Fundamentals of Management Fundamentals of Management

Management Principles

1Fundamentals of Management

Concept of managementConcept of management

Basic elements of managementBasic elements of management

Nature of the managerial taskNature of the managerial task

Modern Approaches to ManagementModern Approaches to Management

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Definition of ManagementDefinition of Management

ManagementManagement in business and human in business and human organization activity is simply the act of organization activity is simply the act of getting people together to accomplish getting people together to accomplish desired goalsdesired goals

According to the management guru According to the management guru Peter Drucker, “Peter Drucker, “Organization and Organization and coordination of the activities of an coordination of the activities of an enterprise in accordance with certain enterprise in accordance with certain policies and in achievement of clearly policies and in achievement of clearly defined objectives”defined objectives”

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WHAT IS MANAGEMENT? WHAT IS MANAGEMENT?

An art more than a scienceAn art more than a scienceDeductive Method: General to ParticularDeductive Method: General to ParticularInductive Method: Particular to GeneralInductive Method: Particular to General

Inherently social in natureInherently social in nature

Getting things done through othersGetting things done through others

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GOALS OF BUSINESS OR GOALS OF BUSINESS OR MANAGEMENTMANAGEMENT

Business/economics traditionally defined as Business/economics traditionally defined as based on a sole primary motive of self-based on a sole primary motive of self-interestinterest

Lead to thinking about profit-maximization Lead to thinking about profit-maximization as the major goal of enterpriseas the major goal of enterprise

Failed to account for the social nature of Failed to account for the social nature of business/economics -- inaccurate based on business/economics -- inaccurate based on new sciencenew science

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Is Administration and management Is Administration and management same?same?

Administration refers to the Administration refers to the activities of the higher level of the activities of the higher level of the management group who identifies management group who identifies the major aims and policies. the major aims and policies.

Administration is a part of Administration is a part of management management

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FOUR FUNCTIONSFOUR FUNCTIONS

First stated by Henri Fayol(1841-1925)-First stated by Henri Fayol(1841-1925)-French CEOFrench CEO

Now stated as Now stated as

1. Planning1. Planning2. Organizing2. Organizing3. Directing3. Directing4. Controlling4. Controlling

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PLANNING & ORGANIZINGPLANNING & ORGANIZING

Planning -- Setting firms goals plus Planning -- Setting firms goals plus the way to accomplish themthe way to accomplish them

Organizing -- deciding structure of Organizing -- deciding structure of decision-makingdecision-makingWhat will be done, by whom, for whomWhat will be done, by whom, for whom

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DIRECTING & CONTROLLINGDIRECTING & CONTROLLING

Directing-- Motivating employees to Directing-- Motivating employees to achieve firm’s objectivesachieve firm’s objectives

Controlling -- Controlling -- Monitoring progress toward goalsMonitoring progress toward goalsTaking corrective actionTaking corrective action

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Scientific ManagementScientific Management

Pioneers tried to find more efficient Pioneers tried to find more efficient methods and procedures for controlmethods and procedures for control

Aims at investigating every problem Aims at investigating every problem and find best possible way to solve and find best possible way to solve the problems using the scientific the problems using the scientific methods or research methods or research

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Scientific Management Contd.Scientific Management Contd.

F W Taylor, a management guru, listed F W Taylor, a management guru, listed different principles to guide management:different principles to guide management:• Each worker should have a large, clearly Each worker should have a large, clearly

defined, daily taskdefined, daily task

• Standard conditions are needed to ensure the Standard conditions are needed to ensure the task is more easily accomplishedtask is more easily accomplished

• High payment should be made for successful High payment should be made for successful completion of taskscompletion of tasks

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F W Taylor’s Principles cont:F W Taylor’s Principles cont:

Taylor also listed ‘new duties’ of Taylor also listed ‘new duties’ of management:management:• The Development of a true scienceThe Development of a true science

• The Scientific selection, education and The Scientific selection, education and development of workmendevelopment of workmen

• Friendly close co-operation between Friendly close co-operation between management and workersmanagement and workers

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Administrative ManagementAdministrative Management

Henry Fayol aimed at developing a Henry Fayol aimed at developing a science of administration for science of administration for managementmanagement

He believed managers, at higher He believed managers, at higher levels, are less dependent on levels, are less dependent on technical knowledge and more on a technical knowledge and more on a knowledge of administrationknowledge of administration

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Fayol’s 14 principles of Fayol’s 14 principles of management:management:

1.1. Division of LaborDivision of Labor

2.2. AuthorityAuthority

3.3. DisciplineDiscipline

4.4. Unity of commandUnity of command

5.5. Unity of directionUnity of direction

6.6. Subordination of Individual Interest Subordination of Individual Interest to general interestto general interest

7.7. Remuneration or Salary and wagesRemuneration or Salary and wagesFundamentals of Management 14

Fayol’s 14 principles of Fayol’s 14 principles of management Contd:management Contd:

8. Centralization 8. Centralization

9. Scalar Chain9. Scalar Chain

10. Order10. Order

11. Equity 11. Equity

12. Stability of tenure of personnel12. Stability of tenure of personnel

13. Initiative13. Initiative

14. Esprit de corps14. Esprit de corps

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Max Weber (1864 – 1920)Max Weber (1864 – 1920)

More concerned with the basics of More concerned with the basics of how enterprises are structuredhow enterprises are structured

Developed ideas about the structure Developed ideas about the structure of the organization that define what of the organization that define what we know as bureaucracy (structure we know as bureaucracy (structure and set of regulations in place to and set of regulations in place to control activity, usually in large control activity, usually in large organizations and government) organizations and government)

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Weber’s perspectives on Weber’s perspectives on Administrative Management are:Administrative Management are:

Division of laborDivision of laborHierarchy of authorityHierarchy of authorityFormal selection Formal selection Career managers Career managers Formal rulesFormal rules

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Human relations movement and Human relations movement and behavioral sciencebehavioral science

Deals with sciences of mankind and of Deals with sciences of mankind and of behavior as individuals and in groupsbehavior as individuals and in groups

Concerned with problems of fatigue Concerned with problems of fatigue and efficiency at work and and efficiency at work and

Problems relative to selecting and Problems relative to selecting and training employeestraining employees

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Hawthorne ExperimentsHawthorne Experiments

Focused toward psychological and Focused toward psychological and behavioral side of employees at work behavioral side of employees at work

Psychological Experiments of Psychological Experiments of Elton Mayo Elton Mayo disclosed or revealed components of the disclosed or revealed components of the job and work satisfactionjob and work satisfaction

Experiments were divided into three Experiments were divided into three phasesphases

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Hawthrone Experiments Contd:Hawthrone Experiments Contd:

1.1. Test Room Studies: assesses the effect Test Room Studies: assesses the effect of single variables upon employee of single variables upon employee performanceperformance

2.2. Interviewing Studies: consists of Interviewing Studies: consists of employees’ surveys and interviewsemployees’ surveys and interviews

3.3. Observational Studies: involves Observational Studies: involves studying the “normal” group workingstudying the “normal” group working

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Systems approach to managementSystems approach to management

A system is an organized A system is an organized combination of parts, which forms combination of parts, which forms interactions between the parts and interactions between the parts and between the system and the between the system and the environmentenvironment

Gives managers a way of looking at Gives managers a way of looking at organizations as a complete wholeorganizations as a complete whole

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System approach contd:System approach contd:

Systems can be divided into two Systems can be divided into two categories:categories:

Deterministic : Behavior can be determinedDeterministic : Behavior can be determinedProbabilistic : Behavior can only be Probabilistic : Behavior can only be

estimatedestimated

A system includes different A system includes different elements or systems called sub-elements or systems called sub-systemssystems

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Elements of a systemElements of a system

Sensing systemSensing system Information coding systemInformation coding systemPhysical processing systemPhysical processing systemRegulating and controlling systemRegulating and controlling system Information and storage systemInformation and storage systemGoal setting or policy making systemGoal setting or policy making system

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Systems Approach ProcessSystems Approach Process

Open page no. 21 of the course Open page no. 21 of the course bookbook

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Today’s ManagerToday’s Manager

Responsible for others and their own Responsible for others and their own workwork

Managers are also:Managers are also:Mediators Mediators of disputesof disputesPoliticiansPoliticians:: Persuade and motivatePersuade and motivateDiplomatsDiplomats:: Representative of companiesRepresentative of companies

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ESSENTIAL SKILLS FOR MANAGERSESSENTIAL SKILLS FOR MANAGERS

1. TECHNICAL SKILLS1. TECHNICAL SKILLS

2. HUMAN SKILLS2. HUMAN SKILLS

3. CONCEPTUAL SKILLS3. CONCEPTUAL SKILLS

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Decisional Roles of ManagersDecisional Roles of Managers

Entrepreneur: Brings new ideasEntrepreneur: Brings new ideasDisturbance Handler: Handles or Disturbance Handler: Handles or

tackles strikes and lockoutstackles strikes and lockoutsResource allocator: Allocates or Resource allocator: Allocates or

utilizes the company’s resourcesutilizes the company’s resourcesNegotiator: Deals with suppliers and Negotiator: Deals with suppliers and

negotiates for prices or for best negotiates for prices or for best servicesservices

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Entrepreneurship and Entrepreneurship and IntrapreneurshipIntrapreneurship

Entrepreneurship is a process of Entrepreneurship is a process of bringing creative and innovative bringing creative and innovative ideas and implement them by ideas and implement them by combining factors of production to combining factors of production to create wealth and meet a needcreate wealth and meet a need

Intrapreneurship involves bringing Intrapreneurship involves bringing new ideas within the organizationnew ideas within the organization

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