PRINCIPLES OF MANAGEMENT

UNIT 1

IMPORTANCE OF MANAGEMENT To Business And Industry:

- Protect interest of shareholders- Use resources of the firm effectively- Produce standard and quality products- Charge customers reasonable prices- Provide customer satisfaction- Provide customer satisfaction- Avoid dishonest trade practices

IMPORTANCE OF MANAGEMENT To Society:

- Serve people who are affected by natural and unnatural calamities

- Provide employment opportunities for educated and needy job seekers

- Conserve natural resources by protecting environment

- Hygienic disposal of waste to prevent industrial pollution

IMPORTANCE OF MANAGEMENT To Nation:

- Pay fines, duties, taxes to government on time

- Carry on business as per government rules, policies and practices

- Help government in economic planning and administration

IMPORTANCE OFMANAGEMENT To Consumer:

- Provide products of right quality at right place, time and price

- Smooth after sales service- Avoiding exploitation of customers- Formation of associations of consumer

satisfaction and welfare

IMPORTANCE OF MANAGEMENT To Consumer:

- Provide products of right quality at right place, time and price

- Smooth after sales service- Avoiding exploitation of customers- Formation of associations of consumer

satisfaction and welfare

MANAGEMENT AS A SCIENCE Universally accepted principles

Experimentation & Observation

Cause and Effect relationship

Test of validity and predictability

MANAGEMENT AS A PROFESSION• Specialized body of knowledge and skillsA person who knows to apply his skills and

expertise in taking independent decisions can run business effectively.

• Formal trainingAn untrained but qualified person needs on the

job training .

• Social responsibilityAn efficient manager keeps social responsibility

in mind while carrying on his business.

MANAGEMENT AS A PROFESSION• Code of conductManagers are supposed to run their

business by strictly maintaining the business secrets and without misuse of any resources.

MANAGEMENT AS AN ART• Practical knowledgeManagers have to apply the knowledge about

the environment surrounding the business to it.

• Application is personalizedEvery manager uses his skills in his own way

while running the business.

• Result oriented approachSuccessful managers carry business by

keeping the business goals in mind.

MANAGEMENT AS AN ART• Employee motivationManagers motivate employees to get the

best results.

• Perfection through practiceEvery manager becomes perfect in

dealing with different situations through his day to day experiences.

ADMINISTRATION & MANAGEMENT A DISTINCTION• Administration involves thinking .

Management involves doing

• Administration includes planning, making policies, setting goals whereas management includes carrying out the plans, policies to achieve the set goals.

• Administration has the authority which it hands over to the lower levels to get work done whereas management uses the authority and gets the work done.

ADMINISTRATION & MANAGEMENT A DISTINCTION• Administration is not involved in

directing people efforts to achieve goals which is done by management.

LEVELS OF MANAGEMENT • Top Includes chairman, managing director,

directors, CEO’s , CFO’s etc. They plan, set goals and policies, review and

co-ordinate activities.

• Upper middleIncludes departmental heads.Co-ordinate and are responsible for activities

and results related to their departments.Supervise middle and lower levels of their

department.

LEVELS OF MANAGEMENT • Middle Includes office, area managers etc of

departments They handle daily operational activities of

their departments.

• LowerIncludes supervisorsThey manage the workers and clerical

level employees and carry out routine operational activities.

MANAGERIAL ROLES • Interpersonal roles Manager interacts with different people within

and outside the organization.He guides and motivates his employees as well.Through his interactions he tries to take care of

his strengths, weaknesses, opportunities and threats.

• Informational rolesManager collects information from within and

outside his business and tries to analyze and creates a link between the world within and outside the business.

MANAGERIAL ROLES • Decisional roles Manager takes important decisions which

are for the overall success and stability of the business.

For this he takes decisions to handle conflicts, to properly handle resources and to successfully negotiate between the world inside and the world outside the business.

MANAGERIAL SKILLS • Conceptual skillsManagers should know the basic s of any skills

that they use to operate the business. If it is related to leadership skill, managers should guide and control.

• Diagnostic or analytical skillsSunil B Mittal, Chairman of Bharti Enterprises has

many ‘firsts’ to his credit. He was the first to import diesel generators to manufacture telecom equipment in the private sector, to export basic telecom services and to begin laying overseas cable between Singapore and Chennai.

MANAGERIAL SKILLS • Human skillsManagers should know to deal and interact

with the human resources effectively taking the goals of the business into consideration.

• Technical skillsThe manager should know to carry out the

job of all levels of the business. He should be able to know the basic techniques and operations as well which includes skilled and unskilled jobs.

TAYLOR’S SCIENTIFIC MANAGEMENT

Increasing production efficiency to lower costs, raise profits but also to have increase in pay for workers by increasing their productive efficiency.

TAYLOR’S SCIENTIFIC MANAGEMENTTaylor’s Four Principles:• Have scientific study of tasks• Select, train, teach and develop the

workman scientifically• Provide detailed instruction and

supervision of each worker while reviewing his work.

• Divide work equally between managers and workers for managers to perform and plan work applying scientific management and to ensure performance of tasks by workers.

TAYLOR’S SCIENTIFIC MANAGEMENTFive Contributions by Taylor:Time and Motion study – each motion of

a job is timed with the help of a stop watch and shorter and fewer motions were to be developed.

Differential Payment – a new payment plan under which incentives are linked with production. A worker received low piece rate if he produced standard number of pieces and high rate if he rose above the standard.

TAYLOR’S SCIENTIFIC MANAGEMENTDrastic Reorganization of Supervision –

separation of planning and doing and functional foremanship. Work should be planned by foreman not worker. The number of foreman should depend on the number of special functions and the foremen should give orders to the workers depending on their specialty

Scientific Recruitment and Training – this brings out the best in the workers by enabling him to do a higher, interesting and profitable class of work than he has done in the past.

TAYLOR’S SCIENTIFIC MANAGEMENTIntimate friendly cooperation between

management and workers – management and labor have a common interest in increasing productivity

HENRY FAYOL’S MANAGEMENT THEORYHe is the father of managementDeveloped general theory of management

Administrative Theory of Management:Business activities have been classified into

6 categories;Technical – relating to production or

manufacturingCommerce – related to buying. Selling and

exchange

HENRY FAYOL’S MANAGEMENT THEORYFinancial – optimum utilization of resourcesSecurity – related to protection of property

and assetsAccounting – related to maintenance of

accountsManagerial – related to planning,

organizing, controlling, coordinating and commanding

Merely on the basis of the managerial activities the other five activities can be analyzed.

HENRY FAYOL’S MANAGEMENT THEORY14 Principles of Management:Division of work – different tasks should

be given to those who are experts in performing them.

Authority and Responsibility – the former is the process of getting work done through others and the latter is obligation of person to perform the tasks assigned to him.

HENRY FAYOL’S MANAGEMENT THEORYDiscipline – observance of rules of service

Unity of command – subordinates should receive orders, instructions from superiors only. One person accountable to one boss otherwise there can be chaos.

Unity of direction – for every category of work there should be one plan of action and should be executed under the supervision of one head only.

HENRY FAYOL’S MANAGEMENT THEORYSubordination of individual interest to

general interest – individual interest should not be of importance than common interest to fulfill organizational goals.

Fair remuneration to workers – maximum satisfaction to both employers and employees through fair pay to workers.

Centralization – balance must be maintained between centralization and decentralization to ensure optimum use of all employees.

HENRY FAYOL’S MANAGEMENT THEORYScalar chain – when in an organization if F

wants to talk to Q normally the communication will flow up the ladder from F to A and then come down the ladder from A to Q through M, N, O and P which is lengthy and time consuming when there is a requirement for swift action. In such case a gang plank should be used where F and Q are allowed to have direct contact to settle matters. Scalar chain suggests that communication should pass through proper channels of authority along the scalar chain.

HENRY FAYOL’S MANAGEMENT THEORYOrder – material order (refers to right place

for every occasion)social order (refers to a fixed place for every

worker and the worker will be available at his workplace during working hours and also right man for right job.

Equity – equal treatment to all employees in the organization.

Stability to staff – employees should be assured security of job by management.

HENRY FAYOL’S MANAGEMENT THEORYInitiative – employees must be motivated

to make suggestions and take initiative.

Esprit-de-crops – management should create team spirit among employees

ELTON MAYO AND HAWTHORNE EXPERIENCEAnalysis of Hawthorne experiments

which Mayo made are;• Workers are motivated by more self interest• There is a psychological contract or

understanding between worker and employer regarding what is expected of the employees.

• Workers motivation can be increased by showing interest in them

• Team work can increase workers motivation • Workers socializing during and outside work

and subsequent increase in motivation.

ELTON MAYO AND HAWTHORNE EXPERIENCE• Workers are motivated by recognition,

security and a sense of belonging• Communication between workers and

management affects the employees morale and productivity.