Management Theory and Practice

1. You are hired as a trainer by Sachin Ethanol, a newly set up organization dealing in
manufacturing Ethanol from Sugarcane residue. The CEO wants you to train the newly
recruited management trainees about the Principles of Management. Explain the principles of
Management to these newly recruited employees by taking the help of Henri Fayol’s 14
Principles of Management.

SOLUTION

Introduction

Henri Fayol was one of the pioneers who could highlight the difference between managerial and
technical skills. He highlighted the idea that "manager" is a profession in and of itself - one that
needs to be taught, researched, and developed. Let us suppose -- a team where everyone has the best
technical skills on this earth, but none has any clear management practices. That means skills
without direction will not produce any efficient results.

Good technical skills don't automatically consider you a good manager. You would also need
several non-technical skills for planning, forecasting, decision-making, process management,
organization management, coordination, and control. You would also need some credible amount of
non-technical skills for forecasting, planning, decision-making, organization management, process
management, coordination, as well as control. All these skills are taught in the 14 principles of
management which are helpful for managers to understand how to effectively run an organization.

14 Principles of Henry Fayol’s Management

14 principles of Henry Fayol’s management is a top-down approach to help managers get the best
from employees that enables the business to run with ease. Let’s take a closer view at them and
understand them thoroughly.

1. Division of Work -- Among Henry Fayol's principles of management, the first one is based on
the theory that says if an employee is given a specific task to carry out, s/he will become adequately
skilled in it, and thus accomplish the task more efficiently. This is opposed to a multi-tasking
environment, wherein an employee is given so many tasks to do at once. To implement this
principle effectively, look at the current skill sets of each employee and assign them the specific
task that s/he can perform proficiently. In the long run, this will help them to showcase their
productivity, skillfulness, and efficiency.

2. Authority-- The second management principle of Henry Fayol states that a manager must have
the required authority to convey to his followers to carry out his instructions without any "ifs &
buts". If managers are void of any authority, they would lack the ability to get any job done.
However, this authority must accompany responsibility. Henri Fayol however stresses that there
should be a balance between responsibility and authority. If there is more authority and lesser
responsibility, the employees will be eventually frustrated, vis-a-vis, if there is more responsibility
than authority, the manager will turn frustrated.

3. Discipline -- This principle of Henry Fayol reflects that to run any organization effectively,
discipline is required with true spirit. To make employees disciplined, effective managers need to
build a culture of mutual respect. There needs to be a set of organizational philosophies, rules, and
structures in place that has to be followed by everyone. Slacking or bending rules should not be
allowed in any organization. There has to be good impartial judgment and supervision to achieve
this.

4. Unity of Command -- According to this principle, there should be a clear chain of command in an
organization. The employees should be sure of the rule whose instructions to follow.

5. Unity of Direction -- This Henry Fayol’s principle of management denotes that the work to be
done needs to be organized in such a way that employees work in sync with the same objective, by
adhering to one plan, under a single manager’s direction. Multiple types of activities need to be
broken down for different sub-managers, but all these managers should all work towards a common
goal under the direction of only that person who is in charge of the whole program. 

6. Collective Interest must reign over individual interest -- According to this principle, the overall
interest of the team needs to take precedence over personal ones. The interest of the organization
should not be jeopardized by any individual's self-interest.

7. Remuneration -- According to this principle, employees should get fair wages for their work
completed. Any organization that underpays its workers will fail to motivate, rather the latter will
leave the organization. Also, there should be a structure in place that is for rewarding good
performers and motivating employees.

8. Centralization -- Centralization means proper concentration of power in the hands of the

authority, followed by a top-bottom approach to management. No organization, in a modern
context, can be completely decentralized or centralized. Complete centralization signifies that
people at the bottom have no authority over their responsibilities. With the same logic, complete
decentralization symbolizes there will be no higher authority to control the organization. To use this
principle effectively today, there needs to be a balanced decentralization & centralization.

9. Scalar Chain -- A scalar chain means a clear chain of communication between superiors and
subordinates. Fayol suggests that to implement this in the workplace, an organizational chart should
be drawn out for employees to see this structure.

10. Order -- This principle indicates that there should be an organized placement of resources
(manpower, materials, money, etc.) at the right time and in the right place. This ensures the proper
use of resources, fashioned structurally. Misplacement of any of these resources will result in
mismanagement and disarray in the organization.

11. Equity -- This term embodies a combination of justice and kindness on the part of manager(s).
This creates devotion as well as loyalty among the employees towards the organization they work
for.

12. Stability of Personnel & their Tenure -- As per this principle, an organization should work to
bring down staff turnover rather than maximize their staff efficiency. Both new and old employees
should also be ensured job security, otherwise, it would lead to instability and inefficiency. There
should also be an effective and clear method to handle vacancies as and when they arise, as it takes
expenses and time to train new ones.

13. Initiative -- This denotes all employees should be motivated to show initiative. If workers have
a say as to how best they can prove themselves, they feel encouraged and respected.

14. Esprit de Corps or "Team Spirit" -- The management should strive to bring morality,
cooperation, and unity among the employees.
Conclusion -- All these 14 principles are a great source of strength in an organization. Over &
above happy and motivated employees are more likely to be productive and efficient and thus
become an asset to the organization.
2. The newly set up management team is divided in their deliberation on a certain topic and
requires your help. The core area of this discussion is whether Management is an Art or a
Science. As the chairman of the forum, can you throw some light on whether Management is
an art or a science or both, and Why?

SOLUTION

Introduction

It is a tricky issue whether Management is an Art or a Science. Still, it would be a revealing

discussion to enlighten some points.

Management As Science -- Science means a systematic body of knowledge that pertains to a

specific field of study, containing general facts and explaining a phenomenon. It establishes cause
and effect relationship between two or more variables. It also underlines the principles that govern
their relationship. Several scientific methods of observations and verification are done through
testing to reach these principles which are further developed. Science is characterized by the
following main features:

I) Universally accepted principles – Scientific principles reflect some basic truth about a particular
field of inquiry. These principles may apply to all situations, at all places, and at all times. For
example -- the law of gravitation gets applied in all countries irrespective of time & zone.
Management also follows some fundamental principles that are applicable universally. Example-
Principle of Unity of Command i.e. one man, one boss. This principle applies to all types of
entities – non-business or business.

II) Experimentation & Observation – Scientific principles are derived through research & scientific
investigation i.e. they are based on logic. This signifies that the principle that the earth goes around
the sun is scientifically proven. Management principles are also based on scientific observation &
inquiry and not entirely on the opinion of Henry Fayol. They have been developed through practical
experiences & experiments of a large number of managers. For example -- it is observed that fair
remuneration to personnel helps in creating a satisfied workforce.

III) Relationship of Cause & Effect – Principles of science establishes a relationship between cause
and effect between different variables. Example- On heating metals, they get expanded. Heating is
the cause & expansion is the result. Management decides on many plans as per their cause and
effect, therefore it also establishes a cause and effect relationship. For example-- if workers are
given fair wages and bonuses, they will work hard otherwise of it, such as, if they are not treated in
a just and fair manner, the result can be seen in a reduction in the organization's productivity.

IV) Validity & PredictabilityTest – Principles of scientific validity can be tested at any number of
times or at any time. All of them stand the test of time. Each time these tests produce the same
result. Furthermore, by using any of the scientific principles, future events can be predicted with
reasonable accuracy. For example -- Mix of oxygen & hydrogen will always produce water. In
management, the principle of unity of command can be tested by comparing two persons – one
having 2 bosses and one having a single boss. The performance of the 2 nd case will be better than
the 1st case. Management is behavioral science. That is the reason, Ernest Dale has called it a Soft
Science.

Management as Art -- Art implies the application of skill as well as knowledge to trying about
desired results. Art may be defined as general theoretical principles' personalized application for
achieving the best possible results. The following characteristics are essential in Art:

I) Practical Knowledge -- Every art mandates practical knowledge, hence, learning theory is not
enough. It is very essential to know theoretical principles' practical application. For example -- to
become a good painter, the person should not only possess the idea of different brushes and colors
but different situations, designs, dimensions, etc to use them with perfect appropriation. A manager
can never be successful just by obtaining requisite academic management degrees/diplomas; he
must have also known how to apply various principles in real situations by functioning as a
manager.
II) Personal Skill -- No doubt, the theoretical base may be the same for every artist, nevertheless,
each one has his approach and style toward his job & responsibility. That is why the level of quality
and success of performance differs from one person to another. Example --. there are several
notable painters, but M.F. Hussain is distinguished for his style statement. Similarly, some
managers have personalized their management acumen as an art and have successfully curved out
their names. Every manager has his way of managing things based on his experience, personality,
and knowledge that is why some managers are known as path-breakers (like Steven Jobs, Aditya
Birla, Rahul Bajaj, and some more luminaries to be named) whereas others are their followers.

III) Creativity -- Every artist is blessed with some sort of elements of creativity in line. That is why
s/he continuously produces something new or innovative art pieces, which necessitate a
combination of imagination & intelligence. It combines non-human and human resources in a
useful way for achieving desired results.

IV) Practice for Perfection -- Practice makes a man perfect. Every artist shines through constant
practice. Similarly managers, initially, learn through the art of trial and error but applying
management principles over some time makes them perfect in job management.

V) Goal-Oriented -- Every piece of art is result based, as it endeavors to achieve concrete results
from different inputs. In the same way, management is directed towards accomplishing pre-
determined goals. Managers use various resources like materials, men, money, methods &
machinery to promote the growth of an organization. Management also deals with molding the
behavior and attitude of people at work and achieving desired goals, due to which the company runs
successfully.

VI) Effective working -- Managers not only shoulder and manage all problems in every
environment so this can't be science, it is an art of managing every organizational problem in every
environment.

Management as both Art and Science

Management is not only an art it is also a science. All the above-given points establish that
management combines features of both arts as well as science.

Conclusion

Management is considered a science as it possesses an organized body of knowledge that contains

some categories of universal truth. While it is considered an art, managing requires certain skills
which are possessed by managers' credibility. Art deals with the application of knowledge and
skills, while science provides knowledge. To be successful in his profession, a manager must
acquire the knowledge of science & the art of applying it.

3. Lemon Tree, a famous hotel chain in India is losing its market share to its peers. The major
reason contributing to the same is that there is a lot of conflict in the organization due to
which correct and timely decisions are not being taken. The company has hired you as a
consultant to understand and solve this issue.

a. Explain the different types of Conflicts that can arise in an organization. (5 Marks)

SOLUTION

Introduction

It sometimes appears that some types of conflict are always with us in the workplace. Any person in
an enterprise who misses a deadline, the person is likely to face conflict with his/her boss. Next, any
employee lashes out at a colleague who s/he feels continually undermines the former, and the issue
will end up in conflict. And again, if anyone disagrees with his/her fellow manager about whether
to represent a client whose values s/he disdains, conflict is also likely to crop up. Three types of
conflict are commonly visible in organizations: 1) task conflict, then 2) relationship conflict, and
3) value conflict. Harvard Education enlightens some reference to this.

1) Task Conflict -- Often this conflict involves concrete issues connected with the work
assignments of employees and can encompass disputes related to managing expectations at work,
dividing up resources, policies, differences of opinion on procedures, and interpretation and
judgments of facts.

Task conflict, out of these 3 types, is likely to be the simplest to resolve. But this conflict often
happens to have deeper roots and is more complex than it looks to be at first glance. To exemplify
it, coworkers who are arguing about which one of them would get a chance to avail the opportunity
to attend an out-of-town conference may fathom a deeper conflict based on a sense of rivalry.
An organization's leader's intervention can often resolve task conflict, benefiting the organization.
Managers can focus on how to identify the deeper interests underneath the parties' positions, by
serving as de facto mediators. This is accomplished through active listening, viz repeating back
what you perceived through hearing, just to confirm your understanding, involved in asking
questions, and asking even deeper questions so that deeper concerns can be probed.

2) Relationship Conflict -- This conflict arises from differences in matters of taste, personality,
style, and even conflict styles. People who would not ordinarily meet ‘in real life in their
organizations are often thrown together and so strive to get along. Hence, it's no surprise that
relationship conflict can be common in the organization in this situation. Let us assume that you've
felt a long-simmering tension with a colleague, it may be anything like personality differences,
work assignments, or some other issue. You might invite the colleague out to lunch or lay the such
ground and try to get to know her or him better, before turning to a manager.

3) Value Conflict -- This conflict can arise from fundamental differences in values and identities,
which can be any of the differences in ethics, norms, politics, religion, and other deeply held
beliefs. As it is common, discussion of religion and politics is often taboo in organizations,
decisions, and policies, such as whether to take on a client with ties to a corrupt government or
whether to implement an affirmative action program, and some other disputing elements/values can
arise in the context of work.

Conclusion

Having discussed all the above, it can be concluded that there may arise different types of conflicts
in an organization due to which correct and timely decisions are not being taken. Example -- Lemon
Tree, the case study organization here.
b. Explain what strategies can be used by Lemon Tree to resolve these conflicts. (5 Marks)

SOLUTION

Introduction

Before explaining what strategies can be used by Lemon Tree to resolve their conflicts, let me cite
the last 3 years’ financial status of the Hotel chain. As per the consolidated financial results (Value
Stocks n.d.), the Hotel Chain’s total income came down from 203.47 crores (October 2019–
December 2019) to 177.28 crores (January 2020–March 2020). LTH needed to ride out the
difficulties COVID had stricken. The hotel chain had to keep in mind the different types of
stakeholders who would be impacted due to the unfolding scenario. Taking into consideration of the
overall uncertainty, LTH was not at all sure about the severity of COVID and its severity.

The above scenario compelled Keswani and the other top management team to come up with some
scenario planning. Conflict is a situation where any two parties have opposing or contradictory
opinions or viewpoints. In general, conflicts are disagreements between individuals or teams. There
are several projects, employees, departments, or even several methods of performing a task in any
business organization. Sometimes, this diversity can lead to situations where there is some sort of
incongruence, and this is known as organizational conflict. An organizational conflict can arise due
to a variety of reasons like - different opinions, opposing goals, or incompatibility in the working
style.

In the present case study of the firm, Lemon Tree is passing through some issues due to
organizational conflicts. In this hotel chain, the possible conflicts are supposed to be -

1) Disagreement in the task - This informs that there may be different viewpoints among the
employees relating to how the task has to be performed or the goal of the task. Another noteworthy
conflict type could be conflicts due to the non-clarity of job roles that make it difficult to
understand who is shouldering which role and also how can the organization make any one person
accountable for any work. Ambiguous responsibilities not only create confusion among the
workforce and also woefully impact their overall performance.

2) The conflict between the Management and employee -- If the management and employees
here are not on cordial terms between them, instead, there are differences among them, which leads
to interpersonal conflicts in Lemon Tree. Besides this, ineffective coordination between them could
also be a reasonable cause for the delayed decision-making process in the organization.

3) Departmental differences - As the lemon Tree hotel chain has several departments and on
some occasions, there may be a situation where two or more departments have opposing interests
and goals. This is evidenced that the business is trying hard to resolve the internal issues.
Conclusion

While concluding, it is relevant to refer to one of their many admissions about their inability, as
published in Point no26, Page no 28. Our inability to effectively manage our expansion and
execute our growth strategy could h
urt our business, results of operations, and financial condition. And the publisher is no other than
SEBI . And to conclude, it should be worth mentioning that the company claims, in 2017 when the
hotel group was ranked the fourth “Best Company to Work for” in India and was the only hotel
company in the top 10.