CHAPTER 2

MANAGEMENT

INTRODUCTION

2.1 MEANING
Managing is one of the most important activities of human life. To accom-
plish aims that could not be achieved individually, people started forming
groups. Managing has become essential to ensure the coordination of individual
efforts. Management applies to all kinds of organizations and to managers at all
organizational levels. Principles of management are now used not only for man-
aging business but in all walks of life viz., government, military, social and edu-
cational institutions. Essentially, management is same process in all forms of or-
ganization. But it may vary widely in its complexity with size and level of orga-
nization. Management is the life giving element of any organization.
Definitions suggested by some of the management experts are presented
below:
Henri Fayol: “Management is conduct of affairs of business, moving to-
wards its objective through a continuous process of improvement and optimiza-
tion of resources”.
Koontz: “Management is the process of designing and maintaining an en-
vironment in which individuals, working together in groups, efficiently accom-
plish selected aims”.
Mary Parker Follett: “Management is the art of getting things done
through people”.
George R. Terry: “Management is a process consisting of planning, orga-
nizing, actuating and controlling, performed to determine and accomplish the
objectives by use of people and resources”.
ILO: “Management is the complex of continuously coordinated activity
by means of which any undertaking administration/public or private service
conducts its business”.
Lawrence A. Appley: “Management is guiding human and physical re-
sources into a dynamic, hard hitting organization until that attains its objectives
to the satisfaction of those served and with a high degree of morale and sense
of attainment on the part of those rendering the service”.
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 6 Management and Entrepreneurship

¾ Deciding in advance what to do, how to do, who has to do, when to
do and where to do.
¾ Planning bridges the gap from where we are now to where we want
be in future.
Organising: Organising is a part of management that involves in estab-
lishing an intentional structure of roles for people to fill in an organization. To
organize a business well, it is required to provide all the useful things for its
proper functioning. They are raw materials, tools, capital and personnel. The
purpose of an organization structure is to help in creating an environment for
human performance. This involves in:
¾ Determination of activities required to achieve goals.
¾ Grouping these activities into department.
¾ Assigning such groups of activities to managers.
¾ Forming deligation of authority.
¾ Making provisions for coordination of activities.

Staffing: Staffing is considered as an important function which makes

provision for man power to fill different positions. It involves in building the
human organization by filling, and keep filling the staff. This is done by identify-
ing work-force requirements, taking inventory of people available, recruiting
new staff, selecting, placing, promoting, apprising, planning their career, train-
ing the staff to accomplish their tasks effectively and efficiently. This involves
in:
¾ Finding the right person for right job.
¾ Selecting the personnel.
¾ Placement, training and developing new skills required for present
and future jobs.
¾ Creating new positions.
¾ Apprising the staff and planning their growth and promotions etc.
Directing: After planning, organizing and staffing, the next important
function of management is directing or leading the people towards the defined
objectives. Directing involves three sub-functions namely communication, lead-
ership and motivation. Communication is the process of passing information
and understanding from one person to another. Leadership is the process by
which a manager guides and influences the work of his subordinates. Motiva-
tion means arousing desire in the minds of employees of an organization to per-
form their best. If properly motivated, the employees will put their best efforts
with dedication, loyalty and carry out the assigned task effectively. There are
two types of motivations viz., financial and non-financial. Financial motivations
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Management 7

are in the form of salary, bonus, profit-sharing, rewards etc. The common
non-financial motivations are job security, promotions, recognition, praise,
felicitation etc.
Controlling: Controlling is measuring and correcting of activities of
subordinates to make sure that the work is going on as per the plans. It
measures performance against goals and plans, shows where short falls or
deviations exist and takes necessary corrective actions to achieve the goals.
Controlling generally relates to the measurement of achievement. This involves
three elements.
¾ Establishing standards of performance.
¾ Measuring performance and comparing with established standards.
¾ Taking necessary corrective action to meet the set standards.
With accomplishment of this function, the “Management Cycle” is said to
be complete.

Management Cycle

2.5 MANAGEMENT AS A SCIENCE, ART OR PROFESSION

Managing, like any other practice – whether medicine, music composition,
engineering, accounting or even cricket – is an art. It is a know-how. It is doing
things in the light of the realities of a situation. Under ‘art’ one normally learns
the “how” of a phenomenon. It is the art of getting things done through others
in dynamic and mostly non-repetitive situations.
Science is an organized knowledge. A discipline can be called scientific if
its methods of inquiry are systematic and empirical, information can be
accumulated and analysed and results are commutative and communicable. The
essential feature of any science is the application of scientific methods to the
development of knowledge. Being systematic means being orderly and
unbiased. All the scientific information collected first as raw data is finally
arranged in order and analysed with the help of statistical tools. Science is also
cumulative in that what is discovered is added to that which has been found
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8 Management and Entrepreneurship

before. We learn from past mistakes and go in right direction in future. On the
basis of the above discussions of science, it can be accepted that management
is also a science.
It is seen that management is partly an art and partly a science. Manage-
ment does not possess the characteristics of a profession. A profession is ex-
pected to have organized and systematic knowledge, formalized methods of ac-
quiring training and experience, ethical code to regulate the behaviour of the
members of the profession, charging of fees based on service etc. Unlike medi-
cine and law, the management does no have any fixed norms of managerial
behaviour. There is no uniform code of conduct or licensing of managers. Law-
yers and doctors take up profession after obtaining a valid academic qualifica-
tion where as a manager job is not restricted to individuals with a special aca-
demic degree only. Based on this, it can be concluded that management is not a
profession. However, the present trend is towards the professionalisation of
management.
Nowadays, it has become essential to acquire management degrees or
training in management to be called as good manager. There is increased de-
mand for qualified managers with M.B.A degree after graduation. This gave
scope for establishment of large number of business schools in India. Managing
a business is no longer just a matter of a family or institution. In this contest,
one should remember Peter Drucker’s opinion on management. “A degree in
management does not by itself make an individual a professional manager any
more than does a degree in philosophy make an individual a philosopher”. By
insisting on holding a degree, we are over emphasizing knowledge and com-
pletely over looking skill. This leads to loosing of good and skilled managers
who do not have required degree. There have been good examples of efficient
managers without any professional managerial degree. Some of them are, Ford
of Ford Motors, Bill Gates of Microsoft, Jemshedji Tata, Birla, Dhiru Bhai
Ambani of Reliance group etc.
But nowadays, management has become a profession than art or science.

2.6 MANAGEMENT AND ADMINISTRATION

There is lack of concurrence among management writers over the mean-
ing and use of the words management and administration.
One group of management writers feels that administration involves
“thinking”. It is a top level function that centers around the preparation of plans,
rules, policies and objectives of an organization. Where as management involves
“doing” and is a lower level function, concerning with execution and direction
of policies and operations. Hence, administration is more important at lower lev-
els.

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Management 9

Another group of management writers feels management as comprehen-

sive generic term that includes administration. Management is regarded as com-
prehensive generic function covering entire process of planning, organizing, di-
recting and controlling. Administration is regarded as a branch of management
that comprises of two functions – planning and controlling. According to them,
the function of management is divided into two categories – the upper level
management usually called as administrative management and the lower level
management which is termed as operative management.
According to Peter Drucker, the basic difference between management
and administration lies in use of these terms in different fields. According to
him, managing of business enterprises is called management and managing non-
business organizations is called administration. Hence financial performance
plays key role in management. But in managing non business organizations like
educational institutions, government offices, military etc., administration is
more priority than financial decisions.
Administration is the function in industry concerned with determination of
the corporate policy, the coordination of finance, production and distribution,
the settlement of compass of the organization under the ultimate control of the
executives”.
“Management is the function in industry concerned with the execution of
polity within the limits setup by the administration and the employment of the
organization for the particular objects set before it”. (Oliver Sheldon)
“Administration is primarily the process and the agency used to establish
the object or purpose which an undertaking and its staff are to achieve, second-
arily, administration has to plan and stabilize the broad lines of principles which
will govern action. These broad lines are in turn called policies. Management is
the process and the agency through which the execution of policy is planned
and supervised”. (G.E. Milward)
“Administration is that phase of business enterprise that concerns with
overall determination of institutional objectives and the policies necessary to be
followed in achieving those objectives. Administration predetermines the
specific goals and lays down the broad areas within which those goals are to
be attained. Administration is a determinative function, management on the
other hand is an executive function – which is primarily concerned with the
carrying out of the broad policies laid down by the administration. (William R.
Spriegal)
Thus administration is a “thinking” function and management is a “doing”
function. According this concept, managers get salary and administration staff
get dividends.
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Administration determines the policies upon which the enterprise is to be

conducted while the function of management is to carry out the policies that are
laid down by the administrative group.
The differences between administration and management are listed below:

Characteristic Administration Management

1. Main functions Planning, Organising Leading, motivating and
and Staffing controlling.
2. Status Acts as owner Acts as an agency
3. Skills Requires good Requires more technical
administrative skills skills.
4. Level in the Top level Lower level
organization
5. Position Managing Director, Managers, Supervisors,
Owner, CEO, etc., Foremen etc.,
6. Objectives Makes the policies, Implements the plans and
objectives and goals to policies
be achieved.
7. Involvement No direct involvement Directly involves in the
in production or services execution of plans and
achieving goals.

2.7 ROLES OF MANAGEMENT

Manager in any organization plays variety of roles responding to a particu-
lar situation. The three important roles played by a manager are Interpersonal
roles, Decision roles and Informational roles.
(i) Interpersonal roles: These includes figurehead, leader and liaison roles:
In figurehead role, the manager will perform some duties that are casual
and informal ones like, receiving and greeting visiting dignitaries,
attending to social functions of employees, entertaining customers by
offering parties and lunches etc.
As a leader, managers motivate, direct and encourage his subordinates. He
also reconciles the needs with the goals of the organization.
In the role of liaison, the manager works like a liaison officer between top
management and the subordinate staff. He also develops contacts with
outside people and collects useful information for the well being of the
organization.

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12 Management and Entrepreneurship

The various levels and skilled required at different management levels are
shown below.

Skills at different Management level

2.9 DEVELOPMENT OF MANAGEMENT THOUGHT

Management has emerged as a powerful and innovative force on which
the today’s society depends for material support from a unrecognized situation
in the past one or two centuries. Seventeen and Eighteen centuries had seen In-
dustrial Revolution. Lots of inventions and new technologies had emerged. The
importance of management was focused. Division of labour concept was
evolved. Importance of planning was identified. But management as a separate
field of study had emerged only during early 20th century when new industrial
era began. Business organizations had a stage shift from ownership towards
joint stock companies. As an answer to the problems like insufficient systems,
inefficiency of labour and discrepancy in wage payment, “management” has
been recognized as a separate and important field of study. Subsequently, man-
agement has evolved as a scientific discipline of study and practice.
The evolution of management can be divided into two parts – Early man-
agement approach and Modern management approach.

2.10 EARLY MANAGEMENT APPROACHES

History of the management is as old as a man. Evidence of well organized
principle of management can be seen in ancient Greece and India. Those Kings
used the concepts of management like planning, organizing, leading and control-
ling the various activities.
The process of early management approaches are:
¾ Psychological development
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Management 13

¾ Scientific management
¾ Administrative management and
¾ Human relations movement.

2.10.1 Psychological development: (Before 17th century)

In olden days when there was no experience and knowledge of business,
they had to depend upon their inborn abilities. This gave rise to management
that was totally based on Psychological process. As a result, people were hav-
ing universal belief that managers are born and cannot be made such as artists,
directors, poets, kings etc.

2.10.2 Scientific management: (18th – 19th century)

During this time the development was brought about by the following two
important factors.
¾ The effort of scientists to demonstrate the application of science and
scientific methods.
¾ The effort of establishing standard practices.

Thus during this development, management was adopted with scientific

approach. The work made use of scientific methods for achieving standard
practice and higher efficiency. Thus, scientific management came into exist-
ence. Many pioneers have contributed for this development.
Frederik Winslow Taylor (1856 – 1915) has been considered to be father
of scientific management. He had conducted series of experiments and pro-
moted the development of management thought through his experiments and
writings. Some of the contributions of F.W. Taylor for the scientific manage-
ment are explained here.

(i) Work study

Work-study includes time and motion study. Taylor observed that the
workers were not producing their full capacity for the fear that their piece rate
would be cut with rise in production. Hence he started time and motion study.
He recorded the time required for each motion of a job with the help of stop-
watch. Shorter and fewer motions were developed. Unwanted motions were
eliminated. The best way of doing a particular job was arrived at. With this, the
time required to complete one job was calculated called standard time.

(ii) Differential payment

Motion and time study and establishment of standard time further helped
in arriving at the production rate of a particular piece or job. Taylor also intro-
 Management 15

(ii) He evolved principles of motion economy.

(iii) He established Therbligs that are the fundamental motions involved in
doing any activity.
(iv) He had carried out study on fatigue due to repetitive work by
conducting experiments.

Objectives of Scientific Management

The objectives of scientific management are:
(i) To assess industrial and market tendencies and to regularize
continuous operation.
(ii) To earn a larger profit from a given expenditure on man and materials
by minimizing waste work and waste movements.
(iii) To provide healthy and safe working environment.
(iv) To build character through proper work.
(v) To develop self realization and self satisfaction among workers there
by improving their morale.
(vi) To give better opportunity for individual through scientific methods
of working.
(vii) To ensure happier and social life to workers.
(viii) To promote justice among the workers by treating them equal.
(ix) To perform planned and balanced operations.

The time and motion study of scientific management had created aware-
ness of using right tools and minimizing waste movements while performing a
work. Further the scientific management also insisted the scientific selection of
workers and made the management to realize the training needs to do a job. The
scientific management suggested the work design, that is, one best way of do-
ing a job. The scientific management had developed a rational approach to solve
the problems of an organization and contributed to the professionalisation of
management.
But Taylor’s concept of monitory benefits to motivate workers did not
fetch expected results. Taylor’s time and motion study was not accepted as en-
tirely scientific because there is no “one best way” of doing a job. Separation of
‘planning’ and ‘doing’ functions coupled with greater specialization led to
greater monotony of work.

2.10.3 Administrative Management

Henri Fayol (1841-1925) is considered as father of administrative manage-
ment. His theory was focused on the development of administrative principles

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16 Management and Entrepreneurship

applicable to middle and top level managers. He used the word ‘administration’
which is otherwise known as management nowadays. He wrote a book titled
“General and Industrial Administration”, in which he explained the process of
administration. His thinking is beyond the worker and shop level production but
of a wider perspective, covering the common administrative and managerial
functions and processes of the managers. He suggested that activity of any
business organization could be divided into six groups viz., financial, technical,
accounting, commercial, managerial and security. His main focus was on mana-
gerial or administrative activity. He divided the management function into five
functions:- Planning, organizing, commanding, coordinating and controlling.
These functions are very similar to what are being practical in today’s manage-
ment. He also told that these activities are same at all levels of any organization
and are same for all organizations. Fayol had suggested 14 principles of man-
agement as a guideline to the process of management practice. They are given
below:

Principles of Management:
(i) Division of work
(ii) Authority and responsibility
(iii) Discipline
(iv) Unity of command
(v) Unity of direction
(vi) Subordination of individual interest to general interest
(vii) Union is strength
(viii) Initiative
(ix) Equity
(x) Scalar chain
(xi) Order
(xii) Stability of tenure of personnel
(xiii) Remuneration and
(xiv) Centralisation.

2.10.4 Human Relations Movement

Taylor and Fayol’s management techniques did not completely achieve the
efficient production and harmony at work place. The unpredicted and irrational
pattern of behaviour of workers made the task of managers more difficult.
These two theories did not consider or focus on human side of the organiza-
tion. Hence there was a need to focus on human side. Elton Mayo conducted
series of experiments at Western Electric Company, which are commonly
known as Hawthorne experiments. They are broadly classified as:
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18 Management and Entrepreneurship

2.11.2 Quantitative Approach

Quantitative approach is also known as management science approach
which was developed during Second World War to find solutions to some com-
plex new problems in warfare. As a result the quantitative approach called Op-
erations Research (OR) was developed by a team of interdisciplinary members.
This deals with formulating a mathematical model to simulate a given problem
that includes the feasibilities, constraints, costs of events etc. An optimum mix
of these critical variables is arrived at, either for minimizing time or cost, or
maximizing profit or production or service etc., enabling the management to
take up a logical decision.
OR techniques are widely used in project planning and control where bet-
ter benefits have been obtained with its use.

2.11.3 Systems Approach

The classical approach emphasizes on the structure and task, the
behavioural approach emphasizes on people and the quantitative approach on
mathematical modeling and decision-making based on the model. But systems
approach provides the management the integrated approach of problem solving.
A system is defined as a set of independent parts together form a unitary
whole that performs a defined task. Organisation is a system that consists of
people, task, structure and technology. Each part of the system has an indepen-
dent relation with other part. The systems approach tries to emphasize to regard
the organizations as a whole, rather than dealing the parts separately. A system
can be either an open system or closed system. A system that interacts with
outside environment is called open system and a system that works with in
closed boundary is called closed systems.

Systems Approach

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