Paper: 05, Principles of Management

Module: 01, Management: The Conceptual Framework

Prof. S P Bansal
Principal Investigator Vice Chancellor
Maharaja Agrasen University, Baddi

Prof YoginderVerma
Co-Principal Investigator Pro–Vice Chancellor
Central University of Himachal Pradesh. Kangra. H.P.

Prof. Tejinder Sharma

Paper Coordinator Department of Commerce
Krukshetra University, Kurukshetra

Content Writer Dr. Niti Goyal

Assistant Professor,
IGN College, Ladwa
 Items Description of Module
Subject Name Management
Paper Name Principles of Management
Module Title Management: The Conceptual Framework
Module Id Module no.-1
Pre- Requisites Basic knowledge of what management is.
Objectives To study the basic concepts of Management
Keywords Management, Features, Process and Functions

QUADRANT-I

1. Module 1: Management: The Conceptual Framework

2. Learning Outcome
3. Meaning & Definition of management
4. Functions of Management
5. Features of Management
6. Importance of management
7. Levels of Management
8. Management vs. Administration
9. Summary

Learning Outcome:
After completing this module the students will be able to:
 Understand the meaning of management.
 Understand the nature & features of management
 Define the process & functions of the business management
 Importance of management
 Levels of management

Introduction to Management:

According to Theo Heimann, Management has three different meanings, viz.,

Management as a Noun: refers to a Group of Managers.

Management as a Process: refers to the Functions of Management i.e. Planning, Organising,

Directing, Controlling, etc.

Management as a Discipline: refers to the Subject of Management.

Management is indispensable wherever human efforts are to be undertaken collectively to

achieve certain objective. Management is a vital aspect in any organized group activity, be it
business activity or any other activity Management integrates the human and the physical
resources for efficient achievement of objectives. Without the leadership provided by
management, the resources of production remain resources only.
It is required not only in business enterprises but to all kinds of organizations where wherever
resources are deployed to achieve some objectives. It is the specific organ of all kinds of
organizations since every organisation need to utilize their limited resources most efficiently
and effectively for the achievement of their goals .
Without management there will be chaos, wastage of time, effort and resources. Although
management is pervasive, our discussion is confined to managing a business enterprise. The
quality of management has a major implication on the growth and prosperity of the
enterprise. Management is the dynamic and gives life to every organization. The aim of
management is to accomplish desired goals. To achieve goals, one need to deploy resources.
Management aims at judicious use of these resources. In today's competitive world, the
quality management lays the foundation of the enterprise.

Figure 1: CONCEPTUAL FRAMEWORK OF MANAGEMENT

The above figure gives a conceptual framework of management. Management is about

making decisions regarding various resources such as human, capital and physical
resources for the accomplishment of desired objectives. It aims at judicious use of these
resources to achieve the desired result.

Management Definitions
It is very difficult to give a precise definition of the term 'management'. There is no
universally accepted definition of management. Different scholars from different
disciplines have their own interpretation of word management. Some of the leading
definitions of Management given by various experts are:

 Henri Fayol, who is known as the father of modern management defined

management as, "Management is to forecast, to plan, to organize, to command, to
coordinate and control activities of others."
 F.W. Taylor, father of scientific management, “Management is an art of knowing
what is to be done and seeing that it is done in the best possible manner."

Scientific management is defined as the use of the scientific method to determine the “one
best way” for a job to be done.
  "Management is the process by which co-operative group directs actions towards
common goals.” by Joseph Massie
 Henry Sisk defines "Management is the coordination of all resources through the
process of planning, organizing, directing and controlling in order to attain stated
goals."

 Tho Harmann & William Scott defines management as , “Social and technical process
that utilises resources, influences human action and facilitates changes in order to
accomplish an organization's goals."

 According to Rovert Kreitner "Management is a process of working with and through

others to achieve organizational objectives in a changing environment, central to this
purpose is the effective and efficient use of limited resources."

 According to Harold Koontz,"Management is the art of getting things done through

and with people in formally organised groups."
 According to Peter Drucker,"Management is a multi-purpose organ that manages
business and manages managers and manages workers and work."
 Mary Parker Follett defines management as the "art of getting things done through
people". A manager is one who contributes to the organization’s goals indirectly by
directing the efforts of others – not by performing the task himself. On the other hand,
a person who is not a manager makes his contribution to the organization’s goals
directly by performing the task himself.
Various definitions of management cited above are different but still have something in
common. Management is carried out in order to achieve some objective by putting together
the physical and human resources.

Management functions or Process

Different experts have given definitions of the various functions of management differently.
Henri Fayol has given POSDCORB as the functions of management: POSDCORD stands
for Planning, Organizing, Staffing, Directing, Coordinating, Reporting & Budgeting
.According to Luther Gulick, Decision Making, Organizing, Staffing, Planning, Controlling,
Communicating & Directing are the functions of Management. Warren Haynes & Joseph
Massie classify management functions into Planning, Organizing, Staffing, Directing &
Controlling. Koontz and O'Donnell divide these functions into planning organizing, staffing,
directing and controlling.

The basic functions or process of management have been elaborated below:

Figure 2 : Management Functions or The Process Of Management

1. Planning
Planning is the most fundamental of all management functions. first of all the objective of
the business are determined after that the plans are made to achieve those objectives.
Planning is deciding in advance, what is to be done, how is to be done, and where it is to be
done, who will do it and how result are to be evaluated.

2. Organizing

Organising provides structure to the organisation. Organizing refers to the identifying the
activities to be carried out, grouping similar activities and establishing relationship among the
activities in terms of superior subordinate relationships. It also establishes the authority and
responsibility relationship among the activities.

3. Staffing

Staffing refers to putting the right person at right place, It provides competent people to fill
various positions created out of the organisational structure. Staffing should be done very
carefully. If the right person is not employed at right place, all the efforts go haywire.

4. Directing

Directing aims at guiding the activities towards achieving a common goal. Directing leads to
action. Managers get the work done by providing the right and a uniform direction to work.
The above mentioned functions of management create preconditions, while directing makes
use of these preconditions to achieve the desired result. A manager directs the employees
through communication (the exchange of ideas , understanding and information from one
person to other person.), leadership (guiding & influencing the work) and motivation
(encouraging the employees to give their best to the organization)

5. Controlling
Controlling is the process of ensuring that the actual outcome is consistent with the planned
objectives. It involves measuring and comparing the actual outcome with the plans and
finding the deviations and if deviations are found, taking corrective measures.

Figure 3: Control Process

FEATURES OF MANAGEMENT.

1. Continuous Process:

Management is a circular process which never ends. It is concerned with constantly

identifying the problem and solving them by taking adequate steps. The process of
management starts with planning and ends with controlling. New plans need to de designed
as per the needs. If the result are not achieved as per the plans, plans are revised again. This
way, management becomes a continuous and never ending process. It lasts till the
organisation lasts.

2. Pervasive

Management is required everywhere. Management is a vital aspect in any organized group

activity. Management is required not only for running a business but for any organised group
activity be it a educational, charitable and religious institutions etc.

3. Result oriented

The goal of management is to achieve the desired objectives. Management makes group
efforts more effective. The group as a whole cannot realize its objectives unless and until
there is mutual co-operation and co-ordination among the members of the group.
Management creates team work and team spirit in an organization by developing a sound
organization structure. It brings the human and material resources together and motivates the
people for the achievement of the goals of the organization.

5. Integrative Force
Management aims at integrating the human resources with physical resources. Human efforts
are directed towards the effective use of these resources so that the desired result can be
achieved in the best possible way. Managers also seek to harmonize the individuals' goals
with the organizational goals for the smooth working of the organization.

6. Multidisciplinary

Management deals with both human and physical resources. To manage people is a much
difficult task than managing physical resources. A manager needs to be good at
understanding the emotions, feelings, aspirations, etc. So, management is a very complex job.
Therefore, management uses knowledge from many different subjects such Psychology,
Sociology, as Economics, Information Technology, etc. Therefore, it is multidisciplinary in
nature.

7. Flexible

Management aims at achieving the objectives in the future. Various plans are made to
achieve those objectives. However, future is uncertain. So, a manager needs to be flexible in
his approach and enough scope should be there to incorporate the necessary changes.

7. Owners and Managers may be different

In small organisations, generally the owner manages the business himself. But the need of
management arises when there are so many people to do the work. In large organisations,
generally, management is separate from ownership. The managers are highly qualified
professionals who are hired from outside.

8. Both an art and science

An Effective Management is blend of both science & art. Science provides the principles and
the art is the application of these principles.
As science, there is a specialised field of knowledge that exists. Over the year the principles
of management have been identified. Fredrick W. Taylor made significant contribution to
the development of management science. He propounded the fundamental principles of
scientific management . Even though management is a science as it possess a systematized
body of knowledge which has evolved through observation and repeated experimentation, it
is not an exact science like natural sciences since management deals with the behaviour of
people in organization. Behaviour of people is much more complex and variable and it is
difficult to do the controlled experiments. As a result, management principles cannot be
applied directly as a rule of thumb but serve as a guide in decision making & problem
solving. The application of these principles depends on the ability and the creativity of the
manager. There is no hard and fast rule for the application of these principles. Different
situations arise which require the application of the specialised field of knowledge, but the
way these principles are applied distinguishes a successful manager from an unsuccessful
one. Thus management is both a science and an art.
Developments in the field of the knowledge of management help in the improvement of its
practice; and improvements in the practice of management spur further research resulting in
further development of management principles.

9. Management is Intangible

Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realised by
its results. Good management leads to the successful enterprise but an unsuccessful
management leads to its failure.

10. Dynamic

Management is dynamic in nature. That is, management is creative and innovative. An

organisation will survive and succeed only if it is dynamic. It must continuously bring in new
and creative ideas, new products, new product features, new ads, new marketing techniques,
etc.

Importance of Management
Management is concerned with acquiring maximum prosperity with a minimum effort.
Management is essential wherever group efforts are required to be directed towards
achievement of common goals. It is said that, anything minus management amounts to
nothing. The following points further highlight the significance of management:

1. Achieving the objectives: The ultimate goal of management is to achieve the

objectives of the enterprise. It adds effectiveness to the efforts of the group of persons
involved in achieving those objectives.

2. Optimum utilization of resources: Management aims at optimum utilisation of the

physical and human resources. The available resources of production are put to use in
such a way that all sort of wastage and inefficiencies are reduced to a minimum.
Workers are motivated to put in their best performance by the inspiring leadership.
Through the optimum use of available resources, management accelerates the process
of economic growth.

3. Reduces cost: In the modern era of intense competition, only those concerns can
survive in the market, which can produce goods of better quality at the minimum cost.
A study of the principles of management helps in knowing certain techniques used for
reducing costs. Management by decreasing costs increases its profits and thus
provides opportunities for future growth and development

4. Establishes a sound organisation: Efficient management creates a sound

organisation. It not only establishes a sound organisational structure but also employs
the right type of people at right place to carry further the operations of the enterprise.
 5. Change and growth: A business enterprise operates in a constantly changing
environment. Changes in business environment create uncertainties and risk and also
produce opportunities for growth. Sound management makes effective SWOT
analysis to ensure the success of the business.

6. Provide innovation : Management gives new ideas, imagination and visions to an

enterprise.

7. Social benefits : Management is useful not only to the business firms but to the
society as a whole. It improves the standard of living of the people through higher
production and more efficient use of scarce resources. By establishing cordial
relations between different social groups, management promotes peace and prosperity
in society.

LEVELS OF MANAGEMENT
There may be different levels or layers of management in an organization depending upon its
size, technical facilities, and the range of production.
Broadly there are three levels of management: Top level, Middle level & Lower level
management

Figure 4: Levels of Management

1. Top management : Top management lays down goals, policies and plans for the
enterprise . It consists of Company Presidents, Executives, Vice Presidents , Chairman
and other Key Officers. Top management is the ultimate source of authority. It is
accountable to the owners of the business for the overall management. The important
functions of top management include:

(a) Establishment of the goals, objectives & overall policies for the enterprise .
 (b) To assemble the resources: money, men, materials & machines.
(c) To exercise effective control on the operations.
(d) To provide overall leadership to the enterprise.

2. Middle management : The job of middle management is to implement the policies

and plans framed by the top management. Most importantly, they serve as a link between
the top and the lower level. They consist of sales managers, personnel managers & other
departmental head. They are responsible to the top management for the functioning of
their departments. The following are the main functions of middle management :

(a) To implement the policies of the top management.

(b) To recruit and select suitable operative and supervisory staff.
(c) To compile all the instructions and issue them to supervisor under their control.
(d) To motivate personnel to attain higher productivity and to reward them properly.
(e) To ensure cooperation among the various departments for smooth functioning of the
entire organization.
(f) To report to the top management
(g) To communicate the problems of the lower level management.

3. Lower or operative management: Lower management performs the executory function.

It consists of foreman, supervisors, sales officers, accounts officers and so on. They are in
direct touch with the rank and file or workers. Their authority and responsibility is limited.
They pass on the instructions of the middle management to workers. They prepare the short
term or operating plans. They are also involved in day to day decisions-making . They have
to get the work done through the workers. They allot various jobs to the workers, evaluate
their performance and report to the middle level management. They are more concerned with
direction and control functions of management. They devote more time in the supervision of
the workers.

MANAGEMENT vs. ADMINISTRATION

The use of two terms management and administration are generally used interchangeably but
the two terms are different. The difference between Management and Administration can be
summarized as under:

Basis Management Administration

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

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

Status Management constitutes the Administration represents owners of

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

Level Middle & lower level function Top level function

Function Management is a doing function Administration is a thinking function

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

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

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

Process Management decides how to do. Administration decides what is to be

done & when it is to be done.

Influence The management decisions are The administration is influenced by

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

In actual practice, there is no difference between management & administration. Every

manager has to perform both administrative management functions and operative
management functions. However, higher the hierarchical level of the manager, he denotes
more time on administrative function & the lower level denote more time on directing and
controlling worker’s performance i.e. management.

Summary:
Management is the binding force that binds various resources. It brings all resources together
and efficiently utilize them to help accomplish organization’s goals. Koontz and O' Donnel
have rightly observed "there is no more important area of human activity than management
since its task is that of getting things done through others." The assumes greater significance
in business activities. The various factors of production could never become productive
without the catalyst of management. It is now widely recognized that management is an
important factor of growth of any country.