Lecture Notes on

Basic Conceptual Perspectives in

Business Management

Compiled by

Chandra P. Rijal, PhD in Leadership

Nepal College of Management

Lalitpur, Nepal

[Spring, 2015]

March 15, 2015 1

Perspectives of Management

This session will help you to --understand the management terms like managers, employees, efficiency and effectiveness, and management,

learn management process, managerial roles and essential skills, understand the various evolutionary concepts of management as a discipline, and

learn essentials of high performing managers.

March 15, 2015 2

ORGANIZATION The term ‘organization’ may be referred to as a

systematic arrangement of resources brought together to accomplish some specific purpose of an institution.

These resources are people dominant in an organizational process climate.

In addition to people arrangement, efficient and effective allocation of other resources is also equally important in management of an institution.March 15, 2015 3

An institution is distinct by its …

* Vision

* Mission

* Objectives

* Goals

* Strategy, and

* Tactics

March 15, 2015 4

An institution may have its

goalstructure

andpeople

Operatives

• People who work directly on a job or task and have no responsibility for overseeing the work of others.

• Known as employees.

• Operatives in a university college?

March 15, 2015 5

Managers …

Individuals in an organization, who direct the activities of others (operatives)

Questions for discussion:

1.How are managers different from operatives at

schools?

2.How operatives and managers contribute for the betterment of the institution as a social entity?

March 15, 2015 6

MANAGERS Vs. ENTREPRENEURS

¤ Entrepreneurs are the people who pursue business opportunities, fulfilling needs and wants through innovation.

¤ Entrepreneurs are the innovative people who give birth to the new businesses regardless small or big in size. They are the creators.

¤ All entrepreneurs are managers but all managers may not be entrepreneurs.

¤ Can you identify five successful entrepreneurs of Nepal?

March 15, 2015 7

Manager CharacteristicsAdministersMakes a copy or imitatesMaintainsFocuses on systems and structuresRelies on controlsShort-range viewAsks how and whenEyes on the bottom lineAccepts the status quoClassic good soldierDoes things right

March 15, 2015 8

Manager Vs. LeaderManager Vs. Leader

Leader CharacteristicsInnovatesCreates original or innovatesDevelopsFocuses on peopleInspires trustLong-range perspectiveAsks what and whyEyes on the horizonChallenges the status quoOwn personDoes the right things

Warren G. Bennis, Managing the dream: leadership in 21st century, journal of

Organizational Change Management, vol. 2, No. 1, 1989, p. 7

Leadership

Influencing people by providing the purpose,

direction, and motivation while operating to

accomplish the mission and improving the

organization.

March 15, 2015 9

ORGANIZATIONAL LEVELS & MANAGERS

March 15, 2015 10

Top ManagersChair, President,

MD, GMMiddle Managers

HODs, Sr. Managers

First-Line ManagersSupervisors

OperativesLine staff

What do these people

do?

How can yourelate these

levels in an institution?

MANAGEMENT

The process of getting things done - effectively and efficiently - through and with other people.

Efficiency: doing something rightly.

Effectiveness: doing something right.

Management: getting done right thing in a right way.

March 15, 2015 11

Example?

Efficiency vs. Effectiveness

Means Ends

Efficiency Effectiveness

Goals

Low High

wastage attainment

March 15, 2015 12

ResourceUsage Goal

Attainment

Efficiency Vs. Effectiveness

March 15, 2015 131

Optim

al utilization of resources2

Control over cost of production3

Control over defective production4

Minim

ized level of idle time or tim

e lags5

Continuous system standardization

6Continuous process im

provement

7Ethical and environm

ent friendly operations

Management of means of operation Attainment of ends or results of operation

1 Low

er c

ost o

f pro

duct

ion

2 Hig

her l

evel

of o

pera

tiona

l pro

duct

ivity

3 Sat

isfie

d em

ploy

ees

and

stak

ehol

ders

4 Inc

reas

ed e

mpl

oyee

rete

ntio

n5 R

educ

ed e

mpl

oyee

abs

ente

eism

6 Im

prov

ed q

ualit

y of

wor

k lif

e7 E

nhan

ced

inst

itutio

nal c

itize

nshi

p

Reduction of wastage Increment of outputs

Features of an Effective Management System

March 15, 2015 14

1. Goal attainment and maximization

2. Development of resourcefulness

4. Stakeholder satisfaction

3. Process improvement

Bases of measuring

management effectiveness

MANAGEMENT PROCESS

The processes aimed at the achievement of the organization’s stated objectives.

The French industrialist Henri Fayol wrote that all managers perform FIVE management activities; planning, organizing, commanding, coordinating, and controlling.

In the 1950s, two professors at UCLA recognized FIVE terms planning, organizing, staffing, directing and controlling as the framework of management.

Now condensed to FOUR; Planning, organizing, leading and controlling.

March 15, 2015 15

Management Process Activities

March 15, 2015 16

1. Planning1. Planning1. Define goals2. Establish strategy3. Develop tactics/subplans

3. Leading3. Leading1. Direct the people2. Motivate the people3. Resolve the conflicts

2. Organizing2. OrganizingDetermine:1. What to be done2. How to be done3. Who is to do

4. Controlling4. ControllingMotivate activitiesto ensure that theyare accomplishedas planned.

Achieving theorganization’sstated purpose

Mintzberg’s Managerial Roles

Source: Robbins, S. P., Judge, T. A., & Sanghi, S. (2009). Organizational Behavior (13th ed.). PHI.

Managerial Roles

1. InterpersonalFigureheadLeaderLiaison

2. InformationalMonitorDisseminatorSpokesperson

3. DecisionalEntrepreneurDisturbance handlerResource allocatorNegotiator

March 15, 2015 17

MANAGERIAL SKILLS COMPETENCIES

A. General Skills

1. Conceptual skills 2. Human skills3. Technical skills a. Interpersonal skills

b. Political skills

B. Specific Skills

1. Controlling the organization’s environment and resources

2. Organizing and coordinating

3. Handling information

4. Providing for growth and development

5. Motivating employees and handling conflicts

6. Strategic problem solving

CATZ’s Skills

March 15, 2015 18

Management as an Integrated Function

March 15, 2015 19

Management

Human Resources Management

R&D and ProductionsManagement

Financial Management

Marketing Management

WHY STUDY MANAGEMENT?

General Reason

1. Gain conceptual insights in general management of any institution

Specific Reasons

1. To improve organization’s overall management

2. To develop career

March 15, 2015 20

Universality of Management

Management is a universal discipline.

Application of management may be modified as per the contexts and environments but the main essence of management principles remains same worldwide.

For example, employee motivation is a universal tool of productivity but the factors considered for motivation may be different from country to country and context to context.

March 15, 2015 21

Universality of management should be studied in the following basis

1. Levels in the organizationLevels in the organization: lower, upper, middle

2. Organizational objectivesOrganizational objectives: profit or not-for-profit

3. SizeSize: big or small

4. National bordersNational borders: similar management concepts

5. Decision makingDecision making: synonymous to management

6. Dealing with changeDealing with change: main challenge worldwide

7. Competencies and skillsCompetencies and skills: required worldwide

March 15, 2015 22

History and Evolution of Management as a Discipline

Both theoretically and historically, study of management has appeared to be one of the interesting and indispensable tool for managing organizations of each type.

While studying about the evolution of management, we must understand that a theory is a conceptual framework for organizing knowledge that provides a blueprint for various courses of action whereas history is the cumulative story of evolution of such frameworks, one after another.

March 15, 2015 24

Such a study should be distinctively grouped into two sections:

1.Historical background

2.Evolution of different approaches to the evolution of management as a discipline

Historical BackgroundAdam Smith Adam Smith published ‘the wealth of nations’ in

1776 with an argument that the economic advantages that the organizations and society would gain from implementing the idea of division of labor or job specialization (breakdown of jobs into narrow and repetitive tasks).

For example, the way the different people work in a tailoring shop, or the way different people work in a building construction site.

March 15, 2015 25

Historical Background … Industrial revolution Industrial revolution started in late eighteenth

century when machine power overtook the human power and proved to be became more economical to manufacture goods in factories than at homes as a result of system standardization and mass production.

Such a revolution took place in absence of any universally accepted management principles..

Only after early 1900s, the initial steps were taken towards developing management theories.

March 15, 2015 26

Evolution of Management as a Discipline

To study management as a discipline, the following theoretical perspectives will accomplish the purpose:

a.a. Early approaches to management Early approaches to management

b.b. Classical approachesClassical approaches

c.c. Behavioral approachesBehavioral approaches

d.d. Quantitative approachesQuantitative approaches

e.e. Modern approaches to managementModern approaches to management

f.f. Emerging approaches in management thoughtEmerging approaches in management thought

a. Early Approaches to ManagementContributor Period Contribution

Robert Owen 1771-1858 Proposed legislative reforms to improve working conditions of labor

Charles Babbage

1792-1871 Advocated the concept on ‘division of labor’

Andrew Ure 1778-1857 Advocated the study of management

Charles Dupin 1784-1873

Henry R.Towne 1844-1924 Emphasized the need to consider management as separated field of study and the importance of business skills for running a business.

Major Classifications of Management ApproachesMajor Classifications of Management ApproachesApproachesApproaches Theories

Classical Classical approachesapproaches

Scientific Management Theory

Management ofBureaucracy

Administrative Management

Behavioral Behavioral approachesapproaches

Hawthorne Studies

Maslow’s Needs Hierarchy

Theory X and Theory Y

Quantitative Quantitative approachesapproaches

Management Science

Operations Management

Management Information Systems

Modern Modern approachesapproaches

The Systems Theory

Contingency Theory

Emerging Approaches

b. Classical Approachesb. Classical Approaches This approach tends to form the early foundation This approach tends to form the early foundation

of study in managementof study in management

The schools of thought in management under The schools of thought in management under classical approach include:classical approach include:

1.1. Scientific Management TheoryScientific Management Theory

2.2. Administrative TheoryAdministrative Theory

3.3. Bureaucratic ManagementBureaucratic Management

1. Scientific Management Theory [Taylor, Gillbreth, & Gantt]1. Scientific Management Theory [Taylor, Gillbreth, & Gantt] Piece rate incentive system Time and motion study Example, Gantt scheduling chart by Henry Laurence Gantt

2. Administrative Theory [Fayol]2. Administrative Theory [Fayol] Technical Commercial Financial Security Accounting Managerial

3. Bureaucratic Management Theory 3. Bureaucratic Management Theory [Weber][Weber]Work specialization and division of laborAbstract rules and regulationsImpersonality of managersHierarchy of organization structure

1. Scientific Management Theories1. Scientific Management Theories

Evolved in early 1900s Under these theories, management has been

projected as a tool to conduct a business or affairs by standards established, by facts or truths gained through systematic observation, experiment and reasoning.

Major contributors include: Frederick Winslow Taylor Frank and Lillian Gillbreth Henry L. Gantt

a. Classical Approach The first studies of management, which

emphasized rationality and making organizations and workers as efficient as possible

Scientific management Born in 1911, Frederick Winslow Taylor

propagated the ‘Principles of Scientific Management’.

Its contents were widely embraced by managers around the world.

Book describes theory of scientific management: use of scientific methods to define “one best way for a job to be done” 33

Frederick Winslow Taylor

F W Taylor (1878) is best known as the “father of scientific management”

He introduced two major managerial practices:

a. ‘Piece-rate’ incentive system

b. Recognized equal importance of ‘time-and-motion’ study

Frank Gillbreth and Lillian Gillbreth (1868-1924)

They contributed with motion study which involves finding out the best sequence and minimum number of motions needed to complete a task.

These two management scientists explored newer ways for eliminating unnecessary motions and reducing work fatigue among the lobourers.

Henry L. Gantt (1861-1919)

A well known management engineer for ‘task–and-bonus system’, which was exhibited in the Gantt Chart.

If the worker completed the work fast, i.e., in less than the standard time, he received a bonus.

It is a simple chart that compares actual and planned performances in respect with activities and proposed timelines presented in a matrix.

Limitations of Scientific Management TheoriesLimitations of Scientific Management Theories

1.1. These theories do not focus on the management These theories do not focus on the management of an organization from a manager’s point of of an organization from a manager’s point of view.view.

2.2. These theories consider that the people are These theories consider that the people are always “rational” and are motivated primarily by always “rational” and are motivated primarily by the desire for material gains, which may not the desire for material gains, which may not apply in the real world of works.apply in the real world of works.

3.3. The theories severely lacked paying attention The theories severely lacked paying attention towards human desire for job satisfaction as a towards human desire for job satisfaction as a major tool of the employee performance.major tool of the employee performance.

2. Administrative Theory

Propagated by Henri Fayol (1841-1925), the Administrative Theory of Management focused on principles that could be applied by the managers to coordinate the internal activities of the organization.

Such principles intended to oversee the general administrative arrangement pertaining to finance, HR affairs, relationship, production and operations and so on.

Fayol’s Fourteen Principles of ManagementFayol’s Fourteen Principles of Management1. Division of work

2. Authority and responsibility

3. Discipline

4. Unity of command

5. Unity of direction

6. Subordination of the individual interest to the general interest

7. Remuneration

8. Centralization

9. Scalar chain

10. Order

11. Equity

12. Stability

13. Initiative

14. Espirit de corps (team spirit)

3. Bureaucratic Management

Weber (1864-1920); best known as ‘Weber’s ideal bureaucracy’

Weber, a German sociologist, developed a theory of authority structures and relations based on an ideal type of organization he called a bureaucracy.

Characteristics of Weber’s ideal bureaucracy:

1.Work specification and division of labor

2.Abstract rules and regulations

3.Impersonality of managers

4.Hierarchy of organization structure

Limitations of Bureaucratic Management and Administrative Theories

1.1. Not universally applicable the present day Not universally applicable the present day complex organizations.complex organizations.

2.2. Like Fayol’s principles, the concept of Like Fayol’s principles, the concept of specialization is frequently in conflict with the specialization is frequently in conflict with the principle of unity of command.principle of unity of command.

3.3. Principle characteristic of bureaucracy changes Principle characteristic of bureaucracy changes along the changes in the global business along the changes in the global business environment.environment.

4.4. Classical theorists ignored the problems of Classical theorists ignored the problems of leadership, motivation, power or information leadership, motivation, power or information relations.relations.

c. Behavioral Approaches to Management

The behavioral approaches to management are

deeply rooted on employee behavioral dimension

of performance.

These theories have emphasized individual

attitudes and behaviors, group processes and

recognized the significance of behavioral process in

the workplace.

Hawthorne Studies Most important question to the field of OB came

out of the Hawthorne studies It is a series of studies conducted at the Western

Electric Company, Cicero, Illinois These studies, started in 1924, were initially

designed by Western Electric Industrial Engineers as a scientific management experiment.

Major study landmarks included –• Illumination studies• Relay assembly room study• Bank wiring room study 43

Contributions of Behavioral Thinkers to Management Thought

Name Period Contribution

Mary Parker Follet

1868-1933

Advocated the concept of ‘power sharing’ and integration

Elton Mayo 1868-1933

foundation for the Human Relations Movement;

Abraham Maslow

1908 – 1970

motivated by a hierarchy of needs

Douglas McGregor

1906-1964

Theory X and Theory Y personalities

Chris Argyris - Classified organizations based on the employees’ set of values

Mary Parker Follet (1868-1933) Power, according to Follet, is the ability to

influence and bring about a change.

Concept of integration, which involves finding a solution acceptable to all group members is the ultimate source of power building at workplaces.

Elton Mayo (1868-1933) Studies Pre-judgment Findings

Job performance depends on the individual worker

The group is the key factors in job performance

Fatigue is the main factor affecting output.

Perceived meaning and importance of the work determining output.

Management sets production standards

Workplace culture sets its own production standards.

Abraham Maslow His theory rested on these assumptions.

1. Physiological needs

2. Safety or security needs

3. Belongingness or social needs

4. Esteem or status needs

5. Self actualization or self-fulfillment needs.

Maslow’s Need Hierarchy

Self actualization needs

Esteem needs

Social needs

Safety needs

Physiological needs

Douglas McgregorTheory X Theory Y

Most People dislike work Work is a natural activity like play.

Most People must be coerced and threatened before they work.

People are capable of self direction and self control

Most people prefer to be directed. They avoid responsibility and have little ambition.

People become committed to organizational objectives if they are rewarded in doing so.

Chris Argyris

Maturity – immaturity theory: People progress from a stage of immaturity and dependence to a state of maturity and independence.

• Model I and Model II organization analysis.

1. Model I organization are manipulative

2. Model II organization are open to learning

d. Quantitative Approaches to Management

These includes the application of statistics, optimization models, information models and computer simulations.

More specifically, the approaches focus on achieving organizational effectiveness.

Three main branches: Management Science

Operations Management

Management Information Systems.

Management Science It stresses the use of mathematical models and

statistical methods for decision-making. Another name is the Operations Research.

Operations Management It deals with the effective management of the

production process and the timely delivery of an organization’s products and services.

Management Information Systems Management information systems focuses on

designing and implementing computer-based information systems for business organizations.

e. Modern Approaches to Management

There are two dominant modern approaches to management studies. These include –

a.a. Systems TheorySystems Theory

b.b. Contingency TheoryContingency Theory

Systems Theory

Resources

Labor Materials Capital Machinery Information

Managerial and Technological Abilities Planning Organizing Staffing Leading Controlling Technology

Goods Services Profits and

losses Employee satisfaction

Inputs Transformation process Outputs

Feedback

Contingency Theory

Systems ViewpointHow the parts fits together •Individual •Group•Organization •environment

Behavioral ViewpointHow managers influence

others•Interpersonal Roles •Informational Roles

•Decisional Roles

Traditional viewpointWhat managers do•Plan •Organize•Lead• Control

Contingency Viewpoint

Managers’ use of other view points to solve problems

•External environment

•Technology

•Individuals

f. Emerging Approaches to Management

William Ouchi, a Japanese quality Guru, has outlined a new theory called Theory Z.

It is the blend of positive aspects of both American and Japanese management styles.

Quality Management is a management approach that directs the efforts of management towards bringing about continuous improvement in product and service quality to achieve higher levels of customer satisfaction and build customer loyalty.

More recently, many newer theoretical concepts have evolved. A few of them are Charismatic Theory, Servant Leadership, Management by Objective (MBO), Management by Walking Around (MBWA), Management by Exception, etc.

Caution!

This work is a compilation from different resources, including my own works and the works of many other scholars in the field of

management and lacks appropriate acknowledgement of all sources. Thus, it

should not be used for any sort of academic referencing via literature

reviews.

Dr Rijal, C. P.