UNIT-1

Management Concepts and Evolution

Management is an essential and integrated force in all structured activity in both situations social
and formal. In an organization individuals work together to achieve common objectives, at each
step individuals have to coordinate and organize their activities to utilize scarce resources i.e.
man, money, materials, machines etc.

Management may be defined in many ways. It is a social process targeted towards realization of
predetermined objectives through planning, organizing, directing, controlling and coordinating
all the activities. Henry Fayol a neoclassical economic theoretician described management “to
manage is to forecast and to plan, organize, to command, to coordinate and to control”. Whereas
Peter F Drucker stated “Management is a multi-purpose organ that manages a business and
manages managers and manages worker and work”. In the words of George R Terry –
“Management is a distinct process consisting of planning, organising, actuating and controlling
performed to determine and accomplish the objectives by the use of people and resources”.
According to Joseph Massie – “Management is defined as the process by which a cooperative
group directs action towards common goals”. Mary Parker Follet defined “Management is the
art of getting things done through others”. But the most commonly used concept is that managing
involves getting things done through and with people. A number of definitions are advanced by
various eminent experts have similar or partial point of view. Some of them are listed blow:

"Management is the process of getting activities completed efficiently with and through other
people" - Michael Nolty CPA

"Management is what a manager does"

- Louis allen

“Management is principally the task of planning, coordinating, motivating and controlling the
efforts of others towards a specific objective”.
 - James L Lundy

“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”.

- Koontz and O’Donnel

From the above definitions, it is clear the “management” is a technique of structured work from
others in an integrated and coordinated manner for achievement of the common or specific
objectives through proper utilization of the scarce resources. Management can be defined as “an
arrangement of the physical, human and financial resources and planning their utilization for
business operations in such a manner so as to realize predetermined objectives.

History of Management and evolution of management thoughts

It is difficult to trace the history of management but early innovations took place in the field of
management during 5th to 15th century such as Arabic numerals, double entry book
keeping(1494) provided tools for management. There are a number of researchers who
contribute to the management like Sun Tzu (The Art of War) in this military strategic book he
recommends being aware of and acting on strengths and weaknesses of both a manager's
organization and a foe’s. Niccolò Machiavelli in his book “The Prince, 1513” he emphasized on
leadership and stated that leaders use fear—but not hatred—to maintain control. Adam Smith
targeted for efficient organization of work through Specialization of labor in his book “The
Wealth of Nations, 1776”.

Classical economists Adam Smith (1723–1790) and John Stuart Mill (1806–1873) gave a
theoretical background to resource-allocation, production, and pricing issues. Eli Whitney
(1765–1825), James Watt (1736–1819), and Matthew Boulton (1728–1809) developed elements
of technical production such as standardization, quality-control procedures, cost-accounting,
interchangeability of parts, and work-planning. During the late 19th century, marginal
economists Alfred Marshall (1842–1924), Leon Walras (1834–1910) et.al. introduced a new
layer of complexity to the theoretical underpinnings of management. Joseph Wharton offered the
first tertiary-level course in management in 1881.

In 1900 managers started approaching to place their theories on what they regarded as a
thoroughly scientific basis i.e. Henry R. Towne's Science of management in the 1890s, Frederick
Winslow Taylor's The Principles of Scientific Management (1911), Frank and Lillian Gilbreth's
Applied motion study (1917), and Henry L. Gantt's charts (1910s). J. Duncan wrote the first
college management textbook in 1911. In 1912 Yoichi Ueno introduced Taylorism to Japan and
became first management consultant of the "Japanese-management style". His son Ichiro Ueno
pioneered Japanese quality assurance.
The first comprehensive theories of management appeared around 1920. The Harvard Business
School invented the Master of Business Administration degree (MBA) in 1921. People like
Henri Fayol (1841–1925) and Alexander Church described the various branches of management
and their inter-relationships. In the early 20th century, people like Ordway Tead (1891–1973),
Walter Scott and J. Mooney applied the principles of psychology to management, while other
writers, such as Elton Mayo (1880–1949), Mary Parker Follett (1868–1933), Chester Barnard
(1886–1961), Max Weber (1864–1920), Rensis Likert (1903–1981), and Chris Argyris (1923 - )
approached the phenomenon of management from a sociological perspective.

Peter Drucker (1909–2005) wrote one of the earliest books on applied management: Concept of
the Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors
until 1956) commissioning a study of the organisation. Drucker went on to write 39 books, many
in the same vein.

H. Dodge, Ronald Fisher (1890–1962), and Thornton C. Fry introduced statistical techniques
into management-studies. In the 1940s, Patrick Blackett combined these statistical theories with
microeconomic theory and gave birth to the science of operations research. Operations research,
sometimes known as "management science" (but distinct from Taylor's Scientific Management)
attempts to take a scientific approach to solving management problems, particularly in the areas
of logistics and operations.

Some of the more recent developments include the Theory of Constraints, management by
objectives, reengineering, Six Sigma and various information-technology-driven theories such as
agile software development, as well as group management theories such as Cog's Ladder.

As the general recognition of managers as a class solidified during the 20th century and gave
perceived practitioners of the art/science of management a certain amount of prestige, so the way
opened for popularised systems of management ideas to peddle their wares. In this context many
management fads may have had more to do with pop psychology than with scientific theories of
management.

Towards the end of the 20th century, business management came to consist of six separate
branches, namely:

 Human resource management

 Operations management or production management
 Strategic management
 Marketing management
 Financial management
 Information technology management responsible for management information systems

In the 21st century observers find it increasingly difficult to subdivide management into
functional categories in this way. More and more processes simultaneously involve several
categories. Instead, one tends to think in terms of the various processes, tasks, and objects
subject to management.

Branches of management theory also exist relating to nonprofits and to government: such as
public administration, public management, and educational management. Further, management
programs related to civil-society organizations have also spawned programs in nonprofit
management and social entrepreneurship.

Note that many of the assumptions made by management have come under attack from business
ethics viewpoints, critical management studies, and anti-corporate activism.

As one consequence, workplace democracy has become both more common, and more
advocated, in some places distributing all management functions among the workers, each of
whom takes on a portion of the work. However, these models predate any current political issue,
and may occur more naturally than does a command hierarchy. All management to some degree
embraces democratic principles in that in the long term workers must give majority support to
management; otherwise they leave to find other work, or go on strike. Despite the move toward
workplace democracy, command-and-control organization structures remain commonplace and
the de facto organization structure. Indeed, the entrenched nature of command-and-control can
be seen in the way that recent layoffs have been conducted with management ranks affected far
less than employees at the lower levels of organizations. In some cases, management has even
rewarded itself with bonuses when lower level employees have been laid off.[6]

Nature of management:

1. Management is a Science:. Management is a science because by the application of

theories, principles, observations and experimentations predetermined objectives can be
achieved. Fredrick W. Taylor was the first manager theorist who made significant
contributions to the development of management as a science. It has a systematized body
of knowledge pertaining to a particular field of inquiry which contains principles and
theories developed through continuous observation, experimentation and research. These
principles have universal applicability and the organized body of knowledge can be
taught and learnt in the classroom.

2. Management is an Art:

Management is an art because there are definite principles of management. It involves the
practical application of personal skills and knowledge to achieve concrete results. It is a
personalized process and every artist has his own style. Management contains main
elements of art i.e. Personal skills, practical know-how, result-orientation, creativity, etc.

Management is both science and art:

Thus management is both an art and a science. Hence it contains general principles and also
requires certain personal skills to accomplish the desired goals.

Management is a science and an art, just like medicine which is learnt in an institution but
perfected only through practice in the clinics. Hence management may be learnt in the class
room but practice is required to make its successful use.

3. Management is a process: Management is a process. This process continues till the

objectives set by the organization are actually achieved. In the words of E.F.L. Brech –
“Management is a social process entailing responsibility for the effective and economical
planning and regulation of the operations of an enterprise, in fulfillment of a given
purpose or task, such responsibility involving: (a) judgment and decision in determining
plans and in using data to control performance, and progress against plans; and (b) the
guidance, integration, motivation and supervision of the personnel composing the
enterprise and carrying out its operations”. Thus “Management is a social process
involving co-ordination of the physical, human and financial resources through the
functions of planning, organizing, staffing, leading and controlling in order to accomplish
predetermined 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 or in general in
our day to day life.
5. Management is a Profession: There has been a growing trend towards
professionalization of management. Professionalization imparts a certain social
responsibility and dignity to management. A professional cannot be controlled or directed
by the client. He has professional knowledge and judgment which he uses to make his
decision. Thus, professionalization makes business more efficient, dynamic and socially
responsible. The growth of management education in India has contributed to
professionalization in the business field.

According to Abraham Flexner, A profession is -

 A body of specialized knowledge and recognized educational process of acquiring it.

 A standard of qualifications governing admission to the profession.
 A standard of conduct governing the relationship of the practitioners with clients,
colleagues and the public.
 An acceptance of the social responsibility inherent in an occupation and the public
interest.
 An association or society devoted to the advancement of the social obligations as distinct
from the economic interests of the group.
 According to Lewis Allen, ” a professional manager is one who specializes in the work of
planning, organizing, leading and controlling the efforts of others and does so through a
systematic use of classified knowledge, a common vocabulary and principles, who subscribes to
the standards of practice and code of ethics established by a recognized body”.

According to Peter Drucker, “Professional management is a function, a discipline, a task to

be done; and managers are the professionals who practice this discipline, carry out the functions
and discharge these tasks. It is no longer relevant whether the manager is also an owner; if he is
it is incidental to his main function, which is to be a manager.”

Hence management is gradually becoming a profession because there are established principles
of management which are being applied in practice, and it involves specialized training and is
governed by ethical code arising out of its social obligations.

6. Management is an earnest and conscientious activity to achieve pre-determined

objectives: Management is a coordinated and planned process to achieve predetermined
objectives. It is concerned with planning, organizing, directing and controlling of the
various activities of the organization to attain the pre-determined objectives. Every
managerial activity has certain objectives, which is to be accomplished in a systematic
manner.
7. Management involves decision-making: The success or failure of an organization can
be judged by the quality of decisions taken by the managers. Management concern with
making decisions regarding the organization and operation of the business in its different
units and dimensions. Therefore, decisions plays an important role in management.

8. Management is dynamic: Management is dynamic in nature. It has to adopt itself and

has to work according to changes in the markets, customers and demands.

9. Management is interdisciplinary: Management is an interdisciplinary hence it draws

ideas and concepts from various disciplines like economics, statistics, mathematics,
psychology, sociology, anthropology etc.

10. Management is Goal Oriented: Management is a purposeful activity. It aims to the

achievement of pre-determined objectives of an organization.

11. Management required at all levels: Management is needed at different levels of an

organisation namely top level, middle level and lower level.

12. Management implies good leadership: A manager must be a good leader, who by hook
or crook gets the desired course of action from the subordinates for the fulfillment of the
predetermined objectives. According to R. C. Davis – “management is the function of
executive leadership everywhere”. Management of the high order involves the capacity of
managers to influence the behaviour of their subordinates.

Scope of Management
Objectives and Importance of Management

1. Management helps to achieve predetermined objectives. Every organization has

2. To reduce cost.

3. To maximize the profit.

4. To utilize scarce resources.

5. To solve the day to day problems.

6. To suggest possible solutions to the problems arising in businesses.

7. To improve brand image of the company.

Principles of Management (General and Industrial Management: Henri Fayol)

In the early twentieth century Henri Fayol developed fourteen principles of Management, based
on his own management experience. These 14 principles of management are as follows:

1. Division of work (Specialization of labor). Henry fayol suggested division of work so that
each and every worker has their own separated and outlined work, which leads to continuous
improvement in skills and the development of improvements in methods of workers.

2. Authority and responsibility. Authority should be given to the employees to take decisions
with freedom. Because independent decisions are more responsible and helps to improve the
morale and skills. Hence employees should have the right to give orders and the power to faithful
obedience with a balance between authority and responsibility.

3. Discipline. Workers working in the organization should be disciplined at both individual level
and organizational level means no slacking and bending of rules.

4. Unity of command. Each employee has one and only one boss or superior to remove conflict
and confusion.

5. Unity of direction. A single mind generates a single plan and all play their part in that plan.
Manger has to work as a leader to direct the subordinates to ensure the success of the plans.

6. Subordination of Individual Interests: Delegation of authority and responsibility should be in

the form so that every individual has own interest to accomplish the work. Hence when at work,
only work things should be pursued or thought about.

7. Remuneration: Employees should receive fair payment for fair days work or services.

8. Centralization. Centralization leads to collaboration of management functions so that decisions

and directions are made from the top.
9. Scalar Chain (line of authority). Dissemination of authority has a top to bottom approach
means a formal chain of command running from top to bottom of the organization i.e. army,
navy, and air force etc.

10. Order. All materials and personnel have a prescribed place, and they must remain there.

11. Equity. Equality of treatment (but not necessarily identical treatment)

12. Personnel Tenure. Limited turnover of personnel. Lifetime employment for good workers.

13. Initiative. Thinking out a plan and do what it takes to make it happen.

14. Esprit de corps. Harmony, cohesion among personnel.

Levels of Management

There are three levels of management suppose to be in any organization namely top, middle, and
lower management. Which categorize the extent to which managers uses the functions of
management in the management hierarchy as shown in figure.

Top Level Management:

The major functions of top level management is planning and organizing. Top management
determines the mission vision and objectives for the organization. It’s a long-range planning. The
main aim of top management is to define the business statements i.e. taking long term decisions.

Middle Level management:

The middle level management implements the mission, vision and objectives determined by top
management. It monitors and controls the all operations, trains, motivates and develops the
employees and also coordinates the functions of various departments.
Lower level or supervisory management:

Lower level management is also known as supervisory management hence it supervises, directs,
and control the actual work. It is the only level of management to manage non-managers.Most of
the supervisors work is allocated to the functions of directing and controlling, to maintain
discipline and good human relations among the actual work force.

Functions Of Management:

Functions of Management:

Various researchers have classified functions of management. Henry Fayol identified five major
functions of management:

1. Planning
2. Organizing
3. Commanding
4. Coordinating and
5. Controlling
Luther Gullick updated them in the term of ‘POSDCORB’ which stands for

1. Planning (P)
2. Organizing (O)
3. Staffing (S)
4. Directing (D)
5. Controlling (CO)
6. Reporting (R) and
7. Budgeting(B)

Koontz and O’Donnell have classified them as following

1. Planning
2. Organizing
3. Staffing
4. Directing and
5. Controlling
Planning:

It is the first function of the management. Planning means determining in advance the future
courses of actions. It bridge the gap between where we are and where we want to go in future. It
is an essential function. Planning helps managers to do following tasks.

 To plan for the organization the he can understand the culture and objectives of the
Organization.
 The Manager has to study the availability of resources.
 It helps him to identify the strength and weakness of the Organization.
 It also helps him to know the opportunities available in the market and who are the
competitors.
 Planning includes selection of missions and objectives and the action plans to achieve
them.
 It consists of rules and regulations, procedures, methods, budgets, strategy and programs ,
needed to achieve the goals.

The process of planning involves following steps:

 1. Determination of organizational objectives
2. Forecasting
3. Gap analysis
4. Decision making
5. Formulation of strategies, rule and regulations and
6. Budgeting

Organizing:

Organizing is the process of placing and assigning work, authority and responsibility, and
resources among the organization’s members so as to achieve organization’s goals.

Organizing provides a proper structure that that enables to run all activities smoothly to achieve
predetermined goals. All the activities to fulfill the goals needed to be grouped together and these
are to be assigned to respective groups or departments. Authority and responsibility,
accountability needed at each level of management to execute predetermined goals are to be
defined and delegated properly. To organize all the people, activities and plans organizing
function involves following steps.

1. Identification of activities to be organized

2. Defining structures of activities according to their nature ( Departmentation).
3. Assigning roles to the employees
4. Delegation of authority to each and every one.
5. Establishing the relationship between authority and responsibility.

Staffing:

Staffing is a process through which an organization ensures that adequate number of manpower
of required quality be available at the right time at the right place. In other words it is a process
of searching right candidates, training, placing them in the right positions or jobs and retaining
them for future. It’s a matching of workforce with the job i.e. the knowledge and skills with the
job requirement.

From the above discussion staffing function involves following

 Identification and selection of right person for the right job.

 All the jobs concerned with recruitment, selection, training, placement, remuneration
appraisal, promotion, career planning of the human resources in the organization to
realize the predetermined objectives effectively and efficiently

Directing:
It is a process of instructing, guiding, and supervising the performance of the workers to achieve
predetermined goals. Directing is the heart of management process hence without staffing other
functions like planning organizing has no importance. It consists of human factors. In simple
words, it may be described as providing guidance to workers for doing work with proper
supervision.

It is clear from above discussion that directing involves following activities:

1. Orders and instructions

2. supervision
3. motivation and communication and
4. leadership

Controlling:

According to Koontz and O’Donnel “Controlling is the measurement of accomplishment against

the standards and the corrections of deviations to assure attainment of objectives according to
plans.” In the words of E.F.L. Breach “Controlling is the process of checking actual
performance against the agreed standards or plans with a view to ensure adequate progress and
satisfactory performance.”

Form above the definitions it is clear that controlling involves two basic aspects:

1. Checking of actual performance against the agreed standards and finding out the
deviations.
2. Taking corrective actions if deviations are there.

Process of Controlling

1. Establishing the standards

2. Measuring the actual performance
3. Comparison of the performance and standards
4. Finding out deviations
5. Taking corrective actions

So it is clear that management is a a social process targeted towards realization of predetermined

objectives through planning, organizing, directing, controlling and coordinating all the activities.

Role of a Manager:
In late 1960s, Henry Mintzberg determined 10 different but inter-related roles of a manager
through his empirical study and grouped them into three category namely; Interpersonal roles,
Informational roles, and Decisional roles.

Informational roles include duties of a legal or social… Shiva Prakashan

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