1.

Concept, nature and scope of Management

1.1 Organization and need for Management

Organization: Collection of people moving towards a common goal.

Goal: Goal is the purpose that organization strives to achieve.

Management: According to Harold Koontz and Heinz Weihrich management is the process of creating
and maintaining an environment in which individuals working together in groups efficiently accomplish
selected aims.
According to them
 As manager people carry out the following managerial functions
 Planning -The process of establishing goal and suitable course of action to achieve those
goals.
 Organizing- The process of engaging two or more people to work together in a structured
manner to achieve the specified goal(s).
 Staffing- The process of seeking people to join the structure or relationships.
 Leading- The process of directing and influencing the task related activities of group
members or an entire organization.
 Controlling- The process of ensuring that actual activities conform to planned activities.
 Management is applicable to any kind of organization.
 It is applicable to all level of the organization.
 The aim of all managers is same, i.e. to create surplus.
 Management is concerned with productivity, which implies effectiveness and efficiency.
Effectiveness is the achievement of objectives, i.e. ‘doing things right’.
Efficiency is the achievement of objectives with least amount of resources, i.e. ‘doing the right thing’.

1.2 Deterministic nature of work of a manager

MANAGE→MEN→T (Tactfully/Technically)

Six ‘M’ of Management are: Men/Women, Money, Materials, Machines, Methods, Market

Different perspectives to define ‘management’

1. Angle of vision 2. Emphasis 3.Environment.

Managerial Skills
Skill can be defined as the ability to perform a task. Robert L Katz, a teacher and business executive has
identified three skills which are required in managers. A forth skill, the ability to design solutions may be
added to the three skills.
1. Technical skill: It is manager understands to the nature of job that people under him are going to
perform, i.e. it is his knowledge and proficiency in activities involving methods.
2. Human Skill: It is the ability to interact effectively with people of all levels. It is associated with the
creation of works environment in which people feel free and secure to express their opinions.
3. Conceptual Skill: It is the ability to see the ‘big picture, and to take a broad and farsighted view of
the organization and its feature. The skill enables the manager to recognize the significant elements
and to understand the relationship amongst those elements.
4. Design skill: It is the ability to design a workable solution to the problem. The solution must be
viable and feasible in the light of realities of the situation.

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Technical Skill Human Skill Conceptual Skill

Top Management Low High High
Middle Management Medium High High
Supervisors High High Low

Managerial Roles

Henry Mintzberg suggested that a manager must play ten different roles in order to achieve the
organizational objectives. The roles are as follows:

A. Interpersonal Roles
1. Figurehead: In this role manager performs duties of ceremonial nature, such as taking an important
client for dinner.
2. Leader: As a leader the manager must motivated his subordinates and he must be to reconcile their
individual needs and aspirations with the larger goals of the organization.
3. Liaison: The manager should cultivate outside his vertical chain of command to collect information
relevant to his/her organization.
B. Informational Role
4. Monitor: The manager has to continuously scan the environment for information.
5. Disseminator: In this type of role manager passes some of the prevailed information to his
subordinates, who otherwise would have no access to it.
6. Spokesman: The manager gives relevant information to the various groups of people who influence
the organization’s success or failure.
C. Decisional Roles
7. Entrepreneur: The manager is always on a look out for new ideas and tries to improve his unit
continually by adopting strategies to cope with the ever changing environment.
8. Disturbance Handler: The organization may face threat of strike, or an important customer may face
bankruptcy, etc. But, the manager has to work as a fighter and find solutions of the unanticipated
problems.
9. Resource Allocator: The manager delegates authority and allocates resources, so that they are
optimally utilized.
10. Negotiator: A manager spends considerable amount of time in negotiation. The manager has to
negotiate with the suppliers, the customers, the workers’ union representatives regarding workers’
grievances etc.

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1.3 Universality of Principles of Management

The concept of universality of principles of management suggests that transmission of knowledge may be
undertaken
a. By a manager from one country to another country.
b. By a people from one developing country to coming to study and work in an industrially advanced
country and returning back to their own country.
c. Through training and development program for managers in the developing countries.
Thus managerial knowledge may transferred from
 One person to another person.
 One firm to another firm in the same country.
 From one country to another country.

Argument against universality

According to this view management is entirely situational and there is nothing like universal principles of
management. The arguments against universality of management are based on following factors:
1. Management is culture bound.
2. The objective of an enterprise determines the type of management required.
3. Differences in philosophy.

Argument for the universality

Following arguments can be advanced to suggest the view of universality of management:
1. Management as a process is universal.
2. Distinction between management fundamentals and techniques, because, management techniques
vary with the needs of the situation but, the fundamentals are the theories or principles.
3. Distinction between management fundamentals and practices.

1.4 Evolution of Management thoughts

1.4.1 The Scientific Management School

The scientific approach first requires clear concepts. Concepts are mental images of anything: formed by
generalization from particulars. The scientific methods are involved in determining the facts through
observations. After classifying and analyzing these facts, scientists look for casual relationships. When
these generalizations or hypothesis are tested for accuracy and appear to be true, i.e. to reflect and explain
reality, they are called ‘principles’. Principles have value in predicting what will happen in similar
circumstances.

Scientific management theory arose in part from the need to increase productivity. In the United States
skilled labor was short in supply at the beginning of the twentieth century. The only way to increase
productivity was raise the efficiency of the workers. Frederick W. Taylor, Henry L. Gantt and Lillian
Gilberth proposed the proposed the principles known as Scientific Management Theory.

Frederick W. Taylor

F. W. Taylor is acknowledged as the father of scientific management. Taylor’s famous work entitled as
‘Principles of Scientific Management’ was published in 1911. His primary concern was to increase
productivity through
 Greater efficiency in production and
 Increased pay for workers through the application of scientific methods.

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Taylorism

1. The methods of science can be applied to management.

2. Observation, measurement, standardization and specialization are the elements of management.
3. Working condition can minimize fatigue less.
4. Quantification of each job, i.e. not only shift for day, but for an hour.
5. Higher wage and financial incentives motivate the workers to work more effectively.
6. Each job has a best method to do.
7. The best method may not be the least fatigued method.
8. Setting the standard time.
9. Give the work to a specialist and low skilled workers should be encouraged to change their work.
10. Differential piece work plan.

Taylor’s Philosophy

F. W. Taylor rested his philosophy on four basic principles:

1. The development of a true science of management, so that the best method for performing each
task should be determined.
2. The scientific selection of workers, so that each worker would be given responsibility for the task
for which he or she was best suited.
3. The scientific education and development of workers.
4. Intimate, friendly cooperation between management and workers.

Henry L. Gantt and Frank B. and Lillian M. Gilberth

Taylor focused on lower level management especially to the workers. Henry L Gantt and Frank and
Lillian Gilberth were among the immediate disciples of Taylor. Gantt strongly espoused Taylor’s ideas
and emphasized the need for developing a mutuality of interest between management and labor, i.e. a
harmonious cooperation. He believed that in all problems of management, human element is the most
important one.

Gantt developed graphic methods in describing plans, making possible better managerial control, which
eventually let to the Gantt chart.

The ideas of Taylor were strongly supported by famous husband and wife team of Frank B. (1868-1924)
and Lillian M.Gilberth (1878-1972). They classified all movements employed and the industrial work into
seventeen basic types, called ‘therbligs’. According to them motion and fatigue studies raised worker’s
morale, not only because of their obvious physical benefits, but also because they demonstrated
management’s concern for the workers.

Russ Ackoff

Russ Ackoff did not support Taylorism. He suggested that, performance is the product of interactions and
not the sum of performance of parts taken separately. According to him managers do not manage actions
but interactions.

1.4.2 Classical Organization Theory School

Scientific management was concerned with increase in productivity of the shop and individuals workers.
Classical organization theory grew out of the need to find guidelines or managing such complex
organizations as factories.

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Henri Fayol

Henry Fayol referred to as ‘the father of modern management’ published his observation known as
‘General and Industrial Management’ in French in 1916, he believed in
a. Proper forecasting and
b. Proper scientific methods to apply.

Fayol found that the activities of an industrial undertaking could be divided into six groups as shown
below:

1. Technical: production, manufacturing.

2. Commercial: buying, selling and exchanging.
3. Financial: search for and optimum use of capital.
4. Security: protection of property and people.
5. Accounting: stock maintaining, balance sheet, cost and statistics.
6. Managerial: planning, organizing, command, coordination and control.

Fayol’s principles of management

1. Division of Labor
 The more people specialize the more efficiently they can perform.
 The work is divided according to the workers capability and quantity on scientific basis.
2. Authority and Responsibility
 Authority right to give orders and power to extract obedience.
 When power is exercised responsibility naturally arises. Responsibility arises out of assigning the
task.
 Orders are given to get things done.
 Formal authority gives managers the right to command.
3. Discipline
 Discipline is seen as the respect of agreement which are directed at achieving obedience, respect etc.
 Members in an organization need to respect the rules and agreement that govern the organization.
 Discipline is a result of good leadership at all levels of the organization.
4. Unity of Command
 Each employee must receive instructions from one person only.
 If two superiors exercise their authority over the same person or department, that may cause conflict
or confusion.
5. Unity of Direction
 Unity of direction means one head and one plan for a group of activities having the same objective.
 The ability of direction is different to unity of command to the sense that the former is concerned with
the functioning of body corporate while the latter with functioning of personnel at all levels.
6. Subordination of Individual Interests to the Common Good/Social Interest
 In any undertaking the interest of the employees should not take precedence over the interest of
organization as a whole.
 Factors like- ambition, laziness and weakness etc. tend to reduce the importance of the general
interest. These practices should not be indulged at all.
7. Remuneration
 Compensation for work done should be fair to both employees and employers.
8. Centralization

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 Decreasing the role of subordinates in decision making is centralization, increasing their role in
decision making is decentralization.
 According to Fayol, managers should retain the overall final responsibility and at the same time
should delegate enough authority to subordinates to do the job properly.
 In a small firm, there is absolute centralization, but in case of large organization, there are several
levels.
9. Scalar Chain
 The clearer the line of authority from the ultimate management position in an enterprise to every
subordinate position, the clearer will be the responsibility for decision making and more effective
organization will be.
10. Order
 Order means a place of everything and everything in its place.
 Materials and people should be in the right place and at the right time.
11. Equity
 Equity is the combination of justice and kindness to the employees at all levels.
 Managers should be both friendly and fair to their subordinates.
12. Stability of Staff
 A high employee turnover rate undermines the efficient functioning of an organization.
13. Initiative
 Initiative is concerned with thinking out and execution of a plan.
 Subordinates should be given the freedom to conceive and carry out their plans even through some
mistakes may result.
14. Esprit de corps
 Promoting term spirit will give the organization a sense of unity.
 According to Fayol, the use of verbal communication instead of formal written communication helps
to develop team spirit.

Max Weber

The German Sociologist Max Weber (1864-1920) realized that any goal oriented organization consisting
of thousands of individuals would require carefully controlled regulations of its activities. He developed a
theory of bureaucratic management that stressed the need for a strictly defined hierarchy governed by
clearly defined regulations and lines of authority.

Mary Parker Follett

Mary Parker Follett (1868-1933) was among those who built the basic framework of the classical school.
She was convinced that no one could become a whole person except as member of a group. She took for
granted Taylor’s philosophy of harmonious cooperation between workers and management, but, she
believed that the artificial distinction between managers and subordinates obscured this natural
partnership.

The contribution of Mary Parker Follett can be summarized as the “concept of dynamic administration”.
As a political scientist and philosopher, she developed her interest in the psychologically rooted
foundation of human activities.
She argues that the human beings who served production were important than the institutions in which
they worked. The core of her philosophy of organization is:

 Human interaction is the source of power emotions which colors one’s action as a member group.

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 Conflict is not the expression of difference in individuals but the difference in contributions of
individuals to the common task.
 Orders and authorities must be depersonalized. Group psychology rather than the psychology of an
individual was her theme.
She emphasized on treating workers as individual. She was more concerned with the principles of
management and had a firm belief in the integration of the interest of management and workers.
Mary Parker Follett concluded that the authority of a supervisor should be based on superiority.

1.4.3 The Behavioral School

The Behavioral School emerged partly because the classical approach did not achieve sufficient
production efficiency and workplace harmony. People did not always follow predicted or expected
pattern of behavior. Thus, there was increased demand in managers to deal effectively with the people
side of the organization. So, behavioral school grew out of attempts to understand better and manage
workers using insights from sociology and psychology.

Elton Mayo (1880-1949) and Fritz Roethlisberger

Elton Mayo and F. J. Roethlisberger undertook the famous experiments at Hawthorne Plant of Western
Electric Company between 1927 and 1932. The studies included investigations into:
 The extent of relationship between physical working condition and productivity.
 Extent of the value of wage incentive.
 General workers’ attitude.
 Extent of control of individuals upon working group.
Mayo and his colleagues found that changing illumination for the test group, modifying test period,
shortening working days and varying incentive pay systems did not seem to explain change in
productivity.

They came to the conclusion that factors other than these were responsible for the change in productivity.
They found that the improvement in productivity was due to such social factors as morale in ‘sense of
belonging’ which is the result of improved interpersonal relationship between the members of a working
group, and effective management.

Effective management is a kind of management that would understand human behavior, especially group
behavior and serve it through such skills as motivating, leading and communicating. This phenomenon
arose basically from people being ‘noticed’, is known as the Hawthorne Effect.

They concluded that:

1) Employees are unaffected.
2) Progress in mechanical aid can not increase production.
3) Improvement in mental condition can increase productivity.
4) Employees work hard when managers pay attention to them.
5) Social environment is the leader outside the factory.
6) Informal group can have positive impact.
They were talking about group dynamics understanding the people’s mind. They emphasized to the
fact that ‘management of people’ is a tool of productivity.

1.4.4 Management Science School

The management science school emerged as computers became available. It involves the use of
mathematical techniques for modeling, analyzing and solving management problems.

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