Principles of Management

M. Ramani
M.A., M.A., M.Sc., MBA., M.Phil, Ph.D
PGDPR, PGDHM
Resource Person – Social Science
 Management-
Definitions
“To Management is to fore cast, to
plan, to organize, to command, to co-
ordinate and to control”
-Henri Fayol.
“Management is a multipurpose organ
that manages a business and
manages worker, work and manager”
-PeterF.Drucker.
 Management- Definitions
Management is the art of getting things done
thro and with the people in formally
organised groups.

Management is the art of Knowing what you

want to do and then seeing that it is done in
the cheapest and best way

-F.W. Taylor
 Management Process

Planning

Controlling Men Organizing

Machine
Materials
Money

Coordinating Directing
Basic resources Inputs Fundamental functions Stated Object

Planning Organizing
Products

Service
Men
Profits
Machine
Satisfaction
Materials
Controlling Directing Goal
Money integration
Others
Nature of Management
 Management is Universal
 Integrative force
Purposeful
 Multidisciplinary
 Continuous process
 Art and Science
 Aims at profit
 A factor of production
 Nature …..,
 Is a profession
 Is dynamic
 Needed at all level
 Is getting things done
 Is intangible.
 Direction and control
 Evolution of Management
Theory Org. Environment

Management Science

Behavioral Management

Administrative Management
1890

Scientific Management

1940 2000
Evolution of Management
 Pre scientific Management
 Scientific Management
 Management process School
 Human Resource school
 Decision theory school
 Mathematical school
 System school
 Contingency school
 Scientific Management
theory

 Modern management began in the late 19th

century.
 Organizations were seeking ways to better
satisfy customer needs.
 Machinery was changing the way goods were
produced.
 Managers had to increase the efficiency of the
worker-task mix.
 Scientific Management

 Defined by Frederick Taylor, late 1800’s.

 The systematic study of the relationships

between people and tasks to redesign the

work for higher efficiency.
 Taylor sought to reduce the time a worker
spent on each task by optimizing the way
the task was done.
 Problems of Scientific
Management
 Managers often implemented only the
increased output side of Taylor’s
plan.
 They did not allow workers to share in
increased output.
 Specialized jobs became very boring,
dull.
 Workers ended up distrusting Scientific
Management.
 Workers could purposely “under-

perform”
Is Management a science
or an art

Management is a
science
 Management

Management is an art
 Scope of Management
 Very wide  Maintenance
 Production  Materials
 Marketing  Stress
 Operation  Education
 Finance  Sports
 Sales  Pain
 Personnel  Time
 Importance of
Management
 Management meet the challenge of
change
 Accomplishment of group goals
 Effective utilization of Business
 Effective functioning of Business
 Resource development
 Sound organization structure
 It directs the organization
 Stability
 Innovation
Importance of
Management
 Co-ordination and team spirit
 Tackling problems
 A tool for personality development
 Integration of various interests
Administration vs
Management
 Administration  Management
 Legislative and  Executive
determinative function
function
 Determination of
objectives and  Implementation of
policies policies.
 Mainly top level
functions
 Mainly lower level
functions
Administration vs
Management
 Planning, organising  Direction motivation
and staffing and control
 Involves thinking of  Involves doing and
planning achieving
 More popular in Govt  More commonly used
and Public Sectors in Business world
 Represents in entire only
enterprise  Represents only in
 Requires Management
administrative ability  Requires technical
ability
 Four Functions of
Management
Planning
Choose Goals

Controlling Organizing
Monitor & measure Working together

Leading
Coordinate
 Planning
Planning is the process used by managers to
identify and select appropriate goals and
courses of action for an organization.
3 steps to good planning :
1. Which goals should be pursued?
2. How should the goal be attained?
3. How should resources be
allocated?
The planning function determines how
effective and efficient the organization is
and determines the strategy of the
 Organizing

 In organizing, managers create the structure of

working relationships between organizational
members that best allows them to work together
and achieve goals.
 Managers will group people into departments

according to the tasks performed.

 Managers will also lay out lines of authority and

responsibility for members.

 An organizational structure is the outcome of

organizing. This structure coordinates and

motivates employees so that they work together to
achieve goals.
 Leading

 In leading, managers determine direction,

state a clear vision for employees to
follow, and help employees understand
the role they play in attaining goals.
 Leadership involves a manager using
power, influence, vision, persuasion, and
communication skills.
 The outcome of the leading function is a
high level of motivation and commitment
from employees to the organization.
 Controlling
 In controlling, managers evaluate how well
the organization is achieving its goals and
takes corrective action to improve
performance.
 Managers will monitor individuals,

departments, and the organization to

determine if desired performance has been
reached.
 Managers will also take action to increase

performance as required.
 The outcome of the controlling function is
 Management Levels
Organizations often have 3 levels of managers:

First-line Managers: responsible for day-to-day

operation. They supervise the people performing
the activities required to make the good or
service.
Middle Managers: Supervise first-line managers.
They are also responsible to find the best way to
use departmental resources to achieve goals.
Top Managers: Responsible for the performance
of all departments and have cross-departmental
responsibility. They establish organizational goals
and monitor middle managers.
Three Levels of Management

Top
Managers
Middle
Managers

First-line Managers

Non-management
 Managerial Roles

 Described by Mintzberg.
 A role is a set of specific tasks a person
performs because of the position they
hold.
 Roles are directed inside as well as
outside the organization.
 There are 3 broad role categories:
1. Interpersonal
2. Informational
3. Decisional
 Interpersonal Roles

 Roles managers assume to coordinate and interact

with employees and provide direction to the
organization.
 Figurehead role: symbolizes the organization
and what it is trying to achieve.
 Leader role: train, counsel, mentor and
encourage high employee performance.
 Liaison role: link and coordinate people inside
and outside the organization to help achieve
goals.
 Informational Roles

 Associated with the tasks needed to obtain

and transmit information for management
of the organization.
 Monitor role: analyzes information from
both the internal and external
environment.
 Disseminator role: manager transmits
information to influence attitudes and
behavior of employees.
 Spokesperson role: use of information to
positively influence the way people in
 Decisional Roles

 Associated with the methods managers use to plan

strategy and utilize resources to achieve goals.
 Entrepreneur role: deciding upon new projects or
programs to initiate and invest.
 Disturbance handler role: assume responsibility
for handling an unexpected event or crisis.
 Resource allocator role: assign resources
between functions and divisions, set budgets of
lower managers.
 Negotiator role: seeks to negotiate solutions
between other managers, unions, customers, or
shareholders.
 Managerial Skills

There are three skill sets that managers need to

perform effectively.
1. Conceptual skills: the ability to analyze and
diagnose a situation and find the cause and
effect.
2. Human skills: the ability to understand, alter,
lead, and control people’s behavior.
3. Technical skills: the job-specific knowledge
required to perform a task. Common examples
include marketing, accounting, and
manufacturing.
All three skills are enhanced through formal
Skill Type Needed by Manager
Level
Top
Managers

Middle
Managers

Line
Managers

Conceptual Human Technical

 MBO- Definition
 MBO is a comprehensive approach
focusing on objectives providing
guidelines and developing positive
motivation among all people for
the attainment of desired results.
 MBO- Definition
 MBO is a comprehensive
managerial system that integrates
various key result areas in a
systematic manner, consciously
directed toward the effective and
efficient achievement of
organizational objectives
 Company Objectives

Key Result Areas

Superior’s Objective

Useful dialogue between

superior and subordinate

Agreed Subordinates
objectives

Performance of subordinate
evaluated

New inputs added

Final Performance and

review
 MBO- Benefits
 Better Managing
 Clarifying roles and structure of an
organization
 Planning is effectively sharpened
 Elicits commitment
 Gives the best guides and reason
for control
 Improved Staff- Boss relationship
 MBO- Weakness
 Goals are difficult to set.
 Tendency of goals to be short –
term.
 Danger of over-emphasizing the
objective.
 Objective sometimes may not be
an accurate measure of
performance.
 Excessive paper work.
MBO- Practical Difficulties
 Learning the system is difficult.
 Failure to give goal seekers guidelines
 Over insistance on numbers.
 Use of inapplicable standards.
 Danger of inflexibility
 Settings arbitrary goals
 Failure to exist on verifiability
 Failure to review, counsell and control
adequately
 Planning

Planning is deciding what is to be

done in advance.
Planning is a predetermined
course of action to achieve a
specific goal.
Planning is deciding in advance
what to do, How to do it, when to
do it, an who is to do it. It bridges
the gap from where we are to
Steps involved in
Planning process
 Opportunity Analysis

Establishing objective

Devolving Premises

Identifying alternatives

Evaluating alternative and

choosing the best alternative

Formulating supporting
plans

Developing budgets
 Types of Plans
 Purposes and missions
 Objectives
 Strategies
 Policies
 Procedures
 Rules
 Budget
 programmes
Narrow Span
Advantages of Narrow
span management
 Close control
 Close supervision
 Fast
communication
with subordinates
and superiors
 Managers have
more time to
devote for their
future plans
Disadvantages- Narrow
Span
 Higher executive pay
role
 Many levels of
management
 Supervisors tend to
get more involved in
subordinates’ work
 Excessive distance
between lowest level
and top level
Wide Span
Advantages of wide span
 Superiors are
forced to delegate
 Clear policies
must be made
 Subordinate must
be carefully
selected
Disadvantages- Wide span
 Requires exceptional quality of
Managers
 The superiors may not have
sufficient control
 Due to paucity of time, the
superiors may become decision
bottlenecks.
 Departmentation by
function

M.D

Marketing Production Finance Personal Purchase

manager manager manager manager manger
 Departmentation by
function
Advantages
 Logical reflection of function
 It follows the principle of occupational
specialization which facilitates efficiency
in the utilization of people
 The power and prestige of major
functions are defended and maintained
by top managers
 It also simplifies training and furnishes
means of tight control at the top
Disadvantages- Function
 De-emphasizes the overall objectives.
 Limits development of general
managers
 Reduces coordination between functions
 The responsibility of profits lies at the
top
 This kind of departmentation makes it
difficult to adopt quickly to
environmental changes
 Departmentation by
product

President

V.P. Automobile V.P. Wheels

V.P. Brakes
 Product Structure
CEO
C o r p o r a tio n

C o rp o ra te
M a n a g e rs

W a s h in g M a c h in e L ig h tin g T e le v is io n
D iv is io n D iv is io n D iv is io n
 Departmentation by
Product
Advantages
 It places attention on product lines
 It facilitates use of special study of
knowledge
 It improves co-ordination of functional
activities
 It places responsibility for profits at the
division level
 It permits growth of diversity of product
and services
 Furnishes measurable grounds for GMs’
 Departmentation by
Product
Disadvantages
 Requires more persons with GM
qualifications
 Services like Purchasing, Personnel
etc, are duplicated in each division
 Presents increased problems of
top management control
 Territory Structure
CEO
C o r p o r a tio n

C o rp o ra te
M a n a g e rs

N o rth e rn W e s te rn S o u th e rn E a s te rn
R e g io n R e g io n R e g io n R e g io n
 Departmentation by
Territory -Advantages
 It places responsibility of at a lower
level and improves co-ordination of
activities at a regional level
 It places emphasis on local markets and
problems
 The local economies of operation can be
utilized for eg., labour costs,
transportation costs may be cheaper in
a particular region
 It improves face to face communication
 Provides measurable training ground for
GMs’
 Matrix Structure
CEO

Func.
Managers

Sales Design Production

Product
Team Managers

team A

Product
team B
Product Team
Product
team C

= two boss employee

 Organizing
 Put the right things in right places
 Organising derived from
-Organism- implies a structure of
interrelated parts.
 An identified group of people
contributing their efforts towards
the attainment of goals.
 It is a structure of relationships
among various positions or jobs.
 Characteristics of
Organization
 Common purpose
 Division of labour
 Authority structure
 People
 Communication
 Co-ordination
 Environment
 Rules and regulations
 Organisation- Types
 Line, military or Scalar
 Functional
 Line and staff
 Committee
 Project
 Matrix
 Freedom
 Formal and informal
 Motivation

 Defined as the psychological forces within a person

that determine:
1) direction of behavior in an organization;
2) the effort or how hard people work;
3) the persistence displayed in meeting goals.
 Intrinsic Motivation: behavior performed for

its own sake.

 Motivation comes from performing the work.

 Extrinsic Motivation: behavior performed to

acquire rewards.
 Motivation source is the consequence of an

action.
 Need Theory

People are motivated to obtain outcomes

at work to satisfy their needs.
 A need is a requirement for survival.
 To motivate a person:
1)Managers must determine what needs worker
wants satisfied.
2)Ensure that a person receives the outcomes when
performing well.
 Several needs theories exist.
 Maslow’s Hierarchy of Needs.

Alderfer’s ERG.
 Hierarchy of Needs
Need Level Description Examples
Self- Realize one’s Use abilities
Actualization full potential to the fullest

Feel good Promotions

Esteem about oneself & recognition

Social Interpersonal
Belongingness interaction, love relations, parties

Job security,
Safety Security, stability
health insurance

Food, water, Basic pay level

Physiological shelter to buy items

Lower level needs must be satisfied before higher needs are addressed.
 Alderfer’s ERG
Need Level Description Examples
Highest

Self-development, Worker continually

Growth creative work improves skills

Interpersonal Good relations,

Relatedness relations, feelings feedback
Lowest

Food, water, Basic pay level

Existence shelter to buy items

After lower level needs satisfied, person seeks higher needs. When
unable to satisfy higher needs, lower needs motivation is raised.
Motivation-Hygiene Theory

Focuses on outcomes that can lead to

high motivation, job satisfaction, & those
that can prevent dissatisfaction.
 Motivator needs: related to nature of the
work and how challenging it is.
 Outcomes are autonomy, responsibility, interesting
work.
 Hygiene needs: relate to the physical &
psychological context of the work.
 Refers to a good work environment, pay, job
security.
 When hygiene needs not met, workers are
dissatisfied. Note: when met, they will NOT lead to
 Expectancy Theory

Developed by Victor Vroom and is a

very popular theory of work
motivation.
Vroom suggests that motivation will

be high when workers feel:

 High levels of effort lead to high
performance.
 High performance will lead to the
attainment of desire outcomes.
Consists of three areas:

 Motivation Equation

Inputs from Outcomes

Organizational Performance received by
members members

Time
Contribute to Pay
Effort
organization Job Security
Education
efficiency, Benefits
Experience
effectiveness Vacation
Skills
and Autonomy
Knowledge
attain goals Responsibility
Work Behav.
Expectancy, Instrumentality, &
Valence

Effort Performance Outcomes

Expectancy:
Instrumentality Valence:
Person’s
perception that How desired
perception that
performance are the outcomes
their effort will
results in from a
result in
outcomes job
performance
Expectancy, Instrumentality,
& Valence
 Expectancy is the perception that effort (input)
will result in a level of performance.
 You will work hard if it leads to high

performance.
 You would be less willing to work hard if you

knew that the best you would get on a

paper was a D regardless of how hard you
tried.
 Instrumentality: Performance leads to

outcomes.
 Workers are only motivated if they think
performance leads to an outcome.
 Managers should link performance to

outcomes.
 Expectancy Theory

High Expectancy High High Valence

Instrumentality
(Worker desires the
(Worker knows that
(Worker perceives that outcomes resulting
if they try, they can
high performance from high
perform)
leads to outcomes) performance)

High
Motivation
 Importance of Good
Communication

 Good Communication allows a firm

to
 Learn new skills and technologies.
 Become more responsive to
customers.
 Improve Quality of their product or
service.
 Foster innovation
 Effective communication is needed
 The Communication
Process
Transmission Phase
Message Encoding Medium Decoding

NOISE Receiver
Sender
(now sender)

Decoding Medium Encoding Message

Feedback Phase
The Communication Process
 Messages are transmitted over a medium to a
receiver.
 Medium: pathway the message is

transmitted on (phone, letter).

 Receiver: person getting the message.

 Receiver next decodes the message.

 Decoding allows the receiver to understand

the message.
 This is a critical point, can lead to mis-

understanding.
 Feedback is started by receiver and states that
the message is understood or that it must be re-
sent.
 Communication Networks in Groups
& Teams
Figure 15.3

Wheel Network
Chain Network

All Channel Network

Circle Network
 Leadership

Leadership is the process where a person

exerts influence over others and inspires,
motivates and directs their activities to
achieve goals.
Effective leadership increases the firm’s
ability to meet new challenges.
 Leader: The person exerting the influence.
 Personal Leadership Style: the ways

leaders choose to influence others.

 Some leaders delegate and support

subordinates, others are very authoritarian.

 Managers at all levels have their own

leadership style.
Groups, Teams and
Effectiveness
 Group: two or more people who interact with each
other to accomplish a goal.
 Team: group who work intensively with each other
to achieve a specific common goal.
 All teams are groups, BUT, not all groups are
teams.
 Teams often are difficult to form.
 Takes time for members to work together.
 Teams can improve organizational performance.
 What are groups?

 Groups of two or more

people
 Exist to fulfill a purpose
 Interdependent -- interact
and influence each other
 Mutually accountable for
achieving common goals
 Perceive themselves as a
 Groups versus Teams
 All teams are
groups
 Some groups are
just people
assembled together
© A. Levenson/Getty Images

 Teams have task

interdependence
whereas some
groups do not (e.g.,
group of employees
 Why Informal Groups
Exist
 Relatedness Needs
 Fulfill need for social interaction
 Social identity
 Goal accomplishment
 Emotional support
 Stages of Team
Development
Performing

Norming

Storming

Existing teams
Forming might regress Adjourning
back to an
earlier stage of
development
 Causes of Team
Cohesiveness
Member
Similarity

External Member
Challenges Interaction
Team
Cohesiveness
Team Team
Success Size

Somewhat
Difficult Entry
 Three Types of Control

Conversion
Inputs Outputs
Process

Feedforward Concurrent Feedback

Control Control Control
(anticipate (manage problems (manage problems
problems) as they occur) after they occur)
 Organizational Control

 Managers must monitor & evaluate:

 Arewe efficiently converting inputs into
outputs?
 Must accurately measure units of inputs and
outputs.
 Is product quality improving?
 Are we competitive with other firms?
 Are employees responsive to customers?
 customer service is increasingly important.
 Are our managers innovative in outlook?

Control Process Steps
1. Establish standards of performance, goals, or
targets against which performance is evaluated.

2. Measure actual performance

3. Compare actual performance

against chosen standards

4. Evaluate results and take corrective action

when the standard is not being achieved.
 The Control Process

1. Establish standards, goals, or targets against which

performance is to be evaluated.

Standards must be consistent with strategy, for a low
cost strategy, standards should focus closely on cost.
 Managers at each level need to set their own

standards.
2. Measure actual performance: managers can measure
outputs resulting from worker behavior or they can
measure the behavior themselves.

The more non-routine the task, the harder to measure.
 Managers then measure the behavior (come to

work on time) not the output.

 The Control Process

3. Compare actual performance against chosen

standards.

Managers must decide if performance actually
deviates.
 Often, several problems combine creating low

performance.
4. Evaluate result and take corrective action.
 Perhaps the standards have been set too high.

 Workers may need additional training, or

equipment.

This step is often hard since the environment is
constantly changing.
Organizational Culture & Clan
Control

 Organizational culture is a collection of values, norms, &

behavior shared by workers that control the way workers
interact with each other.
 Clan Control: control through the development of an
internal system of values and norms.
 Both culture and clan control accept the norms and
values as their own and then work within them.
 Examples include dress styles, work hours, pride in

work.
 These methods provide control where output and
behavioral control does not work.
 Strong culture and clan control help worker to focus on
the organization and enhance its performance.
Creating Strong Organizational
Culture
Values of Founder

Socialization Process
Organizational
Culture
Ceremonies & Rites

Stories & Language

 Some External Forces for
Change
Information
 Easier information
Technology transfer
 Facilitates global
Globalization structures
& Competition
 Requires new
competencies and
Demography expectations
 Facilitates
telecommuting; new
employment
relationships
 Some External Forces for
Change
Information
Technology  Global competition
 Technology makes it
Globalization
& Competition
easier to compete
quickly

Demography
 Results in
restructuring,
outsourcing, mergers
 produces many
employment changes
 Some External Forces for
Change
Information
Technology  More educated
workforce
Globalization  want involvement;
& Competition interesting work
 Younger generation
Demography  less intimidated by status
 want a more balanced
work life
 Cultural changes
 more individualism in