Chapter 1: MANAGEMENT

1. INTRODUCTION

In the present day industrial world, management has become universal. With the increase in
the complexities of management of business concerns, the importance of ‘management’ has
increased enormously. The principles of management are being applied not only for managing
business concerns, but also to manage various other institutions like hospitals, educational and
social institutions and government. Management occupies such an important place in the
modern world that the welfare of the people and the destiny of the country are very much
influenced by it.

1.1 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.
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.
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

1
 generate income in hands. Organization comes with new products and researches
beneficial for society.

2. WHAT IS MANAGEMENT?

Management is a universal phenomenon. It is a very popular and widely used term. All
organizations - business, political, cultural or social are involved in management because it is
the management which helps and directs the various efforts towards a definite purpose.

As there is no universally accepted definition for management, it is difficult to define it.

But a simple traditional definition, defines it as the "art of getting things done by others". This
definition brings in two elements namely accomplishment of objectives, and direction of group
activities towards the goal. The weaknesses of this definition is that firstly it uses the word
"art", whereas management is not merely an art, but it is both art and science. Secondly, the
definition does not state the various functions of a manager clearly.

A more elaborate definition given by George R. Terry, defines management as a process

"consisting of planning, organizing, actuating and controlling, performed to determine and
accomplish the objectives by the use of people and resources." Firstly it considers management
as a "process" i.e. a systematic way of doing things. Secondly it states four management
activities: Planning, organizing, actuating, and controlling. Planning is thinking of an actions in
advance. organizing is coordination of the human and material resources of an organization.
Actuating is motivation and direction of subordinates. Controlling means the attempt to ensure
no deviation from the norm or plan. Thirdly it states that manager uses people and other
resources. For example a manager who wants to increase the sales, might try not only to
increase the sales force, but also to increase advertising budget. And fourthly, it states that
management involves the act of achieving the organization's objectives.

3. VARIOUS DEFINITIONS

A few definitions by experts are:

 "Management is an art of knowing what is to be done and seeing that it is done in the
best possible manner." (planning and controlling)
o F.W. Taylor (father of scientific management)
 "Management is to forecast, to plan, to organize, to command, to coordinate and
control activities of others."
o Henri Fayol (father of modern management)
 "Management is the process by which co-operative group directs actions towards
common goals."
o Joseph Massie

2
  "Management is that process by which managers create, direct, maintain and operate
purposive organization through systematic, coordinated and cooperative human
efforts."
o McFarland
 "Management is the coordination of all resources through the process of planning,
organising, directing and controlling in order to attain stated goals."
o Henry Sisk
 "Management is a social and technical process that utilises resources, influences human
action and facilitates changes in order to accomplish an organization's goals."
o Tho Harmann, William Scott
 "Management is a process of working with and through others to achieve organizational
objectives in a changing environment, central to this purpose is the effective and
efficient use of limited resources."
o Rovert Kreitner

According to Harold Koontz, “Management is an art of getting things done through and with the
people in formally organized groups. It is an art of creating an environment in which people can
perform and individuals and can co-operate towards attainment of group goals”.

According to F.W. Taylor, “Management is an art of knowing what to do, when to do and see
that it is done in the best and cheapest way”.

Management involves creating an internal environment: - It is the management which puts into
use the various factors of production. Therefore, it is the responsibility of management to
create such conditions which are conducive to maximum efforts so that people are able to
perform their task efficiently and effectively. It includes ensuring availability of raw materials,
determination of wages and salaries, formulation of rules & regulations etc.

Therefore, we can say that good management includes both being effective and efficient. Being
effective means doing the appropriate task i.e, fitting the square pegs in square holes and
round pegs in round holes. Being efficient means doing the task correctly, at least possible cost
with minimum wastage of resources.

The basic skills needed for manager are:

 Calmness
 Maturity
 Friendliness
 Tolerance
 Appreciable
 Tolerable
 Adorable
 Frank
 Determined

3
  Neutral towards means & end etc.

4. IS MANAGEMENT SCIENCE OR AN ART?

Science is a systematized body of knowledge acquired by mankind through observation and

experimentation based on certain principles capable of general application. Art, on the other
hand, is concerned with the application of skill or knowledge so acquired. If this idea of science
and art is applied to managerial activity, it is clear that management is both a science and an
art. The term is clear that management is both a science and an art. The term ‘management’
involves providing a body of principles or laws for the solution of specific management
problems and the objective evaluation of results. Further, the analysis of the functions of
management has led to the development of certain principles, which are useful for solving
concrete business problems in future. On the other hand, the art of management is concerned
with applying of skills and knowledge for accomplishing an end through deliberate efforts. Thus,
in future On the other hand, the art of management is concerned with applying of skills and
knowledge for accomplishing an end through deliberate efforts. Thus, we find that
management is both science and an art. The American Society of Mechanical Engineers has
rightly stated that “management is the art and science of preparing, organizing and directing
human effort applied to control the forces and utilize the materials of nature for the benefit of
man “
An analysis of the characteristics of management indicates that it does not possess all the
essential characteristics of a profession. Like other recognized professions, such as medicine
and law, management does not have norms of managerial behavior, common rules, uniform
code of conduct and organization or licensing. Further, it does not restrict the entry of people
into managerial jobs with a specific academic degree. In the light of this analysis, we can
conclude that management cannot be called a profession

5. EVOLUTION OF MANAGEMENT THOUGHT

The evolution of management thought can be classified into three stages. Each of these
approaches has made a distinctive contribution to management theory.

1. Pre- scientific management period.

2. Early management approaches represented by scientific management, process management
theory and human relations movement.
3. Modern management approaches represented by behavioral science movement, quantitative
approach, systems approach etc

5.1 PRE-SCIENTIFIC MANAGEMENT PERIOD

The real development of management thought began with the scientific management approach
stated by Taylor, though some of the concepts have been developed by thinkers earlier to
Taylor. Early management thoughts have come from the Roman Catholic Church, military
organizations, the Cameraliasts, a group of German and Austrian public administrators and

4
intellectuals from the sixteenth centuries. Their concepts of management were mostly related
to the principles of specialization, selection of subordinates and their training and simplification
of administrative procedures.

In the later period, contributions were made by Charles Babbage, James Watt and Robinson
Boulton, Robert Owen, Towne and Simon.
Charles Babbage was professor of Mathematics at the Cambridge University and he suggested
the use of accurate data obtained through rigid investigation in the management of an
undertaking. James Watt Junior (1796-1848) and Robinson Boulton (1770-1842) used the
management techniques such as market research and forecasting, production planning,
planned machine layout, standardization of components and parts, elaborate statistical
records, maintenance of control report, cost accounting data, provision of welfare of personnel
etc. Robert Owen (1771-1858) managed a group of textile mills in Scotland and is well known as
the promoter of co-operative and trade union movements in England. Henry S. Simon was one
of those effective thinkers who advocated that in economic and social systems, the role of
capital is constructive, creative and entrepreneurial other than of exploiting the resources for
its own benefit.

The contributions of management thinkers started above were limited mostly to the field of
developing the concept to make resources more effective at the shop floor levels. These
contributions were made bit by bit and in a haphazard manner and have failed to stimulate
management as a distinct discipline for further study. However, the various ideas started by
them have created awareness about managerial problems. A stage was set by the end of the
nineteenth century for making a systematic study of management and a beginning was made
by Fredrick Taylor at the beginning of the present century whose thoughts came to be known as
Scientific Management.

5.2 EARLY MANAGEMENT APPROACHES

5.2.1 Scientific management:

F.W Taylor, Gilberth, Lillian Gilberth, Gantt and others have made tremendous contributions to
the concept of scientific management. Of all these persons, Taylor’s contribution is the most
significant and because of this, he is considered as the father of scientific management. We
shall give here the contributions of Taylor and some others.

Fredrick Winslow Taylor (1865-1915) worked as a chief engineer in the Midvale Steel Works
where he joined as a worker. Afterwards, he worked in the Bethlehem Steel Works and after
retirement from his concern, he worked as a consultant.

Taylor, the founder of scientific management movement, states that the object of
management should be to secure the maximum prosperity for each employer, coupled with the
maximum prosperity of each employee. According to Taylor, scientific management, in its
essence, consists of a certain philosophy which results in the combination of four great

5
principles of management, viz., the development of true science, the scientific selection of
workers, their scientific selection and development, intimate and friendly co-operation
between the management and their workmen. When management of a business unit is based
on a systematic study and analysis of various aspects of work involved with a view to find out
the best way of doing things, we call it scientific management of business. Broadly speaking,
scientific management is the art of knowing exactly what is to be done and the best way of
doing it.

Taylor observed that inefficiency prevails in the organization because of three causes, viz., (a)
workers feel that any increase in output would lead to unemployment, (b) defective systems of
management and because of these, each worker restricts his output in order to safeguard his
interests, and (c) inefficient rule of thumb efforts and wasting methods of work.

The elements of scientific management are: (a) determination of the task, (b) planning of
industrial operations, (c) proper selection and training of workers, (d) improvement in methods
of work, (e) modification of organization, and (f) mental revolution.

Determination of task or workload to each employee is on the basis of method study, routing,
motion study, time study, fatigue study and differential piece- wage system. After setting the
task to workers, the next step is to plan production, which requires the planning of industrial
operations. This involves further considerations, viz., what work shall be done, how the work
shall be done, where the work shall be done and when the work shall be done. Proper selection
and training of workers and also their correct placement have to be done by the management.
Further, in order to make the workers complete the task as per the conditions set by the
management, there is need for improvement in the methods of work. This involves
standardization of tools and equipment, speed, conditions of work and materials. Taylor also
suggested modification in the organization. This involves introduction of functional
foremanship. According to this, the two functions of planning and doing are divided. He has
also suggested eight functional foremen, viz., (a) route clerk, (b) instruction card clerk, (c) time
and cost clerk, (d) gang boss, (e) speed boss, (f) repair boss, (g) inspector, and (h) shop
disciplinarian.

For the success of scientific management, there should be a thorough change in the mental
outlook of both the employees and the employer and their mutual hostility and suspicion
should give place to co-operation and goodwill.

5.2.2 Process Management (H. Fayol 1841-1925)

Around 1910, H.Fayol, a French engineer, initiated the administrative theory of management
(process management) in Europe. Sheldon, Mooney and Railey, L.F .Urwick and L.Gulick also
contributed a lot to the administrative theory of management. This theory is called process
(functional) management and advocates of this theory belong to the process school of
management.

6
In 1916, Fayol published his book “General and Industrial management” in French, of which
later and English edition was brought out. Fayol identified management as a separate set of
skills or functions performed by a supervisor in an organization. He clearly distinguished the
difference between technical and managerial skills an emphasized that supervisor should be
efficient in both. He stated that technical ability is more dominant at the lower level of
management, whereas managerial ability is more important at the higher level of management.
Fayol, in his famous book, stated fourteen management principles that can capture the entire
flavor of the process management theory.

5.2.3 Human relations movement

Elton Mayo, who is considered to be the founder of human relations movement, and his
associates, conducted the Hawthorne Studies in the Hawthorne plant of Western Electric
Company, USA during1927-1932. They stated that the employees’ morale had a great influence
on productivity and the manager should treat them as social beings instead of economic beings
or simply as cogs of a wheel. For solving any management problem, the manager should
understand group attitudes and psychology, as employees are members of a group.

His approach and theory emphasized the importance of human and social factors and also
individual as well as group relationships, while the classical theory of Taylor and Fayol gave
importance to job content and management of physical resources.

This theory served to focus attention on the social side of the work and man, as opposed to the
economical and technical aspects. This theory is also criticized on the ground that there is no
direct connection between morale and productivity, hence the research in Hawthorne plant
had a management bias, and that the samples were too small. In spite of these criticisms, the
contribution of human relations remains and are being applied even today by managers.

5.3 MODERN MANAGEMENT APPROACHES

BEHAVIORAL SCIENCE MOVEMENT: The behavioral science approach through its research
studies of individual behavior and motivation indicated that the relation between morale and
productivity was oversimplified and there was no direct or deep connection between morale
and productivity. Behavioral science experts made a further refinement of human relations
movement and also covered a much wider scope in interpersonal roles and relationships.

The behavioral science movement which started after 1940 emphasized the importance of
individuals and their interpersonal relationship, psychology of the individuals as related to
personal needs and motivation and motivational potential in people. The important
contributors to the behavioral science movement are A.Maslow, F.Hertzberg, V.Vroom and
D.McGregor. While Maslow developed a need hierarchy to explain human behavior within an
organization, Hertzberg and Vroom developed motivational models, which explained the causes
of human behavior and motivation in business. Behavioral science movement has drawn
heavily on the work of Maslow to explain human behavior and the dynamics of motivation

7
 process. McGregor developed his two theories, viz., Theory X and Y and also explained certain
basic assumptions about the human element. The classical theory reflected almost all the
aspects of Theory X while the behavioral approach theory of management reflected almost all
the aspects of Theory Y.

ELEMENTS OF NEO-CLASSICAL THEORIES : This theory may be stated as follows.

It may be noted here that the theories started by Taylor and Fayol are called by some writers as
Classical theories while the theories sated by the human relations movement and the
behavioral science movement are called neo- Classical theories.
Henri Fayol, the father of principles of management, has classified managerial functions as
follows:

a. Planning, including forecasting,

b. Organizing
c. Commanding
d. Coordinating, and
e. Controlling.

6. FEATURES OF MANAGEMENT

Management is an activity concerned with guiding human and physical resources such that
organizational goals can be achieved. Nature of management can be highlighted as: -

1. Management is Goal-Oriented: The success of any management activity is assessed by

its achievement of the predetermined goals or objective. Management is a purposeful
activity. It is a tool which helps use of human & physical resources to fulfill the pre-
determined goals. For example, the goal of an enterprise is maximum consumer
satisfaction by producing quality goods and at reasonable prices. This can be achieved
by employing efficient persons and making better use of scarce resources.
2. Management integrates Human, Physical and Financial Resources: In an organization,
human beings work with non-human resources like machines. Materials, financial
assets, buildings etc. Management integrates human efforts to those resources. It brings
harmony among the human, physical and financial resources.
3. Management is Continuous: Management is an ongoing process. It involves continuous
handling of problems and issues. It is concerned with identifying the problem and taking
appropriate steps to solve it. E.g. the target of a company is maximum production. For
achieving this target various policies have to be framed but this is not the end.
Marketing and Advertising is also to be done. For this policies have to be again framed.
Hence this is an ongoing process.
4. Management is all Pervasive: Management is required in all types of organizations
whether it is political, social, cultural or business because it helps and directs various
efforts towards a definite purpose. Thus clubs, hospitals, political parties, colleges,
hospitals, business firms all require management. When ever more than one person is
engaged in working for a common goal, management is necessary. Whether it is a small

8
 business firm which may be engaged in trading or a large firm like Tata Iron & Steel,
management is required everywhere irrespective of size or type of activity.
5. Management is a Group Activity: Management is very much less concerned with
individual’s efforts. It is more concerned with groups. It involves the use of group effort
to achieve predetermined goal of management of ABC & Co. is good refers to a group of
persons managing the enterprise.

7. OBJECTIVES OF MANAGEMENT

The main objectives of management are:

1. Getting Maximum Results with Minimum Efforts - The main objective of management
is to secure maximum outputs with minimum efforts & resources. Management is
basically concerned with thinking & utilizing human, material & financial resources in
such a manner that would result in best combination. This combination results in
reduction of various costs.
2. Increasing the Efficiency of factors of Production - Through proper utilization of various
factors of production, their efficiency can be increased to a great extent which can be
obtained by reducing spoilage, wastages and breakage of all kinds, this in turn leads to
saving of time, effort and money which is essential for the growth & prosperity of the
enterprise.
3. Maximum Prosperity for Employer & Employees - Management ensures smooth and
coordinated functioning of the enterprise. This in turn helps in providing maximum
benefits to the employee in the shape of good working condition, suitable wage system,
incentive plans on the one hand and higher profits to the employer on the other hand.
4. Human betterment & Social Justice - Management serves as a tool for the upliftment as
well as betterment of the society. Through increased productivity & employment,
management ensures better standards of living for the society. It provides justice
through its uniform policies.

8. 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

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three
levels is discussed below:

9
1. Top Level of Management

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 of Management

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 -

10
 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. Lower Level of Management

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.

11
9. MANAGEMENT AND ADMINISTRATION

According to Theo Haimann, “Administration means overall determination of policies, setting of

major objectives, the identification of general purposes and laying down of broad programmes
and projects”. It refers to the activities of higher level. It lays down basic principles of the
enterprise. According to Newman, “Administration means guidance, leadership & control of the
efforts of the groups towards some common goals”.

Whereas, management involves conceiving, initiating and bringing together the various
elements; coordinating, actuating, integrating the diverse organizational components while
sustaining the viability of the organization towards some pre-determined goals. In other words,
it is an art of getting things done through & with the people in formally organized groups.

The difference between Management and Administration can be summarized under 2

categories: -

1. Functions
2. Usage / Applicability

On the Basis of Functions: -

Basis Management Administration

Meaning Management is an art of getting things done It is concerned with formulation of

through others by directing their efforts broad objectives, plans & policies.
towards achievement of pre-determined
goals.

Nature Management is an executing function. Administration is a decision-

making function.

Process Management decides who should as it & how Administration decides what is to
should he dot it. be done & when it is to be done.

Function Management is a doing function because Administration is a thinking

managers get work done under their function because plans & policies
supervision. are determined under it.

12
Skills Technical and Human skills Conceptual and Human skills

Level Middle & lower level function Top level function

On the Basis of Usage: -

Basis Management Administration

Applicability It is applicable to business concerns It is applicable to non-business

i.e. profit-making organization. concerns i.e. clubs, schools, hospitals
etc.

Influence The management decisions are The administration is influenced by

influenced by the values, opinions, public opinion, govt. policies, religious
beliefs & decisions of the managers. organizations, customs etc.

Status Management constitutes the Administration represents owners of

employees of the organization who the enterprise who earn return on their
are paid remuneration (in the form capital invested & profits in the form of
of salaries & wages). dividend.

10. SCIENTIFIC MANAGEMENT BY TAYLOR

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.

13
Hence scientific management is a thoughtful, organized, dual approach towards the job of
management against hit or miss or Rule of Thumb.

According to Drucker, “The cost of scientific management is the organized study of work, the
analysis of work into simplest element & systematic management of worker’s performance of
each element”.

10.1 Principles of Scientific Management

1. Development of Science for each part of men’s job (replacement of rule of thumb)
a. This principle suggests that work assigned to any employee should be observed,
analyzed with respect to each and every element and part and time involved in it.
b. This means replacement of odd rule of thumb by the use of method of enquiry,
investigation, data collection, analysis and framing of rules.
c. Under scientific management, decisions are made on the basis of facts and by the
application of scientific decisions.
2. Scientific Selection, Training & Development of Workers
a. There should be scientifically designed procedure for the selection of workers.
b. Physical, mental & other requirement should be specified for each and every job.
c. Workers should be selected & trained to make them fit for the job.
d. The management has to provide opportunities for development of workers having
better capabilities.
e. According to Taylor efforts should be made to develop each employee to his
greatest level and efficiency & prosperity.
3. Co-operation between Management & workers or Harmony not discord
a. Taylor believed in co-operation and not individualism.
b. It is only through co-operation that the goals of the enterprise can be achieved
efficiently.
c. There should be no conflict between managers & workers.
d. Taylor believed that interest of employer & employees should be fully harmonized
so as to secure mutually understanding relations between them.
4. Division of Responsibility
a. This principle determines the concrete nature of roles to be played by different level
of managers & workers.
b. The management should assume the responsibility of planning the work whereas
workers should be concerned with execution of task.
c. Thus planning is to be separated from execution.
5. Mental Revolution
a. The workers and managers should have a complete change of outlook towards their
mutual relation and work effort.
b. It requires that management should create suitable working condition and solve all
problems scientifically.
c. Similarly workers should attend their jobs with utmost attention, devotion and
carefulness. They should not waste the resources of enterprise.

14
 d. Handsome remuneration should be provided to workers to boost up their moral.
e. It will create a sense of belongingness among worker.
f. They will be disciplined, loyal and sincere in fulfilling the task assigned to them.
g. There will be more production and economical growth at a faster rate.
6. Maximum Prosperity for Employer & Employees
a. The aim of scientific management is to see maximum prosperity for employer and
employees.
b. It is important only when there is opportunity for each worker to attain his highest
efficiency.
c. Maximum output & optimum utilization of resources will bring higher profits for the
employer & better wages for the workers.
d. There should be maximum output in place of restricted output.
e. Both managers & workers should be paid handsomely.

10.2 Techniques of Scientific Management

1. Time Study
a. It is a technique which enables the manager to ascertain standard time taken for
performing a specified job.
b. Every job or every part of it is studied in detail.
c. This technique is based on the study of an average worker having reasonable skill
and ability.
d. Average worker is selected and assigned the job and then with the help of a stop
watch, time is ascertained for performing that particular job.
e. Taylor maintained that Fair day’s work should be determined through observations,
experiment and analysis by keeping in view an average worker.

Standard Time × Working Hours = Fair Day’s Work

2. Motion Study
a. In this study, movement of body and limbs required to perform a job are closely
observed.
b. In other words, it refers to the study of movement of an operator on machine
involved in a particular task.
c. The purpose of motion study is to eliminate useless motions and determine the bet
way of doing the job.
d. By undertaking motion study an attempt is made to know whether some elements
of a job can be eliminated combined or their sequence can be changed to achieve
necessary rhythm.
e. Motion study increases the efficiency and productivity of workers by cutting down
all wasteful motions.

15
11. HENRI FAYOL’S 14 PRINCIPLES OF MANAGEMENT

1. DIVISION OF WORK: Work should be divided among individuals and groups to ensure that
effort and attention are focused on special portions of the task. Fayol presented work
specialization as the best way to use the human resources of the organization.

2. AUTHORITY: The concepts of Authority and responsibility are closely related. Authority
was defined by Fayol as the right to give orders and the power to exact obedience.
Responsibility involves being accountable, and is therefore naturally associated with
authority. Whoever assumes authority also assumes responsibility.

3. DISCIPLINE: A successful organization requires the common effort of workers. Penalties

should be applied judiciously to encourage this common effort.

4. UNITY OF COMMAND: Workers should receive orders from only one manager.

5. UNITY OF DIRECTION: The entire organization should be moving towards a common

objective in a common direction.

6. SUBORDINATION OF INDIVIDUAL INTERESTS TO THE GENERAL INTERESTS: The interests

of one person should not take priority over the interests of the organization as a whole.

7. REMUNERATION: Many variables, such as cost of living, supply of qualified personnel,

general business conditions, and success of the business, should be considered in
determining a worker’s rate of pay.
8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the
subordinate role. Decentralization is increasing the importance. The degree to which
centralization or decentralization should be adopted depends on the specific organization
in which the manager is working.

9. SCALAR CHAIN: Managers in hierarchies are part of a chain like authority scale. Each
manager, from the first line supervisor to the president, possess certain amounts of
authority. The President possesses the most authority; the first line supervisor the least.
Lower level managers should always keep upper level managers informed of their work
activities. The existence of a scalar chain and adherence to it are necessary if the
organization is to be successful.
10. ORDER: For the sake of efficiency and coordination, all materials and people related to a
specific kind of work should be treated as equally as possible.

11. EQUITY: All employees should be treated as equally as possible.

16
 12. STABILITY OF TENURE OF PERSONNEL: Retaining productive employees should always be
a high priority of management. Recruitment and Selection Costs, as well as increased
product-reject rates are usually associated with hiring new workers.

13. INITIATIVE: Management should take steps to encourage worker initiative, which is
defined as new or additional work activity undertaken through self direction.

14. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings
among employees.

12. FUNCTIONS OF MANAGEMENT

Different experts have classified functions of management. According to George & Jerry, “There
are four fundamental functions of management i.e. planning, organizing, actuating and
controlling”.

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.

17
3. 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

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of
watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.
Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from

one person to another. It is a bridge of understanding.

4. 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:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.

18
QUESTION BANK

1. Write the various definitions of management.

2. Distinguish between management and administration.
3. Explain the “Levels of management”.
4. Give an outline of management thought during the 20th century.
5. What is scientific management? Explain its basic elements.
6. Give the 14 principles of management propagated by Henry Fayol.
7. Write short notes on (i) Human Relation Management (ii) Modern Management
8. Explain Management As an Art, Science or Profession
9. Explain Evolution Of Management.
10. Define different thoughts of Management.
11. What are the objectives of management.
12. Explain the various functions of management.

19