Management is a process, and let us say, a universal process, by which an organisation realises its objectives in a planned way. Modern management thinkers agree that management is a distinct process. People who perform management can be designated as managers, members of management, or executive leaders. 

Management is the art of securing maximum prosperity with a minimum of effort. Wherever there is an organised group of people working towards common goals, some type of management becomes essential. It has been rightly said that ‘anything minus management amounts to nothing’. In the words of Koontz and O’Donnel, “There is no more important area of human activity than management since its task is that of getting things done through others.” 

Its role is to co-ordinate, integrate and bring together the various elements of business (7m’s of business – viz, money, men, material, machinery, management method and market) for achieving business objectives

According to Peter F. Drucker, “Management is a dynamic life giving element in an organisation. In its absence the resources of production remain resources and never become production.” 


Big growth in multinational operations, more flexible and elastic organization structure, fast-changing technological, economic and social environment and the increasing complications in decision making, all these will largely influence the future managerial job and managerial world. Management education and management development will acquire vital importance in a dynamic environment.

Introduction to Management

Management is the life-giving and dynamic element in every business because without it the resources of production (men, machines and materials) cannot be converted into production. Its role is to co-ordinate, integrate and bring together the various elements of business (7m’s of business – viz, money, men, material, machinery, management method and market) for achieving business objectives.

These objectives are earning of adequate profits, supplying better and cheaper goods and services to consumers, and providing employment opportunity to community. Management is now being recognised as a crucial economic resource of a Country. How the various elements of business are handled depends upon the ability of managers.

Management is essential in group activity. Group activity is not peculiar to business, It is equally true of Government, military, schools and colleges, etc. Whenever group activity exists, efficient management becomes necessary to realise the objectives of the group with minimum expenditure of time, money and effort. In other words, management helps in the transformation of various types of resources into ultimate goals or objectives, i.e. maximisation of profits or service to mankind.

Management History


Difficulties arise in tracing the history of management. Some see it (by definition) as a late modern (in the sense of late modernity) conceptualization. On those terms, it cannot have a pre-modern history, only harbingers (such as stewards). Others, however, detect management-like thought back to Sumerian traders and to the builders of the pyramids of ancient Egypt. 

Slave owners through the centuries faced the problems of exploiting/motivating a dependent but sometimes unenthusiastic or recalcitrant workforce. Still, many pre-industrial enterprises, given their small scale, did not feel compelled to face the issues of management systematically. However, innovations such as the spread of Arabic numerals (5th to 15th centuries) and the codification of double-entry bookkeeping (1494) provided tools for management assessment, planning and control. 

Given the scale of most commercial operations and the lack of mechanized record-keeping and recording before the industrial revolution, it made sense for most owners of enterprises in those times to carry out management functions by and for themselves. 

But with growing size and complexity of organizations, the split between owners (individuals, industrial dynasties or groups of shareholders) and day-to-day managers (independent specialists in planning and control) gradually became more common. 


Early Writing: 

While management has been present for millennia, several writers have created a background of works that assisted in modern management theories. 

Sun Tzu’s – The Art of War: 

Written by Chinese general Sun Tzu in the 6th century BC, The Art of War is a military strategy book that, for managerial purposes, recommends being aware of and acting on strengths and weaknesses of both a manager’s organization and a foe’s. 

Chanakya’s Arthashastra: 

Chanakya wrote the Arthashastra around 300 BC in which various strategies, techniques and management theories were written which gives an account on the management of empires, economy and family. The work is often compared to the later works of Machiavelli. 

Niccolo Machiavelli’s The Prince Believing that people were motivated by self-interest, Niccolo Machiavelli wrote The Prince in 1513 as advice for the of Florence, Italy. Machiavelli recommended that leaders use fear- but not hatred-to maintain control. 

Adam Smith’s The Wealth of Nations Written in 1776 by Adam Smith, a Scottish moral philosopher, The Wealth of Nations aims for efficient organization of work through the specialization of labour. Smith described how changes in processes could boost productivity in the manufacture of pins. While individuals could produce 200 pins per day, Smith analysed the steps involved in manufacture and, with 10 specialists, enabled production of 48,000 pins per day 

19th Century: 


Classical economists such as Adam Smith (1723-1790) and John Stuart Mill (1806-1873) provided a theoretical background to resource-allocation, production, and pricing issues. About the same time, innovators like Eli Whitney (1765-1825), James Watt (1736-1819), and Matthew Boulton (1728-1809) developed elements of technical production such as standardization, quality-control procedures, cost-accounting, interchange ability of parts, and work-planning. 

Many of these aspects of management existed in the pre-1861 slave-based sector of the US economy. That environment saw 4 million people, as the contemporary usages had it, “managed” in profitable quasi-mass production. 

By the late 19th century, marginal economists Alfred Marshall (1842-1924), Leon Walras (1834-1910), and others introduced a new layer of complexity to the theoretical underpinnings of management. Joseph Wharton offered the first tertiary-level course in management in 1881. 

20th Century: 


By about 1900 one finds managers trying to place their theories on what they regarded as a thoroughly scientific basis. Examples include Henry R. Towne’s Science of management in the 1890s, Frederick Winslow Taylor’s The Principles of Scientific Management (1911), Frank and Lillian Gilbreth’s applied motion study (1917), and Henry L. Gantt’s charts (1910s). 

J. Duncan wrote the first college management textbook in 1911. In 1912 Yoichi Ueno introduced Taylorism to Japan and became first management consultant of the “Japanese-management style”. His son Ichiro Ueno pioneered Japanese quality assurance. 

The first comprehensive theories of management appeared around 1920. The Harvard Business School invented the Master of Business Administration degree (MBA) in 1921. People like Henry Fayol (1841 -1925) and Alexander Church described the various branches of management and their inter-relationships. 

In the early 20th century, people like Ordway Tead (1891-1973), Walter Scott and J. Mooney applied the principles of psychology to management, while other writers, such as Elton Mayo (1880-1949), Mary Parker Follett (1868-1933), Chester Barnard (1886-1961), Max Weber (1864-1920), Rensis Likert (1903-1981), and Chris Argyris (1923) approached the phenomenon of management from a sociological perspective. 


Peter Drucker (1909-2005) wrote one of the earliest books on applied management – Concept of the Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors until 1956) commissioning a study of the organisation. Drucker went on to write 39 books, many in the same vein. 

H. Dodge, Ronald Fisher (1890-1962), and Thornton C. Fry introduced statistical techniques into management studies. In the 1940s, Patrick Blackett combined these statistical theories with microeconomic theory and gave birth to the science of operations research. 

Operations research, sometimes known as “management science” (but distinct from Taylor’s scientific management), attempts to take a scientific approach to solving management problems, particularly in the areas of logistics and operations. 

Some of the more recent developments include the Theory of Constraints, management by objectives, reengineering, Six Sigma and various information-technology-driven theories such as agile software development, as well as group management theories such as Cog’s Ladder. 

As the general recognition of managers as a class solidified during the 20th century and gave perceived practitioners of the art/science of management a certain amount of prestige, the way opened for popularised systems of management ideas to peddle their wares. In this context many management fads may have had more to do with pop psychology than with scientific theories of management. 

Towards the end of the 20th century, business management came to consist of six separate branches, namely: 

  1. Human resource management. 
  2. Operations management or production management. 
  3. Strategic management. 
  4. Marketing management.
  5. Financial management.
  6. Information technology management responsible for management information systems. 


21st Century: 

In the 21st century observers find it increasingly difficult to subdivide management into functional categories in this way. More and more processes simultaneously involve several categories. Instead, one tends to think in terms of the various processes, tasks, and objects subject to management. 

Branches of management theory also exist relating to nonprofits and to government – such as public administration, public management, and educational management. Further, management programs related to civil-society organizations have also spawned programs in nonprofit management and social entrepreneurship. 

Note that many of the assumptions made by management have come under attack from business ethics viewpoints, critical management studies, and anti-corporate activism. 

As one consequence, workplace democracy has become both more common and more advocated, in some places distributing all management functions among the workers, each of whom takes on a portion of the work. However, these models predate any current political issue, and may occur more naturally than does a command hierarchy. 

All management to some degree embraces democratic principles in that in the long term workers must give majority support to management; otherwise they leave to find other work, or go on strike. Despite the move toward workplace democracy, command-and-control organization structures remain commonplace and the de facto organization structure. 


Indeed, the entrenched nature of command and control can be seen in the way that recent layoffs have been conducted with management ranks affected far less than employees at the lower levels of organizations. In some cases, management has even rewarded itself with bonuses when lower level employees have been laid off. 

Evolution of Management Thought 

The development of management thought could be traced to over 2000 years BC.

However, the significant contributions that came up during the last three centuries could be grouped under the following four periods:

  1. Period of management awakening.
  2. Scientific management period.
  3. The human relations period (this is also called the behavioural sciences period).
  4. Modern management period.

1. Period of Management Awakening:

This was the period of the Industrial Revolution, which paved the way for large growth and diversification of business enterprises.

Some of the chief features of the industrial revolution were:

  1. Automation (muscle power is transferred to machines).
  2. New inventions increased demand.
  3. The number of commercial establishments expanded.

During this period, certain pioneers challenged the traditional approaches to management with their new ideas and approaches.


Significant of these contributions are listed herein:

(1) Robert Owen:

Robert Owen was the first person who spelled out the mostly neglected critical issues relating to personnel management. He believed that workers’ performance was influenced by a number of factors such as – the shop-floor working conditions, working hours, housing facilities, training of workers, provision of canteen, rest places, kind treatment, and so on.

(2) Charles Babbage:

Babbage advocated the use of science and mathematics for investigations and accurate data to run the factories which were at that time using traditional methods, opinions, and rules of thumb for decision-making.

Charles Babbage is more remembered because:


i. He invented the analytical engine, which was the early version of the modern computer

ii. He suggested the division of work into mental and physical efforts, determining the precise cost for every process, payment of bonus, profit sharing, and so on.

(3) James Watt JR and Robinson Boulton:

Both of these were the sons of James Watt, who invented steam engine. They used, for the first time, several management techniques such as – forecasting, market research, planned machine layout, production planning, standardisation of parts, and welfare of workers, elaborate statistical records, and others in their factory at So on. These techniques are considered as vital even in today’s context.

2. Scientific Management Period:

The scientific management period holds prominently two greatest exponents of classical theories – Henri Fayol (1841-1925), who was a French industrialist (a mining engineer), and FW Taylor (1856-1915), who started his career as an apprentice in engineering and later rose to the level of a shop superintendent.

A clear distinction is visible in the contributions of both Fayol and Taylor. While Fayol’s contribution was enterprise-oriented, Taylor’s focus was work-oriented. In other words, Fayol tried to understand organisations from the top to the bottom. On the contrary, Taylor analysed organisations from the bottom to the top.

Highlights of Henri Fayol’s Contribution:

The following were the highlights of Henri Fayol’s contribution to management:

Fayol defined managerial functions as forecasting and planning, organising, commanding, coordinating, and controlling. He identified six types of activities to be accomplished in every industrial organisation – technical (e.g., production), commercial (e.g., buying and selling), financial (e.g., procuring capital), security (e.g., protecting property and people), accounting (e.g., maintaining account books), and managerial (e.g., planning and controlling).

Also, Fayol identified 14 principles of management.

They are:

i. Division of work:

Here, the work is divided among the members of the group based on the employee’s skills and talents. It also provides an opportunity to specialise in different problem areas.

ii. Authority:

It refers to the right or power to give orders. It must also be adequately supported by responsibility.

iii. Discipline:

Both the employer and employees should respect each other by observing the rules.

iv. Unity of command:

An employee should receive instructions from only one superior.

v. Unity of direction:

Where the objectives are similar, the action plan’s also should be similar. In other words, similar activities should be grouped together, placed under one manager and there should be one action plan.

vi. Subordination of individual interest to group interest:

Group interests or goals of organisation must prevail any time over the individual interests or personal goals.

vii. Remuneration:

The wages and salaries must be fair and bring out the best possible commitment in the employees to achieve the organisational goals.

viii. Centralisation of authority:

Authority is said to be centralised when decision-making powers are retained at the top level. The degree of centralisation or decentralisation is determined by the needs of the company.

ix. Scalar chain:

It indicates how the authority flows from top to bottom.

x. Order:

It means keeping the right man or a right thing in the right place.

xi. Equity:

This implies that the dealings with the employees should be so fair and so open that they will reinforce their commitment to the organisation. Be kind and fair to them.

xii. Stability of tenure of personnel:

This indicates avoiding frequent transfers of the employees much before they settle in their jobs.

xiii. Initiative:

The staff should be encouraged to show initiative, within the limits of authority and discipline.

xiv. Espirit de corps:

This means team work; implying that there is unity in strength.

These principles reflect how the organisations should be structured. They also explain how the managers and workers should be taken care of. Henri Fayol contributed immensely to the growth of professional management. Hence, he is hailed as the father of modern management.

Contribution of Frederick Winslow Taylor:

Frederick Winslow Taylor is well known as the father of scientific management. Taylor spent a greater part of his life finding solutions to the problems of achieving greater efficiency on the shop floor. Taylor observed that the workers used to intentionally delayed the process of completing the job and that the tools and equipment provided to them were not standard and modern.

He identified the need to teach the workers the prima facie that if they turn out more work, they would not be thrown out of employment. The solutions suggested by Taylor were the outcomes of his own experience at work, initially as a shop floor worker himself and later as a manager.

All this was against the backdrop of the industrial revolution, which turned out to be very ugly, particularly towards the end of the nineteenth century. Employers used to give a high degree of priority to efficient working methods. New industries were cropping up. New plant and machinery and plentiful labour were seen everywhere. The employers were preoccupied with the task of organising all these efficiently and profitably.

Taylor was passionately interested in the efficiency of working methods. He, initially, realised that the systematic analysis of work would find a solution to all the problems associated with enhancing the efficiency of the working methods. He also realised that this was the only way to address the apprehensions of the workers.

Taylor, thus, consolidated his ideas at Bethlehem Steel Company and conducted some of his most famous experiments in improving labour productivity. His writings were published as The Principles of Scientific Management in 1911.

Taylor was the first person to recognise and emphasise the need for adopting a scientific approach to the task of an enterprise.

Benefits from Scientific Management:

Scientific management proved to be very beneficial to the industry at large.

i. Scientific management improved working methods and brought an enormous increase in productivity.

ii. It developed a rational approach to measure tasks and processes with a considerable degree of accuracy.

iii. It initiated certain improvements in working methods, plant design and other things, based on information generated by measurement of tasks and processes.

iv. Piece rate wage system was introduced and incentive systems were evolved.

v. It stimulated the employers and the higher levels of management to take a positive view of leadership at the shop floor operations. This has led to the introduction of systems for tight control over work.

vi. Physical working conditions for the employees underwent a sea change.

vii. It laid the foundation for work study and other related techniques.

viii. The scientific approach replaced the most widely prevalent traditional rule of thumb approach.

ix. The observations about workers formed the basis for McGregor’s theory of X assumptions about people.

x. The concepts of work design and job enrichment were meant for the victims of the fragmentation effects of Taylorism.

xi. Japanese companies combined most of the beneficial aspects of scientific management with other approaches to produce a highly successful production system. One example is theory Z, developed by W Ouchi, which focuses on developing the ability of the organisation to coordinate people, not technology, to achieve higher productivity.

3. Human Relations Period:

Human relations period is characterised by the focus on the human factor in dealing with business and production issues. The researchers and practising executives concentrate more on issues such as – human behaviour at the workplace, motivation, group relationships, and leadership. The contribution of selected behavioural scientists is outlined below.

i. George Elton Mayo:

Mayo was known for his famous experiment at the Hawthorne Plant of the Western Electric Company, Chicago, USA, for evaluating the attitudes and psychological reactions of workers on the job situations. The study focussed on the influence of social attitudes and relationships of workgroups on performance.

The experiment started as a study into physical conditions and productivity. It ended as a series of studies into social factors – membership of work groups, informal relationships with the supervisors, and so on. It revealed that workers valued most the social relations at work and these were viewed as important as monetary incentives and good physical working conditions. The study demonstrated that the influence of groups in determining behaviour at work can be very powerful.

ii. The Hawthorne Experiments:

In one of the Hawthorne experiments, Mayo’s research team examined changes in the amount of light available in the work area. The results were confusing at first. When the lighting was increased, output rose; on the other hand, when the light was decreased, output still rose.

An analysis of this and other such puzzling results showed that the workers were highly motivated more for the importance given to them. The reduction in light did not affect their work. What mattered to them was that they were really making a contribution to company operations and this fact is being recognised by the top management.

The research team also examined other effects of change in the work environment. They varied the working conditions such as – rest periods, hot lunches, and working hours; used interviews to determine attitudes; and analysed the social organisation among workers. During the studies, it was found that changes in the work environment had little long-term effect upon worker productivity.

The reasons for this phenomenon were very interesting. The workers started feeling that they were being recognised. Since management had asked for their opinions on working conditions, the workers felt that their relationships with management were no longer impersonal.

When the workers were being informed the reasons for the management decisions, they felt that they had achieved a status and some degree of respect. The Hawthorne studies revealed that recognising the emotions of workers, in this way, could enhance the productivity and physical well-being of the employees.

The following were the conclusions from the Hawthorne researches:

a. Individual workers must be seen as members of a group.

b. The sense of belongingness and effective management were the two secrets unfolded by the Hawthorne experiments. The workers enjoyed more the sense of belongingness, as evident from their high morale and functional interrelationships among the members of a group.

The management was effective in terms of understanding human relationships among workers, particularly groups. The way the workers were motivated, counselled, led, and communicated proved very effective. This highlights the recognition of the human factor and constitutes the essence of the ‘Hawthorne effect’.

c. Need for status and belongingness to a group were viewed as more important than monetary incentives or good physical working conditions.

d. Informal or personal groups influenced the behaviour of workers on the job.

e. To seek workers’ cooperation, the management should be aware of their social needs and cater to them. Otherwise, there is every danger that the workers ignore and turn against the interests of the organisation.

4. Modern Management Period:

The management studies of the last fifty years or so have tried to integrate the findings of scientific management, principles of management, and human relations movements. While all these groups made significant contribution to management thinking, they ignored each other’s contribution. This resulted, as Harold Koontz observed, in ‘management theory jungle’.

The modern management period is characterised by dynamic business environment. The list of demands and expectations from all the segments of the society – producers, consumers, intermediaries, governments, and others has been growing ever globally.

The state-of-the-art technology has revolutionised the range of goods and services available to the customers. The firms are able to compete with one another globally. The massive improvements in communication systems have literally made the entire world a global village.

Management Meaning

Different people seem to have different ideas concerning the meaning of the term “Management”. Many people consider management as to command others. To many others management is nothing more than checking the clerical works and putting signature here and there. Some say it is an art of getting things done. 

Some others say it is a full-fledged science. Management is all these, and much more. Management, in its true sense, is what management does. It is an activity like walking, reading, swimming or running.

Management is a process, and let us say, a universal process, by which an organisation realises its objectives in a planned way. Modern management thinkers agree that management is a distinct process. People who perform management can be designated as managers, members of management, or executive leaders. Thus management can be studied as a process.

As a process, management is concerned with allocating inputs of an organisation (physical and human resources) by typical managerial functions (planning, organising, directing and controlling) for the purpose of achieving some stated objectives viz., output of goods and services desired by its customers.

Management Definitions

Management helps in doing and also getting things done through others. It is a process which helps in optimum utilization of human, material and financial resources so as to attain the organizational goals and objectives. 

Some of the definitions by famous management thinkers are given below: 

“Management is an art of knowing what is to be done and seeing that it is done in the best possible manner.” – F.W. Taylor 

“Management is the process of designing and maintaining an environment in which individuals working together in groups, efficiently accomplish the selected aims.” — Koontz and Weihrich 

“Management is to forecast, to plan, to organize, to command, to co-ordinate and to control the activities of others.” — Henri Fayol 

Management may be defined as the art of securing maximum results with a minimum of effort so as to secure maximum prosperity and happiness for both employer and employee and give the public the best possible service. — John F. Mee 

Management is a distinct process consisting of planning, organising, actuating, and controlling performed to determine and accomplish the objectives by the use of people and resources. — George R. Terry 

Management is the development of people and not the direction of things Management is personnel administration. — Lawrence A. Appley 

Management is defined as the process by which a co-operative group directs action towards common goals. — Joseph Massie 

Management is principally the task of planning, coordinating, motivating and controlling the efforts of others towards a specific objective. — James L. Lundy 

Management is a social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of a given purpose or task, such responsibility involving- (a) judgment and decision in determining plans and in using data to control performance, and progress against plans; and (b) the guidance, integration, motivation and supervision of the personnel composing the enterprise, and carrying out its operations. — E.F.L. Brech 

Management is the art of getting things done through and with people in formally organized groups. It is the art of creating an environment in which people can perform and individuals could co-operate towards attaining of group goals. It is the art of removing blocks to such performance, a way of optimizing efficiency in reaching goals. — Harold Koontz 

What is Management?

Management is defined as the art of getting things done through people, both efficiently and effectively.

Efficiency – Ability to do things in the right way.

Effectiveness – Ability to do right things.

For example- Effectiveness is the ability to determine appropriate objectives, whereas Efficiency is the ability to minimise the expenditures in achieving the objectives set.

Management is a science, a systematic body of knowledge, pertaining to a field of activity, having concepts, hypotheses, theories, experiments, principles and techniques.

Management is the art of application of skills to achieve desired results.

Management is a process consisting of planning, organising, staffing, leading (or influencing) or directing and controlling functions performed to determine and accomplish the objectives of an organisation, by the use of people and resources.

Management refers to a social group of people, who direct the activities of other people towards common objectives.

Management is a profession that demands artistic application of scientific theories for efficient functioning of any organisation.

Management is concerned with the attitude of mind to problems, risks, opportunities and changes and also the ability to foresee, adapt, innovate, motivate, guide and inspire.

“Management makes work productive and the worker achieving” – Peter Drucker.

Management Concepts 

Management which was traditionally viewed as an act of managing the men in a tactful manner is no longer restricted to getting things done through them, rather it involves all kinds of activities that identify and determine objectives of the organisation and blend the environment in such a manner that the objectives of an organisation are achieved in the required time with minimum utilization of the resources.

In other words, management is an art of securing maximum prosperity with minimum of efforts. It is the management of the organisation that determines its success story. “An organisation succeeds not due to fact that it is long established or because it is big, but because there are men and women in it who live, it, sleep it, dream it and build great future plans for it.” The word management has been used in varied contexts each serving a different aspect of the organisation.

Some of the most popular concepts related to management are:

1. Management as a Process:

It refers to all that a manager does. It includes all activities starting from setting up of objectives to taking up of steps which ensure the attainment of these objectives. It comprises of all functions which transform resources into products & services to satisfy consumer’s need.

Its features are:

(a) Continuity – Management is an ongoing and a never ending process that starts with the inception of an idea and culminates at the end of the process. The task of manager doesn’t finish even after performing last function of management i.e. controlling.

(b) Integration – All functions of management are performed for integrating the human & non-human resources for attainment of goals.

(c) Universal nature – The principles of management are applicable to all types of enterprises whether small units or big units as MNC’s.

(d) Social orientation – Management deals with human beings. A manager directs, coordinates & controls the activities of human beings for productive relationship for achieving organisational objectives.

(e) Interactive process – Various functions are interwoven i.e. two or more can be performed at a time. While planning for goals, the standards for that are also laid down.

2. Management as a Noun:

Management refers to all those persons who are concerned with getting things done through others. Thus, all person in organization who have supervisory responsibility over others & chief executive officer makes up the management.

3. Management as an Activity:

According to Harold Koontz, “Management is the act of getting things done through and with people in formally organised groups.”

(a) Informative activities i.e. to have regular and continuous communication.

(b) Decisional activities i.e. take number of decisions as allocation of resources, recruitment and selection; fix production targets, quality standards etc.

(c) Interpersonal activities i.e. involves the activities for getting work done, keep liaison with outside world, maintain healthy relations.

4. Management as a Group:

It refers to those who carry activities of management. It comprises of CEO, departmental manager, sectional officers and supervisors. In a company, shareholders are the real owners, and are scattered throughout country, so affairs are managed by no. of persons employed in it. Its characteristics as group effort brings out quality products, improves economic and social life of a company as well as country.

5. Management as a Discipline:

  1. It is a body of knowledge, a practice and a discipline. 
  2. It includes financial management, personnel management, and marketing management.
  3. It is an organised body of knowledge.
  4. It can be learnt through teaching and training.
  5. Its study produces qualified professionals.
  6. Code of conduct and ethics for management personnel are being considered.
  7. Associations of management, and body of managerial personnel are also being formed.

6. Management as a Philosophy:

Management as a philosophy may be defined as the set of fundamental principles that underlie the formation and the subsequent operation of a business enterprise.

Management: Science or Art

Management as Science: 

Science may be defined as a body of knowledge systematized through application of scientific method in any department of enquiry. Science is called systematic as it establishes clear relationships and principles, which are tested further and are repeatable under same condition and also points any limiting factors under which a phenomenon might not work. However discovery of new knowledge can always change any principle. 

There are two kinds of sciences: 

(i) Physical sciences or Exact Sciences such as physics, chemistry, and mathematics. 

(ii) Social sciences or Variable Sciences such as economics, sociology, and psychology they are referred as variable sciences as they are based on human behaviour, which is unpredictable. 

Verified principles of a science are useful for a practitioner as they help to predict the outcome of certain actions. It establishes cause & effect relationship. 

Following are the features for why management is known as science: 

i. It has a systematic body of knowledge. 

ii. It has an universal application. 

iii. It establishes cause & effect relationship.

iv. Principle based on empirical study. 

v. The validity of scientific principles can be verified and therefore, they provide a reliable basis for predicting future events. 

vi. It uses scientific methods for observation. 

Management as a field of study has in recent years established a theoretical base with a number of principles relating to organization, decision-making, coordination, and other aspects. 

Though it is not possible to conduct same kind of experimentation in management as is possible in natural sciences, management can still be called as a growing and a variable science as compared with exact physical sciences. 

Is Management an Art, a Science, or Both? 

Features of Management as a Science: 

Following are the features of why management is known as science: 

1. Systematic body of knowledge:

Management is also a systematic body of knowledge having its own theory and principles. e.g. Fayol’s principles of General Management and Taylor’s principles of Scientific Management. 

2. Universal application:

Management also contains some fundamental principles which can be applied universally like the Principle of Unity of Command is applied in all kinds of organization. 

3. Cause & Effect relationship:

It also establishes cause and effect relationship, e.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. 

4. Experimentation &Observation:

The principles of management have also been developed over a period of time, on the basis of experimentation and observation in different types of organisations. Taylor conducted extensive study in machine tools, time motion etc. 

5. Management is an inter:

disciplinary science-it as it draws from other disciplines such as economics, sociology and psychology. 

Although management has been recognised as a science, it is not exact like the biological and physical sciences. It falls in the area of ‘Social Science’ as it is a social process and deals with complex human beings. 

The theories and principles of management are situation bound. It may produce different results in different situations. That is why Ernest Dale has called management a ‘Soft Science’. 

Management as Art: 

Art may be defined as “the technique of applying the principles to actual practice so as to achieve the desired results with efficiency.” It is concerned with the application of knowledge and skills. If science is learnt, an art is practiced. Unlike other theories; principles of Management have been developed for their practical application in real life situations. 

The skills that are required for an executive to apply the principles of management to real work situations are of prime most importance to the job of an executive hence authorities regard management to be essentially an art. 

Thus, an art has the following features: 

  1. It denotes personal skills. 
  2. It signifies practical knowledge. 
  3. It helps in achieving concrete results. 
  4. It is creative in nature. 

Features of Management as an Art: 

The principles and techniques of management when applied in the organisation to achieve its objects become ‘Art’. 

In this manner, management is also an art because of the following reasons: 

(i) Like art, the process of management also involves the use of know-how and skills; its direction is towards the accomplishment of concrete results. 

(ii) Like any art Management is creative as management needs to creatively find ways, enhance productivity and find solutions to complex work situations; 

(iii) Like any art Management is personalized as every manager has his own way/approach to tackle problems. 


Any form of art is always based on an understanding of the science underlying it. The fact is that science is a body of knowledge while art denotes the practical application of knowledge implies that science and art are not mutually exclusive but are complementary to each other. Science teaches to ‘know’ and art teaches to ‘do’. Management is considered a science because it has an organised body of knowledge. It is called an art because managing requires certain skills. 

The art of management is founded on scientific principles. According to Terry, “In essence, a manager is as much an artist as a scientist. It can be said that the art of management begins where the science of management stops.” Thus, theory and practice of management need to go hand in hand for the efficient functioning of any organization. Hence; management is both science and art. 

Management as a Profession

Profession refers to an occupation requiring some significant body of knowledge that is formally acquired and applied with high degree of integrity and consistency in accordance with the code of conduct prescribed by apex body in the service of relevant segment of the society. 

Attributes of Profession: 

1. Body of Knowledge: 

The concepts, principles, techniques and functions constitute a systematic body of knowledge. Besides, the horizon of knowledge of management has been growing due to its interdependence of various other disciplines like economy, psychology, sociology, anthropology, etc. The body of knowledge should be capable of being put into practice. 

2. Facilities for Formal Training: 

There should be formal education for anyone to be called a professional. Management education is imparted by management institutions, colleges and universities. But, it cannot be regarded as a full-fledged profession because entry to management profession is not strictly restricted to management graduates only. Any graduate from any other discipline can join management course. In other words, these is no entry barrier for any graduate to management profession. 

3. Existence of Representative Body: 

There should be a recognized apex body to promote the interest and values of the profession. 

The functions of such body include: 

  1. Prescribing criteria to enter the profession. 
  2. Engaging in research to update professional knowledge. 
  3. Formulating and administering code of conduct for the members of the profession. 
  4. Serving as forum for interaction. 
  5. Serving as a reference point for new ideas. 

4. Existence of Ethical Code of Conduct: 

Every profession has prescribed ethical code of conduct for its members. They are supposed to be observed in true letter and spirit. Code of conduct is necessary to keep up the prestige and reputation of any profession and its members. However, there is no obligatory code of conduct for managers prescribed by any management association. 

5. Predominance of Service Motive: 

A profession should be service oriented. The characteristics of profession is based on the logic that the professional should not try to exploit clients by charging exorbitant fees. A ‘professional’ is considered to be a noble person committed to the service of humanity. 

Contemporary managers are slowly embracing the concept of service orientation. Managers still work to earn profit for employers. Nevertheless, they commit themselves to rendering social obligations to customers, employees, and society. 

6. Self-Discipline: 

Members should observe voluntarily self-discipline and self-control in their dealings with the client and other interested groups. They should observe the norms of professional conduct voluntarily. 


Management cannot be described to be a full-fledged profession even though it meets most of die criteria prescribed for a profession. It is considered to be a profession to the extent of its insistence on formal education and formal training, existence of formal body like AIMA and existence of systematic body of knowledge constantly expanding through research. 

However, it cannot be construed to be a profession as it does not restrict the entry of non-management to business schools. The association of management professionals does not have power to regulate entry of non-management graduates into management profession. Membership in the management association is not mandatory like Bar Council, ICAI, ICWAI, ICSI, etc. The code of conduct of management association is not binding on the members. Strictly speaking management is not a profession. 

Additional Barriers to Get Recognition as Profession: 

i. Absence of universally acceptable criteria for evaluation of managers’ performance. 

ii. Absence of homogenous group of clients for managers. 

iii. Management being essentially art and practice. 

iv. Evolutionary nature of theory of management. All these factors hinder the managers from getting professional status. 

Scope of Management

Scope of management has nowadays expanded from national frontier and assumed international dimensions.

Management applies to small and large organization, to profit and non-profit enterprises and to manufacturing and service industries.

The scope of management can also be said to include general managerial functions such as planning, organizing, staffing directing and controlling. These are also called as subject matter of management.

The scope of management covers three important aspects viz.:

  1. Subject matter of management.
  2. Functional areas of management.
  3. Interdisciplinary approach.

1. Subject Matter of Management: 

Subject matter of management covers process or functions of management, like planning, organising, staffing, directing, and controlling.

2. Functional Areas of Management:

Functional areas of management includes:

(i) Financial management:

It includes cost control, budgetary control, financial planning, capital budgeting, capital structure. It mainly deals with the financial affairs of the business enterprise.

(ii) Purchases management:

It includes inviting tenders for the supply of raw materials, semi-finished products, planning orders, and storage of materials.

(iii) Production management: 

Production management includes, production planning, control, and quality control etc.

(iv) Marketing management:

It covers marketing of goods, and services, determination of price, market research, advertisement sales promotion, etc.

(v) Transport management:

Transport management includes dispatch of goods, ware housing, insurance etc.

(vi) Personnel management:

It covers the issues such as recruitment, training, transfers, promotions, retirement, social security measures etc.

(vii) Office management:

It is concerned with organisation of the office, correspondence filing etc.

3. Inter Disciplinary Approach:

In order to implement the principles of management effectively, the study of other related subjects such as psychology, mathematics, statistics, economics, is also required. Management study also includes scientific methods, human relations modern techniques etc.

Nature of Management

The nature of management can be described as follows:

1. Multidisciplinary:

Management is multidisciplinary in nature. By multidisciplinary it means that though management is a separate discipline but it freely draws ideas and concepts from such disciplines as psychology, sociology, anthropology, economics, ecology, statistics, operation research, history etc. 

Management integrates the ideas and concepts taken from these disciplines and presents novel concepts which can be put into practice for managing the organisations.

2. Dynamic Nature of Principles:

A principle is a fundamental truth which establishes cause and effect relationships of a function. Management has framed various principles based on integration and supported by practical evidences. However, these principles are extremely dynamic in nature and they undergo change with the changes in the environment in which an organisation exists. Thus, the principles of management are not constant but keep on changing constantly.

3. Management Principles are Relative not Absolute:

Management principles are relative and not absolute and they should be applied according to the need of the organisation. The choice of the principle can be made according to the conditions prevailing in organisation and adequate allowance must be made for the changing environment.

4. Management, Science or Art:

Management is an amalgamation of science as well as art.

5. Management as a Profession:

Management possesses all the features of a profession although with certain limitations.

6. Universal Application of Management:

Management is a universal process. However, the principles of management are not universally applicable but are to be modified according to the needs of the situation.

Thus, the nature of management clearly indicates that it is multidisciplinary phenomenon, its principles are flexible, relative and not absolute. It is both science and art, it can be taken as a profession and finally it is universal.

Characteristics of Management 

The important characteristics of management are as follows: 

1. Purposive Activity:

The purpose of management is always to achieve certain predetermined objectives. The tasks of management are directed towards effectiveness (i.e., economy in the use of resources). 

2. Group Activity: 

Management is a group activity. An organized group of people work together towards a common goal. It is a teamwork. It coordinates the efforts of organizational members to achieve certain predetermined objectives. 

3. Integrating Activity:

Management integrates human efforts with non-human resources (like materials, machines, technology, financial resources, etc.). It seeks to harmonize human and non-human resources to achieve predetermined objectives. 

4. Continuous Activity:

There is always a continuous need of the solution of problems and improvements in the business. The cycle of management continues to operate so long as there is an organization. 

5. Distinct Process:

Management is a distinct process performed to accomplish predetermined objectives. It is quite distinct from its various functional activities, techniques, and procedures. It consists of various functions, such as planning, organizing, staffing, directing, coordinating, motivating, and controlling. 

6. Rational Process:

Management deals with the achievement of some clearly defined objectives. Group efforts are directed to achieve a predetermined objective. Management organizes plans, directs, and controls an enterprise for the purpose of earning satisfactory profits. Therefore, it is a rational process. 

7. Universal Process:

The principles and techniques of management are universal in character. They are equally applicable in all types of organizations, such as business, social, religious, educational, cultural, sports, military, etc. Therefore, wherever there is human activity, there is management. 

8. Social Process:

Management aims at the optimum utilization of scarce resources for the benefit of the community as a whole. The effort of human beings have to be directed, coordinated, and regulated by the management in order to achieve the desired results. In this sense, management is regarded as a social process. 

9. Goal-Oriented: 

All management activities have to be goal-oriented and result-oriented. Effective management is always ‘management by objectives.’ Management is concerned with the establishment and accomplishment of some definite goals. 

10. Human Activity:

Management is related with human activities. It is the function of getting things done through people. Managerial techniques are used by human beings as tools to achieve predetermined organizational goals. 

11. Pervasive:

Management is pervasive in the sense that it is relevant for all organizations, irrespective of the size (small or large), nature (economic, social or political), and location (in rural or urban areas). Moreover, management is applicable at all levels of the organization. 

12. Hierarchy of Authority: 

Management is the authority to make and enforce rules. In other words, it is a rule-making and rule-enforcing body. It is bound together by a web of relationships between superiors and subordinates. There is a chain of authority distribution and the responsibility always goes with the authority. 

13. Dynamic Function:

Management is a dynamic function, which is to be performed continuously. Policies and procedures of management are quickly changed to cope with the changing business environment. 

14. Decision-Making Function:

Management involves decisions relating to various aspects of an enterprise. All managerial functions are settled by managers with the tool of decision-making. 

15. Management as a Profession:

Management is a well-defined body of knowledge and requires formal training for new entrants. It consists of principles, techniques, and laws that can be taught as a separate discipline. Therefore, it is recognized as a profession. 

Features of Management

As rightly explained by Peter Drucker, “Without Institution, there is no management. But without management, there is no Institution,” it is clear that Management becomes the specific organ of performance and survival of the institutions. 

The following are the features of management: 

1. Dynamic:

In the context of changing environment management is expected to be situational and dynamic so that the approaches used can be best used in the situations. 

2. Goal-Oriented: 

An activity, process or group effort, management has to be goal-oriented and must play a significant role in goal achievement. The concept of Managing by objectives (MBO) has evolved on this theory. 

3. Intangible:

Management as a concept and practice cannot be seen or felt but it can definitely be observed. 

Principles of Management

Henry Fayol emphasized, “The soundness and good working order of the corporate body depend on a certain number of conditions, termed as principles, laws and rules”. He is of the opinion that there is nothing rigid or absolute in management affairs and it all being a question of proportion. He said that the principles are flexible and can be adaptable to any need. Only difficult task is to know how to use them, which needs intelligence, experience decision and proportion.

The given below are the fourteen principles of management given by Henry Fayol:

  1. Division of work,
  2. Authority and Responsibility,
  3. Discipline,
  4. Unity of command,
  5. Unity of direction,
  6. Subordination of individual interest to the general interest,
  7. Remuneration,
  8. Centralization,
  9. Scalar chain (Line of Authority),
  10. Order,
  11. Equity,
  12. Stability or tenure of personnel,
  13. Initiative, and
  14. Esprit de corps.

1. Division of Work:

Fayol describes that higher productivity can be achieved by division of work with the same effort. He says that the division of work and specialization as the best means of increasing the productivity and he also says that division of work has its limits, which should not be exceeded.

The principle here is the whole work which can be divided into small units then each unit is allocated to one worker and train him in that work, so that he become proficient in that work and does it without much strain thus increasing productivity. But there is a danger of monotony and boredom, which may have effect on the worker.

2. Authority and Responsibility:

According to Fayol, Authority is the right to give orders and the power to exact obedience. Manager has two types of authority one being derived from his position in the office, i.e. official authority, and other derived from his experience, qualification, intelligence, moral worth and ability to lead etc., which is known as personal authority.

He describes responsibility as a corollary of authority, as its natural consequence and essential counterpart. It is interesting to note that his stress on responsibility being feared as much as authority is sought then after requires the good leader to infuse in persons around him – courage to accept responsibility.

In fact authority and responsibility are the two faces of the same coin. If one comes automatically other exists. Authority can be delegated to the subordinate but responsibility cannot be. Ultimately, manager who handles the project is responsible for all results of the project, even though he has delegated the authority to his subordinate.

3. Discipline:

Fayol believes that discipline is absolutely essential for the smooth running of business. Here, ‘discipline is respect for agreements, which are, directed at achieving obedience, application, energy, and the outward marks of respect.’ The best means of establishing and maintaining discipline are- (a) To appoint good superiors at all levels, (b) have clear and fair agreement between management and employees and (c) The punishment or penalty or sanctions must be judiciously applied.

4. Unity of Command:

Unity of command means an employee must receive orders from one superior only for any action whatsoever. An individual or a department feels uneasiness if he or it receives orders from two different superiors and the person or the department will be under confusion in deciding to whom he has to obey. He also says that the dual command is a perpetual source to many conflicts.

Consider in a house if a child receives command from both father and mother at the same time, the child will be in dilemma as to obey whom. In case, the child receives command from either father or mother or from mother through father, it will feel happy. By unity of command duplication of work may be avoided.

5. Unity of Direction:

This is best explained as ‘one head and one plan for a group of activities having the same objective’ This is essential for ‘unity of action, coordination of strength and focusing of an effort’. Unity of direction refers to ‘one head, one plan’ whilst unity of command emphasizes’ one employee to have orders from one superior only’.

In real life situation also we can see that if a person receives orders or command from one person only, it will be easy for him to do work without confusion. Also we see that employees of group must have one objective to fulfill. If individuals of a group have different objectives, then nothing can be achieved. Here objectives refer to organizational objective and not personal objectives.

6. Subordination of Individual Interest to the General Interest:

For the well-being of an organization, its employee or group of employees must consider the institutional objective/interest is superior that their personal goals and interests. But in general, due to human characteristics like ignorance, ambition, selfishness, laziness and weakness, man ignores institutional interest and tries to satisfy personal interests.

7. Remuneration of Personnel:

The remuneration is the price paid to the worker/employee by the firm for the services rendered by him, The remuneration should be on par with the existing market rate and must be quite enough for the employee to lead his life happily and satisfy his mere needs. At the same time the remuneration paid should not be too excess. It should be fair enough that both employee and the employer are satisfied.

8. Centralization:

Here he refers to the centralization of authority. The importance of role of subordinate and executive depends on the degree of centralization exists in the organization. More the centralization, of authority more will be the importance of executive and more the decentralization, the subordinate’s role is important. 

Any way certain amount of centralization and decentralization exists in all the organizations. This is necessary for smooth running of the organization. But the manager must be careful to see that there will be an optimum degree of combination of both in the organization to get fruitful results.

9. Scalar Chain:

Scalar chain concerned with the flow of authority from the top management to the low level managers. It also indicates line of communication. It clearly shows who is accountable to whom. General scalar chain indicates line of communication and flow line of authority. Thus the line of authority is routed via every link in the chain by all communications, which commence from or reach the ultimate authority. 

This path is disastrously lengthy in large concerns, notably in government organizations. One should not depart needlessly from the line of authority but it is even a greater error to stick to it when detrimental to the business.

10. Order:

Order refers to indicate where one should be. Here the rule is ‘a place for everything and everything must be in its place for materials and for men ‘a place for everyone and everyone must be in his place’. It is the principle of organization for arrangement of material things and human beings. It is a must for both material order and social order. When this principle is followed, one can find the required material /person when needed without much difficulty and without wasting time.

11. Equity:

Equity refers to the act of creating a sense of loyalty and devotion among the employees of all levels. This makes them to feel that they are also important in the organization and the organization belongs to them and it is their duty to see that they have to work with commitment, so that the unit will grow healthily, which in turn help their personal growth. Equity results from kindness and justice. When these two exists, the loyalty and devotion automatically will be the characteristics of the employees.

12. Stability of Tenure of Personnel:

This refers to the stay of an employee/manager in an organization. Whenever an employee joins the organization, he takes some time to learn the job and get proficiency in that job, after which his higher productivity will benefit the organization. If the employee remains in the organization for a small length of time and when he has no guarantee of his stay in the organization, he will not show interest in the job and his work is a mere waste. It is a loss to the organization.

It is the responsibility of the manager to see that labor turnover is kept at a minimum, so that trained workers will not leave the organization. Employee must have confidence that his job is secured and he will be with the organization until he retires. This point (Stability of Tenure) is as important as remuneration. These are the two factors required to keep good relation between management and workers.

13. Initiative:

Every manager must think that he should develop his subordinates and try to create initiative in them, so that they work with commitment and cultivate the power of thinking to execute the given work. For this the manager may have to sacrifice some of his personal vanity. When the employees are encouraged to develop the power of thinking to execute the work, they take initiative and do the work.

14. Esprit de Corps:

As ‘union is strength’, harmony and union among the personnel constitute the great strength of a concern. The dangers to be avoided are a misguided interpretation of the motto ‘divide and rule’ and misunderstandings caused through poor communication. At the time of crisis, everyone must stand united and work to achieve the desired goal. Unity is to work and not to fight. Instead of unity for fighting, unity to bargain is healthier.

The principles enunciated are not aimed at being exhaustive but are the ones to which Fayol had recourse most often. He stresses the universality of such principles and their application not only to business but also for the success of all associations of individuals.

Objectives of Management

The primary objective of management is to run the enterprise smoothly. The profit earning objective of a business is also to be kept in mind while undertaking various functions. 

Following are the broad objectives of management: 

1. Proper Utilisation of Resources: 

The main objective of management is to use various resources of the enterprise in a most economical way. The proper use of men, materials, machines and money will help a business to earn sufficient profits to satisfy various interests. The proprietors will want more returns on their investments while employees, customers and public will expect a fan-deal from the management. All these interests will be satisfied only when physical resources of the business are properly utilised. 

2. Improving Performance: 

Management should aim at improving the performance of each and every factor of production. The environment should be so congenial that workers are able to give their maximum to the enterprise. The fixing of objectives of various factors of production will help them in improving their performance. 

3. Mobilising Best Talent: 

The management should try to employ persons in various fields so that better results are possible. The employment of specialists in various fields will be increasing the efficiency of various factors of production. There should be a proper environment that should encourage good persons to join the enterprise. The better pay scales, proper amenities, future growth potentialities will attract more people in joining a concern. 

4. Planning for Future: 

Another important objective of management is to prepare plans. No management should feel satisfied with today’s work if it has not thought of tomorrow. Future plans should take into consideration what is to be done next. Future performance will depend upon present planning. So, planning for future is essential to help the concern. 

Importance of Management

Management is the art of securing maximum prosperity with a minimum of effort. Wherever there is an organised group of people working towards common goals, some type of management becomes essential. It has been rightly said that ‘anything minus management amounts to nothing’. In the words of Koontz and O’Donnell, “There is no more important area of human activity than management since its task is that of getting things done through others.” 

In the case of business enterprise, management is all the more important, because “no business runs on itself, even on momentum, every business needs repeated stimulus which can only be provided by management.” According to Peter F. Drucker, “Management is a dynamic life giving element in an organisation. In its absence the resources of production remain resources and never become production.” 

The following points further highlight the importance of management: 

1. Achievement of Group Objectives:

It is the management which makes the people realise the objectives of the group and directs their efforts towards the achievement of these objectives. It brings the human and material resources together to mobilise the people for the achievement of the objectives of the organisation. 

2. Optimum Utilisation of Resources:

No business activity can be undertaken without the five factors of production viz., the land, labour, capital, enterprise and management. The four factors may prove ineffective in the absence of the fifth-the management. It is the management which makes optimum utilisation of resources possible. In the words of Urwick and Brech, “No ideology, no ism, no political theory can win greater output with less efforts, only sound management.” 

3. Minimisation of Cost (to Combat Rising Competition):

In the present days of increasing competition, only those business enterprises can survive which can produce quality goods at the lowest of costs. Through better planning, sound organisation and effective control, management enables a concern to reduce costs and enables an enterprise to face cut-throat competition. 

4. Increased Profits:

Profits can be increased in any organisation either by increasing the sales revenue or reducing cost. To increase the sales revenue is beyond the control of an organisation. Management by reducing costs increases its profits and provides opportunities for future growth and development. 

5. Smooth Running of Business:

Management ensures efficient and smooth running of business through better planning, sound organisation, effective control and the various tools of management. 

6. Provides Innovation:

Management provides new ideas, imagination and visions to the organisation. 

7. Change of Growth:

An enterprise operates in a changing environment. Management moulds the enterprise in such a changing environment. It moulds not only the enterprise but also alters the environment itself to ensure the success of the business. In order to meet the challenge of automation and the complexities of advanced technology also there is a need for the development of management. 

8. Meeting Social Obligations:

Management is beneficial not only to the business enterprises but to the society as a whole. It raises the standard of living of the people by providing good quality products and services at the lowest possible cost. It also makes the optimum use of scarce resources and promotes peace and prosperity in the society. 

9. Special Importance of Management in India’s Developing Economy:

Management has to play a more vital role in the developing countries like India, where productivity is low and the resources limited. It has been rightly said, “There are no under-developed countries. There are only under-managed ones.” 

Advantages of Management

Management is considered advantageous for the following reasons:

1. Allows the Attainment of Goals in Spite of Limited Resources:

Management aims at efficiency and effectiveness of the business. By efficiency we mean conducting business activities at a low cost and within the given means. It requires one to perform tasks in the best way possible, while investing the least possible input (labor, material, and time). This is made possible through the efforts of the manager.

2. Much Needed Shot in the Arm in Times of Crisis:

When the business is functioning smoothly with all employees working efficiently, one does not realize the need for management. The role of the manager comes into play especially when a business is facing difficulty. Managers are expected to anticipate problems and deploy necessary organizational changes and tools to either prevent disaster or to mitigate its impact, at the same time planning on how to steer the company back to health.

3. Brings Perpetuity into the Business:

If there are no clear parameters regarding decision-making, the continuity of the organization cannot be assured. It is normal that as time goes by, new members are hired and others retire and leave the organization. Yet it is left to management to ensure that there is some sense of continuity in the organization.

Modern organizations have technical as well as administrative systems and procedures which ensure desired quality on a constant basis. This technique guarantees continued existence in a global competition. In addition, managers have contingency plans that make certain that the company is not left in the lurch when key members decide to leave.

4. Highlights the Importance of a Team:

Were it left up to individuals to plan and organize separately it would lead to drastic results. For this reason, management takes the responsibility to direct and channel group efforts to achieve common organizational goals and objectives.

5. Works toward Economy and Efficiency:

Businesses need managers for smooth functioning of the organization. A manager’s responsibilities include coordinating and monitoring the efforts of the work force and estimating whether it comes up to the standards of the organization. When there is deficit, the manager endeavors to help the employees execute their work more effectively.

6. Vital for Achieving Economic Growth:

Management is a key factor in the creative and well-organized use of accessible resources. It is possible that a country can have substantial work force and natural resources which would take into account abundant skilled labor, and ample capital but still be relatively poor because of the lack of competent managers who would organize these resources to work constructively together in the production and distribution of useful goods and services. 

By generating wealth, managers ensure a boost to the national income, and this in turn, raises the standard of living. The result of this is guaranteed economic growth.

Levels of Management

On the basis of authority and responsibility, we can identify three levels of management in the organizational hierarchy, namely: 

  1. Top level management; 
  2. Middle-level management; 
  3. Lower level management. 

1. Top Level Management:

It is the highest level in the managerial hierarchy and the ultimate source of authority in the organization. This level consists of the Board of Directors, the Chief Executive Officer (i.e., Managing Director) and the General Manager. 

The main tasks of top-level management include the following: 

i. To formulate a plan for the entire organization covering all areas of operations; 

ii. To set the organizational goals and decide on the means to achieve those goals; 

iii. To frame policies and make plans to achieve these objectives; 

iv. To set up an organizational structure and create various positions therein; 

v. To lay down guidelines for the departmental heads; 

vi. To assemble the resources (men, materials, machines, money, methods, etc.); 

vii. To provide overall leadership; 

viii. To review the work of executives and evaluate their performance; 

ix. To exercise control on various activities by reviewing overall operating results; 

x. To relate the organization to the external environment; 

xi. To decide upon matters for the survival and growth of the organization; 

xii. To make decision regarding distribution of profits and others incomes; 

xiii. To coordinate various subsystems of the organization; 

xiv. To maintain liaison with external parties. 

2. Middle Level Management:

It consists of various functional managers (such as production manager, purchase manager, marketing manager, public relation officer, research and development officer, etc.) and administrative officer. These executives are mainly concerned with the overall functioning of their respective departments. 

The main tasks of middle-level management include the following: 

i. To establish a link between top management and lower management; 

ii. To establish departmental objectives and to decide on the means to achieve goals; 

iii. To prepare departmental plans covering all activities of the departments; 

iv. To transmit orders, suggestions, policy decisions, and instructions to lower level; 

v. To settle various problems and forward suggestions to the upper level; 

vi. To achieve coordination between the different parts of the organization; 

vii. To build up efficient workforce by giving reward according to merit; 

viii. To inspire operating managers towards better performance; 

ix. To motivate subordinates to achieve higher productivity; 

x. To explain and interpret policy decisions to the lower level; 

xi. To coordinate the activities of various work units at lower level; 

xii. To collect reports on performance to be intimated to the top management. 

3. Lower Level Management:

This level consists of superintendent, supervisors, and foremen. They directly guide and control the performance of the rank and file workers. This level is also called ‘operating management’. They issue orders and instructions to operative employees and guide them in their day to day activities. 

The main tasks of lower-level management include the following: 

i. To make a plan for day to day activities and assign jobs to subordinates; 

ii. To arrange materials, machinery and tools for smooth operations; 

iii. To assist the subordinates by explaining the procedures of work; 

iv. To ensure the work of requisite quantity and quality as scheduled; 

v. To supervise and guide the work of operatives; 

vi. To report the problems faced by workers to the middle-level management; 

vii. To maintain close personal contacts with workers for ensuring discipline & teamwork; 

viii. To communicate the grievances and suggestions of workers to higher authorities; 

ix. To evaluate operating performance and send reports to the higher authority. 

Functions of Management

We can isolate that work which a person performs because he is a manager. There are certain basic operations or functions in the work of the manager. All managers carry out managerial functions to achieve the desired results. Management process is the sum total of several inter-related activities. 

These activities or elements are known as the functions of management. The best way to analyse the management process is in terms of what a manager does. The functions of management emphasize the managerial “whole” in organization. As managing is a dynamic activity, it includes two kinds of functions which are common to all managerial jobs. 

The list of management functions can be presented as follows: 


A brief description of these functions is given below: 

1. Planning: 

Planning is the primary and crucial function of management. It is the determination of how to achieve an objective – deciding what is to be done and when to do it. It is looking ahead and preparing for the future. It is the process by which a manager anticipates the future and discovers alternative courses of action. It determines the direction of the management. 

Planning involves the following: 

  1. Determining the firm’s objectives to be achieved. 
  2. Establishing planning assumptions. 
  3. Formulating policies, procedures and rules. 
  4. Determining alternative courses of action. 
  5. Evaluating the alternative courses and selecting the right type of action. 
  6. Formulating derivative plans to support the basic plan. 
  7. Numberizing plans by budgeting. 

Planning can range from the general to the specific. Strategic planning deals with the strategies, policies and programmes to achieve long-range goals. The operational planning deals with day-to-day affairs carried out by lower-level managers. 

2. Organizing: 

Planning is concerned with where to go; organizing is the vehicle used to get there. Organizing is the process by which the structure and allocation of jobs are determined. To organize a business is to provide it with everything useful to its functioning- raw materials, tools, capital, and personnel. Organizing provides the formal structure through which work is defined, subdivided, and coordinated. 

Organizing consists of the following sub-functions: 

  1. Identifying and analysing the activities for the achievement of objectives. 
  2. Grouping of similar activities to create departments. 
  3. Assigning of the activities to various groups and departments. 
  4. Defining and delegating the responsibility and authority. 
  5. Establishing relationship among individual jobs. 

3. Staffing: 

In staffing, a manager recruits and selects suitable personnel for manning the jobs. It is the function of determining and meeting the manpower requirements of an enterprise. It is concerned with the management of human resources. 

Some writers consider staffing to be a part of the organizing function. Because every managerial activity requires competent individuals, staffing transcends the other management functions. 

4. Directing: 

The third basic function of management is directing. This is also termed leading or actuating. While planning tells us what to do and organizing tells us how to do it, directing tells us why the employees should want to do it. Directing is concerned with guiding and leading people. It consists of supervising and motivating the subordinates towards the achievement of set goals. It entails interpersonal relationships. Direction initiates action and puts the enterprise into motion. 

To direct others, the manager needs the following sub-functions: 

  1. Communication – Exchanging ideas and informations in order to create mutual understanding. 
  2. Command – Issuing orders and instructions to subordinates. 
  3. Motivation – Inspiring employees to work with zeal. 
  4. Leadership – Influencing people to accomplish set task goals. 
  5. Supervision – Overseeing of subordinates at workplace with a view to guide and regulate their efforts. 

5. Controlling: 

Controlling is evaluating the performance and applying corrective measures so that the performance takes place according to plans. It is reviewing the performance of the employees in the light of the targets and goals. 

Controlling involves- (a) establishing standards of desired performance, (b) measuring the actual performance, (c) comparing the performance against the established standards, and (d) taking action to correct performance that does not meet those standards. Controlling exists at every managerial level. It operates on everything, activities, resources, and persons. 

6. Co-Ordinating: 

Some experts consider co-ordination as a separate and dynamic function of management. Koontz and O’Donnell regard it the “essence of managership”. It is an integral part of all other functions. To co-ordinate is to harmonize all the activities, decisions and efforts of an organization so as to achieve the unity of action. It is blending the efforts of all employees or an efficient running of an organization. 

7. Decision Making: 

Terry says that “Managers are paid to make decisions and act on them.” Simon treats decision making as being the same as managing. When a manager plans, organizes, directs, or controls, he is making decisions. Thus, it is the gist of all functions of management. 

Decision making is the process by which a course of action is consciously chosen from available alternatives. Decision making is inherent in every managerial function. It is the process of generating and evaluating alternatives and making choices among them. Allen says – “it is arriving at a conclusion or judgement.” 

8. Innovation: 

Ernest Dale regards innovation as the true and dynamic function of the manager. According to Drucker, it is the entrepreneurial task of the manager. He says – “Managing a business must be a creative rather than an adaptive task.” Innovation means developing new ideas, new products, new quality or devising new methods of work. In other words, the real manager is always an innovator. 

9. Representation: 

The manager’s job also includes representing his organization in dealings with outside group – government officials, unions, civic groups, financial institutions, customers, suppliers, and the general public. This function is important due to growing awareness towards social responsibility of business. 

10. Administration and Entrepreneurship: 

This is a new task of manager which is described by Peter Drucker. He writes: “The manager always has to administer. He has to manage and improve what already exists and is already known. But he also has to be an entrepreneur. He has to redirect resources from areas of low or diminishing results to areas of high or increasing results. The administrative job of the manager is to optimize the yield from resources.” 

What are the Functions of Management

Management is the process of achieving organisational goals/objectives through the five major functions of planning, organising, staffing, directing (or influencing or leading) and controlling.

These functions are briefly described below:

1. Planning:

The process of determining in advance what should be accomplished and how it should be realised. It is the process of setting goals/objectives and deciding how best to achieve them.

2. Organising:

The process of allocating and arranging human and other resources so that plans can be carried out successfully. It also prescribes formal relationships among people and resources to accomplish the goals/objectives.

3. Staffing:

The formal process of ensuring that the organisation has qualified workers available at all levels to meet its short-range and long-range business objectives. It includes a set of activities aimed at attracting and selecting individuals for positions to facilitate the achievement of organisational goals/objectives.

4. Directing (Influencing/Leading):

Directing includes all activities carried out by managers in the implementation of work. Leading is influencing others to do what the leader wants them to do.

Influencing is the process of determining or affecting the behaviour of others.

In organisational leadership, the leader influences the behaviour of other people in the group to work towards the achievement of goals/objectives of the organisation.

Factors Affecting Influencing/Leading:

  1. Motivation,
  2. Communication,
  3. Group dynamics,
  4. Power,
  5. Politics, and
  6. Corporate culture.

(a) Motivation: The willingness to put forth effort in pursuit of organisational goals/objectives.

(b) Communication: The transfer of information, ideas, understanding or feelings among people.

(c) Group dynamics:Teamwork, team spirit, group-effectiveness and synergism. Synergism or Synergy is the co-operative action of two or more persons working together to accomplish more than what they could achieve working separately.

(d) Power: The ability to influence behaviour of others and to get things done the way one wants them to be done.

(e) Politics:  A network of interactions by which power is acquired, transferred and exercised on others.

(f) Corporate culture: The system of shared values, beliefs and habits in an organisation that interacts with formal structure to produce behaviour norms.

(v) Controlling: The process of comparing actual performance with standards and taking necessary corrective action if required. It is the process of regulating organisational activities so that actual performance conforms to expected organisational performance standards set in terms of goals/objectives.

Planning in Management

Planning is the first and most important function of management. It is determination of a course of action to be followed for achieving the organizational objectives. In the words of Koontz and O’Donnell, “Planning is deciding in advance, what to do, how to do it, when to do it, and who is to do it.” 

A plan is a future course of action. It can be characterised as the process of ‘thinking before doing’. It is a paper- pencil work. Planning is basically an intellectual exercise or a mental gymnastic. It is a projected course of action.

“Planning is the determination in advance a line of action by which certain results are to be achieved.” —Hart

“Planning is deciding the best alternative among others to perform different managerial operations in order to achieve the pre-determined goals.” —Fayol

Planning involves chalking out a detailed programme to accomplish a particular job within the prevailing conditions. 

It has been rightly explained by George K. Terry as “a constructive reviewing of future needs so that present actions can be adjusted in view of the established goal. It is deliberate conscious research used to formulate the design and orderly sequence of actions through which it is expected to reach the objective. Planning should take place before doing., most individual and group efforts are made more efficient by determining before any operative action takes place, what shall be done, where, how and who shall do it.”

Planning is selecting a particular course of action out of the several courses available to a manager. If the situation changes, the course of action selected may not achieve the desired result and a manager may be forced to change the course of action. Rigidity in planning should be avoided as far as possible.

Planning is based on the estimates of the future situation, and the success of a plan, therefore, lies in the manager’s ability to forecast future situations correctly and accurately. Forecasting is, thus, an inseparable part of planning.

Planning is a pre-requisite of doing anything. Systematic planning is necessary for any business activity. Otherwise it will be done in a haphazard manner. Good planning is essential to ensure proper utilisation of human and material resources to achieve the desired goals.

Planning is a process of looking ahead. The basic aim of planning is to attain best results. It involves the selection of objectives and developing policies, procedures, programmes, schedules, strategies and budgets.

  1. Objectives are goals to guide the efforts.
  2. Policies are guide to an action.
  3. Procedures prescribe the manner or method of doing.
  4. Programme represents a sequence of related activities.
  5. Schedule prescribes the timetable.
  6. Strategy is an action plan based on the reaction pattern of others.
  7. Budget is a time-bound plan expressed in quantitative terms.

Planning takes place at all levels of an organisation. Managers at all levels have to plan. It is a continuous exercise. It enables us to do things in an orderly manner. It secures economies in operation.

Planning to be real, should be flexible and feasible. Fayol considers, “unity, continuity, flexibility and precision are the broad features of a good plan of action.” In his opinion “a good plan is a precious managerial instrument.”

Plans may be of many kinds. Examples are standing plans, single use plans, strategic plans, administrative plans, operational plans, short range plans, medium range plans and long range plans. For better results and improved efficiency, short-range plans should be properly co-ordinated with long-range plans.

The standing plans are used repeatedly such as objectives, policies, procedures, methods and rules. The single use plans are prepared for a specific purpose. The examples of single use plans are budgets, programmes, projects and strategies.

The process of planning comprises a number of steps:

  1. Collecting information;
  2. Determining objectives;
  3. Developing planning premises;
  4. Examining alternative course of action;
  5. Evaluating action patterns;
  6. Reviewing limitations; and
  7. Execution of plans.

Organizing in Management

Organizing is the process of dividing work into sections and departments. It involves the allocation of authority, responsibility and duties among all the members of the enterprise. The management has to organize the enterprise by grouping the activities, so that work is carried out as planned.

It represents an organized effort to accomplish planned work. It is a tool of managing because it helps in creating an environment for human performance. Organisation provides the necessary framework within which people associate for the achievement of business objectives. 

The group efforts cannot succeed without a sound organisation. As a network of human relationships, organization is the mechanism through which management coordinates individual efforts.

According to Fayol, “To organize a business is to provide it with everything useful to its functioning – raw materials, tools, capital and personnel. Thus, organizing is an important managerial activity by which management brings together the manpower and material resources for the achievement of objectives of the enterprise.”

Brech says, “organization is the framework of management because it sets out the direction and distribution of the total responsibility into relevant sections or groupings, for more effective performance.”

Alvin Brown defines, “Organisation as a part which each member of an enterprise is expected to perform and the relations between such members to the end that their concerted endeavour shall be most effective for the purpose of the enterprise.” Similarly Urwick defines organisation as, “determining what activities are necessary to any purpose (or plan) and arranging them in groups which may be assigned to individuals.”

In a nutshell, organizing is structuring of functions and duties to be performed by a group of people for the purpose of attaining enterprise objectives. Functions and activities of the enterprise depend upon objectives to be accomplished and are also directed towards fulfilment of such objectives. This necessitates establishment of activity-authority relations through the enterprise.

More specifically organisation as a function of management involves the following steps:

i. Determination of activities of the enterprise keeping in view its objectives.

ii. Classification of such activities into convenient groups for the purpose of division.

iii. Assignment of these groups of activities to individuals.

iv. Delegation of authority and fixing of responsibility for carrying out such assigned duties.

v. Co-ordination of these activities and authority relations throughout the organisation.

vi. Providing equipment and work facilities.

vii. Mobilisation of fixed and working capital.

Thus, division of work among people and co-ordination of their efforts to achieve specific objectives are the fundamental aspects of an organisation.

It needs no mention that problem of organizing arises only when group efforts are involved. One man ownership needs no organizing because all the activities are to be done by a single individual. Similarly, organisation is always intended to achieve objectives and as such it is a means to an end and never an end in itself. For better results it is, therefore, implied that an organisation should be based upon practical prudence and sound application of organizational principles.

The success of an enterprise mostly depends upon the quality of its organisation. Andrew Carnegie has nicely summed up its importance into these lines- “Take away our trade, our avenues of transportation, our money, leave us nothing but our organisation, and in four years, we shall have re- established ourselves.”

Staffing in Management

Another popular term for staffing is “Human Resource Management.” Staffing is the function of manning and keeping manned the positions provided in the organisation structure. It is concerned with the human resources of an organisation. Broadly speaking, staffing includes personnel functions of recruitment, selection, placement, training, promotion, transfer and retirement. Thus staffing means “manning and keeping manned a right man at right place.” This needs man-power planning and man-power management.

Staffing process, therefore, provides the organisation with adequate, competent and qualified personnel at all levels in the enterprise. Since successful performance by individuals largely determines success of the structure, staffing function of the manager deserves sufficient care and attention of the management.

The staffing function has assumed greater importance these days because of rapid advancement of technology, increasing size of organizations and unpredictable behaviour of human beings. 

According to Koontz and O’ Donnell “the managerial function of staffing involves manning the organisational structure through proper and effective selection, appraisal, and development of personnel to fill the roles designed into the structure.”

Thus staffing consists of the following:

i. Manpower planning or assessing the manpower requirements of an enterprise in terms of both quantity and quality.

ii. Recruitment, selection and placement.

iii. Training and development.

iv. Promotions, transfers and appraisals.

v. Determination of employees’ remuneration, etc.

Staffing function involves properly estimating manpower requirements, recruitment, selection, training, development and appraisal of personnel. Every manager is continuously engaged in recruitment, selection, training and appraisal of his subordinates. The Board of Directors of a company undertakes staffing function by selecting, helping and appraising a chief executive who in turn performs these functions in relation to the heads of various divisions or departments of the enterprise.

The departmental heads also select, train and appraise their assistants and so on. Finally, the first line managers or supervisors perform the staffing function when they participate in selecting, training and appraising their subordinates. Thus, it can be said that staffing is also a pervasive function of management like other functions of management.

Staffing is a continuous function. A new enterprise is to employ people to fill positions established in the organization. In an established concern also, death, retirement of employees and frequent changes in objectives and in the organisation itself, make staffing a continuous function of management. Now, it has developed as a separate branch of the management (i.e., Human Resource Management).

Directing in Management

The organisation does not start working till the manager gives direction. Direction means guiding and supervising the subordinates. Directing is that part of the management process which actuates organisation members to work efficiently and effectively for the attainment of organizational objectives. George R. Terry calls directing as “moving to action and supplying simulative power to the group.” Moving into action literally means directing or motivation.

According to Joseph Massie, “Directing concerns the total manner in which a manager influences the actions of subordinates. It is the final action of manager in getting others to act after all preparations have been completed.” It deals directly with influencing, guiding, supervising and motivating the subordinates for the accomplishment of predetermined objectives.

Directing is concerned with implementation of plans. It initiates organized action and ensures good performance by employees towards the accomplishment of group objectives. Direction breathes life into an organisation and may be called management in action. It involves interpersonal relationships. The main aim of direction is to integrate harmoniously the efforts of people for the best interest of the enterprise.

Directing is a continuous function of management and it is performed by managers at all levels in an organisation.

The main activities or elements involved in direction are as follows:

i. Issuing orders and instructions to subordinates.

ii. Interpreting the orders and instructions.

iii. Guiding and counselling the subordinates in their work with a view to improving their performance.

iv. Inspiring and supervising the work of subordinates to ensure that it conforms to plans.

v. Maintaining discipline among the staff of the organisation.

vi. Communicating with the subordinates to create mutual understanding.

vii. Motivating subordinates to work hard; and

viii. Leading the subordinates, etc.

Orders and instructions are important means of direction. They should be clear, precise and written. They should be communicated or explained to the subordinates.

Sub-Functions of Directing:

Direction involves communicating and providing leadership to the subordinates and motivating them to contribute to the best of their capability for the achievement of organizational objectives.

Thus, directing process consists of three sub- functions:

  1. Communication,
  2. Leadership, and
  3. Motivation.

1. Communication:

It is a process of passing information from one person to another. A manager has always to tell the subordinates what they are required to do, how to do it and when to do it. He has to create an understanding in the minds of these people of the work to be done.

A manager to be successful must develop an effective system of communication so that he may issue instructions, receive the reactions of the subordinates and guide and motivate them. It is a means by which the behaviour of the subordinates is modified and change is effected in their actions.

2. Leadership:

Leadership may be defined as the process by which a manager guides and influences the work of his subordinates. The main task of leadership is to direct and unify the efforts and inclinations of the individuals of a group towards the achievement of desired common goals. Koontz and O’ Donnell state that, “leadership is influencing people to follow in the achievement of common goal.”

An executive, as an effective leader, should consult his subordinates while starting any line of action to ensure their voluntary co-operation. As leaders, managers have not only to show the way but also to lead the group towards it. He should build up confidence and zeal among people and to secure voluntary co-operation from them.

In order to be an effective leader, a manager must possess several qualities, such as initiative, self-confidence, tact etc. Different situations need different types or styles of leadership. Autocratic leadership requires rigid adherence to orders and instructions. It may be useful where subordinates are uneducated and incompetent.

Participative or democratic leadership involving the consultation of subordinates in the decision-making process is very often desirable. Laissez fair or free rein leadership implies complete freedom to subordinates to use their own skills and initiative in the preparation and implementation of plans.

3. Motivation:

Motivation means inspiring the subordinates with a zeal to do work for the achievement of organizational objectives. A man is said to be motivated when his latent energy is directed towards a certain goal. Motivation is the driving power which carries out the plans of management through the enthusiasm of the group.

Both financial and non-financial incentives are given to workers to encourage them to perform their work with maximum efficiency. The incentives are designed to satisfy the physiological, social, safety, ego and self-actualisation needs of employees.

A manager can successfully motivate his subordinates only when he thoroughly understands their needs and motives. Financial incentives are important to some while others are motivated by non-financial incentives like job security, job enlargement, freedom to do work, recognition, achievement, etc.

Motivation is the process of stimulating people to take desired course of action. It involves knowledge, understanding and use of the motives governing human behaviour.

Rensis Likert has regarded motivation as the core of management. A manager cannot do his job without knowing what motivates people. According to Dalton E. McFarland, the concept of motivation is mainly psychological. It is now well recognized that will to work is quite different from ability to work. The importance of motivation lies in converting this ability to work into will to work.

When put in the form of an equation:

Performance = Ability x Motivation

According to Clarence Francis, “You can buy a man’s time, you can buy a man’s physical presence at a given place, but you cannot buy his enthusiasm, initiative or loyalty.” But through proper motivation we can get his initiative and secure his loyalty.

Motivation is closely connected with morale. Morale is a state of mental health. Good motivation, in turn, leads to high morale.

Co-Ordination in Management

Many authors view co-ordination as a separate function of management. Even Henry Fayol included co-ordination amongst one of the elements of management. Since co-ordination is all pervasive and permeates every function of management, it is better to consider co-ordination as the overall function or the essence of management.

In fact, every managerial function represents an exercise in co-ordination. Thus, planning, organizing, staffing, direction and control, all help the managers to achieve proper co-ordination. Failure to perform any of the above functions efficiently shall be reflected in poor co-ordination.

Co-ordination is unifying the actions of a group of people for some common purpose. It is the job of harmonizing the activities of different individuals or groups as also of reconciling conflicting interests or approaches. 

Mooney and Reiley describe co-ordination “the orderly arrangement of group effort to provide unity of action in the pursuit of common purpose”. Spriegel defines it as “a process of so arranging group activities in relation to time, place and effort that each item will take care of itself according to the need of the situation.”

According to Fayol, “to co-ordinate is to harmonise all the activities of a concern so as to facilitate its working and its success.”

According to him in a well co-ordinated company the following facts are to be observed:

(i) Every department works in harmony with the rest.

(ii) Divisions and sub-divisions in each department are precisely informed as to the share they must take in the communal task and the reciprocal aid they are to afford one another.

(iii) The working schedule of the various departments and sub­divisions thereof constantly attend to circumstances.

In simple words, it can be said that coordination is to unite all activities of the business. It is very close to leadership. Co-ordination cannot be achieved without effective leadership. Co-ordination refers to the synchronization of the specialized efforts of individuals towards the accomplishment of common objectives. Co-ordination creates a team spirit and helps in achieving goal through collective efforts.

Co-ordination cannot be left to chance. The manager must con­sciously strive towards it. The greater the division of labour, greater the need for co-ordination.

The following principles of co-ordination are suggested:

  1. Clear-cut organisation structure.
  2. Total integration of policies with organisation goals.
  3. Effective channels of communication.
  4. Willing and spirited work force.
  5. Effective leadership and supervision.

Co-ordination is the force which streamlines the efforts of men and machines. Present day production administration is based on a feeling of co-ordination, co-operation and team spirit.

Controlling in Management

Control is to guide somebody or something in the direction in which it is intended to go. In terms of managerial functions, control consists of the steps taken to ensure that the performance of the organisation conforms to the plans. Brech defines control as the process of checking actual performance against the agreed standards or plans, with a view to ensuring adequate progress or satisfactory performance.

According to Haimann “Control is the process of checking to determine whether or not, proper progress is being made towards the objectives and goals and action, if necessary to correct the deviation.”

Henry Fayol says, “Control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established. It has the object to point out weaknesses and errors in order to rectify them and prevent recurrence.” 

Koontz St O’Donnell have defined controlling, “as the measurement and correction of the performance of subordinates in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished.”

Thus controlling enumerates the following four steps or elements:

(i) Establishing standards of accountability. It is essential to establish proper standards for measuring the progress.

(ii) Measuring work-in-progress. It is necessary to compare to the standards fixed.

(iii) Interpreting results. It analyses the cause of deviations, variations and discrepancies.

(iv) Taking corrective action (viz., correction of employees performance so that group goals and plans are accomplished).

Control implies the measurement of accomplishment against the standards and the correction of deviations to ensure attainment of objectives. The purpose of control is to ensure that everything in an enterprise occurs in conformity with pre-determined plans. Effective control consists of comparing actual performance with planned performance, and taking corrective action for deviations, if any. “The essence of control”, says James Lundy, “lies in initiation and follow-up of corrective action.”

Control keeps a check on other functions for ensuring the successful functioning of management. It brings to light all bottlenecks to work performance and operates as a straight pointer to the needs of the situation. It is, thus, closely related to the planning job of the manager.

But it should not be viewed merely as a postmortem of past achievements and performance. In fact, a good control system should suggest corrective measures so that negative deviations may not reoccur in future. The principle of feedback when incorporated in the control system can be of great use in this direction.

Relationship between Planning and Control:

Control is closely connected with planning. Control is inseparable from planning and uncontrolled activities result in the failure of plans. If planning is the beginning of the management process, controlling may be said to be final stage. If planning is looking ahead, control is looking back.

Control is not possible without planning, and planning has no meaning without control. The control system must be appropriate to the needs and circumstances of the enterprise. Indeed, the management process is employed into planning and control.

Decision Making in Management

Decision making is number one function of the management, because without taking decisions nothing can be performed in the organization. In the words of Peter F. Drucker “whatever a manager does, he does through decision making.” “The business executive is by profession is a decision maker.” Decision making is deeply rooted in the management process. Management without decisions is like a man without back bone. Thus Decision making is an essential part of every functions of management.

Manager at all levels have to take some decisions in their day-to-day working. The most outstanding quality of a successful manager is his ability to make sound decisions. The basic objectives of taking the decision are to solve the various problems of the business enterprise. Decision making is a blend of thinking, deciding, and action. While making decision, a manager has to make a choice from amongst various courses of action or alternatives.

So choice making forms a part of decision making. Decisions are taken for future actions hence decisions involve uncertainty and risk. So decision making is risk bearing. This makes the manager’s job challenging. Manager’s performance is judged on the basis of his decision making instinct. Management and decision making are bound up and go side by side. Whether knowingly or unknowingly, every manager makes decisions constantly. Such decisions may be either positive or negative.

Management Skills

In order to perform various management functions, managers must have certain skills. Skills refer to practical ability or expertness required in an action or doing something. From the very beginning of development of management thought, management researchers and practitioners have emphasized different skills for managers.

As a result, list of these skills has become quite long.

Robert Katz has put various management skills into three broad categories:

  1. Technical skills
  2. Human skills
  3. Conceptual skills

This classification of management skills is more popular.

1. Technical Skills:

Technical skills refer to knowledge and proficiency in processes, procedures, methods, and techniques which are used in doing a work. These skills are hard skills and are easily visible in a person. Technical skills are developed by accountants, engineers, managers, and other persons through the actual practice by doing things.

For managers, technical skills are required for effective performance of the following managerial jobs:

i. Managers are required to maintain workflow in the organization. Workflow involves initiation of action, that is, who will initiate the action and who will receive it. For example, in production, stores section gives raw materials to manufacturing section which receives this. For prescribing the workflow, managers must have technical knowledge of the work concerned.

ii. Managers are required to maintain order in the work system. Order in the work system states that there should be place for everything and everything must be on its place. For maintaining effective order in the work system, managers must have knowledge of work system and workflow.

2. Human Skills:

Human skills, also known as human relations skills or administrative skills, are the ability of a person to work with others on a person-to-person basis and to build cooperative group relations to achieve group objectives and, consequently, organizational objectives.

Human skills are required in managers for effective performance of the following managerial jobs:

i. Managers interact with others on one-to-one basis- superior, subordinate, peer, and outsider. Similarly, they interact with others as a member of groups, formed formally or informally. To make this interaction effective, the managers should have good interpersonal skills so that they can understand others and make them understood by others.

ii. Managers communicate frequently with others — within the organization and outside it. For making communication effective, managers must be good orators and have ability to be empathic to understand the others’ views in right perspective.

iii. Managers influence behaviour of subordinates to get intended results. For this purpose, they cannot rely merely on the use of their positional authority but they must have leadership ability to influence behaviour of the subordinates to work willingly and enthusiastically.

iv. For getting better results, managers must motivate their subordinates so that they put their utmost efforts. For motivating subordinates, managers must have motivating skills.

v. Organizational conflicts are natural phenomena. Many times, these conflicts arise because of misinterpretation of the issues involved in the conflicts. Managers are required to handle these conflicts amicably. For this purpose, they must have skills for handling conflicts.

3. Conceptual Skills:

Conceptual skills, also known as general management skills, are related to concepts and mental perception — conceptual framework intended to develop new ideas, products, etc. Conceptual skills refer to the ability to see the whole picture to recognize significant elements in a situation and to understand the relationship among these elements.

Conceptual skills are required for effective performance of the following managerial jobs:

i. Managers, particularly at higher levels, are required to make strategic decisions. These decisions are relevant for solving unusual/unique problems like launching new products, expansion of business in different lines, etc.

Conditions for making these decisions are highly uncertain and fluid and various alternatives for making decisions cannot be identified in advance. Conceptual skills are required to identify and interpret these conditions properly so that suitable strategic decisions are made.

ii. Managers are required to build models like model showing how different business activities will contribute to revenue generation, model for predicting environmental variables, etc. A model is an abstraction of reality; a simplified representation of some real-world phenomenon. For constructing a model, only partial information is available to the managers. They can use their conceptual skills to generate desired additional information to fill the information gap.

In short, technical skills deal with things, human skills deal with people, and conceptual skills deal with ideas. Managers require these skills. However, what will be proportion of these skills in managers depends on the management levels at which they work. Managers at lower level require technical skills more; managers at middle level require human skills more, and managers at top level require conceptual skills more.

Besides these three skills, various writers and researchers have provided other skill sets for various levels of management:

1. Top Management Skills:

In the academic world, much attention has been focused on the skills and their development in top management because this level is the major driving force in an organization. A survey of 90 global chief executives, conducted by Anderson Consulting, a US-based consultancy firm, shows that the chief executives require fourteen skills.

Accordingly, a chief executive thinks globally, anticipates opportunities, creates a shared vision, develops and empowers people, appreciates cultural diversity, builds teamwork and partnership, embraces changes, shows technological savvy, encourages constructive challenge, ensures customer satisfaction, achieves a competitive advantage, demonstrates personal mastery, shares leadership, and lives the values.

In Indian context, one such study of 125 chief executives has identified various relevant personal skills as analytical skills, creativity, sense of high achievement, risk-taking aptitudes, business aptitudes, leadership; job-related skills such as corporate perspective, knowledge of external environment, outside contacts, planning processes, and accuracy in work.

2. Middle Management Skills:

In middle management group, there may be managers at different levels placed between the top management and supervisors. Usually, they are concerned with a particular functional area of the organization. There is a tendency of faster movement of this group of managers.

Therefore, they require a variety of skills which must be relevant for their entire career. While at the lower end of middle management, more of technical and human skills are required; at the higher end of middle management, more creative and integrative skills are required. Thus, managers in middle management require human relations skill, leadership skill, motivating skill, and integrative skill.

3. Supervisory Management Skills:

Supervisors may also be classified into front-line, intermediate, and senior. Since they are directly concerned with operatives where the actual operations of the organization take place, supervisors should possess skills which help them to get things done by operatives.

Every supervisor in the organization should have sound technical knowledge of his field to provide proper instructions and guidance to operatives, interpersonal skills to develop cohesive operative-management relations, accuracy in work, motivational skills for creating proper work environment, and communication skills for interacting with higher management.

Types of Management

Broadly speaking there are six types of management:

1. Authoritarian Management:

In family and proprietary concerns management is authoritarian. The owners themselves are responsible for the entire management. The growth of business depends upon the skill and competence of proprietor. With better talents, brains, and specialised abilities, the proprietary or family business will convert itself into partnership or a joint stock company.

2. Centralized Management:

The authority is centralized to facilitate wide spread application of knowledge and judgement of the top executives, to unify and integrate the total operations of the enterprise and to bring uniformity in action and risks.

Authoritarian and centralized management represents revolution stage. The revolutionary stage reaches with the emergence of unified and decentralized management.

3. Unified Management:

In this type of management, professional manager start asking for dispersal of responsibility with authority in a manner that will help each member in the management to feel responsible for his assignment.

4. Decentralized Management:

In this type of management, authority is decentralized. Fayol observes that everything that goes to increase the importance of subordinate’s role is decentralization.

5. Bottom-up Management:

The extreme form of decentralisation is bottom-up management. In the words of William Given, “It gives people all along the management line a stimulating feeling of personal freedom; freedom to think and plan boldly; freedom to venture along new and untried paths; freedom to take calculated risks; freedom to fail.”

The success of decentralized and bottom-up management provides conditions for the culmination of managerial revolution.

6. Enterprise Management:

It is type which belongs to post revolution stage. Peter Drucker observes that mass production has already led to the formation of giant industrial enterprises in the U.S.A. bringing in their wake a new society. “The emergence of the enterprise has radically altered the pattern of society by creating two new classes the new ruling group of the executives and union leaders, and the new middle class; neither existed sixty or seventy years ago.” The creation of this new society as a result of the growth of giant corporations is itself a revolution of different kind.

Whatever the type, certain circumstances inside an enterprise like size and problems force management to rely more and more on professional managers. The recognition of professional managers is the first sign of managerial revolution and the beginning of the end of status quo regarding reservation of authority.

Functional Areas of Management

The functional areas of management, as distinguished from ‘principles of management’, also called General Management, are, generally speaking, as under:

  1. Production Management
  2. Materials Management
  3. Marketing Management
  4. Financial Management
  5. Personnel (or Human Resources) Management
  6. Office Management

1. Production Management:

This area deals with production related management. The main aspects are- plant location, production planning and control, work improvement and work measurement.

2. Materials Management:

This area deals with management aspects of goods and materials used in business e.g. – raw-materials, purchased parts, semi-manufactured goods or work-in-process, inventories, finished products, equipment items and supplies. Its main branches are- (a) Purchase Management (b) Inventory Management (c) Quality Control and Management (d) Transport Management (or Logistics) Nowadays, these branches are often regarded as separate functional areas of management.

3. Marketing Management:

This deals with the marketing system of a business. The various aspects are – market analysis, sales forecasting, pricing policies, salesmanship and advertisement, distribution channels, market research and international marketing. Nowadays, some of these aspects are treated as separate functional areas e.g. – Sales and Advertisement Management, International Marketing Management, also called Export- Import-Management.

4. Financial Management:

This area deals with the finance function of an enterprise. The important areas are – financial planning or capital budgeting, working capital management, budgetary control, etc.

5. Personnel Management:

Also called human resource management, this area deals with the personnel aspects of a business enterprise. The important aspects are – manpower planning (or human resource planning), recruitment, selection and training, promotion, motivation, systems of remuneration or wage payment, etc.

6. Office Management:

In modern times, with increasing size of offices, growing computerization of office work and fast changing information and communications technology, proper and effective handling of office activities has become quite an important area of management. Important aspects are – office planning and organization, office information management system (including MIS), records management (indexing and filing), Forms Design, management and control, etc.

Management Theories

1. Classical Management Theory:

This is the oldest theory of management and is also known as traditional approach, management process approach or empirical approach. Classical theory provides foundation to the study of management. This is the first step towards the study of management as a separate field of study.

The main factors of this theory are as follows:

a. Classical theory works on the principle of division of labour. This covers all the activities of the organization.

b. A set of management principles are developed and they are universally applicable to all types of organizations.

c. A systematic network of interrelated functions is viewed by management and inter relationship between these functions is the core of this approach.

d. The principles, skills and functions of management are applied in different situations because they are considered universally.

e. Formal education and training is considered for developing managerial skills and case study method is often used for this purpose.

f. Economic gains are the motivator for people. Therefore, Emphasis is on economic efficiency and the formal organization structure.

The classical approach was based on three main theories- Scientific Management, Administrative Theory and Bureaucracy. Scientific management theory was introduced by engineers and technicians. Frederick W. Taylor, Harrington, Emerson, Henry Gantt, Frank Gilberth and Lillian Gilberth are the main contributors of scientific management.

This school advocated improving the efficiency of men and machines. The practitioners and thinkers of administrative theory were Henri Fayol, Lyndall F. Urwick, James D. Mooney, Allen C. Reiley and others. The focus of this theory was on the development of management functions and principles for universal application.

Mere technical efficiency is not enough, efficiency improvement of the total organization was felt by this school thinkers. Bureaucracy was developed by German sociologist Max Weber. This provides a machine model of organization in which hierarchy of authority was stressed. Rules and regulations and impersonal control over human beings are other features of this approach.

2. Scientific Management Theory:

The United States of America was suffering with productivity during the beginning of the 20th century due to the scarcity of skilled labour. To find out the ways to increase efficiency of workers in productivity enhancement by eliminating or combining operations of work was the prime issue in front of management thinkers. The scientific management theory was developed by Fredrick W. Taylor in this adverse situation. Taylor is also known as the father of Scientific Management.

Taylor observed that functioning of most of the organizations was not scientific. This causes wastage of human and non-human resources. There was also absence of time and work studies in the organizations. 

Therefore, the quantity of work and payment for each day’s work was ignored. He found that workers produce much less than what they are capable of, because they follow traditional methods of production. Hit and trial approach was used in spite of being scientific or the best way of work.

Taylor considered all issues of production and developed a scientific base for performing this work. Various experiments were conducted by him to develop the theory of scientific management. They focused on the best way of doing each work by rending wastage of men and material. Taylor also works on time and motion studies to find optimum time and nature of operations for completion of each work.

The theory of Taylor is based on his work experience in three companies.

These three are:

  1. Midvale steel,
  2. Symonds Rolling Machine Company, and
  3. Bethlehem steel.

a. Midvale Steel:

Taylor started working in Midvale steel as a Labourer and became its chief engineer in 6 years. He observed that workers work at less than their full capacity at Midvale.

His conclusion was based on the following reasons:

  1. Workers were present in the organization but their production was low because the wage system was based on daily wages.
  2. Workers do not work fast due to fear of being turned down by the management after finishing the work.
  3. Methods of work were implemented on the basis of ‘Rule of Thumb’ or ‘Hit and trail’.

b. Simonds Rolling Machine Company:

Taylor Joined as a management consultant in this company. The workers were inspected on a bicycle ball bearings project and management felt that workers efficiency was low due to long working hours and absence of Innovation. Taylor observed and fixed the movement of best workers to motivate and trained the rest of workers to come up to that level.

To attain this he adopted the differential rate system and introduced the improvements in their working including rest hours. Due to this the quality and quality of production was high. It also increases the workers earnings and management profit both.

c. Bethlehem Steel:

Taylor conducted two important experiments of pig iron Handling and shovelling. During the pig iron experiment, Taylor studied the time and movement of workers who were involved in unloading material from the incoming Railcars and working of finished goods on the outgoing ones. He found that each worker could load about 12 % tones per day and earn $ 1.15 each day.

The most efficient workers were identified by Taylor. He studied time and motion and changed the work being done. The Rest periods during the long working hour and incentive plans to workers who achieved the targeted performance were introduced by him. The Target of 48 tonnes per day and a wage rate of $ 1.85 per day were fixed by Taylor. The result was that workers were loading 48 tonnes of goods per day. Taylor found that the problem lay with management and not with the workers.

In the light of such problems, he suggested his principles of scientific management to overcome the problems of organization. Taylor defined management as – “The art of knowing exactly what you want men to do and seeing that they do it in the best and cheapest way”. Taylor’s philosophy and principles are discussed in his book ‘Principles of Management’ Published in 1911.

These principles of scientific management are as follows:

  1. Develop a true science for each element of a worker’s job to replace rule of thumb.
  2. Scientific selection, training and development of workers for each job.
  3. A more equal division of responsibility between management and workers.
  4. Close cooperation between management and workers to maximise efficiency and productivity.

Taylor’s philosophy may be summarised as:

  1. Science, not rule of thumb
  2. Development of each man to his greatest efficiency
  3. Harmony not discards
  4. Close cooperation, not individualised.
  5. Maximum out in place of restricted output with maximum prosperity of each employee.

3. Mental Revolution:

This was known as the philosophy of scientific management. The principles of scientific management will come true if the stakeholders will follow this principle. Generally, employers think that employees do not want to do their job with honesty. Therefore, there should be an autocratic style of management with the employees.

On the other hand, employees have a perception in their mind that the employer will not provide the benefits for which he is entitled. Due to such perception both the employer and employee do not trust each other and the organizational activities suffer a lot.

According to Taylor such perception should be abolished from the mind of both sides and this is called mental revolution. This will take place only when the thinking of both sides will go for a revolutionary change. The principles of scientific management will be applied with such changed mind and thinking.

Universal Principle of Management:                

Along with scientific management, the classical approach was enriched by administrative theory. This theory was given by Henri Fayol. Fayol was a contemporary of Taylor. Fayol started his journey in 1860 as a junior engineer in a coal mining company situated in France. He became its General Manager in 1880.

After retirement he wrote a book on “Administration Industrielle et Generale ” in 1916 which was in French. This book was published in English in 1949 under the little “General and Industrial Management ”. The contribution of this book is a milestone in the field of management.

Fayol’s principles are discussed under the following heads:

Classification of Business Activities:

Fayol divided all business activities into six categories.

These categories are as follows:-

  1. Technical (Manufacturing or production).
  2. Commercial (Buying, selling and exchange).
  3. Financial (Search for and optimum use of capital).
  4. Security (Protection of Property and persons).
  5. Accounting (Including statistics).
  6. Managerial.

Functions of Management:

There are so many functions of management identified by different thinkers of management. Fayol defined, “To manage is to forecast and plan to organise, to command, and coordinate and to control.”

Thus, Fayol identified five functions of management process:

  1. Planning.
  2. Organising.
  3. Commanding.
  4. Coordinating.
  5. Controlling.

Abilities of Managers:

At different levels of organization managers must have these skills. These skills vary on the basis of the level at which managers’ work and the size of the organization.

1. On the Basis of the Level:

Managers have more managerial skills at a higher level while they possess more technical skills at a lower level. Much more managerial activities are performed by top level managers, more of technical work is performed by lower level.

2. On the Basis of Size of the organization:

Size of the organization is another detriment of skills. Managers at the same level perform duties of lower skill in a small sized organization and of higher skill in a large size organization.

Fayol identified the abilities of managers as follows:

  1. Physical – Health and vigour.
  2. Mental – Ability to analyse, interpret and arrive at conclusions.
  3. Moral.
  4. General Education.
  5. Special Knowledge.
  6. Experience.

The contribution of Fayol’s theory is much more in modern management. The principles of management given by Fayol are applied in both business and more business organizations. People learn managerial activities through management institute by practice.

The important contribution of Fayol theory is as follows:

i. Fayol distinguished management functions from other functions of a business.

ii. His maiden contribution was for universality of management principles.

iii. His management theory provides the foundation to understand management thoughts. The functions of management given by him provide systematic understanding to the process of management. Thus, his theory is also known as the management process approach.

Being such above good qualities in Fayol’s theory there are few limitations.

These are as follows:

  1. In modern business organizations this theory is not very suitable. The principles like centralization and few others are not relevant in modern business organizations. Therefore, the concept of universality of management does not hold true.
  2. Fayol’s theory overemphasised the formal structure of their organization and does not care for the informal needs of the people.
  3. The impact of the external environment on an organization is also not taken into consideration.

4. Behavioural Theory:

People as means of production and suggested ways to increase production were the issue of classical theory. The drawback of this theory was that the human factor was divided but in behavioural theory, the focus shifted from the workplace to the Human side of the organization. 

The focus shifted from job to worker and production oriented approach was substituted by people oriented approach in the behavioural theory. Behavioural theory attempts to understand the various factors affecting human behaviour in organization.

Two main theories of behavioural approach are:

  1. Human relation theory, and
  2. Behavioural science theory.

1. Human Relations Theory:

Human Relations are the ways and means by which managers interact with their subordinates. To develop good human relations in the organization managers should be aware about the motivating factors of the employees.

Elton Mayo, who is known as the father of human Relations Approach made the most significant contribution to this approach. A series of experiments at the Hawthorne Plant of the western electric company from 1927 to 1932 were conducted by him to study the impact of human forms on Productivity. Even the exact factors could not be known but human factors were considered in affecting productivity.

The Hawthorne study is divided into three groups:

  1. Test Room studies –
    1. Illumination experiment
    2. Relay assembly test room experiment
  2. Interviewing studies.
  3. Observation studies.

I. Test Room Studies:

Western electric researchers conducted this study to know the Impact of a single variable on women’s productivity.

These two experiments are as follows:

a. Illumination Experiment:

The lighting effect was studied on two groups. The lighting condition of one group was constant while the lighting condition of the other group was changed. Group of workers’ productivity increased surprisingly. Even when the lighting conditions declined, productivity went up.

It was also from an increase in output of the group where there was no change in lighting conditions. Mayo came to know that there was something more that contributed to industrial productivity rather than just the lighting condition.

b. Relay Assembly Test Room Experiment:

A small group of six girls was working in a test room during the experiment. Working conditions were the variable for this group now. These were less working hours, rest periods, improved working conditions, betting wages and free interaction among group members. The role of supervisor was friendly and Informal.

There was an increase in productivity but once again the productivity did not go down after withdrawing these conditions. It was oblivious that something other than these factors was Important. Mayo found that this was being caused by satisfaction of social and psychological needs of the workers. These are participation in decision making, freedom to work, sense of acceptance, recognition, informal relationship and interaction among group members.

II. Interviewing Studies:

To collect the information regarding jobs, jobs conditions and superiors 20,000 of Workers were interviewed from 1928 to 1930. It was found that workers behaviour was being influenced by group behaviour during the interview. If the employees were permitted to represent their views and problems openly to managers, their morale and productivity went up. This conclusion was not very satisfactory. Therefore, another series of experiments was conducted by researchers.

III. Observation Studies:

These studies are related to the Bank Wiring Observation Room experiment. A workers group of 14 people was selected to attach wire to switches for some instrument at telephone exchange. Working conditions were not changed as they were made in earlier experiments. The impact of social pressure was studied on the working of this group Bank Wiring Observation Room Experiments (1931-32) – in order to establish a correlation between group behaviour and individual behaviour, the bank wiring room observation experiment was conducted.

It was observed that the social pressure was more effective on individuals in groups making a group norm. It was clear from the experiments that there is a strong relation of group behaviour to productivity. Group norms carry more significance for employees than company rules. The reasons for these types of group norms were fear of being laid off, fear of raising standard performance or safeguarding the slower employees.

Having many limitations in experiments, the Hawthorne experiments provided many insights about the human behaviour in organization and provide new vistas for researchers. The role of informal leadership in organizations, impact of social factors on productivity, group dynamics in organizations, and gender effect were some of the key outcomes. There was a phenomenal change in management approach after these experiments.

5. Modern Management Theory

Modern management theory is developed to handle the increasing complexities of the organization.

This theory includes:

  1. Quantitative theory,
  2. System theory,
  3. Contingency theory, and
  4. Operation theory of management.

1. Quantitative Theory:

Quantitative theory is known as operations research theory, decision theory or management science theory. This theory came into existence during the Second World War, as the solution to the problems of war. Operation research is the application of scientific methods to solve problems arising from operations involving integrated systems of people, machines and materials.

The view of quantitative management focuses on the use of Mathematics, Statistics and information aids to support managerial decision making and organizational effectiveness.

Assumptions of Quantitative Theory:

a. Organizations are decision-making units and efficient decisions through mathematical models are taken by them.

b. Joint effort of a team consisting of experts from the field of Mathematics, Statistics, Accountancy and Engineering.

c. Business problems are expressed in the form of mathematical models. The relevant factors related to such problems are quantified in numerical terms.

2. System Theory:

An organization is treated as a system interacting with its parts and interdependent. This is an organic and open system and interacts with its environment continuously. According to Fred Luthans, “A system viewpoint may provide the impetus to unify the management theory. By definition it could meet the various approaches, such as – the process, quantitative and behavioural ones, as sub-system in an overall theory of management”.

This is a theory that considers the organization as a whole and operates in the external environment along with an internal environment consisting of various departments interrelated to each other. These are done to find the output by providing some input as usual happens in the system.

Thus, the system approach views the organization as a single and integrated system of subsystems. It is a set of interrelated parts that operate as a whole in pursuit of common goals. The system approach as applied to organizations is based largely on work in biology and other physical sciences.

3. Contingency Theory:

On the basis of the study of 100 British firms of different sizes producing different products, the contingency theory 1950 was developed by an industrial sociologist John Woodward. In his research Woodward compared the better performing companies with average or below average performing companies.

He found that the difference in performance of companies was not because of principles of classical theories. It was only due to better technology adopted by organizations to produce goals. This concluded that the managerial efficiency depends on the situation.

According to contingency theory, appropriate managerial action depends on certain parameters of the situation. organizations are found unique because their problems and decisions are unique. Therefore, the way of handling situations is also unique. This theory also considers that there is no best way of doing things universally in all situations. Contingency theory is the extension of system theory.

organization is an open system and it interacts with its external environment continuously. The manager tries to make a balance between the internal and external environment of the organization to solve the problems. The contingency approach has three important constraints within the organization.

These three constraints are:

  1. Technological Constraints.
  2. Task Constraints.
  3. Human constraints.

Considering three constraints in mind, the contingency approach tries to coordinate between external and internal environments of the organization. Thus, this approach does not advocate about any principle and explains the solution of the problem to the situation only.

4. Operation Theory:

This is also known as the Universalist approach to management. It attempts to draw together the pertinent knowledge of management by relating it to the managerial job performance by managers. Management is known as an operational and dynamic process consisting of certain common elements of the organization.

In the words of Koontz and O’Donnell, “The operational approach regards management as a universally applicable body of knowledge that can be brought to bear on all levels of management and in all types of organizations.” This is the advanced form of the functions of management process approach.

Neo-Classical Theory of Management

The limitations of classical theories give raise to neo-classical theories or human relations approach.

1. Elton Mayo’s Human Relations Approach: 

It was developed in 1920’s by ‘Elton Mayo’ who is known as the father of human relations ap­proach. It focused on human aspect of industry. Organization is a social system and human factor is the most important element in it. Human relations approach was initiated by Elton Mayo and his team of researchers including John Dewy, Kurt Lewin, F.J. Roethlisberger and W.J. Dickson. They conducted a series of experiments known as Hawthorne experiments in the Hawthorne works plant of west­ern electric company in the Chicago area.

These experiments were conducted over a span of five years from 1927 to 1932 and involved the following 4 stages:

i. The Test Room Study:

It was concerned with an experiment on working conditions and employee efficiency. Two groups of female employees were constituted and the researchers concluded that there is increase in output due to favourable change in worker’s attitude i.e. by asking their help and coop­eration the investigator had made girls feel important. They worked faster and better than ever.

ii. Relay Assembly Room Study:

It was concerned with an inter­viewing programme designed to determine what aspects of the environment employees either liked or disliked and effect of fatigue or rest on output. The supervisor is replaced by observer where they asked two girls to pick another four girls of their choice in an informal atmosphere where they participate in tension free environment with group cohesion. Improvement was there in the form of increased productivity. This provides importance of human relations in organization.

iii. Bank Wiring Observation Room Study:

In this 14 male workers employed in bank wiring room were observed to judge the influence of informal group on human behaviour. The work­ers were given piece rate incentive system as hypothesis and employees individually would produce more and help others to increase group bonus. But the informal group put pressure on individual members not to produce more beyond group standards due to fear of unemployment, fear of increase in standard and to protect slow workers.

iv. Mass Interviewing Programme:

About 20000 interviews were conducted in order to find out the attitude of employees to­wards job, company and working conditions. First of all, direct questioning and then non directive approach was adopted and the result was by providing opportunity to talk and air griev­ances the workers feel satisfied. Hence interaction, perception and interpersonal relations were found to be basic factors responsible for human behaviour in organization.

Contribution of Hawthorne Experiments:

Features of Neo-Classical/ Human Relations Approach:

i. Social system:

Organization is a social system rather than tech- no-economic system. It defines individual roles and establishes norms determined by their co-workers which defines amount of work.

ii. Group dynamics: 

At workplace, workers act as members of the group. Group norms are important and employees’ behaviour is affected by ‘Group think’. The individual performance is determined by group norms.

iii. Communication:

Both way communications is necessary as it carries information to the functioning of the organization and the feelings of people working in that organization.

iv. Informal organization: 

It exists within the framework of formal organization and is affected by the formal organization and also affects formal organization.

v. Conflict:

There is a conflict between individual and organi­zational goals. For smooth functioning of the organization, integration between them should be there.

vi. Role of money: 

Money is not the sole motivator of human behaviour. Socio psychological factors act as important moti­vators. Employees are diversely motivated and want to fulfil different types of needs.

vii. Informal leadership: 

There is emergence of informal leadership that sets group norms. It is important for the organization to manage these group norms and informal leadership.

viii. Social environment: 

It affects the workers and is also affected by them. Mayo argued that human relations skills are very important and it is required at all the levels in an organization.

ix. Teamwork:

Teamwork is very important for cooperative sound organizational functioning and this work is not automatic but achieved through individual and team efforts.

Criticism of Hawthorne Studies:

Limitations of Neo-Classical Approach:

i. Unidimensional approach: 

Human relations approach tried to achieve organizational effectiveness through satisfaction of employees by ignoring rationality dimension. Classical ap­proach tries to achieve organizational effectiveness through rationality by ignoring human dimension. There is a one-to-one replacement of thoughts.

ii. Limited focus on work:

Peter Drucker argued that human relations theory put all the stress on interpersonal and social relations rather than work and workers, it overemphasis on psychological aspects at the cost of technical aspect.

iii. Classical biasness:

It has been argued that Mayo’s model has biasness on sample size taken only for one company and on the basis of experiments conducted in that company only. A general verdict was announced in favour of human happiness.

iv. A closed system model:

Mayo’s model has been criticized of being a closed system model because it doesn’t consider envi­ronmental factors.

v. Individual assumptions:

Certain assumptions are not true. For example, there is solution to every problem which satisfies everybody in an organization is not true in real sense.

vi. Limited application:

There is no particular structure which may serve purpose of all organizations and limited application is there.

vii. Over concern with happiness: 

This theory is over emphasising and over concerning with happiness element among employees. It has been criticized for single minded attention.

viii. Fragmented approach:

This theory is simply the modification of classical theory and has same limitation as classical theory.

2. Behavioural Approach:

Behavioural approach is the logical extension of human relations because it provides more advanced, refined and matured version of human relations approach. It provides description about ‘why and how of human happiness? The prominent behavioural thinkers who contributed in explaining human satisfaction through motivation theories, leadership theories and change management theories were Abram Maslow, Herzberg, McGregor, Rensis Likert, Kurt Lewin etc.

Behavioural approach argued that healthy behaviour is important for healthy human relations because there is important relationship between human behaviour and organizational effective­ness. This approach viewed that along with the rationality, human behaviour and happiness is an important aspect. Therefore, the study of organizational behaviour is considered as the study of organization, employees, their behaviour and their management.

The behavioural scientists made the following propositions:

i. An organization has wide range of factors influencing inter­personal and group behaviour of employees.

ii. Individual and organizational goals are different and attempt should be made to achieve coordination between both of them.

iii. An organization is a techno-social system.


In order to understand human behaviour in an organization various factors i.e. perception, personality, motivation, values, attitudes, social system, organizational factors etc. plays a vital role. This approach suggests how the knowledge of human behaviour is used in making employees more effective.

Various behavioural thinkers contributed their ideas in the field of perception, motivation, leadership and hence enriched management.

Social Responsibilities of Management

John. F. Mee the Authority on management science describes the management as, the art of securing maximum results with a minimum of effort, so as to secure maximum prosperity and happiness for both employer, and employee, and give the public, the best possible service.

This definition indicates the social responsibilities of management towards:

  1. Employer (shareholders)
  2. Employees (workers)
  3. Public (consumers, and society)

In other words management is responsible for protecting the interest of:

  1. The shareholders
  2. The employee (workers)
  3. The consumers 
  4. Society

1. Responsibilities to Share Holders:

The responsibilities of management towards the shareholders are as follows:

(i) Solvency and stability of the enterprise – Management is responsible for maintaining the solvency and stability of the organisation by effective and efficient utilisation of resources.

(ii) Fair return (dividend) on investments – Management should assure the fair return on the amount invested by the shareholders.

(iii) Execution of plans and policies – It is the responsibility of the management to execute the plan and policies decided by the top executives.

(iv) Optimum use of resources – The management must ensure optimum use of all the available resources like, money, men, materials, machinery etc.

(v) Future growth and expansion – Management has to device a long-range planning for the future growth and expansion of the enterprise to ensure continued progress and prosperity.

2. Responsibilities to Employees:

The responsibilities of management towards employees are as follows:

(i) Fair wages – It is the responsibility of the management to pay fair wages to the workers, at least to meet their basic needs.

(ii) Job security and stability – Management should protect the interest of employees by assuring them the security and stability of the employment.

(iii) Incentives – To motivate subordinates, for higher productivity management should provide incentives in the form of bonus, timely increase in wages, promotion etc.

(iv) Better working conditions – Proper ventilation, lighting, drinking water facilities, canteen facilities are to be provided by the management to increase the efficiency of the workers.

(v) Protection against hazards – It is the responsibility of the management to protect the workers from the industrial hazards like accident, sickness, old age, retirement etc.

(vi) Workers participation – Management should give the scope to the employees to take part in the decision making process. This would boost the moral of the employees.

3. Responsibilities towards Consumers:

The responsibilities of Management towards consumers are:

(i) Better goods and services at fair prices – It is the responsibility of the management to supply better and cheaper goods and services to consumers continuously.

(ii) Supply of Standard quality goods and services – Management should protect the interest of customers by supplying standard quality goods and services.

(iii) Service after sale – It is the responsibility of the management to make necessary arrangement for providing service after the sale, of certain types of goods such as electrical and electronic goods etc.

4. Responsibilities towards the Society:

The responsibilities of the management towards the societies are as follows:

(i) Better standard of living to the society – It is the social responsibility of the management to provide better standard of living to society by supplying quality goods at fair prices.

(ii) Provision of employment – Management should provide ample employment opportunities to the society.

(iii) Building up good will – Management should build up good will of the firm among the society. This they can achieve by assuring fair return to investors providing better and cheaper goods to consumers, better wages to workers and higher standard of living to the society.

(iv) Payment of taxes – Another social responsibility of the management is prompt, regular and timely payment of various taxes to the Government and Semi-Government authorities.

Management Thinkers

The most important persons are: 

  1. Fredric Winslow Taylor (F.W.Taylor) – 1856-1916, U.S.A. 
  2. Henry Robinson Towne- 1844-1924, U.S.A. 
  3. Harrington Emerson- 1853-1931, U.S.A. 
  4. Fredric Arthur Halsey- 1856-1935, U.S.A. 
  5. Henry Laurence Gantt (H.L.Gantt)- 1861-1919, U.S.A. 
  6. Mary Parker Follet- 1868-1933, U.S.A. 
  7. Frank Bunker Gilbreth- 1868-1924, U.S.A. 
  8. George Elton Mayo- 1880-1949, Australia. 

Let us now briefly discuss the contributions of the above mentioned persons to the field of management: 

1. Fredric Winslow Taylor: 

F.W.Taylor coined the word scientific management and his work Principles of Scientific Management was published in the year 1911. From that time onwards-greater attention has been given to scientific management as a separate discipline worth studying. F.W. Taylor has been accepted as father of scientific management in spite of severe criticism about his works. 

Taylor received training as a machinist in 1873 and took position in 1878 in Midvale Steel Works at Philadelphia, and become chief engineer of the plant in the year 1884, at the age of 31 years. He began to concentrate attention on such basic industrial problems as ‘which is the best way to do a work? What should constitute a day’s work? He deliberately set out to give answers to many of these questions. He extended his studies further and endeavored to establish basic principles of management, which would apply to all fields of industrial activity. 

He explained his objectives as: 

The development of a science for each element of a man’s work, thereby replacing the old thumb rule method. 

(i) The selection of the best worker for each particular task and then training, teaching and developing the workman; in place of the former practice of allowing the worker to select his own task and train himself as best he could. 

(ii) The development of a spirit of hearty co-operation between management and the men in the carrying on of the activities in accordance with the principles of the developed science. 

(iii) The division of the work into almost equal shares between management and the workers, each department taking over the work for which it is best fitted; instead of the former condition in which almost all of the work and the greater part of the responsibility were thrown on the men. 

It was these principles, extended and applied, which formed the basis of what has been called ‘Scientific Management’. 

In the year 1989, Taylor went to Bethlehem Steel Works, where he undertook his famous studies of shovelling. He designed an optimal shovel and by which the productivity increased. He also started planning department in order to determine in advance the amount of work to be done in the yard during the ensuing day. To him must go the credit for naming his technique ‘time study’ for necessity of time studies became the principal feature of his scientific management. 

2. Henry Robinson Towne: 

Towne’s most significant contribution to management was the leading part he played in persuading his fellow engineers to extend the traditional scope of their professional interest to include management subjects. He also elaborated an important management technique where he presented the results of the gain sharing system operating in his own works. Under this system gains were awarded to the departments on the basis of relative efficiency. This was a modified form of profit sharing on a group basis and an attempt at improving the traditional piece rate system. 

3. Harrington Emerson: 

He is well known as efficiency engineer; he popularized scientific management and expounded the concepts of standard time, standard costs, preventable wastes etc. He was the first man to call attention to the lessons to be learnt from military experienced by business management. 

4. Fredric Arthur Halsey: 

He originated first successful incentive scheme of wage payment in the American industry and improved upon the ordinary piece rate system. His incentive schemes have advantages over piece rate system, day rate system and Twine’s gain sharing system. Halsey’s premium plan of paying labor aimed at eliminating rate cutting. It guaranteed daily or hourly rate for fixed quantity of work as agreed with the worker based on customary performance in the past. 

The premium payment was provided for any additional work of about one-half to one-third of the sum normally payable for such work. As the employer gets benefit from increased output, he should not indulge in rate cutting. 

5. Henry Laurence Gantt: 

He is very much bothered about human beings in industry. He considered human resource as the most important one in all problems of management. He is also described as ‘The forerunner of modern industrial democracy’. He was famous for one particular chart, which bears his name although he evolved many charts. This chart is known as Gantt chart, which is used for scheduling the work. He also devised incentive schemes to motivate human beings to work. 

6. Mary Parker Follet:

Her contribution to industrial management is the application of psychological insight and findings of social sciences. She was herself a political and social philosopher. She offered a new conception of the nature of management and of human relationships within industrial groups. She showed that conflict can be constructive and could be harnessed to the service of the groups. 

7. Frank Bunker Gilbreth: 

The industrial world owes an incalculable debt to Frank and Lillian Gilbreth, for the development of what they named ‘motion study’, an intensification of the broad pioneering method studies of Robert Owen and many others. Frank B. Gilbreth was a New England contractor and industrial consultant and another pioneer in the field of scientific management. He was always greatly assisted by his wife, Dr. Lillian Gilbreth, a trained psychologist, who until her death played an active part in the continuation of her husband’s work. 

Gilbreth started as a bricklayer and became a successful contractor. His wife worked for many years to win her doctorate in psychology; yet she was able at the same time to assist her husband materially in his work to develop the technique motion study – Which concentrates on finding the best way of doing the work. 

8. George Elton Mayo: 

Elton Mayo is famous for his contribution to management on the human and the social factors in industrial relationships and the great difficulty in developing true scientific techniques applicable to the study of social behaviour. He is very famous for his investigation at Hawthorne. His experiments at Hawthorne emphasized that emotional, non-logical attitudes and sentiments are more important even in economic relationships than the logical, economic ones. 

Span of Management

Span of management is also known as span of control, or span of supervision, or span of direction. The span of management is an important principle of sound organisation. Span of management refers to a numerical limit of subordinates to be supervised, controlled, and directed by a manager. 

In other words, it is the ratio between superior and subordinate. A manager can supervise limited number of subordinates effectively and efficiently. Therefore, deciding of appropriate span of control is an important managerial task, while deciding an organisational structure. 

Management Development

Management development is an educational process utilising a systematic and organised procedure by which managerial personnel learn conceptual and theoretical knowledge for general purposes. These purposes concern – productivity, quality, human resource planning, morale, indirect compensation, health and safety, personnel growth, etc.

Purpose or Objectives:

Management development is an attempt at improving an individual’s managerial effectiveness through a planned and deliberate process of learning. For an individual this means a change through a process of planned learning. This should be the common and significant aim of development attempts from the point of view of the trainer and the trainee in an organisational setting.

The change in the individual must take place in those crucial areas which can be considered as output variables:

  1. Knowledge change’
  2. Attitude change’
  3. Behaviour change’
  4. Performance change and
  5. End operational results.

The success of development effort to be marked as effective depends upon the following inputs:

  1. Trainee’s personnel characteristics, such as – his intelligence and motivation to learn.
  2. His actual learning efforts. These two variables are influenced by –
    1. Formal organisational
    2. Leadership climate and
    3. Cultural features

Aims of Management Development:

The organisational aims of management development are to secure the following valuable end results:

  1. Improvement in technical performance.
  2. Improvement in supervision and leadership at each level.
  3. Improvement in inter departmental cooperation.
  4. Highlighting individuals’ weaknesses.
  5. Attracting good men.
  6. Facilitating sound promotion from within policies and practices.
  7. Ensuring that the qualifications of key personnel become better known.
  8. Creating reserves in management ranks.
  9. Making an organisation more flexible by an increased versatility of its members.
  10. Improving organisation structure.
  11. Stimulating junior executives to do better work.
  12. Broadening key men in the middle cadre.

In sum, management development aims at securing management improvement in the short run.

It may be summed up that the primary objectives of executive or management development are:

  1. To provide adequate leaders.
  2. To increase the efficiency of performance.
  3. To serve as a means of control in operations.
  4. To train managers for higher assignment who show potential for growth.
  5. To prepare them for adaptation to changes environment, ideological and technological.
  6. To develop a unity of purpose and improve morale.

Causes of Management Development:

The causes of management development programmes are thus:

1. The rapid rate of technological and social change in society has necessitated the training of manners so that they may cope with these developments.

2. The introduction of automation, intense market competition from foreign countries, the growth of new markets in the under­developed countries, enlarged participation of labour in management and greater interest by the public and the government in the actions of the businessmen have all led to the need for the development of managerial personnel.

3. Increased recognition by business and industrial leaders of the social and public responsibilities of management has necessitated the development of managerial personnel.

4. The increased size and complexity of most organisations require trained managers.

5. The frequent labour management strives have necessitated the services of trained personnel.

6. The change in socio-economic forces, including changes in public policy and the concepts of social justice, industrial democracy, problems of ecology, ekistics (problems of human settlements), ergonomics (problems of working environment) and cultural anthropology (problem of fitting machines to men) – all these demand increasing attention of the management for decisions in these diverse fields.

Development of Management Thought

The Evolution of Management Discipline:

Until Industrial revolution after Second World War, adequate thought was not given to the practice of management as separate discipline. Development of management theory on a systematic basis began in twentieth century because of industrial revolution and advent of factory system. Economists, psychologists, sociologists, engineers etc. made contributions to the theory of management to promote management as separate discipline.

Develop of management thought in a time perspective can be divided into four stages, they are:

  1. The Scientific Management Stage,
  2. The Organizational Stage,
  3. The Management Process Stage, and
  4. The General Management Theory Stage.

1. The Scientific Management Stage:

During early 20th century, man was very much interested in using human effort effectively. His intention was to reduce the waste and unnecessary operations from human work and to increase the productivity. In this direction, the work was divided as operative work and planning work. Top level management was responsible for planning the work effectively and the lower level managers or operative management was responsible for executing the plan.

Thus, the line organization and line and staff organization structures developed during this period. Wage payment plans were aimed at providing incentives for the worker for maximum motivation. Thus, a major break-through was affected during this decade of World War-I with the greatest contributions being that of Taylor and Fayol. In short, it was conceived as mental attitudes towards intelligent use of human effort to increase the productivity by reducing the wastages and at the same time taking care of labor welfare.

2. The Organizational Stage:

In the next decade, that is during 1930s more attention was given to organization as a structure for carrying out managerial assignments. Administration was concerned with formulation of policies and the establishment of the organization through which the plan was executed and the organization structure become a management mechanism for carrying out the work assignment.

Management’s main concern was to control and ensure proper work performance with the organization structure. Later on certain people divided the work of management as administrative management and operative management where administrative management was responsible for formulation of policies, plans and the operative management was responsible for execution of plans.

3. The Management Process Stage:

In the next decade, i.e. during 1940, more emphasis is placed on two management functions planning and control to crystallize the objectives, so that all activities are directed to achieve the desired objectives. Thus, achievement of objectives of an enterprise as a whole became the basis of conceptual framework of the management and more stress was placed on the process of managing. In this stage more emphasis is placed on setting of objectives and goals, and also on the functions of management such as organizing, staffing, motivating etc. to fulfill the organizational objectives.

4. The General Management Theory Stage:

In this stage, the management concepts so far evolved is synthesized into a conceptual framework for a general management theory. The process of managing was influenced by technology. Developments in communication and information technology, advent of computers in database management, use of operations Research techniques in decision making have dramatically changed the process of management.

Especially after World War II, one can recognize the changes in management approach and then onwards, due to changes in technology, introduction of computers in decision-making process, a new wave swept the general management theory, due to which new schools of management thought began to evolve.

Management by Objectives

MBO is a result-centred, non-specialist, operational managerial process for the effective utilisation of the material, physical and human resources of the organisation by integration the individual with the organisation and the organisation with the environment.

At its best, management by objectives is a system that integrates the company goals of profit and growth with the managers needs to contribute to the company’s well-being and develop himself.

A basic reason for the increased acceptance of MBO has been the rapidly changing environmental conditions. The concept of corporate strategy or strategic planning is also a response to a challenging environment. The components of such strategy, intended for the achievement of overall enterprise objectives, are- (a) product-market scope; (b) growth vector, product development and diversification, competitive advantage; and (c) synergy, i.e., latent untapped potential.

Evolution of corporate strategy on these lines has given an additional fillip to MBO. Indeed, so far as top level management is concerned, both MBO and strategic planning seem to be identical. However, since MBO has important behaviour implications for the middle and lower level managers, it differs in its basic approach from strategic planning.

The latter is confined to a few top management executives, largely because relevant information, ability and experience are usually scarce lower down the hierarchy. In addition, there is often the overriding need for maintaining secrecy about the overall strategic moves contemplated by the enterprise.

But MBO involves the utilisation of available knowledge and expertise at all levels, and also sharing of overall corporate goals and objectives by all managers. It tries to cultivate a sort of openness rather than secrecy which is not antithetical to the closed loop circulation of certain aspects of enterprise management at the top echelons.

Approaches to Management

A heterogeneous group of management practitioners, thinkers and social scientists have contributed to the accumulation of knowledge in management. Therefore, several approaches to the study of management have emerged over the years. 

Some of these approaches are described here: 

1. Classical Approach to Management: 

The classical approach is also known as traditional approach, management process approach, or empirical approach. 

The main features of this approach are as follows: 

1. Formal education and training is emphasized for developing managerial skills, among the would be managers. Case study method is often used for this purpose. 

2. Emphasis is placed on economic efficiency and the formal organizational structure. 

3. Management is viewed as a systematic network (process) of interrelated functions. The nature and content of these functions, the mechanics by which each function is performed and the interrelation-ship between these functions is the core of the classical approach. 

4. People are motivated by economic gains. Therefore, the organization controls economic incentives. 

5. On the basis of experiences of practicing managers, principles are developed. These principles are used as guidelines for the practicing executive. 

6. Functions, principles and skills of management are considered universal. They can be applied in different situations. 

The classical approach was developed through three mainstreams-scientific management, administrative theory and bureaucracy. Scientific management was developed by engineers and technicians like F.W. Taylor, and Harrington. 

2. The System Approach: 

The system approach to management was developed during the late 1950’s. Many pioneers such as E.L.Trist, A.K.Rice, F.E.Kast, J.E. Rosenzweig, R.A. Jhonson, R.L.Khan, Daniel Kartz, and Kenneth Boulding have made significant contributions to this approach. 

The fundamental features of the systems approach are as follows: 

1. Management is expected to regulate and adjust the system to secure better performance. Management involves taking into account many variables, which are interrelated and interdependent. This multivariate aspect of management suggests that there is no simple cause and effect relationship. To ensure the survival and growth of an organization, management must continually adjust and adapt it to the changing environment. 

2. Every system is a part of a supra system (environment). 

3. Organization is an open system and it interacts with its environment. It is also a dynamic system as the equilibrium in it is always changing. An organization operates in a dynamic environment, which cannot be predicted with certainty. Therefore, it is probabilistic. 

4. An organization is a system consisting of many interrelated and interdependent parts or subsystems. These elements are arranged orderly according to some scheme such that the whole is more than the sum of the parts. For example, if an organization is taken as a system, production, sales, finance and other departments are its subsystems. 

5. As a system an organization draws inputs (energy, information, materials, etc.) from its environment. It transforms these inputs and returns the output back into the environment in the form of goods and services. 

Systems Approach to Management

Just like a human body, an organization is also made of different interdependent systems.

A change in any one of these systems may affect all or some other systems to varying degrees. This “ripple effect” influences the effectiveness of the organization. To understand the interactions and the consequences between the various systems of the organization, the managers should possess the ability to get a perspective view. The term systems approach is used when different approaches are used by an organization to deal with various issues.

Systems theory was first applied in the field of science and engineering. It also has found wide acceptance in the practice of management. A system can be defined as essentially a set or assemblage of things interconnected or interdependent, so as to form a complex unity. Cars, computers, television and radio sets are some examples of such systems.

There are two major types of systems.

They are as follows:

  1. Closed system
  2. Open system

1. A closed system has definite boundaries. It operates relatively independently and is not affected by the environment outside the system. In this case, stand by generator serve as appropriate examples. With its different systems working together in perfect harmony, the generator continues to supply power as long as it has sufficient fuel supply without much regard to the external environment.

2. An open system, as the name implies, is characterized by its interaction with the external environment. Clearly, an open-system model that includes interactions between the enterprise and its external environment should describe any business or other organization.


An important mechanism helps the system to adapt and adjust to the changing conditions of its environment. This system is “feedback” and it helps in exercising control over its operations. The systems approach of management provides an integral approach to management. It views management in its totality. It helps in seeing the problems of the organization in wider perspective. This approach is more useful in managerial decision-making.

Based on the systems approach, Talcot Parsons has suggested the following three meaningful levels in the hierarchy of complex organizations:

  1. Technical
  2. Organizational
  3. Institutional.

The technical level is concerned with the actual production and distribution of products and services. It also includes activities like research and development, operation research and accounting. The organizational level coordinates and integrates work performance at the technical level.

It helps in obtaining a continued flow of inputs into the system and maintaining the markets for the outputs from the system. The institutional level is concerned with relating activities of the organization to environmental system. It involves relating the organization to the needs of the environment.

Modern Approaches to Management

Modern approaches to management basically centre on the quantitative school, the sys­tems theory and contingency theory. We call it modern because all these approaches have emerged over the years, primarily based on industry practices. 

For example, the quantita­tive school of management thought had emerged during World War II, when the team of managers, the government, and the scientists worked together to help the army with mod­els for effective utilisation of resources. 

This interdisciplinary team integrated the existing mathematical approaches with the concepts of Taylor and Gantt. This school of thought has now expanded into many branches like management science, operations management and management information systems.

Management science approach visualizes management as a logical entity, expressing management in terms of mathematical symbols, relationships and measurement data. It is also known as the operations research approach, and it extends to various functions of manage­ment. For example in finance, it is used in capital budgeting and cash flow management. 

In production and operations, it helps in scheduling and framing of product strategies. In hu­man resource management, it helps in resource planning. In materials function, it is used in inventory management. 

Using this approach, managers can reduce their errors significantly. More extended approach of management science is known as operations management. Al­though the initial focus was on issues in production and operations management, now it is used in all functional areas of management.

Management Information Systems (MIS) approach depends on computer-based infor­mation systems for use by the management. It converts raw data into information inputs, which are subsequently used by the management in decision-making. 

Now, of course, MIS helps in building organization-wide Decision Support Systems (DSS), like various Enterprise Resource Planning (ERP) modules, Human Resource Information Systems (HRIS) etc.

More advanced form of computer-based information systems is the systems theory ap­proach which considers the organization as a system, and its various units as subsystems. With this approach, managers can effectively coordinate the efforts of related subsystems.

Contingency theory approach discards the concept of universality in management principles and determines managerial decisions considering situational factors. 

The task of a manager, as per this theory, is to identify which techniques will, in a particular situ­ation, under particular circumstances, at a particular point of time, best contribute to achieving organizational goals. With the integration of contingency and systems theory, we get the integrative school of management thought, which we consider to be the best in a given situation.

Qualities of a Manager

The manager has to be a competent person in the area of his specialisation. He should be a man of creative open mind, moral and capable to solve problems. H. Fayol was the first person to identify the qualities required in a manager. 

He classified managerial qualities into six categories as follows: 

(i) Physical Qualities – The manager must have good health and well dress up. 

(ii) Mental Qualities – The manager must understand and learn, judgment mental vigour and capability. 

(iii) Moral Qualities – The manager must have moral energy, firmness, initiative, loyalty, tact, dignity and to accept responsibility. 

(iv) Educational Qualities – The manager must an acquaintance with matters not belonging exclusively to the functions performed. 

(v) Special Knowledge Qualities – The manager must have technical qualities peculiar to the work performed. 

(vi) Experience Qualities – The manager must have experience arising to the place. 

Apart from these, an efficient manager must have the following qualities: 

1. Knowledge Ability:

The manager must have educational and professional skills to run the business. A specific training for the job is required to perform. He must be able to think rationally. 

2. Dynamic Personality:

The manager should have secured health, attractive behaviour and well-mannered personality so that employees should accept him and his ideas and thoughts. 

3. Leadership:

The manager should provide an appropriate direction and guidance to his team members so that they must perform effectively and efficiently because he cannot perform all the activities of the business himself alone. 

4. Emotional Stability: 

The manager must the able to keep his personal likes and dislikes away from organisation responsibility. His managerial decisions should be based upon emotions but on the logical considerations. 

5. Self Confidence: 

The manager should take important decisions after careful scientific analysis of facts and must not change it upon the advice of employees. 

6. Honesty and Integrity:

The manager being the in-charge of organisation and for department must be honest and possess good moral character. He must remember the saying that it is not enough to be good, one must also appear to be good. 

7. Technical Ability:

The manager should be technically sound in his job and must correspond to the needs of the organisation. The technical skills are more important at the supervisory level. 

8. Human Relations:

The manager must keep in mind that he has to deal with human and to drive them. He must recognise the emotional and psychological needs of the employees. He must be aware about labour Acts. Manager should maintain good industrial relation. 

Leadership and Leadership Styles in Management

Leadership means guiding and directing others. It means ability to guide, direct and motivate others. In the words of Allen, ‘Leader is one who guides and directs other people. Koontz and Weihrich have defined leadership as, ‘influence’, that is’ the art or process of influencing people so that they strive willingly and enthusiastically to the achievement of group goals’.

Leadership Styles in Management:

Leaders are the individuals who lead a group of people to achieve specific goals. Each leader has its own style to lead his/her followers. Mahatma Gandhi, Hitler, Bill Clinton, Mukesh Ambani, Steve Jobs, Narendra Modi, etc., are the few names among various leaders who have led people in their own ways/styles.

Leadership styles refer to a leader’s behaviour. A leader adopts a particular style of leadership depending on his/her philosophy, personality, and experience and value system. It also depends upon the type of followers and the atmosphere prevailing in the organisation. Thus, the behavioural pattern of a leader reflects his/her style of leadership.

The business people and psychologists have developed useful frameworks that describe the main ways the people may lead.

Psychologist Kurt Lewin has developed three main leadership styles:

  1. Autocratic leadership.
  2. Participative leadership.
  3. Free rein leadership-Laissez Faire.

Let us study the above-mentioned leadership styles:

1. Autocratic/Authoritative Leadership:

An autocratic leader is the one who does not consult or take inputs from his/her team members while taking decisions or formulating policies.

The main characteristics of an authoritative leadership are:

i. All the decision-making powers are centralized with the leader.

ii. Leader gives orders and insists that they are obeyed.

iii. Leader takes decisions or determines the policies for the group without consulting the group members.

iv. The group is simply instructed about the immediate steps to be taken. It does not share plans with the group.

v. It does not give group members any freedom to influence decisions of the leader.

vi. It does not ask for feedback from group members.

Traits of an Autocratic Leader:

  1. Sets-goals individually.
  2. Engages in downward and one-way communication.
  3. Likes to boss people around.
  4. Controls discussions with followers.
  5. Does not allow any kind of interactions.

Advantages of Autocratic Leadership:

i. Facilitates quick decision-making as the leader takes all decisions without any consultation or discussion with group members,

ii. Direct and close supervision improves productivity of the group,

iii. Develops professional relationship among group members,

iv. Leader’s main focus is to achieve maximum efficiency.

Disadvantages of Autocratic Leadership:

  1. Autocratic style of decision-making may demoralise or frustrate followers,
  2. Followers may not cooperate with leader due to his ‘I am the boss attitude’,
  3. Lack of opportunities for initiative or self-development may affect performance,
  4. Lacks flexibility and creativity.

Suitability of Autocratic leadership:

This type of leadership is suitable where involvement of subordinates in decision-making is not required; activities require fast actions or work is being done by unskilled or untrained workforce.

2. Participative Leadership:

A Participative or Democratic leader is one who takes decisions only after consulting with group members.

The main characteristics of participative leadership are:

i. The decision-making power is shared with group members.

ii. All decisions or policies are finalised with the acceptance of all members in the group.

iii. Before starting any activity the group members are informed about the long term plans.

Traits of a Democratic Leader:

  1. Sets goals in consultation with group members
  2. Engages in vertical and two-way communication
  3. Acts as a friend to people around
  4. Participates in discussions with followers
  5. Allows interactions among superiors and subordinates

Advantages of Democratic Leadership:

i. Involvement of group members in decision making ensures effective decisions are taken.

ii. It builds loyalty, belongingness and sense of responsibility among subordinates.

iii. It changes employees’ attitude towards their jobs and the organization.

iv. Active participation in business activities increases employees’ confidence, creativity and morale.

Disadvantages of Democratic Leadership:

i. Decision-making under this system is very time-consuming. It may delay actions to be taken.

ii. Expectations of employees increase and they start feeling that it is their right to be consulted thus may feel frustrated if not consulted before taking decisions.

iii. Employees may resist any change or implementation of decision if their prior acceptance is not taken.

Suitability of Democratic Leadership:

This type of leadership is suitable when leaders are working with specialized professional or skilled workers; decisions require opinion of workers directly responsible for their implementation; to develop the managerial skills or increase creativity of workers etc.

3. Laissez Faire/Free Rein Leadership:

A free rein leader is the one who gives complete freedom to subordinates to plan and execute the work assigned in the manner most suitable to them. Free-rein leadership is also called as Laissez faire.

Laissez faire is derived from French, where laissesz meaning ‘to let’ and faire meaning ‘to do’. It means ‘No interference in the affairs of others’.

The characteristics of free rein leadership are:

i. Leaders provide opportunity to their subordinates to establish their respective goals and pave the way to achieve them.

ii. It allows workers to work as per their choice and competence.

iii. The leader plays the role of an observer who gives suggestions or advice whenever required.

iv. Leader avoids using of power as the decision making powers are delegated to subordinates.

v. Process leader provides support to subordinates to acquire information and resources required to accomplish the work assigned.

Traits of a Free Rein Leader:

  1. Allows freedom to work.
  2. Acts as a guide.
  3. Avoids use of power.

Advantages of Free Rein Leader:

  1. Independence to work gives high level of job satisfaction and increases morale of subordinates.
  2. Develops sense of responsibility.
  3. It provides opportunities for growth and development.
  4. It facilitates optimum utilisation of human resource.
  5. Quick decision making and fast implementation.

Disadvantages of Free Rein Leader:

i. Lack of appropriate knowledge and skills may affect efficiency.

ii. Subordinates may not be self-motivated which may mean delays in completion of work.

iii. Absence of leader’s direct involvement may lead to lack of direction,

iv. Subordinates may ignore organisational interest for personal interests,

v. Independent working may result in poor coordination.

Suitability of Free Rein Leadership:

Leaders may use free rein leadership style if the subordinates are:

i. Highly skilled, educated, experienced and trustworthy.

ii. Subordinates are self-driven and highly motivated to take up responsibility with pride.

iii. Managers do not possess skills to control work and subordinates.

Difference between Management and Organisation

On the basis of the various views expressed above, the main points of distinction between management and organisation may be summarised as under:


1. It is an executive function which is primarily concerned with the getting things done through others.

2. Planning, organisation, staffing, motivation, direction, co-ordination and control are all functions of management.

3. Management functions are executed by bringing into being an organisation.

4. It is like the entire body of a human being.

5. There are different levels in management viz. top, middle and lower.

6. Management uses the organisation determined by administration.


1. It is an organic function of putting together the different parts of an enterprise into working order. Organisation is one of the important functions of management.

2. Organisation is the framework or edifice of management.

3. It is like the nervous system of a human body. There are no such levels in organisation.

4. Organisation is the machine of management in its achievement of the ends determined by administration.

Difference between Administration and Management

The distinction between administration and management can be summarised as follows:


  1. Major policies are determined.
  2. Formal policy is down.
  3. Major decisions about enterprise are taken.
  4. Decisions are gene­rally influenced by Government Policy, Public opinion, So­cio-economic and religious factors.
  5. Group of owners take the decision.


  1. Achievement of major objectives laid down by the administration.
  2. To put policy into action.
  3. To see that major deci­sions are achieved by guiding and directing the operations. Their deci­sions are based upon the major framework laid down by the administra­tion.
  4. Scope for decision is limited as these decisions are influenced by values, beliefs and opinions.
  5. Group of employees with specialised know­ledge take action based on the decisions.

Comparison: Administration, Management and Organisation

Administration, Management and Organisation:

The terms “Administration”, “Management” and “Organisations” are frequently used in the management science. Therefore it is necessary to understand the exact meaning of the terms “Administration”, “Management” and “Organisation”.

1. Administration – Is the total of planning, organising, co-ordinating, motivating controlling, and operating work.

2. Management – Is regarded a generic function comprising the entire process of planning, policy making, co-ordination of efforts, controlling the operations, maintaining the discipline in order to accomplish the best possible results.

3. Organisation – An organisation is the combination of the necessary human beings, materials tools, equipment’s, working space, in systematic and effective correlation to accomplish some desired object.

Administration vs. Management:

There is often a terminological conflict between management and Administration.

The terminology conflict between two terms can be examined from three angles:

  1. Administration and management are separate functions
  2. Administration is a part of management
  3. Administration and management are same.

1. Administration and Management are Separate Functions:

According to Oliver Sheldon, William Spriegel, Milward, Lansberg, etc. administration is above management so far as different functions in the organisation are concerned. 

According to them, Administration is primarily concerned with the determination of corporate policies and objectives. Thus the main task of the Administration is to determine in advance the specific goals, and lay down the broad area within which the goals are to be achieved.

Management on the other hand is an executive function which is primarily concerned with carrying out broad policies laid down by the administration. In other words management is a function in an industry concerned in execution of policies within the limit set out in administration.

Thus, according to this school of thought administration determines the goals of the enterprise, whereas management executes them within limit set out by the administrations. Administrators think managers act. Administration is a top level activity and management is a lower level function.

2. Administration is a Part of Management:

According to Brech management is comprehensive term and administration is its part. “Management is generic name for the total process of executive control in industry or commerce.” In the words of Brech “Management is the comprehensive term embarrassing within its scope, the entire process of planning, policy making, co-ordinating of activities, so as to achieve the best possible result.

According to this school of thought management functions are divided into:

  1. Administrative management (Decision making function)
  2. Operative management (Executing the decisions)

Thus According to this school of thought Administration (planning & policy making) is also part of management.

3. Management and Administration are the Same:

The third view point is that, there is no distinction between the terms “Management” and “Administration”. The term management is used for higher executive functions like determination of policies, planning, organising and controlling in the business circles, while the term “Administration” is used for the same set of functions in the Government circles. So there no difference between these two terms and they are often used interchangeably.

In order to do away the controversy, we can classify management into (i) administrative management and (ii) operative management. Administrative management is primarily concerned with laying down policies, and determination of goals, whereas operative management is concerned with the implementation of the policies for the achievement of the goals. But both these functions i.e. framing of policies and executing them are performed by the same group of individuals known as managers.

Every manager has to perform the dual function simultaneously viz., thinking and doing functions. In general, it can be said that people at the top spend more time in discharging administrative functions, while people at the lower level pay more attention to performing routine activities.

In other words top managements perform more administrative functions and less management functions. Whereas middle and lower managements have to perform more management functions and less administrative functions.

The distinction between Administration and Management:


1. Meaning – Administration is primarily concerned with the determination of corporate policies and objectives.

2. Objectives – Administrations sets the objectives of the enterprise

3. Implementation of policies – Administration is not directly concerned with the implementation of policies

4. Authority – Entire authorities of business enterprise are vested with administration

5. Direction of human efforts – It is not actively concerned with direction of human efforts in the execution of plans or policies

6. Functions – It performance planning and organising functions.

7. Managerial Level – Administration is related to top level management.

8. Decision making – It makes over all decisions of the enterprise.

9. Skill – More Administrative skill is involved in Administration.

10. Use of Terms – The term Administration is used mostly in Government or public sector


1. Meaning – Management is function in an industry concerned in execution of policies within the limit set out by the Administration.

2. Objectives – Whereas management strive to achieve these objectives.

3. Implementation of policies – Implementation of policies framed by administration is the main job of management

4. Authority – Whereas management is vested with delegated authority.

5. Direction of human efforts – It is mainly concerned with the direction of human efforts in the execution of the plans and policies.

6. Functions – Whereas management performs motivating and controlling functions.

7. Managerial Level – Whereas management is concerned with middle and lower level management.

8. Decision making – Management makes routine decisions.

9. Skill – Whereas more technical skill is involved in management.

10. Use of terms – The term management is mostly used in the business or industrial sector.

The distinction between management and Administration may be of academic interest, but in practical life this distinction seems superfluous.

The distinction between Management and Organisation:


1. Meaning – Management is an executive function which is mainly concerned the getting things done with others

2. Functions – Management performs planning, organisation, co-ordination & control functions.

3. Levels – There are different levels in management viz., top, middle and lower level management

4. Nature – It is like entire body of a human being.


1. Meaning – Organisation is concerned with logical arrangement of men and materials for the accomplishment of the work.

2. Functions – Organisation is one of the important functions of management.

3. Levels – There is no such level in organisation.

4. Nature – It is like the nervous system of a human body.

To conclude administration decides what is to be done and when it is to be done. Management direct as to how it should be done, while organisation consists of arrangement as to who should do it.

Management Vs Administration

Management versus Administration:

1. Management and Administration as Synonyms:

There are some writers who held the view that the two terms viz. – management and administration are synonyms and there is no difference between these terms. Henry Fayol makes no distinction between the two terms.

A variant of this view has been that management refers to skill used for running a business enterprise and administration refers to skill required for running government departments and non-profit, charitable institutions. In fact, the term administration is used for higher executive functions in government circles while term management is used for same functions in business world. This viewpoint is endorsed by William Newman and Peter Drucker.

2. Not Synonyms:

There are however others who feel that they are not synonyms and have different meaning.

In this regard, following views may be noted:

View One – Administration is Policy-Making but Management is Policy Implementation:

Administration is ‘determining the policies’ of an enterprise whereas management is to carry out the policies laid down by administrative group.

Thus, the differences are:

(a) Administration relates to policy-making and goal determination

(b) Management relates to execution of policies

(c) Policy-making and hence administration is a top-level function

(d) Execution and hence management is a lower-level function.

Distinguishing Administration and Management – Views of Some Experts in Brief:

1. Oliver Sheldon:

i. Administration is determination of corporate policy’ & setting up ‘structure’ of organization

ii. Management is execution of policy

2. William Spriegal:

  1. Administration – a ‘determinative function’
  2. Management – an ‘executive function’

3. G.E. MiIward:

  1. Administration – a ‘thinking function’
  2. Management – a ‘doing function’

Ordway Tead and Leffingmen & Robinson have also supported this view.

Distinguishing Administration and Management:


  1. Nature – A Thinking function
  2. Policy and objectives – Determination
  3. Execution & achievement of objectives – Not directly involved
  4. Main functions – Planning, Organizing, Staffing
  5. Levels – Top Level executives (e.g. Owners/Board of Directors)
  6. Type of Knowledge – Administrative Ability
  7. Type of decisions – What and when to do


  1. Nature – A Doing function
  2. Policy and objectives – Implementation or Execution
  3. Execution & achievement of objectives – Directly involved
  4. Main functions – Direction, Motivation, Control
  5. Levels – Middle and Lower Level executives e.g. Manager, Supervisor & Workers
  6. Type of Knowledge – Managerial and Technical Ability
  7. Type of decisions – Who should do and how to do

View Two – Management includes Administration:

Brech subscribes to this view. He uses management as an all- inclusive function and administration is part of management. Here, management includes both thinking function as well as executive function whereas administration is ‘carrying out’ the objectives lay down by management that is, executive function.

Difference Between Management and Leadership

Leadership and management are not the same.

The following point highlights the differences between the two:


1. Concept: Broader concept and includes leadership

2. Purpose: Management aims at accomplishment of organizational goals.

3. Functions: It is planning, organizing, directing and controlling the organizational activities.

4. Inter-Change- Ability: Good managers are normally good leaders. Managers may carry out the functions of leaders also.

5. Formal Structure: Managers belong to the organizational hierarchy. They manage structured groups of people.

6. Followership: Since managers are part of formal hierarchy, they act as managers whether or not subordinates like them.

7. Focus of Attention: Management is a process of getting things done. It is more of a procedure and result-oriented approach.

8. Repetitiveness: Managerial functions are repetitive in nature. Managers perform the same functions again and again.

9. Interaction: A manager does not interact with subordinates in person.

10. Nature: Management is directive in nature. It directs people to behave in a specific way.

11. Force: It is a compelling force.


1. Concept: It is a part of management

2. Purpose: It may or may not attain organizational goals. It can occur even outside the organisation.

3. Functions: It is influencing people’s behaviour to achieve a specific purpose.

4. Inter-Change- Ability: Good leaders need not necessarily be good managers. Leaders do not normally carry out the functions of managers.

5. Formal Structure: Leaders are not part of organizational hierarchy. They may even lead unstructured groups of people.

6. Followership: Individuals are accepted as leaders only if followers accept them as such. Leadership cannot exist without followership.

7. Focus of attention: Leadership is a process of influencing behaviour. The focus is more on human relations.

8. Repetitiveness: They carry innovative activities and inspire the followers for high level performance.

9. Interaction: Leaders personally interact with the followers.

10. Nature: Leadership is normally participative. It invites followers to participate in the decision-making process.

11. Force: It is a persuasive force.

Challenges Faced by Management in 21st Century

Management principles formulated long time back and the recent additions in them need to be deeply understood by organizations to be mature enough to face the challenges of the 21st century.

The search for better and more efficient ways of utilizing people’s knowledge and skills in providing services has become a must to handle challenges like:

  1. Globalization,
  2. Micro­electronic technology,
  3. Market changes,
  4. Lack of skilled employees and
  5. Increased expectations of customers.

1. Globalization:

Because of globalization, organizations seek to expand and search for new markets to remain competitive, increase profitability, find talents and reduce risks. However, globalization has a continuous influence on the basic issues of operation management; location strategies, supply-chain management, human resource issues, quality, and process strategies. 

Such challenge firstly requires establishing an explicit vision, mission, culture and goals. Those could be developed by excellent leaders having high knowledge to keep the performance of organization at high levels.

2. Micro-Electronic Technology:

Micro-electronic technology becomes widely used by successful competitive organizations to increase productivity and enhance the outcome results. It includes the use of automated manufacturing process, advanced telecommunication, internet, software, etc. High technology opens the door up to the global marketing and this requires innovative ideas to cope with such change and to minimize costs. It also helps communicate more effectively with internal corporation and external market and customers.

3. Lack of Skills:

Lack of skills is another challenge facing organizations. It becomes harder and harder to find talented and experienced people. That is because other organizations take prior precautions to retain the skilled employees by applying motivation and empowerment theories to secure their loyalty and job satisfaction.

4. Market Changes:

Coping with continuous rapid changes in marketplace and the need to find new ways in anticipating changes are as challenging as they ever were. For example, current global financial crisis is considered a significant change which requires innovative enlightened management skills to adapt it. 

Reshaping the organizational structures, strategic merging with other organizations, searching for new markets and reducing overhead costs are some of the initial solutions which can be implemented to cope with such change.

5. Power-Added Manager – New Concept Arises:

Power-added managers are considered the strategic leaders of an organization who formulate and drive through visions which are innovative and creative. They need exceptional competence and experience in relation to both knowledge and people to face different contexts, cultures and communities. 

Knowledge management, social acumen and global orientation are the three areas of competence which characterise the power-added managers.

They make effective use of technology and social networks to elicit the necessary knowledge for creativity and innovation. Such managers are the strategic leaders for the organization who are really mature to meet the challenges of the 21 century.

6. Motivation – The Way Forward:

Since it is a big challenge to retain the highly skilled employees especially in view of the strong competition from other organizations, then attractive motivation measures should be implemented to adapt the changes in culture. Managers should have better understanding of what motivates the employees. 

Rewards, recognition and incentive programmes can positively affect performance and interest with the organization. Leaders should play an active role in motivating the employees to share their knowledge and ideas within the organization.

7. Empowerment – The Road to Success:

Nowadays, Empowerment is another key to keep the organizational successful. Making decisions becomes more complex than before, that is why asking the employees to share the decision is a vital and a strategic tool to secure the most appropriate decision to be made. Researchers have concluded that employee’s participation in decisions has at least a moderately positive affect on job satisfaction and productivity.

8. HR Departments – Call for a New Role:

Recruiting the right people for the right jobs and training them to improve performance is another challenge for HR departments in light of the lack of skills and the market huge demand. 

HR departments play now more significant roles than before, however, they need to develop new roles and agenda to deliver organizational excellence such as creating partnering with senior managers and becoming agents of continuous transformation and shaping a culture to improve the organization capacity for change.

Trends and Issues of Management

Recent Trends and Issues in Management:

1. Work-Force Diversity:

Employees in an organisation are heterogeneous in terms of gender, race, ethnicity etc.

2. Ethics:

Concern over perceived decline in ethical standards is being addressed at two levels

  1. Ethics education in college curriculum
  2. Organisations creating code of ethics, introducing ethics training programs etc.

3. Stimulating Innovation and Change:

Managers now confront an environment in which change is taking place at an unprecedented rate, new competitors emerge overnight and old ones disappear through mergers, acquisitions or by failing to keep up with the changing market place.

Constant innovations’ in computer and telecommunications technology combined with globalisation of product and financial markets make the earlier management principles and technique out dated. 

There is a need for organisations to be flexible, able to respond quickly and to be led by managers who can challenge conventional wisdom and effectively enact massive and revolutionary changes.

The need for innovation and change is requiring many organisations re-invent themselves.

4. Total Quality Management (TQM):

A philosophy of management that is driven by customer needs and expectations. It was inspired by US quality expert W. Edwards Deming.

Salient features of TQM are:

(a) Intense focus on customer (both internal and external customer).

(b) Concern for continuous improvement (Kaizen).

(c) Improvement in the quality of everything the organisation does.

(d) Accurate measurement – TQM uses SQC techniques to measure every critical variable in the organisation’s operations.

(e) Empowerment of Employees – Involve people on the line to improve the process. TQM enables manufacture of high-quality products at low-cost. Many basic components of TQM are-quality control groups, process improvement, team work, improved supplier relations and listening to consumer’s needs and wants.

5. Re-Engineering:

(Term created by MIT computer science professor Michael Hammer) A radical redesign of all or part of a company’s work processes to improve productivity and financial performance.

It is a procedure in which traditional assumptions and approaches are questioned and work activities radically changed and redesigned.

6. Empowerment and Teams:

Increasing the decision making discretion of workers. Managers, recognising that they can often improve quality, productivity and employee commitment by redesigning jobs and letting individual workers and work teams make job-related decisions. This process is known as empowering employees.

7. The Bimodal Workforce:

Employees tend to perform either low-skilled service jobs for near- minimum wage or high-skilled well-paying jobs. Most organisations have human resource practices well designed to keep and motivate well-paid employees and highly skilled worker. The low-skilled workers are paid very low wages and managers have a major challenge of how to motivate them.

8. Downsizing:

“Organisational structuring efforts in which individuals are laid off from their jobs”. In US about 85% of “Fortune 1000” companies have downsized their white collared workforce in recent years. The trend of downsizing (sometimes called right sizing, reduction in workforce or restructuring) will continue to impact managers and organisations for a period of time in future also.

Downsizing efforts create tremendous anxiety both for those employees who are let go and those remaining in the organisation. The same amount of work will have to be done by lesser number of people.

9. Contingent Workers:

“Part-time, temporary or freelance employees” since 1980. The number of contingent workers has grown in US three times faster than the labour force as a whole. (It may be as, high as 30 to 50% of the workforce). Similar trend is existing in Indian firms also.

Managing the contingent workforce has its own special set of challenges. Treating these employees fairly and flexibly is the key. In fact keeping the entire workforce motivated, creatively involved and committed to doing a good job is the real work of today’s and future managers.

Management in Future

Management in future is likely to be even more dynamic and o challenging to meet the complicated and frequent changes in the environment variables in the next couple of decades. It will be characterized by much greater uses of operation research (O.R.), systems analysis and the computer sciences. These techniques will help the management in better organising, communicating, leading, motivating and controlling. It will lead to effective management.

Big growth in multinational operations, more flexible and elastic organization structure, fast-changing technological, economic and social environment and the increasing complications in decision making, all these will largely influence the future managerial job and managerial world. Management education and management development will acquire vital importance in a dynamic environment.

The manager of the future will have to bring management of change. The managerial environment in the future will be changing so fast that outstanding solution to the problems in the past may prove to be utter failures in the present or in the near future. The future is to be regarded as an opportunity, not a problem.

The change is the necessity of life. It means growth. It will certainly pose varied and complicated problems. Management in future through adequate planning and control can meet the challenges of the change involving opportunities as well as uncertainties and risks. Effective management of change can establish cordial relationship with its internal as well as external environment.

Present and future environment will be dominated by fast technological changes, material and power shortages, problems of pollution, problems of consumerism, worldwide inflation and new innovations in organization/management. Managers will be struggling for the solutions of these problems and will be preparing themselves to meet these challenges and new tasks.

Basic Trends Influencing Management in Future

There are six fundamental trends affecting management in the future in the next couple of decades.

1. Shift from Industrial to Service Economy:

Most countries were agrarian for many centuries till the advent of industrial revolution. By 1930 many of the industrialized countries like U.K., U.S.A., Germany and Japan had already moved from industrial economy to a service economy. 

In 1950 service workers were about 50% of the total labour force, by 1980 about 70% of labour force is in the service area and at present 80% (eight workers out of every ten) have moved into service sector in all these industrial countries.

In India and many other developing countries, the shift from agrarian economy to industrial economy and then to service economy is likely to take place probably within one or two generations.

In a particular service economy one may conic across the following developments:

(a) Acute shortage of able managerial talents specifically at the lower levels as the service economy grows.

(b) Decreasing rate of productivity growth in a service economy.

(c) Rising number of white collar workers who are more technically and professionally qualified e.g. Accounting, Computer programming, O.R. Analysts, Statisticians, Economists etc.

(d) More decentralized operations as service work deals with ideas and information, i.e., intellectual labour.

(e) Increasing sub-urban and rural living, bringing change in the character of bigger cities.

2. Emergence of Knowledge Society:

A knowledge society is one in which majority of workers perform work based on knowledge rather than on merely physical manual work. Knowledge takes the place of chief human factor in production. 

Ever-expanding educational facilities alone can give knowledge to workers. Industry will be brought very close to higher educational institutions. Intellectual labour will naturally demand internal motivation from management so that their high-level needs can be satisfied.

3. Emergence of Socially-Concerned Humanistic Society:

In Service or Knowledge Society one has reasonable satisfaction of all economic wants. They seek for good working conditions and better standard of living. The need-hierarchy of Maslow properly explains the increasing demand of people for a better quality of life. 

Employees in future will ask for greater autonomy and participation at work. Consumers will demand better quality of goods at reasonable prices. Citizens will need freedom from air, water and food pollution.

4. Long-Range Outlook:

Service economy means slower rate productivity growth or even no growth. Management in future must concentrate on long-term profit rather than on short-term gains. It means more stress on strategic planning.

5. Innovations and Research & Development (R &D):

Management will have to recognize importance of innovations and investment in research and development. This investment in R and D should be ever-increasing to reap the fruits of better technology.

6. Motivation of Work:

Management will have to create congenial environment to provide internal motivation at work so as to seek the willing co-operation of employees.

Management has already become and will continue to be, the central activity of modern society. We finish with a modification of Drucker’s famous statement and assert that ‘management will be what the future world will be all about.’

Frequently Asked Questions

What is Management Introduction?

There’s no doubt that the world has changed, is changing, and continues to change. The dynamic nature of today’s organizations means both rewards and challenges for those individual who will be managing those organizations. Management is a dynamic discipline and a course pack on the subject must undergo significant changes to prepare you to manage under these conditions.

Management is the organizational process that aids us in creating a service or product from the raw materials we have at hand. It is the sum of the input processes that allow us to mold something useful from what otherwise is a disarray of human resources and raw components.

The output of this controlled processing creates a valuable product or service, which someone (a customer) is generally willing to pay for. Simply stated, the manager’s job is to help all these processes run smoothly, and to address the roadblocks to successful output.

Management is universal in the modern industrial world and there is no substitute for good management. It makes human efforts more productive and brings better technology, products and services to our society. It is a crucial economic resource and a life-giving element in business.

Without proper management, the resources of production (men, machines and materials) cannot be converted into production. Thus management is a vital function concerned with all aspects of the working of an organization.

Management is a must to accomplish desired goals through group action. It is essential to convert the disorganized resources of men, machines, materials, and methods into a useful and effective enterprise. Thus management is the function of getting things done through people and directing the efforts of individuals towards a common objective.

What do you Mean by Management?

According to Harold Koontz and Heinz Weihrich, “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.”

In other words, “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.”

What is Management and its Importance? 

Management is a universally necessary function. It is essential for all kinds of organisations, whether they be business organisations or non-business organisations. This is so because every organisation requires the making of decisions, the coordinating of activities, the handling of people, and evaluating the performance directed towards its objectives. This task for the organisation is performed by that responsible person called the Manager. 

He brings the principal resource – human talent into combination with non-human resources, viz., machines, materials and money. Every organisation therefore has managers. They may be called supervisors, directors, superintendents, agency chiefs, or foremen, but managers, are present. In other words, management takes place at all levels in the organisational hierarchy. Every manager performs essentially the same functions whether he belongs to the top or middle or first-line management. 

The only difference is in the magnitude of the task and the scope and degree of the authority. Qualified managers, therefore, are important both to their firms and to the future of society. They are so important that high quality management is a firm’s single most important resource.   

What are the 6 Importance of Management?

The six importance of management are as follows:

1. It Helps in Achieving Group Goals:

It arranges the factors of production, assembles and organizes the resources, integrates the resources in effective manner to achieve goals. It directs group efforts towards achievement of pre-determined goals. By defining objective of organization clearly there would be no wastage of time, money and effort. Management converts disorganized resources of men, machines, money etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that enterprise work towards attainment of goals.

2. Optimum Utilization of Resources:

Management utilizes all the physical & human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. 

It makes use of experts, professional and these services leads to use of their skills, knowledge, and proper utilization and avoids wastage. If employees and machines are producing its maximum there is no under employment of any resources.

3. Reduces Costs:

It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction.

4. Establishes Sound Organization:

No overlapping of efforts (smooth and coordinated functions). To establish sound organizational structure is one of the objective of management which is in tune with objective of organization and for fulfillment of this, it establishes effective authority & responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who are subordinates. Management fills up various positions with right persons, having right skills, training and qualification. All jobs should be cleared to everyone.

5. Establishes Equilibrium:

It enables the organization to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organization must be changed. So it adapts organization to changing demand of market / changing needs of societies. It is responsible for growth and survival of organization.

6. Essentials for Prosperity of Society:

Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. 

It improves standard of living. It increases the profit which is beneficial to business and society will get maximum output at minimum cost by creating employment opportunities which generate income in hands. Organization comes with new products and researches beneficial for society.

Multiple Choice Questions

1. Management is essential in

  1. Formal group
  2. Business
  3. Government
  4. Organised group effort

Ans. d

2. Management, as a distinct institution, is:

  1. Very old
  2. The outcome of Industrial Revolution
  3. Hardly a century old
  4. As old as civilization

Ans. c

3. Literally, management means managing men:

  1. Tactfully
  2. Carefully
  3. Properly
  4. Strictly

Ans. a

4. Management, in essence, is the management of:

  1. Tasks
  2. Men
  3. Things
  4. Activities

Ans. b

5. Management is needed at:

  1. Operative level
  2. Middle level
  3. Top level
  4.  All levels.

Ans. d

6. Management is:

  1. A science
  2. An art
  3. An art as well as science
  4. None of these

Ans. c

7. Management is:

  1. Pure science
  2. Social science
  3. Natural science
  4. None of these

Ans. b

8. Who pioneered the idea of management as a profession?

  1. Henry Fayol
  2. F.W. Taylor
  3. Mary Parker Follet
  4. Peter F. Druker

Ans. c

9. In India, professionalisation of management is slow because of:

  1. Family-based Indian business
  2. Psychological resistance
  3. Both of these reasons
  4. None of these reasons.

Ans. c

10. Administration is largely the task of:

  1. Top management
  2. Operative Management
  3. Middle Management
  4. Lower Management

Ans. a

11. How many branches of management are there?

  1. Four
  2. Five
  3. Six
  4. Seven

Ans. d

12. Fayol has used the term ‘elements’ of management to denote its:

  1. Scope
  2. Nature
  3. Functions
  4. Principles

Ans. c

13. Management is:

  1. an art.
  2. a science,
  3. both art and science.
  4.  neither

Ans. (c)

14. The following is not an objective of management:

  1. Earning profits
  2. Growth of the organisation
  3. Providing employment
  4. Policy making

Ans. (d)

15. Policy formulation is the function of:

  1. Top level managers.
  2. Middle level managers,
  3. Operational management.
  4. All of the above

Ans. (a)

16. Functional approach to Management was developed by

  1. Koontz
  2. Taylor
  3. Henry Fayol
  4. None of these

Ans. c

17. Delegation of authority is an element of:

  1. Controlling
  2. Coordinating
  3. Staffing
  4. Organizing

Ans. d

18. Which of the following management functions are closely related:

  1. Planning & Organizing
  2. Planning & Staffing
  3. Planning & Control
  4. Staffing & Control

Ans. c

19. The planning function of management is performed by

  1. Top Management
  2. Middle Management
  3. Lower Management
  4. All of these

Ans. d

20. The directing function of management embraces the activities of

  1. Providing Leadership
  2. Supervising subordinates
  3. Issuing order to subordinates
  4. Guiding and teaching the subordinates
  5. All of these

Ans. e

21. MBO stands for:

  1. Main business organisation
  2. Master by organisation
  3. Management by objectives
  4. None of these

Ans. c

22. How many subordinates a manager can supervise, is determined by the principle of

  1. Span of control
  2. Scalar chain
  3. Unity of efforts

Ans. a

23. According to Whom Administration and Management to be same

  1. Terry
  2. P. F. Drucker
  3. H. Fayol
  4. None of these

Ans. d

24. Who said “Management is What Manager does”

  1. Louis Allen
  2. H. Fayol
  3. Elton Mayo
  4. Freud

Ans. a

25. Original policies are formulated by_________

  1. Top level Management
  2. Middle level management
  3. Lower level Management
  4. None of the above

Ans. a

26. Who put forth this statement that “Management is an operational process that can be dissected into five essential managerial functions?”

  1. Koontz and Weihrich
  2. Koontz and O’Donnell
  3. W.F. Glueck
  4. Tom Peters

Ans. b

27. Who was the one who led the second school of thought to explain what administration means in relation to management?

  1. Florence and Tead
  2. Spreigel and Lansburgh
  3. Henry Fayol
  4. Brech

Ans. d

28. Which of the following functions is NOT a part of management functions under any school of man­agement thought?

  1. Controlling
  2. Planning
  3. Participating
  4. Directing

Ans. c

29. Which of the following is NOT a reason for management to be viewed as a very significant tool?

  1. It ensures that every person is loyal toward the organization
  2. It facilitates the accomplishment of goals of an organization with limited resources
  3. It ensures continuity in the organization
  4. It ensures smooth sailing in case of any trouble faced in an organization

Ans. a

30. Which of the following is NOT true about management?

  1. Management is an inexact science
  2. Management is situational in nature
  3. Management is only an art
  4. Management is a social process

Ans. c

31. According to Tom Peters, management explains:

  1. How to utilize the economic resources available productively
  2. How activities in an organization can be controlled through simple support systems
  3. How to deal with the chaos and strain of management
  4. How to achieve the given results set forth by an organization

Ans. b

32. The use of different disciplines implies that management is:

  1. Inter-disciplinary
  2. A profession
  3. An art and a science
  4. Situational

Ans. a

33. Who said that “Management is broader and it includes administration?”

  1. Argyris
  2. Brech
  3. Henry Fayol
  4. Oliver Sheldon

Ans. b

34. What can be concluded about management after reading the statement “Management calls for a professional approach to manage situations?”

  1. Management is a social process
  2. Management is an art
  3. Management is a profession
  4. Management is complex

Ans. d