Unit 11 –

Introduction to Management

By C.A , I.S.A , M.A (Eco) , B.com Mrugesh Madlani

Definitions of Management

▪ Harold Koontz in his book “Management Theory Jungle”, American

Management Association , Mary Parker Follet “ Management is “art of getting
things done through & with people in formally organized groups”
▪ Henri Fayol in his “Industrial & General Administration” Management “ To
manage , forecast , plan , organize , command , to coordinate & to control”
▪ Peter Drucker in his book “Principles of Management” “Management is multi-
purpose organ that manages business , managers , workers & work”
▪ George Terry “ Management is distinct process of planning , organizing ,
actuating & controlling to determine & accomplish objective by use of people
& resources”
▪ Terry wrote book “Principles of Management & said there are 4 functions of
Management Planning , organizing , Directing / Actuating & Controlling”
 Theories on Functions of Management

Scientific Theory by F.W Taylor –

• We should determine most effective & efficient way to do the work . He created 4
principles
1. Each task should be done by most efficient way. Traditional way (Rule of Thumb)
should be replaced by scientific analysis of work
2. Complete harmony between workers & management to increase profit
3. Work should be closely monitored to follow best working practices
4. Managers should spend time on training employees & planning for future
• It’s only criticism his increasing efficiency is good , but there is de-emphasis on
team work
Classical Theory by Henri Fayol –
Founding Father - 14 Principles of Classical
Management Theory

1. Division of Work – Specialize in certain areas which will increase efficiency

2. Authority – Authority to give order .Authority & responsibility go together
3. Discipline – Employees should listen to commands & being disciplined in doing
work
4. Unit of Command – Each employee should be under 1 boss only
5. Unity of Direction – Team should be striving for common goals
6. Sub-ordination of Individual Interest – Team comes before Individuals
7. Remuneration – Monetary & Non-monetary incentives to motivate employees
8. Centralization – Top level will take decisions & others will follow
9. Scalar Chain – Clear hierarchical structure & should be known to all
10.Order – Right employee at right time at right place to increase profits
11.Equity – All should be treated well
12.Stability of Tenure of Personnel – Limit turnover of employees
13.Initiative – Employees should share ideas & be awarded for the same
14.Esprit De Corps - Managers should work to keep employees engaged &
promote team spirit & unity
As per Henry Fayol 5 Functions of Management are – Forecasting , Planning ,
Organizing , Commanding , Controlling
 Bureaucratic Theory by Max Weber

 Organization will be most effective , if it uses bureaucratic structure . Weber’s

ideal business uses standard rules & procedures to organize itself
 It includes 5 principles
1. Task Specialization – Each employee should be given specific role
2. Hierarchy – Clear hierarchical structure in the organization
3. Formal Selection – Selecting leaders should be based on qualification & not vote
4. Rules & Requirements – Standard rules , so everyone knows what’s expected for
them
5. Impersonal – Promotions aren’t about emotions or personal ties , but rather
performance
Human Relation by Elton Mayo

 Mayo believes productivity increase when people feel like they are part
of team & valued by their co-workers
Features of this Theory
1. Manager should have basic understanding of human behavior
2. Informal groups have significant influence on morale & productivity of
works
3. Workers are motivated not only by money but by recognition,
participation
4. Study of management should draw principles like psychology , sociology
 It emphasis team work & praise as motivational factors
Systems Theory by Ludwig Von

 Business is an open System . It takes input , throughputs & output.

There are exchanges of money , matter , people & information with
external environment
X & Y Theory by Douglas McGregor
 2 types of workers . X lack motivation , need to be ordered by
bosses to do anything
 Y on the other hand enjoy work & strive for self-fulfilment
Functions of Management

 According to Harold Koontz & Cyril O’ Donnel an essay

“Management” believed there are 5 Functions of Management
1. Planning
2. Organizing
3. Staffing
4. Directing \ Leading
5. Controlling
Planning

• First & Foremost Function is Planning

• Planning is deciding in advance “What to do , How to do & Who is to do.
It bridges gap between where we are & where we want to go . It makes
things possible , which would not otherwise occur”
• Planning takes into consideration potential human & physical resources of
the organization .
• It is on-going & recurring function
• Henri Fayol called Planning as most difficult to achieve as a lot of
knowledge & flexibility is required
 Steps in Planning Process

1. Establishment of Objectives – First we will set objectives . Objectives form nucleus of planning process .
They are in clear , precise & explicit language . It should be practical , acceptable , feasible &
reliasable
2. Establishment of Planning Premises – It is about assumptions about event in future based on which
plan is made . It can be internal or external . Internal are management labour relations , capital invest
policy & external can be political , economic , socio cultural which are uncontrollable
3. Choice of Alternative Courses of Action – Several alternatives we will get and we have to see prons &
cons in light of available resources & organizations requirements & best alternative is chosen
4. Formulation of Derivative Plans – Secondary plans which help in accomplishing master plan. Profit
maximization is plan , then secondary plan would be sales maximization , cost minimization etc
5. Securing Co-operation – After plans are made , we should take into confidence sub-ordinates as they
may feel valued & only then plan will be implemented nicely
6. Follow up of Plans – After plan is made , we need to check it is effective or not by those who are
responsible for execution . Feedback enables management to take corrective actions. Follow up
established link between Planning & Controlling
Organizing

• Brings together Human , Physical & Financial Structure

• According to Chester “Organizing is function by which
concern is able to define role positions , the jobs related &
coordination between authority & responsibility”
• Organizing is all about over-all structure of specific managerial
level
• Prepares Proper Org Structure for Division of work and roles &
responsibility
Why is Organizing Essential

1. Benefits of Specialization – While Organizing every activity is divided into sub-tasks. For
performing this sub-task competent people are appointed .
2. Clarity in Working Relationship – Clear picture of working relationship between employees
, we know whom we need to report
3. Optimum Utilization of Resources – Whole work is divided into activities , for each job there
is different person, ensuring best utilization & no one is left out
4. Adaption to Change – Whenever position falls vacant , it is straight away filled by
promotion , every sub-ordinate is aware of working of his senior
5. Effective Administration – All knows their positions and to whom they are accountable
6. Development of Personnel – Delegation of authority is done , So we can realize new
techniques of work . It provides opportunities of taking decisions for the sub-ordinates
7. Expansion & Growth – Gives employees freedom to take decision , face new challenges
which will lead to development of Enterprise
 Organising

Steps in Organizing
1. Identification of Activities – Prepare list of tasks to be done. All activities are
grouped & classified into units
2. Dividing Activities into Departments – Manager tries to combine similar activities
in units , divisions or departments . Process of dividing whole concern into
departments is Departmentation
3. Classifying the Authority – Activity of giving rank to managerial position is called
hierarchy . Top level will make policies , Middle level into Departmental
Supervision & Lower level into supervision of foremen .
4. Co-ordination between Authority & Responsibility – Each individual should be
well aware of his authority , from whom to take orders , whom to report . Clear
structure is drawn & employees are made aware of it
 Staffing

• The managerial function of staffing involves manning the organization structure through proper & effective
recruitment , selection , appraisal & development of the personnel to fill the roles assigned to employees /
workforce
• It is seen closely related to organizing with both focused on ensuring resources are directed to right
processes & tasks
• Main aim of function is organization has right people in right positions & organization isn’t hindered by
shortage or surplus of personnel
• Staffing is inseparable function of management , all 4 functions depend on strong team which is built
through staffing
• It is pervasive activity , carried by all managers & all types of organizations
• It is continuous activity , carried throughout the life of organization
• Efficient management of personnel – through proper recruitment , selection , placing , ,training &
development & providing remuneration
• Staffing helps in placing right men at right job through proper recruitment & then finally selecting best
candidate as per job requirement
• Performed by all managers
 How to Staff ?

1. Manpower Requirements – Plan the manpower inventory required in order to match them with job
requirements & demand
2. Recruitment – Invite people for jobs , we should mention candidate’s profile , so only eligible people apply
for job . We can go through placement , consultants or advertisements
3. Selection – We will select the best candidate . It is 2 way process both company & candidate should be
careful in selecting each other
4. Orientation & Placement – In this new employees are introduced to existing ones & are made to feel
comfortable within the organization
5. Training & Development – It is given to develop & grow them with the concern
6. Remuneration – Based on nature of job skilled or unskilled , physical or mental , monetary incentives are
given
7. Performance Evaluation – Keeps track or record of behavior , attitudes as well as opinions of workers
towards the job
8. Promotion & Transfer – It is non-monetary incentive in which we are shifted to higher job demanding more
responsibilities as well as shifting workers & transferring them to different work units & branches of same
organization
 Directing

• It is process in which managers instruct , guide & oversee performance of subordinates to achieve
predetermined goals
• It is heart of management process
• Planning , Organizing , Staffing have no importance , if there is no Directing
• It is process or technique by which instructions can be issued & operations can be carried out as
planned
• It is pervasive – Required by all organization at all levels
• Continuous activity done through out the life of organization
• Since human factor is complex , Directing becomes important
• Creative - Without this people become inactive & physical resources are meaningless
• Executive Function – Carried by all managers & executives at al levels
• Delegate – Human behavior is unpredictable , it is termed as having delicacy in it to tackle human
behavior
 Scope of Direction /
5 Methods of Direction

Leadership SCM
1. Leadership – Process by which manager guides & influences the work of his sub-ordinates. It is
concerned with influencing people for achievement of common goals
2. Supervision – Overseeing subordinates at work . Direct & immediate guidance of subordinates in
performance of their task
3. Communication – Process of telling , listening , understanding or passing information from one person
to another . Manager has to tell subordinates what to do , when to do & how to do
4. Commanding – Setting business going to get desired optimum results from subordinates. Fayol said is
is “operation of organization”
5. Motivation – Relates to conscious attempt made by executive to influence the role & direction of
individuals & group behavior . Inspires sub-ordinates to work with zeal , willingness & initiaties to
achieve enterprise goals
• Leadership & Motivation are 2 wings of Direction in the process of management
 Controlling

• Controlling consists of whether everything occurs in conformities with plans adopted ,

instructions issued & principles established
• Measures the deviation of actual performance from standard performance , discovers causes
os such deviations & helps in taking corrective action
• Controlling is End Function – It comes when performances are made as per plan
• Pervasive Function – Performed by managers at all levels in all organizations
• Forward Looking – Looks forward so follow-up can be made whenever required
• Dynamic Process – Since it requires review , changes have to made wherever possible
• Related with Planning – Planning & Controlling are 2 inseparable functions of management .
Without Planning , controlling is meaningless & without Controlling , Planning is useless
• Planning comes first , then Controlling succeeds Planning
• Controlling most important function is risk reduction capability
 How to Control ?

1. Establishment of Standards – Standards are targets to be achieved. They can be measurable like cost ,
output , expenditure , time , profit or Non-measurable like loyalty , performance , honesty of employee
, hard work etc
2. Measurement of Performance – Second step is measurement of performance . Tangible standards are
easy to measure , but intangible are difficult . It can be done by various reports like weekly , monthly ,
quarterly , yearly reports etc
3. Comparison of Actual Performance with Standard – Comparison is done to find out deviation – Extent
& cause of deviation . Deviation is positive or negative. Minor deviations can be ignored , but major
like quality of RM , rate of profits should be looked upon , we should also find out cause of deviation
like erroneous planning , coordination problem , plan is defective , supervision & communication
ineffective
4. Taking Remedial Action – After identifying deviation & cause , we will take corrective action . 2
Alternatives are there –
• Take corrective measures for deviations which have occurred
• After corrective measures , still actual performance is not as per plans , we will revise targets.