Principles of Management

Dr. Vivek N Katare
Shantiniketan Business School, Nagpur

Topics to be prepared….
• Concept, Nature, Process and Significance of
Management; Managerial Roles
• An Overview of Functional Areas of Management
– Marketing, Finance, Production, HRM, IT, R and D
• Development of Management Thought –
Classical, Neo- Classical, System and Contingency
Approaches – An Overview.

Management
• What is management ?
It is the art of getting things done by a group of
people with the effective utilization of available
resources.
When a minimum of two persons, essentially
come together to form a team to perform
functions in order to achieve the objectives of the
organization is k/as management.

Management is an organ; organs can be
defined and described only through their
functions.

Management is not people: it is an activity like
walking, reading, swimming or running
People who perform management can be
designated as members of management or
executive leaders

To manage is to forecast and
plan, to organize, to compound,
to coordinate and to control

Management is the art of
getting things done
through and with an
informally organized group.

Management is the art of knowing what
you want to do and then seeing that it is
done in the best and cheapest way.

• Management is the creation and maintenance of an
internal environment in an enterprise where
individuals working in groups, can perform
efficiently and effectively towards the of group
goals.
• It is the art of getting work done through and with
people in formally organized groups.

Nature of Management
Management- An art or a science??
• Science- Management is a developing
science. However management can be
equated with exact sciences like physics and
chemistry. Most of the managerial activities
like decision making, planning, organizing and
directing cannot be an exact science.
• But management satisfies the characteristics
of science like:

a) Body of knowledge being developed
systematically; in the same way management
knowledge is developed through a number of
systems like i/p- o/p system, organizational
system, functional system, etc.
b) Management knowledge is developed
through observation, measurement and
experimentation.
c) Inferences are drawn based on data analysis.

• Art- It is an understanding how a particular activity can be
done. Art can be acquired by conscious effort and practice.
Management is getting things done by and through other
people. They have to modify the strategies based on the
environmental changes.
The principles of management and theories of
management cannot be implemented as learnt, in the real
world. They have to be modified based on the and then
applied based on the real life situations.

Functions of Management
1. Planning:
In order to achieve objectives, the
organization plans what has to be done, how
it is to be done, when it is to be done, what is
to be done and by whom it is to be done!!!
Planning should take place before doing,
most individual or group efforts are made by
determining before any operative action
takes place, what shall be done, where, how
and who shall do it.

2. Organizing :
Organizing is the distribution of work group
wise or section wise for effective
performance.
Organization provides all facilities which are
necessary to perform the work. The
organization divides the total work and
coordinates all the activities by authority and
relationship.

• Organization is of two types: (Henri Fayol)
1. Human Factor- It covers the distribution of
work to those who are best suitable along with
authority and responsibility.
2. Material Factor-It covers utilization of raw
material, plant and machinery, etc
Knootz and O’Donnell:
Organizing consists of conscious coordination of
people towards a desired goal.

3. Staffing:
Staffing function comprises the activities of
selection and placement of competent
personnel. It means, staffing includes
selection of right persons, training to those
needy persons, promotion of best persons,
and retirement of old persons, performance
appraisals of all the personnel and adequate
remuneration of the personnel.

4. Directing:
The actual performance of the work starts with the
function of direction.
Planning, organizing are concerned with the
preliminary work for the achievement of
organizational goals.
Direction deals with making the workers learn the
techniques to perform jobs assigned to them. It
includes guidance, supervision and motivation of
employees.

5. Coordinating:
All the activities are divided group wise or
section wise under organizing functions. Such
grouped activities are coordinated towards
the accomplishment of objectives of an
organization.
The difficulty of coordination depends on the
size of the organization.

6. Controlling:
Controlling function ensures that the
achieved objectives conform to pre-planned
objectives. Necessary corrective action
maybe taken if there is any deviation. The
control is very easy whenever the
organization has a fixed standard.

7. Innovation:
Innovation refers to the preparations of
personnel and organization to face the
changes made in the business world.
Innovation involves developing new material,
new products, new techniques in production,
new package, new design of a product and
cost reduction.

Importance of Management
• Management is a must for every enterprise. The
existence of management ensures proper
functioning and running of an enterprise.
Management can plan the activities to achieve the
objectives and utilize the available resources at a
minimum cost.
• Management provides a direction for every business.
The resources of production are converted into
production, they will remain as resources in the
absence of management. The conversion process
occurs only through management co-ordination.

Importance of Management is
explained as below
1. Manage meets the challenge of change: In
the modern business world, change is
inevitable. Change can bring businesses in
dangerous positions. Only an effective
management saves the business from the
dangers caused due to emerging challenges.

Importance of Mgmt is exp as below
2. Accomplishment of group goals: It depends
upon 3 factors-
a) Proper planning of avail resources.
b) Adjusting possibility of business unit with
existing business environment.
c) The quality of decision taken and the control
made by the business unit.

3. Effective utilization of business: The eight M’s
in a business are Man, Money, Material,
Machine, Methods, Motivation, Markets and
Management. Management is the top most of
all other Ms and controls the other remaining
Ms.

4. Effective functioning of business: Ability,
experience, mutual understanding,
coordination, motivation and supervision are
some of the factors responsible for the
effective functioning of the business.
Cooperation is obtained through mutual
understanding and abilities of workers are
properly understood and put to use.

5. Resource Development: Efficient
management is the backbone of any
business. The resources like men, money,
material and machine can be identified and
developed by the management.

6. Sound Organization Structure: This means
the authority and responsibility relationship-
i.e who is responsible to whom, who will
report to whom, etc.
Care is taken in appointing qualified persons
to the right job by the management.

7. Management directs the organization: It is
the management which directs and controls
the functioning of the organization.
8. Integrates various interests: Management
takes various steps to integrate interests to
achieve the objectives of an organization

9. Stability: The fluctuations in a business are
stabilized by the management. These
fluctuations are caused due to changing govt
policies, pressures on the part of competitors
and changing customer tastes.
10. Innovation: Innovation leading to new ideas
are developed and implemented by the
management in the organization.

11. Coordination and team spirit: All the
activities of business are grouped dept-wise.
Management coordinates the activities of
different departments and establishes team
spirit to achieve the objectives.
12. Tackling problems: The role of a good
management is to help build the confidence of
the team to tackle problems by acting as
friend or guide.

13. Tool for personality development:
Management acts as a tool for developing the
personality of the workers. Management
conducts gives direction, provides new
techniques and methods and training facilities
to the workers to help them to raise their
efficiency and productivity ability.

Managers are responsible for the processes of
getting activities completed efficiently with and
through other people and achieving the firm’s
goals through the execution of four basic
management functions: planning, organizing,
leading, and controlling. Both sets of processes
utilize human, financial, and material
resources.
Managerial Roles

10 Managerial Roles by Henry Mintzberg

Interpersonal Category
The managerial roles in this category involve providing information
and ideas.
Figurehead – As a manager, you have social and legal responsibilities.
You're expected to be a source of inspiration. People look up to you
as a person with authority, and as a figurehead.
Leader – This is where you provide leadership for your team, your
department or perhaps your entire organization; and it's where you
manage the performance and responsibilities of everyone in the
group.
Liaison – Managers must communicate with internal and external
contacts. You need to be able to network effectively on behalf of
your organization.

Informational Category
The managerial roles in this category involve processing information.
Monitor – In this role, you regularly seek out information related to your
organization and industry, looking for relevant changes in the
environment. You also monitor your team, in terms of both their
productivity, and their well-being.
Disseminator – This is where you communicate potentially useful
information to your colleagues and your team.
Spokesperson – Managers represent and speak for their organization. In
this role you're responsible for transmitting information about your
organization and its goals to the people outside it.

Decisional Category
The managerial roles in this category involve using information.
Entrepreneur – As a manager, you create and control change within
the organization. This means solving problems, generating new ideas,
and implementing them.
Disturbance Handler – When an organization or team hits an
unexpected roadblock, it's the manager who must take charge. You
also need to help mediate disputes within it.
Resource Allocator – You'll also need to determine where
organizational resources are best applied. This involves allocating
funding, as well as assigning staff and other organizational resources.
Negotiator – You may be needed to take part in, and direct, important
negotiations within your team, department, or organization.

Overview of Functional Areas of Management
• Leverage our existing customer base using
best-in-class direct marketing campaigns via e-
mail, phone, Web, and print or mail
communications.
• Convert our current customer spreadsheet and
database into a highly functional, lean customer
relationship management (CRM) system
Marketing :

• Be great at customer service personally—
excelling in person and on the phone, and you
will help us build a Ninja certification system for
our employees and partners to be like you.
• Build our Web-enabled direct sales force,
requiring a lot of strategic work, sales-force
incentive design and experimentation, and
rollout of Web features to support the direct
channel.
Marketing :

Finance & Accounting :
• Build our financial and accounting structures
and processes, take over QuickBooks, manage
our team of accountants, hire additional
resources as needed, and get that profit and
loss statement (P&L) rocking.

• Figure out when we should pay our bills
and manage team members to get things
paid on time and manage our working capital
effectively.
• Track our actual revenues and expenses
against your own projection—you will be
building and running our financial model.
Finance & Accounting :

Production & Product Development :
• The company is actively recruiting production
assistant/ manager—in the meanwhile, there
are a number of Wage-facing and vendor-facing
activities you will pitch in on.

This includes managing recruiting and hiring
employees, coordinating employee benefits and
suggesting employee training and development
strategies. In this way, HR professionals are
consultants, not workers in an isolated business
function; they advise managers on many issues
related to employees and how they help the
organization achieve its goals.
Human Resource Management:

Information Technology :
This includes task management in organization
by use of computers and internet.
• Communication : Email is the principal means
of communication between employees,
suppliers and customers. Email was one of the
early drivers of the Internet, providing a simple
and inexpensive means to communicate

Information Technology :
• Inventory Management: These systems are
best used when the inventory management
system is connected to the point-of-sale (POS)
system. The POS system ensures that each time
an item is sold, one of that item is removed
from the inventory count, creating a closed
information loop between all departments.

Research & Development :
R&D management can be defined as where the
tasks of innovation management (i.e., creating
and commercializing inventions) meet the tasks
of technology management (i.e., external and
internal creation and retention of technological
know-how). It covers activities such as basic
research, fundamental research, technology
development, advanced development, concept
development, new product development, process
development, technology transfer, etc.

Development of Management Thought !
The emergence of management thought is not a
matter of mere chance. The development of it was
gradual and it has passed through various distinct
time periods.
Herbert G. Hicks has divided the period into three
distinct stages. We shall classify the stages of the
time periods i.e. the evolution of management into
three periods viz.
(1) The Classical Period (1900-1930)
(2) The Neo-Classical Period (1930-1950) &
(3) The Modern Period (1950 to present)
Stages in the History of

We can identify three streams of thought in this
period:
1. Bureaucratic Model introduced by Max
Webber around 1900.
2. Scientific Management Concept introduced
by F.W, Taylor around 1910.
3. Functional or Administrative or Process
Management Theory advanced by Henry Fayol
around 1910.
I. The Classical Theory of Management:

II. The Neo-Classical Theory:
It includes two streams of thought:
1. Human Relations Movement was propagated
by Elton Mayo and Reothlisberger around 1930.
2. Behavioral Sciences Movement was introduced
by A. Maslow, McGregor around 1940.

III. The Modern Management Theories:
It consists of three steams of thought:
1. Quantitative Approach or Operations Research
Analysis was developed by Taylor around 1950.
2. Systems Approach was propounded by
Boulding, Johnson and others after 1950.
3. Contingency Approach was developed by
Lorsch, Lawrence and others.

Weber has given a number of features of bureaucracy.
Accordingly, following features suggest the characteristics
of bureaucratic organizations.
Max Weber’s Bureaucracy:
1. Administrative Class:
Bureaucratic organizations generally have administrative
class responsible for maintaining coordinative activities
of the members.
The Classical Theory
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(iii) Their tenure in the organization is determined by the
rules and regulations of the organization
(iv) They do not have any proprietary interest in the
organization
(v) They are selected for the purpose of employment
based on their competence
Main features of Administrative class are:
(i) People are paid and are whole time employees
(ii) They receive salary and other perquisites normally
based on their positions
Max Weber’s Bureaucracy: The Classical Theory
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2. Hierarchy:
The basic feature of bureaucratic organization is
that there is hierarchy of positions in the
organization. Hierarchy is a system of ranking
various positions in descending scale from top to
bottom of the organization. In bureaucratic
organization, offices also follow the principle of
hierarchy that is each lower office is subject to
control and supervision by higher office.
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3. Division of Work:
Work of the organization is divided on the basis of
specialization to take the advantages of division of
labor. Each office in the bureaucratic organization has
specific sphere of competence.
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4. Official Rules:
A basic and most emphasized feature of
bureaucratic organization is that administrative
process is continuous and governed by official
rules. Bureaucratic organization is the antithesis of
ad hoc, temporary, and temporary and unstable
relations.
Rules provide the benefits of stability, continuity,
and predictability and each official knows precisely
the outcome of his behavior in a particular matter.
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5. Impersonal Relationships:
A notable feature of bureaucracy is that
relationships among individuals are governed
through the system of official authority and
rules.
Official positions are free from personal
involvement, emotions and sentiments. Thus,
decisions are governed by rational factors rather
than personal factors. This impersonality concept
is used in dealing with organizational relations
as well as relations between the organization and
outsiders.
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6. Official Record:
Bureaucratic organization is characterized by
maintenance of proper official records. The
decisions and activities of the organization are
formally recorded and preserved for future
reference.
This is made possible by extensive use of filling
system in the organization. An official record is
almost regarded as encyclopedia of various
activities performed by the people in the
organization.
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F. W. Taylor’s Scientific
Management Concept
(1) Science, Not Rule of Thumb:
This principle says that we should not get stuck in
a set routine with the old techniques of doing
work; rather we should be constantly
experimenting to develop new techniques which
make the work much simpler, easier and quicker.

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Management Concept
Taylor has referred to such a situation as a ‘Mental
Revolution’. Taylor firmly believed that the occurrence
of a mental revolution would end all conflicts between
the two parties and would be beneficial to both of
them.
As per this principle, such an atmosphere should be
created in the organization that labour (the major
factor of production) and management consider each
other indispensable.
(2) Harmony, Not Discord:

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Management Concept
3) Cooperation, Not Individualism:
According to this principle, all the activities done
by different people must be carried on with a
spirit of mutual cooperation.
Taylor has suggested that the manager and the
workers should jointly determine standards. This
increases involvement and thus, in turn, increases
responsibility.

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Management Concept
(4) Development of Each and Every Person to His / Her
Greatest Efficiency and Prosperity:
According to this principle, the efficiency of each and
every person should be taken care of right from his
selection. A proper arrangement of everybody’s training
should be made.
It should also be taken care that each individual should
be allotted work according to his ability and interest.
Such a caring attitude would create a sense of
enthusiasm among the employees and a feeling of
belongingness too.

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Functional or Administrative or
Process Management Theory
1. Specialization/Division of Labor
By specializing in a limited set of activities, workers
become more efficient and increase their output.
2. Authority/Responsibility
Managers must have the authority to issue commands,
but with that authority comes the responsibility to
ensure that the work gets done.
Fayol’s 14 Principles of Management

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4. Unity of Command
An employee should receive orders only from one
boss to avoid conflicting instructions.
3. Discipline
Workers must obey orders if the business is to run
smoothly. But good discipline is the result of effective
leadership: workers must understand the rules and
management should use penalties judiciously if
workers violate the rules.

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6. Subordination of Individual Interest
The interests of one person should never take
precedence over what is best for the company as a
whole.
7. Remuneration
Workers must be fairly paid for their services.
5. Unity of Direction
Each unit or group has only one boss and follows one
plan so that work is coordinated.

8. Centralization
Centralization refers to decision making: specifically,
whether decisions are centralized (made by
management) or decentralized (made by
employees).
Fayol believed that whether a company should
centralize or decentralize its decision making
depended on the company’s situation and the
quality of its workers.
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9. Line of Authority
The line of authority moves from top management
down to the lowest ranks. This hierarchy is necessary
for unity of command, but communication can also
occur laterally if the bosses are kept aware of it. The
line should not be overextended or have too many
levels.
10. Order
Orderliness refers both to the environment and
materials as well as to the policies and rules. People
and materials should be in the right place at the right
time.
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11. Equity
Fairness (equity), dignity, and respect should pervade
the organization. Bosses must treat employees well,
with a “combination of kindliness and justice.”
12. Stability of Tenure
Organizations do best when tenure is high (i.e.,
turnover is low). People need time to learn their jobs,
and stability promotes loyalty. High employee
turnover is inefficient.
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13. Initiative
Allowing everyone in the organization the right to
create plans and carry them out will make them
more enthusiastic and will encourage them to work
harder.
14. Esprit de Corps
Harmony and team spirit across the organization
builds morale and unity.
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The neoclassical theory was an attempt at incorporating
the behavioral sciences into management thought in
order to solve the problems caused by classical theory
practices. The premise of this inclusion was based on the
idea that the role of management is to use employees to
get things done in organizations. Rather than focus on
production, structures, or technology, the neoclassical
theory was concerned with the employee. Neoclassical
theorists concentrated on answering questions related to
the best way to motivate, structure, and support
employees within the organization.
The Neo Classical Theory
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1. Human Relations Movement
Have you ever felt as if you were insignificant to your
company?
Did your work seem more concerned about profits and
sales than your own job motivation, interests and
attitudes?
For many years, companies ignored an employee's
own personal development. This, in turn, led to
negative attitudes, high turnover, high absenteeism
and poor job commitment.

When companies focus only on the production and
profits of their business, they ignore the human
behavioral issues of people.
The human relations movement in organizational
behavior focuses instead on the person as an
individual and analyzes what motivates and
cultivates their achievement in a work setting.
Employee attitudes towards work became important
to a successful company.
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2. Behavioral Sciences Movement
by Abraham Maslow
The Neo Classical
Theory of Management
Maslow wanted to understand what motivates people.
He believed that people possess a set of motivation
systems unrelated to rewards or unconscious desires
Maslow stated that people are motivated to achieve
certain needs. When one need is fulfilled a person seeks
to fulfill the next one, and so on.
The hierarchy of needs includes five motivational needs,
often depicted as hierarchical levels within a pyramid.

The Neo Classical
Theory of Management

The Modern Theory of
Management
1. Quantitative Approach or
Operations Research Analysis :
It incorporates many analytical and numeric
techniques into management methods. The goal is to
have specific formulas that information can be
plugged into to provide the best answer to common
management questions.
This area applies mathematical models and statistical
techniques to management decision-making.

Management
For example:
• Determining the critical path in a production line;
this is the set of steps where any delays will lead to
delays in the entire production process
• Determining the percentage of items produced that
have quality errors and the types of errors that are
present
• Forecasting inventory and raw material needs for
future time
1. Quantitative Approach or
Operations Research Analysis :

Management
System approach is based on the generalization that
everything is inter-related and inter-dependent.
A system is composed of related and dependent
element which, when in interaction, forms a unitary
whole.
A system is simply an assemblage or combination of
things or parts forming a complex whole.
2. System Approach :

Management
One of its most important characteristic is that it is
composed of hierarchy of sub-systems. That is the
parts forming the major systems and so on. For
example, the world can be considered to be a system
in which various national economies are sub-systems.
In turn, each national economy is composed of its
various industries, each industry is composed of firms;
and of course, a firm can be considered a system
composed of sub-systems such as production,
marketing, finance, accounting and so on.
2. System Approach :

Management
3. Contingency Approach:
Contingency approach is an improvement over the
systems approach. The interactions between the
sub-systems of an organization have long been
recognized by the systems approach.
Contingency approach also recognizes that
organizational system is the product of the
interaction of the sub systems and the environment.
Besides, it seeks to identify exact nature of inter-
actions and inter-relationships.

Management
Contingency views are ultimately directed towards
suggesting organizational designs situations.
Therefore, this approach is also called situational
approach. This approach helps us to evolve practical
answers to the problems remanding solutions.
In contingency approach, managers should find out
which method works better in a particular situation

Principles of Management

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