PRINCIPLES

OF
MANAGEMENT

BUS 611

2012/2013
 BUS 611 Principles of Management

bankrupt because managers fail in their attempt

CHAPTER 1
to cope with the change.
BASIC PRINCIPLES OF
2 Management as “coordination”:
MANAGEMENT
Donally, Gibson and Ivancevich also support the

MANAGEMENT DEFINED view of management as a process but their stress

is more on co-ordination. According to them,
Perceptive of Managers: “Management is a process by which individual and
group effort is coordinated towards group goals”.
There are many definitions of management but In order to achieve goals, coordination is
most perceptive managers are convinced that it is essential and management involves securing and
an organized effort of people whose purpose is to maintaining this coordination. This coordination
achieve the objectives and goals of an organization. effort is also stressed in the definition of Koontz
Of course, it is not that simple. To gain a better and O’Donnell. According to them, “Management
understanding of management, let’s review the is a process of designing and maintaining an
ideas and views expressed by academicians and environment in which, individuals, working
practitioners. together in groups efficiently and effectively
accomplish group goals”.
1 Management as a “Process”:

3 Management as a “Function”:
McFarland defines management as “A process by
which managers create, direct, maintain and There are those who view management as a
operate purposive organization through function rather than a process. Dunn, Stephens
systematic, coordinated, cooperative human and Kelly contend that “Management is a role
efforts”. which includes a set of duties, responsibilities, and
An important term in this definition is “Process”. relationships-involved in work organizations”.
This term emphasis the dynamic or ongoing These duties and responsibilities constitute the
nature of management, as an activity over function a manager performs. The duties and
varying span of time. The dynamic nature implies responsibilities a manager performs are quite
that change is a reality of organizational life. In different from those performed by managerial
managing organizations, managers create employees.
changes, adopt organizations to changes and
implement changes successfully in their Management is getting things done through
organizations. Businesses fail and become other people:

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 BUS 611 Principles of Management

A simple definition of management that is often written that businessmen would accept and
quoted and sounds very simple: According to this practice and academicians would teach.
definition, managers do not do things they get Ultimately they came up with the fallowing
other people to do things. If managing is an
definition. No individual is identified with this
individual ability to get things done, then it is not
definition. The definition reads;
a problem. We can plan and perform things
according to our own convenience and interests. “Management is guiding human and physical
When somebody else is involved and wants to resources into a dynamic organization
get things done through them, there is difficulty.
units that attain their objectives to the
All sorts of problems arise; personalities come
satisfaction of those served and with the
into contact and conflict.
high degree of moral and sense of
Interpersonal problems crop up. We have to attainment on the part of those rendering
understand the behavior of other people and must the services” .
have knowledge as to how to motivate them in
order to get things done through them. We have to Management is a vital aspect of the economic

consider the conveniences and interest of others life of man, which is an organized group activity.
also in planning and implementing things. A central directing and controlling agency is
indispensable for a business concern. The
In getting things done through others, people have
productive resources – material, labor, capital
to be coaxed, they have to be shown, they have to
etc. are entrusted to the organizing skill,
be inspired, they have to be motivated and this is
administrative ability and enterprising initiative
what management means. These activities are
performed not only by the people at the top but of the management. Thus, management

from the chairman of the board to the front line provides leadership to a business enterprise.
supervisors and foremen. They use the above Without able managers and effective
mentioned methods to get things done through managerial leadership the resources of
other people. production remain merely resources and never
become production. Under competitive
A comprehensive definition of Management: economy and ever-changing environment the
quality and performance of managers
In mid 1940s, academic people from various
determine both the survival as well as success
business schools in the United States gathered
of any business enterprise. Management
together with the sole purpose of deciding
occupies such an important place in the modern
whether a definition of management could be

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 BUS 611 Principles of Management

world that the welfare of the people and the controlling utilizing both in each science and art
destiny of the country are very much influenced and followed in order to accomplish
by it. predetermined objectives of the organization”.

“Management is the process of getting things Necessity of Management:

done through the efforts of other people in order
(1) Management is an essential activity of all
to achieve the predetermined objectives of
organizational level (Low, middle, and upper
organization”.
level)
Management may also be defined as:
“The process by which execution of given
purpose put into operation and supervise”.

A concise statement:
“The function of executive leadership
anywhere”.

Another statement may be defined as:

“A technique by which the purpose and
objectives of particular human group are
determined, defined, clarified and completed”

From business Point of view:

“Management is the art of securing maximum

results with the minimum of efforts so as to get
maximum prosperity and happiness for both
employer and employee and give public the best
possible service”.

Complete definition of management:

“Management is a distinct process consisting of
planning, organizing, staffing, leading and
MANAGER

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 BUS 611 Principles of Management

A Manager is also known as a leader and coupled with technical skills, human skills and
administrator. A Manager is a person who under knowledge base, are important ingredients in
take the tasks and functions of managing at any organizational performance.
level, in any kind of enterprise.
4. Design Skills:

Managerial Skills: It is the ability to solve the problems

in ways that will benefit the
There are four skills of managers are expected
enterprise. Managers must be able to
to have ability of:
solve the problems.

1 Technical skills:
The Skills vary at different levels:
Technical skills that reflect both an
 Top management - Concept and design
understanding of, and a proficiency in a
Skills.
specialized field. For example, a manager
 Middle Management - Human Skills
may have technical skills in accounting,
 Supervisors - Technical skills.
finance, engineering, manufacturing, or
computer science.
THE FUNCTIONS OF A MANAGER
2 Human Skills:
There are five functions of managers: Planning,

Human skills are skills associated with Organizing, Staffing, Leading, and Controlling.

manager’s ability to work well with others, The functions of managers provide a useful

both as a member of a group and as a leader structure for organizing management

who gets things done through other. knowledge.

1 Planning:
3. Conceptual Skills:
Conceptual skills related to the ability to Planning involves selecting missions and
visualize the organization as a whole, discern objectives and the action to achieve them
interrelationships among organizational requires decision making; choosing future
parts, and understand how the organization courses of action from among
fits into the wider context of the industry, alternatives. There are five types of
community, and world. Conceptual skills, planning:

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 BUS 611 Principles of Management

1. Missions and objectives.

4. Leading
2. Strategies and polices.
3. Procedures and rules. Leading is influence people so that they will
4. Programs. contribute to organization and group goals.
5. Budgets. All managers would agree that most
problems arises from peoples desires and

2 Organizing problems , their behavior as individuals and

in groups and that effective managers also
Organizing is the part of managing that need to be effective leaders. Leading
involves establishing an intentional structure involves motivation, leadership styles and
of roles for people to fill in an organization. approaches and communications.
The purpose of an organization structure is to
creating an environment helpful for human 5. Controlling

performance. It is then management tools and Controlling is measuring and correcting

not an end. Although the structure must individuals and organizational

define the task to be done, the rules so performance. It involves measuring

established must also be designed in the light performance against goals and plans,

of the abilities and motivations of the people showing where the deviations from

available designing an effective organization standards exit and helping to correct

structure is not an easy managerial task. Many them. In short controlling facilitates the

problems arises in making structures fit accomplishment of plans. Control activity

situations. generally relate to the measurement of

achievement. Some means of controlling
like the budget for expenses, inspection,
3. Staffing
record of labors-hours lost, are generally
Staffing involves filling and keeping filled, familiar. Each shows whether plans are
the positions in the organization. This is working out.
done by identifying the work force
CONCEPTS OF MANAGEMENT
requirement inventorying the people
available and recruiting, selecting, placing, Management as a Discipline
promoting, appraising, planning the
Discipline refers to a field of study having well-
careers, compensating and training.

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 BUS 611 Principles of Management

defined concepts and principles. When we refer considered as a whole. Thus, management as a
to management as a discipline, we include in it process includes various activities and sub
the various relevant concepts and principles, activities
the knowledge of which aids in managing

Management as a Science
Management as a Group of People Science is a systematic body of knowledge
We refer to management as a group of people pertaining to a specific field of study that
in which we include all those personnel who contains general facts which explains a
perform managerial functions in organizations. phenomenon. It establishes the cause and
effect of relationships between two or more
We refer to two distinct classes or groups of
variables and underlines the principles
personnel in the organization. In the first
governing their relationships. These principles
category, we include all those persons who are
are developed through scientific method of
responsible for managerial functions and in the
observation and verification through testing.
second category, we include non-managerial
personnel.

Science is characterized by following main

features:
Management as a process
1 Universally acceptance principles – Scientific
In studying management discipline, we
generally refer to management as a process. A principles represents basic truth about a
particular field of enquiry. These principles
process can simply be defined s systematic
may be applied in all situations, at all time &
method of handling activates. However, the
at all places.
management process can be treated as a
complex one which can be referred to as an Management also contains some
identifiable flow of information through fundamental principles which can be
interrelated stages of analysis directed towards applied universally like the Principle of Unity
the achievement of an objective or set of of Command i.e. one man, one boss. This
objective. It is a concept of dynamic rather than principle is applicable to all type of
static existence in which events and organization – business or non-business.
relationships must be seen as dynamic, 2 Experimentation & Observation – Scientific
continuous, and flexible, and as such, must be

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 BUS 611 Principles of Management

principles are derived through scientific time or any number of times i.e. they stand
investigation & researching i.e. they are the test of time. Each time these tests will
based on logic. E.g. the principle that earth give same result. Moreover future events
goes round the sun has been scientifically can be predicted with reasonable accuracy
proved. Management principles are also by using scientific principles. E.g. H & O
2 2
based on scientific enquiry & observation
will always give H O.
and not only on the opinion of Henry Fayol. 2

They have been developed through

Principles of management can also be
experiments & practical experiences of
tested for validity. E.g. principle of unity of
large no. of managers. E.g. it is observed
command can be tested by comparing two
that fair remuneration to personal helps in
persons – one having single boss and one
creating a satisfied work force.
having 2 bosses. The performance of 1st
3 Cause & Effect Relationship – Principles of person will be better than 2nd.
science lay down cause and effect
relationship between various variables. E.g.
It cannot be denied that management has a
when metals are heated, they are
systematic body of knowledge but it is not as
expanded. The cause is heating & result is
exact as that of other physical sciences like
expansion.
biology, physics, and chemistry etc. The main
The same is true for management;
reason for the inexactness of science of
therefore it also establishes cause and
management is that it deals with ‘human
effect relationship. E.g. lack of parity
beings’ and it is very difficult to predict their
(balance) between authority &
behavior accurately. Since it is a social process,
responsibility will lead to ineffectiveness. If
therefore it falls in the area of social sciences. It
you know the cause i.e. lack of balance, the
is a flexible science & that is why its theories
effect can be ascertained easily i.e. in
and principles may produce different results at
effectiveness. Similarly if workers are given
different times and therefore it is a behavioral
bonuses, fair wages they will work hard but
science. Ernest Dale has called it as a Soft
when not treated in fair and just manner,
Science.
reduces productivity of organization.

4 Test of Validity & Predictability – Validity of Management as an Art

scientific principles can be tested at any

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 BUS 611 Principles of Management

Art implies application of knowledge & skill to things based on his knowledge,
trying about desired results. An art may be experience and personality, that is why
defined as personalized application of general some managers are known as good
theoretical principles for achieving best possible managers; whereas others as bad.
results. Art has the following characteristics; c) Creativity: Every artist has an element
a) Practical Knowledge: Every art requires of creativity in line. That is why he aims
practical knowledge therefore learning of at producing something that has never
theory is not sufficient. It is very important existed before which requires
to know practical application of combination of intelligence &
theoretical principles. E.g. to become a imagination. Management is also
good painter, the person may not only be creative in nature like any other art. It
knowing different color and brushes but combines human and non-human
different designs, dimensions, situations resources in useful way so as to achieve
etc. to use them appropriately. A manager desired results. It tries to produce
can never be successful just by obtaining sweet music by combining chords in an
degree or diploma in management; he efficient manner.
must have also known how to apply d) Perfection through practice: Practice
various principles in real situations by makes a man perfect. Every artist
functioning in capacity of manager becomes more and more proficient
(experience). through constant practice. Similarly
b) Personal Skill: Although theoretical managers learn through an art of trial
base may be same for every artist, but and error initially but application of
each one has his own style and management principles over the years
approach towards his job. That is why makes them perfect in the job of
the level of success and quality of managing.
performance differs from one person to
another. E.g. there are several qualified
e) Goal-Oriented: Every art is result
painters but M.F. Husain is recognized
oriented as it seeks to achieve concrete
for his style. Similarly management as
results. In the same manner,
an art is also personalized. Every
management is also directed towards
manager has his own way of managing

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 BUS 611 Principles of Management

accomplishment of pre-determined Science teaches to ’know’ and art teaches to

goals. Managers use various resources ’do’. E.g. a person cannot become a good singer
like men, money, material, machinery & unless he has knowledge about various ragas &
methods to promote growth of an he also applies his personal skill in the art of
organization. singing. Same way it is not sufficient for
manager to first know the principles but he
Thus, we can say that management is an art
must also apply them in solving various
that requires application of certain principles. It
managerial problems that is why, science and
is also an art of the highest order because it
art are not mutually exclusive but they are
deals with molding the attitude and behavior of
complementary to each other (like tea and
people at work towards desired goals.
biscuit, bread and butter etc.).The old saying
that “Managers are Born” has been rejected in
Management as both Science and Art 
favor of “Managers are Made”. It has been
Management is both an art and a science. The
aptly remarked that management is the oldest
above mentioned points clearly reveal that
of art and youngest of science. To conclude, we
management combines features of both science
can say that science is the root and art is the
as well as art. It is considered as a science
fruit.
because it has an organized body of knowledge
which contains certain universal truth. It is
CHARACTERSTICS OR NATURE OF
called an art because managing requires certain
MANAGEMENT
skills which are personal possessions of
managers. Science provides the knowledge &
art deals with the application of knowledge and i. Management is Goal-Oriented: The

skills. success of any management activity is

accessed by its achievement of the
predetermined goals or objective.
A manager to be successful in his profession
Management is a purposeful activity. It is
must acquire the knowledge of science & the
a tool which helps use of human &
art of applying it. Therefore management is a
physical resources to fulfill the pre-
judicious blend of science as well as an art
determined goals. For example, the goal
because it proves the principles and the way
of an enterprise is maximum consumer
these principles are applied is a matter of art.
satisfaction by producing quality goods

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 BUS 611 Principles of Management

and at reasonable prices. This can be helps and directs various efforts towards
achieved by employing efficient persons a definite purpose. Thus clubs, hospitals,
and making better use of scarce political parties, colleges, hospitals,
resources. business firms all require management.
Whenever more than one person is
ii. Management integrates Human,
engaged in working for a common goal,
Physical and Financial Resources: In an
management is necessary. Whether it is
organization, human beings work with
a small business firm which may be
non-human resources like machines.
engaged in trading or a large firm like
iii. Materials, financial assets, buildings etc.
Tata Iron & Steel, management is
Management integrates human efforts
required everywhere irrespective of size
to those resources. It brings harmony
or type of activity.
among the human, physical and financial
vi. Management is a Group Activity:
resources.
Management is very much less
iv. Management is Continuous: concerned with individual’s efforts. It is
Management is an ongoing process. It more concerned with groups. It involves
involves continuous handling of the use of group effort to achieve
problems and issues. It is concerned with predetermined goal of management of
identifying the problem and taking ABC & Co. is good refers to a group of
appropriate steps to solve it. For persons managing the enterprise
achieving this target various policies
vii. Organized Activities: Management is a
have to be framed but this is not the
process of organized activities. Groups
end. Marketing and Advertising is also to
of people cannot be involved in the
be done. For this policies have to be
performance of activities without
again framed. Hence this is an ongoing
organized activities. Management comes
process.
into existence where a group of people
are involved in achieving a common

v. Management is all Pervasive: objective. The organized activities may

Management is required in all types of take a variety of forms ranging from a

organizations whether it is political, tightly structured organization to a

social, cultural or business because it loosely-knit organization.

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 BUS 611 Principles of Management

viii. Existence of Objectives: The existence of objectives achieved through them.

objectives is a basic criterion of every Working through people is interpreted in
human organization. The organizational terms of assigning activities to
objectives are the desired state of affairs subordinates.
which an organization attempts to xii. Multidisciplinary: Management is
realize. This realization of objectives is multidisciplinary because it includes
sought through the coordinated efforts knowledge/information from various
of the people constituting an disciplines- economics, statistics, math,
organization. psychology, sociology, ecology,
ix. Decision-making: Management process operations research, history, etc.
involves decision making at all levels. Management integrates the ideas and
Decision-making describes the process concepts taken from these disciplines
by which a course of action is selected as and presents newer concepts which can
the way to deal with a specific problem. be put into practice for managing the
If there is only one alternative, the organizations.
question of decision making does not xiii. Management is dynamic: Management
arise. The quality of alternatives which a has framed certain principles, which are
manger selects determines the flexible in nature and change with the
organization’s performance, and the changes in the environment in which an
future of the organization. organization exits.
x. Relationship among resources : The xiv. Relative, Not Absolute Principles:
essence of management is integration of Management principles are relative, not
various organizational resources. absolute, and they should be applied
Resources include money, machine, according to the need of the
materials, and people. Management is organization. A particular management
concerned with the proper utilization of principle has different strengths in
human resources which, in turn, utilize different conditions. Therefore,
other resources. principles should be applied according to
xi. Working with and through people : the prevailing conditions.
Management involves working with xv. Management: Science or Art:
people and getting organizational

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 BUS 611 Principles of Management

Management likes other practices-

The basic principles of Management include;
whether medicine, music composition,
or even accountancy- is an art. It is know-
1 Planning
how. Yet managers can work better by
2 Organizing
using the organized knowledge about
3 Controlling
management. It is this knowledge that
constitutes science. Thus, managing as PLANNING
practice is an art; the organized
knowledge underlying the practice may What is planning?

be referred to as science.
There are many definitions of planning.
xvi. Management as Profession: Planning may define as: According to Fayol
Management has been regarded as a -"The plan of action is, at one and the same
profession by many while many have time, the result envisaged, the line of action to
suggested that it has not achieved the be followed, the stages to go through, and the
status of a profession. Schein concluded methods to use. It is a kind of future picture
that by some criteria management is wherein proximate events are outlined with
indeed a profession, but by other criteria some distinctness...." Planning is deciding in
it is not. Today we can see many signs advance what is to be done. It involves the
that management is working towards selection of objectives, policies, procedures
increased professionalism. and programmes from among alternatives. A
xvii. Management is Universal: Management plan is a predetermined course of action to
is a universal phenomenon. However, achieve a specified goal. It is a statement of
management principles are not objectives to be achieved by certain means in
universally applicable but are to be the future. In short, it is a blueprint for action.
modified according to the needs of the
situation.

According to Louis A Allen -"Management

CHAPTER 2
planning involves the development of forecasts,
objectives, policies, programmes, procedures,
PRINCIPLES OF MANAGEMENT
schedules and budgets". According to Theo
Hayman -"Planning is deciding in advance what is

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 BUS 611 Principles of Management

to be done. When a manager plans, he projects a This concept and use in organized enterprise
course of action, for the future, attempting to which try to accomplishment of group
achieve a consistent, coordinated structure of purpose through deliberate cooperation.
operations aimed at the desired results".
2. THE PRAMACY OF PLANNING:
According to Koontz O’Donnell -"Planning is an Since managerial functions like organizing,
intellectual process, the conscious determination Staffing, Leading and controlling support to
of courses of action, the basing of decisions on the accomplishment of enterprise objectives,
purpose, acts and considered estimates". planning logically precedes or help the
accomplishment of all other managerial
Planning is the pre-selection of objectives and functions. Because Manager must plan on
outlines the action before starting any business. order to know what kinds of organization
relationship and personal qualifications are
Planning is selection of mission, objectives and needed, which method should be filed by
true strategies, polices programs and subordinates and what kind of control is to
procedure to achieve them. be applied. All the other Managerial
Planning is decision making in advance. We can functions must be planned if they are to be
also say that planning is “choosing the effective.
alternatives and making the decision is called
planning”. 3. THE PERVASIVENESS OF PLANNING:
Planning is the function of all Managers,
THE NATURE & PURPOS OF PLANNING: although the character and breadth of
The essential nature of planning can be defined planning will vary with each Managers
by dividing it into four Major aspects. authority and with nature of polices and
plans outlined by superiors. If Managers
are not allowed a certain degree of
discretion and planning responsibility they

1. THE CONTRIBUTION OF PLANNING TO are not truly Managers. If we recognize

PURPOSE AND OBJECTIVE: the pervasiveness of planning, we can

Every plan and all its supporting plans more easily understand why some people

should contribute accomplishment of the distinguish between the “manager” and

purpose and objectives of the enterprise. the “administrator” or “supervisor”,

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 BUS 611 Principles of Management

because of his or her authority or position market. Plan can even make it impossible to
in the organization, may do more achieve objects if they make enough people in
important planning than another, or the an organization this satisfied or unhappy.
planning of one may be more basic than
that of another and applicable to a large STEPS IN PLANNING
portion of the enterprise. However, all There are eight applicable steps in planning
managers from presidents to first level which should be followed by managers in
supervisors plan. Even the head of a road connection with major programs and in any
gang or a factory crew plans in a limited other through planning.
area under fairly
1. AWARENESS OF OPPERTUNITIES
4. THE CONTRIBUTION OF PLANNING TO
An awareness of opportunities in the
PURPOSE AND OBJECTIVE:
external environment as well as within the
Every plan and all its supporting plans
organization is the real starting point for
should contribute accomplishment of the
planning. All managers should take look at
purpose and objectives of the enterprise.
future opportunities and see them clearly
This concept can be used in organized
and completely. They should know where
enterprise which tries to accomplishment
they stand in light of their strengths and
of group purpose through deliberate
weakness, understand what problems they
cooperation.
wish to solve and why, and know what they

THE EFFIENCY OF PLANS expect to gain. Setting realistic objectives

Plans are efficient, if they achieve their purpose depends on this awareness.

at a reasonable cost, when cost is measured not i. About market

only in terms of times or money or production ii. About expected

but also in degree of individual and group competition

satisfaction. Many managers have followed iii. What customers wants

plans whose costs were greater than the iv. Awareness about their

revenue that could be obtained. For example, qualities and weakness

one airline acquired certain aircraft with costs

exceeding revenues. Companies have also tried 2. SETTING OBJECTIVES

to sell products that were unacceptable to the The second step in planning is to

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BUS 611 Principles of Management

establish or set objectives for the entire actions. The planner must usually make
enterprise and then for each subordinate preliminary examination alternative
work unit. Objectives specify the courses to accomplish the goal.
expected results and indicate the end
5. EVALUATING ALTERNATIVE COURSES
points of
After determining alternative courses
i. What is to be done.
and examining their strong and weak
ii. Where the primary emphasis is to
points, the next step is to evaluate the
be placed
alternatives. That which alternative will
iii. What is to be accomplished by the
give the best of meeting goals at the
network of strategies, policies,
lowest cost and highest profit in a given
procedures, rules, budgets and
period.
programs.

6. SELECTING A COURSE
3. DEVELOPING PREMISES
Selecting an alternative is the real
The third logical step in planning is to
point of decision making. This is the
establish planning premises. Such as
point at which the plan is adopted.
forecasts, applicable basic policies and
After identifying and evaluating
existing company plan. They are
alternative the manager has to
assumptions about the environment in
decide one best alternative or
which the plan is to be the carried out. It
several alternative courses of action.
is important for all the managers
involved in planning to agree on the 7. FORMULATING DERIVATIVE PLANS
premises. Forecasting is important in The seventh step in planning is
premising: What kind of markets will be formulating derivative plans. When a
there? What volume of sales? What decision is made next step is to
prices? What products? What technical formulate a supporting plan, such as to
developments? What cost? Etc. buy equipment, materials, hire and train
workers and develop a new product.
4. INDENTIFYING ALTERNATIVE COURSES
OF ACTION 8. NUBERISING PLANS BY MAKING
The forth step in planning is to search BUDGETS
and examined alternative courses of After decision making and formulating

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 BUS 611 Principles of Management

plans the final step in planning is to

numberise decision and plan by STEPS IN DECISION MAKING
converting them into budgets. The There are three steps in decision making:
overall budgets of an enterprise
represent the sum total of income and 1. THE SEARCH FOR ALTERNATIVES.
expenses with resulting profit. Budgets The first steps of decision making are to
are important thing in planning process. develop alternatives. There are almost
always alternatives to any course of action.

DECISION MAKING If we think of only one course of action,

Decision making is defined as the selection of clearly we have not thought hard enough.

course of action from among alternative. It is The ability to develop alternatives is often

the core of planning. A plan cannot be said to as important as being able to select

exist unless a decision has been made. correctly from among them. One of the

Managers sometimes see decision making as other hand ingenuity research and common

their central job because they must constantly sense will often unearth so many choices

choose what is to be done, who is to do it and that all of them cannot be evaluated. The

when, where and how it will be done. Decision manager needs help in this situation, and

making is the part of planning and everyone’s this help can be solved by decision making.

daily living.
2. EVALUATION OF ALTERNATIVES.
When an appropriate alternative has been
RATIONAL DECISION MAKING;
found, the next steps in planning one best
It is the rational decision making that goals
alternative to achieve the goals. There are
cannot be attain without action. People acting
three ways of evaluated decision making.
or deciding rationally are attempting to reach
some goal that cannot be attained without 3. SELECTING AN ALTERNATIVE
action. They must have a clear understanding of During the selection among the
alternatives. They must have ability and alternatives, managers can use three basic
information to analyze and evaluate approaches:
alternatives in order to achieve goals. Finally 1. Experience
they must have desire to come the best solution 2. Experimentations
by selecting alternative. 3. Research and analysis.

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 BUS 611 Principles of Management

means solving problems by first

BASES FOR SELECTING AMONG ALTERNATIVES comparing it. It is pencil and paper
Experimentation on how to select from approach to decision making.
among alternatives. Research and analysis
Reliance on past Choice made.
ORGANIZATION
a) EXPERIENCE Organization involves division of work among
Reliance on past experience plays a people whose efforts must be coordinate to
larger part in decision making to achieve specific objectives and to implement
some extent, experience is the best pre-determined strategies. Organization is the
teacher. The very fact that foundation upon which the whole structure of
managers have reached their management is built? It is the backbone of
position appears to justify their management. After the objectives of an
past decisions. Moreover, the enterprise are determined and the plan is
process of thinking problems Prepared, the next step in the management
through making decisions and process is to organize the activities of the
seeing programs succeed or fail. Enterprise to execute the plan and to attain the
objectives of the enterprise. The term
b) EXPERIMENTATION
Organization is given a variety of
One way of deciding among alternatives
interpretations. In any case, there are two
is to try one of them and see what
broad ways in which the term is used. In the
happens. Experimentation is often used
first sense, organization is understood as a
in scientific theory. The experimental
dynamic process and a managerial activity
technique can be most expensive,
which is necessary for bringing people together
especially if a program requires heavy
and tying them together in the pursuit of
expenditures firm cannot afford to
common objectives. When used in the other
attempt several alternatives.
sense, Organization refers to the structure of

c) RESEARCH AND ANALYSIS relationships among positions and jobs which is

One of the most effective techniques for Built up for the realizations of common

selecting from alternatives is research objectives. Without organizing managers

and analysis of decisions. This approach cannot function as managers. Organization is

concerned with the building, developing and

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 BUS 611 Principles of Management

maintaining of a structure of working together or as a structure of relationships or as

relationships in order to accomplish the a process of management. Now, let us analyze
objectives of the enterprise. some of the important definition of organizing
or organization, and understand the meaning of

Organization means the determination and organization.

assignment of duties to People, and also the

establishment and the maintenance of authority ACCORDING TO SHELDON
relationships among these grouped activities. It "Organization is the process of so combining the
is the structural framework within which the work which individuals or groups have to perform
various efforts are coordinated and related to with facilities necessary for its execution, that the
each other. Sound organization contributes duties so performed provide the best channels for
greatly to the Continuity and success of the efficient, systematic, positive and coordinated

enterprise. The distinguished industrialist of application of available effort."

America, Andrew Carnegie has shown his

confidence in organization by stating that: CHESTER I BERNARD DEFINED

"Organization is a system of co-operative

"Take away our factories, take away our trade, our
activities of two or more persons."
avenues of transportation, our money, leave nothing
but our organization, and in four years we shall have
MC FERLAND DEFINED ORGANIZATION
reestablished ourselves."
"an identifiable group of people contributing
their efforts towards the attainment of goals".
That shows the significance of managerial skills
and organization. However, good organization
ACCORDING TO LOUIS A ALLEN,
structure does not by itself produce good
"Organization is the process of identifying and
performance. But a poor organization structure
grouping the work to be performed, defining
makes good performance impossible, no matter
and delegating responsibility and authority, and
how good the individual may be. The term
establishing Relationships for the purpose of
'Organization' connotes different things to enabling people to work most effectively
different people. Many writers have attempted together in accomplishing objectives”.
to state the nature, characteristics and
principles of organization in their own way. It ACCORDING TO NORTH WHITEHEAD
can be used as a group of persons working

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 BUS 611 Principles of Management

“Organization is the adjustment of diverse 2. Controlling is evaluating the performance

elements, so that their mutual relationship and if necessary applying corrective
may exhibit more pre-determined quality”. measures so that the performance takes
place according to plans.
IN THE WORDS OF THEO HAIMANN
3. Controlling is measurement and correction of
“Organizing is the process of defining and
performance in order to make sure that
grouping the activities of the enterprise and
enterprise objectives and the plane advised
establishing the authority relationships among
to attain then are being accomplish.
them. In performing the organizing function, the
4. Controlling is looking behind planning bears a
manager defines, departmentalizes and assigns
close relationship to controlling.
activities so that they can be most effectively
executed”. 5. Effective controlling assists to regulate actual
performance to assure that it takes place as

IN THE WORDS OF MOONEY AND RAILEY planned.

"Organization is the form of every human 6. Controlling exists at every management level
association for the attainment of a common from president to supervisor of a company
purpose.” Control is the process through which
managers assure that actual activities
ACCORDING TO JOHN M PFIFFNER AND FRANK conform to planned activities.
P SHERWOOD
"Organization is the pattern of ways in which ACCORDING TO BREACH
large number of people, too many to have intimate "Control is checking current performance against
face-to-face contact with all others, and engaged predetermined standards contained in the plans,
in a complexity of tasks, relate themselves to each with a view to ensuring adequate progress and
other in the conscious, systematic establishment satisfactory performance."
and accomplishment of mutually agreed
purposes.” ACCORDING TO GEORGE R TERRY –
"Controlling is determining what is being
accomplished i.e., evaluating the performance
CONTROL
and if necessary, applying corrective measures
There are many definitions of controlling.
so that the performance takes place according
1. Controlling is the process of determining
to plans."
what is being accomplished.

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 BUS 611 Principles of Management

ACCORDING TO BILLY E GOETZ managerial function of control consists in a

"Management control seeks to compel events to comparison of the actual performance with the
conform plans". planned performance with the object of
discovering whether all is going on well

ACCORDING TO ROBERT N ANTHONY according to plans and if not why. Remedial

"Management control is the process by which action arising from a study of deviations of the

managers assure that resources are obtained and actual performance with the standard or

used effectively and efficiently." planned performance will serve to correct the
plans and make suitable changes. Controlling is
IN THE WORDS OF KOONTZ AND O'DONNELL the nature of follow-up to the other three
"Managerial control implies measurement of fundamental functions of management. There
accomplishment against the standard and the can, in fact, be not controlling without previous
correction of deviations to assure attainment of
planning, organizing and directing. Controlling
objectives according to plans."
cannot take place in a vacuum.

IN THE WORDS OF HAYNES AND MASSIE

"Fundamentally, control is any process that THE BASIC CONTROL PROCESS
guides activity towards some predetermined The basic control process involves three steps.
goal. The essence of the concept is in 1. Establishing standards.
determining whether the activity is achieving 2. Measuring performance against these
the desired results”. standards.
3. Correcting variations from standard and
IN THE WORDS OF HENRY FAYOL
plans / correction of deviations.
"Control consists in verifying whether everything
occurs in conformity with the plan adopted, the
1. ESTABLISHING STANDARD
instructions issued and the principles established.
Standards are by definition is simply criteria
Its object is to find out the weakness and errors in
of performance. Standards are the selected
order to rectify them and prevent recurrence. It
points in a planning performance at which
operates on everything, i.e., things, people and
performance is measured, so that managers
actions".
can receive signals about how things are
going. There are many kinds of standard.
From the above definitions it is clear that the

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 BUS 611 Principles of Management

(1) Physical Standard or by modifying their goals or they may

(2) Cost Standard correct deviations by clarification of duties.
(3) Capital Standard
(4) Revenue Standard CRICTICAL CONTROL POINTS & STANDARDS
(5) Program Standard Standards are yardsticks against which
(6) Intangible Standard expected performance is measured. In simple
(7) Goals/ objectives Standard operation a manager may control through
(8) Strategic plans as control point strategic careful observations. But, in most operations
control. this is not possible because of the complexity of
the operations. Manager must choose points
2. MEASUREMENT OF PERFORMANCE for special attention and then watch them to be
It is the second step of control process. sure that the whole operation is proceeding as
Although such measurement is not always planned. The points selected for control should
predictable, but if standard are appropriately be critical. With such standards, manager can
drown and if means are available for handle a large group of subordinates and plans
determining exactly what subordinates are are working out the principle or critical. Points
doing then measurement of performance is control states “effective control requires
fairly easy. But there are many activities for attention to these Factors critical to evaluating
which it is difficult to develop accurate performance against plans.
standards and there are many activities that
are hard to measure. Technical kind of work
is hard to measure performance. SPAN OF CONTROL
Span of control refers to the number of
3. CORRECTION OF DEVIATIONSS
immediate subordinate who report a manager.
It is third and last step of control process. If
Different level of organization level is also called
performance is measured accurately, t is
span of control.
easier to correct deviations manage know
exactly where the corrective measure must
FACTORS DETERMINING AN EFFECTIVE SPAN
be applied correction of deviations is the
There are several factors which influence the
point at which contact can be related to the
span of management.
other managerial factions. Managers may
correct deviations by redrawing their plans

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BUS 611 Principles of Management

1. TRAINING OF SUBORDINATES planning, they may require considerable

The better training of subordinates guidance.
increases the necessary superior
4. USE OF OBJECTIVE STANDARD
subordinate’s relationship. Well
A manager must find out, either by
trained subordinates require less time
personal observation or through the use
of their managers also they have less
of objective standards, whether
contact with their managers. Training
subordinates are following plans.
programs increase in new and more
Obviously, good objective standards
complex industries.
enable managers to avoid many time
2. CLARITY OF DELEGATION OF consuming contact.
AUTHORITY
Although training enables 5. RATE OF CHANGE
managers to reduce the frequency Certain enter rises change much more
of time consuming contact but rapidly than others. The rate of change
delegation of authority should be is very important in formulating and
clear. If a manager clearly delegates maintaining policies. It may explain the
authority to task with a minimum of organization structure of company’s
the managers time and attention. railroad, banking and public utility
But if a manager delegate’s companies.
authority unclearly than
subordinate give his maximum. 6. COMMUNICATION TECNIQUES
Communication techniques also
3. CLARITY OF PLANS
influence the span of management. If
If plans are well defined if they are
every plan, instruction, order or
workable; if the delegation of authority
direction has to be communicated by
towards planning is clear; if the
personal contact than managers time
subordinate understands what is
will be heavily burdened. An ability to
expected, than little of a supervisor’s
communicate plans and instructions
time will be required; on the other hand
clearly and concisely also tends to
if a plan cannot be drawn accurately
increase a managers span.
and subordinates do much of their own
7. AMOUNT OF PERSONAL CONTACT

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BUS 611 Principles of Management

NEEDED
Many instances, face to face meetings 10. MATURITY AND MOTIVATION OF
are necessary. Many situations cannot SUBORDINATES
be completely policy statements The more mature subordinates may
planning documents or other delegate more authority, thus widening
communications that do not involves the Span.
personal contact. An executive may
and valuable information’s by meeting FACTORS INFLUCING THE SPAN OF CONTROL
to subordinates and by discuss
problems with them. Some problems a)DEPARTEMENTATION
can be handled only in face to face Departmentation is the process of grouping
meeting so the best way of activities and people into department to
communicating problems, instructor, make it possible to expand organization.
and subordinates is to spend time in After reviewing the plan, usually the first
personal contact. step in the organization process is
departmentalization. Once job have been
8. VARIATION BY ORGANIZATION LEVEL
classified through work specialization, they
Several research projects have found
are grouped so those common tasks can be
that the size of the most effective span
coordinated.
differs by organizational level. For
example, it was studied that when a Departmentalization is the bases on which
greater number of specialties were work or individuals are grouped into
supervised, effective spans were manageable units. There are five traditional
narrower at lower and middle levels of methods for grouping work activities.
organization but were increased at Thus workflow analysis can be used to
upper levels. tighten the connection between
employees’ work and customers’ needs.
9. COMPETENCY OF MANAGERS
Also it can help to make major performance
A manager who is competent and well
breakthroughs throughout business
trained can effectively supervise more
process reengineering (BPR).
people than who is not.
A functional rethinking and radical redesign
of business process to achieve dramatic

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 BUS 611 Principles of Management

improvements in costs, quality, service, and Chief Executive

speed. BPR use workflow analysis to
identify jobs that can be eliminated or
Managers
recombined to improve company.

b) AUTHORITY & POWER

Supervisors
Power is much broader concept than
authority. Power is the ability of individuals
POWER
or groups to informal the actions of other
Power is border concept than authority. It
persons or groups. Formal organization
may be defined as a strong influence on
Informal organization: morning Coffee
direction on individuals as behaviors.
regular Informal organization: bowling
Power may also be defined as the ability of
team Informal organization: chess group
individuals or groups to influence the
President Voice president Decision
action of other persons. There are five
managers Department managers
bases / sources or kind of power.
1. LEGITIMATE POWER
AUTHORITY
The official position of a person is an
Authority is the legal right to command
organization is known as legitimate
actions by others and to enforce
power. For example, a major in army
compliance. Authority may also be
has power over Captain and
defined as the degree of discretion in
subordinate.
organizational position conferring on
2. COERCIVE POWER
persons occupying these positions the
A person’s ability to create fear in other
right to use their judgment in decision
individuals is based on subordinate’s
making.
expectation that punishment will be
TOP TO DOWN AUTHORITY received for not completing work. It is
closely related to reward power and
Share holder
normally arising from legitimate.
3. REWARD POWER
Board of Director
Power arising from ability of some
people to grant reward is known as

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 BUS 611 Principles of Management

reward power. University Professors authority is known as ‘line of authority’.

have considerable reward. Power they
made high grade. President
4. EXPERT POWER
Power may also come from the
expertness of a person or a group. Vice President
This is power of knowledge.
Physician lowers, & university
Supervisor
professors may have considerable
influence for their special
knowledge.
Employee.
5. REFERENT POWER
This is the power of admiring high
esteemed leader by individuals.
d) STAFF CONCEPT
6. DECESION MAKING POWER
The nature of the staff relationship is
This power arises from the power
advisory. The function of people in pure staff
of positions. When people speak
capacity is to investigate research and give
of authority in managerial setting,
advice to line managers. In other words, staff
they are usually referring to the
functions are those that help the line persons
decision making power.
work more effectively in accomplishing the
objectives.
c) LINE OF AUTHORITY
Line of authority gives a Superior a line of
NATURE OF LINE & STAFF CONCEPT
authority over subordinates. It exists in
Line authority gives a Superior a line of an
all organizations. Line of authority can
authority over a Subordinate. Line authority
also be defined as the Superior –
is that relationship in which Superior
Subordinate authority relationship where
exercises direct supervision over a
by a superior makes decision and tells
Subordinate. On the other hand the nature of
them to a subordinate who in turn makes
the staff relationship is advisory. The function
decision and tells to his subordinates; this
of a person in staff capacity is to investigate
forms a line from top to lower level of an
research and give advice to line manager. 3
organizations’ structure. This line of

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 BUS 611 Principles of Management

delegate authority they do not have,

BENEFITS OF STAFF
whether they are board members,
1. Provide highly specialized knowledge
Presidents, Voice Presidents or Superiors.
indifferent areas, i-e-economics,
The process of delegation involves.
technical, legal etc. Vice president,
1. Determining the results expected from a
Director, Research Director, Production
position.
Director, Public Relation Vice President,
2. Assigning tasks to the positions.
Manager, Accounting Manager, Cash
3. Delegating authority to accomplishment
Control Manager, Purchasing Manager,
of the tasks.
Factory Manager, Personnel Manager,
4. Holding the persons in that position
Domestic Sales Manager, Advertising
responsible for the accomplishing meat
Manager, Foreign Sale Supervisor,
of the tasks.
Production Control, Supervisor, Parts
5. Authority is delegate from higher level to
Production, Chief Assembling, Chief
lower level.
Maintenance.
2. Specialist staff avails lines to analysis
STEPS IN DELEGATING SPLINTERERD
collected data and make advice for
AUTHORITY
managers.
Splintered authority exits whenever a problem
3. Staff analysis and advices help in
cannot be solved in day to day operations of
resolving problems arise during process
any company. There are many cases of
splintered authority. Many Managerial
WEAKNESSES OF STAFF
Conferences are held because of the necessity
1. Danger of understanding line authority.
of splintered authority to make decisions.
2. Lack of staff responsibility.
3. Thinking in a vacuum
RECOVERY OF DELEGATED AUTHORITY
4. Managerial problems.
A manager who delegate’s authority does not
permanently dispose of it, delegated
e)DELEGATION OF AUTHORITY
authority can always be regained.
Delegation is necessary for an organization
Reorganization involves reorganization, rights
to exist. Authority is delegated when a
are recovered by the responsible head of the
superior gives a subordinate discretion to
firm or a department, to head of a new
make decision. Clearly, supervisors cannot

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 BUS 611 Principles of Management

department may receive authority formally

iii. WILLINGNESS TO LET OTHERS MAKE
held by other Managers.
MISTAKES
Since everyone makes mistakes, a
THE ART OF DELEGATION OF AUTHORITY
subordinate must be allowed to make
The most failure in effective delegation occurs
some, and their cost must be considered
not because Manager does not understand
an investment in personal development.
the nature and principles of delegation but
Serious or repeated mistakes can be
because they are unable to apply them. There
largely avoided without mortifying
are many reasons for poor delegation.
delegation.
There are many kinds of personal attitudes
which cause poor delegation of authority so iv. WILLINGNESS TO TRUST SUBORDINATES
Managers should follow these steps: Superiors have no alternative to trusting
their subordinates; for delegation implies a
i. RESPECTIVENESS trustful attitude among them. A superior
Decision making always involves some may put off delegation will the thought that
discretion and a subordinates decision is not subordinates have not yet experienced
likely to be exactly the one superior would enough, they cannot handle people, and
have made the manager who know how to they have not developed Judgment etc.
delegate must be able to help others and to Sometimes these considerations are true
compliment on their ingenuity. but then a superior or should either train
subordinates or else select others who are
ii. WILLINGNESS TO LET GO
prepared to assume the responsibility.
manager who will effectively delegate
authority must be willing to release the v. WILLINGNESS TO ESTABLISH AND USE
right to make decisions to subordinates. A BROAD CONTROLS
major fault of some managers is that they Superiors should not delegate authority
want to continue to make decisions for the unless they are willing to find means of
positions they have left. Corporate getting feedback. Obviously, controls
president and vice presidents who insist on cannot goals, policies and plans are used
confirming every purchase do not realize as basic standard for judging the
that doing so takes their time and attention activities of subordinates.
away from more important decisions.

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GUIDES FOR OVERCOMING WEAK DELEGATION 7) Mcgor Gor’s theory X and theory Y
The following guide can overcome weak 8) The Hierarchy of need theory
delegation. 9) Hygiene approach to motivation
1. Define assignments and delegate 10) Frederick Herzberg theory of
authority in the light of results motivation
expected.
11) Job enrichment
2. Select the person in light of the job to
be done. DEFINING LEADERSHIP
3. Maintain open lines of Leadership has different meanings by different
communication. authors. Leadership is influence. Leadership is
4. Establish proper control. the art or process of influencing people so that
5. Reward effective delegation and they will contribute willingly and
successful assumption of authority. wholeheartedly toward the achievement of
group goals. Ideally, people should be
LEADING encouraged to develop not only zeal and
Leading is the process of influence people so confidence. Zeal is intensity in the execution of
that they will contribute to organization and works; Confidence reflects experience and
group goals. technical ability. Leaders help a group to attain
objectives through the maximum application of
LEADERSHIP its capabilities. They do not stand behind a
Ingredients of leadership group but they inspire the group to accomplish
1) Power organizational goals. A good example is an

2) Fundamental understanding of people orchestra leader, whose function is to produce

3) Ability to inspire followers coordinated sound and correct tempo through

the integrated efforts of the musicians.
4) The ability to act in manner Trait
Depending on the quality of director’s
approaches to leadership Motivation
leadership, the orchestra will respond.
& motivators Special motivational
Leadership is a great quality and it can create
techniques
and convert anything. There are many
5) Participation
definitions of leadership. Some of the
6) Quality of working life An early
definitions of leadership are reproduced below:
behavioral model

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ACCORDING TO LOUIS A ALLEN

ACCORDING TO ALFORD AND BEATTY
"A leader is one who guides and directs other
"It is the ability to secure desirable actions from a
people. He gives the efforts to his followers a
group of followers voluntarily, without the use of
direction and purpose by influencing their
coercion". behavior".

ACCORDING TO CHESTER I BARNARD IN THE WORDS OF THEO HAIMANN

"It (leadership) refers to the quality of the "Leadership is the process by which an executive
behavior of the individual whereby they guide imaginatively directs guides and influences the
people on their activities in organized efforts". work of others in choosing and attaining specified
goals by mediating between the individuals and
ACCORDING TO TERRY the organization in such a manner that both will
"A leader shows the way by his example. He is obtain maximum satisfaction".
not a pusher, he pulls rather than pushes".
ACCORDING TO KATZ AND KALM

ACCORDING TO KOONTZ AND O'DONNELL "In the descriptions of organizations, no word is

used with such varied meanings. The word
“Managerial leadership is the ability to exert
leadership is sometimes used to indicate that it is
interpersonal influence by means of
an attribute of personality; sometimes, it is used
communication, towards the achievement of a
as if it were a characteristic of certain positions,
goal. Since managers get things done through
and sometimes as an attribute of behavior".
people, their success depends, to a considerable
extent upon their ability to provide leadership". In
the words of R.T. Livingston -Leadership is "the From the above definitions we can conclude

ability to awaken in others the desire to follow a that leadership is a psychological process of

common objective". influencing followers (subordinates) and

providing guidance, directing and leading the
ACCORDING TO PETER DRUCKER people in an organization towards attainment
Leadership "is not making friends and influencing of the objectives of the enterprise.
people (i.e. salesmanship). Leadership is the
lifting of man's vision to higher sights, the raising
INGREDIENTS OF LEADERSHIP
of man's performance to higher standards, the
Every group of people that performs job has
building of man's personality beyond its normal
same person as its head who is skilled in art of
limitations".
leadership. This skill seems to be a compound at

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 BUS 611 Principles of Management

least four major ingredients. positions.

1. Power
2. Fundamental understanding of people. TRAITS OF A LEADER

3. Ability to inspire followers 1) FUNDAMENTAL UNDERSTANDING OF

4. The ability to act in a manner that will PEOPLE

develop a conducive climate to responding and The second ingredient of leadership is

rousing motivations. fundamental understanding of people. A

manager or any other leader who knows

POWER the present state of motivation theory

The first ingredient of leadership is power. and understands the elements of

Power may be define as a strong influence on motivation is more aware of the nature

the direction of an individual’s behavior. There and strength to define and design ways

are ive kind of power. satisfaction.

LEGITMATE POWER 2) ABILITY TO INSPIRE FOLLOWERS

The official position of a person in The third ingredient of leadership is an ability

organization is known as legitimate power. to inspire followers to apply their full

1. COERECTIVE POWER capabilities to a project. Inspirations also

A person’s ability to create fear in other come from group heads. They may have

individuals is known as coercive power. qualities of charm and appeal that increase

2. REWARD POWER loyalty, deviation and strong desire in

This power arises from ability of some to followers that the leaders want. This is not a

grant reward is known as reward power. matter of need satisfaction; it is a matter of

3. EXPERT POWER people giving unselfish support to a chosen

This power comes from the expertness objective.

of a person or a group.
4. REFERENT POWER 3) THE ABILITY TO ACT IN A MANNER:
This is the power of admiring high The forth ingredient of leadership is related
esteemed leader by individuals. to style of leader and the climate he or she
5. DECISION MAKING POWER develops. The strength of motivation
This power arises from the power of greatly depends on expectations, perceived

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rewards, the task to be done and other confidence (including emotional stability),
factors that are part of an environment as cognitive ability and understanding of the
well as an organizational climate. business. Less clear taints is creativity, flexibility
etc.)

4) PRINCIPLE OF LEADERSHIP:
The fundamental is since people tend to In general, the study of leader’s traits has not

follow those who in their view offer them been a very fruitful approach to explaining

a means of satisfying their own personal leadership. Not all leader processes all the traits

goals. The more managers understand and many non-leaders may possess most or all

what motivates their subordinates and of them. Also, the trait approach gives no

how these motivation operate, and the guidance as to how much of any train a person

more they reflect their understanding in should have. Most of these so called traits are

caring out their managerial actions, the really patterns of behavior.

more effective they are likely to be as

leaders. Motivation & Motivators: Motivation:
Motivation is a general term applying to the

TRAIT APPROACHE TO LEADERSHIP entire class of drives, desire needs similar

Many studies of traits have been made various forces. To say that managers motivate their

researchers have identified specific traits subordinates is to say that they do those things

related to leadership ability. Five physical traits which they hope will satisfy these drives and

(such as energy, appearance and height), four desire and induce the subordinates to act in a

intelligence and ability traits; sixteen personality desired manner.

traits (such as adaptability, aggressiveness, self-

confidence etc.). Six task related characteristics THE NEED-WANT SATISFACTION CHAIN:
(Such as achievement drive, persistence and Motivation can be explained by a chain reaction:
initiative) and nine social characteristic (Such as Felt needs give rise to want or goal sought
co cooperativeness, interpersonal skill and which cause tensions (that is unfulfilled
administrative ability). More recently following desired), which give rise to action toward
key leadership taints were identified drive achieving goals which finally result in
(including achievement, motivations energy, satisfaction.
ambition etc.). Honest and integrity, self- The chain explanation is complex. In the first

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 BUS 611 Principles of Management

place, except for physiological needs, such as organization are any enterprise, managers must
food, need are not independent of person's be concerned about motivators, and also
environment. Many physiological needs are inventive in their use. People can often satisfy
stimulated by environmental factors the small their wants in a variety of ways.
of food may cause hunger, a lower
thermometer reaching may cause chills. SPECIAL MOTIVATIONAL TECHNIQUES:
Environment has a major influence on our There are many motivational techniques:
perception of secondary needs. The promotion Money is important in form of wages, prince
of a colleague may arouse one's desire for work, stock options, bonuses, company paid,
higher position. In second place, the need want insurance etc. Many are often more than
satisfaction chain does not always operate as monetary value. It can also mean status or
simply as portrayed. Needs do cause behavior power. Tended to place money high on the
but needs also may result from behavior. scale of motivators or a high scare of
Satisfying one deed may lead to a desire to motivators, while behavioral scientists tend to
satisfy more needs. place it on low sale. But if money is to be kind of
motivator then managers must remember
COMPLEXITY OF MOTIVATIONS:
several things. First, money, as money is likely
In individuals motives maybe quite complex and
to be more important to people who are raising
often conflicting. A person maybe motivated by
and family. Second, it is quite true that in most
a desire for economy goods and services (a
kinds of business and other enterprises, money
better house, a new car or a Needs Give Rise to
is used as mean of keeping an organization
Wants Which cause Tension Give Rise to Action
staffed. Third money becomes dull if salaries of
Which result in Satisfaction trip and these
many managers in a company are similar.
desires may be complex and conflicting. Should
Fourth, if is to be an effective motivator, people
one buy a new house or a new car?) Motivators
in various positions must be given salaries and
are things that induce an individual to perform
bonuses that reflect their individual
motivators sharpen the drive or need to satisfy
performance. It is almost certainly true the
wants. Motivators are also the means by which
money can motivate only if payment is large
conflicting needs may be reconciled. A manager
relative to persons income.
can do much to sharpen motive by establishing
an environment. So the motivator is something
PARTICIPATIONS:
that influences an individual’s behavior. In any

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 BUS 611 Principles of Management

The second motivational technique is increase AN EARLY BEHAVIORAL MODEL:

of awareness and use of participation. The nature of people has been expressed in
Participation is necessary for the solution of two sets of assumptions developed by
problems participation is a mean of recognition. Douglas Macgregor and commonly known as
It produces need for affiliation and acceptance. "Theory X" and "Theory Y" Macgregor chosen
It gives people a sense of accomplishment but these terms because he wanted natural
encouraging participation should not mean that terminology. Without any connotation of
managers -78 weaken their position. They being "good or bad".
should encourage participation of subordinates
on matter and they should listen carefully but THEORY X ASSUMPTIONS:
they should make decision on matters The traditional assumptions about the nature of
themselves. people in theory X are:
1: Average human beings have an inherent
QUALITY OF WORKING LIFE: dislike of work and will avoid it if they can.
The third motivational technique is quality of 2: Because of this human nature or
working life program. Quality work life (QWL) characteristic of dislike work most people
is not only a very broad approach to job must be coerced, controlled, directed and
enrichment but also a field of inquiry and threatened with punishment to get them
action combining industrial and organization to put forth adequate effort toward the
psychology and sociology, industrial achievement of organizational objectives
engineering, organization theory and 3: Average human beings prefer to be
development motivation and leadership directed wish to avoid responsibility
theory and industrial relations. QWL has have relatively little ambition and want
received support from a number of sources. security above all
Manager use it as a means of dealing with
productivity. Workers and union THEORY Y ASSUMPTIONS:
representatives have seen it as a mean of The assumption of theory Y of McGregor as
improving working conditions and follows:
productivity and as a mean of justifying 1: the expenditure of physical effort and mental
higher pay. effort in work is as natural as play or rest.
2: External control and the threat of

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punishment are not the only means for CONTRIBUTORS TO MANAGEMENT

producing effort toward organizational
objectives. People will exercise self-direction
and self-control in the service of objectives to Henri Fayol (1841-1925): Principles of
which they are committed. Management
3: The degree of commitment to objective is in
One of the first persons to sit down and try to
proportion to the size of the rewards associated
work out what managers do (and what they
with their achievements.
should do) was a Frenchman called Henri Fayol.
4: the capacity to exercise high degree of
Fayol was a mining engineer who became the
imagination, ingenuity and creativity in
managing director of an ailing coal mining firm
solution of organizational problem is
and turned it into a highly successful coal and
widely distributed in the population.
steel business. All this took place between 1888
5: Average human being learns under proper
and 1918, when he retired. In 1916, after many
conditions not only to accept responsibility but
years of thinking about the job of the manager,
also to seek it.
he published a small book called General and
6: Under the conditions of modern industrial
Industrial Management. Henry Fayol was years
life, the intellectual potentialities of the average
ahead of his time in linking strategy and
human being are only partially utilized. These
organizational theory and in emphasizing the
two sets of assumptions are fundamentally
need for management development and the
different theory x is pessimistic, static and rigid.
qualities of leadership. Igor Ansoff, in Corporate
Theory y is optimistic, dynamic and flexible with
Strategy (1965) said that Fayol ‘anticipated
an emphasis on self-directions. There is little
imaginatively and soundly most of the more
doubt that each set of assumption will affect
recent analyses of modern business practice,’
managerial functions and activities of
although Peter Drucker in his great
managers.
compendium Management: Tasks,
Responsibilities and Practice (1973), criticized
the application of Fayol’s functional approach
to larger and more complex organizations than
the one he knew and managed. Oddly enough,
it was years before a translation appeared in
CHAPTER 3

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 BUS 611 Principles of Management

English, even though it contains a great deal of Control is seeing that everything occurs in
wisdom and sense. conformity with established rule and expressed
command.
Part of the book deals with the ‘elements’ or
‘functions’ of management, and Fayol identifies The first and last functions—planning and
five such functions. They are: control—are immediately recognizable from
the analysis that has just been carried out, and
a) Forecasting and Planning
indeed there tends to be less argument
b) Organizing
generally about these two functions than about
c) Command
others.
d) Co-ordination
e) Control Organizing is, of course, similar to planning in
that it is concerned with preparation for some

It is important to appreciate what Fayol meant future events. But whereas planning is the more

by these five functions: glamorous activity of deciding on the overall

future direction of the business, organization is
Forecasting and Planning is looking ahead,
that tough, demanding business of putting
examining and making provision for the future,
together the elements in such ways that the
and drawing up a plan of action. Failure to plan
overall plans succeed.
signifies managerial incompetence.

Organizing is in building up the structure of the Command is seen as the function that actually
business/undertaking, and providing it with makes things happen. It is really derived from
everything it needs to operate (equipment, military practice, and no doubt in Fayol’s time all
materials, finance, people) and includes employees in organizations responded to
management training as a key part in it. command. The very word suggests ‘ordering

Command is how organizing gets achieved; in a about’ and has been the subject of a great deal

nutshell, it is directing and maintaining activity of debate and argument. Fayol did not really

among your personnel. intend it to be taken in a very narrow sense, but

rather in the sense of making sure that things
Co-ordination is binding together, unifying, and
get done—the actual operations of the
harmonizing activities and efforts for successful
organization. As a result, all kinds of substitute
results.
words have been used in its place—like
‘direction’ and (horribly) ‘actuating’.

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From his own long experience in Industry, Fayol

The fifth function of management in Fayol’s identified fourteen
view is that of co-ordination. It is concerned
with harmony, with making sure that all the bits General Principles of Management, or
work together, and, like an orchestra under its guidelines, and he emphasized that these are
conductor, play the same tune. This is the only not rigid but have to be adapted to suit the
function that does not seem easily to stand on particular needs of the situation.
its own and will be found to be part of planning, 1 Division of work—with specialization
of organizing, of control, and the key to allowing individuals to build up skills
successful operations themselves. and become more productive. ‘The
objective of division of work is to
An organization, therefore, begins with a produce more and better work with the
strategic plan or definition of goals, progresses same effort.’
to a structure to put that plan into action, is 2 Authority—both official and personal,
carried forward by controlled activity between and matching responsibility. ‘Generally
manager and workforce, has the work of its speaking, responsibility is feared as
disparate departments harmonized by much as authority is sought after, and
coordinated management and, finally, is fear of responsibility paralyzes much
subject to checks on the efficiency of its initiative and destroys many good
working, preferably by the independent ‘staff’ qualities. A good leader should possess
departments separate from the functional and infuse into those around him
departments. courage to accept responsibility’
The five functions of management have
3 Discipline—‘in essence, obedience,
been adequately discussed, but there are
application, energy, behavior and
two other aspects of management that
outward marks of respect observed in
Fayol mentioned that must be looked at
accordance with the standing
separately.
agreements between the firm and its
Fayol believed that a manager obtained the
employees… when a defect in
best performance from his workforce by
discipline is apparent or when relations
leadership qualities, by his knowledge of the
between superiors and subordinates
business and his workers, and by the ability to
leave much to be desired… the ill
instill sense of mission.

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mostly results from the ineptitude of 8 Centralization or decentralization—the

leaders. choice to depend on the condition of

4 Unity of Command—each man should the business and the culture of its staff.

have only one boss with no conflicting ‘The finding of the measure which shall

lines of command. ‘In all human give the best overall yield; that is the

associations, in industry, commerce, problem of centralization or

army, home, State, dual command is a decentralization. Everything which

perpetual source of conflicts…’ goes to increase the importance of the

subordinate’s role is decentralization;
5 Unity of direction—‘one head and one
everything which goes to reduce it is
plan for a group of activities having the
centralization.’
same objective. It is the condition
essential to unity of action,
coordination of strength, and focusing 9 The scalar chain or hierarchical
of effort.’ principle of management—a path

6 Subordination of individual interests to ‘dictated both by the need for some

general interests, reconciling transmission and by the principle of

conflicting interests where necessary unity of command, but it is not always

—‘that represents one of the great the swiftest… it is an error to depart

difficulties of management.’ Means of needlessly from the line of authority

affecting it are: (1) firmness and good but an even greater one to keep to it

example on the part of the superiors when detriment to the business

(2) agreements as fair as possible (3) ensues. When an employee is obliged

constant supervision. to choose between the two practices,

and it is impossible for him to take
7 Fair Remuneration for effort—‘every
advice from his superiors, he should be
mode of payment likely to make the
courageous enough and feel free
personnel more valuable and improve
enough to adopt the line dictated by
its lot in life, and also to inspire
the general interest.’
keenness on the part of employees at
all levels, should be a matter for 10 Order, both managerial and social

managers’ constant attention.’ —‘Social order demands a precise

knowledge of the human requirements

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BUS 611 Principles of Management

and resources of the concern and a business… the manager must be able
constant balance between these.’ In to sacrifice some personal vanity in
terms of managerial order—‘a place for order to grant this sort of satisfaction
everything and everything in its place’, to subordinates.’
e.g. the organization chart and 14 Esprit de corps There should be a sense
statement of areas of responsibility of ‘Esprit de corps’ essential for

11 Equity in the treatment of employees management to foster the morale of its

—‘the head of the business should workforce. ‘Real talent is needed,’ said

strive to instill a sense of equity Fayol, ‘to coordinate effort, encourage

throughout all levels of the scalar keenness, use each person’s abilities,

chain.’—i.e. kindliness and justice by and reward each one’s merit without

managers help to produce loyalty from arousing possible jealousies and

staff disturbing harmonious relations.

12 Stability of tenure among personnel

—‘generally the managerial concern of
Elton Mayo (1880-1949): Human relations in
prosperous personnel is stable, that of
industry and respect for individuals
unsuccessful ones is unstable.
Instability of tenure is at one and the
Australian-born Mayo is regarded as the
same time cause and effect of bad
founder, of Industrial sociology, particularly the
running. Nevertheless, changes of
‘Human Relations Movement,’ based on his
personnel are also a question of
discoveries in the Hawthorne Experiments of
proportion.’
1927-32 of what really motivates workers to
13 Initiative—‘thinking out a plan and
higher performance.
ensuring its success is one of the
A graduate of Adelaide University and a medical
keenest satisfactions for an intelligent
student in London and Edinburgh, Mayo taught
man to experience. It is also one of the
mental and moral- philosophy at the University of
most powerful stimulants of human
Queensland between 1911 and 1919. In 1923 he
endeavor… the initiative of all, added
immigrated to the United States, where he
to that of the manager and
worked first on a three-year research project at a
supplementing it if need be, represents
Pennsylvania textile mill, prior to joining Harvard
a great source of strength for
University, as associate professor of industrial

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 BUS 611 Principles of Management

research in 1926. name is forever linked were named after

Mayo spent most of his career at Harvard, ending Western Electric's Hawthorne Works in Chicago.
up as professor of industrial research in the They ran from 1927 to 1932 under Mayo's
Graduate School of Business Administration. He leadership (and a further five years after that),
was also a consultant on industrial problems to and were conducted by a team of Harvard
the postwar British Labor government led by scientists and between 75 and 100 investigators
Clement Attlee. working with 20,000 Western Electric
employees.
Elton Mayo's most important finding was to The experiments arose from an earlier series of
identify the roots of work ‘satisfaction as non- tests by Western Electric which had involved
economic and to connect them more with the changes in working conditions and produced
interest taken in a worker's performance than unexpected results in employee performance.
with financial reward. In this, he reversed the Two teams of workers took part in these tests,
emphasis on the incentive of monetary reward in which the lighting conditions for one group
which had been the conventional wisdom ever only were improved. Production in that group
since the writings of F. W. Taylor. Workers rose dramatically - but so it did in the group for
rejected 'Taylorism,' Mayo explained, because which the lighting remained unchanged. Mayo
in spite of its aids to efficiency it was basically an took these further, making as many as ten
imposed system, not one that took account of changes in working conditions such as shorter
the employees' own views. hours, varied rest breaks and a number of
The vital importance of management-worker incentives. Mayo's research team spent a great
communication, a key Mayo discovery, laid the deal of time with the work groups—each
foundation for the work of many later consisting of six women—discussing the
management thinkers and writers, including changes before they were put into effect.
Peters and Waterman (In Search of Excellence) Output increased each time a change was
and the 1950s school of sociologists headed by made. Yet when the teams were asked to return
Chris Argyris, Frederick Herzberg and Abraham to their original working conditions, with a 48-
Maslow. hour week, no incentives and no rest breaks,
output rose again—indeed, to the highest ever
recorded at Hawthorne. Other significant
Hawthorne Experiment
results included a decline in absenteeism of 80
The Hawthorne Experiments with which Mayo's
per cent. The only explanation, Mayo concluded

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 BUS 611 Principles of Management

in one of his later works, was that the called human instinct of association, easily
employees had gained enormously in work outweighs the merely individual interest and the
satisfaction by, the feeling that they were teams logic of reasoning upon which so many spurious
of individuals, not cogs in a machine, and by the principles of management are based,’ wrote
communication between researchers and Mayo in the Social Problems of an Industrial
workers, leading to everyone feeling more Civilization.
valued and responsible for her performance and Mayo was not, however, against scientific
that of the group as a whole. This sense of management, for all that he debunked Taylor's
cohesiveness and self-esteem was more rigid application of it. ‘Observation - skill -
important to performance than any number of experiment and logic—these must be regarded
improvements ill the working environment. as the three stages of advancement,’ he
Although Mayo did not crystallize his findings observed in the same book. Mayo believed that
until years after the Hawthorne Experiments, a his findings disproved what he called the ‘rabble
contemporary series of interviews in the hypotheses of society as ‘a horde of
Chicago works established an equally important unorganized individuals,’ each of whom ‘acts in
discovery: that worker-management conflict a manner calculated to secure his self-
may often be due less to the ostensible reasons preservation or self-interest.’
for a dispute, such as tea-breaks or insufficient Two later sociological writers, D. C. Miller and
light, than to basic emotional attitudes. Workers W. H. Form, developed eight principal
were ruled by the logic of sentiment, thought conclusions from Mayo's researches in their
Mayo, whereas managers were activated by the book Industrial Sociology, quoted in J. A. C.
‘logic of cost and efficiency.’ Thus, without Brown's The Social Psychology of Industry
understanding the compromise, conflict was (1954):
inevitable.
The ultimate importance of the Hawthorne (1) Work is a group activity.
experiments was their demonstration, in Mayo's (2) The social world of the adult is primarily
view; that the dour Taylorist philosophy of ‘self- patterned about work activity.
interest was disproved: that workers valued
(3) The need for recognition, security, and sense
spontaneous cooperation and creative
of belonging is more important in
relationships among those with, whom they
determining a worker's morale and
worked, and would perform accordingly. ‘The
productivity than the physical conditions
desire to stand well with one's fellows, the so-

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 BUS 611 Principles of Management

under which he works. managers.

(4) A complaint is not necessarily an objective More profoundly, Mayo believed that by

recital, of facts; it is commonly a symptom creating such an atmosphere of spontaneous

manifesting disturbance of an individual's cooperation in industry, society at large should

status position. help to combat the postwar collapse in

traditional values. This, for him, remained one of
(5) The worker is a person whose attitudes and
the most important tasks facing a manager. The
effectiveness are conditioned by social
whole Human Relations movement, as
demands from both inside and outside the
engendered by Mayo's work, became
work plant.
concerned with discovering, through scientific
(6) Informal groups within the work plant
research, how to harness the motivation and
exercise strong social controls over the
commitment of individuals to corporate goals. .
work habits and attitudes of the individual
Mayo's contribution to management thinking
worker.
was seminal. It revealed the importance, in hard
(7) The change from an established to an bottom-line terms, of human emotions,
adaptive society . . . tends continually to reactions and respect to the business of
disrupt the social organization of a work managing others. It also pioneered the whole
plant and industry generally. concept of proper management-worker

(8) Group collaboration does not occur by communication—again a new idea because of

accident; it must be planned for and the respect for the individual it required

developed. If group collaboration is between bosses and workers.

achieved, the work relations within a work Management, Mayo demonstrated once and for

plant may reach a cohesion which resists all, could only succeed in leading an

the disrupting effects of adaptive society. organization's employees if the workers in their
informal groups, accepted that leadership
without reservation. In his own words, Mayo
Mayo's discovery of the importance of the peer
identified the importance of the Hawthorne
group at work led/him to conclude that within
findings as specifying, quite clearly, that the
each formal organization existed many informal
relation of working groups to management was
ones which could be encouraged to greater
one of ‘the fundamental problems of large-scale
productivity by being led to do it themselves,
industry. Organizing teamwork—developing
through interest and respect on the part of their
and sustaining cooperation—had to be a major

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 BUS 611 Principles of Management

preoccupation of management. Above all, For many years a pillar of New York University
management needed to think less about what Business School, Drucker since 1971 has been
‘we’ wanted to get across to ‘them’ than to Clarke Professor of Social Science at Claremont
listen to what ‘they’ wanted to know and would Graduate School, Claremont California. He is still
be receptive to. writing prolifically in his eighties, adding to the
24-odd books he has published since The End of
Peter Drucker (b.1909): Primary tasks for the Economic Man appeared in 1939. They divide
effective managers almost equally between works on management
theory and technique and works of economic,
The management guru’s management guru. Born political and social analysis. Many of the latter are
in Vienna during the heyday of that city’s pre-1914 seminal works which mapped out whole
culture, Drucker has invented or prefigured most landscapes of the future with much wider
of the leading management theories of the last horizons than those bounded by management.
half century, from “Management by Objectives” Philip Sadler, vice-president and former director
to privatization; from putting the customer first of Ashridge Management College, found his
to the role of the chief executive in corporate thinking entirely changed by Drucker’s 1969 book
strategy; from “structure follows strategy” to The Age of Discontinuity, which for Sadler
“stick to the knitting”, from decentralization to pointed clearly to the coming decline of Britain’s
the implications of the information age. manufacturing industry.
His five basic principles of management remain as This book, still well worth study, prefigured many
valid as ever: setting objectives, organizing, of the business best-sellers of the late 1980s and
motivating and communicating, establishing early 1990s on managing chaos and disruptive
measurements of performance and developing change. Drucker’s books have anticipated those
people. of Charles Handy, Tom Peters, and Richard
Tom Peters, whose co-authored book In Search Pascale, to name only three. In some of its ideas,
of Excellence developed many of Drucker’s ideas, The Age of Discontinuity was 20 years ahead of
says the Viennese sage deserves much of the John Naisbitt’s Megatrends and Charles Handy’s
credit for “moving 75 to 80 percent of the The Age of Unreason. It was in The Age of
Fortune 500 to radical decentralization,” adding Discontinuity, incidentally, that Drucker
that no true “discipline of management” existed introduced the concept of privatization, though
before Drucker. he called it “re-privatization”. He accurately
forecasted the disillusionment with government

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 BUS 611 Principles of Management

arising from the discovery that governments produced his first book two years later and in
could now, after all, produce miracles. “There is 1942 took a consultant’s job with General Motors,
little doubt, for instance, that the British in then the world’s largest company.
adopting the National Health Service believed Out of this experience came his influential 1946
that medical case would cost nothing. Nurses, book Concept of the Corporation, still one of the
doctors, hospitals, drugs, and so on have to be best and most perceptive analyses if the
paid for by somebody. But everybody expected successful large organization. As well as General
this “somebody” to be somebody else.” Motors, other companies studied in the book
Drucker advocated privatization on the were General Electric, IBM, Sears Roebuck, and
grounds that the purpose of government was Drucker identified their success with certain
to govern, not to “do”, and that the two roles managerial characteristics, notably delegation
were incompatible. His vision, unlike the and goal-setting (Management by Objectives)
Conservative Party’s realization of it, was for and certain structural characteristics, such as
privatization to cover all institutions, not decentralization.
merely business ones—universities, for Drucker believed that the ultimate key to success
example. in all these companies was that “they knew what
A year or so after publication of The Age of businesses they were in, what their competencies
Discontinuity, the word “privatization” made were and how to keep their efforts focused on
its first appearance in a Conservative Central their goals.” (Organization Theory, ed. D.S.
Office pamphlet in May 1970 (“A New Style of Pugh) Nearly 30 years later, Peters and
Government”), crediting Drucker with the Waterman reached much the same conclusion,
coinage. set out in more populist style, in their best-seller
The son of an Austrian government official who In Search of Excellence.
helped found the Salzburg Festival, Drucker came Concept of the Corporation also analyzed the
to Britain in the late 1920s, and his first job was as importance of marketing—at that time an
an apprentice clerk in a Bradford wool exporting almost universally neglected function—and the
firm, working with a quill pen in 80-ound delicate balance which a company must seek to
brassbound ledgers chained to the desk. achieve between long-term strategy and short-
Between 1933 and 1936 he worked as an term performance.
economist in a London merchant bank and then Drucker figures in more management-book
decided to throw in his lot with the United indexes than any other individual by far. In
States. He immigrated to the US in 1937, Makers of Management, by David Clutterbuck

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 BUS 611 Principles of Management

and Stuart Crainer, he rates no fewer than 40 believed, “the first attempt at an organized
separate page references. presentation of the economic tasks of the
business executive and the first halting step
Peter Drucker’s reputation as a management towards a discipline of economic performance
guru was established with The Practice of in business enterprise.” It sets out in clear, no-
Management (1954), a work still regarded by nonsense prose, guidelines for understanding
later theorists as one of the best and clearest in business realities and for analyzing a company
the field. In this, he identified management by in terms of revenues, resources, prospects, cost
objectives as the first of seven primary tasks of centers, customer needs, building on strengths,
management. MBO, dignified with capital finding potential, making key decisions, and
letters, became a movement of its own, and building strategies for the future. It is still one of
Britain’s John Humble made a specialty of the best practical vade mecums for anyone
developing its theory and practice. running a business enterprise. Drucker believes
Management by Objectives emerged out of that every three years or so a company should
Drucker’s work with General Electric among his be put under the microscope and every
studies for Concept of the Corporation. Each GE product, process, technology, service or market
managed was responsible for a profit center subjected to a grueling assessment.
and given targets to achieve—seven percent Throughout his work, Drucker’s emphasis has
return on sales and 20 percent return on been on the effectiveness of managers—
Investment. These were severely applied; you particularly in making good use of their human
lost your job if you didn’t meet them. resources—as key to a productive and
Drucker perceived that, since businesses profitable organization. Management, says
survive or fall by the bottom line corporate Drucker, is the job of organizing resources to
goals should be divided into objectives and achieve the satisfactory performance of an
clearly assigned to units and individuals. enterprise. Managers must in the end be
“Management by Objectives,” as Richard measured by their economic performance,
Pascale observes in Managing on the Edge, though this is not necessarily synonymous with
“ensures that each link in the chain of maximum profits; rather, with sufficient profit
command does its part…” that will cover the risks which have been taken,
A subsequent handbook, managing for Results and to avoid the enterprise making a loss.
(1964) is, in Drucker’s own words of Management by objectives is the key to this.
introduction, a “what-to-do book.” It was, he Drucker has sometimes been criticized for

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 BUS 611 Principles of Management

neglecting theories of motivation, though he organism.” These summarize the essentials of

was one of the first to recognize and praise management with more clarity than any other
Douglas McGregor’s Theory Y of consultative book before or since:
management as early as 1954. “A manager, in the first place, sets objectives.
Drucker’s emphasis on objective-setting for He determines what the objectives should be.
management is most clearly set out in his He determines what the goals in each area of
mammoth compendium Management: Tasks, objectives should be. He decides what has to be
Responsibilities and Practices (1973). This done to reach these objectives. He makes the
represents an encyclopedia of his earlier objectives effective by communicating them to
writings and is recommended as the bedrock of the people whose performance is needed to
any aspiring manager’s reading list. Studded attain them. “Second, a manager organizes. He
with illuminating case studies, the massive analyses the activities, decisions and relations
volume (weighing 3 ½ pounds in hardback) needed. He classifies the work. He divides it into
defines every aspect of managerial skills and manageable activities and further divides it into
pinpoints eight areas where clear objectives are manageable jobs. He groups these units and
vital: marketing, innovation, human jobs into an organization structure. He selects
organization, financial resources, physical people for the management of these units and
resources, productivity, social responsibility, for jobs to be done.
and profit requirements. A thorough grounding “Next, a manager motivates and
in this vast work is virtually the equivalent of a communicates. He makes a team out of the
do-it-yourself business-school course. people that are responsible for various jobs. He
Shortly before it was published, Drucker had does that through the practices with which he
defined his broad view of management in works. He does it in his own relations to the
People and Performance (1973): “To fulfill the men with whom he works. He does it through
specific purpose and mission of the his “people decisions” on pay, placement and
organization to make work productive and the promotion. And he does it through constant
worker achieving; and to manage the social communication, to and from his subordinates
impacts and responsibilities” and to and from his superior, and to and from
In Management: Tasks, Responsibilities, Practices, his colleagues.”
he identified five basic operations in the work of “The fourth basic element in the work of the
the manager, which together “result in the manager is measurement. The manager
integration of resources into a viable growing establishes the yardsticks—and few factors are

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 BUS 611 Principles of Management

as important to the performance of the (6) Marketing;

organization and of every man in it. He sees to it (7) Long-range planning.
that each man has measurements available to
him which are focused on the performance of In recent years, Drucker’s books have included
the whole organization and which, at the same Innovation and Entrepreneurship (1985), a
time, focus on the work of the individual and typically wide-ranging study of growth sectors
help him do it. He analyses, appraises and of the US Economy in the early 1980s, including
interprets performance. As in all other areas of many businesses not normally considered as
his work, he communicates the meaning of the suck: private health care, for example, non-
measurements and their findings to his profit-making private schools and public/private
subordinates, to his superiors and to partnerships in which government units
colleagues.” contract out services to competitive private
“Finally, a manager develops people, including companies. The New Realities (1989) ranged
himself.” over a global stage, anticipating the
development of such contemporary
Taking a historical perspective, Drucker has phenomena as the transnational economy, the
since identified seven key elements in postwar democratization of the Soviet Republics, the
management development: changing ethos of the United States and the
(1) Scientific management of work as the key to demands of a postindustrial, post-business
productivity; society.

(2) Decentralization as a basic principle of Drucker’s breadth of vision, and eclectic range

organization; of publications spring from his belief that

management is central to life; not merely to
(3) Personnel management as the orderly way
business… One of his recurring concepts is that
of fitting people into organization
of the Chief Executive as conductor of an
structures;
Orchestra. As he says, “We are beginning to
(4) Manager development to provide for the
realize that management itself is the central
needs of tomorrow;
institution of our present society, and that there
(5) Managerial accounting—use of analysis and are very few differences between managing a
information as the foundation for firm business, managing a diocese, managing a
decision-making; research lab, managing a labor union, managing
a hospital, managing a university, or managing a

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 BUS 611 Principles of Management

government agency. All along, this has been the the keynote of my work that has remained
main thrust of my work, and one that constant over more than 40 years.”
distinguishes it from practically all my Drucker sums up his own vast contribution to
contemporaries working in the field.” management thinking in these words, quoted in
Rosabeth Moss Kanter views his goals as even Makers of Management (Clutterbuck and
more embracing. In an article in New Crainer):
Management (winter 1985), she wrote: “Good “I was the first one to see that the purpose of a
management is also our best hope for world business lies outside of itself—that is, in
peace. In the Drucker perspective, imperatives creating and satisfying a customer. I was the
for growth push organizations beyond national first to see the decision process as central, the
borders in the search for new markets. The first to see that structure has to follow strategy,
world becomes interconnected by a series of and the first one to see, or at least the first to
cross-cutting trade relationships in which the say, that management has to be management
interests of managers in the survival of their by objectives and self-control.”
multinational enterprises outweigh the
interests of politicians. Quality of life, Michael E. Porter (b. 1947): Strategies for
technological progress, and world peace, then, competitive advantage, both national and
are all the products of good management… at international.
root, Drucker is a management utopian, Michael E. Porter is the Bishop William Lawrence
descended as much from Robert Owen as Max University Professor, based at Harvard Business
Weber.” School. A University professorship is the highest
To Drucker, the business organization, as any professional recognition that can be awarded to
organization, is “a human, a social, indeed a a Harvard faculty member. Michael Porter is the
moral phenomenon.” Customer service rather fourth faculty member in Harvard Business
than profit should dominate management School history to earn this distinction, and is one
thinking, profit being the means of continued of about 15 current University Professors at
investment in innovation and improvement. Harvard. In 2001, Harvard Business School and
“Contrary to the approach to the study of Harvard University jointly created the Institute
political and social organization that has for Strategy and Competitiveness, to further
prevailed in the West since Machiavelli, I Michael Porter’s work.
stressed all along that organization does not
deal with power but with responsibility. This is Michael Porter, the author of 17 books and over

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 BUS 611 Principles of Management

125 articles, is a leading authority on competitive newly appointed CEOs of billion dollar
strategy and the competitiveness and economic corporations. Michael Porter speaks widely on
development of nations, states, and regions. He competitive strategy, competitiveness, and
received a B.S.E. with high honors in aerospace related subjects to business and government
and mechanical engineering from Princeton leaders throughout the world.
University in 1969, where he was elected to Phi
Beta Kappa and Tau Beta Pi. He received an Research on Strategy
M.B.A. with high distinction in 1971 from the Michael Porter’s core field is strategy, and this
Harvard Business School, where he was a George remains a primary focus of his research. His
F. Baker Scholar and a Ph.D. in Business book, Competitive Strategy: Techniques for
Economics from Harvard University in 1973. Analyzing Industries and Competitors, was his
first book-length publication on strategy. The
Porter joined the Harvard faculty at the age of book is in its 58th printing and has been
twenty six after earning his Ph.D. Books such as translated into 17 languages. His second major
Competitive Strategy, and the Competitive strategy book, Competitive Advantage: Creating
Advantage of Nations analyze various factors of and Sustaining Superior Performance, was
strategy,--corporate and governmental/trans- published in 1985 and is in its 34th printing. His
national book On Competition (1998) includes a series of
articles on strategy and competition, including
Teaching his Harvard Business Review article 'What is
Michael Porter's ideas on strategy have now Strategy?' (1996). 'Strategy and the Internet' was
become the foundation for the required published in 2001
strategy course at the Harvard Business School,
and his work is taught in virtually every business NOTES
school in the world. Michael Porter’s primary
course for Harvard graduate students is a _________________________________________________

University-wide course, Microeconomics of ________________________________________________

Competitiveness, which is taught not only at ________________________________________________

Harvard but at 56 other universities around the ________________________________________________

________________________________________________
world using video content and instructor
________________________________________________
support developed at Harvard. Michael Porter
________________________________________________
also created and chairs Harvard's program for

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 BUS 611 Principles of Management

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