Concept of Management, Nature and

Scope of management.
Every business requires planning for the future to find a way to successful business for which the person
in the helm of affairs has to take decisions and is responsible for the consequences for his decision
making whether favorable or unfavorable.

In short this is the crux of the science of management. According to Bradford and Johnson,
“Management is an intangible part of production which develops within the lives of men. It is first a
mental process, a concentration of desires, a will power.

In economic terms management is one of the factors of production together with land, labor and
capital.

According to specialists in administration and organization, management is a system of authority.

In view of sociologists, management is a class and status system. A manager should be a person elite of
brains and education.

According to Newman and Summer, management is considered to be a process consisting of organizing,

planning, leading and controlling.

Organization deals with assigning various tasks to different people and coordinating their efforts as well
maintaining a careful balance between different parts of the enterprise. Planning is concerned with
setting goals, objectives and targets and delineating mechanisms for attaining them at various levels
throughout the organization as well as for the total organization.

Leading is concerned with the manner in which the manager integrates the needs of the employee with
those of the departments or total organization. Leading necessitates clear direction, coupled with a
spirit of cooperation. Leadership is also concerned with the maintenance of high standards, discipline
and occasionally the judicious mix of authority, power and influence in order to attain target objectives.

Controlling is concerned with measuring and narrowing the gap between planned performance and
actual performance, and with the monitoring of performances, as well as, taking corrective actions
wherever necessary. Management is thus a complex, integrated and ongoing dynamic process.

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The management is viewed as:

1. An economic resource.

2. A system of authority.

3. A class or elite.

Nature of Management

(i) Universal Process: Wherever there is human activity, there is management. Without efficient
management, objectives of the company cannot be achieved.

(ii) Factor of Production: Qualified and efficient managers are essential to utilization of labor and
capital.

(iii) Goal Oriented: The most important goal of all management activity is to accomplish the
objectives of an enterprise. The goals should be realistic and attainable.

(iv) Supreme in Thought and Action: Managers set realizable objectives and then mastermind action
on all fronts to accomplish them. For this, they require full support form middle and lower levels of
management.

(v) Group activity: All human and physical resources should be efficiently coordinated to attain
maximum levels of combined productivity. Without coordination, no work would accomplish and
there would be chaos and retention.

(vi) Dynamic Function: Management should be equipped to face the changes in business environment
brought about by economic, social, political, technological or human factors. They must be adequate
training so that can enable them to perform well even in critical situations.

(vii) Social Science: All individuals that a manager deals with, have different levels of sensitivity,
understanding and dynamism.

(viii) Important Organ of Society: Society influences managerial action and managerial actions influence
society. Its managers responsibility that they should also contribute towards the society by organizing
charity functions, sports competition, donation to NGO’s etc.

(ix) System of Authority: Well-defined lines of command, delegation of suitable authority and
responsibility at all levels of decision-making. This is necessary so that each individual should what is
expected from him and to whom he need to report to.

(x) Profession: Managers need to possess managerial knowledge and training, and have to conform to
a recognized code of conduct and remain conscious of their social and human obligations.

(xi) Process: The management process comprises a series of actions or operations conducted towards
an end.

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MANAGEMENT AS A PROCESS

As a process, management refers to a series of inter-related functions. It is the process by which

management creates, operates and directs purposive organization through systematic, coordinated and
co-operated human efforts, according to George R. Terry, “Management is a distinct process consisting
of planning, organizing, actuating and controlling, performed to determine and accomplish stated
objective by the use of human beings and other resources”. As a process, management consists of
three aspects: -

(i) Management is a social process: Since human factor is most important among the other factors,
therefore management is concerned with developing relationship among people. It is the duty of
management to make interaction between people – productive and useful for obtaining organizational
goals.

(ii) Management is an integrating process: Management undertakes the job of bringing together human
physical and financial resources so as to achieve organizational purpose. Therefore, is an important
function to bring harmony between various factors.

(iii) Management is a continuous process: It is a never-ending process. It is concerned with

constantly identifying the problem and solving them by taking adequate steps. It is an on-going
process.

SIGNIFICANCE OF MANAGEMENT

(i) 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.

(ii) 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.

(iii) 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.

(iv) Establishes Sound Organization: No overlapping of efforts (smooth and coordinated functions). To
establish sound organizational structure is one of the objectives 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 &

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who are subordinates. Management fills up various positions with right persons, having right skills,
training and qualification. All jobs should be cleared to everyone.

(v) 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.

(vi) 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.

SCOPE OR BRANCHES OF MANAGEMENT:

Management is an all-pervasive function since it is required in all types of organized endeavors. Thus, its
scope is very large.

The following activities are covered under the scope of management:

(i) Planning,

(ii) Organization

(iii) Staffing.

(iv) Directing,

(v) Coordinating, and

(vi) Controlling.

The operational aspects of business management, called the branches of management, are as follows:

1. Production Management

2. Marketing Management

3. Financial Management.

4. Personnel Management and

5. Office Management.

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1. Production Management:

Production means creation of utilities. This creation of utilities takes place when raw materials are
converted into finished products. Production management, then, is that branch of management ‘which
by scientific planning and regulation sets into motion that part of enterprise to which has been
entrusted the task of actual translation of raw material into finished product.’

It is a very important field of management,’for every production activity which has not been hammered
on the anvil of effective planning and regulation will not reach the goal, it will not meet the customers
and ultimately will force a business enterprise to close its doors of activities which will give birth to so
many social evils’.

Plant location and layout, production policy, type of production, plant facilities, material handling,
production planning and control, repair and maintenance, research and development, simplification and
standardization, quality control and value analysis, etc., are the main problems involved in production
management.

2. Marketing Management:

Marketing is a sum total of physical activities which are involved in the transfer of goods and services
and which provide for their physical distribution. Marketing management refers to the planning,
organizing, directing and controlling the activities of the persons working in the market division of a
business enterprise with the aim of achieving the organization objectives.

It can be regarded as a process of identifying and assessing the consumer needs with a view to first
converting them into products or services and then involving the same to the final consumer or user so
as to satisfy their wants with a stress on profitability that ensures the optimum use of the resources
available to the enterprise. Market analysis, marketing policy, brand name, pricing, channels of
distribution, sales promotion, sale-mix, after sales service, market research, etc. are the problems of
marketing management.

3. Financial Management:

Finance is viewed as one of the most important factors in every enterprise. Financial management is
concerned with the managerial activities pertaining to the procurement and utilization of funds or
finance for business purposes.

The main functions of financial management include:

(i) Estimation of capital requirements;

(ii) Ensuring a fair return to investors;

(iii) Determining the suitable sources of funds;

(iv) Laying down the optimum and suitable capital

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Structure for the enterprise:

(i) Co-coordinating the operations of various departments;

(ii) Preparation, analysis and interpretation of financial statements;

(iii) Laying down a proper dividend policy; and

(iv) Negotiating for outside financing.

4. Personnel Management:

Personnel Management is that phase of management which deals with the effective control and use of
manpower. Effective management of human resources is one of the most crucial factors associated with
the success of an enterprise. Personnel management is concerned with managerial and operative
functions.

Managerial functions of personnel management include:

(i) Personnel planning;

(ii) Organizing by setting up the structure of relationship among jobs, personnel and physical factors
to contribute towards organization goals;

(iii) Directing the employees; and

(iv) Controlling.

The operating functions of personnel management are:

(i) Procurement of right kind and number of persons;

(ii) Training and development of employees;

(iii) Determination of adequate and equitable compensation of employees;

(iv) Integration of the interests of the personnel with that of the enterprise; and

(v) Providing good working conditions and welfare services to the employees.

5. Office Management:

The concept of management when applied to office is called ‘office management’. Office management is
the technique of planning, coordinating and controlling office activities with a view to achieve common
business objectives. One of the functions of management is to organize the office work in such a way
that it helps the management in attaining its goals. It works as a service department for other
departments.

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The success of a business depends upon the efficiency of its administration. The efficiency of the
administration depends upon the information supplied to it by the office. The volume of paper work in
office has increased manifold in these days due to industrial revolution, population explosion, increased
interference by government and complexities of taxation and other laws.

Harry H. Wylie defines office management as “the manipulation and control of men, methods, machines
and material to achieve the best possible results—results of the highest possible quality with the
expenditure of least possible effect and expense, in the shortest practicable time, and in a manner
acceptable to the top management.”

Functions of Management:
Management in some form or another is an integral part of living and is essential wherever human
efforts are to be undertaken to achieve desired objectives. The basic ingredients of management are
always at play, whether we manage our lives or business.

“Management is a set of principles relating to the functions of planning, organizing, directing, and
controlling, and the applications of these principles in harnessing physical, financial, human, and
informational resources efficiently and effectively to achieve organizational goals”.

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Management is essential for an organized life and necessary to run all types of organizations. Managing
life means getting things done to achieve life’s objectives and managing an organization means getting
things done with and through other people to achieve its objectives.

There are basically five primary functions of management. These are:

1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

The controlling function comprises coordination, reporting, and budgeting, and hence the controlling
function can be broken into these three separate functions. Based upon these seven functions, Luther
Gulick coined the word POSDCORB, which generally represents the initials of these seven functions i.e.

P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for
reporting & B for Budgeting.

But, Planning, Organizing, Staffing, Directing, and Controlling are widely recognized functions of
management.

FIVE FUNCTIONS OF MANAGEMENT

1. Planning
Planning is future-oriented and determines an organization’s direction. It is a rational and systematic
way of making decisions today that will affect the future of the company. It is a kind of organized
foresight as well as corrective hindsight. It involves predicting of the future as well as attempting to
control the events. It involves the ability to foresee the effects of current actions in the long run in the
future.

Peter Drucker has defined planning as follows:

“Planning is the continuous process of making present entrepreneurial decisions systematically and
with best possible knowledge of their futurity, organizing systematically the efforts needed to
carry out these decisions and measuring the results of these decisions against the expectations
through organized and systematic feedback”.

An effective planning program incorporates the effect of both external as well as internal factors. The
external factors are shortages of resources; both capital and material, general economic trend as far as
interest rates and inflation are concerned, dynamic technological advancements, increased
governmental regulation regarding community interests, unstable international political environments,
etc.

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The internal factors that affect planning are limited growth opportunities due to saturation requiring
diversification, changing patterns of the workforce, more complex organizational structures,
decentralization, etc

2. Organizing
Organizing requires a formal structure of authority and the direction and flow of such authority through
which work subdivisions are defined, arranged and coordinated so that each part
relates to the other part in a united and coherent manner so as to attain the prescribed objectives.

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”.

Thus the function of organizing involves the determination of activities that need to be done in order to
reach the company goals, assigning these activities to the proper personnel, and delegating the
necessary authority to carry out these activities in a coordinated and cohesive manner.

It follows, therefore, that the function of organizing is concerned with:

1. Identifying the tasks that must be performed and grouping them whenever necessary

2. Assigning these tasks to the personnel while defining their authority and responsibility.

3. Delegating this authority to these employees

4. Establishing a relationship between authority and responsibility

5. Coordinating these activities

3. Staffing
Staffing is the function of hiring and retaining a suitable work-force for the enterprise both at
managerial as well as non-managerial levels. It involves the process of recruiting, training, developing,
compensating and evaluating employees and maintaining this workforce with proper incentives and
motivations. Since the human element is the most vital factor in the process of management, it is
important to recruit the right personnel.

According to Kootz & O’Donnell, “Managerial function of staffing involves manning the organization
structure through the proper and effective selection, appraisal & development of personnel to fill the
roles designed in the structure”.

This function is even more critically important since people differ in their intelligence, knowledge, skills,
experience, physical condition, age and attitudes, and this complicates the function. Hence,
management must understand, in addition to the technical and operational competence, the
sociological and psychological structure of the workforce.

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4. Directing
The directing function is concerned with leadership, communication, motivation, and supervision so that
the employees perform their activities in the most efficient manner possible, in order to achieve the
desired goals.

The leadership element involves issuing of instructions and guiding the subordinates about procedures
and methods.

The communication must be open both ways so that the information can be passed on to the
subordinates and the feedback received from them.

Motivation is very important since highly motivated people show excellent performance with less
direction from superiors.

Supervising subordinates would lead to continuous progress reports as well as assure the superiors that
the directions are being properly carried out.

5. Controlling
The function of control consists of those activities that are undertaken to ensure that the events do not
deviate from the pre-arranged plans. The activities consist of establishing standards for work
performance, measuring performance and comparing it to these set standards and taking corrective
actions as and when needed, to correct any deviations.

According to Koontz & O’Donnell, “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”.

The controlling function involves:

a. Establishment of standard performance.

b. Measurement of actual performance.

c. Measuring actual performance with the pre-determined standard and finding out the deviations.

d. Taking corrective action.

All these five functions of management are closely interrelated. However, these functions are highly
indistinguishable and virtually unrecognizable on the job. It is necessary, though, to put each function
separately into focus and deal with it.

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Management: Management as a Science,
Arts and Profession
Some authors regard management as science because there are well tested and experimented
principles of management, some authors describe management as an art because more practice is
required in management and some authors consider that management is going towards the paths of
profession.

To conclude whether management is science, art or profession, we must understand the

features and meanings of science, art and profession and compare them with management
meaning and features.

Management as a Science:

Science can be defined as a systematic and organised body of knowledge based on logically
observed findings, facts and events.

Science comprises of exact principles which can be verified and it can establish cause and effect
relations.

Main characteristics/features of science are:

1. Systematic body of knowledge:

In science organised and systematic study material is available which is used to acquire the
knowledge of science. Like science in management also there is availability of systematic and
organised study material. So first feature of science is present in management.

2. Scientific principles are derived on the basis of logical and scientific observations:

The scientists perform logical observation before deriving any principle or theory. They are very
objective while doing the observations. But when managers are observing they have to observe
human beings and observation of human being cannot be purely logical and objective.

Some kind of subjectivity enters in the observations so this feature of science is not present in
management. All the scientific principles have same effect, wherever we try them whereas
effect of management principles varies from one situation to other.

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3. Principles are based on repeated experiments:

Before developing scientific principles scientists test these principles under different conditions
and places. Similarly, managers also test and experiment managerial principles under different
conditions in different organisations. So this feature of science is present in management.

4. Universal Validity:

Scientific principles have universal application and validity. Management principles are not
exact like scientific principles so their application and use is not universal. They have to be
modified according to the given situation. So this feature of science is not present in
management.

5. Replication is possible:

In science replication is possible as when two scientists are undertaking the same investigation
working independently and treating the same data under the same conditions may desire or
obtain the identical or exactly same result.

But in management managers have to conduct research or experiments on human beings. So if’
two managers are investigating same data, on different sets of human beings they will not get
identical or same result because human beings never respond in exactly identical manner. So
this feature of science is also not present in management.

Management as an Art:

Art can be defined as systematic body of knowledge which requires skill, creativity and practice
to get perfection.

The main features of art are:

1. Systematic body of knowledge/Existence of theoretical knowledge:

In every art there is systematic and organized study material available to acquire theoretical
knowledge of the art. For example, various books on different ragas are available in music. In
management also there is systematic and organised body of knowledge available which can
help in acquiring managerial studies. So this feature of art is present in management also.

2. Personalised application:

In the field of art only theoretical knowledge is not enough. Every artist must have personal skill
and creativity to apply that knowledge. For example, all musicians learn same ragas but they
apply these ragas according to their personal skill and creativity which makes them different.

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In management also all managers learn same management theories and principles. But their
efficiency depends on how well they use these principles under different situations by applying
personal skills and creativity so this feature of art is also present in management.

3. Based on Practice and creativity:

The artist requires regular practice of art to become more fine and perfect. Without practice
artists lose their perfection. Art requires creative practice, i.e., artist must add his creativity to
the theoretical knowledge he has learned. Same way with experience managers also improves
their managerial skills and efficiency. So this feature of art is also present in management.

Management: Both Science and Art:

Management is both science as well as art. Like science it has systematic and well- organised
body of knowledge and like art it requires personal skill, creativity and practice to apply such
knowledge in the best possible way. Science and art are not in contrast to each other; both
exist together in every function of management.

Management as a Profession:

Profession can be defined as an occupation backed by specialised knowledge and training, in

which entry is restricted.

The main features of profession are:

1. Well defined Body of knowledge:

In every profession there is practice of systematic body of knowledge which helps the
professionals to gain specialised knowledge of that profession. In case of management also
there is availability of systematic body of knowledge.

There are large numbers of books available on management studies. Scholars are studying
various business situations and are trying to develop new principles to tackle these situations.
So presently this feature of profession is present in management also.

2. Restricted Entry:

The entry to a profession is restricted through an examination or degree. For example a person
can practice as Doctor only when he is having MBBS degree.

Whereas there is no legal restriction on appointment of a manager, anyone can become a

manager irrespective of the educational qualification. But now many companies prefer to
appoint managers only with MBA degree. So presently this feature of profession is not present
in management but very soon it will be included with statutory backing.

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3. Presence of professional associations:

For all the professions, special associations are established and every professional has to get
himself registered with his association before practising that profession. For example, doctors
have to get themselves registered with Medical Council of India, lawyers with Bar Council of
India etc.

In case of management various management associations are set up at national and

international levels which have some membership rules and set of ethical codes, for example,
AIMA in New Delhi, National Institute of Personal Management at Calcutta etc., but legally it is
not compulsory for managers to become a part of these organisations by registration. So
presently this feature of profession is not present in management but very soon it will be
included and get statutory backing also.

4. Existence of ethical codes:

For every profession there are set of ethical codes fixed by professional organisations and are
binding on all the professionals of that profession. In case of management there is growing
emphasis on ethical behaviour of managers. All India Management Association (AIMA) has
devised a code of conduct for Indian managers. But legally it is not compulsory for all the
managers to get registered with AIMA and abide by the ethical codes.

So presently this feature of profession is not present in management but very soon it will be
included with statutory backing.

5. Service Motive:

The basic motive of every profession is to serve the clients with dedication. Whereas basic
purpose of management is achievement of management goal, for example for a business
organisation the goal can be profit maximisation.

But nowadays only profit maximisation cannot be the sole goal of an enterprise. To survive in
market for a long period of time, a businessman must give due importance to social objectives
along with economic objectives. So presently this feature of profession is not present but very
soon it will be included.

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Levels of Management - Top, Middle
and Lower
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:

 Top level/Administrative level

 Middle level/Executory

 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:

LEVELS OF MANAGEMENT

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 -

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 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 -

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

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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.

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 DEVELOPMENT OF MANAGEMENT THOUGHT
Management is defined as the art of getting things done by making the best use of available
resources. Over the passing centuries, organizational structure has undergone radical changes,
and simultaneously the process of management as well. Hence, several theories were
propounded over centuries which were considered crucial for understanding business
operations. These, when clubbed together, are called Management Thought.

Management thought has evolved over the centuries and can be classified as follows:

1. Classical School
2. Behavioural School
3. Quantitative School
4. Systems School
5. Contingency School

1. CLASSICAL SCHOOL

The classical school is the oldest formal school of management thought. Its roots pre-date the
twentieth century. The classical school of thought generally concerns ways to manage work and
organizations more efficiently. Three areas of study that can be grouped under the classical
school are scientific management, administrative management, and bureaucratic management.

(a) Scientific Management

In the late 19th century, management decisions were often arbitrary and workers often worked
at an intentionally slow pace. There was little in the way of systematic management and
workers and management were often in conflict. Scientific management was introduced in an
attempt to create a mental revolution in the workplace. It can be defined as the systematic
study of work methods in order to improve efficiency. Frederick W. Taylor was its main
proponent. Other major contributors were Frank Gilbreth, Lillian Gilbreth, and Henry Gantt.

Scientific management has several major principles. First, it calls for the application of the
scientific method to work in order to determine the best method for accomplishing each task.
Second, scientific management suggests that workers should be scientifically selected based on
their qualifications and trained to perform their jobs in the optimal manner. Third, scientific
management advocates genuine cooperation between workers and management based on
mutual self-interest. Finally, scientific management suggests that management should take
complete responsibility for planning the work and that workers’ primary responsibility should
be implementing management’s plans. Other important characteristics of scientific
management include the scientific development of difficult but fair performance standards and
the implementation of a pay-for-performance incentive plan based on work standards.

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Scientific management had a tremendous influence on management practice in the early
twentieth century. Although it does not represent a complete theory of management, it has
contributed to the study of management and organizations in many areas, including human
resource management and industrial engineering. Many of the tenets of scientific management
are still valid today.

(b) Administrative Management

Administrative management focuses on the management process and principles of

management. In contrast to scientific management, which deals largely with jobs and work at
the individual level of analysis, administrative management provides a more general theory of
management. Henri Fayol is the major contributor to this school of management thought.

Fayol was a management practitioner who brought his experience to bear on the subject of
management functions and principles. He argued that management was a universal process
consisting of functions, which he termed planning, organizing, commanding, coordinating, and
controlling. Fayol believed that all managers performed these functions and that the functions
distinguished management as a separate discipline of study apart from accounting, finance, and
production. Fayol also presented fourteen principles of management, which included maxims
related to the division of work, authority and responsibility, unity of command and direction,
centralization, subordinate initiative, and team spirit.

Although administrative management has been criticized as being rigid and inflexible and the
validity of the functional approach to management has been questioned, this school of
thought still influences management theory and practice. The functional approach to
management is still the dominant way of organizing management knowledge, and many of
Fayol’s principles of management, when applied with the flexibility that he advocated, are still
considered relevant.

(c) Bureaucratic Management

Bureaucratic management focuses on the ideal form of organization. Max Weber was the major
contributor to bureaucratic management. Based on observation, Weber concluded that many
early organizations were inefficiently managed, with decisions based on personal relationships
and loyalty. He proposed that a form of organization, called a bureaucracy, characterized by
division of labor, hierarchy, formalized rules, impersonality, and the selection and promotion of
employees based on ability, would lead to more efficient management. Weber also contended
that managers’ authority in an organization should be based not on tradition or charisma but
on the position held by managers in the organizational hierarchy.

Bureaucracy has come to stand for inflexibility and waste, but Weber did not advocate or favor
the excesses found in many bureaucratic organizations today. Weber’s ideas formed the basis
for modern organization theory and are still descriptive of some organizations.

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 2. BEHAVIORAL SCHOOL

The behavioral school of management thought developed, in part, because of perceived

weaknesses in the assumptions of the classical school. The classical school emphasized
efficiency, process, and principles. Some felt that this emphasis disregarded important aspects
of organizational life, particularly as it related to human behavior. Thus, the behavioral school
focused on trying to understand the factors that affect human behavior at work.

(a) Human Relations

The Hawthorne Experiments began in 1924 and continued through the early 1930s. A variety of
researchers participated in the studies, including Clair Turner, Fritz J. Roethlisberger, and Elton
Mayo, whose respective books on the studies are perhaps the best known. One of the major
conclusions of the Hawthorne studies was that workers’ attitudes are associated with
productivity. Another was that the workplace is a social system and informal group influence
could exert a powerful effect on individual behavior. A third was that the style of supervision is
an important factor in increasing workers’ job satisfaction. The studies also found that
organizations should take steps to assist employees in adjusting to organizational life by
fostering collaborative systems between labor and management. Such conclusions sparked
increasing interest in the human element at work; today, the Hawthorne studies are generally
credited as the impetus for the human relations school.

According to the human relations school, the manager should possess skills for diagnosing the
causes of human behavior at work, interpersonal communication, and motivating and leading
workers. The focus became satisfying worker needs. If worker needs were satisfied, wisdom
held, the workers would in turn be more productive. Thus, the human relations school focuses
on issues of communication, leadership, motivation, and group behavior. The individuals who
contributed to the school are too numerous to mention, but some of the best-known
contributors include Mary Parker Follett, Chester Barnard, Abraham Maslow, Kurt Lewin, Renais
Likert, and Keith Davis. The human relations school of thought still influences management
theory and practice, as contemporary management focuses much attention on human resource
management, organizational behavior, and applied psychology in the workplace.

(b) Behavioral Science

Behavioral science and the study of organizational behavior emerged in the 1950s and 1960s.
The behavioral science school was a natural progression of the human relations movement. It
focused on applying conceptual and analytical tools to the problem of understanding and
predicting behavior in the workplace. However, the study of behavioral science and
organizational behavior was also a result of criticism of the human relations approach as
simplistic and manipulative in its assumptions about the relationship between worker attitudes
and productivity. The study of behavioral science in business schools was given increased
credence by the 1959 Gordon and Howell report on higher education, which emphasized the
importance to management practitioners of understanding human behavior.

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The behavioral science school has contributed to the study of management through its focus on
personality, attitudes, values, motivation, group behavior, leadership, communication, and
conflict, among other issues. Some of the major contributors to this school include Douglas
McGregor, Chris Argyris, Frederick Herzberg, Renais Likert, and Ralph Stogdill, although there
are many others.

3. QUANTITATIVE SCHOOL

The quantitative school focuses on improving decision making via the application of
quantitative techniques. Its roots can be traced back to scientific management.

(a) Management Science and MIS

Management science (also called operations research) uses mathematical and statistical
approaches to solve management problems. It developed during World War II as strategists
tried to apply scientific knowledge and methods to the complex problems of war. Industry
began to apply management science after the war. George Dantzig developed linear
programming, an algebraic method to determine the optimal allocation of scarce resources.
Other tools used in industry include inventory control theory, goal programming, queuing
models, and simulation. The advent of the computer made many management science tools
and concepts more practical for industry. Increasingly, management science and management
information systems (MIS) are intertwined. MIS focuses on providing needed information to
managers in a useful format and at the proper time. Decision support systems (DSS) attempt to
integrate decision models, data, and the decision maker into a system that supports better
management decisions.

(b) Production and Operations Management

This school focuses on the operation and control of the production process that transforms
resources into finished goods and services. It has its roots in scientific management but became
an identifiable area of management study after World War II. It uses many of the tools of
management science.

Operations management emphasizes productivity and quality of both manufacturing and

service organizations. W. Edwards Deming exerted a tremendous influence in shaping modern
ideas about improving productivity and quality. Major areas of study within operations
management include capacity planning, facilities location, facilities layout, materials
requirement planning, scheduling, purchasing and inventory control, quality control, computer
integrated manufacturing, just-in-time inventory systems, and flexible manufacturing systems.

4. SYSTEMS SCHOOL

The systems school focuses on understanding the organization as an open system that
transforms inputs into outputs. This school is based on the work of a biologist, Ludwig von

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Bertalanffy, who believed that a general systems model could be used to unite science. Early
contributors to this school included Kenneth Boulding, Richard Johnson, Fremont Kast, and
James Rosenzweig.

The systems school began to have a strong impact on management thought in the 1960s as a
way of thinking about managing techniques that would allow managers to relate different
specialties and parts of the company to one another, as well as to external environmental
factors. The systems school focuses on the organization as a whole, its interaction with the
environment, and its need to achieve equilibrium. General systems theory received a great deal
of attention in the 1960s, but its influence on management thought has diminished somewhat.
It has been criticized as too abstract and too complex. However, many of the ideas inherent in
the systems school formed the basis for the contingency school of management.

5. CONTINGENCY SCHOOL

The contingency school focuses on applying management principles and processes as dictated
by the unique characteristics of each situation. It emphasizes that there is no one best way to
manage and that it depends on various situational factors, such as the external environment,
technology, organizational characteristics, characteristics of the manager, and characteristics of
the subordinates. Contingency theorists often implicitly or explicitly criticize the classical school
for its emphasis on the universality of management principles; however, most classical writers
recognized the need to consider aspects of the situation when applying management principles.

The contingency school originated in the 1960s. It has been applied primarily to management
issues such as organizational design, job design, motivation, and leadership style. For example,
optimal organizational structure has been theorized to depend upon organizational size,
technology, and environmental uncertainty; optimal leadership style, meanwhile, has been
theorized to depend upon a variety of factors, including task structure, position power,
characteristics of the work group, characteristics of individual subordinates, quality
requirements, and problem structure, to name a few. A few of the major contributors to this
school of management thought include Joan Woodward, Paul Lawrence, Jay Lorsch, and Fred
Fiedler, among many others.

SCHOOLS OF MANAGEMENT THOUGHT

1. Scientific Management School:
This school envisages management to be a scientific management.

It means that, scientific methods and scientific principles are to be followed and applied in managing the
affairs of an enterprise.

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Frederick Winslow Taylor (1856-1915), popularly known as the ‘Father of Scientific Management
Movement’, was the first to recognise and emphasise the need for adopting a systematic scientific
approach to the task of managing an enterprise.

Taylor joined the Midvale Steel Company in the USA, as a worker and later on rose to the position of
chief engineer. Subsequently he joined the Bethlehem Works where he experimented with his ideas and
made his contribution to management theory for which he is so well-known.

He studied the causes of low efficiency in industry and came to the conclusion that much of the waste
and inefficiency is due to the lack of order and system in the methods of management. He observed
that the managers were usually ignorant of the amount of work that could be done by a worker in a day
and had no clear notion of the best method of doing the work.

It was his realisation that there was lack of efficient work standard, absence of clear-cut division of
works between the managers and workers, lack of incentive of the workers, unscientific selection and
placement of workers. He, therefore, suggested that the managers should follow a ‘scientific approach’
in their work and apply scientific methods for achieving higher efficiency.

With a view to improving management practice, he conducted a series of experiments. On the basis of
these experiments he developed his concepts and techniques into a philosophy which is known as
‘Scientific Management’.

He published many papers and books and all his contributions were compiled in his book “The
Principles of Scientific Management’. Taylor’s ideas on scientific management were greatly expanded by
H. S. Person, Henry L. Gantt, and Lillian Gilbreth, Harrington Emerson and M. L. Cooke.

2. Management Process School:

This school builds up the idea that management is a process of getting things done through and with
other people operating in organised groups. It analyses the management process by describing its
functions like planning, organising, directing, coordinating and controlling. The executives perform this
process. In this approach importance is given to the activities of the managers, the general principles
and rules which they should follow.

Henry Fayol is considered to be the ‘Founder of Management Process School’. He points out that
management is a functional concept which is universal and applicable to any type of enterprise, be it a
business enterprise or otherwise. Other persons who worked to develop this approach are J. D. Mooney,
A. C. Reiley, Lyndall Urwick, Harold Koontz and O’Donnell, Newman, Luther Gullick, George Terry, E. F. L.
Brech, Mcfarland, etc.

3. Human Relations School:

In scientific management, importance is given to its technical side to increase the efficiency of the
organisations. On the other hand, ‘Human Relations School’ believes in the importance of human

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resources in the management. This approach focuses attention on the relationship between the
management authority and the working personnel.

The importance of working personnel in management is immense. If their mentality, aspirations,

desires, wants and needs are properly looked into and satisfied by the managers, their activities
become effective and meaningful. The main aspect of this approach is to treat the workers as human
beings.

This school highlights the importance of informal social groups in the organisation, good human
relations, the need for managerial motivation, greater recognition, participation, better communication
and good leadership.

According to this school, an organisation is not merely a formal arrangement of men and functions,
more than that, it is a social system, and the human factor is the most important element within it.

In the early twentieth century Elton Mayo, professor at the Harvard University, could realise the
importance of this thought by experiments and observations in the factory of the Western Electric
Company at Hawthorne city in Chicago. These experiments and observations of Prof. Elton Mayo are
known as ‘Hawthorne Experiment’.

These experiments revealed that physical and environmental factors do not materially influence the
workers’ performance and attitude to work. Mayo realised first the necessity to consider and solve the
problems of the workers with human relation approach.

He thought that the productivity of workers depends upon human relationship. Other important
propagators of this school of management thought are—Roethlis Berger, William J. Dickson, Mary
Parker Follet and A. F. Maslow.

4. Human Behavioural School:

The behavioural approach to management relates to the application of the methods and findings of
psychology and sociology to the organisational behaviour. This school emphasises the actions and
reactions of the human beings in group activity. Mental reactions like emotions, feelings, aims, instincts,
hopes and desires regulate a man’s behaviour or conduct.

‘Human Behavioural School’ believes that, unless these mental reactions of the workers are considered,
and their problems are either solved or at least attempts are made to fulfill their needs and demands
by the managers, effective and meaningful management is not possible.

Thus, according to this school, performance of managerial activities in consideration of the conduct or
behaviour of working personnel is an effective and decent management.

As a result of the experiments, observations and researches of many psychologists and sociologists, and
after the Hawthorne Experiment, ‘Human Behaviour Management Thought’ was evolved out. In this
respect, the contribution of Mary Parker Follet, a member of Human Behaviour School, is particularly

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mentionable. Other notable propagators of this school are A. F. Maslow. F. H. Herzberg, McGregor,
Keith Davis and Chrris Argrys.

The following other schools of management thought are also important in modern management:

5. System Approach School:

According to this school, management is a ‘system’ of co-ordination of some different factors forming
the parts of an overall management process, which are inter-related or inter-dependent. If the activities
related to production of an enterprise are performed, giving much importance to one of its factors or
parts, without considering its relationship and dependence on other factors, the desired result cannot
be obtained.

For example, men, machine, money and raw materials are the factors of production in management.
These elements are not isolated rather they are correlated and interdependent on one another. A
perfect assemblage of these factors results in production. Efficient workers cannot perform their
activities well with bad machines.

Good work cannot be expected of inefficient workers working with good machines. So, management is a
system to assemble the different correlated and inter-dependent factors that are parts of the overall
system. It must be viewed in the context of total environment, and the managers should take into
account the various characteristics and changes therein in managing the organisation.

The major contributors to this school are Kenneth, Boulding, Johnson, F. E. Kast, J. E. Rosenzwig, Katz
and Kahn, Forester and C. W. Churchman.

6. Decision Theory School:

The essence of management lies in decision-making. Whatever a manager does is the outcome of a
decision made by him from several alternatives available to him. The ‘Decision Theory School’ of
management thought concentrates its attention on decision-making and treats the various aspects of
decision-making as constituting the scope of the study of management.

Advocates of this school opine that decision-making is the most critical function of management and
any study of management should focus directly on the decision-making process. Rational approach to
decision-making is the basis of this school.

To perform the managerial functions properly and effectively, one has to learn the procedures,
techniques, causes and effects of taking decisions. Top level management authority has to take
decisions at the stage of planning and the managers in charge of execution of plans have to take
decisions at the stage of its implementation.

It becomes proper, meaningful and effective only if decisions are taken through a reasonable procedure.
Among the proponents of this theory, the names of Herbert Simon, Stephen Robins and Chester
Barnard are especially mentionable.

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7. Mathematical or Quantitative School:
This school views Management as a system of mathematical models and process. The exponents of this
school of thought believe that effective solution of the intricate problems of management of an
enterprise can be achieved through organising mathematical or quantitative model. Management or
organisation, planning or decision-making, as a logical process, can be expressed in terms of
mathematical symbols and relationships.

The contributors to this school of thought have been using mathematical and quantitative techniques in
developing the models of various kinds of decision and problems involved in managing the organisations
with a view to understanding them and also for finding out solutions to them.

This theory uses the techniques of Operation Research, Games Theory, Linear Programming, Queing
Theory and Model Building. As proponents of this theory the names of L. Ackoff, C. W Churchman,
Newman, Hicks and Joel Dean may be mentioned.

8. Contingency Approach School of Management:

According to this approach, management is a subject that is situational by nature. It has no hard and
fast principle and theory. In one way, this is an extension of the system approach. The basic idea of the
contingency approach is that there cannot be a particular management action which will be suitable for
all situations.

Study of management, according to this approach, lies in identifying the important variables in the
situation. An appropriate management action is one that is designed on the basis of external
environment and internal states and needs. Management may be effective and fruitful, if its principles
and procedures are appropriately followed and its techniques are intelligently applied according to the
circumstances.

Contingency theorists suggest that the systems approach does not adequately spell out the precise
relationship between the organisation and its environment. Contingency approach tries to fill this gap by
suggesting what should be done in response to an event in the environment. The supporters of this
theory are mainly, Lorsch and Lawrence, John Woodward, Fiedler and H. M. Carlisle.

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MANAGEMENT PROCESS
Management process is a process of setting goals, planning and/or controlling the organizing and
leading the execution of any type of activity, such as:

 A project (project management process) or

 A process (process management process, sometimes referred to as the process

performance measurement and management system).

An organization’s senior management is responsible for carrying out its management process. However,
this is not always the case for all management processes, for example, it is the responsibility of the
project manager to carry out a project management process.

Nature of Management Process

Management is a process which brings the scarce human and material resources together and
motivates people for the achievement of objectives of the organization. Management is not a onetime
act but an on-going series of interrelated activities. The sum total of these activities is known as
management process. It consists of a set of interrelated operations or functions necessary to achieve
desired organizational goals. A process is a systematic way of doing things. It is concerned with
conversion of inputs into outputs. An analysis of management process will enable us to know the
functions which managers perform.

FEATURES OF MANAGEMENT PROCESS

1. Social Process

The entire management process is regarded as a social process as the success of all organizational
efforts depends upon the willing co-operation of people. Managers guide, direct, influence and control
the actions of others to achieve stated goals. Even people outside the organization are influenced by
the actions of managers.

2. Continuous Process

The process of management is on-going and continuous. Managers continuously take up one or the
other function. Management cycle is repeated over and over again, each managerial function is viewed
as a sub-process of total management process.

3. Universal

Management functions are universal in the sense that a manager has to perform them irrespective of
the size and nature of the organization. Each manager performs the same functions regardless of his
rank or position in the organization. Even in a non-business organization managerial functions are the
same.

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 4. Iterative

Managerial functions are contained within each other the performance of the next function does not
start only when the earlier function is finished. Various functions are taken together. For example,
planning, organizing, directing and controlling may occur within staffing function. Similarly, organizing
may require planning, directing and controlling. So all functions can be thought of as sub-functions of
each other.

5. Composite

All managerial functions are composite and integrated. There cannot be any sequence which can be
strictly followed for performing various functions. The sequential concept may be true in a newly
started business where functions may follow a particular sequence but the same will not apply to a
going concern. Any function may be taken up first or many functions may be taken up at the same time.

Four Functions of Management Process: Planning, Organizing, Leading, Controlling

Functions of management is a systematic way of doing things. Management is a process to emphasize

that all managers, irrespective of their aptitude or skill, engage in some inter-related functions to
achieve their desired goals.

Planning, organizing, leading, and controlling are the 4 functions of management; which work as a
continuous process. First; managers must set a plan, then organize resources according to the plan, lead
employees to work towards the plan, and finally, control everything by monitoring and measuring the
effectiveness of the plan.

Management process/functions involve 4 basic activities

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Four Functions of Management Process
1. Planning and Decision Making: Determining Courses of Action

Looking ahead into the future and predict possible trends or occurrences which are likely to influence
the working situation is the most vital quality as well as the job of a manager.

Planning means setting an organization’s goal and deciding how best to achieve them. Planning is
decision making, regarding the goals and setting the future course of action from a set of alternatives to
reach them.

The plan helps to maintain managerial effectiveness as it works as a guide for the personnel for future
activities. Selecting goals as well as the paths to achieve them is what planning involves.

Planning involves selecting missions and objectives and the actions to achieve them, it requires decision-
making or choosing future courses of action from among alternatives.

In short, planning means determining what the organization’s position and the situation should be at
some time in the future and decide how best to bring about that situation.

Planning helps maintain managerial effectiveness by guiding future activities.

For a manager, planning and decision-making require an ability to foresee, to visualize, and to look
ahead purposefully.

2. Organizing: Coordinating Activities and Resources

Organizing can be defined as the process by which the established plans are moved closer to realization.

Once a manager set goals and develops plans, his next managerial function is organizing human
resource and other resources that are identified as necessary by the plan to reach the goal.

Organizing involves determining how activities and resources are to be assembled and coordinated.

The organization can also be defined as an intentionally formalized structure of positions or roles for
people to fill in an organization.

Organizing produces a structure of relationships in an organization and it is through these structured

relationships that plans are pursued.

Organizing, then, is that part of managing which involves: establishing an intentional structure of roles
for people to fill in the organization.

It is intentional in the sense of making sure that all the tasks necessary to accomplish goals are assigned
to people who can do the best.

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The purpose of an organization structure is to create an environment for the best human performance.

The structure must define the task to be done. The rules so established must also be designed in light of
the abilities and motivations of the people available.

Staffing is related to organizing and it involves filling and keeping filled, the positions in the organization
structure.

This can be done by determining the positions to be filled, identifying the requirement of manpower,
filling the vacancies and training employees so that the assigned tasks are accomplished effectively and
efficiently.

The managerial functions of promotion, demotion, discharge, dismissal, transfer, etc. Are also included
with the broad task “staffing.” staffing ensures the placement of the right person in the right position.

Organizing is deciding where decisions will be made, who will do what jobs and tasks, who will work for
whom, and how resources will assemble.

3. Leading: Managing, Motivating and Directing People

The third basic managerial function is leading it is the skills of influencing people for a particular purpose
or reason. Leading is considered to be the most important and challenging of all managerial activities.

Leading is influencing or prompting the member of the organization to work together with the interest
of the organization.

Creating a positive attitude towards the work and goals among the members of the organization is
called leading. It is required as it helps to serve the objective of effectiveness and efficiency by changing
the behavior of the employees.

Leading involves several deferment processes and activates.

The functions of direction, motivation, communication, and coordination are considered a part of the
leading processor system.

Coordinating is also essential in leading.

Most authors do not consider it a separate function of management.

Rather they regard coordinating as the essence of managership for achieving harmony among individual
efforts towards accomplishing group targets.

Motivating is an essential quality for leading. Motivating is the function of the management process of
influencing people’s behavior based on the knowledge of what cause and channel sustain human
behavior in a particular committed direction.

Efficient managers need to be effective leaders.

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Since leadership implies fellowship and people tend to follow those who offer a means of satisfying their
own needs, hopes and aspirations, understandably, leading involves motivation leadership styles and
approaches and communication.

4. Controlling: Monitoring and Evaluating Activities

Monitoring the organizational progress toward goal fulfillment is called controlling. Monitoring progress
is essential to ensure the achievement of organizational goals.

Controlling is measuring, comparing, finding deviation and correcting the organizational activities which
are performed for achieving the goals or objectives. Controlling consists of activities, like; measuring the
performance, comparing with the existing standard and finding the deviations, and correcting the
deviations.

Control activities generally relate to the measurement of achievement or results of actions that were
taken to attain the goal.

Some means of controlling, like the budget for expenses, inspection records, and the record of labor
hours lost, are generally familiar. Each measure also shows whether plans are working out.

If deviations persist, correction is indicated. Whenever results are found to differ from the planned
action, persons responsible are to be identified and necessary actions are to be taken to improve
performance.

Thus outcomes are controlled by controlling what people do. Controlling is the last but not the least
important management function process.

It is rightly said, “planning without controlling is useless”. In short, we can say the controlling enables
the accomplishment of the plan.

All the management functions of its process are inter-related and cannot be skipped.

The management process designs and maintains an environment in which personnel’s, working together
in groups, accomplish efficiently selected aims.

All managers carry out the main functions of management; planning, organizing, staffing, leading and
controlling. But depending on the skills and position on an organizational level, the time and labor spent
in each function will differ.

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