Introduction to Management

UNIT I
INTRODUCTION OF MANAGEMENT

INTRODUCTION

In the present context, managing has become one of the most important areas of human
activity because of increasing role of large and complex organisations in the society. Because
of their increasing role, the organisations have attracted the attention of both practitioners
and academicians to find out the solutions for business problems.

Concept

Defining the term management precisely is not so simple because the term management is
used in a variety of ways. Being a new discipline, it has drawn concepts and principles from
a number of disciplines such as economics, sociology, psychology, anthropology, statistics
and so on.

Each group of contributors has treated management differently. For example, economists
have treated management as a factor of production; sociologists have treated it as a class or
group of persons; practitioners have treated it as a process comprising different activities.

DEFINITION

“Management is the art of getting things done through and with people in formally organized
groups” --- Koontz

“Management is the art of knowing what you want to do and then seeing that it is done in
the best and cheapest way” – F.W. Taylor

“Management is the art of securing maximum results with minimum effort so as to secure
maximum prosperity and happiness for both employer and employee and give the public the
best possible service” --- John Mee.

“Management is the accomplishment of results through the efforts of other people” --

Lawrence

“Management is simply the process of decision making and control over the action of human
beings for the expressed purpose of attaining pre-determined goals” – Stanley V.

“Management is a process involving planning, organizing, staffing, directing and controlling

human efforts to achieve stated objectives in an organization.”

From the above definitions, the following features are identified:-

1. Organised Activities: Management is a process of organized activities. Without

organized activities, two groups of people cannot be involved in the performance
of activities. Where a group of people are involved in working towards a common
objective, management comes into existence.

2. Existence of objectives: The existence of objectives is a basic criterion of e

very human organization because all organizations are deliberate and purposive
creation and, therefore, they should have some objectives. Without objectives, it
becomes difficult to define the direction where organized group of activities
would lead to.

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3. Relationship among resources: Organized activities meant to achieve

common goals are brought about to establish certain relationships about the
available resources. Resources include money, machine, material, men and
methods. All these resources are made available to those who manage the
organization. Managers apply knowledge, experience, principles for getting the
desired results. Thus, the essence of management is integration of various
organisational resources.

4. Working with and through people: Management involves working with people
and getting organisational objectives achieved through them. The idea of
working through people is interpreted in terms of assigning and reassigning of
activities to subordinates.

5. Decision Making: Management process involves decision making at various

levels for getting things done through people. Decision making basically involves
selecting the most appropriate alternative out of the several. If there is only one
alternative, there is no question of decision making.

Nature of Management
The study and application of management techniques in managing the affairs of the
organization have changed its nature over a period of time. The following points will describe
the nature of management

1) Multidisciplinary: Management has been developed as a separate discipline,

but it draws knowledge and concepts from various disciplines like psychology,
sociology, anthropology, economics, statistics, operations research etc.,.
Management integrates the idea and concepts taken from these disciplines and
presents newer concepts which can be put into practice for managing the
organisations

2) Dynamic nature of Principles: Principle is a fundamental truth which

establishes cause and effect relationships of a function. Based on integration and
supported by practical evidences, management has framed certain principles.
However, these principles are flexible in nature and change with the changes in
the environment in which an organization exists.

3) Relative, Not absolute Principles: Management principles are relative, not

absolute, and they should be applied according to the need of the organization.
Each organization may be different from others. The difference may exist
because of time, place, socio-cultural factors, etc.,.

4) Management As Science or Art: There is a controversy whether management

is science or art.

5) An art is personal skill of business affairs. Art is characterized by practical

knowledge, personal creativity and skill. The more one practices an art, the more
professional one becomes. Management can be considered as an art because it
satisfies all these criterion of an art.

6) A science is a systematized body of knowledge of facts. It can establish cause-

and-effect relationships among various factors. It involves basic principles, which
are capable of universal application. Management can be considered as science
because it satisfies all these criterion of a science.

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7) Management as profession: Management has been regarded as a profession

by many while many have suggested that it has not achieved the
status of a profession.
Profession refers to a vocation or a branch of advanced learning such as engineering
or medicine.

8) Universality of management: Management is a universal phenomenon.

However, management principles are not universally applicable but are to be
modified according to the needs of the situation.

Importance of Management
Management has been important to the daily lives of people and to the organisations. The
importance of management may be traces with the following.

1) Effective utilisation of Resources: Management tries to make effective

utilisation of various resources. The resources are scarce in nature and to meet
the demand of the society, their contribution should be more for the general
interests of the society.
Management not only decides in which particular alternative a particular resource
should be used, but also takes actions to utilize it in that particular alternative in the
best way.

2) Development of Resources: Management develops various resources. This is

true with human as well as non-human factors. Most of the researchers for
resource development are carried on in an organized way and management is
involved in these organized activities.

3) It ensures continuity in the organization: Continuity is very important in the

organisations. Where there are no proper guidelines for decision making
continuity can not be guaranteed. It is quite natural that new people join while
some others retire or leave the organization. It is only management that keeps
the organization continuing.

4) Integrating various interest groups: In the organized efforts, there are

various interest groups and they put pressure over other groups for maximum
share in the combined output. For example, in case of a business organization,
there are various pressure groups such as shareholders, employees, govt. etc.
these interest groups have pressure on an organization. Management has to
balance these pressures from various interest groups.

5) Stability in the society: Management provides stability in the society by

changing and modifying the resources in accordance with the changing
environment of the society. In the modern age, more emphasis is on new
inventions for the betterment of human beings. These inventions make old
systems and factors mostly obsolete and inefficient. Management provides
integration between traditions and new inventions, and safeguards society from
the unfavorable impact of these inventions so that continuity in social process is
maintained.

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Functions of Management

To achieve the organisational objectives managers at all levels of organization should

perform different functions. A function is a group of similar activities.

The list of management functions varies from author to author with the number of functions
varying from three to eight.

Authors Management Functions

Planning, organizing, commanding,

Henry Fayol
coordinating, controlling
POSDCORD- Planning, organizing,staffing,
Luther Gullick Directing, Coordinating, Reporting,
Directing
Planning, organizing, Motivating,
E.F.L.Breech
Coordinating,Controlling

Planning, organizing, staffing, Leading,

Koontz
Controlling

Different authors presented different variations. By combining some of functions,

these are broadly grouped into Planning, Organising, Staffing, Directing, and Controlling.

1) Planning: Planning is the conscious determination of future course of action. This

involves why an action, what action, how to take action, and when to take action.
Thus, planning includes determination of specific objectives, determining projects and
programs, setting policies and strategies, setting rules and procedures and preparing
budgets.

2) Organising: Organising is the process of dividing work into convenient tasks or

duties, grouping of such duties in the form of positions, grouping of various positions
into departments and sections, assigning duties to individual positions, and delegating
authority to each positions so that the work is carried out as planned. It is viewed as a
bridge connecting the conceptual idea developed in creating and planning to the
specific means for accomplishment these ideas.

3) Staffing: Staffing involves manning the various positions created by the organizing
process. It includes preparing inventory of personal available and identifying the
sources of people, selecting people, training and developing them, fixing financial
compensation, appraising them periodically etc.

4) Directing: when people are available in the organization, they must know what
they are expected to do in the organization. Superior managers fulfill this requirement
by communicating to subordinates about their expected behavior. Once subordinates
are oriented, the superiors have continuous responsibility of guiding and leading them
for better work performance and motivating them to work with zeal and enthusiasm.
Thus, directing includes communicating, motivating and leading.

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5) Controlling: Controlling involves identification of actual results, comparison of

actual results with expected results as set by planning process, identification of
deviations between the two, if any, and taking of corrective action so that actual
results match with expected results.

MANAGEMENT ROLES
As against the management functions, Mint berg have defined the roles of
managers to identify what managers do in organizations. Role is the pattern of behavior
which is defined for different positions. It refers to the expected behavior of the occupant of
a position-not all their behavior, but to what he does as occupant of that position. Mint berg
has pointed out that there are three broad categories of role that a manager performs in an
organization. These are the interpersonal roles, informational roles, and decisional roles.
Within each category of roles, there are different roles as shown in figure

Formal authority + personal skills

And status characteristics

Interpersonal roles Informational roles Decision roles

figurehead monitor Entrepreneur
Leader Disseminator Disturbance handler
Resource allocator
Liaison Spokesperson Negotiator
Management roles depend on the formal authority which is delegated to the manager in an
organization. The degree of authority determines his status and different roles. In
performing a particular role, the manager uses his skills and other characteristics. The three
major roles of a manager are interpersonal, informational, and decisional.

Interpersonal roles:
Interpersonal roles of a manager are concerned with his interacting with other persons,
both the organizational members and outsiders. There are three types of interpersonal roles
figurehead role, leader role, and liaison role. In figurehead role the managers performs
activities which or of ceremonial and symbolic nature. These include greeting the visitors,
attending social functions involving employees, handing out merit certificates and other
awards to outstanding employees. Manager’s leader role involves leading his subordinates
and motivating them from willing contribution. Willing contribution come from subordinates
when they see in a manager. The major objective of this role is to maintain a link between
the organization and its external environment.

Informational Role:
Informational roles of a manager include communication-giving and receiving
information both within and outside the organization. Informational is required to make a
decision effective. There are 3 types of informational role of a manager monitor
disseminator, and spokesperson .In his monitoring role, the manager consonantal collects
informational about those factors which affect his activities .such as factors may be within
the organization as well as outside it. In the disseminator role, the manager distributes the
information to his subordinates who may otherwise not be in a position it collect it. As a
spokes person, the manager represents his organization or unit while interacting with
outsiders. These may be customers, financier’s government, suppliers, or other agencies of
the society.

Decisional Role:

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Decision role of a manager involve choosing the most appropriate alternative out of the
available once so that the organization achieves its objectives when the chosen alternative is
put into action. In his decision roles, the manager performs four roles entrepreneur,
disturbance handler, resource allocator, and negotiator.
As an entrepreneur, assumes certain risk which is involved in terms of the outcomes of
an action because these are affected by a variety of external factors.
As an disturbance handler, the manager is require to contain those force and event which
tend to disturb the organizational equilibrium and normal Functioning as recourse allocator,
the manager allocator recourse-human, physical and financial –to various organizational
units according to their needs as negotiator, the manager negotiates with various interest
group in the organization. Such interest groups are shareholders, employees, and outside
agencies.

Functions approach Role approach

Planning
Organizing Inter personal roles
Staffing Information roles
Directing Decisional roles
controlling

Of these units. In directing, the manager performs interpersonal and information roles by
interacting with his subordinates, leading motivating, and communicating them. In
controlling, he shares information roles. The staffing function has not been include in role
approach through managers at every level perform this function. Thus, functions approach
through managers at every level performs this function. Thus function approach of
managerial jobs is more comprehensive as compared to mint berg’s role approach .

Evolution of Management

Good management intends to achieve an objective with the least use of man,
machine, money and material and at the same time maximum satisfaction of the
participants.

Management particle is as old as human civilization when people started living

together in groups. For, every human group requires management and the history of human
beings is full of organizational activities .However, the study of how managers achieve
results is predominantly a twentieth century phenomenon. In the earlier year, management
could not get the attention of researchers because the field of business which the
management concepts were applied was held Low, unworthy of study in different approach
of other social scientists like economists, sociologists, psychologists, etc towards
management and business organizations treatment of management as an not art not as a
science and the commonly held belief that managers are born and not made. These factors
created the situation where the need for a systematic study of management was not felt.
This situation continued till the beginning of the twentieth century.

Management thought Period

1.Early contributions Up to 19th century
2.Scientific management 1900-1930
3.Administrative/operational management 1916-1940
4.Human relations approach 1930-1950
5.Social system approach 1940-1950
6.Decision theory approach 1945-1965
7.Mangement science approach 1950-1960
8.Human behavior approach 1950-1970
9.System approach 1960s onwards

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10.Contingency approach 1970s onwards

Another classification of management thought and approaches is in the form of classical
neoclassical, and modern. Classical approach includes scientific management and
administrative/operational management. Neoclassical approach includes human relations
approach and some relevant parts of social systems approach, decision theory approach,
management science approach, and human behavior approach.

1. EARLY CONTRIBUTIONS
Before the systematic study of management which started close to 19 th century,
contributions in the field came from a variety of sources. For example, the concept of
organizations and administration existed in Egypt in 1300 B.C. Confucius’s parables included
suggestions for proper public administration and admonitions to choose honest, unselfish,
and capable public officers long before Christ. Kantilla has offered sound principles of state
administration in 320 B.C. Roman Catholic Church introduced the concept of staff personnel
in church administration which was further carried on by military organizations. The camera
list, a group of German and Austrian public administrators and intellectuals, emphasized
systematic administration as a source of strengths during 16 th to 18th centuries. These
contributions provided some insights how resources could be utilized more effectively.
However, these contributions were outside the field of business and other economic
organizations.
In the field of business organizations, some stray contributions have come from Robert
Owen, James watt, Charles Babbage, and Henry Town. While Owen emphasized personnel
aspects in management and advocated a number of benefits to employees, other
concentrated on developing concepts relating to effective utilization of resources at the shop
floor level.

2. Taylor’s Scientific Management Theory

The utility of scientific methods to problems of management was first introduced by

F.W.Taylor

Definition: Scientific management may be defined as the “Art of knowing exactly what is to
be done and the best way of doing it”.

Scientific management is the result of applying scientific knowledge and scientific methods to
the various aspects of management and the problems that arise form them.

The concept of scientific management was introduced by Frederick Winslow Taylor in USA
in the beginning of 20th century.

“Scientific management is concerned with knowing exactly what you want to do and then see
in that they do it in the best and cheapest way”

Since Taylor has put the emphasis on solving managerial problems in a scientific way, often,
he is called as father of scientific management and his contributions as the principles of
scientific management.

Taylor carried experiments about how to increase the efficiency of people. On the basis of
experiments, he published many papers and books and all his contributions were compiled in
his book “scientific management”. His contributions are divided into two parts.

 Elements and tools of scientific management

 Principles of scientific management

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FEATURES / ELEMENTS AND TOOLS OF SCIENTIFIC MANAGEMENT

1. Separation of planning & doing: Taylor emphasized the separation of

planning aspect from actual doing of the work. In other words planning should
be left to the supervisor and the worker should concentrate only operational
work.

2. Functional foremanship: Taylor introduced the concept of functional

foremanship based on specialization of functions. In this system, eight persons
are involved to direct the activities of workers. Out of these four persons are
concerned with planning viz., route clerk, instruction card clerk, time and cost
clerk and disciplinarian. The remaining four persons are concerned with doing
aspect of the job, viz., speed boss, inspector, gang boss and maintenance
foreman. It is against to the principle of unity of command.
Work Shop Manager

Planning In charge Production In charge

Time
and Mainten
Instructi Gang Route inspect ance
cost cl
Route on disciplin Boss Boss or Forema
cost
Clerk Card arian n
clerk
clerk
Cost
Clerk

worker

6. Job Analysis: It is useful to find out the one best way of doing the things. The
best way of doing a job is one which requires the least movements, consequently
less time and cost. The best way of doing the thing can be determined by taking
up time – motion - fatigue studies.

7. Time study involves the determination of time a movement takes to complete.

8. Motion study involves the study of movements in parts which are involved in
doing a job and thereby eliminating the wasteful movements.
9. Fatigue study shows the amount and frequency of rest required in completing
the work.

10.Thus, job analysis identifies the fair amount of a day’s work requiring certain
movements and rest periods to complete it.

11.Standardization: As far as possible, standardization should be maintained in

respect of instruments and tools, period of work, amount of work, working
conditions, cost of production etc.,. These things should be fixed in advance on
the basis of job analysis and various elements of costs that in performing a work.

12.Scientific selection and training of workers: Taylor has suggested that

workers should be selected on scientific basis taking into account their education,
work experience, aptitude, physical strength, etc., A worker should be given
work for which he is physically and technically most suitable. Apart from
selection, proper training should be provided to workers to make them more
effective and efficient.

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13.Financial Incentives: Financial incentives can motivate workers to put in their

maximum efforts. If provisions exist to earn higher wages by putting in extra
effort, workers will be motivated to earn more. Taylor himself applied the
concept of differential piece rate system which was highly motivating. According
to this scheme, a worker who completes the normal work gets wages at higher
rate per piece and one who does not complete gets at lower rate.

14.Economy: while applying scientific management, not only scientific and

technical aspects should be considered but adequate consideration should be
given to economy and profit. The economy and profit can be achieved by making
the resources more productive as well as by eliminating the wastages.

15.Mental Revolution: scientific management depends on the mutual co-operation

between management and workers. For this co-operation, there should be
mental change in both parties from conflict to co-operation.

PRINCIPLES OF SCIENTIFIC MANAGEMENT:-

Taylor has given certain basic principles of scientific management.

1. Replacing rule of thumb with science: According to Taylor, exactness of

various aspects of work like day’s fair work, standardization in work, differential
piece rate for payment, etc.., is the basic core of scientific management, it is
essential that all these are measured precisely and should not be based on mere
estimates.

2. Harmony in group action: Taylor has pointed out that attempts should be
made to obtain harmony in group action rather than discord. Group harmony
suggests that there should be mutual give and take situation and proper
understanding so that group as a whole contributes to the maximum.

3. Co-operation: Scientific management involves achieving cooperation rather

than chaotic individualism. It is based on mutual confidence, co-operation and
goodwill. Co-operation between management and workers can be developed
through mutual understanding and a change in thinking.

4. Maximum output: scientific management involves continuous increase in

production and productivity instead of restricted production either by
management or by worker. Taylor heated inefficiency and deliberate curtailment
of production.
5. In his opinion, “there is no worse crime to my mind than that of deliberately
restricting output”

6. Development of workers: all workers should be developed to the fullest extent

possible for their own and for the company’s highest prosperity. Training should
be provided to the workers to keep them fully fit according to the requirement of
new methods of working which may be different from non-scientific methods.

3. FAYOL’S ADMNISTRATIVE MANAGEMENT

Henry Fayol is a French Industrialist and the father of modern operational management
theory. Fayol recognized the following organizational activities.

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Organizational Activities: Fayol divided the activities of organization into six groups---

 Technical (related to production)

 Commercial ( buying, selling and exchange)
 Financial ( search for capital and its optimum use)
 Security ( protection of property and person )
 Accounting
 Managerial ( planning, organizing, commanding, coordinating and
controlling)

Among the above activities Fayol considered managerial activities are the most important for
the success of business and he concentrated more on that. His contributions are divided the
following categories.

 Qualities of a manager
 General principles of management
 Elements of management

Managerial Qualities and Training: According to Fayol the following are the list of
qualities required in a manager.
 Physical ( Health, Vigor and Health )
 Mental ( Ability to understand and learn, judgment , mental vigor and
capability)
 Moral ( energy, firmness, initiative, loyalty, tact etc.,)
 Educational
 Technical ( peculiar to the function being performed )
 Experience

GENERAL PRINCIPLES OF MANAGEMENT:

Fayol has given 14 principles of management. He has made distinction between

management principles and management elements. While management principles is a
fundamental truth and establishes cause effect relationship, elements of management
denotes the function performed by a manager.

While giving the management principles, Fayol has emphasized two things.
 The list of management principles is not exhaustive but suggestive and has
discussed only those principles which he followed on most occasions.
 principles of management are not rigid but flexible

Principles:-

1. Division of work: It is helpful to take the advantage of specialization. Here,

the work is divided among the members of the group based on the employees
skills and talents. It can be applied at all levels of the organization.
2. Authority and Responsibility: Fayol finds authority as a continuation of
official and personal factors. Official authority is derived from the manager’s
position and personal authority is derived from personal qualities such as
intelligence, experience, moral worth, past services, etc., Responsibility arises
out of assignment of activity. In order to discharge the responsibility properly,
there should be parity between authority and responsibility.
3. Discipline: All the personal serving in an organization should be disciplined.
Discipline is obedience, application, behavior and outward mark of respect
shown by employees.

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4. Unity of Command: Unity of command means that a person should get orders
from only one superior. Fayol has considered unity of command as an important
aspect in managing an organization. He says that “should it be violated,
authority is undermined, discipline is in jeopardy, order disturbed, and stability
threatened.”
5. Unity of Direction: According to this principle, each group of activities with the
same objective must have one head and one plan. It is concerned with
functioning of the organization I respect of grouping of activities or planning.
Unity of direction provides better coordination among various activities to be
undertaken by an organization.
6. Subordination of individual interest to general interest: Individual interest
must be subordinate to general interest when there is conflict between the two.
However factors like ambition, laziness, weakness, etc., tend to reduce the
importance of general interest. Therefore, superiors should set an example in
fairness and goodness.
7. Remuneration to Personnel: Remuneration to employees should be fair and
provide maximum possible satisfaction to employees and employers. Fayol did
not favor profit sharing plan for workers but advocated it for managers. He was
also in favor of non-financial benefits.
8. Centralization: Everything which goes to increase the importance of
subordinate’s role is decentralization; every thing which goes to reduce it is
centralization. The degree of centralization or decentralization is determined by
the needs of the company.

9. Scalar Chain: There should be a scalar chain of authority and of

communication ranging from the highest to the lowest. It suggests that each
communication going up or coming down must flow through each position in the
line of authority. It can be short-circuited only in special circumstances. For this
purpose, Fayol has suggested ‘gang plank’. Scalar chain and gang plank can be
presented as follows

10. Order: This is a principle relating to the arrangement of things and people.
In material order, there should be a place for every thing and every thing
should be in its place. Similarly, in social order, there should be the right man in
the right place.

11. Equity: Equity is the combination of justice and kindness. Equity in

treatment and behavior is liked by everyone and it brings loyalty in the
organization. The application of equity requires good sense, experience and
good nature.

12. Stability of tenure: No employee should be removed within short time.

There should be reasonable security of jobs. Stability of tenure is essential to
get an employee accustomed to new work and succeeding in doing it well

13. Initiative: Within the limits of authority and discipline, managers should
encourage their employees for taking initiative. Initiative is concerned with

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thinking out and execution of a plan. Initiative increases zeal and energy on the
part of human beings.

14. Esprit de corps: It is the principle of ‘union is strength’ and extension of

unity of command for establishing team work. The manager should encourage
esprit de corps among his employees.

4.Hawthorne experiments and Human relations

The human relations approach was born out of a reaction to classical approach. A lot of
literature on human relations has been developed. For the first time, an intensive and
systematic analysis of human factor in organisations was made in the form of Hawthorne
experiments.

To investigate the relationship between productivity and physical working conditions, a

team of four members Elton mayo, White head, Roethlisberger and William Dickson was
introduced by the company in Hawthorne plant. They conducted various researches in four
phases with each phase attempting to answer the question raised at the previous phase. The
phases are ---

1. Experiments to determine the effects of changes in illuminations on

productivity. Illumination experiments (1924-27)
2. Experiments to determine the effects of changes in hours and other working
conditions on productivity. (Relay assembly test room experiments 1927-28)
3. mass interviewing programme (1928-1930)
4. determination and analysis of social organization at work (Bank wiring
observation room experiments 1931-32)

Conclusions:

 Individual workers must be seen as members of a group

 The sense of belongingness and effective management were the two secrets
unfolded by the Hawthorne experiments.
 Informal or personal groups influenced the behaviour of workers on the job.
 Need for status and belongingness to a group were viewed as more important
than monetary incentives or good physical working conditions
 To seek workers cooperation, the management should be aware of their social
needs and cater to them. Otherwise, there is every danger that the workers
ignore and turn against the interests of the organisation.

5. MASLOW’S NEED HIERARCHY:

The behaviour of an individual at a particular movement is usually determined by his

strongest need. Psychologist’s claims that needs have a certain priority, as the more basic
needs are satisfied, an individual seeks to satisfy the higher needs. If his basic needs are not
met, efforts to satisfy the higher needs should be postponed.

A.H.Maslow, a famous social scientist, has given a framework that helps to explain the
strength of certain needs. According to him, there is hierarchy for need, which is presented
in the following way.

Self actualization needs

Esteem needs|
Social needs|
Security needs|
Physiological needs |

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Mallow’s need hierarchy

Physiological needs: The Physiological needs are at the top of hierarchy because they tend
to have the highest strength until they are reasonably satisfied. Until these needs are
satisfied to the degree needed for the efficient operation of the body, the majority of a
person’s activities will probably at this level, and the other level will provide him with little
motivation.
A famous saying ‘man can live on bread alone if there is no bread’ suggests that man first
try to acquire necessities for their survival.

Safety Needs: Once physiological needs are satisfied to a reasonable level, the next level in
the hierarchy is safety. Safety means being free of physical danger or self-preservation. In
the industrial society, employee can be motivated through either positive action like pension
plan, insurance plan etc... Or negative actions like laid off or demotions.

Social needs: After the first two needs are satisfied, social needs become important in the
need hierarchy. Since man is a social being, he has a need to belong and to be accepted by
various groups. In the organisation, workers form informal group environment to support
unfulfilled social needs such as affiliation.

Esteem needs: These needs are concerned with self respect, self confidence, a feeling of
personal worth, feeling of being unique and recognition. Satisfaction of these needs produces
feelings of self confidence, prestige, power and control. These needs are satisfied through
adaptive behaviour, matured behaviour or with irresponsible actions.

Self actualization needs: It is the need to maximize ones potential, whatever it may be. It
is related with the development of intrinsic capabilities which lead people to seek situations
that can utilize their potential. This includes competence which implies control over
environmental factors both physical and social and achievement.

Conclusion: Maslow suggest that the various levels are interdependent and overlapping,
each higher level need emerging before the lower level need has been completely satisfied.
Since one need does not disappear when another emerges, all needs tend to be partially
satisfied in each area.

6.HERZBERG’S MOTIVATION – HYGIENE THEORY:

Frederick Hertzberg conducted a structured interview programme to analyse the

experience and feelings of 200 engineers and accountants in nine different companies in
Pittsburg area, U.S.A during the structured interview, they were asked to describe a few
previous job experiences in which they felt ‘exceptionally good’ or exceptionally bad about
jobs.
In his analysis, he found that there are some job conditions which operate primarily to
dissatisfy employees when the conditions are absent, however their presence does not
motivate them in a strong way. Another set of job conditions operates primarily to build
strong motivation and high job satisfaction, but their absence rarely proves strongly
dissatisfying.
The first set of job conditions has been referred to as maintenance or hygiene factors and
second set of job conditions as motivational factors.

Hygiene Factors:

According to Hertzberg, there are 10 maintenance factors. These are company policy and
administration, technical supervision, salary, job security, personal life, status, working

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conditions, interpersonal relationship with superiors, interpersonal relationship with peers

and interpersonal relationship with subordinates.
These maintenance factors are necessary to maintain at a reasonable level of satisfaction
in employees. Any increase beyond this level will not produce any satisfaction to the
employees: however, any cut below this level will dissatisfy them.

Motivational Factors:

These factors are capable of having a positive effect on job satisfaction often resulting in
an increase in ones total output. Hertzberg includes six factors that motivate employees.
These are achievement, recognition, advancement; work itself, possibility of growth and
responsibility.
Most of the above factors are related with job contents. An increase in these factors will
satisfy the employees: however, any decrease in these factors will not affect their level of
satisfaction. Since, these increased level of satisfaction in the employees, can be used in
motivating them for higher output.

The Challenges of Management

A business owner must build the best possible team. Managing a business offers
great rewards, both financial and personal, but success in this role requires sharp problem-
solving skills and an exceptional understanding of people, including customers and
employees. First-time entrepreneurs are often surprised to find how many different skills are
required to be successful when you are in charge of all aspects of a business.

1. Building a Management Team

From the start-up stage onward, one of the toughest challenges for a business owner is to
find the right people for the management team. The owner must identify the combination of
skills and experience that will give the company the best chance for success, and the ideal
combination is subtly different for every business. The individuals chosen must have
personalities that mesh so that they can work together in harmony, particularly during times
of stress. As the company grows, the owner must constantly look ahead and determine what
additional skills may be needed in the future, making the management team always a work
in progress.

2. Supervising and Motivating Employees

Managing a business requires being a teacher and a listener. Employees need direction and
to understand what is expected of them. They also need to be able to voice their opinions
and concerns. Savvy managers understand that employees can provide valuable ideas on
how to increase sales and improve the company’s operations. Motivating employees to put
forth greater effort is easier if they believe that the company appreciates their contributions
to its success.

3. Allocating Resources
Every decision a business owner makes involves recognizing that the company’s financial
and human resources are limited. Success depends on making good choices about how to
allocate these resources. Every dollar spent and every hour of management time must
contribute to the company’s growth and profitability. Small companies in particular can’t
afford to waste resources. The business planning process is critical to achieving efficient
resource allocation as it allows managers to better prioritize expenditures.

4. Continual Improvement
Companies must strive to continually improve all areas of their operations. Being satisfied
with current performance can mean falling behind competitors that are more aggressively

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improving their products, customer service levels and profit margins. Managers have to
instill this philosophy of constant improvement in all employees, some of whom may be
fearful of, and resistant to, change.

5. Adjusting to Changing Conditions

A company is greatly affected by the environment around it, including both the local and
national economy, and the actions of competitors. Conditions can change rapidly, requiring
quick reactions and adjustments in strategies. If a business owner sees new competitive
threats emerging, he must be able to devise strategies to quickly counter these threats. This
important management function is called developing “what if” scenarios or contingency
planning.

6. Anticipating Trends
A creative aspect of management is being able to spot emerging opportunities before the
company’s competitors are able to. These include potential customer groups, new channels
of distribution that could boost sales and new technologies that could make the company
more efficient. Even with pressing day-to-day responsibilities, a business owner has to be
forward-looking and dedicated to formulating a long-range vision for the business.

The '8 Great' Challenges Every Business Faces:

1. Integrity: Business has never faced the type of moral challenges that it
faces in today’s global economy. Everyone is struggling to be more
successful, to make the next quarterly earnings estimate, to keep their job,
to earn a big bonus, or to compete effectively.

2. Cash, Borrowing, and Resource Management: Cash is King! We’ve all

heard this maxim and it is more true today than ever before. A healthy profit
may look nice on your financial statements, but if capital expenditures or
receivable collections are draining your cash, you won’t be able to stay in
business for long.

3. Increased selection and competition: It’s never been easier to start a

business. Gone are the days when it took weeks, months, and a myriad of
forms to get your business started. Now if you can buy a domain name and
register your business online, you’re in business.

4. Marketing and Customer Loyalty: Along the same lines as increased

selection and competition is the challenge to market to potential customers
effectively and retain your existing customers. Smart phones, social media,
texting, email, twitter and other communication channels are making it easy
for businesses and individuals to get their messages out.

5. Uncertainty: All of us, and especially business leaders find great discomfort
in uncertainty. Because of global debt and economic struggles, uncertainty is
more pronounced today than in the past. The sad news is that uncertainty
leads to a short-term focus.

6. Regulation: A changing regulatory environment is always of concern in

certain industries, but uncertain energy, environmental and financial policy is
wreaking havoc for nearly all companies today.

7. Problem Solving and Risk Management: A major challenge for all

companies is identifying, assessing, and mitigating risks, including
human and financial capital, in addition to the macro economy. The

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lack of a sophisticated problem-solving competency among today’s

business leaders is limiting their ability to adequately deal with risks
facing their businesses.
8. Finding the right staff: one of their biggest challenges is staff –
finding the right staff, retaining them, and ensuring they buy into the
vision of the business. In big companies, the human resource challenge
is politics and fit in the workplace, but when it comes to small business,
its personalities and skill.

Decision Theory approach:

Decision theory approach looks at the basic problem of management around decision
making the selection of a suitable course of action out of the give alternatives. Major
contributions in this approach have come from Simon .Other contribution are March,
Coyest, Forrester, etc .the major emphasis of this approach is that decision making is job
of manager. The manager is the decision maker the organization is a decision making
unit. There four, the basic problem in managing is to make rational decision. From this
point of view, decision theory approach has a follow features.

1. Management is essentially decision making.

2. The member of the organization is decision makes and problem solves.
3. Organization can be treated as a combination of various decision centers. The level
and importance of organization members are determine on the basic of importance of
decision which they make.
4. Quality of decision affects the organization effectiveness.
5. All factors affecting decision making are the subject-matter of study of
management beside process and the techniques involved in decision making, other
factors affecting the decision are information system, social and psychological aspects of
decision makes. Thus, covers the entire range of human activities in organization as well
as macro conditions within which the organization works.

Contributions of Herbert Simon:

Herbert Simon, a Noble prize winner in Economics, has made significant contribution in
the field of management particulars administrative behaviors and decision making. His
contribution covers both social system and decision theory approaches, more particularly
the latter. Simon examined the principles of management given by rick and Gallic and
found them contradictory and ambiguous.

1) Concept of organization: Simon has described an organization as a complex

network of decision processes, all pointed towards their influenced upon the
behavior of the operatives.

2) Decision making: Perhaps the greatest contribution of Simon is in the field of

decision making. Decision making is the core of management and management is
synonymous with decision making. This is why he has been referred to as decision
theorist.

3) Bounded Rationality: Simon is of the view that man is not completely rational.
He has criticized the theories which are based on the assumption of complete rationality.
He has advocated the principal of bounded rationality.

4) Administrative Man: Simon has given the concept of administration man has a
model of decision making. The model is based on the following assumption
• Administrative man adopts satisfying approach in decision making rather than the
maximizing approach of economic man.
• He perceives the world as a simplified model of real world.

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5) Organizational communication: Simon has emphasized the role of

communication in organization. According to him, there are three stages in the
communication process initiation, transmittal, and receipt of information.

MANAGEMENT SCIENCE APPROACH:

Management science approach, also known as mathematical or quantitative
measurement approach, visualizes management as logical entity, the can be expressed in
terms of mathematical symbols, relational ship, and measurement data. The primary
focus of this approach is the mathematical model. Through this device, managerial and
other problems can be expressed in basic relational ship and, where a given goal is
sought, the model can be expressed in terms which optimize that goal. This approach
draws many things from the decision theory approach and, in fact, provides many the
techniques for rational making. The major features of these approaches are as follows
• Management is regarded as the problem- solving mechanism with the help of
mathematical tools and techniques.
• Management problems can be described in terms of mathematical symbols and
data Thus, every managerial activity can be quantified.
• This approached covers decision making, system analysis, and some aspects of
human behavior.
• Operations research, mathematical tools, simulation, models, etc. Are the basic
methodologies to solve managerial problems?

Management science approach is a fast developing one is analyzing and understanding

management.

HUMAN BEHAVIOUR APPROACH:

Human behavior approach is the outcome of the thought developing the behavior
scientists who heaved looked at the organizational as collected of people of certain
specified objectives. Since management involves getting thing by the people, the study of
management must revolve around human behavior. The approach, also known as
‘leadership’ behavioral ‘science’ or ‘human resources’ approach, bring to bear the exciting
and newly-developed theories and method of the relevant behavioral sciences upon the
study of human behavior. In contrast to human relations approach has been goal and
efficiency-oriented and considers the understanding of human behavior to be the major
means to that end.

Social Responsibility:-
For most of the business organisation, social responsibility is a way of life. Social
responsibility refers to the process which includes several activities ranging from providing
safe products and services to giving a portion of the company’s profits to welfare
organisations with a philanthropic perspective.

Social responsibility of a business is also viewed as conducting its operations in a free and
fair manner by discharging its consumer towards different segments of its operational
environment such as creditors, share holders consumers, employees, Government, and
other general public.

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Responsibility towards Different Interest Groups

After getting some idea about the concept and importance of social responsibility of business
let us look into the various responsibilities that a business has towards different groups with
whom it interacts. The business generally interacts with owners, investors, employees, suppliers,
customers, competitors, government and society. They are called as interest groups because by
each and every activity of business, the interest of these groups is affected directly or indirectly.

i. Responsibility towards owners

Owners are the persons who own the business. They contribute capital and bear the business
risks. The primary responsibilities of business towards its owners are to:
a. Run the business efficiently.
b. Proper utilisation of capital and other resources.
c. Growth and appreciation of capital.
d. Regular and fair return on capital invested.

ii. Responsibility towards investors

Investors are those who provide finance by way of investment in debentures, bonds, deposits
etc. Banks, financial institutions, and investing public are all included in this category. The
responsibilities of business towards its investors are :
a. Ensuring safety of their investment,
b. Regular payment of interest,
c. Timely repayment of principal amount.

iii. Responsibility towards employees

Business needs employees or workers to work for it. These employees put their best effort for
the benefit of the business. So it is the prime responsibility of every business to take care of the
interest of their employees. If the employees are satisfied and efficient, then the only business
can be successful. The responsibilities of business towards its employees include:
a. Timely and regular payment of wages and salaries.
b. Proper working conditions and welfare amenities.
d. Opportunity for better career prospects.
e. Job security as well as social security like facilities of provident fund, group insurance,
pension, retirement benefits, etc.
f. Better living conditions like housing, transport, canteen, crèches etc.

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g. Timely training and development.

iv. Responsibility towards suppliers

Suppliers are businessmen who supply raw materials and other items required by manufacturers
and traders. Certain suppliers, called distributors, supply finished products to the consumers.
The responsibilities of business towards these suppliers are:
a. Giving regular orders for purchase of goods.
b. Dealing on fair terms and conditions.
c. Availing reasonable credit period.
d. Timely payment of dues.

v. Responsibility towards customers

No business can survive without the support of customers. As a part of the responsibility of
business towards them the business should provide the following facilities:
a. Products and services must be able to take care of the needs of the customers.
b. Products and services must be qualitative
c. There must be regularity in supply of goods and services
d. Price of the goods and services should be reasonable and affordable.
e. All the advantages and disadvantages of the product as well as procedure to use the products
must be informed do the customers.
f. There must be proper after-sales service.
g. Grievances of the consumers, if any, must be settled quickly.
h. Unfair means like under weighing the product, adulteration, etc. must be avoided.

vi. Responsibility towards competitors

Competitors are the other businessmen or organizations involved in a similar type of business.
Existence of competition helps the business in becoming more dynamic and innovative so as to
make itself better than its competitors. It also sometimes encourages the business to indulge in
negative activities like resorting to unfair trade practices. The responsibilities of business
towards its competitors are
i. not to offer exceptionally high sales commission to distributers, agents etc.
ii. not to offer to customers heavy discounts and /or free products in every sale.
iii. not to defame competitors through false or ambiguous advertisements.

vii. Responsibility towards government

Business activities are governed by the rules and regulations framed by the government. The
various responsibilities of business towards government are:
a. Setting up units as per guidelines of government
b. Payment of fees, duties and taxes regularly as well as honestly.
c. Not to indulge in monopolistic and restrictive trade practices.
d. Conforming to pollution control norms set up by government.
h. Not to indulge in corruption through bribing and other unlawful activities.

viii. Responsibility towards society

A society consists of individuals, groups, organizations, families etc. They all are the members
of the society. They interact with each other and are also dependent on each other in almost all
activities. There exists a relationship among them, which may be direct or indirect. Business,
being a part of the society, also maintains its relationship with all other members of the society.
Thus, it has certain responsibilities towards society, which may be as follows:
a. to help the weaker and backward sections of the society
b. to preserve and promote social and cultural values

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c. to generate employment
d. to protect the environment
e. to conserve natural resources and wildlife
f. to promote sports and culture
g. to provide assistance in the field of developmental research on education, medical science,
technology etc.

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