PRINCPLES & PRACTICES OF MANAGEMENT

Definitions

Management is the process of designing and maintaining an environment in which individuals working together in groups efficiently accomplish selected aims.

- Weihrich and Kuontz

The use of people and other resources to accomplish objectives. - Boone and Kurtz

The process by which managers create, direct , maintain and operate purposive organizations through systematic, coordinated, cooperative human effort.

- Mc. Farland

Management is a multi-purpose organ that manages a business, manages a manager and manages workers and work.

- Peter Drucker

Management- Science & Art

Science Advances by

knowledge Proves Predicts Defines Measures Impresses

ArtAdvances by practiceFeelsGuessesDescribesOpinesExpresses

Why Study Management

Utilization of resources Best performance is a given situation To achieve pre-determined objectives Internal and External Environmental factors affecting

business For formulating corporate strategy To face competitive challenges For R &D To understand the impact of change To understand the importance of quality To understand how it can be applied to solve any business

problem

“PROFESSIONAL MANAGEMENT”

Professional ManagementSeparation of ownership from managementKnowledge based decision makingProfessional managers are performance

orientedThey follow management practices based on

information obtained/experienceApplication of management theories to solve

emerging organizational problems

Evolution of Management thought

Classical approach

Fredrick Taylor (1856-1915)1. Science, not rule of the thumb2. Harmony, not discord3. Cooperation, not individualism4. Maximum output5. Development to greatest efficiency and prosperity6. High wages, low cost

Charles Babbage1. Specialization2. Work measurement/ methods3. Utilization of machines and tools4. Division of labour5. Science and mathematics6. Cost reduction

Cont…..

Frank and Lillian Gilberth (1868-1924 & 1878-1972)1. Time and motion study2. Worker welfare3. Potential of workers

Henry Gantt (1861-1919)1. Gantt Chart2. Bonuses for Workers and Supervisors3. Good understanding of IR

Cont…

Henry Fayol ( 1841-1925)

1. Division of labour2. Discipline3. Unity of command4. Subordination of individual interest to common good5. Remuneration6. Centralization7. Hierarchy8. Order9. Equity10. Stability of Staff 11. Initiative12. Esprit De Corps

Cont….

Max Weber (1864-1920)

Bureaucracy Criticisms

Elton Mayo- The Hawthorn Experiments (1927-32) (1880-1949)

Mary Parker Follett (1868-1933)

Chester Barnard (1886-1961)

Cont….

Behavioral Science

Maslow Mc. Gregor Alderfer Herzberg

Management Science

Mathematical Modelling, or for solutions of management problems

Recent Developments

Systems Approach Contingency Approach Dynamic Engagement Approach Ethics and social Responsibility Cultures and Multiculturism TQM

Relation of Motion & Time Study to Work Design

ObjectiveImprove Ops by Effective utilizationOf all resources

ObjectiveImprove Control by More accurate plng/estimating/ evaluatingperformance

s

WorkDesign

Method Study/ OR

Motion Study

Time Study

Standard Symbolso Operation TN/ Movement Inspection D Delay/ Temp Storage Storage

Used to Evaluate

Alternate designs/methods Developed by TaylorDeveloped by

Gilberth

Used to find the fastestMotion sequences

Work Measurement

Combined Activity

Managerial roles identified by Mintzberg

Interpersonal Figurehead Leader Liaison

Informational Monitor Disseminator Spokesperson

Decisional The Entrepreneurial role The disturbance handler role The resource allocator role The negotiator role

“ Aim all communication at identifying and solving problems, not blaming.”

Managerial Attributes

Professional CompetenceEthics/ Value DrivenCandor and honestyEmotional IntelligenceCommitmentHuman ValuesLeadership Qualities

Key Aspect of the Management Process

Organizational Resources Functions of Management

•Labour•Capital•Materials•Machinery•Information

•Planning•Organizing•Staffing•Leading•Controlling•Coordinating

Attainment Of OrganizationalGoal

Types of Managers

Type 1- Expectations Values Targets

Type 2- Expectations Values Targets

Type 3- Expectations Values Targets

Type 4- Expectations Values Targets

Social & Ethical Responsibility of Management

“CSR refers to the businessman’s decisions and actions taken for reasons partially beyond the firm’s direct economic or technical interest.”

- Keith Davis

“CSR contends that management is responsible to the organization itself and to all the interest groups with which it interacts. Other interest groups such as workers, customers, creditors, suppliers, govt. and society in general are placed essentially equal with shareholders

- Operational Definition Ethics How our decisions affect other people Study of people’s rights & duties Moral rules people apply while making decisions Nature of relationships among people

• Arguments for Social Involvement

Improvements benefit both society and business Greater Freedom and flexibility from govt. Power with responsibility Problems can become profits Favorable public image Better to prevent than cure

• Arguments Against

Primary Objectives Costs Associated Enough Power No Accountability

Planning

Planning is a continuous process of making present entrepreneurial decisions systematically and with best possible knowledge of their futurity, organizing systemically the efforts needed to carry out these decisions and measuring the results against expectations through feedback system.

- Peter Drucker

Planning is the selection and relating the facts and making use of assumptions regarding the future in the visualization and formalization of proposed activities believed necessary to achieve the desired result.

- Terry

Nature of Planning

Planning is goal orientedPlanning is an intellectual or rational processPlanning is a primary functionPlanning is all pervasivePlanning is forward looking Planning is a perpetual processPlanning is an integrated processPlanning involves choice

Significance of Planning

Focuses attention on objectivesOffsets uncertainty and riskProvides sense of directionProvides guidelines for decision makingIncreases organizational effectivenessProvides efficiency in operationsEnsures better coordinationFacilitates controlsEncourages innovation and creativityFacilitates delegation

Types of Plans

Top Level Middle Level Lower Level

Time Long Intermediate Short Range Range Range

Scope Strategic Tactical Operational Eight major areas of Strategic Goals• Market Standing and Customer loyalty• Innovation• Human Resources Management• Financial Resources• Physical Resources, Deployment and Use• Productivity, effectiveness , efficiency• Social Responsibility•Profit Requirements

Understanding organization

What is Organization?

Building BlocksDivision of workDepartmentalizationHierarchyCoordination

Mechanistic V/s Organic Systems

Cont…

Classification of Organizations Predominantly coercive, non-legitimate authority Predominantly utilitarian, rational legal authority, use of

economic rewards Predominantly normative, use of membership status and intrinsic

value rewards authority on charisma/ expertise Mixed structures

Structures

By Function By Product Matrix/Mixed

Organizing

Definition

Identification and classification of required objectives Grouping of activities necessary to attain objectives Assignment of each grouping to the manager with authority to supervise it Provision of coordination horizontally and vertically

Formalized intentional structure of roles or positions.

Determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom and where decisions are to be made

- Robbins & Coulter

Organizing is a management function involving assigning duties, grouping tasks, delegating authority and responsibility and allocating resources to carry out a specific plan in an efficient manner

Common Organizational Designs

Simple StructureBureaucracyMatrix StructureTeam StructureVirtual OrganizationBoundary less OrganizationDivisional StructureFunctional Structure

Why Do Structures Differ?

Mechanistic Vs Organic ModelsStrategyOrganizational SizeTechnology Environment

Line and Staff Authority

Line Authority

Directly responsible for organizational goals Standard chain of command Based on legitimate power

Staff Authority

Provides services and authority to line managers Expert help and advice Based on expert power Research, analysis and option development Policy implementation, monitoring and control

Functional Authority

Right to Control activities of other departments Based on legitimate power/ expert power Practiced in most organizations

Contd…

Delegation

Formal authority and accountability to carry out specific tasks

Necessary for efficient functioning of any organization

Span of Control

Department Wide Span Narrow Span Factors determining effective span

Factors determining effective Span of Control

Trained subordinated Clarity of delegation of authority Clarity of plans Use of objective standards Rate of change Communication techniques Amount of personal contact needed Use of Staff Assistants Competence of Manager

Relationships ( Views on Conflicts) Importance of Conflict Management Rewards LeadershipChange (Nadler and Tushman)

Incremental Strategic

Anticipatory Tuning Re-orientation

Reactive Adaptation Re-creation

Learning Organizations•Tolerance for ambiguity•Managing diversity•Open Communications•CPS•Conflict Resolution•Team Orientation•Innovative Efforts

Conflict Handling Modes

Competitive Collaborating (own concerns at others (working with other Expense) party to find solutions)

Compromising (Mutually acceptable solution)

Avoidance Accommodating (Not addressing conflict) (Satisfying)

(High)

Assertiveness

(Low)

(Low) Cooperativeness (High)

Mode Assertiveness Cooperativeness•Competing High Low•Collaboraing High Low•Avoiding Low Low•Accomodating Low High•Compromising Moderate Moderate

Culture

The complex mixture of assumptions, behaviours, stories, myths, metaphors and other ideas that fit together to define what it means to be a member of a particular society

Body Shop•Work, Live, Love and Learn- rather than work, work, work•See meaning and money- rather than money alone•Build network of relationships- rather than hierarchies of power•Sustain resources rather than “Use it and Lose it”•Grow Naturally- rather than grow fast•Embrace work and family- rather than work or family

Artifacts- Espoused values- Basic Assumptions

Cont….

Cultural Practices Material Vs Non Material cultures Ecology and Culture Cultural Characteristics

Observed Behavior Norms Values, Attitudes and beliefs Philosophy Rules Organizational Climate

Decision Making

Process of identifying and selecting a course of action to solve a specific problem

Important aspects Past Experience – both positive and negative Human Relationships Problems and opportunity finding Deciding to decide

Problem finding process Deviation from past experience Deviation from set plans From other people Performance of competitors

Opportunity finding process Something that offers a chance to exceed objectives Dialectical inquiry method (Devil’s Advocate method) Importance of information gathering

Recognizing the Problem Prioritize Is the problem easy to deal with Might the problem solve itself Is this my decision to make

Cont…

Decision Making Specific Requirements1. Expected Results2. Resource Constraints Prioritize Needs Optional Courses of Action Choose Best Option Identify Potential unfavorable consequences

Cont….

Nature of Decision Making Programmed Non Programmed Certainty Objectives Accurate, measurable and reliable information Risk Outcome cannot be predicted Probability factor Uncertainty Little known about alternative and outcome Importance of external factors and informationProgrammed Non programmed

Certainty Risk Uncertainty

Managerial controlHigh Low

Factors affecting the decision making process

InformationTime factorEnvironmental factorsInternal FactorsPersonality of the decision makerParticipation, acceptance & implementationPrecedentEscalation of commitmentProblem perception

Rational Decision Making Process

Investigate Sit:•Define problem•Diagnose causes•Identify decision objectives

Develop alternatives•Seek creative alternatives•Do not evaluate yet

Implement and monitor•Plan Implementation•Monitor•Make adjustment

Evaluate Alternatives & Select best available

Cont…

Investigation Define the problem Diagnose the causes Identify decision objectives Development Easy for programmed Difficult for non-programmed Evaluation Is the alternative feasible Is the alternative a satisfactory solution What are the consequences for the rest of the organization? Implementation Appropriate instructions Acquisition/ Allocation of resources Assigning responsibilities, budgeting Progress reports and corrections

Information Systems for Managerial Control and Decision Making

CorporateDatabases

Information for decisionMaking

Information for control

MIS

DSS

EIS

Feedback Control Systems

Mgt Control Systems

Balanced Scorecard

Management Control Systems

ActualPerformance

MeasurePerformance Comparison

Desired performance

Deviations

Reason ForDeviation

CorrectiveActions

Feedback Loop

Objectives of MCS

Relationship with organizational goalsIdentification of critical processes that affect

goalsIdentify key success factorsIdentify responsibilitiesAccountabilityFinancial Vs non financial performanceImprovement of collective decision making

Why Management Control system fail??

Most control systems are past action orientedPrecision Leave little margin for errorControls do not change with missions,

strategies, objectives and planBehavioral and human side if the control

system overlookedStandards are not modified as per the situation

at handImportance of speedy and reliable feedback

ERP

ERP- Integration of business processes across departments into an enterprise wide information system

Integration of

Product Planning Parts purchasing Inventory Control Product Distribution and fulfillment Order tracking

ERP Users Those who execute strategic planning Those who perform managerial control Those who do operational control

Cont….

SalesOrder placementOrder schedulingShipping and invoicing

FinanceFinancial dataFinancial reportsTrial Balance, Balance SheetQuarterly financial data

Management Control

Management control is a systematic effort to set performance standards with planning objectives to design information feedback with these pre determined standards and to measure their significance and to take any action required to assure that all corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives

- Mockler

Planning Implementation of strategies Control by comparing Actual results with planned results

Strategies to achieve objectives

Feedback Loop of Management Control

Desired Performance Actual

Performance

MeasurementPerformance

AnalysisDeviations

IdentificationOf deviations

Comparison Against Standards

Corrective Action Implementation

Of correction

Cont…..

Management Control helps in1. Coping with uncertainty2. Detecting irregularities3. Identifying opportunities4. Handling complex situations5. Minimizing costs