Notes on Management:

Meaning, Characteristics and Significance

The famous French writer Henri Fayol stated:

To manage is to forecast and to plan, to organize, to command, to co-ordinate and to control.

It is a functional definition of management which clearly indicates the functions of managers.

According to the father of Scientific Management Dr. F. W. Taylor. Management is the art

of “knowing what you want to do” and then seeing that it is done “in the best and cheapest

way”.

The concepts of management have evolved with the evolution in the business world.

Management is considered as a factor of production and this factor is sure to be changed with

the change in the nature of business.

Characteristics of Management:
Management has some distinct features which distinguishes it from other factors of production.

Last but not the least important is the management factor, comparatively of recent origin, which

has marked out a definite place for itself in the whole complex of production.

The distinctive characteristics of management, if analysed, will bring out the following

points in view:
1. Defined object:

The object of management is to achieve the desired goal of the organisation. Effective

management is always management by objectives (Theo Haimann). Terry also is of the opinion

that without definite objectives, effective management cannot be enforced.

2. All-level activity:

In management there is different levels— top, middle, lower etc. At all these levels, besides

carrying out the orders of the higher management, every management level has its own

decision—making powers. So, management characterizes activities at all levels.

3. Combined effort:

A manager, however efficient he may be, cannot do everything alone without the assistance of

others. He needs others to assist him. Management is a group effort. Management personnel as

a team work to achieve the predetermined goals of the organisation.

4. Manager-ship is not usually ownership:

Usually managers are not owners but employees but ownership may not be separate from

manager-ship. Owners themselves may undertake management.

5. Management is a social process:

Management is primarily concerned with the human aspect of production. It deals with people

and, as such, it is a social process.

6. Both an art and science:

Elements of art and principles of science are inherent in management.

7. All level needs:

Management is all pervasive. At all levels of running an organisation, management is needed.

Highest as well as lowest levels of the process of operation, managerial functions are required

to keep the enterprise to attain efficiency and to reach the objectives.

Significance of Management in Business:

It is an accepted concept in Economics that production is the result of the combination of factors

land, labour, capital and organisation. A new dimension has been added to these factors of

production. Management as a distinct activity has proved itself indispensable in organizing

production.

With the progress of time, science and technology have so developed and the productive

process has become so complicated that a simple assembly of land, labour, capital and

organisation cannot yield the desired results and cannot attain the predetermined objectives of

an enterprise unless they are managed efficiently in a scientific way.

Plenty of the attributes of land as defined in Economics, sufficient labour, abundant capital and

the techniques of organisation — all may be at their optimum level but a skilful handing, co-

ordinating, directing and controlling must be there to synchronies these factors.

Management will make the organisation effective by the maximum utilization of the factors. It

will assess the quantum of the need of each fact and there with a scientific outlook, it will

continue its process to achieve the desired goal.

The significance of management has been universally accepted and it has now been

scientifically ascertained that management accounts for over fifty per cent success of an

organisation. It has been surveyed that in spite of the availability of all the factors, it is because
of lack of efficiency in management that has the been stumbling block in the success of an

organization.

Nature of Management Process:

Management is a process which brings the scarce human and material resources together and

motivates people for the achievement of objectives of the organization. Management is not a

onetime act but an on-going series of interrelated activities. The sum total of these activities is

known as management process. It consists of a set of interrelated operations or functions

necessary to achieve desired organizational goals. A process is a systematic way of doing

things. It is concerned with conversion of inputs into outputs. An analysis of management

process will enable us to know the functions which managers perform.

Role of Manager in an Organization

A manager is a person in the organization who directs the activities of others. The managers

perform their work at different levels and they are called by different names. The first line

managers are usually called supervisors or in a manufacturing they may be called foremen.

Middle level mangers include all levels of management between the supervisory level and the

top level of the organization.

These managers may be called functional managers, plant heads, and project managers. Near

the top of hierarchy, there may be top managers who are responsible for making organizational

decisions and setting policies and strategies that affect all the aspects of the organization. These

persons may be called vice-president, managing director, chief executive officer or chairman

of the board etc.

Managerial Functions:

A manager has to perform functions like planning, organizing, staffing, directing and

controlling. All these functions are essential for running an organization smoothly and
achieving enterprise objectives. Planning is required for setting goals and establishing

strategies for coordinating activities.

Managerial Skills:

A manager has to perform a number of jobs. It necessitates that a manager should have proper

skills to perform different jobs.

Henry Fayol put the qualities required by managers into the following categories:

(i) Physical – health, vigour, address.

(ii) Mental – ability to understand and learn; judgement, mental vigour and adaptability.

(iii) Moral – energy, firmness, willingness to accept responsibility, initiative, loyalty, tact,

dignity.

(iv) Educational – general acquaintance with matters not belonging exclusively to the function

performed.

(v) Technical – peculiar to the function.

(vi) Experience – arising from the work proper.

Robert L. Katz conducted research during early 1970’s and found that managers need three

essential skills or competencies ; technical, human and conceptual. He also found that the
relative importance of these skills varied according to the manager’s level within the

organization.

Evolution of Management:

A. Scientific Management:

The growth of factory system led to numerous problems in production and in labour control.

Managers could not solve the problems by trail and error methods. The results could not be

predicted. So the need arose for better management techniques.

The use of method of science for solving management problems was thought of. The scientific

management concept was first developed by F.W. Taylor in between 1895 and 1911.

F.W. Taylor is being called as the Father of scientific, management. In 1878 he joined as a

labourer at Midvale steel company in the USA. From that position he progressed to become

Chief Engineer in 1884. He published papers on “piece rate system”, “the art of cutting

metals” and “shop management”. He published a book on “The Principles of

Management” in 1911.

F.W. Taylor discovered the application of method of science for solving industrial problems.

Application of scientific methods means adopting the following procedures to solve

problems:

a. Observation,

b. Measurement,

c. Experimental comparison, and

d. Formulation of procedure.

He applied the scientific approach to technical and behavioural human problems.

The main features of Taylor’s scientific management are:

a. Science and not rule of thumb.

b. Harmony and not discord.

c. Maximum output and not restricted output.

d. Specialization-Division of work between management and workers.

e. Training and development of workers.

Administrative Management Approach:

Scientific management focused primarily on the efficiency of production, but administrative

management focused on formal organisation structure and the delineation of the basic process

of general management. This approach is also known as functional or process approach and is

based primarily on the ideas of Henry Fayol (1841-1925).

Henry Fayol is recognised as the first person to systematize the administrative approach

activities into six groups, all of which are closely dependent on one another.

They are:

(i) Technical,

(ii) Financial,

(iii) Commercial,

(iv) Accounting, and

(v) Managerial.

He broke down the managerial function into five steps including planning, organizing,

commanding, coordinating and controlling. Further, he developed fourteen management

principles that have been widely circulated as guide for management thought.

These are:
(i) Division of work,
(ii) Authority,

(iii) Discipline,

(iv) Unity of command,

(v) Unity of direction,

(vi) Subordination of individual interest to the common goal,

(vii) Remuneration of staff,

(viii) Centralisation,

(ix) Scalar chain,

(x) Order,

(xi) Equity,

(xii) Stability of staff,

(xiii) Initiative, and

(xiv) Esprit de corps.

(i) Division of Work:

Accordingly, a work is given only a particular work to do. Hence, he can become a specialist

and this specialisation will bring a better efficiency and maximum output.

(ii) Authority:

It is the right to direct to get the work done. This authority is given to execute responsibilities

entrusted and the responsibility is the accountability of authority.

(iii) Discipline:
Discipline is defined by H. Fayol as “outward mark of respect for employment agreements and

organisational rules.” These should be enforced fairly and judiciously.

(iv) Unity of Command:

An employee should receive orders from only one supervisor. If this is not followed, confusion

and conflict will emerge.

(v) Unity of Direction:

Fayol states this principle that “there should be one head and one plan for a group of activities.”

For example the production department should have only one production manager. Without

unity of direction, unity of command cannot function.

(vi) Subordination of Individual Interest to the Common Goal:

While every employee is working with his individual interest, there will be an organisational

interest. So, the individual interest should be integrated with the organisational interest. The

employees should give importance first to the general interest/common goal than his individual

interest.

(vii) Remuneration of Staff:

Remuneration is the payment for services provided by the employees. Since the remuneration

and additional incentives inspires employees to provide their maximum effort to the

organisation, the amount of payment and methods of payment should be chosen carefully and

should be fairly paid.

(viii) Centralisation:

If the top-level person has the full power, it will be called as centralization. By contrast, if the

power is delegated to the subordinates, it will be called as decentralisation. Fayol believed that

while some authority should be given to the subordinates to make decisions, all major policy

decisions should be made at the top management level.

(ix) Scalar Chain:

It means “Line of authority”. According to this principle, communication that is, orders and

instructions should be sent from the top management to the lowest level in the organisation

through the line of authority.

(x) Order:

This principle indicates the arrangement of resources, which may be physical, and human order

means. “A place for everything and everything in its place.” This can be done properly by

developing precise knowledge of the human requirements and the resources of the concern and
having a constant balance between their requirements and their resources.

(xi) Equity:

Equity means a combination of fairness, kindliness and justice. Managers should be both fair

and friendly to the subordinates.

It is not that only the chief executive ought to apply equity in his dealings with the subordinates.

Rather, it is the duty of the chief executive himself to ensure that managers at all levels apply

equity in their dealings with their subordinates. It will help in soliciting loyalty and devotion

from subordinates.

(xii) Stability Off Staff:

Higher labour turnover indicates bad management and bad results and its should be minimized.

Tenure and long term commitment therefore should be encouraged. It is better to have one

manager of average ability than to have very efficient managers who merely come and go.

(xiii) Initiative:

The power of thinking, and executing is called initiative. It is the capacity to decide what needs

to be done. Therefore, subordinates should be encouraged. At times, they will come forward

with new ideas and effective plans.

(xiv) Esprit do Corps:

This is the French word which means feeling of harmony and union among people in the

organisation. So, the employees should work as a team. There is strength in unity.
Importance of Planning: It’s Features, Limitations, Process and Types

Meaning:

Planning can be defined as “thinking in advance what is to be done, when it is to be done, how

it is to be done and by whom it should be done”. In simple words we can say, planning bridges

the gap between where we are standing today and where we want to reach.

Planning involves setting objectives and deciding in advance the appropriate course of action

to achieve these objectives so we can also define planning as setting up of objectives and targets

and formulating an action plan to achieve them.

Another important ingredient of planning is time. Plans are always developed for a fixed time

period as no business can go on planning endlessly.

Features/Nature/Characteristic of Planning:
1. Planning contributes to Objectives:

Planning starts with the determination of objectives. We cannot think of planning in absence

of objective. After setting up of the objectives, planning decides the methods, procedures and

steps to be taken for achievement of set objectives. Planners also help and bring changes in the

plan if things are not moving in the direction of objectives.

For example, if an organisation has the objective of manufacturing 1500 washing machines

and in one month only 80 washing machines are manufactured, then changes are made in the

plan to achieve the final objective.

2. Planning is Primary function of management:

Planning is the primary or first function to be performed by every manager. No other function

can be executed by the manager without performing planning function because objectives are

set up in planning and other functions depend on the objectives only.

3. Pervasive:

Planning is required at all levels of the management. It is not a function restricted to top level

managers only but planning is done by managers at every level. Formation of major plan and
framing of overall policies is the task of top level managers whereas departmental managers

form plan for their respective departments. And lower level managers make plans to support

the overall objectives and to carry on day to day activities.

4. Planning is futuristic/Forward looking:

Planning always means looking ahead or planning is a futuristic function. Planning is never

done for the past. All the managers try to make predictions and assumptions for future and

these predictions are made on the basis of past experiences of the manager and with the regular

and intelligent scanning of the general environment.

5. Planning is continuous:

Planning is a never ending or continuous process because after making plans also one has to
be in touch with the changes in changing environment and in the selection of one best way.

Decision-Making: Definition, Importance

Decision is an act of selection or choice of one action from several alternatives.

Decision-making can be defined as the process of selecting a right and effective course of

action from two or more alternatives for the purpose of achieving a desired result. Decision-

making is the essence of management.

According to P. F. Drucker – “Whatever a manager does he does through making

decisions.” All matters relating to planning, organising, direction, co-ordination and control

are settled by the managers through decisions which are executed into practice by the operators

of the enterprise. Objectives, goals, strategies, policies and organisational designs are all to be
decided upon in order to regulate the performance of the business.

The entire managerial process is based on decisions. Decisions are needed both for tackling the

problems as well as for taking maximum advantages of the opportunities available. Correct

decisions reduce complexities, uncertainties and diversities of the organisational environments.

Importance of Decision-Making:

Management is essentially a bundle of decision-making process. The managers of an enterprise

are responsible for making decisions and ascertaining that the decisions made are carried out

in accordance with defined objectives or goals.

Decision-making plays a vital role in management. Decision-making is perhaps the most

important component of a manager’s activities. It plays the most important role in the planning

process. When the managers plan, they decide on many matters as what goals their organisation

will pursue, what resources they will use, and who will perform each required task.

When plans go wrong or out of track, the managers have to decide what to do to correct the
deviation.

In fact, the whole planning process involves the managers constantly in a series of decision-

making situations. The quality of managerial decisions largely affects the effectiveness of the

plans made by them. In organising process, the manager is to decide upon the structure, division

of work, nature of responsibility and relationships, the procedure of establishing such

responsibility and relationship and so on.

7 Steps involved in Decision Making Process

Decision making is a long and continuous process that involves a number of steps. The

steps involved in the decision-making process (as shown in Figure-2) are explained as

follows:
Setting Objectives:

Refers to the first step of the decision-making process. It is necessary for an organization to

define the objectives of taking a particular decision. The decision-making process of an

organization can be successful if the objectives are clear, realistic, and aligned with the present

market conditions.

In addition, it is preferred that the objectives should be in quantitative form, so that results can
be measured more accurately. Apart from this, the objectives should clearly mention the goals
that an organization desires to achieve and the time period to achieve those goals. For example,

an organization can set an objective ‘to reduce the cost by 5% in the next fiscal year.’

2. Defining the problem:

An organization can be successful if it clearly identifies the problem for which a decision is to

be taken.

3. Identifying the causal factors:

Involves determining the factors that may affect the decision. For example, for setting the price

of a new product, it is required to determine the factors that influence the prices of the product.

These factors can be availability of substitutes, climatic conditions, income level of consumers,
demand and supply of the product, and costs incurred in manufacturing the product.

4. Finding out alternatives:

Refers to the step in which all the possible alternatives are generated for solving a problem. In

this step, an organization precisely identifies the multiple solutions to solve a problem.

5. Collecting information:

Involves gathering data with respect to the alternatives generated so that they can be properly

analyzed. The information collected is related to the important economic variables that

influences the problem. Generally, an organization collects information from internal and

external sources.

6. Evaluating information:

Constitutes an important step of the decision-making process. In this step, the collected data is

analyzed so that best alternative can be selected. Many of the alternatives are eliminated if they

are not able to meet the requirements of the organization or do not match with the budget or

other constraints of the organization.

All the alternatives are analyzed on the basis of their advantages and disadvantages. After

conducting a thorough analysis of the alternatives with the help of quantitative and qualitative

tools, the best alternative is selected.

7. Implementing the alternative and monitoring results:

Moreover, the organization keeps a tab on the results generated after implementing the selected

alternative.

Organising

Organising is that managerial process which seeks to define the role of each individual

(manager and operator) towards the attainment of enterprise objectives; with due regard to

establishing authority-responsibility relationships among all; and providing for co-ordination

in the enterprise-as an in-built device for obtaining harmonious groups action.

“Organising is the process of identifying and grouping the work to be performed, defining and

delegating the responsibility and authority and establishing a pattern of relationship for the

purpose of enabling people work most effectively to accomplish the objective”.

As a function of management, organizing is a process; broadly consisting of the following

steps:
(i) Determination of the Total Work-Load:

The very first step in the process of organizing is to make a determination of all the activities

which are necessary to be undertaken for the attainment of the enterprise objectives. This step
of organizing is, in fact, nothing but an estimation of the total work-load that must be done for

realizing objectives.

(ii) Grouping and Sub-Grouping of Activities i.e. Creation of Departmentation:

Total activities determined for achieving enterprises objectives must be classified i.e. putting

similar or related activities at one place in the form of a group or sub-group

(iii) Creation of Manager-Ship through Delegation of Authority:

After the scheme of departmentation is finalized; the next step in the process of organizing

would be to entrust the responsibility for the functioning of each department to a distinct

manager. Creation of manager-ship, in this manner, requires a requisite delegation of authority

to each manager to enable the manager to take care of the job assigned to him.

(iv) Division of Work within the Departmental Set-Up-Human Organization:

Since no single individual can undertake the performance of the whole of the work assigned to

one department; it becomes necessary to resort to division of work-assigning to each person

only one part of the total job. As a result to undertaking division of work for all departments;

there emerges a human organization within the enterprise.

(v) Arrangement of Physical Facilities to Personnel within the Departmental Set-Up-Material

Organisation:

Each individual of the enterprise, working in whatever capacity, in any department, must need

the basic physical facilities-raw materials, machines and tools, technology and other inputs-for

the proper execution of the assigned task.

(vi) Definition and Establishment of Authority-Responsibility Relationships;

Having created manager-ship and a human organization within the enterprise; it becomes

necessary to devise a system which provides for defining and establishing authority-

responsibility relationships among all personnel-managers and operators.

As a matter of fact, such relationships must be defined and established throughout the enterprise

both-horizontally and vertically.

Some important aspects of the role of the organisation could be stated as follows:

(i) Facilitates specialization:

An organisation exists basically to take care of and implement the division of work of various

types-among managers, subordinates and operators. Such division of work, leading to

specialization in various spheres, is instrumental in bringing about increased human efficiency

in the organization functioning.

Point of comment:

Division of work, not only enables an enterprise to take advantages of specialization, in

managerial and operational work; it also makes for order and system, in the functioning of the

organisation.

(ii) Avoids omissions, overlapping and duplication of efforts:

While dividing work among departments and individuals, during the process of

organizing, care is exercised by management to see that:

(a) No part of work, necessary for attainment of objectives, is lost sight of

(b) There is no overlapping or duplication of activities and efforts, while assigning work to
individuals and departments.

That way, the organisation leads to an economical, effective and efficient functioning of the

enterprise.

(iii) Defines (or clarifies) authority responsibility relationships:

An organizational structure defines and clarifies, authority responsibility relationships among

managers and subordinates in the enterprise all through horizontally and vertically. Such

clarification of authority responsibility relationships not only means a smooth functioning of

the organizational life; but also promotes good human relations, in the organisation through

facilitating mutual understanding of one another.

(iv) Facilitates staffing:

The organizational structure is a great aid to efficient staffing. It, by clearly defining various

organizational positions-managerial and operational, not only points out to the need for

appropriate personnel who must man these positions; but also specifies the requirements to be

sought after in various personnel in terms of the abilities and skills needed to perform those

jobs.