PRINCIPLES OF MANAGEMENT
Prof. MAHUA MUKHERJEE

CHAPTER 1 INTRODUCTION
RESOURCES
MATERIAL
TECHNICAL
FINANCIAL
HUMAN
INFORMATION
ACHIEVEMENT
OF GOALS
PLANNING ORGANISING MOTIVATING CO-
ORDINATING
CONTROL

MANAGEMENT
• MANAGING MEN TACTFULLY
• MANAGING “M-S “ TACTFULLY
MEN
MONEY
MATERIALS
MACHINES
METHODS
MINUTES
MARKETS

DEFINATION
• HENRY FAYOL
“To manage is to forecast and to plan to organise,to command,
to co-ordinate and to control”
• PETER DRUCKER (1909–2005) saw the basic task of
management as twofold: marketing and innovation.
Nevertheless, innovation is also linked to marketing (product
innovation is a central strategic marketing issue). Peter
Drucker identifies marketing as a key essence for business
success, but management and marketing are generally
understood as two different branches of business
administration knowledge

“Management” (from Old French ménagement
“the art of conducting, directing”, from Latin
manu agere “to lead by the hand”)
**characterises the process of leading and
directing all or part of an organization, often a
business, through the deployment and
manipulation of resources (human, financial,
material, intellectual or intangible)
**story of horse

CHARACTERISTICS/NATURE
• 1. Management as a continuous process
• 2. Management as a discipline
• 3. Management as a career
• 4. Management as an Applied Science
• 5. Universal Application
• 6. Goal Oriented
• 7. Guidance
• 8. Divorced from proprietorship

• 9. An activating factor
• 10. Management is a human activity
• 11. Management signifies authority
• 12. Leadership

• Management as a continuous process:
Management can be considered as a process because it consists
of planning, organizing, activating and controlling the resources
(personnel and capital) of an organization. So they are used to
the best advantage in achieving the objectives of the
organization.
None of the managerial functions would produce the ultimate
results in the absence of all other basic functions. Hence we can
say that management is a continuous process.

• Management as a discipline:
Since the boundaries of management are not exact as that of any other
physical sciences, it may not fit in very well for being addressed as
discipline. However its status as a discipline increases because it
continuously discovers many aspects of business enterprises and also
passes on the verified knowledge to the practitioners of the managerial
process.
• Management as a career:
As a career or occupation, management is a broad concept-
Management itself can be regarded as a career, but it also presents a
variety of interesting and challenging careers focused on specialized
occupations in the fields such as marketing, finance and personnel.

• Management as an Applied Science:
Even though management is a science so far as it possesses a
systematized body of knowledge and uses scientific methods of
research, it is not an exact science, like natural sciences which
deal with living phenomena such as botany and medicine.
Hence, management is definitely a social science like economics
or psychology and has the same institutions which these and
other social sciences have.
• Universal Application:
Management is a universal activity, applied to any form of activity,
economic or otherwise.

• Goal Oriented:
Management has the task of attaining certain objectives. The
success or failure of the management depends on how far it is
able to attain the desired goals. It is judged by the extent to
which it achieves its targets.
• Guidance:
The main task of the management is guidance in the utilization
of material and human resources in the best possible way.
Through optimum utilization of resources it has to ensure that
the objectives are attained.

• Divorced from proprietorship:
Management does not signify proprietorship. In earlier days,
management and enterprise were lumped into the same factor. It now
refers to a specialized group of people who have acquired the ability to
carry out a project.
• An activating factor:
Management is the factor which activates other factors of
production. A manager's skill lies in motivating his workers
through guidance, training, incentives, rewards, status, security,
control, etc. So a mangers' ability lies in the fact that he is able
to motivate others to apply their skill to the best advantage of
the enterprise in the accomplishment of its objectives.

• Management is a human activity:
Management functions are discharged only by individuals. No
corporate body or an artificial being can perform the work of a
management. Although it is an activity which may be performed by an
individual it cannot be seen. It can only be felt.
• Management signifies authority:
Since the essence of management is to direct, guide and control,
it has to have authority. Authority is the power to compel others
to work and behave in a particular manner. Management cannot
discharge its function without authority. It is the foundation of
management.

• Leadership:
• The management has to lead a team of workers.
It must be capable of inspiring, motivating and
winning their confidence.

IMPORTANCE
1. It helps in Achieving Group Goals - It arranges the
factors of production, assembles and organizes the resources,
integrates the resources in effective manner to achieve goals. It
directs group efforts towards achievement of pre-determined goals.
2. Optimum Utilization of Resources - Management
utilizes all the physical & human resources productively. This leads to
efficacy in management. Management provides maximum utilization
of scarce resources by selecting its best possible alternate use in
industry from out of various uses.
3. Reduces Costs - It gets maximum results through minimum
input by proper planning and by using minimum input & getting
maximum output. Management uses physical, human and
financial resources in such a manner which results in best
combination. This helps in cost reduction.

4. Establishes Sound Organization - No
overlapping of efforts (smooth and coordinated
functions). To establish sound organizational
structure is one of the objective of management
which is in tune with objective of organization and
for fulfillment of this, it establishes effective
authority & responsibility relationship i.e. who is
accountable to whom, who can give instructions to
whom, who are superiors & who are subordinates.

• 5Establishes Equilibrium - It enables the
organization to survive in changing
environment. It keeps in touch with the
changing environment. With the change is
external environment, the initial co-ordination
of organization must be changed. So it adapts
organization to changing demand of market /
changing needs of societies. It is responsible for
growth and survival of organization.

• 6.Essentials for Prosperity of Society -
Efficient management leads to better
economical production which helps in turn to
increase the welfare of people. Good
management makes a difficult task easier by
avoiding wastage of scarce resource. It improves
standard of living. It increases the profit

FUNCTIONS OF MANAGEMENT

• Management is essential for organized life and
necessary to run all types of organizations.
Managing life means getting things done to achieve
life’s objectives and managing an organization
means getting tings done with and through other
people to achieve its objectives.
• Management is a set of principles relating to the
functions of planning, organizing, directing, and
controlling, and the applications of these principles
in harnessing physical, financial, human and
informational resources efficiently and
effectively to achieve organizational goals.

• There are basically five primary functions of
management. These are:
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

• The controlling function comprises co-ordination,
reporting and budgeting, and hence the controlling
function can be broken into these three separate
functions.
• Based upon these seven functions, Luther Guelick
coined the word POSDCORB, which generally
represents the initials of these seven functions i.e. P
stands for Planning, O for Organizing, S for
Staffing, D for Directing, Co for Co-
ordination, R for reporting & B for
Budgeting.

PLANNING
• Planning is future oriented and determines an
organization’s direction. It is a rational and
systematic way of making decisions today that
will affect the future of the company. It is a kind
of organized foresight as well as corrective
hindsight. It involves the predicting of the future
as well as attempting to control the events. It
involves the ability to foresee the effects of
current actions in the long run in the future.

ORGANISING
• Organizing requires a formal structure of authority
and the direction and flow of such authority through
which work subdivisions are defined, arranged and
co-ordinated so that each part
relates to the other part in a united and coherent
manner so as to attain the prescribed objectives.
• According to Henry Fayol, “To organize a
business is to provide it with everything
useful or its functioning i.e. raw material,
tools, capital and personnel’s”

STAFFING
• Staffing is the function of hiring and
retaining a suitable work-force for the
enterprise both at managerial as well as
non-managerial levels. It involves the
process of recruiting, training, developing,
compensating and evaluating employees, and
maintaining this workforce with proper
incentives and motivations. Since the human
element is the most vital factor in the process of
management, it is important to recruit the right
personnel.

DIRECTING
The directing function is concerned
with leadership, communication, motivation and
supervision so that the employees perform their
activities in the most efficient manner possible, in order
to achieve the desired goals.
The leadership element involves issuing of
instructions and guiding the subordinates about
procedures and methods.
.

The communication must be open both ways so that the
information can be passed on to the subordinates and the
feedback received from them.
Motivation is very important, since highly motivated
people show excellent performance with less direction from
superiors.
Supervising subordinates would lead to continuous
progress reports as well as assure the superiors that the
directions are being properly carried out

CONTROLLING
• The function of control consists of those
activities that are undertaken to ensure that the
events do not deviate from the per-arranged
plans. The activities consist of establishing
standards for work performance, measuring
performance and comparing it to these set
standards and taking corrective actions as and
when needed, to correct any deviations.

The controlling function involves:
a. Establishment of standard performance.
b. Measurement of actual performance.
c. Measuring actual performance with the
pre-determined standard and finding out
the deviations.
d. Taking corrective action.

LEVELS OF MANAGEMENT

• Levels of Management are a term referred to line of
differentiation among various administrative positions
in a company. The levels may increase as and when the
size of the business increases and vice versa. Level of
Management determines the chain of control and the
quantity of power and position that is given to any
management role to an individual in an organization.
• Levels of Management are broadly classified into three:
1. Managerial or the Top Level Management
2. Executive or Middle Level
3. ManagementSupervisory or Operative Level
Management

1. Managerial or the Top Level Management:
• This level consists of the board of directors and
managing director. It is the supreme source of
power since it manages the policies and
procedures of an entity. Their main
responsibility lies in planning and coordinating.
The roles and responsibilities of this ‘creamy’
level can be summed up as follows:

(a). It is at this level that all the objectives and major
policies are laid down.
(b). Instructions are given for preparing the necessary
budgets for various departments, schedules and policies.
(c). Preparation of premeditated plans and policies are
done at this level.
(d). Appointment of executives at central level or
departmental heads.
(e). Since it consists of Board of Director the top
administration is accountable towards the shareholders for
performance of the organization.
(f). Harmonization and control are the two major roles
played by the top management.
(g). It guides the organization in the right direction towards
achieving the goals and objectives.

2. Executive or Middle Level Management:
The line and departmental managers form this
level of management. These people are directly
accountable to the top management for
functioning of their respective departments. Their
main role comes under the directional and
managerial functions of an organization. The roles
of managers at this level are as follows:

a). The main role lies in the implementation of
policies and plans as per the directives of the top
management.
(b). Preparing plans for the sub units of their
respective departments.
(c). Actively contribute in guidance and
employment of supervisory level of management.
(d). Their duty is to understand and elucidate the
policies of the top management to the lower
management.

(e). Bringing together the activities within the
department is another role at this level of
management.
(f). Assessment of performance of junior
managers.
(g). Timely and important reports or data to be
sent to the top management.
(h). Motivation of supervisory managers is a vital
role of this level of management.

3. Supervisory or Operative Level Management:
• This level constitutes mostly of supervisors,
foremen and first line managers. The main role
of these people are:
• (a). Handing over jobs or responsibilities to a
variety of workers.
• (b). Guidance towards day to day activities of the
organization.
• (c). These managers are directly responsible for
quality and amount of production.

(d). They act as mediators in communicating the
problems of workers and also undertake
recommending solutions to higher level of
organization.
(e). They take stock of the machines and material
required for the work to be done.
(f). They are the role models for the workers as
they are directly and constantly in touch them.
(g). It is their duty to uphold discipline and
decorum in the organization.

DIFFERENT SCHOOLS OF MANAGEMENT THOUGHTS
HISTORICAL
BACKGROUND
Pre Classical
Contributions
THE EARLY YEARS –
CLASSICAL
THEORISTS
SCIENTIFIC
MANAGEMENT
(1856-1915)
F.W.TAYLOR
GENERAL
ADMINISTRATIVE
THEORISTS
HENRY FAYOL
(1841-1925)
MAX WEBER
(1864-1920)
THE EARLY
YEARS
HUMAN
RESOURCES
APPROACH
CHESTER BERNARD
Early Advocates
ROBERT OWEN
HUGO MUNSTERBERG
MARY PARKER FOLLETT
(early 1900)
HAWTHORNE
EXPERIMENTS
ELTON MAYO
(1927-1932)
HUMAN RELATIONS
MOVEMENT
DALE CARNEGIE
ABRAHAM MASLOW
DOUGLUS MC
GREGOR
BEHAVIOURAL SCIENCE
THEORISTS
FRED FIEDLER,VICTOR
VROOM,FREDERICK
HERZBERG,EDWIN LOCKE,
DAVID MC
CLELLAND,RICHARD
THE EARLY
YEARS
QUANTITATIVE
APPROACH
OPERATIONS
RESEARCH
MANAGEMENT
SCIENCE
RECENT
YEARS
INTEGRATIVE
APPROACHES
PROCESS
SYSTEM
CONTINGENCY

SCIENTIFIC MANAGEMENT- F.W.Taylor
• Having worked in a number of factories i.e Steel
Companies in Pennsylvania viz. MIDVALE
AND BETHLEHEM and having carefully
observed what was going on , FREDERICK W.
TAYLOR had come to the conclusion that the
main cause of general inefficiency and
wastes in the factories was ignorance on the
part of both men and management.

SALIENT FEATURES OF SCIENTIFIC MANAGEMENT
• ESTABLISHMENT OF A SEPARETE
DEPARTMENT FOR PRODUCTION PLANNING
• INTRODUCTION OF PRINCIPLE OF
SPECIALISATION (Gang Boss, Speed Boss, Repair
Boss & Shop Disciplinarian )
• SYSTEMATIC SELECTION AND TRAINING OF
WORKERS
• USE OF THE TECHNIQUE OF TIME STUDY
• USE OF THE TECHNIQUE OF MOTION STUDY
• INTRODUCTION OF DIFFERENTIAL PIECE
WORK PLAN
• STANDARDISATION OF TOOLS, EQUIPMENTS
ETC.

PHILOSOPHY OF SCIENTIFIC MANAGEMENT
• Science and not the rule of thumb
• Harmony and not discord
• Co-operation and not individualism
• Maximum output in case of restricted
output
And
• The development of each man to his greatest
efficiency and prosperity

Scientific management is not an efficiency device, nor time
study nor motion study nor it is a new sysytem of paying
the workers.
In its essence it involves a complete mental revolution on
the part of the workers and equally complete revolution on
the part of those in this side of management viz. foremen,
the superintendent and the directors.
Without this mental revolution scientific management
does not exist.

Taylor defined Scientific management
as
• “knowing exactly what you want men todo”
• “seeing that they do it in the best and the cheapest way”
• “It is the art of knowing what is to be doneand thebest way of doing it”

MERITS
• REMOVAL OF TRADITIONAL
PRACTICES AND DEVELOPING A
SCIENCE FOR EACH ELEMNET OF
WORK AT SHOPLEVEL
• SELECTION OF WORKING PERSONNEL
ON SCIENTIFIC LINE AND PLACED TO
DIFFERENT JOBS ACCORDING TO
THEIR APTITUDE AND INCLINATIONS

• IT BRINGS ABOUT A MENTAL
REVOLUTION ON THE PART OF BOTH
MANAGEMENT AND WORKING
PERSONNEL
• IT ESTABLISHES A FUNCTIONAL
ORGANISATION
• IT ELIMINATES UNNECESSARY
EXHAUSTUION BY INTRODUCING
MOTION STUDY

• IT EMBRACES FATIQUE STUDY
• IT ENABLES TIME STUDY
• INTRODUCING INCENTIVE WAGE
SYSTEM
• AIMS IN MAXIMISING PRODUCTION
• LESSENING INDIVIDUAL
DICTATORSHIP AND FALLIBILITY
• ENCOURAGING SCIENTIFIC ANALYSIS
AND AVOIDING GUESSWORK AND HIT
OR MISS METHOD.

CRITICISMS
• Workers were considered as mere cog of the
machines
• Taylor could not imagine the disastrous
consequence of excessive division of
labour
• The theory is applicable only to the
activities of a factory or to the production
department of a business organisation.
• Other important activities are ignored.

Henry Fayol
• French Industrialist
• 1916
• ADMINISTRAN INDUSTRIELLE AT
GENERALE – book published in French.
• Fayol looked into problems of managing an
organisation from top management point of
view.

HENRY FAYOL – 14 PRINCIPLES OF MANAGEMENT
• DIVISION OF WORK
• AUTHORITY AND RESPONSIBILITY
• DISCIPLINE
• UNITY OF COMMAND
• UNITY OF DIRECTION
• SUBORDINATION OF INDIVIDUAL
INTEREST TO GENERAL INTEREST
• FAIR REMUNERATION TO WORKERS

• EFFECTIVE CENTRALISATION
• SCALAR CHAIN
• ORDER
• EQUITY
• STABILITY OF TENURE OF WORKERS
• INITIATIVE
• ESPIRIT DE CORPS

WEBER’S IDEAL BUEARUECRACY THEORY
BUREAUCRACY
A form of organisation marked
by division of labour, hierarchy,
rules & regulations & impersonal
relationships
PREDICTABILITY

• MAX WEBER a German sociologist in early
1900’s developed a theory of authority
structures and described organisational
activity based on authority relations.
• He described an ideal type of organisation as
bureaucracy.

Weber recognised that ‘IDEAL BUREAUCRACY’
did not existed in reality but rather represented a
selective reconsruction of the real world.
He meant it as a basis of –
Theorizing about work
How work could be done in large groups

DIVISION OF
LABOUR
AUTHORITY
HIERARCHY
FORMAL SELECTION
FORMAL RULES
&REGULATIONS
IMPERSONALITY
CAREER
ORIENTATION

DIVISION OF
LABOUR
JOBS ARE BROKEN DOWN
INTO SIMPLE , ROUTINE AND
WELL DEFINED TASKS
AUTHORITY
HIERARCHY
OFFICES
ORPOSITIONS ARE
ORGANISED IN A
HIERARCHY EACH
LOWER ONE BEING
CONTROLLED AND
SUPERVISED BY A
HIGHER ONE

FORMAL
SELECTION
ALL ORGANISATIONAL MEMBERS
ARE TO BE SELECTED ON THE
BASIS OF THEIR TECHNICAL
QUALIFICATIONSDEMONSTRATED
BY TRAINING, EDUCATION OR
FORMAL EXAMINATION
FORMAL
RULES AND
REGULATIONS
TO ENSURE UNIFORMITY AND TO
REGULATE THE ACTIONS OF
EMPLOYEES &MANAGERS MUST
DEPEND HEAVILY ON FORMAL
ORGANISATIONAL RULES

IMPERSONALITY
CAREER
ORIENTATION
RULES AND CONTROLS ARE
APPLIED UNIFORMLY
AVOIDING INVOLVEMENT
WITH PERSONALITIES AND
PERSONAL PREFERENCE OF
THE EMPLOYEES
MANAGERS ARE
PROFESSIONAL OFFICIALS
RATHER THAN OWNERS OF
UNITS THEY MANAGE.THEY
WORK FOR FIXED SALARIES
AND PURSUE THEIR CAREERS
WITHIN THE ORGANISATION

Merits
1. The theory forms a basis for theorizing work
2. It helps to perform work in large groups
3. His theory has become a model for many of today’s organisation.
Criticisms
1. Bureaucracy as described by Weber is a lot like scientific management in its
ideology.
2. Weber’s writings were less operational than Taylor’s
3. Strict adherence to rules & regulations

HAWTHORNE STUDIES
• A management movement started in USA giving
particular importance to HUMAN RELATIONS.
• This is called HUMAN RELATIONS
APPROACH
• This Human Relations Approach evolved as a result
of the investigations carried out in the Electric
Co.located in Chicago, USA.The electric co.
produced telephone apparatus and appliances.
• About 30,000 workers were employed in this plant
of which majority were female workers.

• The Researchers of the Graduate School of
Business Administration of the HARVARD
UNIVERSITY carried out the investigations for 5
years from APRIL 1927 to MAY 1930.
• Famous Australian psychologist ELTON MAYP
provided leadership to these researches.

The investigations were carried out in
this way:-
• Intervals of 5 minutes duration were provided two
times a day to the female workers one in the
morning 10 AM and another in the afternoon @
PM.This was followed for 5 weeks.
• The interval time was extended to 10 minutes and
this was carried on for 4 weeks.
• After this intervals were provided 6 times but the
duration was reduced to 5 minutes again and this
was continued for 4 weeks.
• Lastly intervals of 10 minutes duration were
provided 2 times.Breakfast was given during
morning interval time and during afternoon
interval, some foods were served. This time the

Working hour was reduced by one hour.after this
5 working days week was followed.In other words
Saturday and Sunday were declared as holidays.

For experimantation and investigation:
1. A group of 5 female workers were constituted.
2. Incentive wages were paid to them depending
on group production.
3. As it was a small group the female workers got
aquainted with each other and increase in
group production.
4. Production was increasing as a result of the
introduction of incentive wage plan.
5. Intervals and refreshments increased
production further.

6. But the wonderful result of this investigation
was that- Production was increasing whether
intervals and refreshments were given or not.
7. Another important point of this investigation
was that interviews with workers and employees
were arranged.
8. In one such interview the above 5 female
workers expressed that they did not like the
supervisor’s policy of getting work done by putting
pressure on them.

9. During these weeks as the supervisor’s red eyes
were not on them they were able to increase
production by their own effort.
10. They alleged further that the survile attitude of
the supervisors towards them and his managerial
domination dampened their initiative and spirit
and willingness to work.

Mayo’s explanations :
• Only economic incentive cannot increasee
production
• Other incentives are also to be provided
• Importance is to be given to group efforts.
• Instead of showing red eyes & putting pressure
for increasing production, human relations with
them is to be established.
• Social factors are of great importance at work.
• Both the behaviour and motivation of individual
workers are affected by group relationships.

• It was discovered that an informal group of
workers exist along with formal organisation
pattern and this contribute to work satisfaction
and work motivation as does tha physical
environment.
• Job satisfaction and social satisfaction are
important to workers.
• The need for adequate communication between
the workers and management was established to
build up satifactory social relations.

T h e E n d