SYLLABUS ANNA UNIVERSITY, CHENNAI PRINCIPLES OF MANAGEMENT ‘ For B.E Mechanical, Mechatronics, Aeronautical, Automobile, ECE, EEE, Civil, EIE and ICE branches UNIT | INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS Definition of Management - Science or Art - Manager Vs Entrepreneur - types of managers - managerial roles and skills — Evolution of Management — Scientific, human relations , system and contingency approaches — Types of Business organization - Sole proprietorship, partnership, company-public and private sector enterprises - Organization culture and Environment — Current trends and issues in Management. UNIT Il PLANNING Nature and purpose of planning — planning process ~ types of planning — objectives — setting objectives — policies — Planning premises — Strategic Management ~ Planning Tools and Techniques — Decision making steps and process. UNIT Ill ORGANISING Nature and purpose — Formal and informal organization — organization chart — organization structure - types — Line and staff authority — departmentalization — delegation of authority — centralization and decentralization - Job Design - Human Resource Management - HR Planning, Recruitment, selection, Training . and Development, Performance Management, Caréer planning and management. UNIT IV DIRECTING Foundations. of individual and group behaviour — motivation - motivation theories — motivational: techniques — job satisfaction — job enrichment — leadership ~ types and theories of leadership — communication — process ‘of communication - barrier in commtinication — effective communication — communication and IT. UNIT V CONTROLLING System and process of controlling — budgetary and non-budgetary control techniques — use of computers and IT in Management control - Productivity problems and’ management — control and performance — direct and preventive control ~ reporting.INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS | His 1.1. INTRODUCTION Management is a vital aspect of the economic life of people which is an organised. group activity. Management is the process of planning, organising, staffing, directing, co-ordinating and controlling the activities of business enterprises. In simple words, it can be defined as "the art of getting things done by others". The size of management can range from one person in a small organization to hundreds . or thousands of managers in multinational companies. Management is often included as a factor of production along with machines, materials, and money. Without efficient managers and effective managerial leadership, the resources of production remain merely resources and never become production. Every organisation regardless of size, type or location needs managers who have a variety of characteristics. It does not matter in what type of organisation they work. Managers are generally responsible for a group of -individual performance. A manager is someone who works with and through other people by coordinating their work activities in order to accomplish organisational goals. Managers may have a variety of titles and roles. They perform various jobs and duties and they are responsible for high profit and good performance. Managers work(aaa) _Principlos of Managoment in various departments and they are employed by many types of organisation, As * leaders, managers must encourage this group to reach common business goals such as bringing a new product to the market in a timely fashion. 1.2. DEFINITION OF MANAGEMENT Management may be defined in many different ways. Many eminent authors on the subject have defined the term "management". Some of these definitions are reproduced below: Koontz and Weihrich define the management in a simplified form as; “Management is the process of designing and maintaining an environment in which individuals are working together in groups efficiently to accomplish the selected aims”, According to F. W. Taylor, “Management is the art of knowing what is to be done and seeing that it is done in the best possible manner”. In the words of S. George, “Management consists of getting things done through others. Manager is one who accomplishes the objectives by directing the efforts of others”. ‘Mc Farland defines the management in a more elaborate form as: “Management is the process by which managers create, direct, maintain and operate purpos organisation through systematic, coordinated and co-operative human effort”. In the words of George R. Terry, “Management is a distinct process cons of planning, organising, actuating and controlling the performance to dete accomplish the objectives by the use of people and resources”, According to Henry Fayol “To manage is to forecast and plan, to org command, to coordinate and to control”. ” 4 According to Newman, Summer and Warren, “The job of management cooperative endeavour to function properly. A manager is one who gets thi by working with people and other resources”,Introduction to Management and Organizations 3 | According to John, F.M., "Management may be defined as the art of securing maximum results with a minimum of effort so as to secure maximum prosperity and happiness for both employer and employee and give the best possible service to the public". From definitions quoted above, it is concluded that the management is the process of coordinating and integrating work activities so that they are efficiently and effectively completed with and through other people, Management is a continuous process. Management aims at achieving the organi effective use of resources. tions goals by ensuring the 1.3. NATURE OF MANAGEMENT by eminent philosophers and authors indicates that. the management has certain nature/characteristics. The following are the salient characteristics of management: 1, Management is multidisciplinary in nature: Management is an interdisciplinary study. It draws ideas and concepts from various disciplines such as economics, statistics, mathematics, psychology, sociology, anthropology etc. 2. Management is a continuous process: Management is a process or a function or an activity. This process continues till the objectives set by administration are actually achieved. 3. Management is a universal activity: Management is not applicable to business undertakings only. It is also applicable An analysis of various definitions and contributions to the field of management, | | to political, social, religious and educational institutions. Management is necessary when a group effort is required. 4. Management is a Science as well as an Art: Management is an art because there are definite principles of management. It is also a science because predetermined objectives can be achieved by the application of these principles.Ga) Principles of Management 5. Management is dynamic and not static: The principles of management are dynamic and not static. It has to adapt itself according to social changes. 6. Management is a Profession: Management is gradually becoming a profession because there are established principles of management which are being applied in practice and it involves specialized training and it is governed by ethical code arising out of its social obligations. 71. Management is a group acti Management comes into existence only when there is a group activity towards a common objective. Management is always concerned with the group efforts and not individual efforts. To achieve the goals of an organisation, the management plans, organises, co-ordinates, directs and controls the group effort. 8. Management aims at obtaining wealthy results: Manager’s’ primary job is to assure the productive performance through planning, direction and control. It is expected of the management to bring into being the desired results. Rational utilisation of available resources to maximise the profit is the economic function of a manager. 9. Managemeut implies skill and experience in getting things done: through people: Management involves doing the job through people. The economic funetion of earning profitable return cannot be performed without enlisting the co- operation and securing positive response from "people", 10. Management is a system of authority: Authority means power to make others act in a predetermint manner, Management formalises a standard set of rules and procedure to be ee by the subordinates and it ensures their compliance with the rules and regulations.Introduction to Management and Organizations 4.5 11, Management is intangible: Management cannot be seen with the eyes. It is evidenced only by the quality of the organisation and the results i.e., profits, increased productivity etc. 12. Management implies good leadership: A manager must have the ability to lead and get the desired course of. action from the subordinates. Management of the high order implies the capacity of managers to influence the behaviour of their subordinates. 1.4. SCOPE OF MANAGEMENT It is difficult to precisely state the scope of management. However, the management includes the following scopes: () Functional areas of management: Financial Management includes forecasting, cost control, management accounting, budgetary control, statistical control, financial planning ete. Human Resource Management covers the various aspects relating to the employees of the organisation such as recruitment, job training, job transfers, promotions, retirement, terminations, remuneration, labour welfare and_ social security, industrial relations etc. Marketing Management deals the marketing of goods, sales promotion, advertisement and publicity, channels of distribution, market research etc. Production Management includes the production planning, quality control and inspection, production techniques etc. Material Management includes the purchase of materials, issue of materials, storage of materials, maintenance of records, materials control etc. Purchasing Management includes inviting tenders for raw materials, placing orders, entering into contracts etc. Maintenance Management relates the proper care and maintenance of the buildings, plant and machinery ete.Gs] Principlos of Managomeny Office Management is concerned with the office layout, office staffing ang equipment of the office. (ii) Subject-matter of management: Management is ‘considered as a continuing activity made up of basic management functions such as planning, organising, staffing, directing ang controlling. These components form the subject-matter of management. (iii) Management is an inter-disciplinary approach: Though management is regarded as a separate discipline for the correct application of the management principles, study of commerce, economics, sociology, psychology and mathematics are very essential. The science of management draws ideas and concepts from a number of disciplines making it a multi-disciplinary subject. (iv) Principles of management: The principles of management are of universal applications. These principles applicable to any group activity undertaken for the achievement of some common goals. c () Management is an agent of change: ‘The techniques of management can be improved by a proper research and development. ‘ (vi) The essentials of management: The essentials of management include scientific method, human relat quantitative techniques. F, 1.5. FUNCTIONS OF MANAGEMENT The following are five basic functions of management. 1, Planning 2. Organising 3, StaffingIntroduction to Managemont and Organizations 4. Directing 5. Controlling 1. Planning: Planning simply is looking ahead. It is the process of preparing a list of activities for future. Effective planning leads to efficient management. Effective planning provides answers to questions such as What to do?, When to do?, How to do? and Who is to do?. The planning process involves the following activities: (Determination of the goal of the organisation, (ii) Formulating policies, rules, procedures etc. for the organisation, Forecasting the future based on past and present activities, 2. Organising: Organising establishes the harmonious relationship among all workers of an organisation by providing them with suitable authority and responsibility. Organisation process involves the following activities: (i) Identification and analysis’ of activities required for the attainment of organisational objectives. (ii) Assignment of duties to the individuals concerned. Follow-up the activities. 3. Staffing: Staffing process involves the selection of candidates for positions, fixing salary, training and developing them for effective organisational functions. The manager performs the duties of job analysis, job description etc. which come under the staffing function. 4. Directing / Leading: Directing involves the activities such as guiding, supervising, communicating and motivating the subordinates in their jobs. Motivation, leadership and communication are three important sub-functions of directing. Motivation helps to increase the performance of workers. Communication provides a proper information(a) Principles of Management to the subordinates for the improved and effective management. Leadership is the tk of his subordinates. process by which a manager guides and influences the wol 5. Controlling: Controlling deals with the checking and predetermined standards. It is the process of ensuring confirm to the planned activities. Controlling process involves verifying the activities against the that the actual activities the following steps: (i) Establishing standards. (ii) Measuring the current performance. ii) Comparing this performance to the. established standards. (iv) Taking the corrective actions if deviations are detected. 4.6. IS MANAGEMENT A SCIENCE OR AN ART? © ‘A question often arises whether management is a science or an art. It is said that “management is thé oldest of arts and the youngest of sciences”. It explains the changing nature of management but it does not exactly answer what management is? To have an exact answer to the question, it is necessary to know the meanings of the terms “Science” and “Art”. What is science? Is management a science? In the words of Keynes, “Science is a systematized body of knowledge which establishes the relationship between cause and effect”. The following characteristics are essential for the subject to be recognized as a science: > Itis the existence of a systematic body of knowledge with array of, principe. : > Itis based on scientific enquiry. > The principle should be verifiable. > Itisareliable basis for predicting future events, Management as a discipline fulfills the science criterion, The applicdton' of these principles helps any practicing manager to eens the desired 4 Beals. Management isIntroduction to Management and Organizations 1.9 Science is classified into two types. They are exact science and inexact science. In exact science, the results are accurate. In the case of management, it is an inexact science because : > every organisation human resources have different attitudes, aspirations and perceptions. So, the standard results may not be obtained. » readymade and standard solutions cannot be obtained. > management is complex and unpredictable. > every organisation decisions are influenced by the environment. The environment is so complex and unexpected changes may occur any time. : What is an art? Is: management an art? According to Terry, art is “bringing desired results through the application of skill”, Art is skillful application which depends entirely on the inherent capacity of a person. It comes from within a person and it is learned from practice and experience. The above definition contains the following three important characteristics of art: > Artis the application of science. It is putting the principle into practice. > After knowing a particular art, practice or experience is needed to become skillful. > Itis undertaken for accomplishing an end through deliberate efforts. Management is an art because of the following facts: > Management process involves the use of practical knowledgé and personal skill to achieve concrete results. > Management is creative. > Management implies capacity to apply accurately the knowledge to solve the problems, to face the situation and to realise the objectives fully and timely. Management is both a science as well as an art: The above mentioned points clearly reveal that the management combines features of both science as well as art. Management is a science because it contains the general principles. It is also an art because it requires certain personal skills to achieve the desired results. Science provides the knowledge and art deals with the application of knowledge and skills. Management is thus a science as well as an art.ey lent 1.7. MANAGEMENT VS ADMINISTRATION ‘The two terms ‘management’ and “ to see the organisation and various components of it as a whole > to understand how its various parts and functions mesh together > to foresee how changes in any one of them may affect all the others. A higher degree of conceptual skill helps in analyzing the environment and identifying the opportunities. i 1.12. IMPORTANCE OF MANAGEMENT Importance of management is given as follows:Principles of Managemen 1, Attainment of group goals: The achievement of objectives of business depends upon various factors, Th, management theory gives the direction of achievement of goals. 2. Effective functioning of business: Ability, understanding, communication, motivation, coordination ang supervision. are some of the factors responsible for the effective functioning op business. Management is a vital tool to help for effective functioning of business, 3. Resource development: The resources of any enterprise may be identified and developed by the management. Generally, the term resources are men, money, material and.machines, 4, Management controls the organisation: The management controls theractivities of enterprises. A control process is used. to eliminate the unnecessary activities. 5S. Sound organisation structure: Sound organisation structure clearly defines the authority and responsibility of relationship. It helps to take a corrective action wherever and whenever necessary, 4 6. Integrates individual efforts: ‘ ] i Management takes necessary steps to integrate the various efforts to achieve the : objectives of an organisation. 7. Motivation: Motivation is a vital tool to achieve the organisation goal. A proper motivation. to the workers increases the speed of performance of a work. Motivation is in the form of monetary or non-monetary incentive. 8. Communication: Communication is an important role for the effective management. Effecti communication leads to efficient management.Introduction to Management and Organizations 1.19 9. Coordination: > All activities of enterprises are grouped into different departments. Management coordinates the. activities of different departments to attain the objectives of the organisation, 10. Decision-making: There are a few numbers of decisions taken by the management every day. The management guides the managers to take the correct decisions. LL. Leadership quality: Leadership quality is developed in the person who is working in the top level management. : 12, Management is needed at all levels: The functions of management are common to all levels of organisations. The management is more essential for the top management, middle management and lower management. 1.13. EVOLUTION OF MANAGEMENT THOUGHT The origin of‘management can be traced back to the’ days when man started living in groups. The co-ordination of human and material resources has been a’ concern of man ever since he started living in groups. A history reveals that strong men organized the masses into groups according to their intelligence, physical and mental capabilities. In this sense, management took the form of leadership which was essential to co-ordinate the efforts of the group members in order to arrange the necessaries of life. : There are many examples from past history which illustrate how the management has been practiced for thousands of years. Evidence for the use of well- recognized principles of management is found in the organisation of ancient Tamil dynasties such as Chera, Chola, and Pandya, organisation of public life in ancient Greece and the organisation of military forces. Thus, the management in sorhe formPrinciples Of Menage mh or the other has: been practiced in various parts of the world since the day, civilization exists. Most of the evolutionary changes arid new perspectives hi of the Industrial Revolution which was transformed agricultural socjete, ity industrial, societies. The structure of industry became extremely complex, 4, ti stage, the development of a formal theory of management became abso} Huey necessary, It was against this background that the pioneers of modem mmanageng, thought laid the foundations of modem management theory and practice. ave occurred as ay, su Evolution of management thought is divided into the following four stages: 1. Pre-scientific or Pre-classical management period 2. Classical management theory a. Scientific Management of Taylor _b. Administrative Management of Fayol c. Bureaucratic Model of Max Weber 3. Neo-classical theory or Behavioural theory or Human Relations approach 4, Modem theory a. System approach b. Contingency approach. (Evolution of Management Thought ) Neo-classical " Behaviour __ Theory | ( Bureaucratic Model Figure 1.3 Evolution of management thoughtIntroduction to Management and Organizations 4.21 Figure 1.3 explains the evolution of management thought and Figure 1.4 gives the ideas of chronological development of management theories in terms of periods. «Systems Approach 1770 1800 1825 1850 1875 1900 1925 1950 1975 +2000 Figure 1.4 Chronological development of management theories 1.14, PRE-SCIENTIFIC OR PRE-CLASSICAL MANAGEMENT PERIOD The start of industrial revolution in the middle of the 18" century had its impact on management. During the period, by following the industrial revolution, certain pioneers tried to challenge the traditional character of management by introducing new ideas and approaches. The notable contributors of this period are as follows: 1. Robert Owen (1771-1858): He was an owner of a group of textile mills in Lanark, Scotland, where he used his ideas of human relations. He is the promoter of co-operative and trade union movement in England. He emphasized the recognition of human element in industry. He firmly believed that worker's performance in industry was influenced by the working conditions and treatment the workers. He introduced new ideas of human relations such as shorter working hours, housing facilities, training of workers in hygiene, education of their children, provision of canteen etc. Though his approach was very strict, he came to be regarded as the father of Personnel Management.Principles of Managemen, t 2. Charles Babbage (1792-1871): He is considered tobe the:father of modem computing.” He was the Profesor of Mathematics at Cambridge University. He found that the manufacturers made a little'use of science and mathematics and that they relied upon opinions instead of investigations and accurate knowledge. He felt that the methods of science ang mathematics could be applied to the solution of methods in place of guess work for the, solution of business problems. He advocated the use of accurate observations, measurement and precise knowledge for taking the business decisions. “His management ideas also anticipated the concept of profit sharing to improve the productivity. 3. Henry Robinson Towne (1844-1924): He was the president of the famous lock manufacturing company "Yale and Town". He advised the combination of engineers and economists as industrial managers. This combination of qualities together with at ledst some skill as an accountant is essential to the successful management of industrial workers. Pre-classical contributors were no doubt pioneers of management thought. But, the impact of their contributions on the industry as a whole was insufficient. However, they laid the groundwork for the major management theories which arised later. The real beginning of the science of management did not occur until the last decade of the 19" century. i 4.15. CLASSICAL MANAGEMENT THEORY The classical management theory developed during the Industrial Revolution when new problems related to the factory system started to appear. Managers were unsure of how to train employees or deal with the increased labour dissatisfaction; sO they began to test solutions. As a result, the classical management theory developed from efforts to find the “one best way” to perform and manage tasks. A sical management theory is made up of three parts. es (Scientific management theory (ii) Administrative management theory (iii) Bureaucratic management theory.Introduction to Management and Organizations 1.23 1.15.1, Scientific Management Theory Scientific Management is defined as the use of the scientific method to define the “one best way” for a job to be done. The scientific management theory developed due to the need to increase the productivity and efficiency. The emphasis was trying to find the best way to get the most work done by (i) examining how the work process was actually accomplished and (ii) scrutinizing the skills of the workforce. The major contributors of this scientific management theory are as follows: 1. Frederick W. Taylor (1856-1915): He was often called “Father of scientific Management”. He served with the Bethlchem Steel Plant where he conducted experiments with his ideas, Taylor tried to analyse the causes of low efficiency in industry and came to the conclusion that much of waste and inefficiency is due to the lack of order and system in methods of management, Taylor pioneered the time- study and motion-study where by a work task is broken down into its various motions. The study is improved by eliminating unnecessary motions and then the motions timed to determine optimal daily production. Taylor successfully implemented.his theory at Bethlehem Steel Plant in two famous studies involving shoveling and pig-iron handling. Example, in 1898, Taylor calculated how much iron from rail cars Bethlehem Steel Plant workers could be unloading if they were using the correct movements, tools and steps. The result was an amazing 47.5 tons per day instead of the mere 12.5 tons each worker had been averaging. In addition, by redesigning the shovels, the workers were used, Taylor was able to increase the length of work time. Therefore, it decreased the number of people shoveling from 500 to 140. Lastly, he developed an incentive system that workers were paid more money for meeting the new standard. Productivity at Bethlehem Steel Plant shot up overnight. As a result, many theorists followed Taylor's philosophy when developing their own principles of management. 2. Henry Gantt (1861-1919): An associate of F.W. Taylor developed the Gantt chart in which a bar graph measures the planned and completed work along each stage of production, Based onPrinciples of Managemen, the time instend of quantity, volume or weight, this visual display chart has beg, | widely used as a planning and control tool since it is developed in 1910. His Other interests included a unique pay incentive system and the social responsibility of | business. Unique pay-incentive system was aimed at providing extra wages for ext work besides guarantee of minimum wages. Under this system of wage payment, ifg worker completes the work laid out for him, he is paid a definite bonus in addition tg his daily minimum wages, | 3. Frank Gilbreth (1868-1924) and Lillian Gilbreth (1878-1972): A husband and wife team studied the job motions. They refined Taylors analysis of work movements and made many contributions to time-and-motion study, Their aims were to a (i) break-up into each of its component actions and analyze every individual action necessary to perform a particular task, (ii) find better ways to perform cach component action and (iii) reorganise each of the component actions so that the action as a whole could be more efficiently performed at less cost of time and effort. In Frank's early career as an apprentice bricklayer, he was interested in standardization and method study. He watched bricklayers and identified that some workers were slow and inefficient while others were more productive. He discovered that each bricklayer. can be used a different set of motions to lay bricks. From his _ 4 observations, Frank isolated the basic movements necessary to do the job and eliminated unnecessary motions. Workers using these movements raised their output from 1,000 to 2,700 bricks per day. This was the first motion study designed isolate the best possible method of performing a given job. Later, Frank and his wi Lillian studied job motions using a motion-picture camera and a split-second clock. 4.15.2. Fayol’s Administrative Management Theory Whereas scientific management focused on the productivity of individuals, administrative management theory concentrates on developing the organisati structure that leads to high efficiency and effectiveness, Organisational structureIntroduction to Management and Organizations 1.25 the system of task and authority relationships which control how employees use the resources to achieve the organisation’s goals. The emphasis is on the development of managerial principles: rather than work methods. Henry Fayol was the most important performer of this theory. Henri Fayol (1841-1925): A French mining engineer identified 14 Principles of Management based on his management experiences. He believed that these principles are essential to increase the efficiency of the management process. These principles provide modem-day managers with general guidelines on how a supervisor should organise his/her department and manage his/her staff. Henry Fayol is considered the father of Modern theory of general and Industrial Management. Although later research has created controversy over many of the following. principles, they are still widely used management theories. : Fayol’s. contributions are published in,his famous book entitled “The general and industrial administration”. Fayol’s famous book falls into two parts. The first part.concemed with the theory of administration in which Fayol divided the total industrial activities into six categories which are given below: Technical (Production, Manufacture). Commercial (Buying, Selling, Exchange). .. Financial (Search for and optimum use of capital). Security (Protection of property and persons). . Accounting (Balance sheets, Cost statistics). ae Re pe Management (Planning, Organising, Coordinating, Directing and Controlling) ‘The second part is concerned with the fourteen principles of management. They are as follows: ; 1. Division of work 2. Authority and responsibility 3. Discipline(426 ] Principles of Managemeng 4. Unity of command 5. Unity of direction 6. Subordination of individual interest to general interest 7, Remuneration of personnel 8. Centralisation 9. Scalar chain 10. Order 11. Equity 12, Stability of tenure of personnel 13. Initiative 14, Esprit de corps. 1. Division of work: Work should be divided in a proper way with reference to the available time. In _ general, workers on the same job and managers on the same duty acquire the ability sureness and accuracy which increases their output. 2, Authority and Responsibility: Authority: It is the power given to a person to get work from his subordinates. Responsibility: Its the kind and amount of work expected of from a man by his - | ~ superior, One of the essential elements of a good management is the delegation of | authority to the low-level management and fixing responsibility on its own. 4 3. Discipline: Discipline is the obedience to organisational rules and employment agreement. is essential for the smooth running of organisation. According to Fayol, discipline requires good superiors at all levels, clear and fair agreements ‘and judicio enforced penalties for violations. 4. Unity of command: : . ‘An employee must receive orders and instructions from one supervisor aa Multiple commands will cause conflicts and confusions. A sound vance should avoid dual commands. r