Introduction to Principles of Management

Management – art of getting things done through the efforts of other people (Follet, 1995.)

Principles of Management – are the activities that “plan, organize, and control the operations of
the basic elements of people, materials, machines, methods, money and markets, providing
direction and coordination, and giving leadership to human efforts, so as to achieve the sought
objectives of the enterprise”

Nature of Management

 Multidisciplinary
 Dynamic nature of principles
 Relative, not absolute principles
 Management: science or art
 Management as a profession
 Universality of management
 Management is situational in nature

Importance of Management:

 Effective utilization of resources

 Development of resources
 Ensures continuity in the organization
 Integrates various interest groups
 Provides stabilization in the society

Functions of Management

1. Planning
2. Organizing
3. Staffing
4. Leading
5. Controlling
Who are Managers?

Empowerment – the process of enabling or authorizing an individual to think, behave, take

action, and control work and decision making in autonomous ways

Who are Managers?

Different types of Managers:

1. Top Managers – responsible for developing and organization’s strategy and being a
steward for its vision and mission
2. Second set including functional, team, and general managers
a. Functional managers – responsible for the efficiency and effectiveness of an area,
such as accounting or marketing
b. Supervisory or team managers – responsible for coordinating a subgroup of a
particular function or a team composed of members from different parts of the
organization
i. Line managers – lead a function that contributes directly to the products or
services the organization creates
ii. Staff managers – lead a function that creates indirect outputs
iii. Project manager – has the responsibility for the planning, execution, and
closing of any project. Often found in construction, architecture,
consulting, computer networking, telecommunications, or software
development
c. General managers – responsible for managing a clearly identifiable revenue-
producing unit, such as a store, business unit, or product line. They typically make
 decisions across different functions and have rewards tied to the performance of
the entire unit. They take direction from their top executives.

 Top level – Administrative level

 Middle level – Executory
 Low level – Supervisory / operative / first-line managers

Managerial Skills

o Technical Skills
o Human Skills
o Conceptual Skills
o Design Skills

The Nature of Managerial Work

 Scientific Management

Two Theorists:

1. F. W. Taylor – Father of Scientific Management

2. Henry Fayol – Father of Administrative Management

1. Taylor Scientific Management

States that “Scientific management is concerned with the art of knowing exactly what
you want to do and then see that they are done in the best and cheapest way”

Taylor’s contribution to Management

Elements or tools:
o Separation of planning and doing
o Functional foremanship
o Job analysis
o Standardization
o Scientific selection and training of workers
o Financial incentives
o Economy
o Mantal revolution
Functional Foremanship

Principles of Scientific Management

o Replace the rule of thumb with science
o Harmony in the group
o Cooperation
o Maximum output
o Development of workers

Criticisms of Taylor’s Scientific Management

1. It ignores the functional areas of management such as marketing, finance and so on

2. Individual creativity is ignored by favoring one best way
3. Workers are reduced to cogs in the machines
4. Mobility among workers get restricted because of narrow specialization
5. Workers are not involved in the planning part of the job which was controlled by the
management

Henry Fayol’s Management

States that “Management is to manage is to forecast and plan, to organize, to command, to

coordinate and control”

Fayol’s Contributions to Management

1. Qualities of a manager
2. General principles of management
 3. Elements of management

1. Qualities of a manager
o Physical (health and vigor)
o Mental (ability to understand and learn, judgement, mental vigor, and capability)
o Moral (energy, firmness, initiative, loyalty, tact, etc.)
o Educational
o Technical (peculiar to the function being performed)
o Experience

2. General principles of management

o Division of work
o Authority and responsibility
o Discipline
o Unity of command
o Unity of direction
o Interest
o Remuneration
o Centralization
o Scalar chain
o Order
o Equity
o Stability of tenure
o Initiative
o Esprit de corp

3. Elements of management
o Planning
o Organizing
o Commanding
o Coordinating
o Controlling

Evolution of Management as a Discipline

1. Historical Background
2. Evolution of different approaches to the evolution of management as a discipline

1. Historical background
 Adam Smith published “The Wealth of Nations” in 1776 where he argued the economic
advantages that the organization and society would gain from implementing the idea of
division of labor or job specialization (breakdown of jobs into narrow and repetitive
tasks)

For example, the way different people work in a tailoring shop, or the way different
people work in a building construction site

Industrial revolution started in late eighteenth century when machine power overtook the
human power and proved to be became more economical to manufacture goods in
factories than at homes as a result of system standardization and mass production

Such a revolution took place in the absence of any universally accepted management
principles

Only after the early 1900s, the initial steps were taken towards developing management
theories

2. Evolution of Management Approaches

1. Classical approach – emphasized rationality and making organizations and workers as

efficient as possible
2. Quantitative approach – the use of quantitative techniques to improve decision
making
3. Behavioral approach – includes the early advocates of organizational behavior,
Hawthorne studies
4. Contemporary approach – involves two perspectives: systems and contingency

Planning

Planning is essential in every walk of life

Planning is the first and foremost function of management

Planning is defined as the intellectual process of thinking resorted to decide a course of action
which helps to achieve the pre-determined objectives of the organization in the future

Characteristics of Planning

 Planning is looking into the future

 Planning discovers the best alternative out of many available alternatives
 Planning is a continuous process
  Planning is done for a specific period
 Planning is required at all levels of management
 Planning directs the members of the organization

Objectives of Planning

1. To reduce uncertainty
2. To bring cooperation and coordination
3. To bring the economy to operation
4. To anticipate unpredictability contingencies
5. To achieve the pre-determined goals

Nature of Planning

1. Strategic planning
2. Primary planning
3. Planning contribute to objectives
4. Planning an intellectual activity
5. Planning results in higher efficiency
6. Planning is a continuous process
7. Planning is flexible
8. Involves unity and consistency
9. Planning is common to all
10. Basis for all managerial function
11. Getting coordination
12. Considering limiting factors

Forecasting

Predicting future needs on the basis of historical data, present conditions, and assured future

Forecasting controls staffing, purchasing, and production decisions

Planning and forecasting are two different processes

Forecasting is nothing but the guessing of the future course of events correctly

Forecasting: The Risk Factor

  You reduce risk when you collect relevant data and apply it to your forecast
 In some food services, the degree of certainty about tomorrow is high
 Contingency plan: reduce risk by having an alternate plan in reserve
 Keeping records can reduce the risks for repetitive situations

Importance of Planning

 Planning is an important and basic function of management

 Orderly procedure is possible through planning
 According to George Terry, planning is basic to the other fundamental management
functions
 Defective planning and inadequate planning leads to failure of the organization
 Without plans, actions must become merely random activity producing nothing but chaos
 It is very difficult to continue the business under uncertainties

Important Reasons for Planning Function

 To manage by objectives
 Convert uncertainty into certainty
 Economy in operation
 Help in coordination
 Tackling increasing complexities of business
 Effective control
 Effective utilization of resources
 Avoiding business failure

The Planning Process

 Define the purpose or problem and set objectives

 Collect and evaluate data relevant to forecasting the future (focus on the present)
 Develop alternatives courses of action
 Decide on the best course of action
 Carry out the plan

Steps in the Planning Process

 Determination of objectives
 Determining planning premises and constraints
  Examination of alternative courses of action
 Weighing alternative course of action
 Selection of the best alternative course of action
 Establishing the sequence of activities
 Formulation of action programs
 Determining secondary plans
 Securing participation of employees
 Follow-up and evaluation

Methods of Planning
1. Objective plans
o Objectives are treated as basic plans
o Basic plans are necessary for all types of planning operation
2. Standing plans
o Include policies and procedures
o Liable to repetitive actions
o Provide a ready guideline for solving recurring problems
o Standing plans limit the freedom of the manager for ensuring integrated and
cooperative actions
3. Master plans
o Covers the complete course of action along with the consideration of time and
strategy
o If plans are prepared function-wise, may be concerned with production, sales,
purchase, and similar activities

Limitations of Planning
 Inflexibility
 Limitation of forecasts
 Unsuitability
 Time consuming
 Costly
 Mental ability
 False sense of security
 Delay during emergency period
 Capital investment
 Political climate
 Trade union
 Technological changes