Principles of Scientific Management by Taylor:

F.W. Taylor or Fredrick Winslow Taylor, also known as the ‘Father of

scientific management’ proved with his practical theories that a scientific
method can be implemented to management. Taylor gave much
concentration on the supervisory level of management and performance
of managers and workers at an operational level. Let’s discuss in detail
the five principles of management by F.W Taylor.

1. Science, not the Rule of Thumb-

This rule focuses on increasing the efficiency of an organisation through
scientific analysis of work and not with the ‘Rule of Thumb’ method. Taylor
believed that even a small activity like loading paper sheets into boxcars
can be planned scientifically. This will save time and also human energy.
This decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken
according to the manager’s personal judgement.

2. Harmony, Not Discord-

Taylor indicated and believed that the relationship between the workers
and management should be cordial and completely harmonious.
Difference between the two will never be beneficial to either side.
Management and workers should acknowledge and understand each
other’s importance. Taylor also suggested the mental revolution for both
management and workers to achieve total harmony.
3. Mental Revolution-
This technique involves a shift of attitude of management and workers
towards each other. Both should understand the value of each other and
work with full participation and cooperation. The aim of both should be to
improve and boost the profits of the organisation. Mental Revolution
demands a complete change in the outlook of both the workers and
management; both should have a sense of togetherness.

4. Cooperation, not Individualism-

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration
between workers and the management. Managers and workers should
have mutual cooperation and confidence and a sense of goodwill. The
main purpose is to substitute internal competition with cooperation.

5. Development of Every Person to his Greatest Efficiency-

The effectiveness of a company also relies on the abilities and skills of its
employees. Thus, implementing training, learning best practices and
technology, is the scientific approach to brush up the employee skill. To
Dr Swathi Bhat P Organizational Behaviour
Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
assure that the training is given to the right employee, the right steps
should be taken at the time of selection and recruiting candidates based
on a scientific selection.

Michael Porter – Five Force Analysis

Porter's Five Forces is a model that identifies and analyzes five
competitive forces that shape every industry and helps determine an
industry's weaknesses and strengths. Five Forces analysis is frequently
used to identify an industry's structure to determine corporate strategy.

Porter's model can be applied to any segment of the economy to

understand the level of competition within the industry and enhance a
company's long-term profitability. The Five Forces model is named after
Harvard Business School professor, Michael E. Porter.

Porter's 5 forces are:

1. Competition in the industry

2. Potential of new entrants into the industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

The Five Forces model is widely used to analyze the industry

structure of a company as well as its corporate strategy. Porter
identified five undeniable forces that play a part in shaping every
market and industry in the world, with some caveats. The Five
Forces are frequently used to measure competition intensity,
attractiveness, and profitability of an industry or market.

1. Competition in the Industry

The first of the Five Forces refers to the number of competitors and their
ability to undercut a company. The larger the number of competitors,
along with the number of equivalent products and services they offer, the
lesser the power of a company.

Suppliers and buyers seek out a company's competition if they are able
to offer a better deal or lower prices. Conversely, when competitive
rivalry is low, a company has greater power to charge higher prices and
set the terms of deals to achieve higher sales and profits.

2. Potential of New Entrants Into an Industry

Dr Swathi Bhat P Organizational Behaviour
Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
A company's power is also affected by the force of new entrants into its
market. The less time and money it costs for a competitor to enter a
company's market and be an effective competitor, the more an
established company's position could be significantly weakened.

An industry with strong barriers to entry is ideal for existing companies

within that industry since the company would be able to charge higher
prices and negotiate better terms.

3. Power of Suppliers

The next factor in the Porter model addresses how easily suppliers can
drive up the cost of inputs. It is affected by the number of suppliers of key
inputs of a good or service, how unique these inputs are, and how much it
would cost a company to switch to another supplier. The fewer suppliers
to an industry, the more a company would depend on a supplier.

As a result, the supplier has more power and can drive up input costs and
push for other advantages in trade. On the other hand, when there are
many suppliers or low switching costs between rival suppliers, a company
can keep its input costs lower and enhance its profits.

4. Power of Customers

The ability that customers have to drive prices lower or their level of
power is one of the Five Forces. It is affected by how many buyers or
customers a company has, how significant each customer is, and how
much it would cost a company to find new customers or markets for its
output.

A smaller and more powerful client base means that each customer has
more power to negotiate for lower prices and better deals. A company
that has many, smaller, independent customers will have an easier time
charging higher prices to increase profitability.

5. Threat of Substitutes

The last of the Five Forces focuses on substitutes. Substitute goods or

services that can be used in place of a company's products or services
pose a threat. Companies that produce

prices and lock in favorable terms. When close substitutes are available,
customers will have the option to forgo buying a company's product, and
a company's power can be weakened.

Understanding Porter's Five Forces and how they apply to an industry, can
enable a company to adjust its business strategy to better use its
resources to generate higher earnings for its investors.
Dr Swathi Bhat P Organizational Behaviour
Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
Human Resources Approach

This approach recognizes the fact that people are the central resource in
any organization and that they should be developed towards higher levels
of competency, creativity, and fulfillment.

People thus contribute to the success of the organization.

The human resources approach is also called as the supportive approach

in the sense that the manager’s role changes from control of employee to
active support of their growth and performance.

The supportive approach contrasts with the traditional management

approach.

In the traditional approach, managers decided what employees should do

and closely monitored their performance to ensure task accomplishment.

In the human resources approach, the role of managers changes from

structuring and controlling to supporting.

Contingency Approach

Dr Swathi Bhat P Organizational Behaviour

Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
The contingency approach (sometimes called the situational approach) is
based on the premise that methods or behaviors which work effectively in
One situation fail in another.

For example; Organization Development (OD) programs, way work

brilliantly in one situation but fail miserably in another situation.

Results differ because situations differ, the manager’s task, therefore, is

to identify which method will, in a particular situation, under particular
circumstances, and at a particular time, best contribute to the attainment
of organization’s goals.

The strength of the contingency approach lies in the fact it encourages

analysis of each situation prior to action while at the same time
discourages the habitual practice of universal assumptions about methods
and people.

The contingency approach is also more interdisciplinary, more system –

oriented and more research-oriented titan any other approach.

Productivity Approach

Productivity which is the ratio of output to input is a measure of an

organization’s effectiveness. It also reveals the manager’s efficiency in
optimizing resource utilization.

The higher the numerical value of this ratio, the greater the efficiency.

Productivity is generally measured in terms of economic inputs and

outputs, but human and social inputs and outputs also are important.

For example, if better organizational behavior can improve job

satisfaction, a human output or benefit occurs.

In the same manner, when employee development programs lead to

better citizens in a community, a valuable social output occurs.

Organizational behavior decisions typically involve human, social, and/or

economic issues, and so productivity usually a significant part of these
decisions is recognized and discusses extensively in the literature on OB.

Systems Approach

The Systems Approach to OB views the organization as a united,

purposeful system composed of interrelated parts.

This approach gives managers a way of looking at the organization as a

whole, whole, person, whole group, and the whole social system.
Dr Swathi Bhat P Organizational Behaviour
Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
In so doing, the systems approach tells us that the activity of any segment
of an organization affects, in varying degrees the activity of every other
segment. A systems view should be the concern of every person in an
organization.

The clerk at a service counter, the machinist, and the manager all work
with the people and thereby influence the behavioral quality of life in an
organization and its inputs.

Managers, however, tend to have a larger responsibility, because they are

the ones who make the majority are people oriented.

The role of managers, then, is to use organizational behavior to help build

an organizational culture in which talents are utilized and further
developed, people are motivated, teams become productive,
organizations achieve their goals and society reaps the reward.

Inter-Disciplinary Approach

Organizational behavior is an integration of all other social sciences and

disciplines such as psychology, sociology, organizational theories etc.

They all are interdependent and influence each other. The man is studied
as a whole and therefore, all disciplines concerning man are integrated.

What is Management by Objectives (MBO)?

Management by Objectives (MBO) is a strategic approach to enhance the

performance of an organization. It is a process where the goals of the
organization are defined and conveyed by the management to the
members of the organization with the intention to achieve each objective.

An important step in the MBO approach is the monitoring and evaluation

of the performance and progress of each employee against the
established objectives. Ideally, if the employees themselves are involved
in setting goals and deciding their course of action, they are more likely to
fulfill their obligations.

Steps in Management by Objectives Process

1. Define organization goals

Setting objectives is not only critical to the success of any company, but it
also serves a variety of purposes. It needs to include several different
types of managers in setting goals. The objectives set by the supervisors
are provisional, based on an interpretation and evaluation of what the
company can and should achieve within a specified time.

Dr Swathi Bhat P Organizational Behaviour

Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
2. Define employee objectives

Once the employees are briefed about the general objectives, plan, and
the strategies to follow, the managers can start working with their
subordinates on establishing their personal objectives. This will be a one-
on-one discussion where the subordinates will let the managers know
about their targets and which goals they can accomplish within a specific
time and with what resources. They can then share some tentative
thoughts about which goals the organization or department can find
feasible.

3. Continuous monitoring performance and progress

Though the management by objectives approach is necessary for

increasing the effectiveness of managers, it is equally essential for
monitoring the performance and progress of each employee in the
organization.

4. Performance evaluation

Within the MBO framework, the performance review is achieved by the

participation of the managers concerned.

5. Providing feedback

In the management by objectives approach, the most essential step is the

continuous feedback on the results and objectives, as it enables the
employees to track and make corrections to their actions. The ongoing
feedback is complemented by frequent formal evaluation meetings in
which superiors and subordinates may discuss progress towards
objectives, leading to more feedback.

6. Performance appraisal

Performance reviews are a routine review of the success of employees

within MBO organizations.

Dr Swathi Bhat P Organizational Behaviour

Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
Benefits of Management by Objectives

 Management by objectives helps employees appreciate their on-the-

job roles and responsibilities.
 The Key Result Areas (KRAs) planned are specific to each employee,
depending on their interest, educational qualification, and
specialization.
 The MBO approach usually results in better teamwork and
communication.
 It provides the employees with a clear understanding of what is
expected of them. The supervisors set goals for every member of
the team, and every employee is provided with a list of unique
tasks.
 Every employee is assigned unique goals. Hence, each employee
feels indispensable to the organization and eventually develops a
sense of loyalty to the organization.
 Managers help ensure that subordinates’ goals are related to the
objectives of the organization.

Limitations of Management by Objectives

 Management by objectives often ignores the organization’s existing

ethos and working conditions.
 More emphasis is given on goals and targets. The managers put
constant pressure on the employees to accomplish their goals and
forget about the use of MBO for involvement, willingness to
contribute, and growth of management.
 The managers sometimes over-emphasize the target setting, as
compared to operational issues, as a generator of success.
 The MBO approach does not emphasize the significance of the
context wherein the goals are set. The context encompasses
Dr Swathi Bhat P Organizational Behaviour
Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)
 everything from resource availability and efficiency to relative buy-
in from the leadership and stakeholders.
 Finally, there is a tendency for many managers to see management
by objectives as a total system that can handle all management
issues once installed. The overdependence may impose problems
on the MBO system that it is not prepared to tackle, and that
frustrates any potentially positive effects on the issues it is
supposed to deal with.

Dr Swathi Bhat P Organizational Behaviour

Assistant Professor I B.Com, Unit 1
St Aloysius (Deemed To Be University)