Chapter 1
Chapter 1
Chapter 1
(IEng 5241)
Kalkidan Mezgebu
Establishing objectives
strategies to be followed)
Identifying alternative course of action
Types of Organization:
1. Line or scalar organization
2. Functional organization
3. Line and staff organization
Staffing
After objectives are set, policies formulated etc, the next logical
Unity of Direction
Unity of Command
Effective Communication
Effective Leadership
Fayol’s Principles of Management
A body of principles of management has been
developed by Henry Fayol; the father of modern
management.
He has proposed that there are 6 primary functions
of management and 14 principles of management,
Forecasting, Planning, Organizing, Commanding,
Coordinating, Controlling.
He held that there is a single administrative science,
whose principles can be used in all management
situation no matter what kind of organization was Henri Fayol (1841-1925)
being managed.
Henri Fayol - 14 Principles
1. Division of Labor:
Work of all kinds must be divided & subdivided and
allotted to various persons according to their
expertise in a particular area.
2. Authority & Responsibility are related:
Authority refers to the right of superiors to get
exactness from their sub-ordinates. Responsibility
means obligation for the performance of the job
assigned. Note that responsibility arises wherever
authority is exercised.
3. Unity of Command:
A sub-ordinate should receive orders and be
accountable to one and only one boss at a time. He
should not receive instructions from more than one
person.
Henri Fayol - 14 Principles
4. Unity of Direction:
People engaged in the same kind of business or
same kind of activities must have the same
objectives in a single plan. Without unity of
direction, unity of action cannot be achieved.
5. Equity:
Equity means combination of fairness,
kindness & justice. The employees should be
treated with kindness & equity if devotion is
expected of them.
6. Order:
This principle is concerned with proper &
systematic arrangement of things and people.
Arrangement of things is called material order
and placement of people is called social order.
Henri Fayol - 14 Principles
7. Discipline:
Discipline means sincerity, obedience, respect of
authority & observance of rules and regulations of
the enterprise. Subordinate should respect their
superiors and obey their order.
8. Initiative:
Initiative means eagerness to initiate actions without
being asked to do so. Management should provide
opportunity to its employees to suggest ideas,
experiences & new method of work.
9. Remuneration:
Remuneration to be paid to the workers should be
fair, reasonable, satisfactory & rewarding of the
efforts.
It should accord satisfaction to both employer and
the employees
Henri Fayol - 14 Principles
10. Stability of Tenure:
• Employees should not be moved frequently from one job
position to another i.e. the period of service in a job
should be fixed.
11. Scalar Chain of command:
• Scalar chain is the chain of superiors ranging from the
ultimate authority to the lowest. Communications should
follow this chain. However, if following the chain creates
delays, cross-communications can be allowed if agreed
to by all parties and superiors are kept informed.
12. Sub-ordination of Individual Interest to common goal:
• An organization is much bigger than the individual it
constitutes. Therefore interest of the undertaking should
prevail in all circumstances. The interests of any one
employee or group of employees should not take
precedence over the interests of the organization as a
Henri Fayol - 14 Principles
13. Espirit De’ Corps:
• It refers to team spirit i.e. harmony in the work
groups and mutual understanding among the
members.
• Espirit De’ Corps inspires workers to work harder.
14. Centralization:
• Centralization refers to the degree to which
subordinates are involved in decision making.
• Whether decision making is centralized (to
management) or decentralized (to subordinates) is
a question of proper proportion.
• The task is to find the optimum degree of
centralization for each situation.
Levels of Management
1. Top Level:
Top management sets the mission and goals, develops policies, evaluates the
overall performance of various departments, responsible for the business as a
whole and is concerned mainly with long-term planning.
2. Middle Level:
Middle level management develops departmental goals, executes the policies,
plans and strategies determined by top management, develops medium- term
plans and supervises and coordinate lower-level managers’ activities.
3. Lower (Supervisory, frontline) Level:
Lower level management takes charge of day-to-day operations, is involved
in preparing detailed short-range plans, is responsible for smaller segments
of the business, executes plans of middle management, guides staff in their own
subsections and keep close control over their activities.
Importance of Management
A scientific management is most essential as it fulfills the following
necessities:
It maintains discipline by keeping proper control
maximum output
It keeps coordination among the staff
It improves efficiencies
• Finance
• Production
• Operations
• Human Resources
• Marketing
• Administration
Areas of Management
Financial Management –
Focus on obtaining money necessary for
the successful operations and using funds
to further organizational goals
Marketing Management –
Responsible for planning, pricing, and
promoting products and making them
available to customers
Organizational Structure
hierarchy.
In its simplest form, a tall structure results in one long
7. Tall Organisation encourages development of staff. 8. Here, managers may became more dominating.
Definitions of productivity:
Productivity is the measures of how well the resources are brought together
in an organization and utilized for accomplishing a set of objectives.
Production and Productivity
Production system is an organized process of conversion of
raw materials into useful finished products as shown in figure
below.
Transformation
Input Output
process
Men
Machine
Materials Goods and
Money services
Management
Energy
Production System
Production and Productivity
The concept of production and productivity are totally different:
an increase in productivity.
Measurement of Productivity
Productivity can be measured, the amount of output per unit
of input.
In a factory, it might be measured based on the number of
Partial
Total Productivity Total Factor
Productivity
Measures (TPM) Productivity (TFP)
Measures (PPM)
Advantages
Advantages Advantages
•Easy and more accurate
i.Easy to understand and calculate •Data are obtained easily
representation total picture of
ii.A tool to pinpoint improvement •Value added approach
company
Limitations : Limitations :
•Easily related to total cost
i. Misleading if used alone •No consideration of
Limitations :
ii. No consideration of overall materials and energy.
•Difficulties to obtaining the
impact
data
Partial Productivity
The resources of productivity when measured separately are
Product
Plant and equipment Structural adjustment
Technology Natural resources
Materials Government policy
Human factors
Work methods
Productivity Improvement Techniques
Technology Based Material Based
Productivity
Employee
Product Based Improvement Based
Techniques
Task Based
Contd..
Efficiency means whatever you produce or perform; it should
be done in a perfect way. (Doing things right)