Principles & Practices of management

UNIT -1
Meaning & concept of management

Management is a universal phenomenon. It is a very popular and widely used term. All organizations - business,
political, cultural or social are involved in management because it is the management which helps and directs the
various efforts towards a definite purpose.

According to Harold Koontz, “Management is an art of getting things done through and with the people in formally
organized groups. It is an art of creating an environment in which people can perform and individuals and can co-
operate towards attainment of group goals”.

According to F.W. Taylor, “Management is an art of knowing what to do, when to do and see that it is done in the
best and cheapest way”.

Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre
- determined goals. It is the process of working with and through others to effectively achieve the goals of the
organization, by efficiently using limited resources in the changing world. Of course, these goals may vary from one
enterprise to another. E.g.: For one enterprise it may be launching of new products by conducting market surveys
and for other it may be profit maximization by minimizing cost.

Management involves creating an internal environment: - It is the management which puts into use the various
factors of production. Therefore, it is the responsibility of management to create such conditions which are
conducive to maximum efforts so that people are able to perform their task efficiently and effectively. It includes
ensuring availability of raw materials, determination of wages and salaries, formulation of rules & regulations etc.

Therefore, we can say that good management includes both being effective and efficient. Being effective means
doing the appropriate task i.e, fitting the square pegs in square holes and round pegs in round holes. Being efficient
means doing the task correctly, at least possible cost with minimum wastage of resources.

Management can be defined in detail in following categories :

1. Management as a Process

2. Management as an Activity

3. Management as a Discipline

4. Management as a Group

5. Management as a Science

6. Management as an Art

7. Management as a Profession

Management as a Process
As a process, management refers to a series of inter-related functions. It is the process by which management
creates, operates and directs purposive organization through systematic, coordinated and co-operated human efforts,
according to George R. Terry, “Management is a distinct process consisting of planning, organizing, actuating and
controlling, performed to determine and accomplish stated objective by the use of human beings and other
resources”. As a process, management consists of three aspects:

1. Management is a social process - Since human factor is most important among the other factors, therefore
management is concerned with developing relationship among people. It is the duty of management to make
interaction between people - productive and useful for obtaining organizational goals.
2. Management is an integrating process - Management undertakes the job of bringing together human
physical and financial resources so as to achieve organizational purpose. Therefore, is an important function
to bring harmony between various factors.
3. Management is a continuous process - It is a never ending process. It is concerned with constantly
identifying the problem and solving them by taking adequate steps. It is an on-going process.

Management as an Activity
Like various other activities performed by human beings such as writing, playing, eating, cooking etc, management
is also an activity because a manager is one who accomplishes the objectives by directing the efforts of others.
According to Koontz, “Management is what a manager does”. Management as an activity includes -

1. Informational activities - In the functioning of business enterprise, the manager constantly has to receive
and give information orally or in written. A communication link has to be maintained with subordinates as
well as superiors for effective functioning of an enterprise.
2. Decisional activities - Practically all types of managerial activities are based on one or the other types of
decisions. Therefore, managers are continuously involved in decisions of different kinds since the decision
made by one manager becomes the basis of action to be taken by other managers. (E.g. Sales Manager is
deciding the media & content of advertising).
3. Inter-personal activities - Management involves achieving goals through people. Therefore, managers have
to interact with superiors as well as the sub-ordinates. They must maintain good relations with them. The
inter-personal activities include with the sub-ordinates and taking care of the problem. (E.g. Bonuses to be
given to the sub-ordinates).

Management as a Discipline
Management as a discipline refers to that branch of knowledge which is connected to study of principles & practices
of basic administration. It specifies certain code of conduct to be followed by the manager & also various methods
for managing resources efficiently.

Management as a discipline specifies certain code of conduct for managers & indicates various methods of
managing an enterprise. Management is a course of study which is now formally being taught in the institutes and
universities after completing a prescribed course or by obtaining degree or diploma in management, a person can get
employment as a manager.

Any branch of knowledge that fulfils following two requirements is known as discipline:

1. There must be scholars & thinkers who communicate relevant knowledge through research and publications.
2. The knowledge should be formally imparted by education and training programmes.

Since management satisfies both these problems, therefore it qualifies to be a discipline. Though it is comparatively
a new discipline but it is growing at a faster pace.
Management as a Group
Management as a group refers to all those persons who perform the task of managing an enterprise. When we say
that management of ABC & Co. is good, we are referring to a group of people those who are managing. Thus as a
group technically speaking, management will include all managers from chief executive to the first - line managers
(lower-level managers). But in common practice management includes only top management i.e. Chief Executive,
Chairman, General Manager, Board of Directors etc. In other words, those who are concerned with making
important decisions, these persons enjoy the authorities to use resources to accomplish organizational objectives &
also responsibility to for their efficient utilization.

Management as a group may be looked upon in 2 different ways:

1. All managers taken together.

2. Only the top management

The interpretation depends upon the context in which these terms are used. Broadly speaking, there are 3 types of
managers -

1. Patrimonial / Family Manager: Those who have become managers by virtue of their being owners or
relatives of the owners of company.
2. Professional Managers: Those who have been appointed on account of their specialized knowledge and
degree.
3. Political Managers / Civil Servants: Those who manage public sector undertakings.

Managers have become a part of elite group of society as they enjoy higher standard of living in the society.

Management as a Science
Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which
explains a phenomenon. It establishes cause and effect relationship between two or more variables and underlines
the principles governing their relationship. These principles are developed through scientific method of observation
and verification through testing.

Science is characterized by following main features:

1. Universally acceptance principles - Scientific principles represents basic truth about a particular field of
enquiry. These principles may be applied in all situations, at all time & at all places. E.g. - law of gravitation
which can be applied in all countries irrespective of the time.

Management also contains some fundamental principles which can be applied universally like the Principle
of Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization -
business or non business.

2. Experimentation & Observation - Scientific principles are derived through scientific investigation &
researching i.e. they are based on logic. E.g. the principle that earth goes round the sun has been
scientifically proved.

Management principles are also based on scientific enquiry & observation and not only on the opinion of
Henry Fayol. They have been developed through experiments & practical experiences of large no. of
managers. E.g. it is observed that fair remuneration to personal helps in creating a satisfied work force.
 3. Cause & Effect Relationship - Principles of science lay down cause and effect relationship between various
variables. E.g. when metals are heated, they are expanded. The cause is heating & result is expansion.

The same is true for management, therefore it also establishes cause and effect relationship. E.g. lack of
parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e.
lack of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if workers are given
bonuses, fair wages they will work hard but when not treated in fair and just manner, reduces productivity of
organization.

4. Test of Validity & Predictability - Validity of scientific principles can be tested at any time or any number
of times i.e. they stand the test of time. Each time these tests will give same result. Moreover future events
can be predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.

Principles of management can also be tested for validity. E.g. principle of unity of command can be tested by
comparing two persons - one having single boss and one having 2 bosses. The performance of 1st person will
be better than 2nd.

It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of other
physical sciences like biology, physics, and chemistry etc. The main reason for the inexactness of science of
management is that it deals with human beings and it is very difficult to predict their behavior accurately. Since it is
a social process, therefore it falls in the area of social sciences. It is a flexible science & that is why its theories and
principles may produce different results at different times and therefore it is a behavior science. Ernest Dale has
called it as a Soft Science.

Management as an Art
Art implies application of knowledge & skill to trying about desired results. An art may be defined as personalized
application of general theoretical principles for achieving best possible results. Art has the following characters -

1. Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. It
is very important to know practical application of theoretical principles. E.g. to become a good painter, the
person may not only be knowing different colour and brushes but different designs, dimensions, situations
etc to use them appropriately. A manager can never be successful just by obtaining degree or diploma in
management; he must have also know how to apply various principles in real situations by functioning in
capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist, but each one has his own style and
approach towards his job. That is why the level of success and quality of performance differs from one
person to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his style.
Similarly management as an art is also personalized. Every manager has his own way of managing things
based on his knowledge, experience and personality, that is why some managers are known as good
managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that
has never existed before which requires combination of intelligence & imagination. Management is also
creative in nature like any other art. It combines human and non-human resources in useful way so as to
achieve desired results. It tries to produce sweet music by combining chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient
through constant practice. Similarly managers learn through an art of trial and error initially but application
of management principles over the years makes them perfect in the job of managing.
 5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner,
management is also directed towards accomplishment of pre-determined goals. Managers use various
resources like men, money, material, machinery & methods to promote growth of an organization.

Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of
highest order because it deals with moulding the attitude and behavior of people at work towards desired goals.

Management as both Science and Art

Management is both an art and a science. The above mentioned points clearly reveals that management combines
features of both science as well as art. It is considered as a science because it has an organized body of knowledge
which contains certain universal truth. It is called an art because managing requires certain skills which are personal
possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.

A manager to be successful in his profession must acquire the knowledge of science & the art of applying it.
Therefore management is a judicious blend of science as well as an art because it proves the principles and the way
these principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot
become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of
singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving
various managerial problems that is why, science and art are not mutually exclusive but they are complementary to
each other (like tea and biscuit, bread and butter etc.).

The old saying that “Manager are Born” has been rejected in favor of “Managers are Made”. It has been aptly
remarked that management is the oldest of art and youngest of science. To conclude, we can say that science is the
root and art is the fruit.

Management as a Profession
Over a large few decades, factors such as growing size of business unit, separation of ownership from management,
growing competition etc have led to an increased demand for professionally qualified managers. The task of
manager has been quite specialized. As a result of these developments the management has reached a stage where
everything is to be managed professionally.

A profession may be defined as an occupation that requires specialized knowledge and intensive academic
preparations to which entry is regulated by a representative body. The essentials of a profession are:

1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used for
development of professionals. Every professional must make deliberate efforts to acquire expertise in the
principles and techniques. Similarly a manager must have devotion and involvement to acquire expertise in
the science of management.
2. Formal Education & Training - There are no. of institutes and universities to impart education & training
for a profession. No one can practice a profession without going through a prescribed course. Many institutes
of management have been set up for imparting education and training. For example, a CA cannot audit the
A/C’s unless he has acquired a degree or diploma for the same but no minimum qualifications and a course
of study has been prescribed for managers by law. For example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are primarily motivated by the
desire to serve the society. Their actions are influenced by social norms and values. Similarly a manager is
 responsible not only to its owners but also to the society and therefore he is expected to provide quality
goods at reasonable prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains certain rules
and regulations, norms of honesty, integrity and special ethics. A code of conduct is enforced by a
representative association to ensure self discipline among its members. Any member violating the code of
conduct can be punished and his membership can be withdrawn. The AIMA has prescribed a code of conduct
for managers but it has no right to take legal action against any manager who violates it.
5. Representative Association - For the regulation of profession, existance of a representative body is a must.
For example, an institute of Charted Accountants of India establishes and administers standards of
competence for the auditors but the AIMA however does not have any statuary powers to regulate the
activities of managers.

From above discussion, it is quite clear that management fulfills several essentials of a profession, even then it is not
a full fledged profession because: -

a. It does not restrict the entry in managerial jobs for account of one standard or other.
b. No minimum qualifications have been prescribed for managers.
c. No management association has the authority to grant a certificate of practice to various managers.
d. All managers are supposed to abide by the code formulated by AIMA,
e. Competent education and training facilities do not exist.
f. Managers are responsible to many groups such as shareholders, employees and society. A regulatory code
may curtail their freedom.
g. Managers are known by their performance and not mere degrees.
h. The ultimate goal of business is to maximize profit and not social welfare. That is why Haymes has rightly
remarked, “The slogan for management is becoming - ’He who serves best, also profits most’.”

Features of Management

Management is an activity concerned with guiding human and physical resources such that organizational goals can
be achieved. Nature of management can be highlighted as: -
 1. Management is Goal-Oriented: The success of any management activity is assessed by its achievement of
the predetermined goals or objective. Management is a purposeful activity. It is a tool which helps use of
human & physical resources to fulfill the pre-determined goals. For example, the goal of an enterprise is
maximum consumer satisfaction by producing quality goods and at reasonable prices. This can be achieved
by employing efficient persons and making better use of scarce resources.
2. Management integrates Human, Physical and Financial Resources: In an organization, human beings
work with non-human resources like machines. Materials, financial assets, buildings etc. Management
integrates human efforts to those resources. It brings harmony among the human, physical and financial
resources.
3. Management is Continuous: Management is an ongoing process. It involves continuous handling of
problems and issues. It is concerned with identifying the problem and taking appropriate steps to solve it.
E.g. the target of a company is maximum production. For achieving this target various policies have to be
framed but this is not the end. Marketing and Advertising is also to be done. For this policies have to be
again framed. Hence this is an ongoing process.
4. Management is all Pervasive: Management is required in all types of organizations whether it is political,
social, cultural or business because it helps and directs various efforts towards a definite purpose. Thus clubs,
hospitals, political parties, colleges, hospitals, business firms all require management. When ever more than
one person is engaged in working for a common goal, management is necessary. Whether it is a small
business firm which may be engaged in trading or a large firm like Tata Iron & Steel, management is
required everywhere irrespective of size or type of activity.
5. Management is a Group Activity: Management is very much less concerned with individual’s efforts. It is
more concerned with groups. It involves the use of group effort to achieve predetermined goal of
management of ABC & Co. is good refers to a group of persons managing the enterprise.
6. Intangible force: Management can neither be seen nor touched but one can feel its existence, in the way the
organization functions.
Precisely, all the functions, activities and processes of the organization are interconnected to one another. And it is
the task of the management to bring them together in such a way that they help in reaching the intended result.

Scope or Branches of Management:

Management is an all pervasive function since it is required in all types of organized endeavour. Thus, its scope is

very large.

The following activities are covered under the scope of management:

(i) Planning,
(ii) Organization
(iii) Staffing.
(iv) Directing,
(v) Coordinating, and
(vi) Controlling.

The operational aspects of business management, called the branches of management, are as follows:
1. Production Management
2. Marketing Management
3. Financial Management.
4. Personnel Management and
5. Office Management.
1. Production Management:
Production means creation of utilities. This creation of utilities takes place when raw materials are converted into
finished products. Production management, then, is that branch of management ‘which by scientific planning and
regulation sets into motion that part of enterprise to which has been entrusted the task of actual translation of raw
material into finished product.’
It is a very important field of management ,’for every production activity which has not been hammered on the anvil
of effective planning and regulation will not reach the goal, it will not meet the customers and ultimately will force a
business enterprise to close its doors of activities which will give birth to so many social evils’.
Plant location and layout, production policy, type of production, plant facilities, material handling, production
planning and control, repair and maintenance, research and development, simplification and standardization, quality
control and value analysis, etc., are the main problems involved in production management.

2. Marketing Management:
Marketing is a sum total of physical activities which are involved in the transfer of goods and services and which
provide for their physical distribution. Marketing management refers to the planning, organizing, directing and
controlling the activities of the persons working in the market division of a business enterprise with the aim of
achieving the organization objectives.
It can be regarded as a process of identifying and assessing the consumer needs with a view to first converting them
into products or services and then involving the same to the final consumer or user so as to satisfy their wants with a
stress on profitability that ensures the optimum use of the resources available to the enterprise. Market analysis,
marketing policy, brand name, pricing, channels of distribution, sales promotion, sale-mix, after sales service,
market research, etc. are the problems of marketing management.

3. Financial Management:
Finance is viewed as one of the most important factors in every enterprise. Financial management is concerned with
the managerial activities pertaining to the procurement and utilization of funds or finance for business purposes.

The main functions of financial management include:

(i) Estimation of capital requirements;
(ii) Ensuring a fair return to investors;
(iii) Determining the suitable sources of funds;
(iv) Laying down the optimum and suitable capital
Structure for the enterprise:
(i) Co-coordinating the operations of various departments;
(ii) Preparation, analysis and interpretation of financial statements;
(iii) Laying down a proper dividend policy; and
(iv) Negotiating for outside financing.

4. Personnel Management:

Personnel Management is that phase of management which deals with the effective control and use of manpower.

Effective management of human resources is one of the most crucial factors associated with the success of an

enterprise. Personnel management is concerned with managerial and operative functions.Managerial functions of

personnel management include:

(i) Personnel planning;

(ii) Organizing by setting up the structure of relationship among jobs, personnel and physical factors to contribute
towards organization goals;
(iii) Directing the employees; and
(iv) Controlling.
The operating functions of personnel management are:
(i) Procurement of right kind and number of persons;
(ii) Training and development of employees;
(iii) Determination of adequate and equitable compensation of employees;
(iv) Integration of the interests of the personnel with that of the enterprise; and
(v) Providing good working conditions and welfare services to the employees.

5. Office Management:
The concept of management when applied to office is called ‘office management’. Office management is the
technique of planning, coordinating and controlling office activities with a view to achieve common business
objectives. One of the functions of management is to organize the office work in such a way that it helps the
management in attaining its goals. It works as a service department for other departments.
The success of a business depends upon the efficiency of its administration. The efficiency of the administration
depends upon the information supplied to it by the office. The volume of paper work in office has increased
manifold in these days due to industrial revolution, population explosion, increased interference by government and
complexities of taxation and other laws.
Level of management
 1. Top-Level Management: This is the highest level in the organizational hierarchy, which includes Board of
Directors and Chief Executives. They are responsible for defining the objectives, formulating plans,
strategies and policies.

2. Middle-Level Management: It is the second and most important level in the corporate ladder, as it creates a
link between the top and lower-level management. It includes departmental and division heads and
managers who are responsible for implementing and controlling plans and strategies which are formulated by
the top executives.

3. Lower Level Management: Otherwise called as functional or operational level management. It

includes first-line managers, foreman, supervisors. As lower-level management directly interacts with the
workers, it plays a crucial role in the organization because it helps in reducing wastage and idle time of the
workers, improving the quality and quantity of output.

The term “Levels of Management’ refers to a line of demarcation between various managerial positions in an
organization. The number of levels in management increases when the size of the business and work force increases
and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed
by any managerial position. The levels of management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels is discussed
below:
 LEVELS OF MANAGEMENT
1. Top Level of Management

It consists of board of directors, chief executive or managing director. The top management is the ultimate
source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and
coordinating functions.

The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the
enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible to the top
management for the functioning of their department. They devote more time to organizational and directional
functions. In small organization, there is only one layer of middle level of management but in big enterprises,
there may be senior and junior middle level management. Their role can be emphasized as -

a. They execute the plans of the organization in accordance with the policies and directives of the top
management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
 g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.

3. Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of supervisors,
foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to
those executives whose work has to be largely with personal oversight and direction of operative
employees”. In other words, they are concerned with direction and controlling function of management.
Their activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher
level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the workers.

Objectives of Management
The main objectives of management are:

1. Getting Maximum Results with Minimum Efforts - The main objective of management is to secure
maximum outputs with minimum efforts & resources. Management is basically concerned with thinking &
utilizing human, material & financial resources in such a manner that would result in best combination. This
combination results in reduction of various costs.
2. Increasing the Efficiency of factors of Production - Through proper utilization of various factors of
production, their efficiency can be increased to a great extent which can be obtained by reducing spoilage,
wastages and breakage of all kinds, this in turn leads to saving of time, effort and money which is essential
for the growth & prosperity of the enterprise.
3. Maximum Prosperity for Employer & Employees - Management ensures smooth and coordinated
functioning of the enterprise. This in turn helps in providing maximum benefits to the employee in the shape
of good working condition, suitable wage system, incentive plans on the one hand and higher profits to the
employer on the other hand.
4. Human betterment & Social Justice - Management serves as a tool for the upliftment as well as betterment
of the society. Through increased productivity & employment, management ensures better standards of
living for the society. It provides justice through its uniform policies.
Importance of Management

1. It helps in Achieving Group Goals - It arranges the factors of production, assembles and organizes the
resources, integrates the resources in effective manner to achieve goals. It directs group efforts towards
achievement of pre-determined goals. By defining objective of organization clearly there would be no
wastage of time, money and effort. Management converts disorganized resources of men, machines, money
etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that
enterprise work towards attainment of goals.
2. Optimum Utilization of Resources - Management utilizes all the physical & human resources productively.
This leads to efficacy in management. Management provides maximum utilization of scarce resources by
selecting its best possible alternate use in industry from out of various uses. It makes use of experts,
professional and these services leads to use of their skills, knowledge, and proper utilization and avoids
wastage. If employees and machines are producing its maximum there is no under employment of any
resources.
3. Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum
input & getting maximum output. Management uses physical, human and financial resources in such a
manner which results in best combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated functions). To
establish sound organizational structure is one of the objective of management which is in tune with
objective of organization and for fulfillment of this, it establishes effective authority & responsibility
relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who
are subordinates. Management fills up various positions with right persons, having right skills, training and
qualification. All jobs should be cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in changing environment. It keeps in touch
with the changing environment. With the change is external environment, the initial co-ordination of
organization must be changed. So it adapts organization to changing demand of market / changing needs of
societies. It is responsible for growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to better economical production which
helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding
wastage of scarce resource. It improves standard of living. It increases the profit which is beneficial to
business and society will get maximum output at minimum cost by creating employment opportunities which
generate income in hands. Organization comes with new products and researches beneficial for society.

Management and Administration

According to Theo Haimann, “Administration means overall determination of policies, setting of major objectives,
the identification of general purposes and laying down of broad programmes and projects”. It refers to the activities
of higher level. It lays down basic principles of the enterprise. According to Newman, “Administration means
guidance, leadership & control of the efforts of the groups towards some common goals”.

Whereas, management involves conceiving, initiating and bringing together the various elements; coordinating,
actuating, integrating the diverse organizational components while sustaining the viability of the organization
towards some pre-determined goals. In other words, it is an art of getting things done through & with the people in
formally organized groups.

The difference between Management and Administration can be summarized under 2 categories: -

1. Functions
2. Usage / Applicability
On the Basis of Functions: -

Basis Management Administration

Meaning Management is an art of getting things done through others It is concerned with formulation of broad
by directing their efforts towards achievement of pre- objectives, plans & policies.
determined goals.

Nature Management is an executing function. Administration is a decision-making

function.

Process Management decides who should as it & how should he dot Administration decides what is to be done
it. & when it is to be done.

Functio Management is a doing function because managers get Administration is a thinking function
n work done under their supervision. because plans & policies are determined
under it.

Skills Technical and Human skills Conceptual and Human skills

Level Middle & lower level function Top level function

On the Basis of Usage: -

Basis Management Administration

Applicabilit It is applicable to business concerns i.e. profit- It is applicable to non-business concerns i.e. clubs,
y making organization. schools, hospitals etc.

Influence The management decisions are influenced by The administration is influenced by public opinion,
the values, opinions, beliefs & decisions of the govt. policies, religious organizations, customs etc.
managers.

Status Management constitutes the employees of the Administration represents owners of the enterprise
organization who are paid remuneration (in the who earn return on their capital invested & profits
form of salaries & wages). in the form of dividend.

Practically, there is no difference between management & administration. Every manager is concerned with both -
administrative management function and operative management function as shown in the figure. However, the
managers who are higher up in the hierarchy denote more time on administrative function & the lower level denote
more time on directing and controlling worker’s performance i.e. management.
The Figure above clearly shows the degree of administration and management performed by the different levels of
management

Functions of Management
Management has been described as a social process involving responsibility for economical and effective planning
& regulation of operation of an enterprise in the fulfillment of given purposes. It is a dynamic process consisting of
various elements and activities. These activities are different from operative functions like marketing, finance,
purchase etc. Rather these activities are common to each and every manger irrespective of his level or status.

Different experts have classified functions of management. According to George & Jerry, “There are four
fundamental functions of management i.e. planning, organizing, actuating and controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas
Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing,
D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are
functions of management given by KOONTZ and O’DONNEL
i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management but practically these
functions are overlapping in nature i.e. they are highly inseparable. Each function blends into the other & each
affects the performance of others.
1. Planning
It is the basic function of management. It deals with chalking out a future course of action & deciding in
advance the most appropriate course of actions for achievement of pre-determined goals. According to
KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from
where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem
solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus,
planning is a systematic thinking about ways & means for accomplishment of pre-determined goals.
Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is
an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing
It is the process of bringing together physical, financial and human resources and developing productive
relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize
a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and
personnel’s”. To organize a business involves determining & providing human and non-human resources to
the organizational structure. Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.
3. Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater
importance in the recent years due to advancement of technology, increase in size of business, complexity of
human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square
holes and round pegs in round holes. According to Kootz&O’Donell, “Managerial function of staffing
involves manning the organization structure through proper and effective selection, appraisal & development
of personnel to fill the roles designed un the structure”. Staffing involves:
  Manpower Planning (estimating man power in terms of searching, choose the person and giving the
right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.
4. Directing
It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion
the action of people because planning, organizing and staffing are the mere preparations for doing the work.
Direction is that inert-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following
elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,
negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates
in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to another.
It is a bridge of understanding.

5. Controlling
It implies measurement of accomplishment against the standards and correction of deviation if any to ensure
achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in
conformities with the standards. An efficient system of control helps to predict deviations before they
actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper
progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”.
According to Koontz &O’Donell “Controlling is the measurement & correction of performance activities of
subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.
Managerial roles by henry mintzberg
These roles were developed by Henry Mintzberg in the late 1960s after a careful study of executives at work. All
these roles in one form or another deal with people and their interpersonal relationships.

Interpersonal Roles
Managers spend a considerable amount of time in interacting with other people both within their
own organizations as well as outside. These people include peers, subordinates, superiors, suppliers, customers,
government officials and community leaders. All these interactions require an understanding of interpersonal
relations. Studies show that interacting with people takes up nearly 80 per cent of a manager’s time. These
interactions involve the following three major interpersonal roles:
Figurehead: Managers act as symbolic figureheads performing social or legal obligations. These duties include
greeting visitors, signing legal documents, taking important customers to lunch, attending asubordinate’s wedding or
speaking at functions in schools and churches. All these/ primarily, are duties of a ceremonial nature but are
important for the smooth functioning of the organization
Leader: The influence of the manager is most clearly seen in his role as a leader of the unit or organization. Since
he is responsible for the activities of his subordinates, he must lead and coordinate their activities in meeting task-
related goals and he must motivate them to perform better. He must be an exemplary leader so that his subordinates
follow his directions and guidelines with respect and dedication.
Liaison: In addition to their constant contact with their own subordinates, peers and superiors, the managers must
maintain a network of outside contacts in order to assess the external environment of competition, social changes or
changes in governmental rules, regulations and laws. In this role, the managers build up their own external
information system.
In addition, they develop networks of mutual obligations with other managers in the organization. They also form
alliances to win support for their proposals or decisions. The liaison with external sources of information can be
developed by attending meetings and professional conferences, by  personal phone calls, trade  journals and by
informal personal contacts within outside agencies.
Informational Roles
By virtue of his interpersonal contacts, a manager emerges as a source of information about a variety of issues
concerning the organization. In this capacity of information processing, a manager executes the following  three
roles:
Monitor: The managers are constantly monitoring and scanning their environment, both internal and external,
collecting and studying information regarding their organization and the outside environment affecting their
organization. This can be done by reading reports and periodicals, by asking their liaison contacts and through
gossip, hearsay and speculation.
Disseminator of  Information: The managers must transmit their information regarding changes in policies or other
matters to their subordinates, their peers and to other members of the organization.  This can be done through
memorandums, phone calls, individual meetings and group meetings.
Spokesperson: A manager has to be a spokesman for his unit and he represents his unit in either sending relevant
information to people outside his unit or making some demands on behalf of his unit. This may be in the form of the
president of the company making a speech to a lobby on behalf of an organizational cause or an engineer suggesting
a product modification to a supplier.

Decisional Roles
On the basis of the environmental information received, a manager must make decisions and solve organizational
problems. In that respect, a manager plays four important roles.
Entrepreneur: As entrepreneurs, managers are continuously involved in improving their units and facing the
dynamic technological challenges. They are constantly on the lookout for new ideas for product improvement or
products addition.
They initiate feasibility studies, arrange for capital for new products if necessary, and ask for suggestions from the
employees for ways to improve the organization. This can be achieved through suggestion boxes, holding strategy
meetings with project managers and R & D personnel.
Conflict Handler: The managers are constantly involved as arbitrators in solving differences among the
subordinates or the employee’s conflicts with the central management. These conflicts may arise due to demands for
higher pay or other benefits or these conflicts may involve outside forces such as vendors increasing their prices, a
major customer going bankrupt or unwanted visits by governmental inspectors.
 Managers must anticipate such problems and take preventive action if possible or take corrective action once the
problems have arisen. These problems may also involve labor disputes, customer complaints, employee grievances,
machine breakdowns, cash flow shortages and interpersonal conflicts.
Resource Allocator: The third decisional role of a manager is that of a resource allocator. The managers establish
priorities among various projects or programs and make budgetary allocations to the different activities of
the organization based upon these priorities. They assign personnel to jobs, they allocate their own time to different
activities and they allocate funds for new equipment, advertising and pay raises.
Negotiator: The managers represent  their units or organizations in negotiating deals and agreements within and
outside of the organization. They negotiate contracts with the unions. Sale managers may negotiate prices with
prime customers. Purchasing managers may negotiate prices with vendors.
All these ten roles are important in a manager’s  job and are interrelated even through some roles may be more
influential than others, depending upon the managerial position. For example, sales managers may give more
importance to interpersonal roles while the production managers may give more importance to decisional roles.
The ability to recognize the appropriate role to play in each situation and   the flexibility to change roles readily
when necessary, are characteristics of effective managers. Most often, however, the managerial effectiveness is
determined by how well the decisional roles are performed.

Managerial Skills
1. Technical skill is knowledge of and proficiency in activities involving methods, processes, and procedures. Thus it
involves working with tools and specific techniques. For example, mechanics work with tools, and their
supervisors should have the ability to teach them how to use these tools. Similarly, accountants apply specific
techniques in doing their job.
2. Human skill is the ability to work with people; it is cooperative effort; it is teamwork; it is the creation of an
environment in which people feel secure and free to express their opinions.
3. Conceptual skill is the ability to see the "big picture," to recognize significant elements in a situation, and to
understand the relationships among the elements.
Forms of business organization
Forms of Organization
The corporate form of business includes sole proprietorship, partnership and company forms.
The type of business organization is depends upon the factors like type of business, expected volume of business,
area of operations, life span of business, profit sharing arrangements, tax advantage and Government regulations etc.
The division of business organizations can be made as follows.
1. Non corporate firms which includes sole proprietorship, partnership and HUF.
2. Corporate form which includes companies and corporative units.
1 Sole Proprietorship: “Sole proprietorship is a form of organization in which an individual introduces his own
capital, uses his own skill and intelligence in the managements of affairs and is solely responsible for the results of
its operations”. As it is an individual entrepreneurship, it is the easiest to form and is also the simplest in
organization. In this type of organization, the owner has to find the capital on his personal basis only and therefore
he has to start it in his own house or rented premises. There are no legal formality to be gone through except those
required for a particular type of business.
Pros:
1. In this type of business organization, no legal formalities are required so it is easy to form and start the business.
2. There is no problem related to the co-ordination because the proprietor himself has to decide everything.
3. It is possible to take prompt decision because the owner power is in hands of single owner and therefore, it is
possible to take the advantage of gaining opportunities.
4. Secrecy can be maintained in the business matter therefore the proprietor will be able to take full advantage of any
new ideas that occur to him.
5. Sole proprietorship is the least regulated form of business organization.
Cons:
1. The individual proprietor has to suffer from the limitations of financial resources. He cannot borrow much money
from the banks or financial institutions and therefore the growth is limited
2. The managerial ability of proprietor is limited because nobody is expert in all the matters therefore his decision
becomes unstable sometimes.
3. The liability of the owner is unlimited. Not only business asset but the personal assets also will be used to pay the
debts of the firm.
4. The proprietary business comes to an end when anything is happen to the proprietor.
From the merits and demerits, it can be said that the proprietary firm is having limited scope. If the firm has to make
expansion than this type of organization is not helpful and therefore the form of partnership or companies are
adopted.
2 Partnership: The individual proprietorship organization, with all its limitations, proved unequal to the
requirements of the expanding business, expansion of the business called for more capital, enhanced risk, and
required more managerial ability than could be expected of a single individual. A wealthy man may lack managerial
capacity and an able manager might not have money enough to finance a big concerns. This made some kind of an
association among individual businessman necessary and by that way the association of the persons becomes
partnership. It grew essentially out of the failures and limitations of the individual proprietorship and represents the
second stage in the evolution forms of business organization. “The partnership is, the relation between the persons
who have agreed to share profits of a business carried on by all or any of them acting for all”. The partnership firm
can be form when there is an existence of business that is the partners are get together for doing business not for
charitable work, one person cannot enter into the partnership with himself so there is plurality of persons is required
and there must be contractual relationship between them and their object is to earn profit. As per the Indian
companies act 1956, there are minimum 2 persons and maximum 50 persons in general partnership business.
Pros:
1. The partnership can easily be formed and the expenses of formation are very less.
 2. The expansion becomes easier than sole proprietorship so for more capital more persons can be admitted into the
partnership.
3. Partners among themselves provide various sorts of talent necessary for handling of the firm and therefore the
decision can be balanced.
4. The line can be changed easily if the need arises.
5. The losses incurred by the firm will be shared by the all partners hence the share of loss of each partner becomes
less.
Cons:
1. There are high chances of conflicts and difference of opinions between the partners.
2. There is a limit of 50 partners so more expansion will be restricted if necessary.
3. There is a chance of withdrawal of partnership in case of death, insolvency of any partner.
4. A dishonest or incompetent partner may land the firm in difficulties because his acts would bind the firm and the
other partners. The partnership of business organization is excellent when the size of the firm is limited and the
partners can work in full co-operation with one other. The partnership form is mainly suitable to the medium scale
business. When the firm becomes large and partners cannot co-operate with one another the business would be better
under the company form of business organization.

COOPERATIVE SOCIETY
A cooperative society is a voluntary association that started with the aim of the service of its members. It is a form
of business where individuals belonging to the same class join their hands for the promotion of their common
goals.These are generally formed by poor people or weaker sections of people in society. 
characteristics of cooperative organizations.
1. Voluntary association
Everybody having a common interest is free to join a cooperative society. There is no restriction based on caste,
creed, religion, color, etc. Anybody can also leave it at any time after giving due notice to the society.That is the
specialty of any cooperative society. There should be a minimum of 10 members for a cooperative society, but there
is no maximum limit for the membership.
2. Separate legal entity
A cooperative society after registration is recognized as a separate legal entity by law. It acquires an identity quite
distinct and independent of its members can purchase, dispose of its assets, can sue, and also can be sued.
3. Democratic management
Equalities are the essence of cooperative enterprises, governed by democratic principles. Every member has got
equal rights over the function management of that society.As such, each member has only single voting right
irrespective of the number of shares held or capital contributed by them.In the case of a cooperative society, no
member detects the terms and conditions of the functioning because “one man one vote” is the thumb rule.
4. Service motive
 The main objective being the formation of any cooperative society is for mutual benefit through self-help and
collective effort. Profit is not at all on the agenda of the cooperative society.But if members so like, they can take up
any activities of their choice to generate a surplus to meet the day-to-day expenses.

4. Company/ Corporation
Company are probably the dominant form of business organization in the India. Although fewer in number, Company
account for the lion's share of aggregate business receipts in the Indian economy. A corporation is a legal entity doing
business, and is distinct from the individuals within the entity. Public Company are owned by shareholders who elect
a board of directors to oversee primary responsibilities. Along with standard, for-profit Company, there are charitable,
not-for-profit Company.

CHARACTERISTICS OF A COMPANY
The main characteristics of a company are :
1. Incorporated association. A company is created when it is registered under the Companies Act. It comes into being
from the date mentioned in the certificate of incorporation.
2. Artificial legal person. A company is an artificial person. Negatively speaking, it is not a natural person. It exists
in the eyes of the law and cannot act on its own. It has to act through a board of directors elected by shareholders
3. Separate Legal Entity : A company has a legal distinct entity and is independent of its members.
4. Perpetual Existence. A company is a stable form of business organization. Its life does not depend upon the death,
insolvency or retirement of any or all shareholder (s) or director (s).
5. Common Seal. As was pointed out earlier, a company being an artificial person has no body similar to natural
person and as such it cannot sign documents for itself. It acts through natural person who are called its directors.
6. Limited Liability : A company may be company limited by shares or a company limited by guarantee.

Advantages
 Unlimited commercial life. The corporation is an entity of its own and does not dissolve when ownership
changes.
 Greater flexibility in raising capital through the sale of stock.
 Ease of transferring ownership by selling stock.
 Limited liability. This limited liability is probably the biggest advantage to organizing as a corporation.
Individual owners in Company have limits on their personal liability. Even if a corporation is sued for
billions of dollars, individual shareholder's liability is generally limited to the value of their own stock in the
corporation.
 
Disadvantages
 Regulatory restrictions. Company are typically more closely monitored by governmental agencies, including
federal, state, and local. Complying with regulations can be costly.
  Higher organizational and operational costs. Company have to file articles of incorporation with the
appropriate state authorities. These legal and clerical expenses, along with other recurring operational
expenses, can contribute to budgetary challenges.
 Double taxation. The possibility of double taxation arises when companies declare and pay taxes on the net
income of the corporation, which they pay through their corporate income tax returns. If the corporation also
pays out dividends to individual shareholders, those shareholders must declare that dividend income as
personal income and pay taxes at the individual income tax rates. Thus, the possibility of double taxation.

Difference Between Partnership And Company

1. The members of the partnership firm are called partners whereas the members of company are called
shareholders.
2. The partnership business is to be governed by the Indian Partnership Act, 1932 whereas the business of the
company is determined by Indian Companies act, 2013
3. Partnership firm is created by contract between two or more persons whereas company is created by law i.e
registration.
4. The rules of a partnership are to be registered by the state government whereas in the case of the company it
is to be regulated by the central government.
5. Registration of a firm is not necessary whereas the company's registration is mandatory.
6. The mandatory document in case of partnership is partnership deed whereas in the case of a company the
mandatory document is the memorandum of association and articles of association.
7. A partnership firm is not a separate legal entity from its partners whereas a company is a separate legal
entity. 
8. Partners have unlimited liability whereas shareholders have limited liability.
9. Seal ( Stamp ) is not required for partnership whereas in case of company stamp is required.
10. In case of partnership, management is to be done by active partners whereas in case of company management
is done by the board of directors.
11. Decree against a firm can be executed against partners whereas decree can't be executed against
shareholders.
12. In the case of a private company, the word is to be used Pvt. Ltd and in case of a public company, the word is
to be used Ltd. only whereas such words are not required in case of partnership.
13. A partnership firm has to maintain accounts as per the conditions stated in partnership deed whereas a
company should maintain accounts and auditing of accounts by a certified Chartered Accountant.
14. The name of the partnership firm can be changed easily by having discussion between the partners and by
following the simple procedure provided in s.60 whereas the name of the company can't be changed easily
and prior approval of the central government is required.
 Evolution of Management Thoughts

Scientific Management Principles:

Meaning
The term scientific management is the combination of two words i.e. scientific and management.
The word "Scientific" means systematic analytical and objective approach while "management"
means getting things done through others. In simple words scientific management means
application of principles and methods of science in the field of management. "Scientific
management is the art of knowing best and cheapest way". It is the art of knowing exactly what
is to be done by whom it is to be done and what is the best and cheapest way of doing it.
Scientific methods and techniques are applied in the field of management i.e., recruitment,
selection, training, placement of workers and methods of doing work in the best and cheapest
way.

The Scientific management can be studied under the following heads:

 Primary principles of scientific management as evolved by F.W. Taylor.

 Secondary principles of scientific management.
Definitions of Scientific Management

The main definitions of scientific management are as follows:

 According to Fredrick Winslow Taylor, "Scientific management means knowing exactly what
you want men to do and seeing that they do it in the best and the cheapest way."

According to Harlow Person, "Scientific management characterizes that form of organisation and
procedure in purposive collective effort which rests on principles or laws derived by the process
of scientific investigation and analysis, instead of tradition or on policies determined empirically
and casually by the process of trial and error."

According to Jones, "Scientific management is a body of rules, together with their appropriate
expression in physical and administrative mechanism and specialized executives, to be operated
in coordination as a system for the achievement of a new strictness in the control and process of
production."

According to Lioyd, Dodd and Zynch, In broad outline "Scientific management seeks to get the
maximum from methods, men materials machines and money and it controls the works of
production from the location and layout of the worker to the final distribution of the product."

According to Peter F. Drucker, " Scientific management is the organized study of work, the
analysis of work into its simplest element and the systematic improvement of the workers".
Characteristics / Features of Scientific Management

The main characteristics or features of scientific management are as follows:

 Approach: It is a systematic, analytical and objective approach to solve industrial problems.

 Economy: The basis of scientific management is economy. For implementing economy, all the
unnecessary elements of production are eliminated and a sincere effort is made to achieve
optimum production at the minimum cost.
 A Definite plan: The main characteristic of scientific management is that before starting and
work there must be a definite plan before as and the work is to be done strictly according to that
plan.
 Discards old methods: It discards the age old methods of rule of thumb and hit or miss approaches.
 Emphasis: It lays emphasis on all factors of production, men, material and technology.
 Techniques: It implies scientific techniques in methods of work, recruitment, selection and
training of workers.
 Attempts: It attempts to develop each man to his greatest efficiency and prosperities.
 Method: It attempts to discover the best method of doing a work at the cheapest cost.
 A definite Aim: It is another main characteristic of scientific management. Scientific
management is the process of organizing, directing, conducting and controlling human activities.
Hence there must be a definite aim before the managers, so that the human activities be
organized directed conducted and controlled for achieving that aim or aims.
 Changes in attitude: It involves a complete change in the mental attitude of workers as well as
the management.
 A Set of Rules: There must be a set of rules in accordance with the laid plan so that the
objectives can be achieved. According to F.W. Taylor, It is no single element but rather the
 whole combination that constitutes the scientific management

Harmony not Discord

Taylor emphasized that harmony rather than discord should be obtained in group action.
Harmony means that a group should work as a unit and contribute to the maximum. Within it
there should be mutual give Band take situation and proper understanding.

Co-operation not Individualism

Scientific management requires that parts of industrial body co-operate with each other, scientific
management is based on mutual confidence, co-operation and goodwill. It requires a complete
mental revolution on the part of both workers and management. Taylor suggested "Substitution
of war for peace, hearty and brotherly co-operation for contention and strife, replacement of
suspicious watchfulness with mutual confidence of becoming friends instead of enemies."

The Development of each man to his greatest efficiency and prosperity

In order to maximize production all possible efforts are made to increase the efficiency of
workers. Workers are selected according to the nature of work. It includes scientific training,
scientific allotment of work, implementation of incentive wage plan above all, development of
workers to the fullest extent for themselves and also for the companies highest prosperity.
Scientific management leads to the development of each worker to his greatest efficiency and
prosperity.

Standardization of tools & equipment

another principle of scientific management is the standardization of tools and equipments. it is essential for the
improvement of quality of products and also for bringing about uniformity in the production of standard goods. As a
matter of fact, standardization should be maintained in respect of tools, equipments, materials, period of work,
working conditions, amount of work, cost of production etc.

Scientific Selection and Training of Workers

Scientific management requires a radical change in the selection and training or workers. They
must be selected on a scientific basis. The old traditional and absolute methods of selection of
workers have to be replaced by the scientific and modern methods. Taylor suggested that the
workers should be selected on scientific basis taking into account their educational background,
health, work experience, aptitude, physical, strength and I.Q. etc. Further, proper training by
qualified persons should be given according to their capabilities and nature of work.
Experimentation and Scientific Investigation
The success of scientific management depends upon experimentation and investigation. It
involves analytical study, observation research, experimentation and investigation. It is only
through constant experimentation and scientific investigation that one can find out the best and
most efficient methods of doing a work. It has been rightly said that experimentation and
investigation is the life-blood of scientific management.

Incentive Wage System

Taylor for the first time advocated an incentive wage system in the form of differential piece
wages instead of time wages. Under differential piece system two wage rates are prescribed, i.e.
one lower and the other higher. Those who are unable to perform standard work within standard
time are paid wages at lower rate per unit. On the contrary, those who attain standard or even
more within the standard time are paid wages at higher rate per unit. Thus, there is considerable
difference in wages between those who attain and those who do not attain standards.
Scientific Allotment of Task
Another important principle of scientific management is the scientific allotment of task. Every
job must be entrusted to the best available man according to his aptitude and training for that
specific job. As a matter of fact, every person, however efficient he may be, cannot perform all
the jobs efficiently. One has to carefully fit "the man to the job", and "the job to the man". The
principle of 'right job to the right person' should be implemented. A worker may perform his task
most efficiently provided it suits his inclination aptitude taste and capability.

Frank and Lillian Gilbreth:- The Gilbreth used motion picture films to study hand and body
motions. Their concern was on “economy of movement “They emphasized on the use of
technique and methods to help workers in developing their fullest potential trough training
,improved tools ,working environment and standardize work method.
Willing H Leffingwell:- Leffingwell developed five principles of effective work. They are: - i)
planning at work ii) scheduling the work iii) executing the work iv) measuring the work and v)
rewarding the workers.
Henry L Gantt: Gant refined the production control and cost control techniques. Gantt invent a
technique of scheduling work which is also called Gantt Chart. He was the first theorist to
suggest management to pay attention to service rather than profits.
Harrington Emerson: Emerson not only focuses on efficiency and productivity of work but, on
the overall objectives cost accounting and the function of staff department.
Contribution of Scientific Management:
1. It promoted production through efficiency techniques. Productivity increased through
assembly line production method. Gantt chart representing flow of work in still widely
used for scheduling work.
2. It facilitates job design thorough specialization and standardization of work.
3. It gave importance to screening, selection, training and compensation of workers for
improving efficiency.
4. It introduced rational and systematic method to solve management problems .It replaced
“rule of thumb” method of doing work by scientific method.

Limitation of Scientific Management:

1. Exploitation of Workers: Taylor’s Scientific Management put unnecessary pressures on

the employees to perform the work faster. Importance was give to productivity and
profitability. This resulted in exploitation of the employees. Therefore, many employees
joined trade unions. This resulted in mistrust between management and employees.
2. Problem of unity of command: Taylor used functional foremanship. So the workers have
to report to eight bosses. This breaks the principles of unity of command, where the
workers have to report to only one boss. Lack of unity command can create confusion
and chaos in the organisation.
3. Mechanical approach: Taylor approach was a mechanical approach. He gave too much
importance to efficiency. He did not consider the human element. Taylor considered
workers as robots, which could speed up the work at any cost.
4. Problems of separation of planning and doing: Taylor said to separate planning from
doing. In reality we cannot separate planning from doing. The planners should also be
engaged in doing then only they are able to make realistic plans for the organization.
5. Individualistic approach: Taylor’s scientific management gives too much importance to
individual performance and not to group performance. However, the success of an
organization depends not only on individual performance of workers, but also on the
group performance.
6. Wrong assumption: Taylor assumed that workers are motivated only by financial gains.
However, in reality workers are motivated not financial incentives but also by social need
and personal egos.
7. Narrow Application: Taylor’s scientific management has narrow application. It can be
applied only when the performance of the workers can be measured quantitatively. It can
be applied only for factories where the performance can be measured quantitatively. It
cannot be used in the service sector because in this sector the performance of a person
cannot be measured quantitatively.
Administrative Theory
While the proponents of scientiic developed principles that could help workers perform their tasks more
eficiently, another classical theory - the administrative management theory - focused on principles that
could be used by managers to coordinate the internal activities of organizations. The most prominent of the
administrative theorists was Henri Fayol.

Henri Fayol
French industrialist Henri Fayol (1841-1925), a prominent European management theorist, developed a
 general theory of management. Fayol believed that “with scientiic forecasting and proper methods of
management, satisfactory results were inevitable,” Fayol was unknown to American managers and
scholars until his most important work, General and Industrial Management, was translated into English in
1949. Many of the managerial concepts that we take for granted today were irst articulated by Fayol.
According to Fayol, the business operations of an organization could be divided into six activities.
Technical - Producing and manufacturing products Commercial -
Buying, selling and exchange Financial - Search
for and optimal use of capital
Security - Protecting employees and property.
Accounting - Recording and taking stock of costs, profits, a and liabilities,
maintaining balance sheets, and compiling statistics.
Managerial - Planning, Organizing, Commanding, Coordinating and
Controlling.
Fayol focused on the last activity, managerial activity. Within this, he identiied ive major functions: planning,
organizing, commanding, coordinating and controlling. Fayol’s ive management functions are clearly similar to the
modern management functions - planning, organizing, stafing, leading and controlling. Fayol’s concept of
management forms are cornerstone of contemporary management theory.

Fayol outlined fourteen principles of management

1. Division of work: Work specialization results in improving eficiency of operations. The concept of division of
work can be applied to both managerial and technical functions.
2. Authority and responsibility: Authority is deined as “the right to give orders and the power to extract
obedience”. Authority can be formal or personal. Formal authority is derived from one’s oficial position and
personal authority is derived from factors like intelligence and experience. Authority and responsibility go
hand-in-hand. When a manager exercises authority, he should be held responsible for getting the work done in
the desired manner.
3. Discipline: Discipline is vital for running an organization smoothly. It involves obedience to authority,
adherence to rules, respect for superiors and dedication to one’s job.
4. Unity of command: Each employee should receive orders or instructions from one superior only.
5. Unity of direction: Activities should be organized in such a way that they all come under one plan and are
supervised by only one person.
6. Subordination of the individual interest to the general interest: Individual interests should not take precedence
over the goals of the organization.
7. Remuneration: The compensation paid to employees should be fair and based on factors like business
conditions, cost of living, productivity of employees and the ability of the irm to pay.
8. Centralization: Depending on the situation, an organization should adopt a centralized or decentralized
approach to make optimum use of its personnel.
9. Scalar chain: This refers to the chain of authority that extends from the top to the bottom of an organization.
The scalar chain deines the communication path in an organization.
10. Order: This refers to both material and social order in organizations. Material order indicates that everything is
kept in the right place to facilitate the smooth coordination of work activities. Similarly, social order implies
that the right person is placed in the right job (this is achieved by having a proper selection procedure in the
organization).
11. Equity: All employees should be treated fairly. A manager should treat all employees in the same manner
without prejudice.
 12. Stability of tenure of personnel: A high labor turnover should be prevented and managers should motivate their
employees to do a better job.
13. Initiative: Employees should be encouraged to give suggestions and develop new and better work practices.
14. Espirit de corps: This means “a sense of union.” Management must inculcate a team spirit in its employees.

Contribution of Admisnistrative theory

1. This theory serves as the foundation for the study of management function of planning,
organizing, staffing , directing and controlling
2. It serves as the guide for modern management
behaviors.
Limitations:
1. This theory has limited application in the complex and dynamic environment. Since it
ignores the impact of environmental changes.
2. This principle is mechanistic in nature, which cannot be applicable in modern management.
3. This theory ignores the importance of human behaviors.

Comparison between Taylor’s and Fayol’s Principles.

Both the persons have contributed to development of science of management. The contribution of these two
pioneers in the field of science of management has been reviewed as “The work of Taylor & Fayol was, of course,
especially complementary. They both realized that problem of personnel & its management at all levels is the key to
individual success. Both applied scientific method to this problem that Taylor worked primarily from operative
level, from bottom to upward, while Fayol concentrated on managing director and work downwards, was merely a
reflection of their very different careers”. They both differ from each other in following aspects: -
1. Taylor looked at management from supervisory viewpoint & tried to improve efficiency at operating level. He
moved upwards while formulating theory. On the other hand, Fayol analyzed management from level of top
management downward. Thus, Fayol could afford a broader vision than Taylor.
2. Taylor called his philosophy “Scientific Management” while Fayol described his approach as “A general theory
of administration”.
3. Main aim of Taylor - to improve labor productivity & to eliminate all type of waste through standardization of
work & tools. Fayol attempted to develop a universal theory of management and stressed upon need for teaching
the theory of management.
4. Taylor focused his attention on fact by management and his principles are applicable on shop floor. But Fayol
concentrated on function of managers and on general principles of management wheel could be equally applied
in all.

Similarity - Both emphasized mutual co-operat on between employment and employees. Spheres of Human
Activity
Fayol’s theory is more widely applicable than that of Taylor, although Taylor’s philosophy has undergone a big
change under influence of modern development, but Fayol’s principles of management have stood the test of
time and are still being accepted as the core of management theory.
According to Psychologists, Taylor's study had following drawbacks: -
1. Ignores human factors - Considers them as machines. Ignores human requirements, want and aspirations.
2. Separation of Planning and Doing.
3. Dissatisfaction - Comparing performance with others.
4. No best way - Scientific management does not give one best way for solving problems
 3 Max Weber’s Bureaucracy Theory
Max Weber (1864-1920), who was a German sociologist, proposed different characteristics found in
effective bureaucracies that would effectively conduct decision-making, control resources, protect workers and
accomplish organizational goals. Max Weber's model of Bureaucracy is oftentimes described through a simple set of
characteristics, which will be described in this article.
Max Weber's work was translated into English in the mid-forties of the twentieth century, and was oftentimes
interpreted as a caricature of modern bureaucracies with all of their shortcomings. However, Weber's work was
indented to supplant old organizational structures that existed in the earlier periods of industrialization. To fully
appreciate and understand the work of Max Weber, one therefore has to keep the historic context in mind, and not
"just" see his work as a caricature of bureaucratic models.
Below, some characteristics of the bureaucratic model are presented. Each characteristic is described in relation to
which traditional features of administrative systems they were intended to succeed.
1. Fixed division of labor
The jurisdictional areas are clearly specified, and each area has a specific set of official duties and rights that cannot
be changed at the whim of the leader.This division of labor should minimize arbitrary assignments of duties found in
more traditional structures, in which the division of labor was not firm and regular, and in which the leader could
change duties at any time.

2. Hierarchy of offices
Each office should be controlled and supervised by a higher ranking office. However, lower offices should maintain
a right to appeal decisions made higher in the hierarchy.This should replace a more traditional system, in which
power and authority relations are more diffuse, and not based on a clear hierarchical order.

3.Rational-legal authority
A bureaucracy is founded on rational-legal authority. This type of authority rests on the belief in the "legality" of
formal rules and hierarchies, and in the right of those elevated in the hierarchy to posses authority and issue
commands. Authority is given to officials based on their skills, position and authority placed formally in each
position.
This should supplant earlier types administrative systems, where authority was legitimized based on other, and more
individual, aspects of authority like wealth, position, ownership, heritage etc.

4.Creation of rules to govern performance

Rules should be specified to govern official decisions and actions. These formal rules should be relatively stable,
exhaustive and easily understood.
This should supplant old systems, in which rules were either ill-defined or stated vaguely, and in which leaders
could change the rules for conducting the daily work arbitrarily.
5.Selection based on qualifications
Officials are recruited based on qualifications, and are appointed, not elected, to the office. People are compensated
with a salary, and are not compensated with benefices such as rights to land, power etc.
This should supplant more particularistic ways of staffing found in more traditional systems, where officials were
often selected due to their relation with the leader or social rank. Benefices such as land, rights etc. were also
common ways of compensating people, which was to be replaced by a general salary matching qualifications.
Criticisms of Bureaucracy Theory
Bureaucratic organisation is a very rigid type of organisation. It does not give importance to human relation. It is
suitable for government organisation. It is also suitable for organisation s where change is very slow. It is
appropriate for static organization.
Bureaucratic organisation is criticized because of the following reasons:
 Too much emphasis on rules and regulation .The rules and regulations are rigid and inflexible.
 No importance is given to informal groups. Nowadays, informal groups play an important role in all business
organization.
 Bureaucracy involves a lot of paper work. The result in lot of wastage of time, effort and money.
 There will be unnecessary delay in decision making due to formalities and rules.
 Bureaucratic model may be suitable for government organisation. But it is not suitable for business
organisation because business organisation believe in quick decision making and flexibility in procedures.
 Too much importance is given to the technical qualification of the employees for promotion and transfers.
Dedication and commitment of the employee is not considered.
 There is difficulty in coordination and communication.
 There is limited scope for human resources .(HR)
Behavioural Science Theory:
Behavioural Science Theory includes human relation and behavioural science movement. It modified improved and
extended the classical theory. Classical theory concentrated on job content and management of physical resources,
where as behavioural science theory gave greater emphasis to man behind the machine and stressed the importance
of individual as well as group relationship.
 Mary Parker Follett: Follet propounded democratic and participatory theory of management. She pointed
out the need for the concept of group and association to be introduced in the practice of management. She
advocates the democratization of the work force.

 Elton W. Mayo (The Hawthorne Studies): The study conducted by Elton Mayo and his associates between
1927-1932 at Western Electric’s Hawthorne Plant dramatically impacted the prevailing thought of
management .They experimented the effect of illumination on work productivity. In that study, two groups:
i) controlled and ii) experiment groups were formed to find out the effect of bright and dim light. The control
group work without change in lighting and the experiment group worked in fluctuating lighting condition.
The result showed that there is no relation between illumination and performance. In other words,
 productivity of both groups increased. Thus, the study concluded that the human element (more specifically
relation among workers) is important in the workplace. This study discovered the effect of group norms and
standard on individual behaviour. In another experiment Mayo revealed that productivity improved by
change in working conditions as length of rest time, duration of work, presence or absence of free lunch etc.

Maslow’s Hierarchy of Needs:

Maslow’s Hierarchy of Needs (Abraham Maslow): Maslow hypothesized that within every human being, there
exists a hierarchy of five needs.
Physiological: Includes hunger, thirst, shelter, sex and other bodily needs.
Safety: Security and protection from physical and emotional harms.
Social: Affection, belongingness, acceptance and friendship.
Esteem: Internal factor such as self respect, autonomy and achievement and external factors such as status,
recognition and attention.
Self- actualization: Drive to become what one is capable of becoming: includes growth, achieving one’s potential
and self fulfillment.
  McGregor’s Theory X and Theory Y:Douglas McGregor invented the Theory X and Theory Y, also
known as “hard guy, soft guy” approaches of managing people in the organization. It states that, people’s
commitment to work in organization is influenced by assumptions managers make about people. One set of
assumption is called theory X, which describes employees with relatively negative view. And another set of
assumption is called theory Y, which describe employees positively.
Theory X (Traditional View) Theory Y (Contemporary View)
1. The average person dislikes work 1. The average person does not inherently
inherently. dislike work but depending on condition
may find work to be satisfying or
punishment.
2. The average person will avoid work if he 2. People will exercise self-direction and
or she can. self- control to achieve organizational
objectives under certain conditions.
3. Most people must be coerced, controlled or 3.People will seek to attain their firm’s
threatened with punishment to get them to objectives if there are sufficient rewards
work toward the achievement provided.
of organizational goals.
4. The average person prefers to direct to 4.Under proper conditions the average
avoid responsibility. individual will seek responsibility.
5. The average individual has relatively little 5.The capacity to use imagination and
ambition and wants security above all. originality is widely found in the people.

Contribution and Limitation of Behavioural Theory:

Contributions:
1. This theory shifted the focus of management to the human side of organization. The “rational
man” of scientific became “social man” in the human relation theory.
2. Social Setting and groups are important for productivity. Workers respond to pressures of
informal work groups.
3. Non-Financial rewards such as recognition and appreciation are important for worker productivity.
4. Needs influence behavior. Unfulfilled needs influence productivity in organization.
5. Theory Y assumptions get people’s commitment to

work. Limitations:

1. This Theory gives overemphasis on human variable.

2. Human behaviour is complex and is studied from a variety of viewpoints. This complicates
the problem for a manager trying to use insights from the behavioural sciences.
3. Human behaviour cannot be predicted. This limits the practical application of this theory.
4. Focus on symbolic reward may not always be effective on motivating the staffs.
Management Science Theory

The management science theory applies statistical and mathematical technique to solve complex
problem in business. It focuses on solving technical rather than human behaviour problem. It
used the techniques like linear programming, economic order quantity (EOQ), game theory,
queuing theory etc to solve the problem. With the development of computer technology and
other source of communicate media there has been high impact of management science theory in
the business world to make decision and solve complex problems.
Currently, there are three main branches of management science. They are:-
a. Quantitative management: It utilizes mathematical techniques such as linear programming,
modeling, queuing theory, etc to help managers make right decisions.
b. Operation management (Operation Research): It provides managers with a set of techniques
that they can use to utilize an organization’s production system to increase efficiency.

c. Management Information System: It helps manager design information systems that provide
information about events occurring within and outside an organization.
Contribution and Limitation of Management Science Theory:

Contributions:
1. This theory provides a new way to think about the complex managerial problems of the
future and prescribes basis to manage these problems proactively.
2. This theory enhances managers understanding of overall organizational

processes. Limitations:

1. This theory ignores the importance of people, relationships and other non-quantifiable factors.
2. The assumptions used for quantifying decision making do not match the real world situations.
3. This theory is not substitute of management functions. It prescribes a limited number of tools
for the specific use in solving problems.
The System Theory

During the 1960, management researcher began to analyze organization from a systems
perspective, a concept taken from physical science. A system is a combination of two or more
interrelated or interdependent parts in a whole unit. A system is an established arrangement of
components which leads to attainment of particular objectives according to plan. The two basic
types of systems are closed system (which do not interact with their environment) and open
system (which dynamically interact with their environment).
Business Organization are perceive as open adaptive system. Any organism can be considered as
an energy system which has inputs, transformation process and outputs. In general, the term
system is applied to any activity or any collection of facts, ideas or principles which are so
arranged as to present a united a whole. All operation of system will be methodical, thorough and
regular and above all as per plan to achieve set objectives. In business many division and
departments are organized on functional bases and all act as coordinated whole to achieve the
basic objectives of the firm. E.g. the inputs for a university would be students, teaching
materials, books, money and so on. The transformation process would consist of lectures,
seminars, assignments, research, study, discussion, counseling etc. The output would be
educated, cultured and discipline individuals ready to enter the real world of business or
employment.
The major features of system are:
1. Every system is always focusing on a goal.
2. A particular system has some subsystem .Each subsystem interact with each other.
3. System may be open or close.
4. There is always a unity of action in each and every subsystem to achieve an overall system goal.
5. System always has a boundary, which separate it from environment.
6. System depends upon the flow of information in and outside its boundary.
7. The emphasis is given to the effective feedback for system function control.

Contingency Theory (Situational Theory)

The contingency theory can be described as “if, then” theory, i.e. If this is the way my situation
is, then this is the best way for me to manage. It states that, organization and even the units
within the same organization are diverse –in size, goals, work activities etc. So one best way, or
universally applicable management is not possible. Thus, management depends upon the
situation and should act according to the situation. The major contingency variables are:
1. Organizational Size: As size increase, so do the problems of coordination. For instance, the
type of organizational structure appropriate for an organization of 50,000 employees is likely
to be inefficient for an organization of 50 employees.

2. Routineness of Task Technology: To achieve its purpose, an organization uses technology.

Routine technologies require organizational structure, leadership styles and control system
that differ from those required by customized or non-routine technologies.
3. Environmental Uncertainty: The degree of uncertainty caused by environmental changes
influences the management process. What works best in a stable and predictable environment
may be totally inappropriate in a rapidly changing and unpredictable environment.
4. Individual Differences: Individual differences in terms of their desire for growth, autonomy,
tolerance of ambiguity, and expectations. These and other individual differences are
particularly important when mangers select motivation techniques, leadership styles and job
designs.
Contributions of Contingency Theory:

Contributions:
1. This theory helps to examine the conditional or moderating variables of cause and effect relations.
2. This theory helps to improve the caliber of the managers. Since more knowledge is gained
about which factors should be take into account in what situation managers have to use their
best knowledge and will manage organizations better than now in the future.