PRINCIPLES OF MANAGEMENT (TBC-105)

UNIT 1 – NATURE OF MANAGEMENT

Management is a vital aspect of the economic life of man, which is an
organised group activity. A central directing and controlling agency is
indispensable for a business concern. The productive resources - material,
labour, capital etc. are entrusted to the organising skill, administrative ability
and enterprising initiative of the management. Thus, management provides
leadership to a business enterprise. Without able managers and effective
managerial leadership the resources of production remain merely resources
and never become production. Under competitive economy and ever-changing
environment the quality and performance of managers determine both the
survival as well as success of any business enterprise. Management occupies
such an important place in the modern world that the welfare of the people
and the destiny of the country are very much influenced by it.
-MEANING: Management is the process of planning and organising the
resources and activities of a business to achieve specific goals in the most
effective and efficient manner possible. Efficiency in management refers to the
completion of tasks correctly and at minimal costs. Effectiveness in
management relates to the completion of tasks within specific timelines to
yield tangible results.
-DEFINITION OF MANAGEMENT: Management may be defined in many
different ways. Many eminent authors on the subject have defined the term
“management”, some of these definitions are reproduced below:
In the words of Henry Fayol, “To manage is to forecast and to plan, to
organise, to command, to co-ordinate and to control”.
According to Peter F Drucker, “Management is a multi-purpose organ that
manages a business and manages managers and manages worker and work”.
In the words of Koontz and O’Donnel, “Management is defined as the creation
and maintenance of an internal environment in an enterprise where
individuals working together in groups can perform efficiently and effectively
towards the attainment of group goals”.
According to Wheeler, “Business management is a human activity which
directs and controls the organisation and operation of a business enterprise.
Management is centred in the administrators of managers of the firm who
integrate men, material and money into an effective operating limit”.
In the words of S. George, “Management consists of getting things done
through others. Manager is one who accomplishes the objectives by directing
the efforts of others”.
According to John F M, “Management may be defined as the art of securing
maximum results with a minimum of effort so as to secure maximum results
with a minimum of effort so as to secure maximum prosperity and happiness
for both employer and employee and give the Notes public the best possible
service”.
Management is a universal process in all organised social and economic
activities. It is not merely restricted to factory, shop or office. It is an operative
force in all complex organisations trying to achieve some stated objectives.
Management is necessary for a business firm, government enterprises,
education and health services, military organisations, trade associations and so
on.
-NATURE: An analysis of the various definitions of management indicates that
management has certain characteristics. The following are the salient
characteristics of management.
1. Management aims at reaping rich results in economic terms: Manager’s
primary task is to secure the productive performance through planning,
direction and control. It is expected of the management to bring into being the
desired results. Rational utilisation of available resources to maximise the
profit is the economic function of a manager. Professional manager can prove
his administrative talent only by economising the resources and enhancing
profit. According to Kimball, “management is the art of applying the economic
principles that underlie the control of men and materials in the enterprise
under consideration”.
2. Management also implies skill and experience in getting things done
through people: Management involves doing the job through people. The
economic function of earning profitable return cannot be performed without
enlisting co-operation and securing positive response from “people”. Getting
the suitable type of people to execute the operations is the significant aspect
of management. In the words of Koontz and O’Donnell, “Management is the
art of getting things done through people in formally organised groups”.
3. Management is a process: Management is a process, function or activity.
This process continues till the objectives set by administration are actually
achieved. “Management is a social process involving co-ordination of human
and material resources through the functions of planning, organising, staffing,
leading and controlling in order to accomplish stated objectives”.
4. Management is a universal activity: Management is not applicable to
business undertakings only. It is applicable to political, social, religious and
educational institutions also. Management is necessary when group effort is
required.
5. Management is a science as well as an art: Management is an art because
there are definite principles of management. It is also a science because by the
application of these principles predetermined objectives can be achieved.
6. Management is a profession: Management is gradually becoming a
profession because there are established principles of management which are
being applied in practice, and it involves specialised training and is governed by
ethical code arising out of its social obligations.
7. Management is an endeavour to achieve pre-determined objectives:
Management is concerned with directing and controlling of the various
activities of the organisation to attain the pre-determined objectives. Every
managerial activity has certain objectives. In fact, management deals
particularly with the actual directing of human efforts.
8. Management is a group activity: Management comes into existence only
when there is a group activity towards a common objective. Management is
always concerned with group efforts and not individual efforts. To achieve the
goals of an organisation management plans, organises, co-ordinates, directs
and controls the group effort.
9. Management is a system of authority: Authority means power to make
others act in a predetermined manner. Management formalises a standard set
of rules and procedure to be followed by the subordinates and ensures their
compliance with the rules and regulations. Since management is a process of
directing men to perform a task, authority to extract the work from others is
implied in the very concept of management.
10. Management involves decision-making: Management implies making
decisions regarding the organisation and operation of business in its different
dimensions. The success or failure of an organisation can be judged by the
quality of decisions taken by the managers. Therefore, decisions are the key to
the performance of a manager.
11. Management implies good leadership: A manager must have the ability to
lead and get the desired course of action from the subordinates. According to
R. C. Davis, “management is the function of executive leadership everywhere”.
Management of the high order implies the capacity of managers to influence
the behaviour of their subordinates.
12. Management is dynamic and not static: The principles of management are
dynamic and not static. It has to adopt itself according to social changes.
13. Management draws ideas and concepts from various disciplines:
Management is an interdisciplinary study. It draws ideas and concepts from
various disciplines like economics, statistics, mathematics, psychology,
sociology, anthropology etc.
14. Management is goal oriented: Management is a purposeful activity. It is
concerned with Notes the achievement of pre-determined objectives of an
organisation.
15. Different levels of management: Management is needed at different levels
of an organisation namely top level, middle level and lower level.
16. Need of organisation: There is the need of an organisation for the success
of management. Management uses the organisation for achieving pre-
determined objectives.
17. Management need not be owners: It is not necessary that managers are
owners of the enterprise. In joint stock companies, management and owners
(capital) are different entities.
18. Management is intangible: It cannot be seen with the eyes. It is evidenced
only by the quality of the organisation and the results, i.e., profits, increased
productivity etc.
-PURPOSE: The purpose of management can be understood as following:
1. Reducing ambiguity in methods of working,
2. Keeping costs down, and motivating others to do the same.
3. Taking calculated risks
4. Managing prospective risk
5. Exercise good judgement
-IMPORTANCE
To achieve objectives: The main purpose of management is to achieve certain
objectives. The management starts efforts to attain a desired objective and
continues its struggle till it is finally achieved.
Create cooperation and coordination: To crate cooperation and coordination
among the workers and departments. It is a source of crating coordination in
the working of the individual of a working group as well as among a number of
working group of enterprises.
To eliminate the waste of resources: Another important management purpose
is to eliminate the waste of resources. It manages for effective application of
management principles and practices to eliminate the waste of resources and
to accomplish the task with the east possible cost.
To create a friendly relation: Another management purpose is to create a
friendly relation among the participants of a working group devoted to the
attainment of a given objective. It makes the individual worker devoted to his
responsibility attached to the assignment given to him. Such devotion ensures
the desired results of the enterprise.
Regulating and coordinating the activities: It refers to the functional aspect of
an organization and aims at regulating and coordinating the activities of the
individual forming the working group towards the achievement of the common
goal. It provides and prescribes functional discipline and manages to enforce it
in an environment of mutual help and cooperation.
Makes things happen: managers focus their attention on bring about
successful action. They know where to start what to do to keep things moving
and how to follow through. It is the management that makes things happen
with the proper use of human beings’ other available resources.
To solve functional problems: Another management purpose is to provide
guidance in solving the functional problems of organization and as such, is
needed being a source of guidance to organized human efforts moreover, it
provides effectiveness to human efforts and makes the fruit full.
Rational use of resources: Another purpose of management is to make
arrangement for the rational use of resources. I.e. men, money material,
machine etc. rational use of resources ensures the desired objectives.
-FUNCTIONS OF MANAGEMENT:
1. Planning: Planning is the process of making decisions about future. It is the
process of determining enterprise objectives and selecting future courses of
actions necessary for their accomplishment. It is the process of deciding in
advance what is to be done, when and where it is to be done, how it is to be
done and by whom. Planning provides direction to enterprise activities. It helps
managers cope with change. It enables managers to measure progress toward
the objectives so that corrective action can be taken if progress is not
satisfactory. Planning is a fundamental function of management and all other
functions of management are influenced by the planning process.
2. Organising: Organising is concerned with the arrangement of an
organisation’s resources - people, materials, technology and finance in order to
achieve enterprise objectives. It involves decisions about the division of work,
allocation of authority and responsibility and the coordination of tasks. The
function increases in importance as a firm grows. A structure is created to cope
with problems created by growth. Through this formal structure, the various
work activities are defined, classified, arranged and coordinated. Thus,
organising refers to certain dynamic aspects: What tasks are to be done? Who
is to do them? How the tasks are to be grouped? Who is to report to whom?
Where the decisions have to be made?
3. Staffing: Staffing is the function of employing suitable persons for the
enterprise. It may be defined as an activity where people are recruited,
selected, trained, developed, and motivated Notes and compensated for
manning various positions. It includes not only the movement of individuals
into an organisation, but also their movement through (promotion, job
rotation, transfer) and out (termination, retirement) of the organisation.
Staffing involves selection of the right man for the right job. It has four
important elements:
a. Recruitment may be defined as the process of attracting the maximum
number of applications for a particular job.
b. Selection is the process of screening the candidates and choosing the best
ones out of them.
c. Training involves imparting the necessary knowledge and skills required for
the performance of a particular job.
d. Compensation is the price paid to the workers for the services rendered to
the organisation.
4. Directing: The function of guiding and supervising the activities of the
subordinates is known as directing. Acquiring physical and human assets and
suitably placing them on jobs does not suffice; what is more important is that
people must be directed towards organisational goals. This work involves four
important elements:
(a) Leadership: Leadership is the process of influencing the actions of a person
or a group to attain desired objectives. A manager has to get the work done
with and through people. The success of an organisation depends upon the
quality of leadership shown by its managers.
(b) Motivation: Motivation is the work a manager performs to inspire,
encourage and impel people to take required action. It is the process of
stimulating people to take desired courses of action. In order to motivate
employees, manager must provide a congenial working atmosphere coupled
with attractive incentives.
(c) Communication: Communication is the transfer of information and
understanding from one person to another. It is a way of reaching others with
ideas, facts, and thoughts. Significantly, communication always involves two
people: a sender and a receiver. Effective communication is important in
organisations because managers can accomplish very little without it.
(d) Supervision: In getting the work done it is not enough for managers to tell
the subordinates what they are required to do. They have also to watch and
control the activities of the subordinates. Supervision is seeing that
subordinates do their work and do it as directed. It involves overseeing
employees at work.
5. Controlling: The objective of controlling is to ensure that actions contribute
to goal accomplishment. It helps in keeping the organisational activities on the
right path and aligned with plans and goals. In controlling, performances are
observed, measured and compared with what had been planned. If the
measured performance is found wanting, the manager must find reasons and
take corrective actions. If the performance is not found wanting, some
planning decisions must be made, altering the original plans. If the controlling
function is to be effective, it must be preceded by proper planning. Thus,
controlling includes four things:
(a) Setting standards of performance,
(b) Measuring actual performance,
(c) Comparing actual performance against the standard and Notes
(d) Taking corrective actions to ensure goal accomplishment.
-MANAGEMENT AS ART: ‘Art’ refers to “the way of doing specific things; it
indicates how an objective is to be achieved.” Management like any other
operational activity has to be an art. Most of the managerial acts have to be
cultivated as arts of attaining mastery to secure action and results.
The above definition contains three important characteristics of art. They are:
1. Art is the application of science. It is putting principle into practice.
2. After knowing a particular art, practice is needed to reach the level of
perfection.
3. It is undertaken for accomplishing an end through deliberate efforts.
Judging from the above characteristics of art, it may be observed that:
1. Management while performing the activities of getting things done by
others is required to apply the knowledge of certain underlying principles
which are necessary for every art.
2. Management gets perfection in the art of managing only through continuous
practice.
3. Management implies capacity to apply accurately the knowledge to solve
the problems, to face the situation and to realise the objectives fully and
timely.
The above observation makes management an art and that to a fine art.
-MANAGEMENT AS SCIENCE: Science may be described, “as a systematic body
of knowledge pertaining to an area of study and contains some general truths
explaining past events or phenomena”.
The above definition contains three important characteristics of science. They
are:
1. It is a systematized body of knowledge and uses scientific methods for
observation,
2. Its principles are evolved on the basis of continued observation and
experiment, and
3. Its principles are exact and have universal applicability without any
limitation.
Judging from the above characteristics of science, it may be observed that:
1. Management is a systematized body of knowledge and its principles have
evolved on the basis of observation.
2. The kind of experimentation (as in natural sciences) cannot be accompanied
in the area of management since management deals with the human element.
3. In management, it is not possible to define, analyse and measure
phenomena by repeating the same conditions over and over again to obtain a
proof.
The above observation puts a limitation on management as a science.
Management like other social sciences can be called as “inexact science”.
Management is both a Science as well as an Art
Management is both a science as well as an art. The science of management
provides certain general principles which can guide the managers in their
professional effort. The art of management consists in tackling every situation
in an effective manner. As a matter of fact, neither science should be over-
emphasised nor should be the art discounted; the science and the art of
management go together and are both mutually interdependent and
complimentary.
Management is thus a science as well as an art. It can be said that-”the art of
management is as old as human history, but the science of management is an
event of the recent past.”
-MANAGEMENT AS PROFESSION: The professionals enjoy high status in every
society. Individuals desire to join a profession like medicine, chartered
accountant, engineering and law. There has been a growing trend towards
professionalization of management, primarily, because of the desire of
business leaders for social status and recognition.
A profession may be defined as an occupation backed by specialized
knowledge and training, whose code of conduct is regulated by a professional
body and which is duly recognized by the society. The basic requirements of a
profession are as follows:
1. Knowledge: A substantial and expanding body of knowledge and information
in the concerned field.
2. Competent Application: Skilled and judicious utilization of knowledge in the
solution of complex and important problems. This requires education and
training in the specified field.
3. Professional Body: Regulation of entry into the profession and conduct of
members by the representative body.
4. Self-Control: An established code of conduct enforced by the profession’s
membership.
5. Social Responsibility: Primarily motivated by the desire to serve others and
the community.
6. Community Approval: Recognition of professional status by the society.
Does management satisfy the tests of a profession? The application of the
above tests or criteria to management is examined below:
1. Specialized Knowledge: There exists a rapid expanding body of knowledge
underlying the field of management. Since the beginning of this century, many
thinkers on management have contributed to the field of management. Now
we have systematic body of knowledge that can be used for the development
of managers. Management is widely taught in the universities and other
educational institutions as a discipline.
2. Competent Application-Education and Training: MBAs are generally
preferred for managerial jobs, though MBA degree is not necessary to enter
this profession. Persons with degree in psychology, engineering, etc., can also
take up managerial jobs. Thus, there are no standard qualifications for
managers.
3. Managerial Skills can’t be learnt by Trial and Error Method: To be a
successful manager, it is essential to acquire management skills through formal
education and training. Many institutes of management have been functioning
in India and other countries which offer
MBA and other courses in management.
4. Professional Body: For the regulation of any profession, the existence of a
representative body is a must.
5. Social Responsibility: Managers of today recognize their social
responsibilities towards Notes customers, workers and other groups. Their
actions are influenced by social norms and values. That is why, managers enjoy
a respectable position in the society as is the case with doctors, chartered
accountants, etc.
6. Society’s Approval: The managers of modern organisations enjoy respect in
the society.There is typically a positive correlation between a manager’s rank
and his status in the organisation where he is working. This status tends to
affect the manager’s status outside the organisation. Thus, community
approves management as a profession.
-MANAGEMENT VS ADMINISTRATION
Management is defined as an act of managing people and their work, for
achieving a common goal by using the organization’s resources. It creates an
environment under which the manager and his subordinates can work
together for the attainment of group objective. It is a group of people who use
their skills and talent in running the complete system of the organization. It is
an activity, a function, a process, a discipline and much more. Planning,
organizing, leading, motivating, controlling, coordination and decision making
are the major activities performed by the management. Management brings
together 5M’s of the organization, i.e. Men, Material, Machines, Methods, and
Money. It is a result oriented activity, which focuses on achieving the desired
output.
The administration is a systematic process of administering the management
of a business organization, an educational institution like school or college,
government office or any non-profit organization. The main function of
administration is the formation of plans, policies, and procedures, setting up of
goals and objectives, enforcing rules and regulations, etc. Administration lays
down the fundamental framework of an organization, within which the
management of the organization functions. The nature of administration is
bureaucratic. It is a broader term as it involves forecasting, planning,
organizing and decision-making functions at the highest level of the enterprise.
Administration represents the top layer of the management hierarchy of the
organization. These top level authorities are the either owners or business
partners who invest their capital in starting the business. They get their returns
in the form of profits or as a dividend.
Key Differences between Management and Administration
1. Management is a systematic way of managing people and things within
the organization. The administration is defined as an act of administering
the whole organization by a group of people.
2. Management is an activity of business and functional level, whereas
Administration is a high-level activity.
3. While management focuses on policy implementation, policy
formulation is performed by the administration.
4. Functions of administration include legislation and determination.
Conversely, functions of management are executive and governing.
5. Administration takes all the important decisions of the organization
while management makes decisions under the boundaries set by
the administration.
6. A group of persons, who are employees of the organization is collectively
known as management. On the other hand, administration represents
the owners of the organization.
7. Management can be seen in the profit making organization like business
enterprises. Conversely, the Administration is found in government and
military offices, clubs, hospitals, religious organizations and all the non-
profit making enterprises.
8. Management is all about plans and actions, but the administration is
concerned with framing policies and setting objectives.
9. Management focuses on managing people and their work. On the other
hand, administration focuses on making the best possible utilization of
the organization’s resources.
Comparison Chart

BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

Meaning An organized way of managing The process of administering an

people and things of a business organization by a group of people is
organization is called the known as the Administration.
Management.

Authority Middle and Lower Level Top level

Role Executive Decisive

Concerned with Policy Implementation Policy Formulation

Area of It works under administration. It has full control over the activities of
operation the organization.

Applicable to Profit making organizations, i.e. Government offices, military, clubs,

business organizations. business enterprises, hospitals,
religious and educational
organizations.

Decides Who will do the work? And How What should be done? And When is
will it be done? should be done?

Work Putting plans and policies into Formulation of plans, framing policies
actions. and setting objectives

Focus on Managing work Making best possible allocation of

limited resources.

Key person Manager Administrator

Represents Employees, who work for Owners, who get a return on the
remuneration capital invested by them.