responsibility toward employees:                                                                                                      

The success of business largely depends on motivated employees .They are the assets of the business and their welfare and wellbeing should be the main concerned of the management. They should be treated as a part of the organization and encouraged them to produce higher productivity.They should be properly trained and provide monetary and non-monetary benefits.The main responsibilities of business toward employees is to provide meaningful job and job security,to provide fair wages and other benefits,provide welfare facilities like sports ,education,medical,etc, creating favourable working environment,conducting training and development programs.

Responsibility toward government:

All business activities should be conducted within the rules and regulations of the government Government protects and controls the activities of business.It allows business organizations to operate within certain norms.Therefore,cooperation of government is essential to business sector.The business organization must fulfill the responsibilities toward the government by  following government rules and laws,pay different taxes such as VAT,income tax,custom duty ,etc,avoid monopoly and unfair trade practices,support national problems such as unemployment and poverty ,etc.

Responsibility toward Society or Community:

Business Organizations perform their business activities in the society. Their success also depends on wellbeing of the whole society.Therefore,business organizations have some responsibilities toward society or community.They are to create employment opportunities to the people,to maintain environmental ecology,proper utilization of society’s resoures,to promote the program of community welfare services,to maintain the social and cultural values etc.


Organizational Change

Organizational Change, Forces of Organizational change,Planned change, process of planned change

Organizational change:

Change is one of the most challenging events an organization will go through. This lesson describes the steps of the planned changed process, which include recognizing the need for change, developing change goals, appointing a change agent, assessing the current climate, developing and implementing a change plan and evaluating the plan’s success.

Organizational Change refers to relatively enduring alteration of the present state of an organization or its components or interrelation amongst the components and their differential and integrated functions in totality in order to attain greater viability in line context of the present and anticipated future environment.

Forces of Organizational Change:

External factors:

  1. Technology: –The adoption of new technologies, such as computers, telecommunication systems, robotics and flexible. Manufacturing operations have a profound impact on organizations that adopt them.
  2. Social changes: After globalization there is a radical change shift In one value placed on higher education, lifestyle, views on marriage, joint family system and shopping preferences.
  3. 3. Marketing conditions: The need, wants, appreciations, liking, disliking and preferences of customers are changing frequently. Consumer is emerging as a ‘king’ who is actually deciding factor of market forces.
  4. Globalization:-  Global economy refers that competitors likely to come from different countries. Organizations will encounter a wide variety of dynamic changes – merger, acquisition, down rising etc.
  5. Political forces:- As long as currencies fluctuate and some economies outperform other, assets will flow across borders.



Internal forces:-

  1. 1. Changes is managerial personnel:- Changes in the functioning of top level professional manager bring changes in one organization in terms of organization design, delegation of authority, allocation of work, firing responsibility and installation of supervision and contact etc.
  2. Shift in social cultural values:  Workers are more educated, less conservative and more women are joining the work force. They place greater emphasis on human values, such as dignity recognition, social status, equality etc.
  3. To have a dynamic environment: If one organization is not moving forward, then it will not survive and grow. Flexibility, specialization, standardization, modernization and automation are the necessities of the time. Required changes should be incorporated so that employees modify their attitude towards changes.
  4. Deficiency in the existing structures: Changes may be required in the present setup of the organization to meet the challenges imposed by the workforces and technology. These deficiencies may be in the form of more no of levels, lack of cooperation and coordination, poor system of committee, lack of uniform policy decisions, multiplicity of committee autocracy in decision making, centralization and so on.


Planned Change:

Planned Change is constituted with intentional and goal oriented change in activities to adapt with changing environment of business. According to Thomas and Bennis, “planned change is one deliberate design and implements of a structural innovation, anew policy or goal, or a change in operating philosophy, climate, or style.” Planned change attempts at all aspects of one organization which are closely interrelated; technology, task, people, structure.

Process of Planned Change:

Change is often one of the most challenging events an organization will go through. At times it may seem like trying to climb the Himalayan  mountains barefoot! From the moment a change becomes necessary through its implementation, a great deal of factors come into play. To maximize the success of any organizational change, managers need to create and follow a logical sequence of steps to ensure the objectives of the change are accomplished. The planned change process is typically made up of the following steps:

  • Recognize the need for change
  • Develop change goals
  • Appoint a change agent
  • Assess the current climate
  • Develop a change plan method for implementation
  • Implement the plan
  • Evaluate the success of the plan at reaching the change goals

1) Recognize the Need to Change & Determine Goals: In today’s business environment there are many factors that force an organization to change. These factors can be internal to the organization (such as employees, culture, policy or procedures) or external (such as customers, competitors, the economy or politics). Managers at all levels (top, middle and low level) must be aware of these internal and external forces that potentially compromise the success of the organization and promptly respond by changing some aspect of the organization. Recognizing the need for change is pivotal to the long-term sustainability of an organization.

2) Establishing a Sense of Urgency :

Once a manager recognizes that a change should happen in the organization, he or she must be certain to understand why the change is needed. Developing change goals provides managers with the objective or expectation of how a change will respond to whatever internal or external forces are driving the need to change. For example, when Redbox made its explosive entrance into the marketplace with its movie kiosk service, Blockbuster was forced to duplicate this offering in order to stay in business. Redbox essentially created a service that literally stole the customer base from many traditional movie stores by offering the same product at a fraction of the price and at a convenient location. This required traditional movie stores like Blockbuster to recognize they needed to change what they offered as well to meet their goal of staying in business.

3) Appointing a Change Agent:

Once a manager recognizes that a change must happen in the organization and develops the change goals, he or she needs to select somebody to carry out that change. The change agent is someone who serves as a leader during change development and implementation. They are typically forward-thinking individuals who are highly charismatic, good with people and capable of inspiring the workforce to accept the change and even aid in the implementation. It is important to note that while change agents are leaders, not all leaders are change agents. In fact, many organizations will hire someone outside of the company to serve as a change agent due to their expertise and unique abilities to drive change.

4) Assess the Current Climate:

One thing that change agents are particularly good at is assessing the current climate of the organization to determine how ready the organization and its members are for the change. Some organizations are better equipped to handle change, while others take a lot more work. The change agent will spend time gathering information relating to the organizational culture, available resources, employee attitudes, possible training needs and leadership. This data is then used by the change agent to prepare people for change by offering information relating to why the change is needed, what the desired future state will be, how it is better than the current state of the organization and how the change will affect the members of the organization.

5) Developing, Implementing & Evaluating the Change:

Now that the organization has been prepared for the change, a plan is needed. Developing the change plan provides the roadmap for how the change will be implemented in such a way that the organization is able to achieve the change goals. Questions relating to who, when, where and how should all be answered in the change plan. Responsibilities are delegated, specific events and milestones are identified and the action plan is set to provide the methods and procedures that must be completed to implement the change. After the plan is written, it needs to be communicated and implemented.

Implementing the change puts the change plan into action. This is a critical time for the change agent, as he or she must maintain momentum and monitor the progress of implementation. The change agent will also pay attention to the distribution of resources, knowledge and level of employee support to ensure that barriers to successful implementation are removed. New behaviors relating to the change should also be reinforced by the change agent as a part of the implementation process.


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Leadership,  Characteristics,  functions,  Traits/Qualities of Good Leaderdhip,  Styles of Leadership, Approaches to leadership(Trait Approaches to leadership,Behavioral Approaches to leadership, The Ohio State Studies, The Managerial Grid, Situational Approaches to leadership ,Fiedler Model.


Leadership is the ability to influence the behavior and performance of an individual or group of individuals towards the achievement of common objectives.It is a psychological process of influencing subordinates and providing guidance to them.

Characteristics of Leadership:

  1. Empathy: Creating a legitimate rapport with your staff makes it less likely that personal issues and resentment can creep in and derail the group. When your team knows that you are empathetic to their concerns, they will be more likely to work with you and share in your vision, rather than foster negative feelings.
  2. Consistency: Being a consistent leader will gain you respect and credibility, which is essential to getting buy-in from the group. By setting an example of fairness and credibility, the team will want to act the same way.
  3. Honesty: Another characteristic of leadership that lends itself to credibility. Those who are honest, especially about concerns, make it far more likely that obstacles will be addressed rather than avoided. Honesty also allows for better assessment and growth.
  4. Direction: Having the vision to break out of the norm and aim for great things -then the wherewithal to set the steps necessary to get there– is an essential characteristic of good leadership. By seeing what can be and managing the goals on how to get there, a good leader can create impressive change.
  5. Communication: Effective communication helps keep he team working on the right projects with the right attitude. If you communicate effectively about expectations, issues and advice, your staff will be more likely to react and meet your goals.
  6. Flexibility: Not every problem demands the same solution. By being flexible to new ideas and open-minded enough to consider them, you increase the likelihood that you will find the best possible answer. You will set a good example for your team and reward good ideas.
  7. Conviction: A strong vision and the willingness to see it through is one of the most important characterizes of leadership. The leader who believes in the mission and works toward it will be an inspiration and a resource to their followers.
  8. Inspiration: Quite often, employees need someone to look up to for direction, guidance, and motivation. The entrepreneur needs to be that person. Hopefully, Human Resources has hired self-motivated individuals. Nevertheless, there are times, when many employees need the boss to inspire them by word or action. Employees need someone to look up to, admire, and follow. Even when the production or delivery of services looks like “it is all going well,” the leader may at times need to step in personally to offer a suggestion or encouragement to ensure that employees perform their jobs in an optimal manner.
  9. Ambition: Resting on your laurels is bad for employee morale and entrepreneurial credibility. Employees need to be constantly striving for improvement and success; and they need to see the same and more in their leaders. When the boss is seen as someone who works to attain increasingly higher goals, employees will be impressed and more willing to mirror that behavior. It’s a win-win for everyone.
  10. Interpersonal skills: Successful entrepreneurs are comfortable relating to other people; they easily create rapport and are at least more extroverted than they are introverted. These factors help leaders seem approachable, likeable, and comfortable in their position. Those qualities contribute to staff wanting to interact with their leader. They also help motivate employees to do a better job. When workers can relate to their boss, they believe that their boss is more concerned about them, with their performance, and with their output. Furthermore, they believe that they can go to their boss with problems they encounter on the job without fearing consequences for not knowing how to resolve issues.Not all entrepreneurs are adept at interpersonal skills. Those that aren’t, might find it helpful to take a course, choose a mentor or locate a therapist to help them build interpersonal skills. The intangible cost is too high to not improve these abilities. In addition, here’s where a strong team comes into play. The less experienced leader who is still learning these skills can rely on the team to get out and to “press the flesh,” interact with employees, and spread a positive attitude to help develop morale.
  11. A “can do, get it done” attitude: Nothing builds a picture of success more than achievement, and achievement is the number one factor that motivates just about everyone across all cultures. When employees see that their boss can lead and direct, has a clear vision and attainable goals, and actually gains results in a timely manner, then that person’s credibility increases throughout the organization. Entrepreneurs must modestly demonstrate their skills to give their constituents valid reasons to appreciate and value their efforts.

Functions of Leadership:

  1.  To act as a representative of the work-group: Leader is the link between the top management and the work group. He has to communicate the problems and difficulties of the work group to the management and the expectation of the management to the work group. He act as a link between the top management and the work group.
  2.  To develop team spirit: One of the core function of the Leader manager is that to create a team spirit in between the members of the group. They should act as a team rather than performing as individuals. It is his responsibility to create a pleasant atmosphere keeping in view the subordinates needs, potential abilities and competence.
  3.  To act as a counselor of the people at work: When the subordinates face problems at work, which may be technical or emotional, the leader has to guide and advise the subordinate concerned. There may be situation which are out of control, in that situation, leader must stand behind the subordinate to encourage and support and find a solution for the problem.
  4. Proper use of Power: Leader must be careful while exercising his power or authority in relation to his subordinates. According to the situation he may exercise different types of powers like reward power, corrective power, coercive power, expert power, formal or informal power etc., for the positive response from his subordinate. Make sure that while using the power the response from his subordinate should not yield a negative response to the group work. Leader must analyze the situation before exercising his power.
  5. Time Management: Leader must ensure the timely completion of the work while ensuring the quality and efficiency of the work. At different stages, the work should be complete according to the plan. The timely completion of the individual tasks will ensure the completion of the group work. Leader should monitor and ensure the individual task at different stages are accomplished as per the plan.
  6. Secure effectiveness of group-effort: To get the maximum contribution towards the achievement of objectives the leader must delegate authority, ensure the availability of the adequate resources, provide for a reward system to improve the efficiency of capable workmen, invite participation of employees in decision making and communicate necessary information to the employees.

Styles of Leadership:

The total pattern of leaders’ actions as perceived by their employees is called leadership style. It represents the leaders’ philosophy, skills and attitudes in practice.

It is necessary to study the different leadership styles from which an appropriate style can be selected, depending upon the situation in which leadership is to be exercised and the nature of the followers involved.

1. Autocratic or Authoritarian leadership: An autocratic leader centralizes power and decision-making in himself. He gives orders, assigns tasks and duties without consulting the employees. The leader takes full authority and assumes full responsibility.Autocratic leadership is negative, based on threats and punishment. Subordinates act as he directs. He neither cares for their opinions nor permits them to influence the decision. He believes that because of his authority he alone can decide what is best in a given situation.Autocratic leadership is based upon close supervision, clear-cut direction and commanding order of the superior. It facilitates quick decisions, prompt action and unity of direction. It depends on a lesser degree of delegation. But too much use of authority might result in strikes and industrial disputes. It is likely to produce frustration and retard the growth of the capacity of employees.The employees work as hard as is necessary to avoid punishment. They will thus produce the minimum which will escape punishment.

This leadership style is less likely to be effective because (i) the new generation is more independent and less submissive and not amenable to rigid control; (ii) people look for ego satisfactions from their jobs and (iii) revolution of rising expectations changed the attitude of the people.

Autocratic leadership may be divided into three classes:

  •  The hard-boiled autocrat who relies mainly on negative influences uses the force of fear and punishment in directing his subordinates towards the organisational goals. This is likely to result in employees becoming resentful.
  • The benevolent autocrat who relies mainly on positive influences uses the reward and incentives in directing his subordinates towards the organisational goals. By using praise and pats on the back he secures the loyalty of subordinates who accept his decisions.
  • The manipulative autocrat who makes the employees feels that they are participating in decision-making though the manager himself has taken the decision. McGregor labels this style as Theory X.

2. Democratic or Participative leadership: Participative or democratic leaders decentralise authority. It is characterised by consultation with the subordinates and their participation in the formulation of plans and policies. He encourages participation in decision-making.He leads the subordinates mainly through persuasion and example rather than fear and force. Sometimes the leader serves as a moderator of the ideas and suggestions from his group. McGregor labels this style as Theory Y.Taylor’s scientific management was based on the inability of the ordinary employees to make effective decisions about their work. Hence the decision-making power was vested with the management. But recent studies indicate the need for participation by subordinates. The modern trend favours sharing the responsibility with the employees.This will foster enthusiasm in them. The employees feel that management is interested in them as well as in their ideas and suggestions. They will, therefore, place their suggestions for improvement.

Advantages for democratic leadership are as follows: (i) higher motivation and improved morale; (ii) increased co-operation with the management; (iii) improved job performance; (iv) reduction of grievances and (v) reduction of absenteeism and employee turnover.

3. The Laissez-faire or Free-rein leadership: Free-rein leaders avoid power and responsibility. The laissez-faire or non-interfering type of leader passes on the responsibility for decision-making to his subordinates and takes a minimum of initiative in administration. He gives no direction and allows the group to establish its own goals and work out its own problems.The leader plays only a minor role. His idea is that each member of the group when left to himself will put forth his best effort and the maximum results can be achieved in this way. The leader acts as an umpire. But as no direction or control is exercised over the people, the organisation is likely to flounder.

An experiment conducted among Boy Scout Clubs of the USA in 1940 shows autocratic leadership is likely to rouse antagonism in the group and produce hostility towards the leader. In democratic groups, the absence of the leader made little difference, while in autocratic groups productive work dropped to a minimum, when the leader was out of the room.

Democratic leadership is more likely to win the loyalty of the group. The laissez-faire groups also developed friendly approaches to the leader as in the democratic group. But suggestions from the groups were very low and they were also less productive.

4. Paternalistic leadership: Under this management style the leader assumes that his function is fatherly or paternal. Paternalism means papa knows best. The relationship between the leader and his group is the same as the relationship between the head of the family and the members of the family. The leader guides and protects his subordinates as members of his family.As the head of the family he provides his subordinates with good working conditions and fringe benefits. It is assumed that workers will work harder out of gratitude. This leadership style was admirably successful in Japan with her peculiar social background.

This leadership style has still been widely prevalent in small firms in India. However, this paternalistic approach is unlikely to work with mature adult employees, many of whom do not like their interests to be looked after by a “godfather.” Instead of gratitude, it might generate antagonism and resentment in the subordinates.

Approaches to Leadership:

Leadership has been one of the  most studied topics in management. Several studies on leadership have over ther year helped to develop various approaches to leadership.Broadly there are three aproaches to leadership.

1)Trait approaches to Leadership:

This style of leadership gives more credence to the qualities a person is born with rather than what they develop or the relationships they develop with followers. Leadership trait theory is the idea that people are born with certain character traits.  This is the style that is attributed to a leader who others see as “a born leader”.  The innate qualities and characteristics possessed by strong leaders.  These traits, while not totally responsible for an individual’s success as a leader, are influential in the success of the leader.  This theory assumes that if you could identify people with the correct traits, you will be able to identify leaders.

The first major approach to leadership is commonly referred to as the trait approach to leadership because the approach looks for a series of physical, mental, or personality traits that effective leaders possess that neither non-leaders nor ineffective leaders possess. We start with this approach to leadership predominantly because it’s the oldest of the major approaches to leadership and is an approach to leadership that is still very much in existence today. The first major study to synthesize the trait literature was conducted by Ralph Stogdill in 1948.Stogdill, R. M. (1948). Personal factors associated with leadership: A survey of the literature. Journal of Psychology, 25, 35-71. In 1970, Stogdill reanalyzed the literature and found six basic categories of characteristics that were associated with leadership: physical, social background, intelligence and ability, personality, task-related, and social.

The focus of each of these five traits needs to be on what people see you do–not just the things they don’t see you do. Being honest isn’t a matter of not lying–it is taking the extra effort to display honesty.Intelligence, Being smart,  Someone who knows what they are talking about will instill confidence in the followers.  But, if a leaders intelligence is too high for the followers, and there is a disconnect, this can create a problem.  A leader must communicate effectively with one’s followers, and this intelligence difference is something to keep in mind.

  1. Intelligence:Developing intelligence is a lifestyle choice.  Having strong verbal ability, perceptual ability and reasoning appears to make on a better leader.  Most people want to follow someone they feel is “smart”, able to problem solve and have strong social skills.  While it is good to be bright, a leader’s intellectual ability should not be too much from that of his or her followers. This too, would depend on the situation.
  2. Self-confidence:The ability to be certain about one’s competencies and skills. This allows the leader to move ahead because they believe that what they are doing is correct.  They have the skills to be successful.
  3. Determination:The desire to get the job done.  Individuals with determination are willing to assert themselves, take initiative and be persistent. This could also be shown as dominance.
  4. Integrity: The quality of honesty and trustworthiness.  The leader with a high level of integrity will take responsibility for his or her actions.
  5. Sociability:  This refers to a leaders ability to seek out pleasant social relationships.  Leaders with a high degree of sociability are friendly, out going, courteous, tactful and diplomatic.

2)Behavioral Approaches to leadership:

In response to the early criticisms of the trait approach, theorists began to research leadership as a set of behaviors. They evaluated what successful leaders did, developed a taxonomy of actions, and identified broad patterns that indicated different leadership styles. Behavioral theory also incorporates B.F. Skinner’s theory of behavior modification, which takes into account the effect of reward and punishment on changing behavior. An example of this theory in action is a manager or leader who motivates desired behavior by scolding employees who arrive late to meetings and showing appreciation when they are early or on time.

                                                                   The behavioral approach to leadership consists of following three studies.

a)The Ohio State Studies:

The Ohio State Leadership Studies have contributed in general to the fields of management and organizational behavior, and specifically to the field of leadership. These contributions can be summarized in several categories. Process contributions include the use of an interdisciplinary approach to the study of leadership phenomena as well as a consistent emphasis on performing high-quality research. Conceptually, the Ohio State studies helped to shift the focus of the field from a universal trait approach to a more situational, behavioral-based view. Methodologically, the Ohio State studies contributed a model of programmatic construct validation and investigation, and provided future researchers with useful research instruments. In sum, these contributions are substantial and are worthy of continued recognition. In 1945, a group of researchers at Ohio State University sought to identify the observable behaviors of leaders instead of focusing of their individual traits. To document their findings, they generated a list of 150 statements designed to measure nine different dimensions of leadership behavior. These statements were used to develop the Leaders’ Behavior Description Questionnaire (LBDQ). The surveys were then given to members of a group, who were asked to respond to a series of statements about the leader of their group. Respondents of the LBDQ-rated leaders cited how frequently they engaged in a certain behavior. The results of the survey showed that two main behaviors, consideration and initiating structure, were the most significant factors in leadership.

b)University of Michigan Studies:

Lead by the famous organizational psychologist, Dr. Rensis Likert, the leadership studies at the University of Michigan identified three characteristics of effective leadership; two of which were previously observed in studies that had been conducted at Ohio State University. The study showed that task and relationship-oriented behaviors weren’t of major significance within the world of organizational psychology. However it was the third observation that introduced a new concept, one of participative leadership. As a leading center of social science research, the University of Michigan has produced some of the most important studies of leadership. Studies dating back to the 1950s identified two broad leadership styles: an employee orientation and a production orientation. The studies also identified three critical characteristics of effective leaders: task-oriented behavior, relationship-oriented behavior, and participative leadership. The studies concluded that an employee orientation rather than a production orientation, coupled with general instead of close supervision, led to better results. The Michigan leadership studies, along with the Ohio State University studies that took place in the 1940s, are two of the best-known behavioral leadership studies and continue to be cited to this day.

c)The Managerial Grid:

Managerial Grid was originally developed by Robert Blake and Jane Mouton between 1958 and 1960 and first published in 1964 (Blake and Mouton 1964). The model was particularly influenced by Fleishman’s work on initiating structure and consideration (Blake, Mouton and Bidwell 1969; Blake and Mouton 1982b). Fleishman posited that there were two underlying dimensions of leadership behaviour which were called “consideration” and “initiating structure” (Fleishman 1957a, 1957b; Fleishman and Peters 1962). Consideration referred to behaviour reflecting respect for subordinates’ ideas and consideration of their feelings. Initiating structure referred to the extent to which a leader structured and defined his or her role and those of subordinates in order to achieve formal organisational goals. It was argued that high consideration was associated with high subordinate satisfaction, while high initiating structure was associated with high effectiveness but also high grievance levels and absenteeism. Further, it was claimed that when leaders rated high on both dimensions, high effectiveness and high satisfaction would occur without the grievance and absenteeism. Fleishman and Simmons (1970), in a representative quote, concluded “that the leadership pattern which combines high consideration and structure is likely to optimize a number of effectiveness criteria for a variety of supervisory jobs” (p. 171). This was subsequently referred to as the “high-high” leader paradigm and was the subject of research and the target for criticism during the 1970s (Larson , Hunt and Osborn 1976; Nystrom 1978).

3)Situational Approaches to Leadership:

Situational leadership is a theory of leadership that is part of a group of theories known as contingency theories of leadership. Generally speaking, contingency theories of leadership hold that a leader’s effectiveness is related to the leader’s traits or behaviors in relation to differing situational factors. According to situational leadership theory, a leader’s effectiveness is contingent on his ability to modify his management behavior to the level of his subordinates’ maturity or sophistication.

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Introduction to Management

Introduction to Management,Characteristics,Process,Principles,Manangerial levels,Manangerial skills, Managerial roles,Emerging management issues and challenges.

Definition of Management and its functions

Management is the process of reaching organizational goals by working with and through people and other organizational resources.

Management has the following 3 characteristics:

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



The 4 basic management functions that make up the management process are described in the following sections:


PLANNING: Planning involves choosing tasks that must be performed to attain organizational goals, outlining how the tasks must be performed, and indicating when they should be performed.

Planning activity focuses on attaining goals. Managers outline exactly what organizations should do to be successful. Planning is concerned with the success of the organization in the short term as well as in the long term.


Organizing can be thought of as assigning the tasks developed in the planning stages, to various individuals or groups within the organization. Organizing is to create a mechanism to put plans into action.

People within the organization are given work assignments that contribute to the company’s goals. Tasks are organized so that the output of each individual contributes to the success of departments, which, in turn, contributes to the success of divisions, which ultimately contributes to the success of the organization.


Influencing is also referred to as motivating,leading or directing.Influencing can be defined as guiding the activities of organization members in he direction that helps the organization move towards the fulfillment of the goals.

The purpose of influencing is to increase productivity. Human-oriented work situations usually generate higher levels of production over the long term than do task oriented work situations because people find the latter type distasteful.


Controlling is the following roles played by the manager:

  1. Gather information that measures performance
  2. Compare present performance to pre established performance norms.
  3. Determine the next action plan and modifications for meeting the desired performance parameters.

Henry Fayol’s fourteen universal principles of Mananagement

The 14 Management Principles from Henri Fayol (1841-1925) are:

1. Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive.

2. Authority. The right to issue commands, along with which must go the balanced responsibility for its function.

3. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership.

4. Unity of Command. Each worker should have only one boss with no other conflicting lines of command.

5. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it.

6. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount.

7. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system.

8. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its personnel.

9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels.

10. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection.

11.Equity. In running a business a „combination of kindliness and justice‟ is needed. Treating employees well is important to achieve equity.

12. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely.

13. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of „personal vanity‟ on the part of many managers.

14.Esprit de Corps. Management must foster the morale of its employees. He further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person‟s abilities, and reward each one‟s merit without arousing possible jealousies and disturbing harmonious relations.”

Levels of Management,Managerial levels,Managerial Hierarchy

Managerial levels: Many managers work in an organisation. However, these managers do not work at the same level. They work and operate at different positions. Hierarchy of these managerial positions is called Levels of Management. levels of management top middle lower

1)Top Level of Management


The Top Level Management consists of the Board of Directors (BOD) and the Chief Executive Officer (CEO). The Chief Executive Officer is also called General Manager (GM) or Managing Director (MD) or President. The Board of Directors are the representatives of the Shareholders, i.e. they are selected by the Shareholders of the company. Similarly, the Chief Executive Officer is selected by the Board of Directors of an organisation. The main role of the top level management is summarized as follows :-

  1. The top level management determines the objectives, policies and plans of the organisation.
  2. They mobilises (assemble and bring together) available resources.
  3. The top level management does mostly the work of thinking, planning and deciding. Therefore, they are also called as the Administrators and the Brain of the organisation.
  4. They spend more time in planning and organising.
  5. They prepare long-term plans of the organisation which are generally made for 5 to 20 years.
  6. The top level management has maximum authority and responsibility. They are the top or final authority in the organisation. They are directly responsible to the Shareholders, Government and the General Public. The success or failure of the organisation largely depends on their efficiency and decision making.
  7. They require more conceptual skills and less technical Skills.

2)Middle Level of Management


The Middle Level Management consists of the Departmental Heads (HOD), Branch Managers, and the Junior Executives. The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch Managers are the head of a branch or local unit. The Junior Executives are Assistant Finance Managers, Assistant Purchase Managers, etc. The Middle level Management is selected by the Top Level Management. The middle level management emphasize more on following tasks :-

  1. Middle level management gives recommendations (advice) to the top level management.
  2. It executes (implements) the policies and plans which are made by the top level management.
  3. It co-ordinate the activities of all the departments.
  4. They also have to communicate with the top level Management and the lower level management.
  5. They spend more time in co-ordinating and communicating.
  6. They prepare short-term plans of their departments which are generally made for 1 to 5 years.
  7. The middle Level Management has limited authority and responsibility. They are intermediary between top and lower management. They are directly responsible to the chief executive officer and board of directors.
  8. Require more managerial and technical skills and less conceptual skills.

3)Lower Level of Management


The lower level management consists of the Foremen and the Supervisors. They are selected by the middle level management. It is also called Operative / Supervisory level or First Line of Management. The lower level management performs following activities :-

  1. Lower level management directs the workers / employees.
  2. They develops morale in the workers.
  3. It maintains a link between workers and the middle level management.
  4. The lower level management informs the workers about the decisions which are taken by the management. They also inform the management about the performance, difficulties, feelings, demands, etc., of the workers.
  5. They spend more time in directing and controlling.
  6. The lower level managers make daily, weekly and monthly plans.
  7. They have limited authority but important responsibility of getting the work done from the workers. They regularly report and are directly responsible to the middle level management.
  8. Along with the experience and basic management skills, they also require more technical and communication skills.


Managerial roles

Managerial Roles:
There are many roles a manager has within an organization. Henry Mintzberg describes ten specific managerial roles most commonly seen within organizations. This lesson will discuss each of these roles and what behaviors are associated with them.

Henry Mintzberg’s Managerial Roles

There are many roles a manager has within an organization. Performing these roles is the basis of a manager’s job. To be effective at these roles, a manger must be a complete businessperson by understanding the strategic, tactical and operational responsibilities he or she holds. While not always explicitly stated in a manager’s job description, at any given moment a manager might have to be a coach, a strategic planner, a liaison, a cheerleader, a conflict manager, a realist, a problem-solver, an organizer, an optimist, a trainer and a decision-maker. These roles can change from day to day, but one thing is for sure: a manager must understand all of his or her roles and how to perform them effectively. This means that a manager must have a global understanding of all business functions, organizational goals, his or her level of accountability and the appropriate way to serve both internal and external clients of the organization.

Henry Mintzberg spent much of his career researching the managerial roles and behaviors of several chief executive officers, or CEOs. Mintzberg discovered that managers spent most of their time engaging in ten specific roles. He was able to then classify these roles into three categories, including interpersonal, informational and decisional roles. To better understand these roles, let’s look at how they are applied by Bernard the Boss as he goes through his daily routine as a manager at a local grocery store.

Interpersonal Roles:

The first category of roles described by Mintzberg is called interpersonal roles. These roles involve the behaviors associated with human interaction. In other words, interpersonal roles are those roles that allow a manager to interact with his or her employees for the purpose of achieving organizational goals. There are three roles listed under interpersonal roles, which include figurehead, leader and liaison. Let’s look at how these three roles are played out by Bernard.

When Bernard arrives at the store in the morning, he holds a daily meeting for all employees who are working that day. He spends time talking about daily specials and sales goals and motivates his employees for the day by holding a friendly contest between the workers to try to sell as many of the sale items as possible during their shift. He informs his employees that the highest seller will win a $50 gift certificate for the store. As afigurehead, Bernard the Boss has certain social, ceremonial and legal responsibilities that his employees expect him to fulfill. Bernard is seen as a source of inspiration and authority to his employees.

As Bernard goes about his day, he must make sure that he’s monitoring the performance of his employees and how well they are doing in their sales. He checks with his employees periodically to make sure they understand the products that are on sale and what key features to point out, as well as to remind them of their goal of winning the contest. Bernard the Boss’s role as aleader requires him to direct and manage the performance of his employees. He will spend time communicating performance goals, training and mentoring employees, supporting employee efforts, supplying resources, evaluating employee performance and motivating employees toward a higher level of productivity.

Bernard does not leave all the selling up to his employees, because he likes to maintain contact with his customers to better understand their needs and how he can accommodate them. He stops and chats with several customers throughout the day to get feedback on sale items and to learn about products that his customers would like to see the store put on sale in the future. Acting as a liaison is Bernard the Boss’s final interpersonal role. As a liaison, Bernard communicates with internal and external members of the organization. This networking activity is a critical step in reaching organizational goals, especially those concerned with customers.

Informational Roles:

The second category of managerial roles is informational roles. The informational roles include those roles in which a manager must generate and share knowledge to successfully achieve organizational goals. There are three roles listed under informational roles, which include monitor, disseminator and spokesperson.

After Bernard is comfortable with his employees’ understanding of the sales products and their goals, he heads back to his office to do some research for what he will put on sale next week. Bernard spends time reflecting on the feedback his employees gave and the information his customers shared with him that day, and he also looks at what his competitors are putting on sale at this time. The monitor role that Bernard the Boss must fill involves the task of researching, locating and choosing useful information. As a monitor, Bernard has to stay abreast to current industry standards and changes occurring in both the internal and external business environments. This also includes monitoring the performance of employees and their level of productivity.

Bernard combines all of the information into a proposal for next week’s sale advertisement and forwards the information to upper management for approval. He also spends some time previewing this information with his employees so that they can begin to familiarize themselves with the items. As a disseminator, Bernard must take the information he gathered as a monitor and forward it on to the appropriate individuals.

Now that Bernard has approval from upper management, he creates the advertisement for next week’s sale items and begins to distribute it to his customers. Acting as a spokesperson on behalf of the organization is Bernard’s final informational role. As a spokesperson, Bernard communicates information about the organization to outside parties.

Decisional Roles:

The third category of managerial roles according to Mintzberg is called decisional roles. Decisional roles include roles such as the entrepreneur, disturbance-handler, resource-allocator and negotiator. All of these roles involve the process of using information to make decisions.

Bernard checks in with his employees at midday and notices that some of the sale items have not done as well as anticipated. After speaking with his employees, he learns that the items that have not been selling are sitting next to the generic brand on the shelves. These generic brands are still less expensive than the sale items and are causing customers to choose the less expensive version. Bernard makes the decision to move these items to a special display area where they can sit by themselves and hopefully attract more buyers. As an entrepreneur, Bernard the Boss is focused on process improvement. He looks for ways to improve productivity and efficiency within his organization and directs the change process from development to implementation.

Managerial Skill:

Much like a professional basketball player needs to know how to dribble and shoot a basketball, or how a home builder understands the process of framing a house, managers also need to have a specific set of skills in order to effectively perform their jobs. Managerial skills are what the manager uses to assist the organization in accomplishing its goals. Specifically, a manager will make use of his or her own abilities, knowledge base, experiences, and perspectives to increase the productivity of those with whom they manage.

The toolbox for what a manager needs in order to perform their job effectively, typically, fall into one of three categories: technical skills, human skills, and conceptual skills. To give you a better understanding of these skills, let’s take a look at how each of these skills are applied by Manny the Manager and his employee Kelly the Financial Analyst.

a)Technical Skills

Technical skills are those skills needed to accomplish a specific task. It is the ‘how to’ skill set that allows a manager to complete his or her job. These skills are the combination of formal education, training, and on-the-job experience. Most employees expect their managers to have a technical skill set above their own so that, when needed, an employee can come to their manager to find out how to do something specific to their individual job.

For example, let’s say that part of Kelly the Financial Analyst’s job is to update a balance sheet each week. Kelly is a novice financial analyst and is new to the company, so she’s expecting her manager, Manny, to show her how to perform this task initially, so that she can, eventually, do it on her own. Therefore, it is essential for Manny to have the technical skills of how to update a balance sheet so that he may, in turn, share that skill with Kelly. As a low-level manager, technical skills are most important for Manny due to how close his role is to the general workforce – in this case, Kelly.

b)Human Skills:

The next type of skills a manager must have are human skills. These interpersonal skills are what a manager will use to work with his or her employees. Some people are born with good human skills; others must work much harder at it. Human skills are critical for all managers because they work with people. Managers with good human skills understand their role inside the manager/employee relationship and how important things, like trust, cohesion, fairness, empathy, and good will, are to the overall success of the organization. Human skills help the manager to communicate, lead, and motivate an employee to work towards a higher level of productivity.

For example, let’s go back to Kelly and Manny. Imagine Kelly’s job description was changing to include a greater deal of responsibility but for the same pay. Kelly is upset, and feels overwhelmed by this change. Manny is a manager with good human skills, so he is able to empathize and communicate his understanding of Kelly’s frustration with the change to her. Manny quickly works to find ways to motivate Kelly to continue to work at a higher level, despite the additional workload being placed on her.

Conceptual Skills

Conceptual skills are the final type of skills a manager must possess inside their toolbox. The level of analytical ability to envision both the parts and its sum directly translates into a manager’s conceptual skill set. Essentially, a manager’s conceptual skills allow him or her to solve problems in a strategic and calculated fashion. Conceptual skills are becoming increasingly more important in today’s chaotic business environment.

Managers are, continually, being challenged to think conceptually about their organizations to develop action plans and harness resources to achieve organizational goals. A manager with good conceptual skills can look at a problem, break it down into manageable pieces, consider a variety of possible solutions, all before putting it back together again in a more effective and efficient manner. Conceptual skills are most important for top managers but still important for middle and low-level managers as well.



Emerging management issues and challenges:

  1. Globalization: Globalization phenomenon is getting popular these days. Globalization of business refers to the free flow of goods service, technology, labor, capital information, across the national boundary; it is closer economic integration among different countries in terms of flow of good service, capital labor and technology. Globalization is the tendency of expanding business in different countries. Managers have to work in boundary less world. There is no territory or barrier in export and import business. Globalization invites global competition. Organizations which were competing locally with local competitors now they have to compete with global competitors. It is very difficult to organization to survive and develop in such situation. Organizations should increase quality of product and reduce cost which is a challenge for manager. Many organizations are becoming global these days. They are running their business in different countries with different culture, climate, and geography, political and economic system. It is a challenging work for managers to prepare executives officers who can run business in such countries.
  1. Workforce diversity: – Modern organizations are characterized by workforce diversity. Diversified workforce is the reality of business these days. Organizations are becoming heterogeneous in terms of ethnicity, gender, nationality, age group, etc. People having different religions, different nationality works together under one roof. Different people have different nature and they show different behavior because they come from different background. How to manage such diversified workforce is a great challenge for managers. If such diversified workforce is managed properly, organization will be highly benefited because they also bring diversified skill and knowledge. But, if they are not managed properly, they create serious problem.
  1. Quality assurance and productivity: – Quality is the ability of the product to satisfy customers need. How to improve quality of the product or how to assure customers about the quality of the product has become a great challenge for management. Quality ensures organizations survival and growth. Organizations use quality to compete with competitors. Only improving quality of product organizations can face the global competition. Therefore, there must be continuous improvement in quality. Quality improvement has no boundary. It is the race without final line. It is said that people buy quality not product. And, to improve quality is a really a challenge for management. Along, with increasing quality to increase productivity again is another challenge for management. Organization must try to achieve higher productivity. Higher productivity only helps to reduce cost. Productivity is the ratio between input and output. Improved technology, employees, regular skill development and better utilization of resources helps to increase productivity. Total quality management is the latest approach or needs to improve quality.
  1. Technological advancement: – How to utilize advanced and sophisticated technology has become another challenge for management. Technology has developed beyond the expectation of anybody in the world over last 100 years. Tremendous advancement has been made in production, distribution and information technology. Managers must manage all this technology with the development of computer, the face of information technology has absolutely changed. Introduction of internet, email and other electronic media, have benefitted organizations in the field of productions, distribution and other areas of business. Decision making have been facilitated by information technology. Technological advancement has changed the nature of job. Most of the jobs which were performed by unskilled and semi-skilled labors previously, now they are performed by skilled labors. Number of white collar job is increasing and blue collar jobs are decreasing. Organization must train their employees about new technology. Only with new technology, Organization can compete with other competitors.
  1. Ethics and social responsibility: – Ethics is study of how our decisions affect other people. It is the study of people’s right and duties. The moral rules the people to make decisions and the nature of relationship among people. Ethics is to follow social code of conduct, social norms, values and attitude. The decisions made by managers have a broad reach both inside and outside the organization. So, managers must follow ethical norms and consider social responsibilities. Managerial decision must be based on ethical ground. But, these days ethics id\s decreasing in business world. So, many business organizations have unethical practice. Because of the unethical practice of some business houses, all business world is blamed.

How to fulfill social responsibility is also a challenge for management. The concept of corporate social responsibility has developed. Social responsibility means obligation of business organizations towards society community, people, share holders, etc. To provide quality product at affordable price, to develop more and more employment opportunities, to carry out different development activities in society, to control pollution are some social responsibilities of business organizations.

  1. Innovation and change: – Management must pay attention on innovation and change. Otherwise, they would go out of business. Rapid innovations are taking place in technology, product and service. Product lifecycle is getting shorter and shorter. Product needs continuous improvement if the life span is to be made long. New ideas, new techniques, new methods are being innovated; there must be new inventions of ideas, new invention of product. Old and outdated product cannot satisfy customers.

There is change in external environment, political and legal, socio-cultural, economic and technological environment change rapidly. How to adjust with such change, how to keep pace with such change, how to keep pace with such change that has become challenge for management. Empowerment: – This is the age of empowerment. Role difference between management and workers has narrowed down. Status between worker and manager is very narrow. Most of the decisions are taken at operating level. Workers are free to plan and schedule their work. They are given more and more autonomy and freedom. They participate in major decision making activities. Joint goal setting and joint performance evaluation has become common. Self managed work team had been established, more and more information are given to employees, and how to manage such empower team has become challenge for managers.


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Staffing is the process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization’s effectiveness. According to this model: Acquisition comprises the recruitment processes leading to the employment of staff.      

Process of Staffing:

  1. Manpower requirements- The very first step in staffing is to plan the manpower inventory required by a concern in order to match them with the job requirements and demands. Therefore, it involves forecasting and determining the future manpower needs of the concern.
  2. Recruitment- Once the requirements are notified, the concern invites and solicits applications according to the invitations made to the desirable candidates.
  3. Selection- This is the screening step of staffing in which the solicited applications are screened out and suitable candidates are appointed as per the requirements.
  4. Orientation and Placement- Once screening takes place, the appointed candidates are made familiar to the work units and work environment through the orientation programmes. placement takes place by putting right man on the right job.
  5. Training and Development- Training is a part of incentives given to the workers in order to develop and grow them within the concern. Training is generally given according to the nature of activities and scope of expansion in it. Along with it, the workers are developed by providing them extra benefits of indepth knowledge of their functional areas. Development also includes giving them key and important jobsas a test or examination in order to analyse their performances.
  6. Remuneration- It is a kind of compensation provided monetarily to the employees for their work performances. This is given according to the nature of job- skilled or unskilled, physical or mental, etc. Remuneration forms an important monetary incentive for the employees.
  7. Performance Evaluation- In order to keep a track or record of the behaviour, attitudes as well as opinions of the workers towards their jobs. For this regular assessment is done to evaluate and supervise different work units in a concern. It is basically concerning to know the development cycle and growth patterns of the employeesin a concern.
  8. Promotion and transfer- Promotion is said to be a non- monetary incentive in which the worker is shifted from a higher job demanding bigger responsibilities as well as shifting the workers and transferring them to different work units and branches of the same organization.

Nature of Staffing Function

  1. Staffing is an important managerial function- Staffing function is the most important mangerial act along with planning, organizing, directing and controlling. The operations of these four functions depend upon the manpower which is available through staffing function.
  2. Staffing is a pervasive activity- As staffing function is carried out by all mangers and in all types of concerns where business activities are carried out.
  3. Staffing is a continuous activity- This is because staffing function continues throughout the life of an organization due to the transfers and promotions that take place.
  4. The basis of staffing function is efficient management of personnels- Human resources can be efficiently managed by a system or proper procedure, that is, recruitment, selection, placement, training and development, providing remuneration, etc.
  5. Staffing helps in placing right men at the right job. It can be done effectively through proper recruitment procedures and then finally selecting the most suitable candidate as per the job requirements.
  6. Staffing is performed by all managers depending upon the nature of business, size of the company, qualifications and skills of managers,etc. In small companies, the top management generally performs this function. In medium and small scale enterprise, it is performed especially by the personnel department of that concern.

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Decision Making

Decision Making

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Decision-making has great importance for success of organization in contemporary management system. Managers have to take critical decisions at every stage. Decision-making pervades through all managerial functions such as planning, organizing, staffing, directing and control. In planning for example manager decides what to produce, where and when and in organizing manager decides about distribution of work, delegating authority and fixing responsibility. Decision making is commitment to something and a principle or course of action. It is selecting the best among alternative courses of action. The decision-making consists of various factors. Decision-making means that there are various alternatives and the most suitable alternative is chosen to solve the problem. Another factor is existence of alternatives in which the decision-maker has liberty to choose an alternative of his fondness. Decision-making is goal oriented. It implies that the decision maker attempts to accomplish some results through taking vital decisions. In theoretical studies, it is established that decision making is an essential part of management. Decision-making is a process of deciding. Collins (1999) defines decision as the act of making up one’s mind by collecting, sharing and gathering significant ideas from different sources. Furthermore, Longman (2000) describes that “decision as a choice or judgment that you make after a period of discussion or thought”. Longman’s definition is very clear but it gives rise to a question on the definition of deciding or decision-making. Fullan avows that decision-making is the process of identifying and choosing alternative courses of action in a manner appropriate to the demand of the situation (1982). According to Baker et al. (2001), decision making should start with the identification of the decision maker(s) and stakeholder(s) in the decision, reducing the possible disagreement about problem definition, requirements, goals and criteria. Fremount, et, al, defined decision-making as the “conscious and human process, involving both individual and social phenomenon based upon factual and value premises, which concludes with a choice of one behavioural activity from among one or more alternatives with the intention of moving toward some desired state of affairs (1970). A decision maker, as an individual, or as a member of formal organization with his own viewpoint and perception of the organization, selects for optimising values within the constraints imposed by the organization (Varshney, 1997)


Types of Decisions:

Decisions are grouped in a numerous ways:
a)Programmed and non-programmed decisions:
Programmed decisions are those that are made in harmony to policy, procedure and rules. These decisions are regular and cyclical and programmed decision is comparatively easy to make. Non-programmed decisions are new and non-repetitive. If a problem has not arisen before or if there is no precise method for handling it, it must be tackled by non-programmed decision. For programmed decision, there are definite rules exists and therefore it is not possible for two persons to find different solutions to the some problem. In case of non-programmed decision, there are no set rules to deal with the problem. Each manager may bring his own personal beliefs, attitudes and judgments to bear on the decision. In this case, it is possible for two managers to find different solutions to the same problem. Top level manager must have this ability to make non programmed decisions.
b)Major and minor decisions:
Major decisions are taken cautiously and intentionally by the application of human judgment and experience where as minor decisions are made almost subconsciously using rules. The decisions that impact for long term on departments are categorized as major decision. Alternatively, corporate decisions that do not have long term effect are known as minor decisions. Some of major decision example in organization includes diversification of existing product lines, adopting new technology are the major decisions. The decision to obtain raw materials is a minor decision, Major decisions are made at top level and minor decisions are taken at lower level in the organizational ladder.
c)Simple and complex decisions:
Another category of decision making is to take simple and complex decision. Simple decision is taken in situation where there few variables considered for solving a problem. If the variables are many, then it is an intricate decision.
d)DStrategic and tactical or operational decisions:
Strategic decision is making good choice of actions concerning allocation of resources and contribution to accomplish targeted goals of organization. Strategic decisions are major and non-programmed decisions and have long term impact. A strategic decision may involve major removal from earlier system. For example, modification in the product mix. Strategic decisions are taken by senior management. Tactical or operational decision is stemmed from strategic decision. It is associated with daily working of the organization and is made in the context of established policies and procedures such as taking decisions for provisions of air conditioning, parking facilities. Such types of decision are taken by the lower level managerial staff.
e.Individual and group decisions:
 Decision may be taken either by an individual or group. Decisions which are routine in nature, with few variables and exact procedures exists to deal with them are taken by individuals. Decisions which have their impact on other departments, which may result into some transformation in the organization, are taken by groups.

Decision Making Process:

A decision is reasonable if it is suitable for organization that means choose best alternative to accomplish goals. There are various steps in rational decision making:

  1. Recognizing the problem.
  2. Deciding priorities among the problems.
  3. Diagnosing the problem.
  4. Developing alternative solutions or courses of activities.
  5. Evaluating alternatives.
  6. Converting the decision into effective action and follow up of action.

Important steps in decision making process:

.Decision Making
(1) Recognizing the problem:
Decision has great impact on organization’s operations. When a manager takes any decision, it is in effect the organization’s response to a problem. Therefore, it is essential to search the environment for the existence of a problem. A problem exists when there is divergence from past experience or deviation from plan. Problem emerges when competitors do well or when people bring problems to the manager. It is the responsibility of manager to thoroughly explore the root causes of problems.
(2) Deciding priorities among problems:
After identifying problems, manager must assess which problem has more harmful impact on organization. He may find that some of the problems are such that they can be solved by their assistants because they are closest to them. All such problems should be transferred to subordinates. Some problems may need information available only at higher level or affecting other departments. Such problems are referred to higher level managers. And those problems which can be best solved by him are to be focused.
(3) Diagnosing the problems:
It is necessary to understand the intensity of problem. Symptoms of the problem that are observed by the manager may some times misinform him. The symptom may lead manager to think one part when the defect may lie hidden in another part. For example if there is decline in sales, the management may think that the problem is one of poor selling procedure or the saturation of the old market. But the real problem may be incapability to move quickly to meet varying needs of the clients. To diagnose the problem, a manager should follow the systems approach. He should study all the sub-parts of his organization which are connected with the sub-part in which the problem seems to be located.
(4) Developing alternative solutions:
A problem in organization has many solutions. However, all the ways cannot be uniformly satisfying. Decision maker must recognize various alternatives available in order to get best result of a decision. It can be said that all alternatives are not possible to consider either because information about all alternatives may not be available or some of the alternatives cannot be considered because of limitations. Therefore while choosing alternatives, it is necessary to consider the concept of limiting factor. Limiting factor is one which stands in the way of accomplishing a desired objective. A decision maker can categorize alternatives using his own experience, practices followed by others and using creative practice. From past experience, decision maker takes into account the action. The successful action of the past may become an alternative for the future. But main restriction of such thought is that success in past experience may not necessary in the present context because of changing business situation. Other method of developing alternatives is through creative process where various exercises are taken to create completely new ideas. Creative ideas of individuals or groups help in developing alternatives. One popular group technique is brain storming. The brain storming group consists of 5 to 10 people. The best idea behind brain storming is to think of as many alternatives as possible without pausing to evaluate them.
(5) Measuring and comparing consequences of the alternative solution:
After developing various alternatives, it is essential to measure and compare their outcomes of alternatives using quality and acceptability. The quality of a decision must be determined considering both tangible and intangible consequences. Tangible consequences are those which can be quantitatively measured or mathematically demonstrated. Intangible consequences cannot be measured quantitatively. A decision though good in quality may be poor in acceptability or decision though acceptable may not be good in quality. In such cases managers must find the relative importance of these two.
(6) Converting the decision into effective action and follow up of action:
 In this step, decision must be communicated to the employees in clear and unmistakable terms. All necessary efforts should be made to secure employees involvement in some stages of decision making. Association of employees in decision making not only improve the acceptability, but also improves the quality of decision.

Environment of decision-making:

In organization, decision making process has immense importance and sometimes managerial team may not be competent to select best alterative. This problem may be highly complex and vague. These conditions of knowledge are referred to as the ‘environment of decision making’. The environment of decision making is categorized into three types that are certainty risks and uncertainty. The environment of decision-making is a range, at one end there is complete certainty and at the other end there is complete ambiguity.
Decision-making under certainty: The term certainty denotes to precise knowledge of the outcome of each alternative. All pertinent data are available for making decision.
Decision-making under risk: In decision making under risk, the outcome of a particular decision cannot be specific with certainty but can be specified with known probability values. The value of probability is a measure of probability of the happening of that event. In such cases, alternatives are evaluated by computing the expected value of the payoff associated with each alternative.
Decision making under uncertainty: Uncertainty exists when the decision maker does not have good knowledge of the probabilities related with the possible outcomes, though he has been able to recognize the possible outcomes and their related pay-offs. Since the probabilities are not identified, the decision maker cannot use the principle of maximizing the pay off. To summarize, decision making is a selection of the best among alternative courses of action. Effective and successful decisions can be beneficial for company and prevent losses. Therefore, corporate decision making process is the most critical process in any organization. In the decision making process, managers choose one course of action from a few possible alternatives. In the process of decision making, we may use many tools, techniques and perceptions. Decisions may be grouped as programmed and non-programmed decisions, major and minor decisions, simple and complex decisions, strategic and operational decisions. The environment of decision is classified into three types that include certainty, risk and uncertainty.


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Management | Principles Of Management

Management Theories ,Evolution of management thoughts,Contemporary perspective of management

Evolution of Management Thoughts:

Management is studied in business academics since earlier times and it is considered as an integral part to understand business operations. People have been changing and redesigning organizations for centuries. Though the 20th century is noticeable in history as an ‘Era of scientific management’, still it does not indicate that management tactics were not used in yester years. Many studies indicated that Management theory evolved with “scientific” and “bureaucratic” management that used measurement, procedures and routines as the basis for operations. Firms developed hierarchies to apply standardized rules to the place of work and penalized labour for violating rules. With the “human relations” movement, companies emphasized individual workers. Modern management theories, including system theory, contingency theory and chaos theory, focus on the whole organization, with employees as a key part of the system.

The evolution of management can be categorized in to different parts:

  • Pre-Scientific Management Era (before 1880),
  • Classical management Era (1880-1930),
  • Neo-classical Management Era (1930-1950),
  • Modern Management era (1950-on word).

Classical Management includes Scientific Management School, Administration Management School, and Bureaucracy Management. Neo- classical Management includes Human relation school and Behavioural Management School. Modern Management includes Social system school, Decision theory school, Quantitative Management School, System Management School, and Contingency Management School.

Evolution of management

Early Management Thought:

The period of 1700 to 1800 emphasizes the industrial revolution and the factory system highlights the industrial revolution and the importance of direction as a managerial purpose. Thus, the development of management theory can be recognized as the way people have struggled with relationships at particular times in olden periods. Many economic theorists during this period described the notion of management. Adam Smith and James Watt have been recognized as two theorists who launched the world toward industrialization. Adam Smith brought about the revolution in financial thought and James Watt’s steam engine provided cheaper power that revolutionized English commerce and industry. Both provided the base for modern concepts of business management theory and practice. Adam Smith explicated the concept of division of labour and Jacques Turgot described the importance of direction and control. Smith stated that market and competition should be the controllers of economic activity and that tax policies were destructive. The specialization of labour was the basis of Smith’s market system. According to Smith, division of labour provided managers with the maximum opportunity for improved output. In the period of 1771–1858, Robert Owens studied for concern for the workers. He was repulsed by the working conditions and poor treatment of the workers in the factories across Scotland. Owen became a reformer. He reduced the use of child labour and used ethical influence rather than physical punishment in his factories. He reproached his fellow factory owners for treating their equipment better than they treated their workers.

In quantitative approach of early management thought, Charles Babbage (1792–1871) is recognized as the supporter of operations research and management science. Babbage’s scientific innovations are mechanical calculator, a versatile computer, and a punch-card machine. His projects never became a commercial reality. However, Babbage is considered the creator of the concepts behind the present day computer. The most popular book of Babbage, On the Economy of Machinery and Manufacturers, described the tools and machinery used in English factories. It discussed the economic principles of manufacturing, and analysed the operations and the skills used and suggested improved practices. Babbage considered in the benefits of division of labour and was a supporter of profit sharing. He developed a method of observing manufacturing that is the same approach utilized today by operations analysts and consultants analysing manufacturing operations. Other theorists who contributed in quantitative approach of early management thought were Robert Owen, Andrew Ure and Charles Dupin, Henry Robinson Towne.

Another theorist Baptiste, explained the significance of planning. But management is appeared as a different discipline in the second half of 19th century with the beginning of Joint Stock Company. This type of enterprises separated management of business from their ownership and gave emphasis to labour incompetence and improper systems of wage payments. To resolve such problem, people began to identify management as a separate field of study. During 20th century, Management has become more scientific discipline with standard principles and practices.

The Classical Approach:

The classical approach is the earliest thought of management .The classical approach was associated with the ways to manage work and organizations more efficiently. The classical approach are categorized into three groups namely, scientific management, administrative management, and bureaucratic management.

  1. Scientific Management: Scientific management which is also referred to Taylorism or the Taylor system is a theory of management that evaluates and synthesizes workflows, with the aim of improving labour productivity. In other words, conventional rules of thumb are substituted by accurate procedures developed after careful study of an individual at work. Universal approaches of Scientific management are developed for Efficiency of workers, Standardization of job roles/activities and Discipline – the role of managers and the business hierarchy. The scientific management theory had an enormous impact on the business industry at the beginning of the 20th century. Many big and victorious organizations, such as McDonalds hamburger chain or call centres, utilised a modern version of scientific management. Among famous theorist, Taylor’s contribution in the area of scientific management is invaluable. The components of scientific management are determination of the task, planning, proper selection and training of workers improvement in methods, modification of organization and mental revolution such as ‘job specialization’. As a result, it became more concerned with physical things than towards the people even though increased the output. Scientific Management focuses on worker and machine relationships. Organizational productivity can be increased by enhancing the competence of production processes. The competence viewpoint is concerned with creating job that economizes on time, human energy, and other productive resources. Jobs are planned so that each worker has a specified, well controlled task that can be performed as instructed. Principle of scientific management are replacement of old rule of thumb method, scientific selecting and training, labour management co-operation, maximizes output, equal division of responsibility. There are four scientific management systems such as develop a science for each element of the job to replace old rule of thumb method, Scientifically select employees and then train them to do the job as described in step, supervise employees to make sure they follow the prescribed method for performing their job and continue to plan the work but use worker to actually get the work done.

Taylor’s Scientific Management: 

Academic records indicated that F.W. Taylor and his colleagues developed the first systematic study in management. He initiated an innovative movement in 1910 which is identified as scientific management. Frederick Taylor is known as the father of Scientific Management and he published Principals of Scientific Management in which he proposed work methods designed to boost worker productivity. Taylor asserted that to succeed in these principles, it is necessary to transform completely the part of management and labour. His philosophy was based on some basic principles. The first principle is separation of planning and doing. In the pre-Taylor era, an employee himself used to choose or plan how he had to do his work and what machines and equipment would be necessary to perform the work. But Taylor divided the two functions of planning and doing, he stressed that planning should be delegated to specialists. Second principle of Taylor’s management approach is functional foremanship. Taylor launched functional foremanship for administration and direction. Under eight-boss-scheme of functional foremanship, four persons like route clerk, instruction card clerk, time and cost clerk and disciplinarian are associated with planning function, and the remaining four speed boss, inspector, maintenance foreman, and gang boss are concerned with operating function. Third principle is elements of scientific management. The main constituents of scientific management are work study involving work important and work measurement using method and time study, standardization of tools and equipment for workmen and improving working conditions, scientific Selection, placement and training of workers by a centralized personal department. Fourth principle is bilateral mental revolution. Scientific management involves a complete mental change of employees towards their work, toward their fellow-men and toward their employers. Mental revolution is also necessary on the part of management’s side, the foreman, the superintendent, the owners and board of directions. Fifth principle is financial incentives. In order to encourage workers to give better performance, Taylor introduced differential piece-rate system. According to Taylor, the wage should be based on individual performance and on the position which a worker occupies. Economy is other principle of management devised by Taylor. According to him, maximum output is achieved through division of labour and specialization. Scientific Management concentrates on technical aspects as well as on profit and economy. For this purpose, techniques of cost estimates and control should be adopted. Taylor concluded that science, not rule of thumb, Harmony, not discord, Cooperation and not individualism, Maximum output, in place of restricted output.

(ii) Administrative Management: Administrative Management emphasizes the manager and the functions of management. The main objective of Administrative management is to describe the management process and philosophy of management. In contradiction of scientific management, which deals mainly with jobs and work at individual level of scrutiny, administrative management gives a more universal theory of management.

Henry Fayol’s Administrative Management (1841–1925):

 Henri fayol is known as the father of modern Management. He was popular industrialist and victorious manager. Fayol considered that good management practice falls into certain patterns that can be recognized and analysed. From this basic perspective, he devised a blueprint for a consistent policy of managers one that retains much of its force to this day. Fayol provided a broad analytical framework of the process of management. He used the word Administration for Management. Foyal categorized activities of business enterprise into six groups such as Technical, Financial, Accounting, Security, and Administrative or Managerial. He stressed constantly that these managerial functions are the same at every level of an organization and is common to all firms. He wrote General and Industrial Management. His five function of managers were plan, organize, command, co-ordinate, and control. Principal of administrative management: 1.Division of labour, 2.Authority & responsibility, 3.Discipline, 4.Unity of command, 5.Unity of direction, 6.Subordination of individual interests to general interest, 7.Remuneration of personnel, 8.Centralization, 9.Scalar chain, 10.Order, 11.Equity, 12.Stability of tenure, 13.Initiative and14 .Esprit de corps (union of strength). These 14 principles of management serve as general guidelines to the management process and management practice.

His principles of management are described below.

Division of work: This is the principle of specialization which is detailed by economists as an important to efficiency in the utilization of labour. Fayol goes beyond shop labour to apply the principle to all kinds of work, managerial as well as technical.

Authority and responsibility: In this principle, Fayol discovers authority and responsibility to be linked with the letter, the consequence of the former and arising from the latter.

Discipline: This discipline denotes “respect for agreements which are directed at achieving obedience, application, energy and the outward marks of respect”. Fayol declares that discipline requires good superiors at all levels, clear and fair agreement, and judicious application of penalties.

Unity of command: This is the principle that an employee should receive orders from one superior only.

Unity of direction: Fayol asserted that unity of direction is the principle that each group of activities having the same objective must have one head and one plan. As distinguished from the principle of unity of command, Fayol observes unity of direction as related to the functioning of personnel.

Subordination of individual interest to general interest: In any group the interest of the group should supersede that of the individual. When these are found to differ, it is the function of management to reconcile them.

Remuneration of personnel: Fayol recognizes that salary and methods of payment should be fair and give the utmost satisfaction to worker and boss.

Centralization: Fayol principle of centralization refers to the extent to which authority is concentrated or dispersed in an enterprise. Individual circumstances will determine the degree of centralization that will give the best overall yield.

Scalar chain: Fayol believe of the scalar chair as a line of authority, a ‘Chain of Superiors” from the highest to the lowest ranks and held that, while it is an error of subordinate to depart ‘needlessly’ from lines of authority, the chain should be short-circuited when scrupulous following of it would be detrimental.

Order: Breaking this principle into ‘Material order’ and ‘Social Order’, Fayol thinks of it as the simple edge of “a place for everything (everyone), and everything (everyone) in its (his) place”. This is basically a principle of organization in the arrangement of things and persons.

Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel by a combination of kindliness and justice in managers dealing with subordinates.

Stability of tenure of personnel: Finding that such instability is both the cause and effect of bad management, Fayol indicated the dangers and costs of unnecessary turnover.

Initiative: Initiative is envisaged as the thinking out and execution of a plan. Since it is one of the “Keenest satisfactions for an intelligent man to experience”, Fayol exhorts managers to “Sacrifice Personal Vanity” in order to permit subordinates to exercise it.

Esprit de corps: This is the principle that ‘union is strength’ an extension of the principle of unity of command. Fayol here emphasizes the need for teamwork and the importance of communication in obtaining it.

 Bureaucratic Management:

Bureaucratic management denotes to the perfect type of organization. Principal of Bureaucracy include clearly defined and specialized functions, use of legal authority, hierarchical form, written rules and procedures, technically trained bureaucrats, appointment to positions based on technical expertise, promotions based on competence and clearly defined career paths. The German sociologist, Max Weber recognized as father of modern Sociology who appraised bureaucracy as the most logical and structure for big organization. With his observation in business world, Weber summarized that earlier business firms were unproductively managed, with decisions based on personal relationships and faithfulness. He proposed that a form of organization, called a bureaucracy, characterized by division of labour, hierarchy, formalized rules, impersonality, and the selection and promotion of employees based on ability, would lead to more well-organized management. Weber also argued that authoritative position of managers in an organization should be based not on tradition or personality but on the position held by managers in the organizational hierarchy.

Max Weber (1864-1920) devised a theory of bureaucratic management that emphasized the need for a firmly defined hierarchy governed by clearly defined regulations and lines of authority. He considered the perfect organization to be a bureaucracy whose activities and objectives were reasonably thought out and whose divisions of labour were clearly defined. Weber also believed that technical capability should be emphasized and that performance evaluations should be made completely on the basis of merit. Presently, it is considered that bureaucracies are huge, impersonal organizations that put impersonal competence ahead of human needs. Like the scientific management theorists, Weber sought to advance the performance of socially important organizations by making their operations predictable and productive. Although we now value innovation and flexibility as much as efficiency and predictability, Weber’s model of bureaucratic management evidently advanced the development of vast corporations such as Ford. Bureaucracy was a particular pattern of relationships for which Weber saw great promise. Although bureaucracy has been successful for many companies, in the competitive global market of the 1990s organizations such as General Electric and Xerox have adopted bureaucracy, throwing away the organization chart and replacing it with ever-changing constellations of teams, projects, and alliances with the goal of unleashing employee creativeness.

Chester I. Barnard: Chester Barnard (1886-1961) also devised components to classical theory such as Follett that would be further developed in later schools. Barnard, who became president of New Jersey Bell in 1927, used his work experience and his wide reading in sociology and philosophy to devise theories about organizations. Barnard stated that people join in formal organizations to accomplish such goals that cannot be fulfilled by working alone. But as they follow the organization’s goals, they must also gratify their individual needs. Barnard came to conclusion that an enterprise can operate efficiently and survive only when the organization’s goals are kept in balance with the aims and needs of the individuals working for it. Barnard denotes a principle by which people can work in stable and mutually constructive relationships over time. Barnard believed that individual and organizations purposes must be in balance if managers understood an employee’s zone of indifference that is, what the employee would do without questioning the manager’s authority. Apparently, the more activities that fell within an employee’s zone of indifference the smoother and more cooperative an organization would be. Barnard also believed that managers had a duty to inspire a sense of moral purpose in their employees. To do this, they would have to learn to think beyond their narrow self-interest and make an ethical promise to society. Although Barnard emphasized the work of administrative managers, he also focused substantial attention on the role of the individual employee as the basic strategic factor in organization.

Modern Management Approaches

Behavioural Approach: Numerous theorists developed the behavioural approach of management thought as they observed weaknesses in the assumptions of the classical approach. The classical approach emphasized efficiency, process, and principles. Some management scholars considered that this thought ignored important aspects of organizational life, particularly as it related to human behaviour. Therefore the behavioural approach concentrated on the understanding of the factors that affect human behaviour at work. This is an improved and more matured description of human relations approach. The various theorists who have great contribution in developing principles of management in this are Douglas Mc Gregor, Abraham Maslow, Curt Levin, Mary Porker Follelt, Rensis Likert. Behavioural Scientists hold the classical approach as highly mechanistic, which finds to degrade the human spirit. They choose more flexible organization structures and jobs built around the capabilities and talent of average employees. The behavioural approach has based the numerous principles.

Decision-making is done in a sub-optimal manner, because of practical and situational constraints on human rationality of decision-making. The behaviourists attach great weight age on participative and group decision-making.

Behavioural Scientists promote self-direction and control instead of imposed control.

Behavioural Scientists believe the organization as a group of individuals with certain goals.

Behavioural scientists perceive that the democratic-participative styles of leadership are enviable, the autocratic, task oriented styles may also be appropriate in certain situation.

Behavioural scientists propose that different people react differently to the same situation. No two people are exactly similar and manager should tailor his attempts to influence his people according to their needs.

Behavioural scientists identify that organizational variance and change are predictable.

Approach of Mary parker follett: Mary Parker Follett (1868-1933) developed classic structure of the classical school. However, she initiated many new elements particularly in the area of human relations and organizational structure. In this, she introduced trends that would be further developed by the talented behavioural and management science schools. Follett was persuaded that no one could become a whole person except as a member of a group. Human beings grew through their relationships with others in organizations. In fact, she explained management as “the art of getting things done through people.” She took for granted Taylor’s statement that labour and management shared a common purpose as members of the same organization, but she considered that the artificial difference between managers and subordinates is vague in this natural partnership. She believed in the power of the group, where individuals could combine their diverse talents into something bigger. Moreover, Follett’s “holistic” model of control took into account not just individuals and groups, but the effects of such environmental factors as politics, economics, and biology. Follett’s model was significant precursor of the idea that management meant more than just what was happening inside a particular organization.

Maslow’s theory of self-actualisation: His theory is recognized as Hierarchy of Needs. It is illustrated in a pyramid and elucidates the different levels and importance of human’s psychological and physical needs. It can be used in business by managers to better understand employee motivation. The general needs in Maslow’s hierarchy include physiological needs (food and clothing), safety needs (job security), social needs (friendship), self-esteem, and self-fulfilment or actualisation. Maslow’s Hierarchy of Needs relates to organizational theory and behaviour because it explores a worker’s motivation. Some people are prepared to work just for money, because of friends, or the fact that they are respected by others and recognized for their good work. The final level of psychological development that can be achieved when all basic and mental needs are fulfilled and the “actualization” of the full personal potential takes place. In the organizational situation, if an employee’s lower need on the hierarchy is not met, then the higher ones are ignored. For example, if employees are worried that they will be fired, and have no job security, they will be concerned about friendship and respect.

Douglas McGregor theory of management suggested that there is need to motivate employees through authoritative direction and employee self-control and he introduced the concept of Theory X and Y. Theory X is a management theory focused more on classical management theory and assumes that workforce need a high amount of supervision because they are inherently lazy. It presupposes that managers need to motivate through coercion and punishment. Theory Y is a management theory that assumes employees are determined, self-motivated, exercise self-control, and generally enjoy mental and physical work duties. Theory Y is in line with behavioural management theories. Theory X and Theory Y relates to Maslow’s hierarchy of needs in how human behaviour and motivation is the main priority in the workplace in order to maximize output. Theory X: The theory that employees are inherently lazy and irresponsible and will tend to avoid works unless closely supervised and given incentives, contrasted with Theory Y. Theory Y: The theory that employees are capable of being ambitious and self-motivated under suitable conditions, contrasted with Theory X.

An influential theorist in behaviour approach of management thought was Likert. His principles based on four System such as supportive relationships between organizational members, multiple overlapping structures, with groups consisting of superiors and their subordinates, group problem solving by consensus within groups and overlapping memberships between groups by members who serve as linking pins.

Human Relations Approach: The human rationalists which is also denotes to neo-classicists, focused as human aspect of business. These theorists emphasize that organization is a social system and the human factor is the most vital element within it.

There are numerous basic principles of the human relations approach that are mentioned below:

Decentralization: The concept of hierarchy employed by classical management theorists is replaced with the idea that individual workers and functional areas (i.e., departments) should be given greater autonomy and decision-making power. This needs greater emphasis on lateral communication so that coordination of efforts and resources can occur. This communication occurs via informal communication channels rather than the formal, hierarchical ones.

Participatory Decision-Making: Decision-making is participatory in the sense that those making decisions on a day-to-day basis include line workers not normally considered to be “management.” The greater sovereignty afforded individual employees and the subsequent reduction in “height” and increase in span of control of the organizational structure requires that they have the knowledge and ability to make their own decisions and the communication skill to coordinate their efforts with others without a nearby supervisor.

Concern for Developing Self-Motivated Employees: The importance on a system of decentralized and autonomous decision-making by members of the organization necessitates that those members be extremely “self-motivated”. Goal of managers in such an organization is to design and implement organizational structures that reward such self-motivation and autonomy. Another is to negotiate working relationships with subordinates that foster effective communication in both directions.

Therefore, the human relations approach implies modifications in the structure of the organization itself, in the nature of work, and in the association between manager and assistant. Each of these changes depends upon assumptions about the individual, the organization, and communication, just like any other theory of organizations. Elton Mayo and others conducted experiments that was known as Hawthorne experiments and explored informal groupings, informal relationships, patterns of communication, and patterns of internal leadership. Elton Mayo is usually popular as father of Human Relations School. The human relationists, advocates the several factors after conducting Hawthorne experiments which are mentioned below.

Social system: The organization in general is a social system consists of numerous interacting parts. The social system established individual roles and establishes norms that may differ from those of formal organization.

Social environment: The social climate of the job affects the workers and is also affected.

Informal organization: The informal organization does also exist within the frame work of formal organization and it affects and is affected by the formal organization.

Group dynamics: At the place of work, the workers often do not act or react as individuals but as members of group. The group plays an important role in determining the attitudes and performance of individual workers.

Informal leader: There is an appearance of informal leadership as against formal leadership and the informal leader sets and enforces group norms.

Non-economic reward: Money is an encouraging element but not the only motivator of human behaviour. Man is diversely motivated and socio psychological factors act as important motivators.

Behavioural Science: Behavioural science and the study of organizational behaviour emanated during 1950s and1960s. The behavioural science approach was a natural development of the human relations movement. It concentrated on applying conceptual and analytical tools to the problem of understanding and foresees behaviour in the place of work. The behavioural science approach has contributed to the study of management through its elements of personality, attitudes, values, motivation, group behaviour, leadership, communication, and conflict, among other issues.

Contingency Approach: This approach of management thought focuses on management principles and concepts that have no general and universal application under all conditions. Joan Woodward in the 1950s has contributed to develop this approach in management. Contingency school states that management is situational and the study of management recognize the important variables in the situation. It distinguishes that all the subsystem of the environment are interconnected and interrelated. By studying their interrelationship, the management can find resolution to specific situation. Theorists stated that there is not effective way of doing things under all business conditions. Methods and techniques which are extremely effective in one situation may not give the same results in another situation. This approach proposes that the role of managers is to recognize best technique in particular situation to accomplish business goals. Managers have to develop situational understanding and practical selectivity. Contingency visions are applicable in developing organizational structure, in deciding degree of decentralization, in motivation and leadership approach, in establishing communication and control systems, in managing conflicts and in employee development and training. The contingency approach is associated with applying management principles and processes as dictated by the sole characteristics of each situation. It depends on various situational factors, such as the external environment, technology, organizational characteristics, characteristics of the manager, and characteristics of the subordinates. Contingency theorists often implicitly or explicitly disapprove the classical approach as it focuses on the universality of management principles.

The Quantitative Approach Of Management Thought

The quantitative approach aimed at enhancing the process of decision making through the use of quantitative techniques. It is evolved from the principles of scientific management.

Management Science (Operations Research): Management science which is also known as operations research utilized mathematical and statistical approaches to resolve management issues. It was developed during World War II as strategists attempted to apply scientific knowledge and methods to the intricate troubles of war. Industry started to apply management science after the war. The introduction of the computer technology made many management science tools and concepts more practical for industry

Production and Operations Management: This approach emphasizes the operation and control of the production process that changes resources into manufactures goods and services. This approach is emerged from scientific management but became a specific area of management study after World War II. It uses many of the devices of management science. Operations management underlines productivity and quality of both manufacturing and service organizations. W. Edwards Deming exercised a great influence in developing contemporary ideas to improve productivity and quality. Major areas of study within operations management include capacity planning, facilities location, facilities layout, materials requirement planning, scheduling, purchasing and inventory control, quality control, computer integrated manufacturing, just-in-time inventory systems, and flexible manufacturing systems.

Systems Approach Of Management Thought

The systems approach deals with the thoroughly understanding the organization as an open system that converts inputs into outputs. The systems approach has great impact on management thought in the 1960s. During this period, thinking about managing practices allowed managers to relate different specialties and parts of the company to one another, as well as to external environmental factors. The system approach focuses on the organization as a whole, its communication with the environment, and its need to achieve equilibrium.

System approach

To summarize, there are important theories of Management and each theory has distinct role to knowledge of what managers do. Management is an interdisciplinary and global field that has been developed in parts over the years. Numerous approaches to management theory developed that include the universal process approach, the operational approach, the behavioural approach, the systems approach, the contingency approach and others. F W Taylor, Adam Smith, Henry Fayol, Elton Mayo and others have contributed to the development of Management concept. The classical management approach had three major categories that include scientific management, administrative theory and bureaucratic management. Scientific management highlighted the scientific study of work methods to improve worker efficiency. Bureaucratic management dealt with the characteristics of an perfect organization which operates on a rational basis. Administrative theory explored principles that could be used by managers to synchronise the internal activities of organizations. The behavioral approach emerged mainly as an outcome of the Hawthorne studies. Mary Parker Follet, Elton Mayo and his associates, Abraham Maslow, Douglas McGregor and Chris Argyris were main players of this school.

Contemporary perspectiive on Management:

a)Workforce diversity: It refers to a workforce that is heterogeneous in terms of gender, race, ethnicity, age, and other characteristics that reflect differences. Accommodating diverse groups of people by addressing different lifestyles, family needs, and work styles is a major challenge for today’s managers.

b)Knowledge Management and Learning Organizations: Change is occurring at an unprecedented rate. To be successful, today’s organization must become a learning organization—one that has developed the capacity to continuously learn, adapt, and change. Knowledge management involves cultivating a learning culture where organizational members systematically gather knowledge and share it with others in the organization so as to achieve better performance.

c)Outsourcing:In business, outsourcing involves the contracting out of a business process to another party (compare business process outsourcing). The concept “outsourcing” came from American Glossary ‘outside resourcing’ and it dates back to at least 1981. Outsourcing sometimes involves transferring employees and assets from one firm to another, but not always.Outsourcing is also the practice of handing over control of public services to for-profit corporations.

d)Time management: It is the act or process of planning and exercising conscious control over the amount of time spent on specific activities, especially to increase effectiveness,efficiency or productivity.It is a meta-activity with the goal to maximize the overall benefit of a set of other activities within the boundary condition of a limited amount of time.Time management may be aided by a range of skills, tools, and techniques used to manage time when accomplishing specific tasks, projects, and goals complying with a due date. Initially, time management referred to just business or work activities, but eventually the term broadened to include personal activities as well. A time management system is a designed combination of processes, tools, techniques, and methods. Time management is usually a necessity in any project development as it determines the project completion time and scope.

e)Stress management: It refers to the wide spectrum of techniques and psychotherapies aimed at controlling a person’s levels of stress, especially chronic stress, usually for the purpose of improving everyday functioning.In this context, the term ‘stress’ refers only to a stress with significant negative consequences, or distress in the terminology advocated by Hans Selye, rather than what he callseustress, a stress whose consequences are helpful or otherwise positive.Stress produces numerous physical and mental symptoms which vary according to each individual’s situational factors. These can include physical health decline as well asdepression. The process of stress management is named as one of the keys to a happy and successful life in modern society.Although life provides numerous demands that can prove difficult to handle, stress management provides a number of ways to manage anxiety and maintain overall well-being.

f)Conflict management: It is the process of limiting the negative aspects of conflict while increasing the positive aspects of conflict. The aim of conflict management is to enhance learning and group outcomes, including effectiveness or performance in organizational setting.

g)Green Management: It is a comprehensive term which focuses on environmental conservation for suatainable development of business activities. Many disasters such as global warming,deforestation,ozone layer depletion,increasing pressure from ethical consumers,population growth ,etc brought a new perception among individuals, groups and organizations to save natural environment.

h)Participative management: It is the process of involving subordinates in decision m aking process with their immediate superiors.It empowers the subordinates who know the actual problems and can contribute in making better decisions.



Planning,Nature of planning,Types of planning,Process of planning,Barriers of planning


Planning is the primary function of management. It is the important process of deciding business objectives and charting out the method to accomplish these goals. This includes decision of what type of activity is to be done, where to be done and how the results to be analyzed.

Theoretical review:

Many theorists thoroughly describe the planning process of management function. Koontz and O’Donnel stated that “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap from where we are and to where we want to go. It is an essence of the exercise of foresight. Another management theorist, M.S. Hardly explained “Planning is deciding in advance what is to be done”. It involves the selection of objectives, policies, procedures and programs from among alternatives. Heying and Massie defined “It can be said that planning is first function of the manager in which he has to decide in advance action that is to be done.” It is an intellectual process in which managers must have to use their imaginative mind. Planning is an attempt to foresee the future in order to get high performance. Plans have numerous benefits. Planning enables managers to think ahead. It leads to development of performance standards. Plan forces management to articulate clear objectives. Planning makes organization to get ready for unexpected developments. Planning includes various features such as Planning is mainly concerned with looking into future. In planning process, management team has to select suitable course of action under particular business environment. It means there are several ways to achieve objectives. Planning is done at all levels of the organization because managers at all levels are concerned with determination of future course of action. Planning is persistent and constant managerial function.

Nature of planning:

Planning is a rational approach, open system, flexibility and pervasiveness. It clarifies where one stands, where one wants to go in future and how accomplishes goal. Rationalist denotes a manager chooses suitable way to achieve the stated objectives and rational approach fills the gap between the current status and future status. Planning is an open System approach in which firm is an open system because it accepts inputs from the environment and exports output to environment. Planning accepts an open system approach. Open system approach designates that the gap between current and desired status and the action required overpassing this gap which is influenced by array of environmental economic, legal, political, technological, socio-cultural and competitive factors. These factors are vibrant and change with time. Therefore managers have to take into account the dynamic features of environment while using open system approach. Another aspect of planning is the flexibility of Planning: it means plan has ability to change direction to take on to changing situations without excessive cost. Many scholars said that the plans must be stretchy to become accustomed to changes in technology, market, finance, personal and organizational factors. However flexibility is possible only within limits, because it involves extra cost. Another feature is pervasiveness of Planning. Planning is persistent and it broadens throughout the organization. Planning is the primary management function and every manager at different level has to do planning within his particular area of activities. Top management is responsible for general objectives and action of the organization. Therefore it must plan what these objectives should be and how to achieve them. Similarly a departmental head has to develop the objectives of his department within the organizational objectives and also the methods to accomplish them. Planning

Significance of Planning Process:

Planning has core value in all organization whether business or non-business, private or public, small or large. The organization which has mindset for future is likely to succeed as compared to one which fails to do so. Planning establishes the objectives and all other functions are performed to achieve the objectives set by the planning process. The company constantly interacts with the external dynamic environment where there is high risk and ambiguity. In this changing dynamic environment where social and economic conditions change quickly, planning assists the manager to adjust with and prepare for altering environment. Through rational and fact based process for making decisions, manager can lessen market risk and uncertainty. Planning focuses on organizational objectives and course of action to accomplish targeted goal. It facilitates managers to apply and organize all resources of the organization successfully in achieving the objectives. The whole organization is required to embrace identical goals and work together in achieving them. Planning establishes the goal and develops plan to attain them. These goals and plans become the standards against which the actual performance can be measured. Control involves the dimension of actual performance, comparing it with the standards and taking remedial action if there is divergence. Control makes certain that the activity confirms to plans. Hence control can be exercised if there are plans. Planning also enhances organizational effectiveness.

Types of Planning

Planning can be categorized as coverage of activities, importance of contents in planning, approach adopted in planning process, time dimension and degree of formalization in planning process. Types of Planning The planning activities at the corporate level which include activities of whole organizational are termed as corporate planning. Corporate planning is done to chase long term objectives as a whole and to create plans to accomplish these objectives bearing in mind the possible changes in dynamic environment. Strategic planning sets future directions of the organization in which it wants to proceed in future such as diversification of business into new lines, planned growth rate in sales. It has three major characteristics such as it embraces all activities of organization, has long time horizon and successful implementation. Operational planning involves to decide effectual use of resources already allocated to achieve the organizational objectives such as adjustment of production within available capacity, increasing the efficiency of the operating activity by analyzing past performance. The long term planning is strategic in nature and involves more than one year period and can extend to 15 to 20 years. Proactive planning develops appropriate courses of action in expectation of likely changes of environment. Managers who adopt proactive changes do not wait for environment to change, but take action in advance of environmental changes. To get success, it is necessary to continuously review the environment conditions. In reactive planning, response comes after environmental changes occur. Informal planning is done by small organizations. This planning process is based on manager’s experience, intuitions instead of methodical evaluation of environmental changes. This planning process is part of manager’s normal activity. Mainly two types of plans are formulated in management that includes standing plans and single use plans. Standing plans give guidelines for advance course of action and are used over a period of time. Standing plans are designed for situations that persist often enough to justify a standardize approach. Single use plans are intended for specific end when that end is reached, the plan is dissolved or devised again for next end.

Major Steps in Planning Process

The planning process is different from one plan to another and varies from company to company. Common steps in planning are mentioned below:

  1. Establishing goals or objectives: The initial phase of planning process is to establish the business objectives. These organizational goals are made by senior level managers after reviewing numerous objectives. These objectives are based on the number of factors like mission of the organization, abilities of the organization. Once management team establishes the organizational goals, the section wise or department wise objectives are planned at the lower level. Defining the objectives of every department is important and accordingly precise direction is given to the departments.
  2. Establishing planning premises: The next step in planning which involves establishing planning premises is the conditions under which planning activities will be done. Planning premises are planning statements that are the expected environmental factors, pertinent facts and information relating to the future such as general economic conditions, population trends, and competitive behavior. The planning premises can be Internal and External premises, Tangible and Intangible premises, Controllable and non-controllable premises.
  3. Deciding the planning period: After determining the long term objectives and planning premises, another phase is to choose the period of the plan. Some plans are made for a year and other plans are devised for longer period. There are many factors which influence the choice of a period. Lead time in development and commercialization of a new product. Big companies like an aircraft building company plans for a period of five to ten years where as a small manufacturer can commercialize his idea in a year. Another factor is time needed for recovery of capital investment or the payback period. The payback period also influence the planning period. Length of commitment already made also impact the choice of time span in planning. Researchers emphasized that the plan period should be made in such a way that it can fulfil the commitments already made. Identification of alternatives is important factor in determining time frame in planning. A particular objective can be achieved through various actions. Evaluation and selection of alternative is the next step which assess the alternatives with the support of the premises and goals and to choose the best course or courses of action.
  4. Developing derivative/supportive plans: After selection process of plan done, various plans are derived so as to support the main plan. These derivative plans are devised from the main plan.
  5. Measuring and controlling the process: It is advised that plans once established should not be executed unless its progress is monitored. Managers must have continually monitor progress of their plans so that remedial action can be taken to make fruitful plan.

Obstacles in planning Process

It is observed that many executives involve in implementing plans instead of spending time to develop effectively. It is founds that there are many barriers that inhibit planning process. In order for plans to be effective and to get the desired results, managers must recognize any potential barriers and make efforts to reduce them. Common barriers that hinder successful planning are as under: The first barrier is incapability to plan or it can be said as inadequate planning. Managers do not have inherent quality to devise effective plan. Some managers are not successful planners because they do not have ability, education to develop planning for particular situation. Such incapability creates hindrance in planning process. Another barrier is lack of commitment to the planning process. Planning process require hard work. Another cause for lack of commitment can be fear of failure. As a result, managers may choose to do little or nothing to help in the planning process. Inferior information also creates hindrance in planning process. It is observed that poor information or of inadequate quantity can be major barriers to planning. Even though managers are proficient in planning but if they do not have latest information their plans will possibly fail. Another barrier to planning process is failure to consider the long‐term effects of a plan because more emphasis is given to short term issues. This may result in preparing for the future. If managers excessively depend on the organization’s planning department, their plans may not be successful. Many companies have a planning department or a planning and development team. These departments conduct studies, do research, build models, and project probable results, but they do not implement plans. In order to make effective plan, keep the planning process simple. It is advised to discuss the objectives of organization with top level team before preparing for plans and use participative approach in developing plan. It can be concluded that management planning is the process to evaluate an organization’s goals and create a realistic, detailed plan of action for meeting those goals. Planning is the continuous process of systematically making plans with the knowledge of the future, organizing the activities needed to carry out the plans and monitoring the results of the plans through comments. Planers must communicate plan to other staff members as why specific action is taken.

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Scientific Management | Principles of Management

download (14)Scientific Management:

Scientific Management, also called Taylorism, is a theory of management that analyzes and synthesizes workflows. Its main objective is improving economic efficiency, especially labor productivity. It was one of the earliest attempts to apply science to the engineering of processes and to management.

Frederick Winslow Taylor (1856-1915)

Frederick was an American inventor and engineer that applied his engineering and scientific knowledge to management and developed a theory called scientific management theory. His two most important books on his theory are Shop Management (1903) and The Principles of Scientific Management(1911). Frederick Taylor’s scientific management theory can be seen in nearly all modern manufacturing firms and many other types of businesses. His imprint can be found in production planning, production control, process design, quality control, cost accounting, and even ergonomics. If you understand the principles of scientific management, you will be able to understand how manufacturers produce their goods and manage their employees. You will also understand the importance of quantitative analysis, or the analysis of data and numbers to improve production effectiveness and efficiency.

Principles of Scientific Management Theory

In broad terms, scientific management theory is the application of industrial engineering principles to create a system where waste is avoided, the process and method of production is improved, and goods are fairly distributed. These improvements serve the interests of employers, employees, and society in general. Taylor’s theory can be broken down into four general principles for management:

  1. Actively gathering, analyzing, and converting information to laws, rules, or even mathematical formulas for completing tasks.
  2. Utilizing a scientific approach in the selection and training of workers.
  3. Bringing together the science and the worker so that the workers apply the scientifically developed techniques for the task.
  4. Applying the work equally between workers and managers where management applies scientific techniques to planning and the workers perform the tasks pursuant to the plans.

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Managerial levels | Principles Of Management

Levels of Management,Managerial levels,Managerial Hierarchy:

rp_Levels-of-Management-Top-Middle-Lower.jpgMany managers work in an organisation. However, these managers do not work at the same level. They work and operate at different positions. Hierarchy of these managerial positions is called Levels of Management.

1)Top Level of Management

The Top Level Management consists of the Board of Directors (BOD) and the Chief Executive Officer (CEO). The Chief Executive Officer is also called General Manager (GM) or Managing Director (MD) or President. The Board of Directors are the representatives of the Shareholders, i.e. they are selected by the Shareholders of the company. Similarly, the Chief Executive Officer is selected by the Board of Directors of an organisation. The main role of the top level management is summarized as follows :-

  1. The top level management determines the objectives, policies and plans of the organisation.
  2. They mobilises (assemble and bring together) available resources.
  3. The top level management does mostly the work of thinking, planning and deciding. Therefore, they are also called as the Administrators and the Brain of the organisation.
  4. They spend more time in planning and organising.
  5. They prepare long-term plans of the organisation which are generally made for 5 to 20 years.
  6. The top level management has maximum authority and responsibility. They are the top or final authority in the organisation. They are directly responsible to the Shareholders, Government and the General Public. The success or failure of the organisation largely depends on their efficiency and decision making.
  7. They require more conceptual skills and less technical Skills.

2)Middle Level of Management

The Middle Level Management consists of the Departmental Heads (HOD), Branch Managers, and the Junior Executives. The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch Managers are the head of a branch or local unit. The Junior Executives are Assistant Finance Managers, Assistant Purchase Managers, etc. The Middle level Management is selected by the Top Level Management. The middle level management emphasize more on following tasks :-

  1. Middle level management gives recommendations (advice) to the top level management.
  2. It executes (implements) the policies and plans which are made by the top level management.
  3. It co-ordinate the activities of all the departments.
  4. They also have to communicate with the top level Management and the lower level management.
  5. They spend more time in co-ordinating and communicating.
  6. They prepare short-term plans of their departments which are generally made for 1 to 5 years.
  7. The middle Level Management has limited authority and responsibility. They are intermediary between top and lower management. They are directly responsible to the chief executive officer and board of directors.
  8. Require more managerial and technical skills and less conceptual skills.

3)Lower Level of Management 

The lower level management consists of the Foremen and the Supervisors. They are selected by the middle level management. It is also called Operative / Supervisory level or First Line of Management. The lower level management performs following activities :-

  1. Lower level management directs the workers / employees.
  2. They develops morale in the workers.
  3. It maintains a link between workers and the middle level management.
  4. The lower level management informs the workers about the decisions which are taken by the management. They also inform the management about the performance, difficulties, feelings, demands, etc., of the workers.
  5. They spend more time in directing and controlling.
  6. The lower level managers make daily, weekly and monthly plans.
  7. They have limited authority but important responsibility of getting the work done from the workers. They regularly report and are directly responsible to the middle level management.
  8. Along with the experience and basic management skills, they also require more technical and communication skills.


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