Lec-2: Management Scope, Nature and History

2.1 Activities in Management and Definition of Management by

experts
Management is the sum-total of all those activities that:
(i)

determine objectives, plans, policies and programmes

Oliver Scheldon, "Management proper is the function in industry concerned in the

execution of policy, within the limits set up by the administration and the employment of
the organization for the particular objectives set before it."
George R. Terry. He defines management as a process "consisting of planning,
organizing, actuating and controlling, performed to determine and accomplish the
objectives by the use of people and other resources".
(ii)

secure men, material, machinery cheaply

Kimball, "Management embraces all duties and functions that pertain to the initiation of
an enterprise, its financing, the establishment of all major policies, the provision of all
necessary equipment, the outlining of the general form of organization under which the
enterprise is to operate and the selection of the principal officers."
James Lundy, "Management is principally a task of planning, coordinating, motivating
and controlling the efforts of other towards a specific objective. It involves the combining
of the traditional factors of production land, labour, capital in an optimum manner,
paying due attention, of course, to the particular goals of the organization."
(iii)

put all these resources into operations through sound organization

Wheeler, "Management is centered in the administrators or managers of the firm who

integrate men, material and money into an effective operating limit."
Keith and Gubellini, "Management is the force that integrates men and physical plant
into an effective operating unit."
Newman, Summer and Warren, "The job of Management is to make co-operative
endeavour to function properly. A manager is one who gets things done by working with
people and other resources in order to reach an objective."
(iv)

direct and motivate the men at work

According to Mc Farland, "Management is defined for conceptual, theoretical and

analytical purposes as that process by which managers create, direct, maintain and
operate purposive organization through systematic, co-ordinated co-operative human
effort."
J.N. Schulze, "Management is the force which leads guides and directs an organization in
the accomplishment of a pre-determined object."
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Ordway Tead, "Management is the process and agency which directs and guides the
operations of an organization in the realizing of established aims."
(v)

supervises and control their performance

E.F.L. Brech, "Management is concerned with seeing that the job gets done, its tasks all
centre on planning and guiding the operations that are going on in the enterprise."
William Spriegal, "Management is that function of an enterprise which concerns itself
with direction and control of the various activities to attain business objectives.
Management is essentially an executive function; it deals with the active direction of the
human effort."
G.E. Milward, "Management is the process and the agency through which the execution
of policy is planned and supervised."
(vi)

provide maximum prosperity and happiness for both employer and employees
and public at large.

Koontz and O'Donnel, "Management is the creation and maintenance of an internal

environment in an enterprise where individuals, working in groups, can perform
efficiently and effectively toward the attainment of group goals. It is the art of getting
the work done through and with people in formally organized groups."

2.2

Scope of Management

The significance of management in business activities is relatively greater. The inputs of

labour, capital and raw material never become productive without management. It is
now widely recognized that management is an important factor of growth of any country.
The following points further highlight the significance of management:
1. Achievements of group goals: Management creates team work and team spirit
in an organization by developing a sound organization structure. It brings the
human and material resources together and motivates the people for the
achievement of the goals of the organization.
2. Optimum utilization of resources: Management always concentrates on
achieving the objectives of the enterprise. The available resources of production
are put to use in such a way that all sort of wastage and inefficiencies are reduced
to a minimum.
3. Minimizations of cost: Only those concerns can survive in the market, which can
produce goods of better quality at the minimum cost. A study of the principles of
management relates certain techniques such as production control, budgetary
control, cost control, financial control, material control, etc. for reducing costs.
4. Change and growth: Changes in business environment create uncertainties and
risk and also produce opportunities for growth. Sound management alters the
environment itself to ensure the success of the business.
5. Efficient and smooth running of business: Management ensures efficient and
smooth running of business, through better planning, sound organization and
effective control of the various factors of production.
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6. Higher profits: Management by decreasing costs increases its profits and thus
provides opportunities for future growth and development.
7. Provide innovation: Management gives new ideas, imagination and visions to an
enterprise.
8. Social benefits: By establishing cordial relations between different social groups,
management promotes peace and prosperity in society.
9. Sound organization structure: Management establishes proper organization
structure and avoids conflict between the superiors and subordinates. This helps in
the development of spirit of cooperation and mutual understanding, and a
congenial environment is provided in the organization.

2.3

Nature of Management

1. Management as Science:
Management as Science is concerned with developing and applying models and
concepts that help to illuminate management issues and solve managerial problems.
Management as Science is characterized by following main features:

Universally acceptance principles Management contains some fundamental

principles which can be applied universally to all type of organization (business or
non-business).
Experimentation & Observation Management principles are also based on
scientific enquiry & observation and not only on the opinion. They should be
developed through experiments & practical experiences of large no. of managers.

Cause & Effect Relationship Management establishes cause and effect

relationship. E.g. lack of balance between authority & responsibility will lead to
ineffectiveness, where the cause is lack of balance, and its effect is ineffectiveness.

Test of Validity & Predictability Principles of management can be tested for

validity. And based on the test results determining future prospects.

2. Management as Art:
Management as an Art implies application of knowledge & skill to trying about desired
results.
Management as an Art is characterized by following main features:

Practical Knowledge A manager can never be successful just by obtaining

degree or diploma in management; he must also know how to apply various
principles in real situations by functioning in capacity of manager.
Personal Skill Every manager has his own way of managing things based on his
knowledge, experience and personality.
Creativity Management is also creative in nature. It combines human and nonhuman resources in useful way so as to achieve desired results.

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Perfection through practice Practice makes a man perfect. Similarly managers

learn through an art of trial and error initially but application of management
principles over the years makes them perfect in the job of managing.
Goal-Oriented management is directed towards accomplishment of predetermined goals. Managers use various resources like men, money, material,
machinery & methods to promote growth of an organization.

3. Management as Profession:
Management as Profession implies that how it has been brought into practice in an
organization through specialized knowledge.

Specialized Knowledge A profession must have a systematic body of knowledge

that can be used for development of professional expertise.
Formal Education & Training No one can practice a profession without going
through a prescribed course.
Social Obligations A manager is responsible not only to its owners but also to the
society and therefore he is expected to provide quality goods at reasonable prices
to the society.
Code of Conduct A code of conduct contains certain rules and regulations, norms
of honesty, integrity and special ethics that ensures self-discipline among its
members.

2.4

Management vs Administration:

On the Basis of Functions: Basis

Management

Administration

Meani
ng

Management is an art of getting things

done through others by directing their
efforts towards achievement of predetermined goals.

It is concerned with
formulation of broad
objectives, plans & policies.

Natur
e

Management is an executing function.

Administration is a decisionmaking function.

Proces
s

Management decides who should as it &

how should he dot it.

Administration decides what is

to be done & when it is to be
done.

Functi
on

Management is a doing function because

managers get work done under their
supervision.

Administration is a thinking
function because plans &
policies are determined under
it.

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Skills

Technical and Human skills

Conceptual and Human skills

Level

Middle & lower level function

Top level function

On the Basis of Usage: Basis

Management

Administration

Applicabi
lity

It is applicable to business concerns

i.e. profit-making organization.

It is applicable to non-business
concerns i.e. clubs, schools,
hospitals etc.

Influence

The management decisions are

influenced by the values, opinions,
beliefs & decisions of the managers.

The administration is influenced

by public opinion, govt. policies,
religious organizations, customs
etc.

Status

Management constitutes the

employees of the organization who
are paid remuneration (in the form of
salaries & wages).

Administration represents owners

of the enterprise who earn return
on their capital invested & profits.

Practically, there is no difference between management & administration. Every

manager is concerned with both - administrative management function and operative
management function. However, the managers who are higher up in the hierarchy
denote more time on administrative function & the lower level denote more time on
directing and controlling workers performance i.e. management.

2.5

Management History:

History is important because it can put current activities in perspective. Studying history
is important because it helps us see the origins of todays management practices and
recognize what has and has not worked.

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Early Management includes examples such as:

Construction of pyramids and the great china wall.

The Chinese civil service which is 2000 years old where the members were
selected by a competitive examination.
City of Venice, which was a major economic and trade center in the 1400s, where
the Venetians used warehouse and inventory systems to keep track of materials,
human resource management functions to manage the labor force, and an
accounting system to keep track of revenues and costs.

Q. Describe two important historical events that are significant to the study of
management.
However, two pre-twentieth-century events played significant roles in promoting the
study of management. First is Adam Smiths contribution in the field of management and
second is influence of Industrial Revolution in management practice.
Adam Smiths in his contribution Wealth of Nations (1776) outlined the economic
advantage that organization and society can gain from the division of labor. Smith
concluded that division of labor increased productivity by increasing each workers skill,
by saving time lost in changing tasks, and by creating labor-saving inventions and
machinery.
Industrial Revolution The major contribution of the industrial revolution was the
substitution of machine power for human power, which in turn, made it more economical
to manufacture goods in factories. The advent of machine power, mass production, the
reduced transportation costs that followed a rapid expansion of the also fostered the
development of big organization.
Major approaches to management:

2.6

Classical
Quantitative
Behavioral
Contemporary

Classical Approach:

Management has been used in organized efforts since early history; the formal study of
management didnt begin until early in the twentieth century. These first studies of
management, often called the classical approach which emphasized rationality and
making organizations and workers as efficient as possible.

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1. Scientific management An approach that involves using the scientific method to

find the one best way for a job to be done. It emphasizes careful selection and
training of workers and supervisory support.
Contributors to scientific management theory were Frederick W. Taylor
(Father of Scientific Management) and husband-wife team of Frank and Lillian
Gilbreth.
Frederick Taylors four principles of scientific management focused on the need to
carefully select, train, and support workers for individual task performance.
1. Develop a science for each element of an individuals work.
2. Scientifically select and then train, teach, and develop the worker.
3. Cooperate with the workers so as to ensure that all work is done in accordance
with the principles of the science that has been developed.
4. Divide work and responsibility almost equally between management and workers.
Frank and Lillian Gilbreth primary focused on

increasing worker productivity through the reduction of wasted motion.

Designing proper tools and equipment for optimizing work performance.
Developed the microchronometer to time worker motions and optimize work
performance.

Q. What are the principles of Management?

2. General administrative theory focused more on what managers do and what
constitute good management practice. He first identified five functions that
managers perform: planning, organizing, commanding, coordinating, and
controlling. His belief that management was an activity common to all but practice
of management was distinct from other organizational functions. He developed 14
principles of management that applied to all organizational situations.
1. Division of Work. Specialization increases output by making employees more
efficient.
2. Authority. Managers must be able to give orders, and authority gives them this
right.
3. Discipline. Employees must obey and respect the rules that govern the
organization.
4. Unity of command. Every employee should receive orders from only one
superior.
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5. Unity of direction. The organization should have a single plan of action to

guide managers and workers.
6. Subordination of individual interests to the general interest. The
interests of any one employee or group of employees should not take precedence
over the interests of the organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralization. This term refers to the degree to which subordinates are
involved in decision making.
9. Scalar chain. The line of authority from top management to the lowest ranks is
the scalar chain.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. Management should provide orderly
personnel planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will
exert high levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within
the organization.
Q. Explain how todays managers use scientific management and general
administrative theory.
Todays managers use the concepts of scientific management when they analyze basic
work tasks to be performed, use time-and-motion study to eliminate wasted motions,
hire the best qualified workers for a job, and design incentive systems based on output.
They use general administrative theory when they perform the functions of management
and structure their organizations so that resources are used efficiently & effectively.
3. Bureaucratic Organization
Weber saw people holding positions of authority not because of their capabilities,
but because of their privileged social status. Weber described an ideal type of
organization he called a bureaucracy, characteristics that many of todays large
organizations still have.
Bureaucracy A form of organization characterized by division of labor, a clearly
defined hierarchy, detailed rules and regulations, and impersonal relationships.
Clear division of labor: Jobs are well defined, and workers become highly skilled
at performing them.
Clear hierarchy of authority: Authority and responsibility are well defined for
each position, and each position reports to a higher-level one.
Formal rules and procedures: Written guidelines direct behavior and decisions
in jobs, and written files are kept for historical record.
Impersonality: Rules and procedures are impartially and uniformly applied, with
no one receiving preferential treatment.
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Careers based on merit: Workers are selected and promoted on ability,

competency, and performance, and managers are career employees of the
organization.

2.6

Behaviour Approach:

The behavioral approaches shifted management attention toward the human factor as a
key element in organizational performance.
1. Early Advocates:
Robert Owen, Hugo Munsterberg, Mary Parker Follett, and Chester Barnard. Their
contributions were varied and distinct, yet all believed that people were the most
important asset of the organization and should be managed accordingly. Their
ideas provided the foundation of management practices such as employee
selection procedures, motivation programs, and work teams.
Robert Owen Argued that money spent improving labour was smart investment
Hugo Munsterberg suggested using psychological tests for employee selection,
learning theory concepts for employee training, and study of human behavior for
employee motivation.
Mary Parker Follett proposed people-oriented ideas than scientific management
followers.
Chester Barnard believed managers job was to communicate and stimulate
employees high levels of efforts.
2. Hawthrone Studies:
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The Hawthorne studies suggested that work behavior is influenced by social and
psychological forces and that work performance may be improved by better
human relations. A series of productivity experiments conducted at Western
Electric from 1924 to 1932.

Experimental findings
Productivity unexpectedly increased under imposed adverse working
conditions as Good human relations seemed to result in higher
productivity.
The effect of incentive plans was less than expected. Groups can have strong
negative, as well as positive, influences on individual productivity.

Research conclusion
The studies pointed the attention of managers and researchers toward social
and human factors as keys to productivity.
Social norms, group standards and attitudes more strongly influence
individual output and work behavior than do monetary incentives.

3. Organizational Behaviour:
The study that researches the actions of people at work is called organizational
behavior. Much of what managers do today when managing people motivating,
leading, building trust, working with a team, managing conflict, and so forth has
come out of OB research.
Maslows Theory of Human Needs
The work of psychologist Abraham Maslow in the area of human needs has also had a
major impact on the behavioral approach to management. According to him needs
create tensions that can influence a persons work attitudes and behaviors. He also
placed needs in the five levels.
A need is a physiological or psychological deficiency that a person wants to satisfy.

Physiological Needs Most basic of all human needs; need for biological
maintenance; food, water and physical well-being.
Safety Needs Need for security, protection, and stability in the events of day-today life.
Social Needs Need for love, affection, sense of belongingness in ones
relationships with other people.
Esteem Needs Need for esteem in eyes of others; need for respect, prestige,
recognition; self-esteem, personal sense of competence, mastery.
Self-Actualization Needs High level need for self-fulfillment; to grow and use
abilities to fullest and most creative extent

Maslows theory is based on two underlying principles:

Deficit principle a satisfied need does not motivate behavior.
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Progression principle a need is activated only when the next-lower-level need is

satisfied.

S elf
Act
u a li
zati
on
N ee
E steem
N e ed s
ds
S o cia l N e ed s

S ecu rity N eed s

Ph ysiolog ical N eed s

McGregors Theory X and Theory Y

Douglas McGregor urged managers to shift away from Theory X and toward Theory Y
thinking, which views people as independent, responsible, and capable of self-direction in
their work.

Theory X assumptions in which the manager believes that those who work for
them generally dislike work, lack ambition, are irresponsible, are resistant to
change, and prefer to be led rather than to lead.
Theory Y assumptions in which the manager believes people are willing to work,
capable of self-control, willing to accept responsibility, imaginative and creative,
and capable of self-direction.

Q. Explain how todays managers use behavior approach.

The behavioral approach has largely shaped how todays organizations are managed.
From the way that managers design jobs to the way that they work with employee teams
to the way that they communicate.

2.7

Quantitative Approach:

The quantitative approach involves applications of statistics, optimization models,

information models, and computer simulations to management activities. Quantitative
analysis techniques in decision sciences and operations management can help managers
solve complex problems. It is also called operations research or management science.
1. Total quality management A management philosophy devoted to continual
improvement and responding to customer needs and expectations also makes use
of quantitative methods to meet its goals.
1. Intense focus on the customer. The customer includes outsiders who buy the
organizations products or services and internal customers who interact with and
serve others in the organization.
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2. Concern for continual improvement. Quality management is a commitment

to never being satisfied. Very good is not good enough. Quality can always be
improved.
3. Process focused. Quality management focuses on work processes as the
quality of goods and services is continually improved.
4. Improvement in the quality of everything the organization does. This
relates to the final product, how the organization handles deliveries, how rapidly it
responds to complaints, how politely the phones are answered, and the like.
5. Accurate measurement. Quality management uses statistical techniques to
measure every critical variable in the organizations operations. These are
compared against standards to identify problems, trace them to their roots, and
eliminate their causes.
6. Empowerment of employees. Quality management involves the people on
the line in the improvement process. Teams are widely used in quality
management programs as empowerment vehicles for finding and solving
problems.
Q. Explain how todays managers use Quantitative approach.
The quantitative approach contributes directly to management decision making in the
areas of planning and control. For instance, when managers make budgeting, queuing,
scheduling, quality control, and similar decisions, they typically rely on quantitative
techniques. Specialized software has made the use of these techniques less intimidating
for managers.

2.8

Contemporary Approach:

Management researchers began to look at what was happening in the external

environment outside the boundaries of the organization.
Two contemporary management perspectivessystems and contingency
1. System Approach:
The systems approach says that an organization takes in inputs (resources) from the
environment and transforms or processes these resources into outputs that are
distributed into the environment.
System A set of interrelated and interdependent parts arranged in a manner that
produces a unified whole.
Basic Types of Systems
Closed systems are not influenced by and do not interact with their
environment (all system input and output is internal).
Open systems dynamically interact to their environments by taking in inputs
and transforming them into outputs that are distributed into their environments.

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Implications of the Systems Approach:

Coordination of the organizations parts is essential for proper functioning of the

entire organization.

Decisions and actions taken in one area of the organization will have an effect in
other areas of the organization.

Organizations are not self-contained and, therefore, must adapt to changes in their
external environment.

2. Contingency Approach:
The contingency approach says that organizations are different, face different situations,
and require different ways of managing. It helps us understand management because it
stresses there are no simplistic or universal rules for managers to follow. Instead,
managers must look at their situation and determine the best way to manage.
Contingency Variables:
1. Organization size As size increases, so do the problems of coordination.
2. Routineness of task technology Routine technologies require organizational
structures, leadership styles, and control systems that differ from those required
by customized or non-routine technologies.
3. Environmental uncertainty What works best in a stable and predictable
environment may be totally inappropriate in a rapidly changing and unpredictable
environment.
4. Individual differences Individuals differ in terms of their desire for growth,
autonomy, tolerance of ambiguity, and expectations.

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