PRINCIPLES

AND
PRACTICES OF MANAGEMENT
 WHY MANAGEMENT
- Effective utilisation of resources
- Development of resources
- Incorporate innovations
-Integrating varied interest groups
- Stability in the society
 HISTORY OF
MANAGEMENT THOUGHT
• No attention paid before 20th century
– Lowly profession compared to bankers and
lawyers
– Treatment of management as an art or
science confused people
– Belief that managers are born and not
made
 EVOLUTION OF
MANAGEMENT
THOUGHTS
• Growing competition and complexity
of managing large business
organisations gave a push to the
development of management concepts
and principles.
 EVOLUTION OF
MANAGEMENT THOUGHTS
• Competion gave rise to factors like
– Technology innovations
– Obsolescence
– Increase in capital investment
– Freedom at national and international
markets
EVOLUTION OF MANAGEMENT
THOUGHTS - contd…..
• Complexity came because of
– Increase in the size of business
organisations
– High degree of division of labour and
specialisation
– Pressure of various conflicting groups
– Socially oriented business controls by
government
• EVOLUTION OF MANAGEMENT THOUGHTS -
contd…..

• All these have demanded the efficiency in

management process which cannot come by
trial and error methods but by developing and
applying sound management concepts and
principles

• Economists, sociologist, psychologists

,anthropologists, mathematicians and
management practitioners—studied
organisations and its processes
 EMERGENCE OF
MANAGEMENT THOUGHTS
• This all led to the emergence of a
variety of orientations or approaches
in management.
• One approach or thought was an
extention /improvement over the
previous one.
 DEFINITIONS

• PRODUCTION ORIENTED
• DECISION ORIENTED
• PEOPLE ORIENTED
• FUNCTION ORIENTED
PRODUCTION ORIENTED
DEFINITION
• TAYLOR : “Management is
the art of knowing what you
want to do and then seeing
that it is done in the best and
cheapest way”
PRODUCTION ORIENTED
DEFINITION
• Features
– Aim/Goal
– Results
– Efficiency
Shortcomings: It does not specify how
these objectives can be achieved.
 DECISION ORIENTED
DEFINITION
• Stanley Vance : “Management is
simply the process of decision-making
and control over the action of human-
beings for the expressed purpose of
attaining pre-determined goals”.
 DECISION ORIENTED
DEFINITION
• It implies:
– Main activity of a manager is decision
making
– Control
– Goals
Shortcoming: The process or activities where
decision-making is involved is not provided
 PEOPLE ORIENTED
DEFINITION
• L.Apply :“Management is
accomplishment of results through
the efforts of other people”
• Koontz : “It is the art of getting
things done through and with people
in formally organised groups”
 PEOPLE ORIENTED
DEFINITION
• Features
– Existence of objectives
– Working with and through people

Shortcomings: It does not specify the

functions or activities involved in the
process of getting things done by or with
the cooperation of other people
 FUNCTION ORIENTED
DEFINITION
• Mac Farland :“Management is a
process by which managers create,
direct, maintain and operate
purposive organisations through
systematic, coordinated, cooperative
human efforts”
 FUNCTION ORIENTED
DEFINITION
• Features
– Existence of objectives
– Organised activities
– Relation among resources
– Working with and through people
– Decision making
 “Management is the process of
designing and maintaining an
environment in which individuals,
working together in groups,
accomplish their aims effectively and
efficiently.”
This definition implies the
following:
• A process
• Universal application
• Applicable to all managerial levels
• Common aim- creating profits
• Effectiveness and efficiency
DIFFERENT APPROACHES TO
MANAGEMENT
 CLASSIFICATION OF
MANAGEMENT THEORIES

1. CLASSICAL
2. NEO-CLASSICAL
3. MODERN
CLASSICAL APPROACH
• SCIENTIFIC
• ADMINISTRATIVE/OPERATIONAL
• BUREAUCRATIC
SCIENTIFIC MANAGEMENT
F.W TAYLOR- Father of the Scientific
Management.
- emphasised on shop-floor level efficiency
in a scientific manner.
- conducted various experiments to find
out how human beings could be made to
work more efficiently by standardising the
work and better method of doing the work.
 Principles of Scientific
Management
1. Replacing Rule of thumb with
science
2. Harmony in group action
3. Cooperation
4. Maximum output
5. Development of workers
 Elements of Scientific
Management
• Separation of planning and doing
• Funtional foremanship-specialisation of
functions
• Job analysis- find out the best way of doing the
things through Time-Motion and fatigue studies
• Standardisation
• Scientific selection and Training of workers
• Financial incentives
• Economy
• Mental revolution
 Other contributors of
Scientific Management
• Carl Berth – developed mathematical
techniques and formulae
• Henry Gantt - developed graphic
methods of depicting plans.
Developed GANTT chart which led to
PERT.
• F. and W. Gilbreth – looked at
workers problems from social and
psychological point of view
 Critical Analysis of
Scientific Management
• Concerned with problems related to
operating levels
• More relevant from engineering point of
view rather than management point of view
• More relevant to mechanisation and
automation than the broader aspects of
management
Critical Analysis of Scientific
Management …cont

• Taylor’s SM was opposed by trade

unions, industrialists and general public:
-aggressive mechanical view of
production
-close and strict supervision
-exploitation by industrialists
 Operational /Administrative
Management
• HENRY FAYOL:
- looked at the problems of the
management from top management
point of view
- used the word Administration
rather than management
14 Principles of Management
given by Fayol
1.Division of work- to yield the benefits of
specialisation
2. Authority and Responsibility
3. Discipline –self imposed or command discipline
4. Unity of Command
5. Unity of Direction
6. Individual to general interest
 Principles of Management by
Fayol …contd
7. Remuneration of personnel
8. Centralisation –extent to which authority is
centralised
9. Scalar chain
10.Order –arrangement of things and people
11. Equity- justice and kindliness to all
12. Stability of tenure
13. Initiative-thinking out and execution of a plan
14. Esprit de Corps- Union is Strength
 Managerial qualities
1. Physical –health, vigor
2. Mental –learning ability, judgment,
mental vigor and capability
3. Educational –general awareness
4. Technical –peculiar to the function
5. Experience –arising from work
 FAYOL’S MANAGEMENT
ACTIVITIES
1. Technical – related to production
2. Commercial –buying,selling, exchange
3. Financial – searching for capital and its use
4. Security –protection of property and
person
5. Managerial –planning, organising,
coordinating, controlling
 Features of
bureaucracy
– Administrative class
– Hierarchy
– Division of work
– Official rules
– Impersonal relations
– Official record
 Bureaucratic approach
Max Weber: believed that bureaucratic
structure was the most efficient structure.
- It was designed to accomplish large
administrative jobs
- Features
- Administrative class
- Hierarchy
Criticism of Bureaucratic
model
1. Inhuman organisation
– Too much emphasis on rules
– Rigid organisational hierarchy
– Total impersonal approach

2. Goal displacement
3. Closed system perspective
 Neoclassical
Organization Theory
• The neoclassical theorists gained their
reputation by attacking the classical theories.
– Important source of the power and politics,
organizational culture, and systems theory.
• Herbert Simon.
– Bounded rationality and satisficing.
– Programmed and unprogrammed decision-making.
– Management information systems.
 Neoclassical
Organization Theory
• The impact of sociology.
– Philip Selznick – Organizations are made
up of individuals whose goals and
aspirations may not coincide with the
organization’s.
 Modern Structural
Organization Theory
• Basic assumptions
– Organizations are rational institutions whose
primary purpose is to accomplish established
objectives through control and coordination.
– There is a “best” structure for any organization in
light of objectives, environment, products or
services, and the technology of the production
process.
– Specialization and division of labor increase the
quality and quantity of production.
– Most problems result from structural flaws.
 Modern Structural
Organization Theory
• Mechanistic and organization
systems.
– Mechanistic – traditional bureaucracy,
best in stable conditions.
– Organic – less rigidity, more
participation, and more reliance on
workers, best in dynamic conditions.
“Companies fail when they become complacent and
imagine that they will always be successful. So we
are always challenging ourselves. Even the most
successful companies must constantly reinvent
themselves.
--Bill Gates
Chairman and Chief Software Architect
Microsoft
 The Business World
Today
• Constant change!
– Technology
– Society
– Environment
– Competition
– Diversity
 What is Management?
• The process of deciding how best to
use a business’s resources to produce
good or provide services
– Employees
– Equipment
– Money
 What is Management?
• Auto industry managers
– Assembly line: schedule
work shifts, supervise
assembly of vehicles
– Engineering: develop new
product features, enforce
safety standards
– General: plan for the
future
– All organizations need
managers!
 Levels of Management
• Senior management
– Establishes the goal/objectives of the
business
– Decides how to use the company’s resources
– Not involved in the day-to-day problems
– Set the direction the company will follow
– Chairperson of the company’s board of
directors, CEO, COO, senior vice presidents
 Levels of Management
• Middle management
– Responsible for meeting the goals that
senior management sets
– Sets goals for specific areas of the business
– Decides which employees in each area must
do to meet goals
– Department heads, district sales managers
Levels of Management
• Supervisory management
– Make sure the day-to-day
operations of the business
run smoothly
– Responsible for the people
who physically produce the
company's products or
services
– Forepersons, crew leaders,
store managers
The Management Pyramid
The Management Process
• Three ways to examine how management
works:
– Tasks performed
• Planning, organizing, staffing, leading, controlling
– Roles played (set of behaviors associated with a
particular job)
• Interpersonal, information-based, decision-making
– Skills needed
• Conceptual, human relations, technical
 The Management Process
• Planning
– Decides company
goals and the actions
to meet them
– CEO sets a goal of
increasing sales by
10% in the next year
by developing a new
software program
 The Management Process
• Organizing
– Groups related
activities together
and assigns
employees to
perform them
– A manager sets up a
team of employees to
restock an aisle in a
supermarket
The Management Process
• Staffing
– Decides how many and what kind of
people a business needs to meet its
goals and then recruits, selects, and
trains the right people
– A restaurant manager interviews and
trains servers
 The Management Process
• Leading
– Provides guidance
employees need to
perform their tasks
– Keeping the lines of
communication open
• Holding regular staff
meetings
 The Management Process
• Controlling
– Measures how the
business performs to
ensure that financial
goals are being met
– Analyzing accounting
records
– Make changes if
financial standards
not being met
Relative Amount of Emphasis
Placed on Each Function of
Management
 Management Roles
• Managers have authority within
organizations
– Managers take on different roles to
best use their authority
• Interpersonal roles
• Information-related roles
• Decision-making roles
 Management Roles
• Interpersonal roles
– A manager’s relationships with people
• Providing leadership with the company
• Interacting with others outside the organization
• Senior managers spend much of their time on
interpersonal roles
– Represent the company in its relations with people outside
the company, interacting with those people, and providing
guidance and leadership to the organization
– Determine a company’s culture
 Management Roles
• Information-related roles
– Provide knowledge, news or advice to employees
• Holding meetings
• Finding ways of letting employees know about
important business activities
• Decision-making roles
– Makes changes in policies, resolves conflicts,
decides how to best use resources
• Middle and supervisory managers spend more time
resolving conflicts than senior managers
 Management Skills
• Conceptual skills
– Skills that help managers understand how
different parts of a business relate to one another
and to the business as a whole
– Decision making, planning, and organizing
 Management Skills
• Human relations skills
– Skills managers need to understand and work well
with people
– Interviewing job applicants, forming partnerships
with other businesses, resolving conflicts
 Management Skills
• Technical skills
– The specific abilities that people use to perform their
jobs
– Operating a word processing program, designing a
brochure, training people to use a new budgeting system
 Management Skills
• All levels of management require a
combination of conceptual, human
relations, and technical skills
– Conceptual skills most important at senior
management level
– Technical skills most important at lower
levels
– Human relations skills important at all levels
1. External environment factors
2. Internal environmental factors
3. Organizational culture
4. Ethics
5. Social Responsibility
The Organizational Environment
Components of the Internal Environment

Where have we
seen this before?

Group
Performance
Model
 The Systems Process
(“Customers”)

(Suppliers)
Key: Value
Added?

Sales, Surveys,
360° Feedback
 Internal
Environment
Means and Ends Means Justify the End:
•Always treat humanity,
whether yourself or
other people, as an end
and never as a means.
Ends Justify the Means:
•Act as if you are a
•Utilitarianism - Look at a
legislator for all
situation in terms of how
humanity, considered as
it will affect everyone
ends in themselves.
that may be involved.
•Those actions are right
that produce the
greatest total amount of
human well-being.
•Well-being is measured
in terms of "utility" which
is defined as the net
pleasure, preference
satisfaction, or happiness
summed over all affected
beings.
 Three Levels of Organizational Culture

Culture is
Manifested in:
• Heroes
• Stories
• Slogans
• Symbols What People Actually Do
• Ceremonies (“Shadow of the Leader”)

Consequences…..If I
do this, then ____

Deeply Held,
Unquestionably True
 Organizational Culture
(cont’d)
• Strong Cultures
– Have employees who subconsciously know the shared
assumptions; consciously know the values and beliefs; agree with
the shared assumptions, values, and beliefs, and behave as
expected.
• Advantage: benefit from easier
communication and cooperation; unity of
direction; and consensus is easier to reach
• Disadvantage: threat of becoming stagnant
• Weak Cultures
– Have employees who do not behave as expected and do not
agree with the shared values.
 Business Ethics
• Ethics
– The standards of right and wrong that influence
behavior.
• Right behavior is considered ethical, and wrong behavior is
considered unethical.
– Government laws and regulations are designed (having
to be legislated) to govern business behavior.
• However, ethics go beyond legal requirements.
– Ethical concepts are culturally-bound.
• What is considered ethical in one country may be unethical
in another. Understand “RICO” laws (Racketeer Influenced
and Corrupt Organization)
 Business Ethics (cont’d)
• Simple Guides to Ethical Behavior
– Golden Rule
• “Do unto others as you would want them to do unto you.”
– Four-Way Test
• Is it the truth?
• Is it fair to all concerned?
• Will it build goodwill and better friendship?
• Will it be beneficial to all concerned?
– Stakeholders’ Approach to Ethics
• Creating a win-win situation for all stakeholders so that
everyone benefits from the decision.
• Who are the stakeholders in Ethical Situations?
 Business Ethics (cont’d)
• Managing Ethics
– Codes of Ethics
• State the importance of conducting business in an ethical
manner and provide guidelines for ethical behavior.
– Top Management Support and Example
• It is the responsibility of top management to develop
codes of ethics, to ensure that employees are instructed
on what is and what is not considered ethical behavior,
and to enforce ethical behavior.
– Enforcing Ethical Behavior
• Do not fail to punish unethical behavior.
• Whistle-blowers should not suffer negative consequences.
 Levels of Moral Development
• Preconventional
– Self-interest motivates
behavior.
• Conventional
– Behavior is motivated by the
desire to live up to others’
expectations.
• Postconventional
– Behavior is motivated by
universal principles of right
and wrong, regardless of the
expectations of leaders or
one’s group.
 How People Justify
Unethical Behavior
• Moral Justification
– The process of reinterpreting immoral behavior
in terms of a higher purpose.
• Displacement of responsibility
• Diffusion of responsibility
• Advantageous comparison
• Disregard or distortion of consequences
• Attribution of blame
• Euphemistic labeling
 Social Responsibility
• Social Responsibility to Stakeholders
– The conscious effort to try to create a win-win situation
for all external stakeholders, as well as internal
stakeholders.
• Does It Pay to Be Socially Responsible?
– Social responsibility doesn’t guarantee or improve profits,
but scandals hurt corporate reputations. It is more than
Scandals……
• Social Audit
– A measure of how well a firm’s social behavior helps it
achieve its social objectives.

Social Responsibility has become a more significant issue for

Businesses AND Organizations – Community Citizenship
(People and Communities) Environmental Responsibilities
(Regulatory and Moral), and Business Performance (Sales &
Costs of Penalties) Impact
 Who/What Are
Stakeholders?
• Anyone Impacted by an
Organization’s Systems
The Systems Process
Processes?
The Systems Process
(“Customers”)

(Suppliers)
Key: Value
Added?

Sales, Surveys,
360° Feedback

2–79
Exhibit 2–2
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