UNIT 1

Managing &
Managers
 WHAT IS MANAGEMENT?

• FREDERICK W TAYLOR
 “The art of knowing what you want to
do and seeing that it is done in the best and
cheapest way.”


• STANLEY VANCE
 “Simply the process of decision making
and control over the action of human beings
for the expressed purpose of attaining pre-
 DEFINITIONS
• Management is “the process of designing and maintaining
an environment in which individuals, working together
in groups, efficiently accomplish selected aims”
• Management is “the art of getting things done through and
with the people in formally organized groups” – Herald
Koontz
• Management is “a process of planning, organizing,
actuating and accomplish the objectives by the use of
people and resources” – George R. Terry
• Management is concerned with resources, tasks and goals. It is
the process of planning, organizing, directing and controlling
to accomplish organizational objectives through the
Management as a Unifying
Force
M aach
chinine
M eeth
thood ry
e ry
sd s

M anage
m ent
M a te ri
M oney a ls

M an
Pow er
  Organizations possess human as well as non-human resources
that are put to use in the service of specific goals.


 Management is needed whenever people work together in an

organization.
 The aim of managers is to create surplus.
 As managers, people carry out the managerial
functions of planning, organizing, staffing, leading
and controlling.

 Management thus,
 Applies to any kind of organizations.
 Is a continuous process.
 Applies to managers at all organizational levels.
 Is concerned with productivity., which implies
Management Process

INPUTS 2 4 OUTPUTS
1 3

•GOODS
•MEN •SERVICES
•MATERIALS •PROFIT
•MACHINERY •PRODUCTIVITY
•MONEY •CUSTOMER
SATISFACTION
5
 FUNCTIONS OF
MANAGEMENT
LUTHER GULICK – 7 FUNCTIONS - POSDCORB



1) P LANNING
2) O RGANISING
3) S TAFFING
4) D IRECTING


 C
 ORDINATING
 O


 R EPORTING
 B UDGETING
5) C
 ONTROLLING

 PLANNING
 Determining in advance what should be done.
 Determination of what is to be done, how, where it is to be and
who is to be done, finally how the results are to be evaluated.
 It is done for every department, division or sub-unit of the
organization.
 It is a function to be performed by managers are all levels
▪ Top
▪ Middle
▪ Supervisory
 Plans may be
▪ Long term – cover a period more than 5 to 10 years
– made by top management
▪ Short – term – shorter period – for a day or for a
week – made by middle and first line managers.

 ORGANISING
• Providing a business with everything useful for its
functioning : the 4 M’s(Man, Machine, Money &
Methods)
• Refers to “the structure which results from
identifying and grouping work, defining and
delegating responsibility and authority and
establishing relationships” - Allen
 STAFFING
• Important function of building human
resources
• The Manager attempts to find the
right person for each job
• Involves
– Recruiting
– Selection
– Training

• Includes – a suitable system of

compensation
 DIRECTING
 T h is fu n ctio n ca n b e ca lle d b y
▪Le a d in g
▪M o tiva tin g
▪A ctu a tin g
 T h e m a n a g e r exp la in s to h is p e o p le w h a t th e y
h a ve to d o a n d h e lp s th e m d o it to th e b e st o f
th e ir a b ility.
 In vo lve s th re e su b - fu n ctio n s
 C o m m u n ica tio n
Le a d e rsh ip
co n tro l
 C o m m u n ica tio n – p a ssin g o f in fo rm a tio n .
 Le a d e rsh ip – g u id in g a n d in flu e n cin g th e w o rk to
th e su b o rd in a te s
 M o tiva tio n – a ro u sin g d e sire in th e m in d s o f th e
e m p lo ye e s to g ive th e ir b e st to th e e n te rp rise
▪Fin a n cia l – in ce n tive s, b o n u s,
in cre a se in sa la ry , e tc .,
▪
 CONTROLLING
 Ensuring that everything occurs in conformity
with the plans set, the instructions given and
the principles established.
 Involves five functions
▪Setting up of standards
▪Measuring the actual performance
▪Comparing with the standards
▪Finding out deviations, if any
▪Making corrective actions.
 In absence of control, the set objectives could not
be achieved
 LEVELS OF
MANAGEMENT
• First – line Managers
– Foremen
– White collar Supervisors
• Middle Level Managers
– Sales Managers
– Plant Managers
– Personnel Managers
– Other Departmental Heads
• Top – Management
– Board of Chairman
– The Company Presidents
– The Executive Vice-Presidents
– The other men who coordinate all the specialties and
make policies for the company as a whole.
 MANAGERIAL
SKILLS
• A skill is the ability of transforming
knowledge in action
• It can be developed through:-
a) practice b) experience and

c) back ground

• The managerial skills are

– Conceptual skills
– Technical skills
– Human Relations skill
•
 Conceptual Skills
▪ The ability to take a broad and foresighted view
of the organization and its future
▪ To conceptualize the environment, the
organization and his job so that he can set
appropriate goals for his organization, for
himself and for his team
▪ Important when the manager moves up to a
higher position of responsibility.

 Technical Skills
▪ Person’s knowledge and proficiency in any type
of process of technique
▪ Seems to be important at lower levels of
management
 Human relations skill
▪The ability to interact effectively
with people at all levels
▪recognize the feelings and
sentiments of others
▪to judge the possible
reactions and outcomes of
various course of action
▪to examine his own concepts
and values which may
enable him to develop more
useful attitudes about
 Skill - mix at different
management levels

Top Conceptua
Management l skills

Middle Human
Management Relations
skills
Supervisory
Level Technical
skills
 MANAGEMENT &
ADMINISTRATION
• Administration:- “The overall determination of
policies, the setting of major objectives and the
laying out of broad programmes” – Haimann
• Function:- “A type of work activity than can be
identified and distinguished from other work”
• Three different criticisms
• Administration is broader than
Management
• Management is broader than
Administration
• Administration and Management are
identical
•

 Administration is broader than
Management
 Administration determines the specific goals and lays
down the broad areas to achieve these goals
 It is a policy making function
 According to American School of thought -
 Administration – Top Level activity
 Management – Lower Level activity
 Some writers strong with this criticism: -
 a) Ordway Tead
 b) Oliver Sheldon
 c) William Spriegel
 d) William Schulze



 Management is broader than
Administration
 Management is rule - making and rule - enforcing body
 Administration is a part of management and it is just an
implementing agency.
 According to English School of thought –
 Management – wider concept
 Administration – handles the current
 problem that may arise in carrying out
 the policies laid by management.
 Some writers strong with this criticism: -
 a) E.F.L Brech
 b) Henry Fayol
 c) Kimball and Kimball



Administration & Management are
Identical
 Some writers strong with this criticism:
a)William Newman
b)Herold Koontz
c)Dalton E. McFarland
d)Earnest Dale
 Peter Drucker:-
▪ The use of these words in different fields makes a
difference.
▪ Government – Administration
 Emphasis is not on economic consequences of
 decisions. Ex. Military organization
▪ Private - Management
 Emphasis is on economic consequences on every
decision and action put on
ADMINISTRATION AND MANAGEMENT

Top
Administrati Management
on
Middle
Management

Lower
Management Management
 DISTINCTION BETWEEN
ADMINISTRATION AND MANAGEMENT
Point of Distinction Administration Management
Nature Thinking Function Doing Function
Scope Determines Broad Implements and
objectives and achieves
Level policies
Top level Middle and Lower
Skills Conceptual and Level
Technical and Human
Represents Human
Owners – invest Managers – paid
capital and receive individuals
Usage profits
Government Business Enterprises
Organizations
MANAGEMENT – A SCIENCE OR AN
ART?
 Science:-
 An organized or systemized body of knowledge pertaining to a
specific field of enquiry
 a) Systemized body of knowledge – number of principles
to apply and can be used to solve problems

b) Management is a social science – it deals with human
behavior. It can be called a soft science
 c) Management is an inexact science – does not offer
absolute principles. It can offer only guidelines to solve problems
 d) Manager Vs. Scientist – Scientist can wait till all the
information are collected but Manager cannot wait and he has to take
decisions for present and future based on
 inadequate information.

e) Scientific Management – Sophisticated Managerial
 Art:-
 It is the application of knowledge and personal skills to
achieve results

a)Use of Knowledge – use of management theory in

managerial functions

b)Creative art – creative in combining human and non-

human resources in an effective manner to achieve results

c)Personalized – every manager has his own way of

managing things and people
d)Constant Practice – Learning from mistakes as artistic
skills can be developed through training, so as managerial
skills
 MANAGEMENT IS SCIENCE AS
WELL AS ART
• A successful manager requires both the knowledge
of management principles and the skills of how
the knowledge could be utilized
• Management uses both scientific knowledge and art
in managing the organization
• A balance between the two is needed for an
effective management.
COMPARISON BETWEEN SCIENCE
AND ART AS USED IN
MANAGEMENT
SCIENCE ART
Advances by knowledge Advances by practice
Proves Feels
Predicts Guesses
Defines Describes
Measures Opines
Impresses Expresses
 MANAGEMENT AS A
PROFESSION
• Well defined body of knowledge
• Formal education and training
• Representative body
• Code of conduct
• Service motto
SCOPE OF MANAGEMENT
• Management as an economic
resource
• Management is required to convert the
disorganized resources of 5 M’s into a
productive, useful, on-going concern -
Newman

• Management as a system of
authority
• Rule-making and rule-enforcing body
• Bound by a relationship i.e., superior and
subordinate
Management as a class
or elite
– Management is a distinct class in society
having its own value system
– The term Management refers to the group of
individuals occupying managerial positions
– Al the managers from the chief executive to
the first line supervisors are collectively
addressed as ‘Management’, which refers
to the group
 CHARACTERISTICS OF
MANAGEMENT
 Management is
 INTANGIBLE
 GOAL-ORIENTED
 UNIVERSAL
 SOCIAL PROCESS
 GROUP ACTIVITY
 SYSTEM OF AUTHORITY
 ACTIVITY
 DYNAMIC
 SCIENCE AS WELL AS AN ART
 MULTIDISCIPLINARY
 IMPORTANCE OF
MANAGEMENT
• Optimum use of resources
• Effective leadership and motivation
• Establishes sound industrial relations
• Achievement of goals
 Evolution of Management
DEVELOPMENT OF MANAGEMENT
THOUGHT
q The period between 1700 – 1850, the period of Industrial
Revolution which brought out the advent of factory system.
q Highlighted the importance of direction as a managerial
function.
q Several economists in their writings explained the concepts and
functions of management.
q Adam Smith – Division of Labor
q Turgot – The Importance of Direction and Control
q Say – Importance of Planning
q Management emerged as different field of study only during the
19th century with the introduction of stock exchanges.
q The different form of enterprise separated business
organizations from their ownership.
• It gave rise to different problems of labor inefficiency and
inadequate system of wage payment.
• To give solutions to the above problem, Management started
emerging as a new field.
• During the last 100 years, Management is more scientific with
certain standardised principles and practices. We study the
evolution thought in three periods.
• Early Classical approaches – scientific
management, administrative management,
bureaucracy.
• Neo-Classical approaches – human relation
movement and behavioural approach.
• Modern approaches – quantitative approach,
systems approach and contingency approach
 EARLY CLASSICAL
APPROACHES
• Frederick Winslow Taylor is considered to be the
“Father of Scientific Management”
• Through his experiments with companies :
Midvale Steel Company, Simonds Rolling
Machine and Bethlehem Steel he made several
important contributions to Scientific
Management
• Taylor’s work “The Principles of Scientific
Management” was published in 1911 which is
a famous work done by him.
• He invented high-speed steel cutting tools and
 CONTRIBUTIONS OF TAYLOR
• TIME AND MOTION STUDY:-
• The practical application of this approach was to break each
job down into its smallest and simplest component parts
or ‘motions’
• Each single motion in effect became a separate specialized
‘job’ to be allocated to a separate worker
• Each motion of a job was to be timed with the help of a stop
watch and shorter and fewer motions were to be
developed
• Workers were selected and trained to perform such jobs in
the most efficient way possible, eliminating all wasted
motions or unnecessary physical motion
• Thus, the best way of doing job was found
• It replaced the old rule of thumb knowledge of the workman
•
• DIFFERENTIAL PAYMENT:-
• New payment plan called ‘differential piece work’ was
introduced
• Incentives were linked with production
• A worker was entitled to receive a low piece rate if he
produced the standard number of pieces
• A worker received high piece rate if he produced more than
the standard
• Taylor thought high piece rate would motivate the workers
to produce more to increase the production
• SCIENTIFIC RECRUITMENT AND TRAINING:-
• Scientific selection and development of employee was
emphasized
• The management should develop and train every worker to
bring out his best
• To enable the worker to do higher, more interesting and
• DRASTIC REORGANISATION OF SUPERVISION:-
• Two new concepts were developed by Taylor
• (i) Separation of planning and doing
• (ii) Functional Foremanship
• The worker should not plan any work
• It was the duty of the foreman who has to plan for the
work
• There should be many foreman as there are special
functions involved in doing a job
• Each foreman of different functions should give orders
to the worker on his specialty
• INTIMATE FRIENDLY COOPERATION BETWEEN
 THE MANAGEMENT AND WORKERS :-
– Management and labour had a common interest in increasing
productivity
– There should be a complete revolution on the part of
management and labour was required
– By working together profits could be increased, so that
management and labour could no longer compete each
other
CONTRIBUTIONS BY HENRY GANTT
• Using of correct methods and skills in performing a task was
important than knowing the skills and methods
• The importance of human element in productivity , thus he
needed motivation
• He introduced two main features in Taylor’s incentive
scheme
– Every worker who completed his assigned work – 50
% bonus
– Foreman was also entitled to receive a bonus for
every worker who have completed the assigned
task + extra bonus if every one completed
• Ratings of workers publicly:
– Every worker’s progress is recorded on individual bar
charts
• Black – completed the standard
• Red – deviations in standard i.e. fell below the
standard
• A charting system for production control
– Each man’s daily performance compared with
standard of performance
CONTRIBUTIONS BY FRANK AND LILLIAN
GILBERTH
• Frank and Lillian Gilbreth made their contribution
as husband and wife
• They made their contribution in Motion and
Fatigue studies to eliminate wasteful hand-and-
body motions.
• The Gilbreths also experimented with the design
and use of the proper tools and equipment for
optimizing work performance.
• The Gilbreths were among the first to use motion
picture films to study hand-and-body motions.
• The Gilbreths also devised a classification scheme
to label 17 basic hand motions, which they
called “Therbligs.”
• According to them, the Motion and Fatigue
studies raised the workers’ morale
 1. CONTRIBUTIONS OF SCIENTIFIC
MANAGEMENT – IN SHORT
The four objectives of management under scientific management


were as follows:-
a) The development of a science for each element of a man’s work to
replace the old rule-of thumb methods
b) The scientific selection, training and development of workers
instead of allowing them to choose their own tasks and train
themselves as best they could
c) The development of a spirit of hearty cooperation between workers
and management to ensure that work would be carried out in
accordance with scientifically devised procedures.
d) The division of work between workers and the management in
almost equal shares, each group taking over the work for which
it is best fitted instead of the former condition in which
responsibility largely rested with the workers. Self-evident in
this philosophy are organizations arranged in a hierarchy ,
systems of abstract rules and impersonal relationships between
 LIMITATIONS
• Economic incentives are not the strong
motivators for increased production.
Taylor believed it so, which is proved
wrong. No man is an “economic man”
• Time and motion study could not be called a
“one best way”
• Separation of planning and doing tended to
reduce the need for skill and produce
greater monotony of work
• Taking orders from 7 or 8 bosses resulted in
confusion
• Advances in methods and tools and
machines eliminated some workers, who
found it difficult.
 2. ADMINISTRATIVE
qHenry
MANAGMENT
Fayol is considered the “Father of Administrative
Management” (1841 - 1925) broad administrative principles
applicable to general and higher managerial levels
qBasically a French mining engineer turned to a leading
industrialist and successful manager
qTill his monograph “General and Industry Administration” which
he wrote in 1916, was translated to English in 1929, very little
was known about him
qHe provided broad analytical framework on the process of
administration
qHe divided the activities of a business enterprise into six
groups : technical, commercial, financial, accounting, security and
administrative or managerial
qHe has presented 14 Principles of Management to guide the
management process and practices
 FAYOL’S 14 PRINCIPLES OF
MANAGEMENT
1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest to General Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10.Order
11.Equity
12.Stability of Tenure of Personnel
13.Initiative
14.Esprit de Corps
 CONTRIBUTIONS OF ADMINISTRATIVE
MANAGEMENT
• Taylor and Fayol, both concentrated on increasing
production; Taylor worked from the bottom whereas Fayol
worked from upside to down
• Fayol’s principles met with wide spread acceptance
• In US, two General Motor Executives – James D Mooney and
Alan C Reiley, wrote a book, Onward Industry in 1931
and revised as Principles of Organisation
• Colonel L Urwick, a distinguished executive and a
management consultant in UK wrote a book, The
Elements of Administration, where they tried to
comprehend the concepts and principles of Taylor, Fayol,
Mooney and Reiley. It made an explosion in number of
principles of management. His important concepts are
– There should be clear line of authority
– The authority and responsibility should be clearly
communicated
– Each worker should be given single operation or work only
– The span of control of a manager should not exceed six
– Authority can be delegated

• A new school of thought Management Process School came
into existence with inspirations from Fayol
• Harold Koontz and Cyril O’Donnell, the champions of the
school believed management is a dynamic process of
performing the functions of management (PODSCORB)
• They believed these functions and principles on which they
are based have universal or general acceptability
• Managers or the Managing Directors perform same
planning and control functions and only the degree of
complexity differs
• Management functions are applicable not only to business
organisations but also to all organisations where group
effort is employed
• Management theory is not culture - bound but it is
transferable to any environment
• This approach is known as “Universalist approach”
 LIMITATIONS OF ADMINISTRATIVE
MANAGEMENT
• Fayol’s principles of specialization produced dysfunctional
consequences
a)Formation of small work groups with norms and
goals which does not suit with those of the
management
b)Dissatisfaction among workers
c)Increase in overhead cost
• Fayol’sprinciples are both plausible and contradictory.
There is nothing in his writings to indicate which is to
apply
• The principles are based on few case studies only and not
empirically proved
• These principles are stated as unconditional principles but
what needed is conditional principles
• Result in the formation of mechanistic organization
structures which are insensitive to employees’ social and
psychological needs
 3. BUREAUCRACY
• Max Weber is known as the “Father of Bureaucracy”
• A German Sociologist, he made study on different types of
business and Government Organizations
• He found three basic types of administration
– Leader – oriented – no delegation of management
functions
– Tradition – oriented – managerial positions are
handed over from tradition to tradition
– Bureaucratic – management responsibility is based
on the person’s demonstrated ability to hold the
position
• He considered bureaucracy was the ideal type of
administration

 FEATURES OF BUREAUCRACY
1.There is no instance on following Standard
Rules
2.There is a Systematic Division of Work
3.Principle of Hierarchy is Followed
4.It is necessary for the Individual to have
Knowledge of and Training in the
Application of Rules
5.Administrative Acts, Decisions and Rules are
recorded in writing
 LIMITATIONS
• Over conformity to rules
• Buck-passing
• Categorization of Queries
• Displacement of Goals
• No real right of appeal
• Neglect of informal groups
• Rigid structure
• Inability to satisfy the needs of mature individuals
NEO – CLASSICAL APPROACHES

 These approaches are called neo-classical
approaches as they tried to refine the classical
approaches


 Neo classical approaches could be classified into



A)Human Relations Movement

B)Behavioural Approach



 1. HUMAN RELATIONS
•
MOVEMENT
Managers found that Taylor’s and Fayol’s principles of
management were not helpful in achieving complete
production efficiency and work place harmony
• They faced difficulties because of the rational behavior of
employees
• To help the managers to deal effectively with the “people
side” of the organization, the human relations movement
was begun
• The real impression came from “Hawthorne Experiments”
by Prof. Elton Mayo and his colleagues in Western
Electric Company’s plant in Cicero, Illinois from 1927 to
1932
• The plant employed 29,000 workers to manufacture
telephone parts and equipment
• The study can be described in four parts:
1) Illumination Experiments
2) Relay Assembly Test Room
3) Interviewing Programme
4) Bank Wiring Test Room
 1. ILLUMINATION
EXPERIMENT
 First phase of the study to test the correlation between
illumination and productivity
 Experiments were done on a group of workers and the
productivity is measured at various illumination levels
 The results were erratic and the researchers changed their
methodology
 There were two groups of workers in different buildings:
 control groups - who work under constant level of
illumination
 test groups - worked under changing levels of illumination
 The post-test productivity of the two group then compared and
found out that illumination and productivity were very
marginally related
 2. RELAY ASSEMBLY TEST
ROOM
 The object of the study was broadened to know not only the
illumination and productivity but also such other factors
like the length of the working day, rest pauses, their
frequency and duration and other physical conditions
 A group of six women workers were selected, told about the
experiment and asked to work in an informal atmosphere
with a supervisor-researcher in a separate room
 Several variation were made in the working conditions to
find out the combinations which were ideal for
production
 Surprisingly, the production increased at all levels and
stabilised at high level
 Researchers then found the following factors
 Feeling of importance among the girls to participate
in the research
 High cohesion among the workers of the group
 Warm informality, tension-free interpersonal and
social relations and relative freedom from strict
 3. INTERVIEWING
PROGRAMME
 The knowledge about the informal groups in the second phase
made the researchers to design the third phase to know the
basic factors for the human behaviour at work
 20,000 employees were interviewed with direct questions relating
to type of supervision, working conditions, living conditions and
so on where the employees reluctant to answer
 The technique was changed to a non-directive type where the
employees were asked to speak about the most interesting part
of their working environment
 It revealed that the workers’ social relations inside the
organisation had an unmistakable influence on their attitudes
and behaviour
 The study revealed the pervasive nature of the informal groups
which had their own culture and production norms which their
 4. BANK WIRING
OBSERVATION ROOM
 This phase involved the observation of 14 men making terminal
banks of telephone wiring assemblies to find out the effect of
informal group behaviour with formal economic incentives on
productivity
 The group had its own production norms for its members which
was very low when comparing with the management norms,
defeating the incentive scheme
 This artificial restriction saved the employees from a cut in
price rates and protected the weaker employees
 Workers – “foolishness” – means who produced more than
the group norms – isolated from the group – harassed or
punished by the group – called “rate busters”
 “Chisellers” – too slow workers
 “Squealers”- who complained about their co-workers to the
supervisors
 The members of the informal group gave rankings about each
other, which helped to find out the internal social structure of
 FINDINGS OF HAWTHRONE
EXPERIMENT
• Produced an impact on human relations
movement
• The important role played by the
informal group in an organisation was
identified
• Research scholars began to concentrate
on the human behaviour of
management and principle
• When people work together “people
should understand people” to
accomplish the goals of the
CONTRIBUTIONS OF HUMAN RELATIONS
MOVEMENT
 Business organisation is an social system not merely a
techno-economic system
 No correlation between high working conditions and
productivity
 The production norms were set by the group not as
time and motion study. The employees who deviate
from the norms were penalised
 The workers’ main motto is not only money but also
the non-financial rewards which affect largely their
behaviour and limit the effect of economic incentive
plan
 Task-centered leader ship is not effective
 LIMITATIONS
 Human relations writers saw only the human variable as critical
and ignored other variables
 It is possible to find out a solution which satisfies everybody so
that the organisation is turned out to be a big happy family is
not correct
 Over emphasizing on symbolic rewards and underplaying the
role of material rewards
 The informal groups are shown as the major source of
satisfaction for industrial workers
 The approach is production-oriented and not employee-
oriented
 The process of decision making is very leisure which will not
help in emergency
 People want to become managers only for the desire of power
but this approach makes an unrealistic demand on the
 2. BEHAVIOURAL APPROACH
• More mature version of the human relations approach to management
• Behavioural scientists
• Douglas McGregor
• Abraham Maslow
• Kurt Lewin
• Chester Barnard
• Mary Parker Follett
• George Homans
• Rensis Likert
• Argyris
• Warren Bennis
• These scientists were trained in various social sciences such
psychology, sociology and anthropology
• Thus they were known as ‘behavioral scientists’ rather than ‘members
of human relations school’
• Their contributions have helped enormously to understand the
organizational behavior
•
•
CONTRIBUTIONS OF BEHAVIOURAL
APPROACH
• The traditional concepts like hierarchical authority, unity of
command, line and staff relationships and narrow span of
control are criticized by the behavioral scientists
• They concluded that managers are always dominating so
that subordinates are passive and dependent on them
• Behaviorists prefer an organization which is more flexible
and the jobs should be built around the capabilities and
aptitudes of average employees
• It recognizes the practical and situational constraints on
human rationality for making optimal decisions
• They give importance to participate and group decision
making as it is not feasible to make individuals to solve
the problems themselves
• They underlined the desirability of humanizing the
administration of the control process and encouraging
the process of self-direction and control instead of
imposed control
• they considered organization as groups of individuals with
certain goals
• They made extensive studies on leadership. For them, the
democratic-participative leader style is desirable than
the autocratic and task-oriented style
• In real, human motivation is complex, i.e., no two people
are exactly alike, so the manager has tailor his attempts
to influence them based on the individual needs
• They recognized the conflict is inevitable and sometimes
 LIMITATIONS TO BEHAVIOURAL
APPROACH
• Self – actualization view – no two employees are
equal and every one will have different desire
and needs
• There is no compatibility between individual and
organizational goals, in reality, individual’s
desire to be autonomous
• This approach discounted the non-human aspects
of an organisation such as task, technology and
manufacturing
• Like other approaches, it also tried to find out the
best way of managing. It assumed humanizing
the organisation is the best way of managing
• As human behavior is so complex, the behavioral
scientists offer differ in their recommendations
for a particular problem
 MODERN APPROACHES
1 . QUANTITATIVE TECHNIQUES
 During World War II, mathematicians, physicists, and other scientists
joined together to solve military problems.
 The quantitative school of management is a result of the research
conducted during World War II.
 The quantitative approach to management involves the use of
quantitative techniques, such as statistics, information models, and
computer simulations, to improve decision making.
 People used the techniques or problem solving to the industry after
the end of the war
 A mixed team of specialists were called to analyse the problem where
they construct a mathematical model to simulate the problem
 The model shows all the relevant factors which are interrelated with
the problem
 By changing the values of the variables and analysing the different
 FEATURES OF QUANTITATIVE
APPROACH
 The focus of the quantitative approach is decision making.
Managerial choices in any situation depend on criteria such as
costs, revenues, return on investment, impact on other areas
etc.,
 It facilitates disciplined thinking, while defining management
problems and establishing relationships among variables
 It aims at precision and perfection by expressing in quantitative
terms
 Widely used in planning and control activities where problems
can be identified and expressed in quantitative terms
 Heavy emphasis is put on computers and their processing
capabilities. Final solutions to problems are reduced to
mathematical formulae. These are subjected to further
 LIMITATIONS
• Still uncommon in some areas like staffing, organising
and leading where problems are more human
oriented than technical in nature
• There is no importance on human relationships and
individual needs and aspirations
• Though the inputs for decision making are not readily
available, the manager cannot postpone the
decisions
• Decision quality depends on the quality of data
• If the data is not adequate and an updated one, it
does not serve the purpose
 BRANCHES OF
QUANTITATIVE APPROACH
 MANAGEMENT SCIENCE:-
 Aims at increasing decision effectiveness through the use of
advanced mathematical models and statistical methods
 The computers are used more as it focuses on technical rather
than human behaviour problems
 OPERATIONS MANAGEMENT:-
 It includes fields such as inventory management, production
management, planning, design and location, work scheduling
and quality assurance – all functions responsible for managing
the production and delivery of an organisation’s products and
services
 MANAGEMENT INFORMATION SYSTEMS:-
 Focuses on computer based information systems for use by
management where the raw data is converted into
meaningful information for decision making at various levels
 2. SYSTEMS APPROACH
• It attempts to view the organization as a single unified,
purposeful entity
• As the classical approach emphasized “task” and
“structure”, the behavioral approach emphasized
“people” and the quantitative approach emphasized
“mathematical decision making”, the systems
approach tries to get ideas by looking the organisation
as a whole and as a part of the larger, external
environment
• The systems approach provides the manager an
integrated approach to management problems
• Chester Bernard, George Homans, Philip Selznick and
Herbert Simon are the important advocates of
 SYSTEMS - TERMS
• System:-
• Inter-related parts or components
• Sub-system
• The parts which make up the whole
system
• Synergy
• The output of the system which is
always more than the combined
output of it parts
• Open and Closed System
• A system which is interacting with its
environment – Open system
• A system which is not interacting –
Closed System

• System Boundary:-
• Which separates the system from its
environment
• Flow:-
• Receiving inputs from the environment
-----> processing the inputs into output
----> outputs may be goods or services
returned to the environment
• Feedback:-
• Central to system control
• Holism:-
• No part of the system could be accurately
analysed and understood apart from the
whole system. Each part bears the
interdependence to every other part. This
concept is called “Gestalt” in psychology.
• William Foote White with his 3 subordinates
applied this concept in a study of 12
ORGANISATION AS AN OPEN
SYSTEM
E N V IR O N M E N T

E
N E
INPUTS PROCESSES OUTPUTS N
V
V
I
I
R
R
O
M e n , M a te ria ls, M o n e y , Te chAncti o gtiye s, O p e ra tio n sGoals, Sales / Profits
o lvi O
N
N
M
M
E
E
N
N
T
TARGETS
T

E N V IR O N M E N T
 Organisation as a Open System

rmation , Energy , Materials ( Import ) Output of Products , Ideas , Servi

Transformation of Energy
( Throughput )

E N V I R O N M E N T
CONTRIBUTIONS OF SYSTEMS
APPROACH
• A problem is studied both at the level of the sub-
system and the total system
• To apply this approach the executives of the
organisation should be generalists i.e., they
should have enough knowledge in other fields in
addition with their functional skills
• They can easily maintain a trade-off between the
needs of the various parts of the enterprise and
goals of the firm as a whole
 LIMITATIONS
• The conceptual framework of understanding organist
ions provided by the systems approach is vague or
too abstract
• It is not identifying the situational differences and
factors
• The oneness in any organisation, in reality is not a
easy one, either it is difficult or is it impossible
• Provides more specificity in terms of variables and if-
then relationships in a situational context
• Attempts to integrate various school of thought thus
3. CONTINGENCY OR SITUATIONAL
APPROACH
• This approach is in a view point that the various schools
of management could not be applied generally or
universally under all conditions
• There is no one best way as situations and conditions
differ. The same results may not be obtained
• It suggests that the manager should find out which
technique will best suit to the contingency situation to
attain the firm’s goals
• The manager have to select a situational sensitivity and
practical selectivity
• The contingency theorists are
– Selznik
– Burns and Stalker
– Woodward
– Lawrence and Lorsch
– James Thompson
• Contingency approach views are applicable
in
– Designing organizational structure
– Deciding the degree of decentralization
– Planning of information system
– Resolving conflicts and managing change
– Employee development and training
programmes and
– Other relevant areas of organisation
 ENVIRONMENT – AN

INTRODUCTION
Environment is anything which surrounds a system thus business
environment is anything which surrounds the business organisation
 The strategies, decisions, processes and performances are affected by the
environment
 Two types of environment
 Micro Environment:-
 Different types of stakeholders - customers, employees,
suppliers, board of directors and creditors.
 Any changes in this environment will directly affect
 Is also called “internal environment”
 Macro Environment:-
 Beyond the control of the business (STEP) - Social,
Technological, Economical and Political.
 Any changes will indirectly affect
 Is also called “external Environment”


 FEATURES OF
• COMPLEX
ENVIRONMENT
– Environment comprises of different event, factors,
conditions and influences arising from various sources
which interact with each other constantly and produce
new set of influences
– It cannot be predictable what kind of forces influence an
environment
• DYNAMIC
– Environment is constantly changing
– There may be too many changes with in a short span of
time which might be shocks and surprises to the
organisation
– Some times the organizations are forced to comply with
the changes in the environment
• CHALLENGING
– The factors of macro environment have an impact on
organizations (Political, Legal, Economic, Technological
and Social systems)
– These forces are so dynamic and their constant change
results with lot of opportunities, threats and constraints
 ENVIRONMENTAL
•
ANALYSIS
Every organisation must strike a balance between
environment, values and resources in order to survive in
a high competitive environment
• Environmental analysis is the process of monitoring an
organizational environment to identify both present and
future threats and opportunities that may influence the
firm’s ability to reach its goals
• Features : -
– Holistic Exercise – broad view of the environment
– Exploratory process – tries to explore the unknown
future choices, seeking clarification of the
assumptions about future, etc
– Continuous activity – it is a continuous process of
 COMPONENTS OF EXTERNAL
ENVIRONMENT
• Economic – how the economy affects a business in terms of taxation,
government spending, general demand, interest rates, exchange
rates and other economic factors.
• Social – how consumers, households and communities behave and
their beliefs. For instance, changes in attitude towards health, or a
greater number of pensioners in a population.
• Political – how changes in government policy might affect the business
e.g. a decision to subsidize building new houses in an area could be
good for a local brick works.
• Legal – the way in which legislation in society affects the business. E.g.
changes in employment laws on working hours. .
• Technological – how the rapid pace of change in production processes
and product innovation affect a business.
• Ethical – what is regarded as morally right or wrong for a business to
do. For instance should it trade with countries which have a poor
 ECONOMIC
• ENVIRONMENT
Economic environment refers to all forces which have an
economic impact on business
• Economic factors throw light on the nature and direction of the
economy in which a firm operates
• The various economic factors are : -
• National Income
• Savings
• Investment
• Prices, wages, Productivity
• Capital Market
• Policy Initiatives
• International Transactions
• Sectoral Growth
 SOCIO-CULTURAL
ENVIRONMENT
• Refers to the influence exercised by certain factors which are
beyond the company’s gate
• The social factors that affect a firm include the values,
attitudes, beliefs, opinions and life-styles of persons in the
firm’s external environment
• Social factors change continually
• The various factors are : -
• Demographic factors
• Cultural factors
• Religious, Ethical and moral factors
•
•
•
 POLITICAL AND LEGAL
ENVIRONMENT
• Political environment refers to
– the political factors which influence the managers’
formulation and implementation of strategic
direction.

• Legal Environment refers to

– the environment influence exerted by the three
political institutions, viz., legislature, executive and
the judiciary in shaping, directing, developing and
controlling business activities
 TECHNOLOGICAL
ENVIRONMENT
• It exercises considerable influence on business
• Technological factors represent major
opportunities and threats that must be taken
into account while formulating strategies
• Technological advancements can create
competitive advantage


•
•
 NATURAL ENVIRONMENT
• It comprises of ecological, geographical and
topographical factors
• Because of the environmental activities and the
knowledge of different type of pollutions that affect
the earth, most of the companies come out with
– Eco-friendly products
– Modified processes
– Redesigned production equipment
– Recycled by-products
–
–
 INTERNATIONAL OR GLOBAL
ENVIRONMENT
• International factors influence the companies by new global
competitors
• Fluctuations of the rupee against foreign currencies
• International factors assume greater importance when
domestic companies directly depend imports or exports on
certain countries
• Advances in transportation and communication technology has
made the world as a global village and no part of it is cut off
from the rest
 ETHICAL ENVIRONMENT
• Application of moral principles to business problems is known
as business ethics
• Unethical behaviors:-
a) Providing false information
b)Blocking the stock
c) Padding expenses account
d)Exposure of trade secrets to competitors companies
e) Usage of company’s property for the personal use
f) Cheating customers, overselling, unfair credit policies
g)Unfair wages and providing the employees with bad
working conditions, etc.,