UNIT 1

NATURE AND SCOPE OF

MANAGEMENT
BY
SMIT GAMIT
NLCCM, NAVSARI
 CONCEPT OF MANAGEMENT
There is lack of precise definition of management because the term management is used
in different ways which are as follows:

• Management as a Discipline

 Discipline refers to a field of study having well-defined concepts and principles.

 Management can be treated either as an art or science, the two basic and broad
disciplines.

 However, since management prescribes various principles and how these principles can
be applied in managing an organization, it has the orientation of both, Science and art.
• Management as Group of People

 Refers to those persons who perform the functions relevant for managing
organizations.

E.g. Management of ABC Company does not take adequate care of its employees.

(you are referring to management as group of people of ABC company)

Thus management is simply defined as “Management is what managers do.”

 This definition does not tell us the type of activities that manager undertake
• Management as a Process

Another approach of defining management is to take it as a process

 Process is a systematic method of handling activities.

E.g. Management of XYZ Company is highly decentralized.

(You are referring to management as a process of XYZ Company)

 Thus management can be defined as a “Process of getting things done by

others”
 Integrated/Modern Approach of Defining Management

 It put emphasis on integration and coordination of organizational resources in defining

management.

 Thus management can be defined as follows:

Management is the force that integrates organizational resources into an effective

operating unit through:

 Planning
 Organizing
 Staffing
 Directing
 Features/Characteristics of Management
• Group Activity

 Management is a group activity because it comes into existence only in a group which has two
categories of people:

 Those who manages (known as managers)

 Those who are managed (known as operatives)

 Because of group activity, people are placed in superior-subordinate relationships.

 A superior directs his subordinates to perform specified activities to achieve group’s objectives.

 While subordinates perform those activities.

• Goal-oriented Process

 Management is a goal-oriented process.

 A goal is an end result or a set of end results which is to be achieved by the

management process.

E.g. A business organizations adopt management processes to produce desirable

products, to earn profit, and to discharge social responsibility.
• Continuous Process

 Management is a continuous process.

 In a continuous process, there is no apparent beginning or end of a particular

activity.

 Elements of management process (known as management functions) – Planning,

organizing, staffing, directing and controlling

 Can be separated from each other but a manager may perform all these
functions in a single say but not necessarily in the sequence presented above.
The Management process may start from any function because of its
continuity as shown in fig:

Planning

Controlling Organizing

Directing Staffing
• Dynamic Process

 Management is dynamic process.

 A dynamic process is one in which changes are incorporated according to

requirements.

 A Static process does not need any change; once it is set, it goes no working.

 Since management is a dynamic process, managers have to make changes in

their functions based on environmental changes.

 This change may even require reversing old decisions.

• Integrating Force

 Management works as an integrative force.

 An integrating force is one that keeps various related elements together and in
proper form.

 Just like cement keeps various building materials like bricks, sand, steel etc.
together as a building.

 In an organization, management integrates various resources – human,

physical and financial – to achieve organizational objectives.
• Intangible force

 Management is an intangible force which cannot be touched or seen but it can be inferred by the way in which
an organization works.

 The quality of management as an intangible force is perceived by analyzing how the organization is achieving its
objectives.

• Universal

 Management is universal.

 This feature of management has two implications.

 First, management is relevant in all types of organizations: (Business or non- business, public or private, small or
large).

 Second, management is relevant throughout the world: (USA, Russia, India etc.)
 MANAGEMENT ROLES
Henry Mintzberg has identified roles of managers to describe “what managers
do” in an organizations.

 According to Mintzberg, there are three broad categories of roles that a

manager performs in an organization:

 Interpersonal roles
 Informational roles
 Decisional roles
 Formal authority and status + Personal skills and characteristics

Interpersonal Informational
Decisional roles
roles roles
Figurehead Monitor Entrepreneur

Disturbance Handler
Leader Disseminator
Resource Allocator

Liaison Spokesperson Negotiator

• Interpersonal Roles

 Interpersonal roles of a manager are concerned with his interacting with others, both within the
organization and outsiders.

 There are 3 types of interpersonal roles:

 Figurehead Role

 It includes those activities which are of ceremonious and symbolic nature.

 These activities are;

 Greeting the visitors,

 Attending social functions involving employees,

 Leader Role

 It involves leading his subordinates and motivating them for willing and
enthusiastic contribution.

 This type of contribution comes when subordinates see in a manger certain

exemplifying behaviors.

 Liaison Role

 Liaison Role of a manager serves as a connecting link between his organization and
outsiders or between his unit and other units of the organization.

 The major objective of liaison role is maintaining a link between the organization
• Informational Roles

Informational roles of a manager include communication – giving and receiving information –

both within and outside the organization.

There are 3 types of informational roles:

 Monitor Role
 Monitor Role of a manager is to constantly collect information about those factors which affect his activities.
 Such factors may be within the organization and outside it.

 Disseminator Role
 It involves sharing of information with his subordinates who may otherwise not be able to collect it.

 Spokesperson
 In the role of spokesperson, a manager represents his organization while interacting with outsiders –
customers, financiers, suppliers, government, and other agencies of the society.
• Decisional Role

It involves making decision resulting in choosing the most appropriate alternative

out of several alternatives.

So that when chosen alternative is put into action, the organizational objectives are
achieved.

There are 4 decisional roles:

 Entrepreneur
 Disturbance Handler
 Resource Handler
 Negotiator
 Entrepreneur

 Here, manager assumes certain risk which is involved in terms of outcomes of an action.

 Because these are affected by a variety of external factors.

 These factors are dynamic and changes constantly.

 So the manager is required to bring change in the organizational processes. (As per requirement
of the environment).

 Disturbance Handler

 A manager is required to contain those forces and events which tend to disturb the
organizational equilibrium and normal functioning.
 Resource Allocator

 As a resource allocator, a manager allocates organizational resources of various

types to different organizational units.

 Negotiator

 As a negotiator, a manager negotiates with various interest groups in the

organization – shareholders, employees, and outsiders.
 MANAGEMENT AS SCIENCE, ART OR
BOTH
MANAGEMENT AS A SCIENCE
SCIENCE

It is a body of systematized knowledge generated through logical consistency, critical evaluation,

and experimental study.

Thus Science has the following features:

• Systematized body of Knowledge

• Principles Based on Experimentation
• Verifiable Principles
• Universal Application
• Systematized Body of Knowledge

 Science is a systematized body of knowledge.

 Principles of science are based on definite cause-effect relationship,

(i.e. a particular factor has been caused by what factor can be explained
in a definite way)

E.g. If you throw a ball up, after going upwards the ball will ultimately
come back on the ground because of earth’s gravitational force.
In Management, there is lack of such cause-effect relationship,
Here cause-effect relationship is defined in flexible way, not in definite way.
Thus , Management is not a true science.
• Principles Based on Experimentation

 In science, principles are evolved on the basis of experiments

conducted in laboratories.

 Such principles are tested rigorously for final approval.

In Management, this is not done in all cases.

 In many cases, management principles are based on personal observations and

experiences.
 In some cases, experiments in management are conducted under controlled conditions
but their findings are not tested like science.

From this point of view, management is not a true science.

• Verifiable Principles

 Principles of science can be verified by any one.

 Such verifications will give the same results again and again.

 Management principles are not verifiable in many cases.

 In fact, in many cases, it is difficult to appreciate the bases on which

management principles have been evolved.
 • Universal Application

 Principles of science have universal application, that is, they remain

true irrespective of the conditions in which these are applied.

 Management principles are situation bound.

 It implies that a management principle which works well in one country may not work equally well in another country.
This is because of situational difference between the two countries.

 Further, a management principle which works well in one organization may not work well in another organization of
the same country.

 Similarly, a management principle which has worked well in an organization in the past may not work well in the
present because of changed situations.

Above discussion shows that management is not a true science. Therefore, management is called an “inexact
science” or “pseudo-science”
 MANAGEMENT AS AN ART
ART
Art is defined as the use of skills to bring a desired result.
(Skills refers to practical ability or expertness required for doing something)

Thus, art has the following features:

• Practical Knowledge
• Personalized Application of Knowledge
• Improvement through Continuous Practice
• Situational Application
• Emphasis on Creativity
• Practical Knowledge

 Knowledge refers to possession of facts and techniques of a

particular field.

 Knowledge can be acquired through either study, practical

experience or both.

 Generally, in art, more emphasis is given on acquiring knowledge

through practical experience.
In Management, Knowledge is acquired both through study and
experience.
Thus, management is an art.
• Personalized Application of Knowledge

 In art, there is personalized application of knowledge to achieve the

desired results.

 This is possible because the same set of results can be achieved

through a number of alternative ways.

This is done in management too; each manager has his own

way of achieving results.
Thus, management is an art.
• Improvement through Continuous Practice

 In art, improvement is made through continuous practice.

 This practice eliminates those activities which are not relevant for
achieving the desired results

And improves those activities that are relevant.

 Through this way, the person engaged in any art tends to move
towards perfection. This is also done in management
Thus, management is an art
 • Situational Application
 Art has situational application.

 This implies that an art which is appreciated in one situation many

not be appreciated in another situation.

This is true for management too;

 A particular management practice which is quite effective in an organization may not be effective in another
organization because of change in situational context.

 Further in the same organization, management practices may change over the period of time because of change in
situational variables.
• Emphasis on Creativity

 Art puts emphasis on creativity through which new things or ways of

working are created.

 Managers create new products,

 Adopts new ways of working
 Use new means of financing
 Practice new ways of marketing etc.

The above discussion shows that management is an art

 Management: Both a Science and Art
If we combine the discussion of management as a science and art, we
find that management has some features of science and art.

Thus, management is both science and art.

It implies that a person is likely to become an effective manager if he

has knowledge of management principles and skills for applying
correct principles in a given situation.
 MANAGEMENT AS A PROFESSION
Profession is a specialized occupation which involves providing expert
services to clients based on professional knowledge and skills.

In management, there is a controversy whether management is

profession or not.

This issue requires resolution because it will determine the type of

person who are eligible for occupying managerial positions.
For this purpose, we have to identify the features of profession and to
evaluate the extent to which management has these features.

Features of profession are as follows:

 Well-defined Knowledge.
 Restricted Entry.
 Professional Association.
 Ethical Code of Conduct.
 Service Motive
• Well-defined Knowledge

 All profession have well-defined knowledge that can be acquired by the person who wishes to enter a profession.

 This acquisition of knowledge is in a formal way and the person who acquires the knowledge is given a proof for this by the
institution providing knowledge.

• Restricted Entry

 Only those persons are eligible to enter a profession who hold the prescribed qualification.

 Generally, this prescription is made by the concerned professional association.

E.g. In India, Medical Council of India prescribes qualification for medical practice,
Bar Council of India prescribe qualification for legal practice and so on.

• Professional Association

 All professionals of a field are affiliated to their concerned professional association.

 This association frames various rules and regulations for governing the profession.
• Ethical Code of Conduct

 A profession has ethical code of conduct which is framed by the concerned

professional association and prescribes
“What to do” and “What not to do”
While providing professional services to clients.
Any member found short on this code may be expelled from the profession.

• Service Motive

 A profession has service motive which suggests that professionals should keep
interest in their mind while charging fee for their professional services.

 Thus, for professionals, clients interest should be first priority and not their fee.
 UNIVERSALITY OF MANAGEMENT

ARGUMENTS FOR UNIVERSALITY ARGUMENTS AGAINST UNIVERSALITY

• Management as a process • Cultural Characteristics.
• Distinction between • Management Philosophy.
Management Fundamentals and • Organizational Objectives.
Techniques.
• Distinction between
Management Fundamentals and
practice.
 Arguments For Universality

• Management as a process

 Management as a process is universal.

 Various elements of management process – planning, organizing,

staffing, directing, and controlling – are universal for all organizations.

 Every manager performs functions related to these elements.

• Distinction between Management Fundamentals and Techniques

 Distinction is necessary because it is the specific techniques which varies according to the needs of the
situation.

 Management fundamentals: are the basic principles and theories

While Management techniques :are the tools for performing managerial functions.

 Management technique may differ form country to country.

 Management fundamentals will remain the same.

 The aspect of management which lacks universality has to do with:

Interpersonal relationships, including those between management and workers,
 Management and supplier
 Management and customers, community, competition and government.

 All these factors affect the application of technique of management rather than principles and theory
• Distinction between Management Fundamentals and Practice:

 It suggests that management fundamentals are same, only practice differs.

 This is so because management is both science an art.

 The most productive art is always based on an understanding of the science

underlying it. Thus science and art are complementary.

 The art of managing or the practice of managing makes use of organized

knowledge, that is, science.

 However, its practice is subject to variations under different conditions.

 ARGUMENTS AGAINST UNIVERSALITY
• Cultural Characteristics

 The application of management principles is determined by the culture of a country.

 Therefore, it can be said that management is culture bound.

 Culture is set of beliefs, attitudes, and values that are shared commonly by the members of
the society.

 Culture affects people’s behavior significantly and any people-oriented process may be
affected by cultural characteristics.

 Management is a people-oriented process.

 Therefore, management is affected by the cultural characteristics of the country concerned.

• Management Philosophy

• Philosophy in the context of management, consists of an integrated set of

assumptions and beliefs about the way things are, the purpose of the activities,
and the way these should be.

 Philosophy of every organization tends to be somewhat unique.

 Difference in philosophy of various organization require different kinds of

managerial approaches.

E.g. Management practices of two groups of companies in India – professionally-

managed and family-managed – differ considerably.
• Organizational Objectives

 The objectives of an organization determine the type of management

required.

The objectives of business organization would be different from the

objectives of non-business organization.

 Business organization objective – Profit making.

 Non-Business organization objective – welfare of the society.

 Thus, skills, competence, and experience of management of the business

organizations cannot as such be transferred and applied in managing of non-
business organizations.
 TAYLOR’S SCIENTIFIC
MANAGEMENT
The concept of scientific management was introduced by Frederick Winslow
Taylor in USA in the beginning of 20th Century.

Taylor has defined scientific management as follows:

“Scientific management is concerned with knowing exactly what you want to do
and then see in that they do it in the best and cheapest way”.

Since Taylor has put the emphasis on solving managerial problems in a scientific
way, often he is called as “father of scientific management” and his contributions
as scientific management.
 For applying scientific management in organizations, Taylor has
suggested:

• Principles of Scientific Management

• Techniques of Scientific Management
• Mental Revolution
 Principles of Scientific Management
• Science, Not Rule of Thumb

 This principle involves use of scientific method in place of rule of thumb.

 Rule of thumb involves “trial and error methods” or “hit and miss methods ” which is costly affair.

 Scientific method involves investigation of traditional work methods through work study and unifying the best
practices and developing a standard method which would be followed throughout the organization.

• Harmony, Not Discord

 This principle involves maintaining harmony between management and workers in place of discord (conflict)
between them.

 Both should realize that they require each other.

 Management should share the gains of the organization with workers.

 And workers should work hard with loyalty and be willing to embrace change for the good of the organization.
• Cooperation, Not Individualism
 This principle involves cooperation between management and workers
instead of individualism.

 It suggests that management should encourage constructive suggestions

from the workers and reward the suggestions which results in substantial
reduction in time or costs.

 This principle also suggests that management should take workers into
confidence in making important decisions which affect workers.

 There should be almost equal division of work and responsibility between

worker and management both.
• Development of Each and Every person
 This principle involves development of each and every person.

 There should be scientific selection of workers and work assigned to

them should suit their physical, mental, and intellectual capabilities.

 Development of workers requires training at the workplace to keep

them fully fit according to requirement of new methods.
Techniques Scientific Management
• Functional Foremanship

 Taylor has proposed functional foremanship technique for supervising workers.

 Functional foremanship is a technique which involves supervision of each worker

by eight supervisors:

 Four supervisors supervising planning aspect.

 Other Four supervisors supervising production work.
• Standardization and Simplification of Work
 It refers to setting standards for every organizational activity to maximize outputs and making work as
simple as possible.
 By eliminating unnecessary diversity of products.

• Work Study
 Work study refers to the systematic, objective, and critical evaluation of work with the aim of identifying
how the work can be performed in the most desirable way.
 By standardizing and simplifying it.

It studies following methods:

Motion Study
 To identify movement of workers and to determine requirement of least possible movement in the work
performance.
 This attempt resulted in reducing number of movements in doing work and increasing workers efficiency.
Fatigue Study
 To study the time by which workers felt fatigue and their efficiency goes down.
 Based to this study, suitable time intervals of rest and rest periods for the worker were established.
• Differential Piece wage system

 It is a system of wage payment in which a worker who achieves or

exceeds production targets gets wage at higher per piece.

 While a worker who does not achieve this target gets wages at lower
rate per piece.
Mental Revolution
 Mental Revolution is the complete change in the mindset of owners, managers,
and workers.

 Resulting in understanding the need of each other.

According to Taylor, mental revolution is neither a principle of scientific

management nor a technique of it.

It is an approach that should be followed in implementing scientific management

effectively.
 Fayol’s ADMINISTRATIVE
•
MANAGEMENT
The real father of modern operational management theory is the French industrialist Henry Fayol.

• His contributions are generally termed as operational management or administrative management.

• Fayol looked at the problem of managing an organization from top management point of view.

• He has used the term “administration” instead of “management.”

Fayol has divided his approach of studying management into 3 parts:

 Managerial qualities and training

 General Principles of Management
 Elements of Management
Managerial Qualities and Training
Fayol was the first person to identify the qualities required in a manager.

According to him, there are 6 types of qualities that a manager requires:

 Physical (health, vigour, and address)

 Mental (ability to understand and learn, judgmental, mental vigour, and
capability)
 Moral (energy, firmness, initiative, loyalty, tact, and dignity).
 Educational (general acquaintance with matters not belonging exclusively to the
function performed)
 Technical
 Experience (arising from work).
General Principles of Management
Fayol has given 14 principles of management.
• Fayol’s principles of management are known as general principles of management
• Because these principles can be applied in any type of organization:
Business or non-business, public sector or private sector.
Fayol’s Principles of management are as follows:
• Division of work
• Authority and Responsibility
• Discipline
• Unity of Command
• Unity of Direction
• Subordination of Individual Interest to General Interest
• Remuneration of Employees
• Centralization and Decentralization
• Scalar Chain
• Order
• Equity
• Stability of Personnel
• Initiative
 Division of work
• It involves dividing whole work into relevant number of tasks or unit.
• Instead of assigning the whole work to a person, only a task/unit of work is
assigned to him based on his competence.
• Adoption of this principle results in specialization of work.

 Authority and Responsibility

• Authority is the right to make decisions and get these implemented by
subordinates.
• Responsibility is the duty of a person to complete an assigned work.
• Adoption of this principle results in quick decision making and action taking and
no misuse of authority.
• Violation of this principle results in delay in decision making and overburden of
responsibility or chances of misuse of authority.
 Discipline
• Discipline means engaging in desirable behavior prescribed by the organization.
• Such prescription may be through:
Rules and regulations known as enforced or command discipline.
Or
 Through practices like commitment to organization, work etc. known as self-discipline.

This principle also suggests that there should be judicious application of penalties
by management in case of breach of discipline by any one.

• Adoption of this principle results in systematic working in the organization and

mutual trust among people.

• Violation of this principle results in chaos in the organization, wastage of

resources, and delay in work performance.
 Unity of Command
• Means an employees should get orders and instructions from only one
superior.

• This principle’s is against Taylor’s functional foremanship.

• Unity of command is important because if a person has a reporting relationship to a single superior,

Problem of conflicts in instruction is less

And feeling of responsibility for results is high
• Adoption of this principle leads to clarity about what a subordinate has to
do and fast communication of work performance.

• Violation of this principle results in confusion about what to do and what

not to do.
 Unity of Direction
• Unity of direction means “one plan, one boss.”
• According to this principle, each group of activities having the same objectives must
have one plan and one head.
Example:
• Product promotion involves various activities like:
 Advertising through various media (TV, radio, newspapers, magazines etc.)
 Personal Selling (demonstration or selling of products through personal contact)
 Sales promotion (offering of specific occasion discounts)

• All these activities have the same objective, i.e. increasing customer awareness about
products.
• Therefore, all these activities should be put under one plan and one head for better
performance.
• Adoption of this principle results in better coordination between different related
activities and unity of efforts of all employee concerned.
• Violation of this principle results in unnecessary duplication of activities and lack of
coordination in performing various activities.
 Subordination of Individual Interest to General Interest

• This principle implies that individual interest must be subordinate to general interest if
there is any conflict between the two.

• General interest is in the form of common purpose of a next higher entity.

For individuals, the next higher entity is (the group of individual);

for group of individuals, (the department);

for department, (the organization as a whole).

• Adoption of this principle results in emphasis on achieving organizational goals and

coordination among goals at all level.

• Violation will lead to conflict of interest.

 Remuneration of Employees
• The principle implies that remuneration (wages/salaries) of employees should be
fair and provide maximum possible satisfaction to employees and employer.

• This principle also includes non-financial incentives.

• Adoption of this principle results in satisfaction of employees and their

commitment to satisfactory work performance.
 Centralization and Decentralization

• Centralization means concentration of authority at upward.

• Decentralization means widespread distribution of authority.

• Adoption of this principle leads to determination of appropriate level of

 Scalar Chain
• Scalar chain is the chain of superiors ranging from the highest level of authority
to the lowest level in an organization.

• In organization, except person at the highest level and lowest level, all persons
are both superior and subordinates.

• Any communication going up or coming down should follow this chain.

• Thus communication passes through a number of superior-subordinate

relationships.

• However this system results in undue delay in communication.

• In order to overcome this problem, Fayol has suggested gang plank.
• It is a system of direct communication between two employees not in the same
chain.
• For timely horizontal communication flow in special circumstances.
 Order
• This principle implies that there should be a place for everything and
everything should be on its place.

• There should be the right person at the right place.

• Essentially, it means orderliness in the organization.

• Adoption of this principle results in procurement resources at right

time and optimum utilization of resource.
 Equity
• Equity is the combination of justice and kindness.

• This principle implies that employees should be given kind, just and fair
treatment.

• There should not be any discrimination on account of sex, religion, language,

caste, nationality etc.

• Equity also involves that all organizational rules should be followed by everyone
irrespective of the position people hold.

• Adoption of this principle leads to uniformity in behavioral patterns of people

resulting in high morale of employees.
 Stability of Personnel

• Stability of personnel means reasonable security of jobs.

• Employees should be kept at their positions at least for a minimum

fixed period and no employee should be removed within a short
period of time.

• Stability of personnel is essential to get an employee accustomed to

new work and succeeding in doing it well.
 Initiative
• Initiative refers to taking steps ahead of others in doing work
OR
Introducing a new method of doing work in a better way.

• This principle says that managers should encourage employees for taking
initiative.

• The organization should have employee suggestion system whereby suggestion

which result in substantial cost/time reduction should be rewarded.

• Adoption of this principle results in encouragement for creativity in an

organization which helps in finding out new ways of doing better and high
satisfaction to employee.
 Esprit de Corps

• Esprit de Crops is a French term which means “Union is Strength.”

• Esprit de Crops principle states that management should promote team spirit
among employees.

• The word “I” should be replaced by the word “We” in all communications to
employees.

• Adoption of this principle results in development of team spirit, belongingness,

and focus on group working.
 Social System Approach
• This approach closely resembles with the human-behavior approach.

• The pioneer of this approach is Wilfred Pareto who was a sociologist.

Chester Barnard develop this approach.

• According to this approach the organization is a cultural system composed of people who
work in co-operation.

• For the achievement of organizational goals a co-operative system of management can be

developed.

• For this, understanding of group behavior is necessary.

Features of Social System

 An organization is a social system, a system of cultural relationships.

 Relationships exist among the external as well as internal environment of the

organization.

 Co-operation among group members is necessary for the achievement of

organizational objectives.

 For effective management, efforts should be made for establishing harmony

between the goals of the organization and goals of the various groups.
 Decision Theory Approach
• Decision Theory approach discusses the basic problem of management around decision making.

i.e. the problem is to select a suitable action out of the given alternatives.

• The main contributor of this approach is Herbart Simon.

• Other contributors are March, Cyert, Forrester etc.

• The major emphasis of this approach is that decision-making is the job of every manager.

• The manager is a decision maker and organization is a decision making unit.

Features of Decision theory approach:

 Management is essentially decision making unit.

 The members of the organization are decision makers and problem solvers.

 Organization can be treated as a combination of various decision centers.

The level and importance of organizational members are determined on the basis
of importance of decisions which they make.

 Quality of decision affects the organizational effectiveness.

 All factors affecting decision making are the subject-matter of study of

management.
• Besides process and the techniques involved in decision making,
other factors affecting decisions are;

Information systems
Social and psychological aspects of decision makers.

Thus, it covers the entire range of human activities in organization as

well as the macro conditions within which the organization works.
 SYSTEM APPROACH
• This approach is of recent origin, but it has assumed considerable importance in
management.

A System is composed of elements or sub-systems that are related and interdependent.

A system is a set of inter-related parts.

• It is a inter-related parts but separate elements working towards a common purpose.

E.g. Human body may be regarded as a system.

A Car is one type of system.
 THE CONCEPT

• System theory is an overview approach which looks at the “big-picture.”

• It views the entire organization as a single body of inter-related parts.

• Rather than dealing separately with the various parts of an organization,

• The system theory gives managers a way looking at an organization as a whole.

• System theory tells us that the activity of an organization affects the activity of
every other part.

• The Job of the manger is to ensure that all parts of the organization are coordinated
 KEY-WORDS TO UNDERSTAND SYSTEM APPROACH
SYSTEM

 A set of inter-related parts (sub system).

 Each part may have various sub parts.

 These parts are mutually related to each other.

 A change in one part would lead to a change in other part.

SUB-SYSTEM

 The parts that make up the whole of a system are called sub system.

Each sub-system may be a part of larger system.

 Thus, a department may be a sub system plant,

 Which may be a sub system of a company,

 Which may be a sub system of a industry.

 There are 5 sub-systems within the organization:

 Goal sub-system (Individual & group goals).

 Technical sub-system (tools, equipment, employee skills, knowledge).

 Structural sub-system (authority layers and relationships).

 Managerial sub-system (managers who plan, lead and control).

 Psychosocial sub-system (psychological and social factors influencing people at

work).
SYNERGY

 Synergy means that the whole is greater than sum of its parts.

 In order to achieve optimum results, the sub-system of an organization should be inter-

related and inter-dependent so that synergic effect is achieved (2+2=5).

OPEN AND CLOSED SYSTEM

 A System is considered an open system if it interacts with its environment.

 It is considered as closed system if it does not interact with its environment.

 For an organization, it is necessary to understand, adapt and respond to the changes in

SYSTEM BOUNDARY

 Each system limits itself and create a boundary to separate from its environment.

 In a closed system, the system boundary is rigid.

 In a an open system, the boundary is more flexible.

FLOW

 Every organization creates service or product (output).

 By transforming various inputs received from its environment

 And undertaking various processes (activities and operations)
Through available resources.

 This process of creating value through transformation is done by utilizing key resources like Men,
FEEDBACK

 Feedback is a key element in the organizations.

 It gives information about the end-use of the product/service.

 This information will help to make necessary corrections in the

system wherever required and improve the output. I.e. profitability.
 Contingency Approach or Situational
Approach
• The latest approach to management is known as “Contingency” or “Situational”
approach.

• It is in one way an extension of system approach.

• The basic idea of this approach is that;

There cannot be a particular management action which will be suitable to all type of
situations.

• Hence, there is no best way to manage.

• This view emphasize on;

What is best for a particular unit or organization that has:

 A particular technology,
 Group of employees and Environment.

• Each organization is unique.

• Each situation is different and requires for a contingency approach.

• The application of management principle and practices;

Should be contingent upon the existing circumstances.
Characteristics of Contingency approach

 Management action is contingent on certain outside system or sub-system.

 Organizational action must be based on the;

Behavior of outside system’s action,
So that it can be integrated with the environment.

 There is no universal action because of the specific organization environment

relationship.

It differs form situation to situation.

 Management Thought: Empirical
Approach
• This approach takes management as the study of past experiences.

• Its methods are based on past managerial experiences and management cases.

• This approach, is also known as;

Case approach
ORs
Management experience approach
OR

• According to this approach, management is considered to be study of managers in
practice.

It analyses the past experience of successful managers

OR
Mistakes if poor managers

And applies the most effective management techniques.

• On the basis of management cases,

They draw generalizations and

Enumerate principles and
 Characteristic of Empirical Approach

Basically management is a study of past and present managerial experience.

It can be taught best by case method.

 Managerial experiences can be passed on to managerial practitioners and students for continuity
and development in the knowledge of management.

 In the field of management, co-ordination can be achieved between practical experiences and
research.

 Success can be achieved by utilizing the methods of successful managers and by removing the
failures of managers, management can be made effective.

 By studying large number of experiences, theories and principles of management can be developed.

 Managers in their practice make application of management techniques on the basis of study of
 CODE OF CONDUCT: ALL INDIA
MANAGEMENT ASSOCIATION (AIMA)
• Generally, understood norms of conduct for All Members of AIMA covering
professional individual Members are given by AIMA.

• The council and membership of the AIMA look to all its members to
 Meet these standards and
To maintain the reputation of the association
By following this code of conduct.

• The code of conduct can be reviewed by the council.

Standards:

 Every member is obliged to comply with AIMA Code of Conduct for members, and
will also make a genuine attempt to foster the standards laid down in the said
document in all dealing.

 Every member admitted to any grade of membership shall necessarily fulfil the
basic eligibility to become the member of AIMA as prescribed in the Memorandum
of Association.

 Act at all times in accordance with the provisions of Memorandum of the

Associations, Rules and Regulations and the Bye-laws of the Association (including
this code of conduct).

 Ensure a transparent relationship with AIMA, based on trust, respect, responsibility

 Have a pride in their status as an AIMA members and in any AIMA qualification,
they hold and aim to promote its values to others,
Especially industry bodies, employers and prospective members.

 Aim to seek opportunities to support AIMA activities and to provide their

expertise and experience in the best interests of the association and its
stakeholders.

 Treat AIMA office Bearers, Council Members, Other members, and AIMA
employees with the same respect they would wish to be given.

 Ensure that their membership of the AIMA is not publicized in any way that
might suggest that they hold a professional qualification which they are not
entitled to;
 Ensure that any conduct, promotion or public announcement, with which a
member, their name or qualifications are connected, does not bring AIMA and its
stakeholders into disrepute.

 Advise AIMA of any members who are not following its rules or this code, and
advise AIMA of anyone wrongly representing themselves as a member.

 It is expected that Members who are elected to the Council of Management of

AIMA, will make every effort to attend and actively participate in council and
committee meetings and the AGM.

 Always act in the interest of the association and ensure that any other business
or personal association which a member may have, does not conflict with those
of AIMA.
 When dealing with issues related to regulatory matters and
government policies, members should bear in mind the primacy of
the Association and the public interest.

 All decision taken by the council by voting majority are final and all
members are expected to respect such decision and abide by them.
Interaction with Media/Government/Any other agencies

Members shall refrain from public criticism of Council decisions, organizational

policies/stands on key issues.
Any such comments shall be confined to Council meeting and not a public platforms,
and media interaction.
Only president/Director General (DG) are authorized to speak on behalf of AIMA.

 Unless specifically designated for the purpose,

 Members must not represent themselves as speaking officially on behalf of the
Association
And should take utmost care to avoid being placed in a position where they might be
misrepresented as speaking for the Association.

 Safeguard the confidentiality of all information and avoid unauthorized

Non- Adherence

 Any Non-Adherence to the above Code of Conduct/any other observed unethical

behavior on the part of any member should be brought to the attention of the
Code Administrator.

 Who shall be the Director General and who shall report it to committee.

 The Committee shall after investigation, recommend suitable action to the

president who shall bring it before the AIMA Council.
Penalty for breach of Code of Conduct

The AIMA Council will have the right to take disciplinary action.

Against any member who shall have

 In the opinion of the council, wilfully acted in contravention (action which

offends against a law) of the code of conduct,

 Who in the opinion of the council, shall been guilty to such conduct as shall
render him/her unfit to remain a member of the Association.
• Penalty may include

Serious disciplinary action,

Removal or suspension from council

As well as other remedies including:

Recommendations for any of the above penalty, as appropriate by the council

under the circumstances.

Council’s decision shall be final in this respect.

Waivers & Amendments

• Any waiver or amendment of any provision of this Code of Conduct

can be considered as appropriate from time to time and must be
approved in the council.