NOTES

PRINCIPLE OF MANAGEMENT
:
Muhammad Zeeshan(V!RUS)

Management
Definition:Management is the process of reaching organizational goals by
working with and through people and other organizational resources..

Characteristics:The following are the following three characteristics:

1. It is a process or series of continuing and related activities.
2. It involves and concentrates on reaching organizational goals.
3. It reaches these goals by working with and through peoples and
organizational resources.

Functions of Management:The four basic management functions that make up the management process are
described in the following sections:
1.
2.
3.
4.

Planning
Organizing
Leading/Influencing
Controlling

Planning:Planning involves choosing tasks that must be performed to attain organizational

goals, outlining how the tasks must be performed, and indicating when they should
be performed.
Planning activity focuses on attaining goals. Managers outline exactly what
organizations should do to be successful. Planning is concerned with the success of
the organization in the short term as well as in the long term.

Organizing:Organizing can be thought of as assigning the tasks developed in the planning

stages, to various individuals or groups within the organization. Organizing is to
create a mechanism to put plans into action.
People within the organization are given work assignments that contribute to the
companys goals. Tasks are organized so that the output of each individual
contributes to the success of departments, which, in turn, contributes to the success
of divisions, which ultimately contributes to the success of the organization.

Influencing/Leading:Inspiring and motivating workers to work hard to achieve organizational goals.

Controlling:Controlling is the following roles played by the manager:

1. Gather information that measures performance
2. Compare present performance to pre-established performance norms.
3. Determine the next action plan and modifications for meeting the desired
performance parameters.
Controlling is an ongoing process.

Terms of Management:There are two terms of Management:

1. Efficient Management
2. Effective Management

Efficient Management:It is that term of Management which achieves the organizational goals in a given
period of time by the usage of all the resources by working with and through the
people

Effective Management:It is a term of Management which achieves the

organizational goals before the given period of time with the usage of minimum
resources by working with and through the people.

Types of Management:There are three types of Management:

1. Top Managers.
2. Middle Managers.
3. Lower Managers.

Top managers:This is the type of management who do the following duties in

an organization:
1. They make the decisions to bring innovations, expansions of business etc.
2. To make the policy for the organization on which the organization will have
to run and to achieve its goals.
3. These managers monitor the business that is it going fair and have to point
out the errors and problems in evaluation.
Usually the Board of Directors and M.D are counted in Top Managers.

Middle Managers:These are the type of managers who have direct contact with
both the top managers as well as the lower manager. Thus we can say that they
form a chain between top managers and lower managers. The deputy director is
called Middle Manager. The middle manager does the following tasks:

1. The Middle managers take the policies from the Top managers and bring
them to the lower managers.
2. The Middle manager read the problems of the Lower manager and discusses
those problems with the Top managers.
3. The contribute from about 20 to 25% in policy making with the Top
manager

Lower Managers:These are the managers who are in direct contact with the
employees. They are also in contact with the middle manager. So we can consider
the Lower Manager as a chain between employees and Middle manager. The
supervisors are called as the Lower managers. The Lower manager does the
following tasks:
1. They take the problems of employees to the higher level (middle
managers).
2. They examine the employees efficiency, working etc.
3. They perform the daily activities of business given to them by the Middle
managers

Types of Roles:
There are three types of Roles which are performed by the Managers.
Roles refer to the types of action.
1. Decisional Roles:
The actions which are done by the top managers are
called decisional roles. In these actions the top managers make decisions.

2. Impersonal Roles:
The roles which are performed by the Middle Managers
are called Impersonal roles. In this type of roles the managers take the policy
from top managers and give the policy to the Lower managers.
3. Informational Roles:
The Roles which are performed by the lower
managers are called informational roles. In this type of roles the managers

gives information to the employees about the business tasks. The one who
performs the informational roles are called leaders or figurehead.

Managerial skills:Managers need three types of key skills to perform the duties and activities
associated with being aManager.
1. Technical skillsare skills that reflect both an understanding of and a
proficiency in aspecialized field. Technical skills include knowledge of and
proficiency in a certain specializedField, such as engineering, computers,
accounting, or manufacturing. These skills are moreimportant at lower levels
of management since these managers are dealing directly withEmployees
doing the organizations work.
2. Human skillsare associated with a managers ability to work well with
others both as aMember of a group and as a leader who gets things done
through others. Because managersDeal directly with people, this skill is
crucial! Managers with good human skills are able to getthe best out of their
people. They know how to communicate, motivate, lead, and
inspireenthusiasm and trust. These skills are equally important at all levels
of management.
3. Conceptual skills are skills related to the ability to visualize the
organization as a whole, discern interrelationships among organizational
parts, and understand how the organization fit into the wider context of the
industry, community, and world. Conceptual skills are the skills managers
must have to think and to conceptualize about abstract and complex
situations. Using these skills, managers must be able to see the organization
as a whole, understand the relationships among various submits, and
visualize how the organization fits into its broader environment.
Classical viewpoint is divided into three parts:
1. Scientific Management.
2. Bureaucratic Management.
3. Administrative Management.

Scientific Management:

Scientific management is defined as the use of the scientific method to define the
one best way for a job to be done.

Four principles of Scientific Management:1. Study each part of the task scientifically, and develop a best method to perform
it.
2. Carefully select workers and train them to perform a task using the scientifically
developed method.
3. Cooperate fully with workers to ensure they use the proper method.
4. Divide work and responsibility so management is responsible for planning work
methods using scientific principles and workers are responsible for executing the
work accordingly.

Bureaucratic Management:
This type of Management was explained by the Max weber and Henry Fayol in the
same year when the Taylor introduced the four principle of scientific Management.
This is the type of Management which order the middle and lower Manager to
perform the work in a proper way.

Administrative Management:It is a term used for those early-day contributors who developed and taught
principles to be used by managers, both individually and collectively, to improve
the performance of the overall functions of the organization.

Fayols fourteen principles of administrative Management:1. Division of work:

Specialization increases output by making employees more efficient.
2.Authority:
Managers must be able to give order. Authority gives them this right. Along with
authority, however, goes responsibility.
3. Discipline:
Employees must obey and respect the rules that govern the organization.
4. Unity of Command:
An employee should receive orders from one superior only.
5. Unity of direction:
The organization should have a single plan of action to guide managers and
workers.
6. Subordination of individual interests to the general interest:

The interests of any one employee or group of employees should not take
precedence over the interests of the organization as a whole.
7.Remuneration:
Workers must be paid a fair wage for their services.
8. Centralization:
This term refers to the degree to which subordinates are involved in decision
making.
9. Scalar Chain:
The line term refers to the degree to which subordinates are involved in decision
making.
10. Order:
People and materials should be in the right place at the right time.
11. Equity:
Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel:
Management should provide orderly personnel planning and ensure that
replacements are available to fill vacancies.
13. Initiative:
Employees who are allowed to originate and carry out plans will exert high levels
of effort.
14. Esprit de corps:
Promoting team spirit will build harmony and unity within the organization.

Behavioral Theory of Management

Behavioral Viewpoint:
Organizational behavior (OB) research has contributed much of what we know
about behavioral views of management, human resources management, motivation,
leadership, trust, teamwork, and conflict management.

Hugo Munsterbeg (1863-1916):

Heis considered to be the father of industrial psychology and is regarded by
students of psychology as an important figure as Frederick Taylor is by students of
management. Munsterberg attempted to develop practical applications of
psychology. He argued that psychologists could help industry in three major areas:

1. Finding ways to identify individuals best suited to particular jobs.

2. Identifying the psychological conditions for optimum efficiency.
3. Finding ways to influence individual behavior to be congruent with
managements objectives.

Mary Parker Follett (1868-1933):

She brought to management the perspectives of political science and social work.
She identified:
1. The importance of the functioning of groups is not just individuals, in
organization.
2. The principle of power with rather than Power over in managementemployee relations.
3. Conflict resolution through integration, i.e., finding a solution to a conflict
that would satisfy bothparties.
4. The achievement of integrative unity, whereby the organization operates as a
functional whole, withthe various interrelated parts working together
effectively to achieve organizational goals.

The Hawthorne Studies:

He gave four points about the organizational behavior Management:
1. No correlation was found between changes in lighting conditions and
individual work performance.
2. The Hawtrone effect refers to the possibility to individual single out for the
studies may improve their performance.
3. The 3rd set of studies centered on group production norms and individual
motivation.
4. The Hawtrone studies establish the impact that social aspect of the job has
no productivity.

Abraham Maslow (1908-1970):

He developed a theory of motivation that was
based on three assumptions about Human nature:
1. Human beings have needs that are never completely satisfied.
2. Human behavior is aimed at satisfying the needs that are yet unsatisfied
at a given point in time.
3. Needs fit into a somewhat predictable hierarchy ranging from basic,
lower-level needs to higher level needs.

Douglas McGregor (1906-1964):

He developed the Theory of XandTheory

of Y.

Theory of X:
Theory X, managerstend to assume that workers are lazy, need to be coerced, have
little ambition, and are focused on security needs. These managers then treat their
subordinates as if these assumptions were true.

Theory of Y:
Theory Y managerstend to assume that workers do not inherently dislike work, are
capable of self-control, have the capacity to be creative and innovative, and
generally have higher-level needs that are often not met on the job. These
managers then treat their subordinates as if these assumptions were true.

Environment:
The environment is defined as outside institutions and forces outside the
organization that potentially affect an organizations performance.
The following are the two types of environment:
1) External Environment
2) Internal Environment.

External environment:
Major forces outside the organization with potential to influence significantly a
product or Services likely success is called its external environment.
Types of External Environments:
The insights derived from systems theory have helped to highlight the importance
of a managed interaction between an organization and its external environment.
Two major divisions have been made in the external Environment:
1) The Mega Environment
2) The Task Environment

The Mega Environment:

The mega-environment,or general environment as it is sometimes called, is that
segment of the external environmentthat reflects the broad conditions and trends in
the societies within which an organizationoperates.

Major Elements of the Mega Environment:

1. Thetechnologicalelement of the mega-environment reflects the current state

of knowledge regarding the production of products and services.
2. The economic element of the mega-environment encompasses the systems
of producing,distributing, and consuming wealth.
3. The legal-political element of the mega-environment includes the legal and
governmental systems within which an organization must function.
4. The socio-cultural element of the mega-environment includes the attitudes,
values, norms, beliefs, behaviors, and associated demographic trends that are
characteristic of a given geographic area.
5. The international element of the mega-environment includes the
developments in countries outside an organizations home country that have
the potential impact to the organization. International factors far beyond the
direct influence of a particular organization can have profound effects on its
ability to operate successfully.

Task Environment:
The task environment is that segment of the external environment made up of
specific outside elements(usually organizations) with which an organization
interfaces in the course of conducting its business.

Elements of the Task Environment:

1. An organizations customers and clients are those individuals and
organizations that purchase its products and/or services.
2. An organizations competitors are other organizations that either offers of
have a high potential of offering rival products or services.
3. An organizations suppliers are those individual organizations that supply
the resources (such as raw materials, products, or services) the organization
needs to conduct its operations.
4. An organizations labor supply consists of those individuals who are
potentially employable by the organization.
5. Various government agencies provide services and monitor compliance
with laws and regulations at local (e.g., consumer affairs), state or regional
(e.g., health department), and national (e.g., CBR)levels.

Organizational Culture
Organizational culture is a system of shared meaning and beliefs within an
organization that determines, in large degree, how employees act. This definition
implies several things.
The organizational culture has the following seven dimensions:

1. Innovation and risk taking (the degree to which employees are encouraged
to be innovative and take risks)
2. Attention to detail (the degree to which employees are expected to exhibit
precision, analysis, and attention to detail)
3. Outcome orientation (the degree to which managers focus on results or
outcomes rather than on the techniques and processes used to achieve those
outcomes)
4. People orientation (the degree to which management decisions take into
consideration the effect on people within the organization).
5. Team orientation (the degree to which work activities are organized around
teams rather than individuals).
6. Aggressiveness (the degree to which people are aggressive and competitive
rather than easygoing and cooperative).
7. Stability(the degree to which organizational activities emphasize
maintaining the status quo in contrast to growth).

Social Responsibility:
The social responsibility refers to protect and develop the
standard of living of society with the earning of profit. But the time has been
changed now. In this era there are two views of social responsibility.
1. Classical view.
2. Social economic view.

Classical view:
Classical view is the view that management only social
responsibility is to maximize the profit.

Socio-economic view:
The socio economic view is the view that managements
social responsibility goes well beyond the making of profits to include protecting
and improving the societys welfare.
There are ten major arguments for the social responsibility, they include the
following:
1. Public expectations.
2. Long-run profit.
3. Ethical obligation.
4. Public image.
5. Better environment.
6. Discouragement of further government obligation.
7. Balance of power and responsibility.
8. Stock holder interest.

9. Possession of resources.
10.Superiority of prevention over cures.
While there are major six arguments against the social responsibility:
1. Violation of profit maximization.
2. Dilution of profit.
3. Costs.
4. Too much power.
5. Lack of skills.
6. Lack of accountability.

Corporate Social Responsibility (CSR):

CSR is that part of a business
organization which perform the non-profit activities for the development of
society.

Managerial Ethics:
Ethics refers to the rule and principle that define the right and
wrong conduct.
There are ethical dimensions to managerial decisions and actions:
1. Utilitarian view of ethics.
2. Right view of ethics.
3. Theory of Justice View of ethics.
4. Integrative social contract theory.

Planning:
Planning is the process/function that determine in advance that what should be
done.

Nature of Planning:
1. Planning is a mental activity. Planning is not a simpleprocess. It is an
intellectual exercise and involves thinkingand forethought on the part of the
manager.
2. Planning is forward looking. It is futuristic in nature since it is performed to
accomplish some objectives in the future.
3. Planning is the primary function. The planning logically precedes over the
all other managerial functions.
4. Planning is based on facts.

Types of planning:

There are three types of planning:

1. Group planning.
2. Divisional or Functional planning.
3. Strategic Planning.
i.
Group planning:
It refers to the planning for the specific groups or
sections within a department or division.
ii.

Divisional/functional planning:

Such planning includes the plan

formulated for various department of an enterprise.
iii. Strategic plan:
It is made by the top level managers to improve overall
conditions planning for a company as a whole is known as strategic or corporate
planning.

Planning process:
1.
2.
3.
4.
5.
6.

Define the task or objective.

Identify the resources.
Consider the alternatives.
Create the planning.
Work on the planning.
Evaluate.

Limitations of planning:
1.
2.
3.
4.
5.
6.

Lack of accurate information.

Time and cost.
Resistance to change.
Lack of ability to plan.
False sense of security.
Environment constraints.

Essentials of good plan:

1.
2.
3.
4.
5.
6.
7.

Clearly defined objectives.

It should be comprehensive.
It should be proved through proper analysis.
There should be flexibility.
It must use all the available resources.
It should be free from social factors.
There should be proper co-ordination.

ORGANIZING

The following are the main elements of organizational structure.

1. Job design:
Job designis the specification of task activities, usually repeated on a regular basis,
associated with each particular job.

2. Work specialization:
Work specializationis the degree to which the work necessary to achieve organizational
goals is broken down into various jobs. In Work specializationthe tasks in an organization
are divided into separate jobs. Another term for this is division of labor.

3. Job simplification:
Job simplification is the process of configuring or designing jobs so that job holders
have only a small number of narrow, repetitive, activities to perform.

Departmentalization
Definition:
Departmentalization is the clustering of individuals into units and units into departments and
larger units in order to facilitate achieving organizational goals.
There are four types of departmentalization:

1) Functional structure:
Functional structure is a type of departmentalization in which positions are grouped according to
their main functional (or specialized) area.
The following aremain advantages of functional structure.

Advantages:
a.
b.
c.
d.
e.
f.

In-depth development of expertise is encouraged.

Employees have clear career paths within their function.
Resources are used more efficiently.
Economies of scale may be possible because of specialized people and equipment.
Intradepartmental coordination is facilitated.
Specialized technical competencies may be developed and may constitute a
competitiveadvantage.
The functional structure has also some disadvantages:

Disadvantages:

a. Response time on multifunctional problems may be slow due to coordination

problems.
b. Major issues and conflicts between departments may have to be resolved by top
management, with resultant delays.
c. Bottlenecks due to sequential tasks.
d. Over specialization may lead to a restricted view of the departments and the
organizations needs.
e. Performance may be difficult to measure because several functions are responsible for
organizational results.
f. Managers may be trained too narrowly in a single department.
2) Divisional structure:
It is a type of departmentalization in which positions are grouped according to similarity of
products, services, or markets.
The following are the main advantages of divisional structure:

Advantages:
a.
b.
c.
d.
e.
f.

Divisions can react quickly to changes in the environment.

Coordination across functions is simplified.
Each division can focus upon serving its customers.
The divisions goals can be emphasized.
Performance is more easily measured.
Managers can be trained in general management skills.

Disadvantages:
a. Duplication of resources in each division often occurs.
b. In-depth expertise may be sacrificed.
c. Divisions may compete for limited resources.
d. Expertise across divisions may not be shared.
e. Innovations may be restricted to single divisions.
f. Divisional goals may take priority over overall organizational goals.

Hybrid structure:
Hybrid structure is a form of departmentalization that adopts parts of both functional and
divisional structures at the same level of management.
Hybrid structures are adopted by large organizations to gain the advantages of functional and
divisional structures.
Hybrid structures are adopted by large organizations to gain the advantages of functional and
divisional structures.
a. Functional departments are created to take advantage of resource utilization
efficiencies,economies of scale, or in-depth expertise.

b. Divisional departments are usually created to benefit from a stronger focus on products,
services, or markets.

Matrix structure:
A matrix structure is a type of departmentalization that superimposes a
horizontal set of divisional reporting relationships onto a hierarchical functional structure.
1. An organization with a matrix structure has a functional and a divisional structure at the
same time.
2. Employees who work in a matrix organization report to two bosses, thus, the unity-of
command principle is violated.
The following are the main advantages of matrix structure:

Advantages:
a. Decision making can be decentralized.
b. Horizontal coordination is strengthened.
c. Environmental monitoring is more improved.
d. Responses to environmental changes are quickly made.
While the matrix structure has also some disadvantages.

Disadvantages:
a. Administrative costs are increased.
b. Possibilities of conflict are increased.
c. All decisions may become group decisions, leading to gross inefficiency.

Job Rotation:
Job rotationis the practice of periodically shifting workers through a set of jobs in a planned
sequence.

Job enlargement:
Job enlargement is the allocation of a wider variety of similar tasks to a job in order to make it
more challenging.

Job enrichment:
Job enrichment, pioneered by Frederick Hertzberg, is the process of upgrading the job-task mix
in order to increase significantly the potential for growth, achievement, responsibility, and
recognition.

Leading and Leadership

Leading:
Leading can be defined as guiding the activities of organization members in the direction that
helps the organization move towards the fulfillment of the goals.

Leadership:
The ability of a company's management to make sound decisions and inspire others to perform
well is called leadership.
The following are the some characteristics leadership:

Characteristics:
1. Experience of leadership.

2. Co-operation.
3. Properly guide.
4. Bolder/confidence.
5. Motivator.
6. Qualified.
7. Responsibility.
8. Decision making.
9. Innovator.
Motivation:

Motivation is the willingness to exert high level of effort to reach organizational goals.
Conditioned by the efforts ability to satisfy some individuals need.
Effort is measured by the intensity or drive.
Hence motivation is the force that energizes behavior, gives direction to behavior, and
underlies the tendency to persist.
There are two types of motivations:
1. Intrinsic motivation.
2. Extrinsic motivation.

Intrinsic motivation:
Intrinsic motivation is defined as the doing of an activity for its inherent
satisfactions rather than for some separable consequence.

Extrinsic motivation:
Extrinsic motivation is a construct that pertains whenever an activity is done in order to attain
some separable outcome.

Maslow Need Theory:

One of the most widely mentioned theories of motivation is the hierarchy of need theory put
forth by Abraham Maslow, one of the most widely known theories of motivation.
Maslows hierarchy of needs from the most basic to the highest:

Physiological needs:
Theseare the basic need and include needs for food, water, and shelter. Maslow took the
position that until these needs are satisfied to the degree necessary to maintain life, other
needs will not motivate people.

2 Safety needs:
It pertains to the desire to be safe, secure and free from threats to our
existence. These needs can be satisfied in the workplace by job continuity, or retirement
benefits.

3 Belongingness needs:

Itinvolves the desire to affiliate with and be accepted by others.

These needs are satisfied for most people by family and community relationship outside
of work and friendship on the job.

4 Esteem needs:
Theseare related to the two-pronged desire to have a positive self-image
and to have our contributions valued and appreciated by others. According to Maslow,
once people begin to satisfy their need to belong, they tend to want to be held in esteem
both by themselves and by others this kind of need produces such satisfactions as power,
prestige, status and self-confidence.

5 Self-actualization needs:
Maslow regards this as the highest need in his hierarchy. It is
the desire to become what one is capable of becoming- to maximize ones potential and
to accomplish something.

Douglas McGregor:
1
2

This theory was developed by Douglas McGregor and describes two distinct views of
human nature.
Theory X:
Itwas the assumption that employees dislike work, are lazy, seek to avoid
responsibility, and must be coerced to perform.
Theory Y:
Itwas the assumption that employees are creative, seek
responsibility, and can exercise

self-direction.

Motivation Hygiene Theory:

This is the theory developed by Frederick Herzberg that
suggests that intrinsic factors are related to job satisfaction and motivation, and extrinsic
factors are associated with job dissatisfaction. The basis of Herzbergs theory is that he
believed that the opposite of satisfaction was not dissatisfaction. Removing dissatisfying
characteristics from a job would not necessarily make the job satisfying. Frederick
Herzbergs two-factor theory states that there are only two categories of needs.
Hygiene factors are factors that eliminate dissatisfaction.

Hygiene factors:
1
2
3
4

Pay.
Working conditions.
Supervisors.
Company policies.
5 Benefits.

ERG theory of needs :( existence, relatedness, growth)

Clayton Alderfers ERG theory combines Maslows five needs into three need levels: existence,
relatedness and growth.

1 Existence needs:

Itinclude the various forms of material and physiological desires,

such as food and water, as well as such work-related forms as pay, fringe benefits and
physical working conditions.

2 Relatedness needs:
It addresses our relationships with significant others, such as
families, friendship groups, work groups and professional groups.

3 Growth needs:
It impels creativity and innovation, along with the desire to have a
productive impact on our surroundings.