Lesson 2

BUSINESS
LEADERSHIP

Leadership - Mechanism
Management Concepts,
Fundamentals, Evolution
Etc.

1
Introduction

2
 What is Management?

• Genesis of the Word:

The word manage comes from the
Italian maneggiare (to handle -
especially tools), which in turn
derives from the Latin manus
(hand). The French word
mesnagement (later menagement)
influenced the development of the
English word management in the
17th and 18th centuries. 3
 What is Management?
Today it means:
1. A field of Study- a profession which
means to study:
 Management principles, techniques,
functions, etc.
2. Group or Class of people means:
 Individual who performs managerial
activities.
3. Process Managerial activities means:
 Planning, organizing, staffing,
directing, controlling.
4
 What is Management?
F.W. Taylor - “Art of knowing what
you want to do and then seeing that it
is done the best and cheapest way”.

Henry Fayol– “To Manage is to

forecast, to plan, to organize, to
command, to co-ordinate and to
control”.

Peter F. Drucker– “Management is

work and as such it has its own skills,
its own tools and its own techniques”.

5
 What is Management?

“Management is the art of getting

things done through and with
people”.

Management is the process of

planning, organizing, Leading /
directing and controlling to attain set
goals/objectives most efficiently and
affectively utilizing resources
optimally.

6
Efficiency and Effectiveness

Efficiency (Means) Effectiveness

(Ends)
Resource Usage Goal Attainment
Low Waste High Attainment

Management Strives for:

Low Resource Waste (high efficiency)
High Goal Attainment (high
effectiveness) 7
 Fundamentals of Management
1. Is a Process /a function.
2. Is a Social Organizational Process.
3. Involves Group Efforts.
4. Aims at achieving set objectives/goals.
5. Required at all levels of management.
6. Is a Profession.
7. Comprises of following functions:
• Planning
• Organizing
• Directing / Leading
• Controlling / Co-ordination
8. Is an art and science.

8
 Is Management an Art or Science ?
• Art because of:
 Subjectivity of application
 Individual skills/style
 Creativity
 Scope of variation
 Vagaries of human nature and uncertainty of
situation
• Science because of:
 Empirically Derived
 Critically tested
 General principles
 Cause and effect relationship
 Universal applicability
 Concrete knowledge based on science, discipline
and result
 Mathematical methodology.
MANAGEMENT AS A SCIENCE CONFORMS PRINCIPLES BUT AS
AN ART DEMANDS PRUDENCE AND DISCRETION IN
APPLICATION. 9
 Functions of Management

• Planning
 Defining goals/objectives, mapping
out strategies and action plans to
accomplish the set goals integrating
and coordinating activities of all
components.
 The planning process is dynamic,
involving many variables from the
firm's internal and external
environments as well as the firm's
central or core values and mission of
the organization. 10
 Functions of Management (Cont’d)
• End Results of Planning:
Goals/objectives which should be
measurable with realistic and
achievable deadlines.
Mission Statement.
Strategic Plan.
Operational Plan.
Time horizon of plans.
Scope of plans.
Degree of details of plans.

11
Functions of Management (Cont’d)

• Organizing Means:
Identify tasks - mission critical, essential
and subsidiary tasks.
Group, sequence and plan tasks
accomplishment.
Select and group men and material.
Finalize chain of command - who reports
to whom?
Where and how decisions are to be made
and disseminated?

12
 Functions of Management
(cont’d)
• Leading / Directing means:
 Directing, guiding, overseeing and
leading people.
 Motivation, leadership, decision making.

• Controlling
 Laying standards,
 Comparing actual and scheduled progress
 Correcting deviation- thus ensuring
implementation according to plans.

• Co-ordination
 Synchronizing all efforts and unifying the
actions of different groups and
components to ensure synergy.
13
 The Evolution of Management
Theory
• Evolution of Modern Management
-Emerged in the 19th century during
industrial revolution in 1760 – 1840
with machine power, mass production
and efficient transportation as:
 Managers began seeking ways to
satisfy large customer needs better.
 Large-scale mechanized
manufacturing in factories replaced
small-scale craft production at home.

14
The Evolution of Management Theory
(Cont’d)

Large efficient factory system

required managerial skills.

Managers searched for formal

management theories to guide
them to run big enterprises.

15
The Evolution of Management
Theory
Contingency Approach

System Approach

Figure 2.1
16
Job Specialization and the Division of
Labor
Adam Smith (18th century economist)
– Observed that firms manufactured pins
in one of two different ways:
• Craft-style - each worker did all
steps.
• Production - each worker specialized
in one step (Complying the concept-
division of labour).
– Job specialization resulted in much
higher efficiency and productivity.
Breaking down the total job allowed for
the division of labor in which workers
became very skilled at their specific tasks.
17
F.W. Taylor and Scientific
Management
Scientific Management
– The use of scientific methods to
define the “One best way” for a job
to be done.
•Described by Frederick Winslow
Taylor in 1911 to replace informal
rule of thumb knowledge.
•Taylor sought to reduce the time a
worker spent on each task by
optimizing the way the task was
done.
18
 Four Principles of Scientific
Management
1. Develop a science for each element of an
individual’s work. Replace the old rule-
of- thumb method.
2. Scientifically select, teach, Train and
develop the workers.
3. Cooperate with workers to ensure that all
work is done according to the developed
principle of science.
4. Divide work and responsibility almost
equally between management and
workers. Management remains overall in
charge as it is better fitted than the
workers.
19
Emergence of Scientific
Management
1. Study the ways jobs are performed now and
evolve better ways to do them.
• Gather detailed time and motion
information.
• Try different methods to see which is the
best.
2. Codify the new methods into rules and then
teach all workers the new method.
3. Select workers whose skills match the rules.
4.Establish fair levels of performance and pay a
premium for higher performance. Workers
should benefit from higher productivity.
20
 Problems with Scientific
Management
Managers remained focused only
on the increased output side of
Taylor’s theory.

Specialized jobs became very

boring, dull.

Management relied heavily on the

use of machines neglecting human
aspect.
21
 Work of Frank and Lillian Gilbreth

A Construction contractor and

psychologist by trade respectively
studied scientific management theory.
They refined Taylor’s work and made
number of improvements to the
methodologies of time and motion
studies.

Eliminated wasteful hand and body

motions.

Also studied worker-related fatigue

problems caused by lighting, heating,
22
 Administrative Management
Theory

Administrative Management
 The study of how to create an
organizational structure and
general management practices
that lead to high efficiency and
effectiveness

23
 Fayol’s Principles of Management

Henri Fayol – a French mining engineer,

executive, consultant and author who
studied and wrote on management
during same the period as Taylor. Taylor
was concerned with first-line managers
and scientific method. Fayol wrote on all
levels of managers and believed that
management was a common human
activities. He developed general theory
of business administration including his
famous 14 principles of management.

24
Fayol’s Principles of Management

 Division of Labor: allows for job

specialization.
•This principle is the same as Adam
Smith’s ‘Division of Labor’.
Specialization ensures efficiency
and increased productivity.
 Authority and Responsibility
•Fayol included both formal and
informal authority resulting from
special expertise.

25
Fayol’s Principles of Management
(cont’d)
Unity of Command
 Employees should have only one
boss.
Line of Authority
 A clear chain of command from top
to bottom of the firm.
Centralization
 The degree to which authority rests
at the top of the organization.

26
Fayol’s Principles of Management
(cont’d)
Unity of Direction
 A single plan of action to guide the
organization.
Equity
 The provision of justice and the fair and
impartial treatment of all employees.
Order
 The arrangement of employees where
they will be of the most value to the
organization and to provide career
opportunities.
27
 Fayol’s Principles of Management
(cont’d)
Initiative
 The fostering of creativity and
innovation by encouraging
employees to act on their own.
Discipline
 Obedient, applied, respectful
employees are necessary for the
organization to function.
Remuneration of Personnel
 An equitable uniform payment
system that motivates contributes to
organizational success.
28
 Fayol’s Principles of Management
(cont’d)
Stability of Tenure of Personnel
 Long-term employment is important
for the development of skills that
improve the organization’s
performance.
Subordination of Individual Interest to
the Common Interest
 The interest of the organization
takes precedence over that of the
individual employee.
Esprit de corps
 Comradeship, shared enthusiasm
foster devotion to the common cause
(organization).
29
 Administrative Management
Theory

Max Weber- German Sociologist

Studied organization actively in the
early 1900s.
 Developed the concept of
bureaucracy as a formal system of
organization and administration
designed to ensure efficiency and
effectiveness.

30
 Rules, SOPs and Norms
Rules – formal written instructions
that specify actions which are
binding.
Standard Operating Procedures
(SOPs) – specific sets of written
instructions guiding organization’s
routine activities.
Norms – unwritten, informal codes of
conduct that prescribe how people
should act in particular situations.
31
Weber’s
Principles of
Bureaucracy

Figure 2.2
32
 Weber’s Five Principles of
Bureaucracy
• Authority is the power to hold people
accountable for their actions.
• Positions in the firm should be held based
on performance, not social contacts.
• Position and duties are clearly identified
so that people know what is expected of
them.
• Lines of authority should be clearly
identified such that workers know who
reports to who.
• Rules, standard operating procedures
(SOPs), and norms guide the firm’s
operations.
33
 Behavioral Management Theory
Behavioral Management
 The field of study that ascertain the
impacts of individuals , groups and
structure have on behavior within
organizations, for the purpose of
applying such knowledge for
enhancing efficiency and effectiveness.

 Concerns with the behavior of people

at work. Covers subject like HRM,
motivation, team work, conflict
management, trust etc.
34
Robert Owen (Late 1700s)
 Concerned about working
condition
 Proposed idealistic work place.

 Advocated for expenditure on

improving labor.

35
Hugo Munsterberg ( Early 1900s)
 Created the field of industrial
psychology- scientific study of people
at work.
 Proposed psychological tests for
employee selection
 Advocated for training for and
learning of employee.
 Study of human behavior for
employee motivation
36
Mary Parker Follet ( Early 1900s)

 Viewed organizations from the

perspective of individual and group
behavior.
 Proposed more people- oriented
ideas than scientific management.

 Thought organization should be

based on group ethic.

37
Chester Barnard ( 1930s)

 Thought organizations were social

systems that required cooperation.

 Believed manager’s job was to

motivate and stimulate employees.

 Argued that organizations were open

systems.

38
The Hawthorne Studies
 Series of studies conducted at the
Western Electric Company Works in
Cicero, Illinois, during the 1920s and
1930s. Studied the relationship between
illumination and workers performance.
 Social norms or group standards
influences individual work behavior.

 Findings are debatable but it amply

focused on organizational behavior.

39
 Management Science Theory
An approach to management that uses
rigorous quantitative techniques to maximize
the use of organizational resources.
 Quantitative management—utilizes linear
programming, modeling, simulation systems.
 Operations management—techniques to
analyze all aspects of the production system.
 Total Quality Management (TQM)—focuses on
improving quality throughout an
organization.
 Management Information Systems (MIS)—
provides information about the organization.

40
 Organizational Environment Theory
(System App)

Organizational Environment
 The set of forces and conditions that
affect a manager’s decision and
ability to acquire and utilize
resources.

 The theory considers an organization

as a system. System means a set of
interrelated and interdependent
parts organized in a manner that
makes a unified whole.
41
 The Open-Systems View
Open System
 Takes resources from external
environment and converts them into
goods and services sent back those to
the same environment.
 Inputs: the acquisition of external
resources.
 Conversion: the processing of inputs
into goods and services.
 Output: the release of finished goods
into the environment.
Today, when organizations are considered
as system they mean open system.
42
The Organization as an Open
System

Figure 2.4
43
 Other System Considerations
Closed system
 A system that is self-contained and
thus not affected by external
environment.
 Often undergoes entropy and fails.

Synergy
 Performance gains of the whole
system surpass the sum of the
performance of the individual
components.
44
Systems Approach to Management

45
 Contingency Theory
Contingency Theory
 Organizational structures and control
systems are contingent on the external
environment in which the organization
operates.
 Assumes there is no one best way to
manage. Organizations are different, face
different situations (contingencies) and
require different ways of managing.
 In rapidly changing environments,
managers must find ways to coordinate
different departments to respond quickly
and effectively.
46
Contingency Theory of Organizational
Design

47
 Definition of a Manager
 A Manager is the person responsible for
planning and directing the work of a group
of individuals, monitoring their work and
taking corrective action when necessary.
 A manager is not a person who can do the
work better than his men; he is a person
who can get his men to do the work better
than he can.
- Frederick W.
Smith
A manager is responsible for the
application and performance of knowledge.
- Peter Drucker
A person who directs or manages an
organization, industry, shop, etc. 48
 What Does a Manager Do?

BROAD TASK/ROLE OF A MANAGER

 Achieve objectives through and with
people effectively and efficiently.

 Muster resources, task-organize,

build the team , maximize outputs,
minimizing inputs.

 Plan, Analyse, Interpret, Collaborate,

Educate, Problem solver,
Communicator, Build team, Change
agent, Chief executive.
49
 Roles of Managers
 Specific categories of managerial behavior.
Henry Mintzberg identified 10 different but
highly interrelated management roles.
Interpersonal Informatio Decisional
Roles n Roles
Figurehead Entrepreneur
(Symbolic Head,
Roles
Monitoring (Development
Greeting Visitors, (Seeks programs/
Signing internal and Projects)
Documents) external Disturbance
Leader informations) Handler
(Motivate Disseminator (Crisis
Subordinates, Resource
(Transmits management )
Stuffing, Training Allocator
information) (Allot
etc)
Liason
Spokesman organizational
(Outside the Negotiator
(Reveals resources)
organization (Represent
maintains informations to organization in
contacts and outsiders) negotiation)
informers) 50
TIME SPENT IN CARRYING OUT MANAGERIAL
FUNCTIONS 51
Skills of Manager at Different
Levels

52
Conclusion

53
Thank You

54