MG6851 PRINCIPLES OF MANAGEMENT study notes ( BEST STUDY GUIDE !! )

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MG6851 PRINCIPLES OF MANAGEMENT L T P C 3 0 0 3 OBJECTIVES: To enable the students to study the evolution of Management, to study the functions and principles of management and to learn the applic ... ation of the principles in an organization. UNIT I INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS 9 Definition of Management – Science or Art – Manager Vs. Entrepreneur - types of managers -managerial roles and skills – Evolution of Management – Scientific, human relations , system and contingency approaches – Types of Business organization - Sole proprietorship, partnership, company-public and private sector enterprises - Organization culture and Environment – Current trends and issues in Management. UNIT II PLANNING 9 Nature and purpose of planning – planning process – types of planning – objectives – setting objectives – policies – Planning premises – Strategic Management – Planning Tools and Techniques – Decision making steps and process. UNIT III ORGANISING 9 Nature and purpose – Formal and informal organization – organization chart – organization structure – types – Line and staff authority – departmentalization – delegation of authority – centralization and decentralization – Job Design - Human Resource Management – HR Planning, Recruitment, selection, Training and Development, Performance Management , Career planning and management. UNIT IV DIRECTING 9 Foundations of individual and group behavior – motivation – motivation theories – motivational techniques – job satisfaction – job enrichment – leadership – types and theories of leadership – communication – process of communication – barrier in communication – effective communication – communication and IT. UNIT V CONTROLLING 9 System and process of controlling – budgetary and non-budgetary control techniques – use of computers and IT in Management control – Productivity problems and management – control and performance – direct and preventive control – reporting. TOTAL: 45 PERIODS OUTCOMES: Upon completion of the course, students will be able to have clear understanding of managerial functions like planning, organizing, staffing, leading & controlling and have same basic knowledge on international aspect of management TEXTBOOKS: 1. Stephen P. Robbins & Mary Coulter, “Management”, 10th Edition, Prentice Hall (India) Pvt. Ltd., 2009. 2. JAF Stoner, Freeman R.E and Daniel R Gilbert “Management”, 6th Edition, Pearson Education, 2004. REFERENCES: 1. Stephen A. Robbins & David A. Decenzo & Mary Coulter, “Fundamentals of Management” 7th Edition, Pearson Education, 2011. 2. Robert Kreitner & Mamata Mohapatra, “Management”, Biztantra, 2008. 3. Harold Koontz & Heinz Weihrich “Essentials of management” Tata Mc Graw Hill, 1998. 4. Tripathy PC & Reddy PN, “Principles of Management”, Tata McGraw Hill, 1999.UNIT I INTRODUCTION Definition of Management According to F.W. Taylor, "Management is the art of knowing what you want to do and then seeing that they do it in the best and the cheapest may." According to Harold Koontz, "Management is the art of getting things done through others and with formally organised groups." Management is a multipurpose organ that manage a business and manages Managers and manages Workers and work.—Peter Drucker Management as a Science and as an Art and as both According to the nature of management, there is a controversy that whether management is a science or an art. This controversy is very old & is yet to be settled. It should be noted that, learning process of science is different from that of art. Learning of science includes principles while learning of art involves its continuous practice. Management as a Science Science is a systematic body of knowledge relating 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 accepted 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 ofHenry 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. ineffectiveness. 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 time of test. 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 behaviour 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 behaviour science.Management as an Art Art means application of knowledge & skill to get the 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 not only should know about the 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 known how to apply various principles in real situations, by functioning as a 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 an 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 help in the 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 shaping the attitude and behaviour of people at work towards theS desired goals.Management as both Science and Art Management is both an art and a science. The above mentioned points clearly reveal 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. Manager vs. Entrepreneur Characteristic Entrepreneur Manager Behavior Characterized by Desire for Control Delegation of Authority Management Style One-Man Show Management Team Driving Force Creativity - Innovation Establish and Preserve the Status Quo Organizational Growth Rapid Reaction Strategic Planning Organization Structure Informal, Flexible Organized Decision-Making Intuitive Collect Information and Seek Advice Definition of Aims In terms of "Vision" In Commercial Terms Attitude to Money A By-Product Measure of Success Attitude to Risk Calculated Risks Avoidance of Risks Organizational Culture "Entrepreneurial Culture" "Management Culture" Let's summarize the significant differences between the entrepreneur and the manager: 1. Behavioral Differences The typical entrepreneur wants to "be in control" of his life (which is often the reason why he started the business), of his business and especially of his employees. The professional manager, on the other hand, enters a company which needs to delegate authority, since it has reached the stage in its development where the entrepreneur can no longer "do it all himself". 2. Management StyleThe entrepreneurial management style is very demanding, leaving very little room for error, and none at all for actual failures, since in most cases the business is a "one man show", even if there are other employees. The professional manager, however, must be tolerant of failure (and see it as a basis for learning) and develop an administrative team, since a basic assumption is that responsibility in the organization must pass from the "all-knowing" entrepreneur to people who still have to learn about the business. 3. The Moving Force Entrepreneurial management is characterized by concepts such as "entrepreneurship", "creativity", "innovation", and so on, indicators of the desire to create "something from nothing". Professional management is characterized by concepts such as "order", "organization", "procedures", and so on, indicating the desire to organize and maintain what exists. 4. Growth Entrepreneurial management is noted for its ability to react quickly and effectively to new business opportunities. This ability is the foundation for rapid growth of the company in its entrepreneurial stage. Professional management is noted for medium and long term strategic planning, which leads to controlled growth of the company during the process of establishment. 5. Organizational Structure The entrepreneurial organization is characterized by its informal, flexible structure, which allows it to adapt to changes required by its rapid growth. Professional management, on the other hand, requires a formal and fairly rigid organizational structure, which leaves no room for rapid reactions to business opportunities, but protects the organization from sudden collapse. 6. Decision-Making The entrepreneur usually makes decisions, even those of critical importance for his business, on the basis of his own personal intuition and "gut feelings". The professional manager makes decisions after collecting detailed information and reaching operative conclusions, while relying on experts both from within and outside the organization. 7. Definition of AimsThe entrepreneur describes his organization in terms of "vision", "dream" and "mission" and manages to give his employees the feeling that they are working for a higher aim than just marketing a product and/or service. The professional manager describes the company aims in terms of market segments, yield per worker and profitability. 8. Attitude toward Money Although the accepted myth is that entrepreneurs are driven by the desire for power and money, both theoretical and empirical studies have shown that typical entrepreneurs are in fact driven by the desire for success rather than power. This means that, in the eyes of most entrepreneurs, while money is a welcome by-product of their efforts, it is not the reason for their efforts. The professional business manager, on the other hand, looks at the business he manages through "financial eyes" and defines its aims (usually in the short term only) purely in financial terms. 9. Attitude toward Risk The myths describe entrepreneurs as "wild risk-takers", although many studies have shown that in fact the typical entrepreneur is very good at assessing risks. On the other hand, the professional manager, who sees his task as strengthening and maintaining the company, is naturally afraid of risks and tries to maintain the status quo. 10. Company Culture The typical entrepreneur does not usually try to define a "culture" for the organization he sets up, since in most cases he himself is the organization. The literature defines this situation as "the entrepreneurial organizational culture", characterized by large doses of charisma and "manipulativeness". The professional manager does try to establish a well-defined company culture, based on company values on one hand and commercial aims on the other. Types of Managers In organizations, there are generally three different levels of managers: first-level managers, middle-level managers, and top-level managers. These levels of managers are classified in a hierarchy of importance and authority, and are also arranged by the different types of management tasks that each role does. In many organizations, the number of managers in every level resembles a pyramid, in which the first-level has many more managers than middle-level and top-level managers, respectively. Each management level is explained below in specifications of their different responsibilities and likely job titles.Top-level managers Typically consist of board of directors, president, vice-president, chief executive officers, etc. These individuals are mainly responsible for controlling and overseeing all the departments in the organization. They develop goals, strategic plans, and policies for the company, as well as make many decisions on the direction of the business. In addition, top-level managers play a significant role in the mobilization of outside resources and are for the most part responsible for the shareholders and general public. According to Lawrence S. Kleiman, the following skills are needed at the top managerial level.  Broadening their understanding of how factors such as competition, world economies, politics, and social trends influence the effectiveness of the organization. Middle-level managers These personnel typically consist of general managers, branch managers, department managers. These individuals are mainly responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. Their roles can be emphasized as executing plans of the organization in conformance with the company's policies and the objectives of the top management, they define and discuss information and policies from top management to lower management, and most importantly they inspire and provide guidance to lower level managers towards better performance. Some of their functions are as follows:  Designing and implementing effective group and intergroup work and information systems.  Defining and monitoring group-level performance indicators.  Diagnosing and resolving problems within and among work groups.  Designing and implementing reward systems that support cooperative behavior. First-level managers Typically consist of supervisors, section officers, foreman, etc. These individuals focus more on the controlling and direction of management functions. For instance, they assign tasks and jobs to employees, guide and supervise employees on day-to-day activities, look after the quantity and quality of the production of the company, make recommendations, suggestions, and communicate employee problems to the higher level above, etc. In this level, managers are the "image builders" of the company considering they are the only ones who have direct contact with employees.  Basic supervision.  Motivation.  Career planning. Performance feedback. Managerial Roles And Skills Mintzberg defined ten management roles within three categories: interpersonal, informational, and decisional. Management is incorporated into every aspect of an organization and involves different roles and responsibilities. Henry Mintzberg (1973), the Cleghorn Professor of Management Studies at McGill University, defined ten management roles within three categories: interpersonal, informational, and decisional. Each of the three categories embraces the different roles. Interpersonal 1. Figurehead: symbolic head; performs a number of routine duties of a legal or social nature. 2. Leader: motivates and activates subordinates; performs staffing, training, and associated duties. 3. Liaison: maintains a self-developed network of outside contacts and informers who provide favors and information. Informational 1. Mentor: seeks and receives a wide variety of special information (much of it current) to develop a thorough understanding of the organization and environment; emerges as the nerve center of internal and external information for the organization. 2. Disseminator: transmits information received from outsiders or from other subordinates to members of the organization. Some information is factual; some involves interpretation and integration of diverse value positions of organizational influences. Disseminating what is of value, and how, is a critical informational role. 3. Spokesman: transmits information (plans, policies, results, etc.) within and outside of the organization; serves as an expert on the organization's industry.Decisional 1. Entrepreneur: searches the organization and its environment and initiates improvement projects to bring about change; supervises design of certain projects as well. 2. Disturbance Handler: takes corrective action when the organization faces important, unexpected disturbances. 3. Resource Allocator: allocates the organization's resources; makes or approves of all significant organizational decisions. 4. Negotiator: represents the organization at major negotiations. A manager's job is never static; it is always dynamic. At any given time, a manager may carry out some combination of these roles to varying degrees, from none of the time to 100 percent of the time. Throughout an individual's working life, a person may hold various management positions that call upon different roles. No one person can be all things to all people. While these ten roles are highly useful in framing organizational leadership, to expect one person to fill each role in a large organization is impractical. Instead, astute hiring managers will hire people with one or two specific roles in mind, thereby creating a team of managers capable of handling the wide variety of challenges in the business world today. The figure below indicates the skills managers must have and the degree of importance for each level of managers. Conceptual skills is the ability to analyze complex information. It enables managers to process information about the internal/external environment of the organization and determine its implications. Top level managers need to have strong conceptual skills if they are to effectively accomplish goals. Human skills is the ability to work effectively with people. It involves motivating and disciplining employees, monitoring performance, providing feedback, improving communication and instructing employees. Human skills are most important for middle managers as these managers must coordinate efforts of the members in his group as well as other work groups within the organization.Technical skills is the knowledge and the ability to use tools, techniques and procedures that are specific to their particular field. Technical skills tend to be most important for first line managers as they must have the knowledge and the "know-how" to ensure that the products and services of their organization are delivered to customer. EVOLUTION OF MANAGEMENT THOUGHT The practice of management is as old as human civilization. The ancient civilizations of Egypt (the great pyramids), Greece (leadership and war tactics of Alexander the great) and Rome displayed the marvelous results of good management practices. The origin of management as a discipline was developed in the late 19th century. Over time, management thinkers have sought ways to organize and classify the voluminous information about management that has been collected and disseminated. These attempts at classification have resulted in the identification of management approaches. The approaches of management are theoretical frameworks for the study of management. Each of the approaches of management are based on somewhat different assumptions about human beings and the organizations for which they work. The different approaches of management are a) Classical approach, b) Behavioral approach, c) Quantitative approach, d) Systems approach, e) Contingency approach. The formal study of management is largely a twentieth-century phenomenon, and to some degree the relatively large number of management approaches reflects a lack of consensus among management scholars about basic questions of theory and practice. a) THE CLASSICAL APPROACH: The classical approach is the oldest formal approach of management thought. Its roots pre-date the twentieth century. The classical approach of thought generally concerns ways to manage work and organizations more efficiently. Three areas of study that can be grouped under the classical approach are scientific management, administrative management, and bureaucratic management.(i) Scientific Management. Frederick Winslow Taylor is known as the father of scientific management. Scientific management (also called Taylorism or the Taylor system) is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity. In other words, Traditional rules of thumb are replaced by precise procedures developed after careful study of an individual at work. (ii) Administrative Management. Administrative management focuses on the management process and principles of management. In contrast to scientific management, which deals largely with jobs and work at the individual level of analysis, administrative management provides a more general theory of management. Henri Fayol is the major contributor to this approach of management thought. (iii) Bureaucratic Management. Bureaucratic management focuses on the ideal form of organization. Max Weber was the major contributor to bureaucratic management. Based on observation, Weber concluded that many early organizations were inefficiently managed, with decisions based on personal relationships and loyalty. He proposed that a form of organization, called a bureaucracy, characterized by division of labor, hierarchy, formalized rules, impersonality, and the selection and promotion of employees based on ability, would lead to more efficient management. Weber also contended that managers' authority in an organization should be based not on tradition or charisma but on the position held by managers in the organizational hierarchy. b) THE BEHAVIORAL APPROACH: The behavioral approach of management thought developed, in part, because of perceived weaknesses in the assumptions of the classical approach. The classical approach emphasized efficiency, process, and principles. Some felt that this emphasis disregarded important aspects of organizational life, particularly as it related to human behavior. Thus, the behavioral approach focused on trying to understand the factors that affect human behavior at work. (i) Human Relations. The Hawthorne Experiments began in 1924 and continued through the early 1930s. A variety of researchers participated in the studies, including Elton Mayo. One of the major conclusions of the Hawthorne studies was that workers' attitudes are associated with productivity. Another was that the workplace is a social system and informal group influence could exert a powerful effect on individual behavior. A third was that the style of supervision isan important factor in increasing workers' job satisfaction. (ii) Behavioral Science. Behavioral science and the study of organizational behavior emerged in the 1950s and 1960s. The behavioral science approach was a natural progression of the human relations movement. It focused on applying conceptual and analytical tools to the problem of understanding and predicting behavior in the workplace. The behavioral science approach has contributed to the study of management through its focus on personality, attitudes, values, motivation, group behavior, leadership, communication, and conflict, among other issues. c) THE QUANTITATIVE APPROACH: The quantitative approach focuses on improving decision making via the application of quantitative techniques. Its roots can be traced back to scientific management. (i) Management Science (Operations Research) Management science (also called operations research) uses mathematical and statistical approaches to solve management problems. It developed during World War II as strategists tried to apply scientific knowledge and methods to the complex problems of war. Industry began to apply management science after the war. The advent of the computer made many management science tools and concepts more practical for industry (ii) Production And Operations Management. This approach focuses on the operation and control of the production process that transforms resources into finished goods and services. It has its roots in scientific management but became an identifiable area of management study after World War II. It uses many of the tools of management science. Operations management emphasizes productivity and quality of both manufacturing and service organizations. W. Edwards Deming exerted a tremendous influence in shaping modern ideas about improving productivity and quality. Major areas of study within operations management include capacity planning, facilities location, facilities layout, materials requirement planning, scheduling, purchasing and inventory control, quality control, computer integrated manufacturing, just-in-time inventory systems, and flexible manufacturing systems. d) SYSTEMS APPROACH: The simplified block diagram of the systems approach is given below.The systems approach focuses on understanding the organization as an open system that transforms inputs into outputs. The systems approach began to have a strong impact on management thought in the 1960s as a way of thinking about managing techniques that would allow managers to relate different specialties and parts of the company to one another, as well as to external environmental factors. The systems approach focuses on the organization as a whole, its interaction with the environment, and its need to achieve equilibrium e) CONTINGENCY APPROACH: The contingency approach focuses on applying management principles and processes as dictated by the unique characteristics of each situation. It emphasizes that there is no one best way to manage and that it depends on various situational factors, such as the external environment, technology, organizational characteristics, characteristics of the manager, and characteristics of the subordinates. Contingency theorists often implicitly or explicitly criticize the classical approach for its emphasis on the universality of management principles; however, most classical writers recognized the need to consider aspects of the situation when applying management principles [Show More]

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