OM Lesson 1 Definition and Theories of Management

Organization and
Management
Lesson 1: Fundamentals of Management
Can you imagine an army without a captain
or a colonel?
A basketball team without a coach?
An orchestra without a conductor?
Can a business organization operate without
a manager?
Management
A company cannot achieve its
business targets without
managers planning, leading,
organizing and controlling its
people.
Management:Definition and Function
Definitions of Management
Management comes from the Italian word maneggiare,
which means “to handle”
According to Mary Parker Follet, an American Social
worker, management consultant and philosopher, who
is known as the “Mother of Modern Management”.
"Management is the art of getting things done

through people."
Definitions of Management
According to Frederick Taylor, who is known as the
“Father of Scientific Management”, he define
management as:
“An art of knowing what to do, when to do and see
that it is done in the best and cheapest way.”
Theories of Management
Frederick W. Taylor’s Principles of
Scientific Management
Henri Fayol’s Administrative
Principles (14 Principles of
Management)
Elton Mayo’s Hawthorne Studies
Frederick W. Taylor (father of Principles of
Scientific Management)
Main Ideas contributed;
Scientific Management
Determination in finding the “one best way”
Job motion study
Careful selection and training of workers
Aimed for worker’s productivity
PIG IRON EXPERIMENT
A well known example of the scientific management
theory is the pig iron experiment. Iron was loaded
onto rail cars by workers each lot weighing 92
pounds and known as a "pig". On average 12.5 tons
were loaded onto the rail cars but Taylor believed
that scientific management could be used to
increase this to 47/48 tons per day. Through
experimenting with various procedures and tools
Taylor achieved this. This is how he did it:
PIG IRON EXPERIMENT
Taylor ensured that he matched each of
the jobs to each of the workers skills and
abilities.
Taylor ensured that he provided the
workers with the correct tools.
Taylor ensured that he provided workers
with clear instructions about how to do
each job. Taylor ensured that the
workers understood the instructions
and then Taylor ensured that the
workers followed the instructions
exactly as he had explained.
Taylor then created worker motivation
by providing a significantly higher daily
wage.
It is believed that through the use of scientific
management Taylor increased productivity on the
shop floor by 200 percent. Taylor's ideas and
thoughts were adopted throughout the world
including in France, Russia and Japan. In today's
world scientific management has been merged
with other ideas and is used by managers in the
form of time and motion studies to eradicate
wasted motions, incentive schemes based on
performance and hiring the best qualified workers
for each job.
Henri Fayol (Father of Administrative
Principles)
14 principles of Management are statements
that are based on a fundamental truth. These
principles of management serve as a guideline
for decision-making and management actions.
They are drawn up by means of observations
and analyses of events that managers
encounter in practice. Henri Fayol was able to
synthesize 14 principles of management after
years of study.
14 Principles of Management
Division of work
Division of work is the act of dividing a project into
different tasks and assigning those tasks to separate
individuals. By dividing work among different employees,
you can improve both the efficiency and quality of work.
Assign each employee a task that they can become

proficient at. Productivity increases as employees become
more skilled, assured and efficient. Today, experts still warn
against multi-tasking
2. Authority and responsibility
According to this principle, a productive
workplace has a balance between authority and
responsibility.
Managers must possess the authority to give
orders, and recognize that with authority comes
responsibility. As well as rank, Fayol argues that
a manager's intelligence, experience and
values should command respect.
3. Unity of command
With this principle, each employee only has
one direct manager. When an employee
receives directions from more than one
manager, it can create a conflict of interest
or misunderstandings.
4. Unity of direction
Unity of direction ensures that all employees
working on the same activity have the same
goals. This extends to company-wide goals and
smaller project-based goals.
Managers who emphasize this principle
often communicate clear directions and
goals to employees and ensure everyone
works toward them.
5. Equity
A manager in a productive workplace often
treats all employees equally. They have a
responsibility to ensure that no employee
receives preferential treatment or experiences
discrimination.
6. Order
This order does not mean that someone sitting on top
is ordering the people. It is the order of “Order vs
chaos”.
Simply said, if an organization does not work in an
orderly manner, there will be chaos.
So to work in an orderly manner,
employees need the right equipment and the right
procedure to ensure order is
maintained at all times.
7. Discipline
Managers often ensure discipline in their
employees, which refers to respect for rules and
regulations.
Everyone should follow the rules
8. Initiative
The initiative principle states that effective
managers encourage initiative from all
employees. Initiative helps an employee feel
more invested in an organization and offers them
more satisfaction.
9. Remuneration
Employees should be remunerated fairly to keep
their motivation levels high. This remuneration
may be monetary or non monetary. The
monetary compensation includes incentives,
bonus or other financial compensation.
The non monetary compensation may
include rewards or recognition.
10. Stability of Tenure
Stability of tenure of personnel is a principle
stating that in order for an organization to run
smoothly, employees must not frequently enter
and exit the organization.
Organizations should minimize staff turnover
11. Scalar chain
The scalar chain is the hierarchy of authority and
communication within an organization. It defines
which positions have more authority in each
professional relationship.
Having a defined scalar chain allows every
employee to know who to contact in
certain situations and improves
communication throughout an organization.
12. Subordination of individual interest
An organization's interests typically take priority
over the interests of an individual or group.
Managers often make decisions that are better
for everyone rather than ones that benefit a
single employee.
13. Esprit de corps
Esprit de corps is a feeling of pride or loyalty
among an organization. By fostering an effective
team environment, managers can inspire
employees to work harder and produce better
results. To develop esprit de corps, managers can
encourage friendly relationships
among employees, find ways to
generate enthusiasm and reward employees
for strong performance.
14. Centralization and decentralization
Centralization includes the concentration of
authority and responsibility among a few
individuals. Decentralization is when this
responsibility is spread across an entire
organization.
Competitive Advantage
Findings show that business sustainability
includes management of the competitive
advantage concepts.
COMPETITIVE ADVANTAGE – pertains to

distinguishing features or characteristics of a
business organization that enable it to perform
better than rival organizations.
Aspects of Competitive Advantage
1. COST - the amount or equivalent paid or
charged for something.
COMPETITIVE
2. INNOVATION – introduction of new products
or services.
3. QUALITY – ability of a product or service to
meet customer needs.
•Department of Trade and Industry
(Bureau of Product Standards)
•Department of Health (Food and
Drug Administration)
•Department of Transportation and
Communication
4. SERVICE – a requirement for all
customers which translates to “having
what they want when they need it”.
5. SPEED – how fast something moves or
operates.
RULES OF ENGAGEMENT
A military directive that delineates the limitations and
circumstances under which forces will initiate and
prosecute combat engagement with other forces
encountered.
• Strategy
• Action Plan
• Strengths
• Weaknesses
Applicability of military strategies to business.
COMPARATIVE ADVANTAGE
Comparative Advantage Rating Explanation
Aspect 1-5, with 5 being the
highest
Quality
Innovation
Speed
Cost
Service
Managers: Commanding Officers
Bateman and Snell (2008)
detail the function and
roles of managers:
1. Planning, or delivering
strategic value
2. Organizing, or building
a dynamic organization
3. Leading, or mobilizing
people
4. Controlling, or
learning and changing
Planning Tools for managers
1. Simple Frequency Count, which
allows prioritization of problems
that need to be addressed. The
simple frequency count may be
likened to an election tally, where
the candidate with the highest
votes gets chosen by the voting
public. As a planning tool, the
simple frequency count identifies
the issues that receive the most
number of votes as the main or
priority issues
Planning Tools for Managers
2. FlowChart is a tool
that puts key
processes in
symbolic patterns
that are easy to
understand. The
symbols represent
relationship
sequences between
and among different
tasks
3. GANTT Charts
are useful for
scheduling and
planning projects.
The chart may be
considered a visual
tool for the action
plan.
4. Activity Network
Diagram (AND) is a
planning tool used to
diagram activities in
sequence from start to
finish.
5. Plan-Do-Check-Act (PDCA) Describe all the probable
cycle is a problem solving causes of the problem and
model. It is also called as the agree on the root cause/s;
Improvement Storyboard Develop an effective workable
Model. The PDCA cycle is as solution;
follows: Do or implement the
Plan solution; and
Select the problem that will Check or review the result of
be addressed , and describe the change.
the opportunity;
Describe the current situation
Reflect and act on the
surrounding the opportunity; learning.
ACTION PLAN – Community Outreach
Activity
What When Where Who How How Much
Organizing Methods and Structures
1. Downsizing, or the planned 4. Reengineering, includes efforts to
removal of positions or revolutionize organizational systems and
jobs; processes to satisfy customer needs;
5. Total Quality Management (TQM), an
2. Rightsizing, means the
integrative approach to management that
efforts at achieving an supports the realization of customer
appropriate size for satisfaction through an extensive variety
effective enterprise of tools and techniques that result in high
performance; quality goods and services; and
3. Customer Relations 6. Just In Time (JIT), which calls for
Management (CRM), a subassemblies and apparatus to be
function or enterprise unit produced in very small lots and delivered
tasked to focus on to the next stage in the process exactly at
the time needed.
interactive relationships
with customers;
New Leadership Perspective
1. Charismatic leadership – most admired example
of which is Martin Luther King and his dream of a
better world. Charismatic leaders are dominant, self-
confident and convinced of the ethical decency of
their beliefs. They are able to stimulate a sense of
adventure and enthusiasm in their followers.
2. Transformational leadership which is
characterized by (1)charisma or charismatic
leadership traits, (2) aptitudes or capabilities of
giving their followers individualized attention, and
(3) intellectually stimulating qualities.
Change Approaches
1. Education and
Communication –
commonly used where
there is lack of or there is
inaccurate information
Change Approaches
2. Participation and
Involvement- where
initiators face a lack of
information for the
change, and other
participants have the
power to resist the same.
Change Approaches
3. Facilitation and
Support – where
the situations
show adjustment
issues
Change Approaches
4. Manipulation and Co-
optation – often the
quickest and most
inexpensive solution when
there is resistance
Co-opt means to choose or

elect as a member to the
committee.: to appoint as a
colleague or assistant.
(Webster)
Change Approches
5. Explicit or
implicit coercion –
may put the senior
managers or
initiators at risk, but
is essential for
prompt execution.
POLC Flowchart
Management Levels
Top-level managers or senior executives are
responsible for overall management of the
organization.
Middle managers- report to top-level
managers and are located in the middle layers
of the hierarchy.
Frontline managers supervise the operational
activities. Also called operational managers.
Key Activities
Top-level managers
1. Establish high performance standards
2. Institutionalize a set of norms and values
to support cooperation and trust
3. Create the corporate purpose and ambition
Key Activities
Middle level managers
1. Develop individuals and support their
activities
2. Link dispersed knowledge and skills across
diverse units.
3. Manage the tension between short term-
purpose and long- term ambition.
Key Activities
Frontline managers
1. Create and pursue new growth
opportunities for the business.
2. Attract and develop resources
3. Manage continuous improvement
within the unit.
Management Skills
Skill is the ability to perform a specific task to achieve
the desired results.
Technical Skills Conceptual Skills Human Skills
mental capability
involving reasoning,
Ability to perform problem solving, Ability to interact,
specific tasks planning, abstract work or relate
thinking, complex idea effectively with people
comprehension
A. C. T. Solution for Management
Challenges
Analyze your situation
Choose your best strategy
Track your choice
In Summary….
Management is the process of working with
people and resources to accomplish
organizational goals effectively and efficiently.
Effectiveness means organizational goals are
achieved
Efficiency means goals are achieved with
minimal waste of money, time , materials and
people
Supplement to Chapter 1: Decision-Making
Case method template- an
academic tool for business courses
and is also used to teach decision
making stages.

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Organization and

"Management is the art of getting things done

Assign each employee a task that they can become

COMPETITIVE ADVANTAGE – pertains to

Co-opt means to choose or

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