MEANING OF MANAGEMENT

It is very difficult to give a precise definition of the term ‗management‘. Different scholars from different
disciplines view and interpret management from their own angles. The economists consider management as
a resource like land, labour, capital and organisation. The bureaucrats look upon it as a system of authority
to achieve business goals. The sociologists consider managers as a part of the class elite in the society
Management in all business and organizational activities is the act of getting people together to accomplish
desired goals and objectives using available resources efficiently and effectively.

DEFINITION OF MANAGEMENT

Management is the coordination of all resources through the process of planning, organising, directing and
controlling in order to attain stated objectives. —Henry L. Sisk.

Management is the creation and maintenance of an internal environment in an enterprise where individuals,
working in groups, can perform efficiently and effectively towards the attainment of group goals.
—Harold Koontz and Cyrill O’Donnell

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

To manage is to forecast and to plan, to organise to command, to coordinate and to control. —Henry Fayol

CONCEPTS OF MANAGEMENT

The term management has been interpreted in several ways; some of which are given below:

1. Management as an Activity: Management is an activity just like playing, studying, teaching etc. As
an activity management has been defined as the art of getting things done through the efforts of other
people. Management is a group activity wherein managers do to achieve the objectives of the group.
The activities of management are:
a. Informational activities - In the functioning of business enterprise, the manager constantly
has to receive and give information orally or in written. A communication link has to be
maintained with subordinates as well as superiors for effective functioning of an enterprise.
b. Decisional activities - Practically all types of managerial activities are based on one or the
other types of decisions. Therefore, managers are continuously involved in decisions of
different kinds since the decision made by one manager becomes the basis of action to be
taken by other managers. (E.g. Sales Manager is deciding the media & content of
advertising).
c. Inter-personal activities - Management involves achieving goals through people. Therefore,
managers have to interact with superiors as well as the sub-ordinates. They must maintain
good relations with them. The inter-personal activities include with the sub-ordinates and
taking care of the problem. (E.g. Bonuses to be given to the sub-ordinates).

2. Management as a Process: Management is considered a process because it involves a series of

interrelated functions. It consists of getting the objectives of an organization and taking steps to achieve
objectives. The management process includes planning, organising, staffing, directing and controlling
functions. Management as a process has the following implications:
Social Process: Management involves interactions among people. Goals can be achieved only
when relations between people are productive. Human factor is the most important part of the
management.
 Integrated Process: Management brings human, physical and financial resources together
to put into effort. Management also integrates human efforts so as to maintain harmony among
them.
Continuous Process: Management involves continuous identifying and solving problems. It is
repeated every now and then till the goal is achieved
Interactive process: Managerial functions are contained within each other. For example, when a
manager prepares plans, he is also laying down standards for control.

3. Management as a Team: As a group of persons, management consists of all those who have the
responsibility of guiding and coordinating the efforts of other persons. These persons are called as
managers who operate at different levels of authority (top, middle, operating). Some of these
managers have ownership stake in their firms while others have become managers by virtue of their
training and experience. Civil servants and defence personnel who manage public sector
undertakings are also part of the management team. As a group managers have become an elite class
in society occupying positions with enormous power and prestige.

4. Management as a Discipline: Management as a discipline refers to that branch of knowledge which

is connected to study of principles & practices of basic administration. It specifies certain code of
conduct to be followed by the manager & also various methods for managing resources efficiently.
Management as a discipline specifies certain code of conduct for managers & indicates various
methods of managing an enterprise. Management is a course of study which is now formally being
taught in the institutes and universities after completing a prescribed course or by obtaining degree or
diploma in management, a person can get employment as a manager.

Any branch of knowledge that fulfils following two requirements is known as discipline:
a. There must be scholars & thinkers who communicate relevant knowledge through research and
publications.
b. The knowledge should be formally imparted by education and training programmes.

Since management satisfies both these problems, therefore it qualifies to be a discipline. Though it is
comparatively a new discipline but it is growing at a faster pace.

5. Management as a Group: Management as a group refers to all those persons who perform the task
of managing an enterprise. When we say that management of ABC & Co. is good, we are referring to
a group of people those who are managing. Thus as a group technically speaking, management will
include all managers from chief executive to the first - line managers (lower-level managers). But in
common practice management includes only top management i.e. Chief Executive, Chairman,
General Manager, Board of Directors etc. In other words, those who are concerned with making
important decisions, these persons enjoy the authorities to use resources to accomplish organizational
objectives & also responsibility to for their efficient utilization.

Management as a group may be looked upon in 2 different ways:

All managers taken together.
Only the top management

The interpretation depends upon the context in which these terms are used. Broadly speaking,
there are 3 types of managers -
a. Patrimonial / Family Manager: Those who have become managers by virtue of their being
owners or relatives of the owners of company.
 b. Professional Managers: Those who have been appointed on account of their specialized
knowledge and degree.
c. Political Managers / Civil Servants: Those who manage public sector undertakings.

Managers have become a part of elite group of society as they enjoy higher standard of living in
the society.

MANAGEMENT AS A SCIENCE

Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts
which explains a phenomenon. It establishes cause and effect relationship between two or more variables
and underlines the principles governing their relationship. These principles are developed through scientific
method of observation and verification through testing.
Science is characterized by following main features:
1. Universally acceptance principles - Scientific principles represents basic truth about a particular
field of enquiry. These principles may be applied in all situations, at all time & at all places. E.g. -
law of gravitation which can be applied in all countries irrespective of the time.
Management also contains some fundamental principles which can be applied universally
like the Principle of Unity of Command i.e. one man, one boss. This principle is applicable to all
type of organization - business or non business.
2. Experimentation & Observation - Scientific principles are derived through scientific investigation
& researching i.e. they are based on logic. E.g. the principle that earth goes round the sun has been
scientifically proved.
Management principles are also based on scientific enquiry & observation and not only on
the opinion of Henry Fayol. They have been developed through experiments & practical experiences
of large no. of managers. E.g. it is observed that fair remuneration to personal helps in creating a
satisfied work force.
3. Cause & Effect Relationship - Principles of science lay down cause and effect relationship between
various variables. E.g. when metals are heated, they are expanded. The cause is heating & result is
expansion.
The same is true for management, therefore it also establishes cause and effect relationship.
E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you
know the cause i.e. lack of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly
if workers are given bonuses, fair wages they will work hard but when not treated in fair and just
manner, reduces productivity of organization.
4. Test of Validity & Predictability - Validity of scientific principles can be tested at any time or any
number of times i.e. they stand the test of time. Each time these tests will give same result. Moreover
future events can be predicted with reasonable accuracy by using scientific principles. E.g. H2 &
O2 will always give H2O.
Principles of management can also be tested for validity. E.g. principle of unity of command
can be tested by comparing two persons - one having single boss and one having 2 bosses. The
performance of 1st person will be better than 2nd.

It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of
other physical sciences like biology, physics, and chemistry etc. The main reason for the inexactness of
science of management is that it deals with human beings and it is very difficult to predict their behavior
accurately. Since it is a social process, therefore it falls in the area of social sciences. It is a flexible science
& that is why its theories and principles may produce different results at different times and therefore it is a
behavior science. Ernest Dale has called it as a Soft Science.

MANAGEMENT AS AN ART
Art implies application of knowledge & skill to trying about desired results. An art may be defined as
personalized application of general theoretical principles for achieving best possible results. Art has the
following characters -
1. Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not
sufficient. It is very important to know practical application of theoretical principles. E.g. to become
a good painter, the person may not only be knowing different colour and brushes but different
designs, dimensions, situations etc to use them appropriately. A manager can never be successful just
by obtaining degree or diploma in management; he must have also know how to apply various
principles in real situations by functioning in capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist, but each one has his own
style and approach towards his job. That is why the level of success and quality of performance
differs from one person to another. E.g. there are several qualified painters but M.F. Hussain is
recognized for his style. Similarly management as an art is also personalized. Every manager has his
own way of managing things based on his knowledge, experience and personality, that is why some
managers are known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why he aims at producing
something that has never existed before which requires combination of intelligence & imagination.
Management is also creative in nature like any other art. It combines human and non-human
resources in useful way so as to achieve desired results. It tries to produce sweet music by combining
chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist becomes more and more
proficient through constant practice. Similarly managers learn through an art of trial and error
initially but application of management principles over the years makes them perfect in the job of
managing.
5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same
manner, management is also directed towards accomplishment of pre-determined goals. Managers
use various resources like men, money, material, machinery & methods to promote growth of an
organization.
Thus, we can say that management is an art therefore it requires application of certain
principles rather it is an art of highest order because it deals with moulding the attitude and behavior
of people at work towards desired goals.

MANAGEMENT AS BOTH SCIENCE AND ART

Management is both an art and a science. The above mentioned points clearly reveals that management
combines features of both science as well as art. It is considered as a science because it has an organized
body of knowledge which contains certain universal truth. It is called an art because managing requires
certain skills which are personal possessions of managers. Science provides the knowledge & art deals with
the application of knowledge and skills.

A manager to be successful in his profession must acquire the knowledge of science & the art of applying it.
Therefore management is a judicious blend of science as well as an art because it proves the principles and
the way these principles are applied is a matter of art. Science teaches to ‘know‘ and art teaches to ‘do‘. E.g.
a person cannot become a good singer unless he has knowledge about various ragas & he also applies his
personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but
he must also apply them in solving various managerial problems that is why, science and art are not
mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.).
The old saying that ―Manager are Born‖ has been rejected in favor of ―Managers are Made‖. It has been
aptly remarked that management is the oldest of art and youngest of science. To conclude, we can say that
science is the root and art is the fruit.

MANAGEMENT AS A PROFESSION
Over a large few decades, factors such as growing size of business unit, separation of ownership from
management, growing competition etc have led to an increased demand for professionally qualified
managers. The task of manager has been quite specialized. As a result of these developments the
management has reached a stage where everything is to be managed professionally.
A profession may be defined as an occupation that requires specialized knowledge and intensive academic
preparations to which entry is regulated by a representative body. The essentials of a profession are:
1. Specialized Knowledge - A profession must have a systematic body of knowledge that can be used
for development of professionals. Every professional must make deliberate efforts to acquire
expertise in the principles and techniques. Similarly a manager must have devotion and involvement
to acquire expertise in the science of management.
2. Formal Education & Training - There are no. of institutes and universities to impart education &
training for a profession. No one can practice a profession without going through a prescribed
course. Many institutes of management have been set up for imparting education and training. For
example, a CA cannot audit the A/C‘s unless he has acquired a degree or diploma for the same but
no minimum qualifications and a course of study has been prescribed for managers by law. For
example, MBA may be preferred but not necessary.
3. Social Obligations - Profession is a source of livelihood but professionals are primarily motivated
by the desire to serve the society. Their actions are influenced by social norms and values. Similarly
a manager is responsible not only to its owners but also to the society and therefore he is expected to
provide quality goods at reasonable prices to the society.
4. Code of Conduct - Members of a profession have to abide by a code of conduct which contains
certain rules and regulations, norms of honesty, integrity and special ethics. A code of conduct is
enforced by a representative association to ensure self discipline among its members. Any member
violating the code of conduct can be punished and his membership can be withdrawn. The AIMA has
prescribed a code of conduct for managers but it has no right to take legal action against any manager
who violates it.
5. Representative Association - For the regulation of profession, existance of a representative body is
a must. For example, an institute of Charted Accountants of India establishes and administers
standards of competence for the auditors but the AIMA however does not have any statuary powers
to regulate the activities of managers.

From above discussion, it is quite clear that management fulfills several essentials of a profession, even then
it is not a full fledged profession because: -
a. It does not restrict the entry in managerial jobs for account of one standard or other.
b. No minimum qualifications have been prescribed for managers.
c. No management association has the authority to grant a certificate of practice to various managers.
d. All managers are supposed to abide by the code formulated by AIMA,
e. Competent education and training facilities do not exist.
f. Managers are responsible to many groups such as shareholders, employees and society. A regulatory
code may curtail their freedom.
g. Managers are known by their performance and not mere degrees.
h. The ultimate goal of business is to maximize profit and not social welfare. That is why Haymes has
rightly remarked, ―The slogan for management is becoming - ‘He who serves best, also profits
most‘.‖

NATURE AND CHARACTERISTICS OF MANAGEMENT

The salient features which highlight the nature of management are as follows:
1. Management is goal-oriented: Management is not an end in itself. It is a means to achieve certain
goals. Management has no justification to exist without goals. Management goals are called group
goals or organisational goals. The basic goal of management is to ensure efficiency and economy in
 the utilisation of human, phys i cal and financial resources . The success of management is
measured by the extent to which the established goals one achieved. Thus, management is
purposeful.
2. Management is universal: Management is an essential element of every organised activity
irrespective of the size or type of activity. Wherever two or more persons are engaged in working for
a common goal, management is necessary. All types of organisations, e.g., family, club, university,
government, army, cricket team or business, require management. Thus, management is a pervasive
activity. The fundamental principles of management are applicable in all areas of organised effort.
Managers at all levels perform the same basic functions.
3. Management is an Integrative Force: The essence of management lies in the coordination of
individual efforts in to a team. Management reconciles the individual goals with organizational
goals. As unifying force, management creates a whole that is more than the sum of individual parts.
It integrates human andnother resources.
4. Management is a Social Process: Management is done by people, through people and for people. It
is a social process because it is concerned with interpersonal relations. Human factor is the most
important element in management. According to Appley, ―Management is the development of people
not the direction of things. A good manager is a leader not a boss. It is the pervasiveness of human
element which gives management its special character as a social process‖.
5. Management is multidisciplinary: Management has to deal with human behaviour under dynamic
conditions. Therefore, it depends upon wide knowledge derived from several disciplines like
engineering, sociology, psychology, economics, anthropology, etc. The vast body of knowledge in
management draws heavily upon other fields of study.
6. Management is a continuous Process: Management is a dynamic and an on-going process. The
cycle of management continues to operate so long as there is organised action for the achievement of
group goals.
7. Management is Intangible: Management is an unseen or invisible force. It cannot be seen but its
presence can be felt everywhere in the form of results. However, the managers who perform the
functions of management are very much tangible and visible.
8. Management is an Art as well as Science: It contains a systematic body of theoretical knowledge
and it also involves the practical application of such knowledge. Management is also a discipline
involving specialised training and an ethical code arising out of its social obligations.

On the basis of these characteristics, management may be defined as a continuous social process
involving the coordination of human and material resources in order to accomplish desired objectives. It
involves both the determination and the accomplishment of organisational goals.

IMPORTANCE OF MANAGEMENT

1. It helps in Achieving Group Goals - It arranges the factors of production, assembles and organizes
the resources, integrates the resources in effective manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals. By defining objective of organization clearly there
would be no wastage of time, money and effort. Management converts disorganized resources of
men, machines, money etc. into useful enterprise. These resources are coordinated, directed and
controlled in such a manner that enterprise work towards attainment of goals.
2. Optimum Utilization of Resources - Management utilizes all the physical & human resources
productively. This leads to efficacy in management. Management provides maximum utilization of
scarce resources by selecting its best possible alternate use in industry from out of various uses. It
makes use of experts, professional and these services leads to use of their skills, knowledge, and
proper utilization and avoids wastage. If employees and machines are producing its maximum there
is no under employment of any resources.
 3. Reduces Costs - It gets maximum results through minimum input by proper planning and by using
minimum input & getting maximum output. Management uses physical, human and financial
resources in such a manner which results in best combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated functions).
To establish sound organizational structure is one of the objective of management which is in tune
with objective of organization and for fulfillment of this, it establishes effective authority &
responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who
are superiors & who are subordinates. Management fills up various positions with right persons,
having right skills, training and qualification. All jobs should be cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in changing environment. It keeps
in touch with the changing environment. With the change is external environment, the initial co-
ordination of organization must be changed. So it adapts organization to changing demand of market
/ changing needs of societies. It is responsible for growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to better economical production
which helps in turn to increase the welfare of people. Good management makes a difficult task easier
by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which
is beneficial to business and society will get maximum output at minimum cost by creating
employment opportunities which generate income in hands. Organization comes with new products
and researches beneficial for society.

OBJECTIVES OF MANAGEMENT

The objectives of management are narrated as under.

1. Organisational objectives: Management is expected to work for the achievement of the objectives of
the particular organisation in which it exists. Organisational objectives include:
a. Reasonable profits so as to give a fair return on the capital invested in business
b. Survival and solvency of the business, i.e., continuity.
c. Growth and expansion of the enterprise
d. Improving the goodwill or reputation of the enterprise.

2. Personal objectives: An organisation consists of several persons who have their own objectives. These
objectives are as follows:
a. Fair remuneration for work performed
b. Reasonable working conditions
c. Opportunities for training and development
d. Participation in management and prosperity of the enterprise
e. Reasonable security of service.
3. Social objectives: Management is not only a representative of the owners and workers, but is also
responsible to the various groups outside the organisation. It is expected to fulfil the objectives of the
society which are given below:
a. Quality of goods and services at fair price to consumers.
b. Honest and prompt payment of taxes to the Government.
c. Conservation of environment and natural resources.
d. Fair dealings with suppliers, dealers and competitors.
e. Preservation of ethical values of the society.

MANAGEMENT AND ADMINISTRATION

There has been a controversy on the use of these two terms-management and administration. Many experts
make no distinction between administration and management and use them as synonyms. Several American
writers consider them as two distinct functions. The management experts like Elbourne, Unwick and Mary
Follett regarded ‗administration‘ and ‗management‘ as synonymous and use them interchangeably in their
works. But Schuze and Sheldon found distinction between these two concepts. According to them the
distinction is important to clearly understand the role of people in administrative positions versus those in
managerial positions. Oliver Sheldon in his ―The Philosophy of Management‖ defines ‗Administration as a
function is concerned with the determination of the corporate policy, the coordination of finance, production
and distribution, the settlement of the compass (i.e., structure) of the organisation, under the ultimate control
of the executive.‘ On the other hand, ‗Management is concerned with the execution of the policy, within the
limits setup by administration and the employment of the organization for the particular objects before it.
Thus Sheldon declares administration as a thinking process and management as doing process.

Few authors treat administration as part of management. These three points of view are explained below;

1. Administration is different from management: According to this view point, administration is a

higher level activity while management is a lower level function. Administration is a determinative
function concerned with the determination of objectives and policies while management is an executive
function involving the implementation of policies and direction of efforts for the achievement of
objectives.
According to them, administration is superior to management as the latter has only a peripheral role
in determination of objectives and policies.

2. Administration is a part of management: According to the European School of thought, management

is a wider term including administration and organisation. This viewpoint has been propounded by
Breach. According to him, ―Management is the generic term for the total process of executive control
involving responsibility for effective planning and guidance of operations of an enterprise.
Administration is that part of management which is concerned with the installation and carrying out of
the procedures by which the programme is laid down and communicated and the progress of activities is
regulated and checked against plans.

3. Administration and management are one: Many writers like Henri Fayol, William Newman, Chester
Barnard, George Terry, Louis. A. Allen, Koontz and O‘ Donnell make no distinction between
management and administration. According to Newman, Management or administration is ―the
guidance, leadership and control of the efforts of a group of individuals towards some common goals‖.
In actual practice, the two terms are used interchangeably. The term administration is more popular in
Government and other public organisations while the word management is more commonly used in the
business world, where economic performance is of primary importance.

LEVELS OF MANAGEMENT

The term ―Levels of Management‘ refers to a line of demarcation between various managerial positions in
an organization. The number of levels in management increases when the size of the business and work
force increases and vice versa. The level of management determines a chain of command, the amount of
authority & status enjoyed by any managerial position. The levels of management can be classified in three
broad categories: -
1. Top level / Administrative level: It consists of board of directors, chief executive or managing
director. The top management is the ultimate source of authority and it manages goals and policies
for an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules
etc.
c. It prepares strategic plans & policies for the enterprise.
 d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the
enterprise.

2. Middle level / Executory: The branch managers and departmental managers constitute middle level.
They are responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only one layer
of middle level of management but in big enterprises, there may be senior and junior middle level
management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and directives of
the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.

3. Low level / Supervisory / Operative / First-line managers: Lower level is also known as
supervisory / operative level of management. It consists of supervisors, foreman, section officers,
superintendent etc. According to R.C. Davis, ―Supervisory management refers to those executives
whose work has to be largely with personal oversight and direction of operative employees‖. In other
words, they are concerned with direction and controlling function of management. Their activities
include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the
higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the
workers.

FUNCTIONS OF MANAGEMENT

1. Planning: It is the basic function of management. It deals with chalking out a future course of action
& deciding in advance the most appropriate course of actions for achievement of pre-determined
goals. According to KOONTZ, ―Planning is deciding in advance - what to do, when to do & how to
do. It bridges the gap from where we are & where we want to be‖. A plan is a future course of
 actions. It is an exercise in problem solving & decision making. Planning is determination of courses
of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human
& non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding
confusion, uncertainties, risks, wastages etc.
2. Organizing: It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals.
According to Henry Fayol, ―To organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel‘s‖. To organize a business involves
determining & providing human and non-human resources to the organizational structure.
Organizing as a process involves:
Identification of activities.
Classification of grouping of activities.
Assignment of duties.
Delegation of authority and creation of responsibility.
Coordinating authority and responsibility relationships.
3. Staffing: It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology, increase in size of
business, complexity of human behavior etc. The main purpose o staffing is to put right man on right
job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O‘Donell,
―Managerial function of staffing involves manning the organization structure through proper and
effective selection, appraisal & development of personnel to fill the roles designed un the structure‖.
Staffing involves:
Manpower Planning (estimating man power in terms of searching, choose the person and
giving the right place).
Recruitment, selection & placement.
Training & development.
Remuneration.
Performance appraisal.
Promotions & transfer.
4. Directing: It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise
which sets it in motion the action of people because planning, organizing and staffing are the mere
preparations for doing the work. Direction is that inert-personnel aspect of management which deals
directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of
organizational goals. Direction has following elements:
Supervision
Motivation
Leadership
Communication
5. Controlling: It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of controlling is to
ensure that everything occurs in conformities with the standards. An efficient system of control helps
to predict deviations before they actually occur. According to Theo Haimann, ―Controlling is the
process of checking whether or not proper progress is being made towards the objectives and goals
and acting if necessary, to correct any deviation‖. According to Koontz & O‘Donell ―Controlling is
the measurement & correction of performance activities of subordinates in order to make sure that
the enterprise objectives and plans desired to obtain them as being accomplished‖. Therefore
controlling has following steps:
i. Establishment of standard performance.
ii. Measurement of actual performance.
iii. Comparison of actual performance with the standards and finding out deviation if any.
 iv. Corrective action.

SCOPE OF MANAGEMENT

The field of management is very wide. The operational areas of business management may be classified into
the following categories:
1. Production Management: Production management implies planning, organising, directing and
controlling the production function so as to produce the right goods, in right quantity, at the right time
and at the right cost. It includes the following activities:
(a) designing the product
(b) location and layout of plant and building
(c) planning and control of factory operations
(d) operation of purchase and storage of materials
(e) repairs and maintenance
(f) inventory cost and quality control
(g) research and development etc.

2. Marketing Management: Marketing management refers to the identification of consumers needs and
supplying them the goods and services which can satisfy these wants. It involves the following activities:
(a) marketing research to determine the needs and expectation of consumers
(b) planning and developing suitable products
(c) setting appropriate prices
(d) selecting the right channel of distribution, and
(e) promotional activities like advertising and salesmanship to communicate with the customers

3. Financial Management: Financial management seeks to ensure the right amount and type of funds to
business at the right time and at reasonable cost. It comprises the following activities:
(a) estimating the volume of funds required for both long-term and short-term needs of business
(b) selecting the appropriate source of funds
(c) raising the required funds at the right time
(d) ensuring proper utilisation and allocation of raised funds so as to maintain safety and liquidity of
funds and the creditworthiness and profitability of business, and
(e) administration of earnings
Thus, financial management involves the planning, organising and controlling of the financial resources.

4. Personnel Management: Personnel management involves planning, organising and controlling the
procurement, development, compensation, maintenance and integration of human resources of an
organisation. It consists of the following activities:
(a) manpower planning
(b) recruitments,
(c) selection,
(d) training
(e) appraisal,
(f) promotions and transfers,
(g) compensation,
(h) employee welfare services, and
(i) personnel records and research, etc

PODSCORB
PODSCORB is an acronym created by Luther Gulick and Lyndall Urwick in their ―Papers on the Science of
Administration‖ (1937). Developed as a means to structure and analyze management activities, it set a new
paradigm in Public Administration. Based on the theories of Henri Fayol‘s 14 Principles of Management,
Gulick and Lyndall Urwick disputed the prevailing thinking that there was a dichotomy between politics and
administration. Instead that it was impossible to separate the two. It has been called the ―high noon of
orthodoxy,‖ due to the assumption that it was the principles that were important and not where they were
applied.

The acronym which formulates the responsibility of a chief executive or administrator stands for: Planning,
Organizing, Staffing, Direction, Coordinating, Reporting, and Budgeting. It defines the principles as
follows:

PLANNING: Planning is working out in broad outline the things that need .to be done and the methods for
doing them to accomplish the purpose set for the enterprise;

ORGANIZING: Organizing is the establishment of the formal structure of authority through which work
subdivisions are arranged, defined and coordinated for the defined objective;

DIRECTING: Directing is the continuous task of making decisions and embodying them in specific and
general orders and instructions and serving as the leader of the enterprise;

STAFFING: Staffing is the whole personnel function of bringing in and training the staff and maintaining
favorable conditions of work;

CO-ORDINATING: Coordinating is the all-important duty of interrelating the various parts of the work;

REPORTING: Reporting is keeping those to whom the executive is responsible informed as to what is going
on, which thus includes keeping himself and his subordinates informed through records, research and
inspections;

BUDGETING: Budgeting, with all that goes with budgeting in the form of fiscal planning, accounting and
control

All executives perform broadly similar functions. The President of the United States, like the governors of
the states or the Prime Minister of England, does many things in common with his subordinate executives
and with all those who have headed large organizations. Luther Gulick and Lyndall Urwick have classified
these common tasks of the executive, and his categories of important executive functions: What is the work
of the chief executive? What does he do? The answer is POSDCORB.

EVOLUTION OF MANAGEMENT THOUGHTS

Classical Management Theory: Rational economic view, scientific management, administrative principles,
and bureaucratic organisation characterise this phase. While the rational economic view assumed that people
are motivated by economic gains primarily; scientific management of F.W. Taylor and others emphasised
one best way of production etc; administrative theorists personified by Henri Fayol etc looked at the best
way to combine jobs and people into an efficient organisation; bureaucratic organisation theorists led by
Max Weber looked at ways to eliminate managerial inconsistencies due to abuse of power which contributed
to ineffectiveness. This was the era of the industrial revolution and factory system of production. Large scale
production would not have been possible without adherence to the principles governing organising
production based on division of labour and specialisation, relationship between man and the machine,
managing people and so on.

Neo Classical Theory: Human Relations theory: Explains the modern advancement of Human Relations
Management theory which takes into account human factors like the employer-employee relationship.
Human relations theory is largely seen to have been born as a result of the Hawthorne experiments which
Elton Mayo conducted at the Western Electrical Company. The core aspect of Human Relations Theory is
that, when workers were being observed and included in the research, they felt more important and valued
by the company. As a result, their productivity levels went up significantly. Behavioral theory: The
behavioral management theory is often called the human relations movement because it addresses the human
dimension of work. Behavioral theorists believed that a better understanding of human behavior at work,
such as motivation, conflict, expectations, and group dynamics, improved productivity.

Modern Theory: The modern management comprises of three streams of thoughts. Quantitative Approach
to Management (Operational Research) offer systematic analysis and solution to many complex faced by
management in real world. New mathematical and statistical tools are now applied in the field of
management, particularly in the decision making on complex problem. The Systems Approach considers the
organization as a system composed of a set of inter-related - and thus mutually dependent - sub-systems.
Thus the organization consists of components, linking processes and goals. The Contingency or Situational
Approach recognizes that organizational systems are inter-related with their environment and that different
environments require different organizational relationships for effective working of the organization.
Scientific Management Movement: Fredrick Winslow Taylor ( March 20, 1856 - March 21, 1915)
commonly known as ‘Father of Scientific Management‘ started his career as an operator and rose to the
position of chief engineer. He conducted various experiments during this process which forms the basis of
scientific management. It implies application of scientific principles for studying & identifying management
problems.

According to Taylor, ―Scientific Management is an art of knowing exactly what you want your men to do
and seeing that they do it in the best and cheapest way‖. In Taylors view, if a work is analysed scientifically
it will be possible to find one best way to do it.

Hence scientific management is a thoughtful, organized, dual approach towards the job of management
against hit or miss or Rule of Thumb.

Elements of Scientific Management

1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic, objective
and critical examination of all the factors governing the operational efficiency of any specified activity
in order to effect improvement. Work study includes.

a. Methods Study: The management should try to ensure that the plant is laid out in the best manner
and is equipped with the best tools and machinery. The possibilities of eliminating or combining
certain operations may be studied.
b. Motion Study: It is a study of the movement, of an operator (or even of a machine) in performing an
operation with the purpose of eliminating useless motions.
c. Time Study (work measurement): The basic purpose of time study is to determine the proper time for
performing the operation. Such study may be conducted after the motion study. Both time study and
motion study help in determining the best method of doing a job and the standard time allowed for it.
d. Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue, it may
either be beyond the workers or the workers may over strain themselves to attain it. It is necessary,
therefore, to regulate the working hours and provide for rest pauses at scientifically determined
intervals.
e. Rate-setting: Taylor recommended the differential piece wage system, under which workers
performing the standard task within prescribed time are paid a much higher rate per unit than
inefficient workers who are not able to come up to the standard set.

2. Planning the Task: Having set the task which an average worker must strive to perform to get wages at
the higher piece-rate, necessary steps have to be taken to plan the production thoroughly so that there is
no bottle neck and the work goes on systematically.

3. Selection and Training: Scientific Management requires a radical change in the methods and procedures
of selecting workers. It is therefore necessary to entrust the task of selection to a central personnel
department. The procedure of selection will also have to be systematized. Proper attention has also to be
devoted to the training of the workers in the correct methods of work.

4. Standardization: Standardization may be introduced in respect of the following.

(a) Tools and equipment: By standardization is meant the process of bringing about uniformity. The
management must select and store standard tools and implements which will be nearly the best or the
best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to result in
damage to machinery.
 (c) Conditions of Work: To attain standard performance, the maintenance of standard conditions of
ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
(d) Materials: The efficiency of a worker depends on the quality of materials and the method of handling
materials.

5. Specialization: Scientific management will not be complete without the introduction of specialization.
Under this plan, the two functions of 'planning' and 'doing' are separated in the organization of the plant.
The `functional foremen' are specialists who join their heads to give thought to the planning of the
performance of operations in the workshop. Taylor suggested eight functional foremen under his scheme
of functional foremanship.

(a) The Route Clerk

(b) The Instruction Card Clerk
(c) The Time and Cost Clerk
(d) The Shop Disciplinarian
(e) The Gang Boss
(f) The Speed Boss
(g) The Repair Boss
(h) The Inspector

6. Mental Revolution: At present, industry is divided into two groups – management and labour. The major
problem between these two groups is the division of surplus. The management wants the maximum
possible share of the surplus as profit; the workers want, as large share in the form of wages. Taylor has
in mind the enormous gain that arises from higher productivity. Such gains can be shared both by the
management and workers in the form of increased profits and increased wages.

Principles of Scientific Management:

1. Science, not rule of thumb: Scientific management is based on some experiments, rules and facts and
also replaces the working procedure which is based on rule of thumb. For each job, scientific study
requires replacement of rule of thumb approach in new techniques. In scientific management, what to
do? How to do? Who is to do? When to do?, etc concepts are to be considered and decision made on the
basis of facts rather than opinion and beliefs.
2. Harmony, not discord: Harmony means unity of action and discord means difference in approach.
Scientific management emphasizes mutual benefits of employer and employees. Harmony is based on
cooperation not individualism. It also suggests that work should be done on unity basis and conclude
maximum. For cooperation, proper understanding is required. So, Taylor also called it mental revolution.
It will be helpful to increase the profit ratio not debate on profit distribution.
3. Development of workers: Scientific management also emphasizes scientific selection and training of
employees. Physical, mental and extra requirement of employees is also based on work for improving
their abilities and skills, employees should be facilitating with trainings.
4. Maximum output: In scientific management, management and employees must be concerned on
maximum output in place of restricted output, which will be helpful for maximum profit and all for the
society. Maximum output and utilization of natural resources at lower cost will increase the profit ratio
as well as wages for the employees.
5. Equal division of responsibility: Under scientific management, managerial work and responsibility
should equally and properly divide among managerial person and employees. For good planning &
controlling, management is liable whereas for execution of plans, employees are responsible. So,
attaining the goals of the organization, responsibility of planning and controlling and their execution
should be divided between the management and employees properly.
Henri Fayol (Istanbul, 29 July 1841–Paris, 19 November 1925) was a French mining engineer and director
of mines who developed a general theory of business administration. He and his colleagues developed this
theory independently of scientific management but roughly contemporaneously. He was one of the most
influential contributors to modern concepts of management.

1. Division of Labor
a. Henry Fayol has stressed on the specialization of jobs.
b. He recommended that work of all kinds must be divided & subdivided and allotted to various
persons according to their expertise in a particular area.
c. Subdivision of work makes it simpler and results in efficiency.
d. It also helps the individual in acquiring speed, accuracy in his performance.
e. Specialization leads to efficiency & economy in spheres of business.
2. Party of Authority & Responsibility
a. Authority & responsibility are co-existing.
b. If authority is given to a person, he should also be made responsible.
c. In a same way, if anyone is made responsible for any job, he should also have concerned
authority.
d. Authority refers to the right of superiors to get exactness from their sub-ordinates whereas
responsibility means obligation for the performance of the job assigned.
e. There should be a balance between the two i.e. they must go hand in hand.
f. Authority without responsibility leads to irresponsible behavior whereas responsibility
without authority makes the person ineffective.
3. Principle of One Boss
a. A sub-ordinate should receive orders and be accountable to one and only one boss at a time.
b. Therefore, dual sub-ordination should be avoided unless and until it is absolutely essential.
c. Unity of command provides the enterprise a disciplined, stable & orderly existence.
d. It creates harmonious relationship between superiors and sub-ordinates.
4. Unity of Direction
a. Fayol advocates one head one plan which means that there should be one plan for a group of
activities having similar objectives.
b. Related activities should be grouped together. There should be one plan of action for them
and they should be under the charge of a particular manager.
c. According to this principle, efforts of all the members of the organization should be directed
towards common goal.
d. Without unity of direction, unity of action cannot be achieved.
e. In fact, unity of command is not possible without unity of direction.
5. Equity
a. Equity means combination of fairness, kindness & justice.
b. The employees should be treated with kindness & equity if devotion is expected of them.
c. It implies that managers should be fair and impartial while dealing with the subordinates.
d. They should give similar treatment to people of similar position.
e. They should not discriminate with respect to age, caste, sex, religion, relation etc.
f. Equity is essential to create and maintain cordial relations between the managers and sub-
ordinate.
g. But equity does not mean total absence of harshness.
h. Fayol was of opinion that, ―at times force and harshness might become necessary for the sake
of equity‖.
6. Order
a. This principle is concerned with proper & systematic arrangement of things and people.
b. Arrangement of things is called material order and placement of people is called social order.
c. Material order- There should be safe, appropriate and specific place for every article and
every place to be effectively used for specific activity and commodity.
 d. Social order- Selection and appointment of most suitable person on the suitable job. There
should be a specific place for every one and everyone should have a specific place so that
they can easily be contacted whenever need arises.
7. Discipline
a. According to Fayol, ―Discipline means sincerity, obedience, respect of authority &
observance of rules and regulations of the enterprise‖.
b. This principle applies that subordinate should respect their superiors and obey their order.
c. It is an important requisite for smooth running of the enterprise.
d. Discipline is not only required on path of subordinates but also on the part of management.
8. Initiative
a. Workers should be encouraged to take initiative in the work assigned to them.
b. It means eagerness to initiate actions without being asked to do so.
c. Fayol advised that management should provide opportunity to its employees to suggest ideas,
experiences& new method of work.
d. It helps in developing an atmosphere of trust and understanding.
e. People then enjoy working in the organization because it adds to their zeal and energy.
f. To suggest improvement in formulation & implementation of place.
g. They can be encouraged with the help of monetary & non-monetary incentives.
9. Fair Remuneration
a. The quantum and method of remuneration to be paid to the workers should be fair,
reasonable, satisfactory & rewarding of the efforts.
b. As far as possible it should accord satisfaction to both employer and the employees.
c. Wages should be determined on the basis of cost of living, work assigned, financial position
of the business, wage rate prevailing etc.
d. Logical & appropriate wage rates and methods of their payment reduce tension & differences
between workers & management creates harmonious relationship and pleasing atmosphere of
work.
e. Fayol also recommended provision of other benefits such as free education, medical &
residential facilities to workers.
10. Stability of Tenure
a. Fayol emphasized that employees should not be moved frequently from one job position to
another i.e. the period of service in a job should be fixed.
b. Therefore employees should be appointed after keeping in view principles of recruitment &
selection but once they are appointed their services should be served.
c. According to Fayol. ―Time is required for an employee to get used to a new work & succeed
to doing it well but if he is removed before that he will not be able to render worthwhile
services‖.
d. As a result, the time, effort and money spent on training the worker will go waste.
e. Stability of job creates team spirit and a sense of belongingness among workers which
ultimately increase the quality as well as quantity of work.
11. Scalar Chain
a. Fayol defines scalar chain as ‘The chain of superiors ranging from the ultimate authority to
the lowest‖.
b. Every orders, instructions, messages, requests, explanation etc. has to pass through Scalar
chain.
c. But, for the sake of convenience & urgency, this path can be cut shirt and this short cut is
known as Gang Plank.
d. A Gang Plank is a temporary arrangement between two different points to facilitate quick &
easy communication as explained below:
e. Gang Plank clarifies that management principles are not rigid rather they are very flexible.
They can be moulded and modified as per the requirements of situations
12. Sub-Ordination of Individual Interest to General Interest
 a. An organization is much bigger than the individual it constitutes therefore interest of the
undertaking should prevail in all circumstances.
b. As far as possible, reconciliation should be achieved between individual and group interests.
c. But in case of conflict, individual must sacrifice for bigger interests.
13. Espirit De‘ Corps (can be achieved through unity of command)
a. It refers to team spirit i.e. harmony in the work groups and mutual understanding among the
members.
b. Spirit De‘ Corps inspires workers to work harder.
c. Fayol cautioned the managers against dividing the employees into competing groups because
it might damage the moral of the workers and interest of the undertaking in the long run.
d. To inculcate Espirit De‘ Corps following steps should be undertaken -
 There should be proper co-ordination of work at all levels
 Subordinates should be encouraged to develop informal relations among themselves.
 Efforts should be made to create enthusiasm and keenness among subordinates so that
they can work to the maximum ability.
 Efficient employees should be rewarded and those who are not up to the mark should
be given a chance to improve their performance.
 Subordinates should be made conscious of that whatever they are doing is of great
importance to the business & society.
e. He also cautioned against the more use of Britain communication to the subordinates i.e. face
to face communication should be developed. The managers should infuse team spirit &
belongingness. There should be no place for misunderstanding. People then enjoy working in
the organization & offer their best towards the organization.
14. Centralization & De-Centralization
a. Centralization means concentration of authority at the top level. In other words, centralization
is a situation in which top management retains most of the decision making authority.
b. Decentralization means disposal of decision making authority to all the levels of the
organization. In other words, sharing authority downwards is decentralization.
c. According to Fayol, ―Degree of centralization or decentralization depends on no. of factors
like size of business, experience of superiors, dependability & ability of subordinates etc.
d. Anything which increases the role of subordinate is decentralization & anything which
decreases it is centralization.
e. Fayol suggested that absolute centralization or decentralization is not feasible. An
organization should strike to achieve a lot between the two

Human Relation Approach

Managers face many problems because employees do not follow predetermined and balanced patterns of
behaviour. Thus, there is an increase in interest to help managers deal more effectively with the ‗people
side‘ of their organisations. The original inspiration for the movement, however, came from the Hawthorne
experiments, which were done by Prof. Elton Mayo and his colleagues at the Western Electric Company‘s
plant in Cicero, Illinois from 1927 to 1932.
The experiments are described below:
Illumination experiments: they set up two groups of workers in different buildings. One group, called the
control group, worked under a consistent and constant level of illumination and the other group, called the
test group, worked under changing levels of illumination. The post-test productivity was compared and it
was found that production was affected by illumination.

Relay assembly test room: In this phase, the objective of the study was crucial. It now aimed at knowing not
only the impact of illumination on production but also the impact of such factors as the length of the
working day, relaxation intermission and their frequency and duration and other physical conditions. A
group of six women workers, who were friendly with each other, were selected for this experiment. These
women workers were asked to work in a very informal and relaxed atmosphere, with a supervisor-researcher
present in a different room. The supervisor-researcher acted as their friend and guide. During the study,
several variations were made in the working conditions to find which combination of conditions was the
most ideal for production. Surprisingly, the researchers found that the production of the group had no
correlation to the working conditions. Researchers then comprehended and established that this incident was
due to the following factors:

a. Feeling of importance and acknowledgement among the women because of their participation in the
research and the attention they got.
b. The familiarity in the small group and the relaxed and familiar interpersonal and social relations
owing to the relative freedom from stringent supervision and rules.
c. High group-cohesion among the women was also another factor.

Interviewing programme: The information about the informal group processes which were acquired in the
second phase made them design the third phase. In this phase, they wanted to identify the basic factors
responsible for human behaviour at work. For this, they interviewed more than 20,000 workers. This study
revealed that the workers‘ social relations inside the organisation had a clear influence on their attitudes and
behaviours.

Bank wiring test room: The experiment was conducted to study a group of workers under conditions which
were as close as possible to normal. This group comprised of 14 workers. After the experiment, the
production records of this group were compared with their earlier production records. It was observed that
the group evolved its own production norms for each individual worker, which was made lower than those
set by the management. Because of this, workers would produce only that much, thereby defeating the
incentive system. Those workers who tried to produce more than the group norms were isolated, harassed or
punished by the group.

Conclusions of Hawthorne Studies / Experiments

The conclusions derived from the Hawthorne Studies were as follows :-

The social and psychological factors are responsible for workers' productivity and job satisfaction.
Only good physical working conditions are not enough to increase productivity.
The informal relations among workers influence the workers' behaviour and performance more than
the formal relations in the organisation.
Employees will perform better if they are allowed to participate in decision-making affecting their
interests.
Employees will also work more efficiently, when they believe that the management is interested in
their welfare.
When employees are treated with respect and dignity, their performance will improve.
Financial incentives alone cannot increase the performance. Social and Psychological needs must
also be satisfied in order to increase productivity.
Good communication between the superiors and subordinates can improve the relations and the
productivity of the subordinates.
Special attention and freedom to express their views will improve the performance of the workers

Decision Science Approach (Quantitative or Management Science Approach) : Managers in the past used to
make decisions on the basis of common sense of intuition, using a kind of educated guess. In the 1950s and
1960s, the theorist conceptualized decision-making and identified its components and processes. Today
decision science is a well-developed field of study. The technologies available, at present have enabled
managers to collect volumes of data to perform precise mathematics calculations and analyses as
substitution for intuition. Techniques like probability and sampling, linear programming, queuing or
waiting-line, game theory, and the like have made the decision making more precise, accurate, and
scientific. Herbert Simon, Luthe Gulik, and Lyndall Urwick have been the major contributors to this
management thought. Herbert Simon got the Nobel Prize in 1978 for his outstanding work on decision
science. Under this approach, decision-making is considered to be the essence of management and, therefore, this
approach is also known 'decision theory approach'.
In order to analyze and solve complex proems facing management, mathematical techniques are used. The
quantitative approach to management makes use of scientific tools of several disciplines (engineering,
mathematics, statistics, economics, etc in order to provide a quantitative base for managerial decisions. This
approach is also called 'management science approach or 'operations research' or 'mathematical approach‘.
The essential characteristics of this approach are as follows:
(i) Management is essentially decision-making and an organization is a decision-making unit.
(ii) Organizational efficiency depends upon the quality of managerial decisions.
(iii) A problem is expressed in the form of a quantitative or mathematical model containing mathematical
symbols and relationships.
(iv)The different variables in management can be quantified and, expressed in the form of an equation.
The model used to simulate the problem shows in symbolic form all the relevant factors that bear on the
problem and the interrelationship between them.
Operations research began to be used in military operations during the Second World War. The quantitative
approach began with model building and latter on several sophisticated techniques like games theory,
queuing theory, sampling theory, simulation theory, computerized management information system and
linear programming were developed for making rational decisions.

A system is defined as ―a group, of interrelated parts acting together to accompany goal‖. An organization
today is described as a system. It is viewed as a group of internal parts, with a unified purpose. All systems
are composed of three basic elements – input of the system, process of the input, and generation of the
output of the system. According to systems perspective, an organization involves input-conversion-output
process. Organizational systems import inputs (raw materials, equipment, human resources, finance,
technology, and information) from external environment, converts these .(through the organizational and
managerial processes), and exports outputs (goods and services) to the external environment. The input,
process, and output components of the management system contribute to the achievement of the established
goals of the organization.

The functional approach to the management of a system involves planning, organizing, directing, and
controlling. Each function plays an essential role in the efficient and effective operation of a system. These
functions have direct relationships to each other and are operationally interdependent. Within the system
there are processes. The whole process is a source of energy for the organization. It is these processes that
can be improved for efficiency.

The important elements of a system are as follows:

• Goal-orientation. Every system is goal-oriented. It exists for some purpose. It provides a means for
achieving some results or producing some desired end.

• Sub-systems. A particular system has some sub-systems. Each sub-system interacts with other sub-
systems.

• Open and Closed Systems. A closed system is one, which does not interact with its environment. It is a
self-sufficient entity. In an open system, there are interactions between the system and its environment.
Open systems respond to change. All business organizations are open systems

• Synergy. Synergy means that the whole is greater than the sum of its parts. In
organizational terms, synergy means that as separate units within an organization cooperate and interact,
they become more productive than if each had acted in isolation.

• System Boundary. Each system has boundary that separates it from its environment. In closed system, this
boundary is rigid; in an open system. The boundary is more flexible.

• Flow of Information: Information is vital to support the functioning of the system. The system is looked
upon as a process of converting information into actions and opportunities.

• Feedback. Feedback is the key to systems control. As operations of the system proceed information is fed
back to the appropriate unit or person so that the work can be assessed, if necessary, corrected

Management is the most important force within an organization, which coordinates the activities of the sub-
systems and relates them to the environment. Managers are needed to convert die disorganized resources of
men, machines, and money into a useful and effective enterprise. Essentially, management is a .process
whereby these unrelated resources are integrated into a total system for objective accomplishment. The
value of the systems concept to the management of an organization can be seen in terms of two elements of
the manager‘s job.

• A manager desires to achieve overall effectiveness of his or her organization – not to have the
interest in one organizational element.

• A manager must do this in an organizational environment, which invariably involves conflicting

organizational objectives.

The systems ‗theory suggests that the manager must take an overall balanced view. Ofcourse, this means
that some -functional units within an organization may not necessarily achieve their objectives. This means
that what is best for the whole is not necessarily best for each component of the system. This simple
realization is the essence of the systems viewpoint, which has led to more effective management decisions
and to organizing for the effective execution of those decisions

Contingencies Approach

According to this approach, management values and concepts of various schools have no universal
applications. In other words, there is no optimal or single best way of doing things under all conditions.
Methods and techniques, which are highly effective in one situation, may not work in other situations.
Results differ because situations differ. Accordingly, the contingency approach suggests that the task of
managers is to try to identify which technique will best contribute to the attainment of management goals in
a particular situation. Thus, managers have to employ a sort of situational sensitivity and practical
selectivity. What a manager does depends upon a given situation and there is an active inter-relationship
between the variables in a situation and the managerial action. Contingency theory attempts to analyse and
understand these interrelationships with a view towards taking the specific managerial actions necessary to
deal with the issue. This approach is both analytical and situational, with the purpose of developing a
practical answer to the question at hand.
There are three major elements of the overall conceptual framework for contingency management; the
environment, management concepts and techniques and the contingent relationship between them.

Features of contingency approach:

1. Management is externally situational: the conditions of the situation will determine which techniques
and control system should be designed to fit the particular situation.
2. Management is entirely situational.
3. There is no best way of doing anything.
4. One needs to adapt himself to the circumstances.
5. It is a kind of ―if‖ ―then‖ approach.
6. It is a practically suited.
7. Management policies and procedures should respond to environment.
8. Managers should understand that there is no best way of managing. It dispels the universal validity
of principles.