Principles of Management

Unit I

#What is management?

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.

#Levels of management

Management roles come in three levels:

1. Top management
Typically, the senior-most executives in a company are the chairman, chief executive officer, chief
operating officer, president and vice-president. Their role lies in integrating diverse components of the
company and coordinating activities of different departments. They also analyse the business
environment and its implications to formulate goals in order to ensure the survival of the company and
the welfare of its stakeholders.

2. Middle management
Mostly composed of division heads, the middle management links the operational management to the
top management. Division/department heads receive guidance from top managers and are leaders to
operational managers. Their job is to understand the policies framed by the top management and relay
them to their respective divisions/departments to ensure that they follow through with company
policies and decisions.

3. Operational management
Supervisors, section leads or forepersons directly oversee the efforts of the workforce. They are
responsible for quality control and ensure that the work meets deadlines. The top management draws
out the plans that define the authority and responsibility of supervisors.

#Objectives of management

1. Organisational objectives

Management should consider the interests of all company stakeholders, including employees,
customers and the government. Managers are responsible for setting and achieving goals for the
organisation. Typically, the primary aim of an organisation is to achieve growth by utilising its human,
material and financial resources. There are three general organisational objectives for any company:

Survival: An organisation needs to generate enough revenues to cover its operational costs.
Profit: Profit provides incentive and is essential for covering unprecedented costs and risks associated
with running a business.
Growth: You can measure the growth of a business in terms of increases in sales volume, workforce and
capital investment.

2. Social objectives

To an extent, the management is also responsible for creating benefits for the society through their
work. Companies choose to do this in different ways. Some may incorporate environment-friendly
methods of production, while others implement fair wages and opportunities. Larger companies often
maintain or fund initiatives that provide basic amenities like healthcare and education. Based on the
scale of their operations, companies often initiate CSR (Corporate Social Responsibility) campaigns that
benefit society in different ways.

3. Personnel objectives

The management typically decides the financial incentives, salaries, perks and social initiatives for their
employees. Activities that improve peer recognition and interaction like corporate outings and holiday
bonuses cater to the personnel's social growth and development.

#Importance of management

1. Helps in achieving group goals: Effective management gives a common direction to individual efforts
and guides them towards achieving the overall goals of an organisation.

2. Increases efficiency: Efficiency reduces costs and increases productivity in all spheres of an
organisation's work.

3. Creates a dynamic organisation: Management helps its personnel in adapting to change so that the
organisation continues to maintain its competitive edge. How well an organisation can respond and
adapt to change can mean the difference between its success and failure.

4. Helps in achieving personal objectives: Effective management fosters team spirit, cooperation and
commitment to achieve the organisational goals as a group, which helps each team member to achieve
their personal objectives.
#Functions of Management

But the most widely accepted are functions of management given by KOONTZ and O’DONNEL i.e.
Planning, Organizing, Staffing, Directing and Controlling.

1. Planning:

It is the basic function of management. It deals with chalking out a future course of action & deciding in
advance the most appropriate course of actions for achievement of pre-determined goals.

According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges
the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise
in problem solving & decision making.

Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic
thinking about ways & means for accomplishment of pre-determined goals.

Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it
is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing:

It is the process of bringing together physical, financial and human resources and developing productive
relationship amongst them for achievement of organizational goals.
According to Henry Fayol, “To organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”.

Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3. Staffing:

Staffing has assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc.

The main purpose of staffing is to put right man/woman on right job.

According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization
structure through proper and effective selection, appraisal & development of personnel to fill the roles
designed un the structure”.

Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the person and giving
the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.

4. Directing

It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in
motion the action of people because planning, organizing and staffing are the mere preparations for
doing the work.

Direction is that inter-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following
elements:

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,
negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one person to
another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if any to
ensure achievement of organizational goals. The purpose of controlling is to ensure that everything
occurs in conformities with the standards. An efficient system of control helps to predict deviations
before they actually occur.

According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as
being accomplished”.

Therefore controlling has following steps:

 Establishment of standard performance.
 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if any.
 Corrective action.

#Henri Fayol 14 Principles of Management

“DAD U C USSR O I SEE”

Henry Fayol, also known as the ‘father of modern management theory’ gave a new perception of the
concept of management. He introduced a general theory that can be applied to all levels of
management and every department. He concentrated on accomplishing managerial efficiency.

1. Division of Work-

Henri believed that segregating work in the workforce amongst the worker will enhance the quality of
the product. Similarly, he also concluded that the division of work improves the productivity, efficiency,
accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a
technical work level.

2. Authority and Responsibility-

These are the two key aspects of management. Authority facilitates the management to work efficiently,
and responsibility makes them responsible for the work done under their guidance or leadership.

3. Discipline-
Without discipline, nothing can be accomplished. It is the core value for any project or any management.
Good performance and sensible interrelation make the management job easy and comprehensive.
Employees good behaviour also helps them smoothly build and progress in their professional careers.

4. Unity of Command-

This means an employee should have only one boss and follow his command. If an employee has to
follow more than one boss, there begins a conflict of interest and can create confusion.

5. Centralization-

In any company, the management or any authority responsible for the decision-making process should
be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that
there should be a balance between the hierarchy and division of power.

6. Unity of Direction-

Whoever is engaged in the same activity should have a unified goal. This means all the person working in
a company should have one goal and motive which will make the work easier and achieve the set goal
easily.

7. Scalar Chain-

Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is
necessary so that every employee knows their immediate senior also they should be able to contact any,
if needed.

8. Stability-

An employee delivers the best if they feel secure in their job. It is the duty of the management to offer
job security to their employees.

9. Remuneration-

This plays an important role in motivating the workers of a company. Remuneration can be monetary or
non-monetary. However, it should be according to an individual’s efforts they have made.

10. Order-

A company should maintain a well-defined work order to have a favorable work culture. The positive
atmosphere in the workplace will boost more positive productivity.

11. Initiative-
The management should support and encourage the employees to take initiatives in an organization. It
will help them to increase their interest and make then worth.

12. Subordination of Individual Interest-

This indicates a company should work unitedly towards the interest of a company rather than personal
interest. Be subordinate to the purposes of an organization. This refers to the whole chain of command
in a company.

13. Equity-

All employees should be treated equally and respectfully. It’s the responsibility of a manager that no
employees face discrimination.

14. Esprit de Corps-

Management should promote a team spirit of unity and harmony among employees. It is the
responsibility of the management to motivate their employees and be supportive of each other
regularly. Developing trust and mutual understanding will lead to a positive outcome and work
environment.

This 14 principles of management are used to manage an organization and are beneficial for prediction,
planning, decision-making, organization and process management, control and coordination.

#Difference between Management & Administration

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

 BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

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

actions. policies 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.

Function Executive and Governing Legislative and Determinative