KIIT Deemed to be University, B.

com 3rd Sem 2022

Unit – 1 INTRODUCTION OF MANAGEMENT

AIMS AND OBJECTIVES

After studying this lesson you will be able to:

(i) Understand the meaning and characteristics of management.
(ii) Describe scope of management
(iii) Understand functions of management.
(iv) Know the nature of management i.e. is it a science or an art.
(v) Understand skill of the manager.
(vi) Describe management as a profession.
(vii) Understand scientific management.
(viii) Understand the evolution of management thought.
(ix) Understand the principles of management by H. Fayol.

CONTENTS
1.1 Introduction
1.2 Meaning of Management
1.3 Definition of Management
1.4 Nature or Characteristics of Management
1.5 Scope of Management
1.6 Is Management a Science or an Art?
1.7 Professionalization of Management
1.8 Functions of Management
1.9 Skills of a Manager
1.10 Characteristics of Quality Managers
1.11 Universality of Management
1.12 Process of Management
1.13 Development of Management
• Pre-scientific Management Period
• Classical Theory
• Neo-Classical Theory
• Modern Theory
1.14 Summary
1.15 Self-Assessment Questions

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1.1.INTRODUCTION
Management is a universal process in all organized, social and economic activities. Wherever
there is human activity there is management.
Management is a vital aspect of the economic life of man, which is an organized group activity.
A central directing and controlling agency is indispensable for a business concern. The
productive resources –material, labour, capital etc. are entrusted to the organizing skill,
administrative ability and enterprising initiative of the management. Thus, management
provides leadership to a business enterprise. Without able managers and effective managerial
leadership the resources of production remain merely resources and never become production.
Management occupies such an important place in the modern world that the welfare of the
people and the destiny of the country are very much influenced by it.
1.2 MEANING OF MANAGEMENT

Management is a technique of extracting work from others in an integrated and co-ordinated

manner for realizing the specific objectives through productive use of material resources.
Mobilising the physical, human and financial resources and planning their utilization for
business operations in such a manner as to reach the defined goals can be benefited to as
management.

1.3 DEFINITION OF MANAGEMENT

Management may be defined in many different ways. Many eminent authors on the subject have
defined the term "management". Some of these definitions are reproduced below:
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 James L Lundy - "Management is principally the task of planning, coordinating,
motivating and controlling the efforts of others towards a specific objective",
In the words of Henry Fayol - "To manage is to forecast and to plan, to organise, to command, to
co-ordinate and to control".
According to Peter F Drucker - "Management is a multipurpose organ that manages a business
and manages managers and manages worker and work".
In the words of J.N. Schulze - "Management is the force which leads, guides and directs an
organisation in the accomplishment of a pre-determined object".
In the words of Koontz and O'Donnel - "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".
According to Ordway Tead - "Management is the process and agency which directs and guides

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the operations of an organisation in realising of established aims".
According to Stanley Vance - "Management is simply the process of decision-making and
control over the actions of human beings for the express purpose of attaining predetermined
goals".
According to Wheeler - "Business management is a human activity which directs and controls
the organisation and operation of a business enterprise. Management is centred in the
administrators of managers of the firm who integrate men, material and money into an effective
operating limit".
In the words of William Spriegel - "Management is that function of an enterprise which
concerns itself with the direction and control of the various activities to attain the business
objectives".
In the words of S. George - "Management consists of getting things done through others.
Manager is one who accomplishes the objectives by directing the efforts of others".
In the words of Keith and Gubellini - "Management is the force that integrates men and physical
plant into an effective operating unit".
According to Newman, Summer and Warren - "The job of management is to make cooperative
endeavour to function properly. A manager is one who gets things done by working with people
and other resources".
According to John F M - "Management may be defined as the art of securing maximum results
with a minimum of effort so as to secure maximum results with a minimum of effort so as to
secure maximum prosperity and happiness for both employer and employee and give the public
the best possible service".
In the words of Kimball and Kimball - "Management embraces all duties and functions that
pertain to the initiation of an enterprise, its financing, the establishment of all major policies, the
provision of all necessary equipment, the outlining of the general form of organisation under
which the enterprise is to operate and the selection of the principal officers. The group of
officials in primary control of an enterprise is referred to as management".
According to E. Peterson and E.G Plowman - Management is "a technique by means of which
the purpose and objectives of a particular human group are determined, classified and
effectuated".
According to Mary gushing Niles - "Good management or scientific management achieves a
social objective with the best use of human and material energy and time and with satisfaction
for the participants and the public".
If the views of the various authorities are combined, management could be defined as "a distinct
ongoing process of allocating inputs of an organisation (human and economic resources) by
typical managerial functions (planning, organising, directing and controlling) for the purpose of

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achieving stated objectives namely - output of goods and services desired by its customers
(environment). In the process, work is performed with and through personnel of the organisation
in an ever-changing business environment".
Management is a universal process in all organised social and economic activities. It is not
merely restricted to factory, shop or office. It is an operative force in all complex organisations
trying to achieve some stated objectives. Management is necessary for a business firm,
government enterprises, education and health services, military organisations, trade associations
and so on.
1.4 NATURE OR CHARACTERISTICS OF MANAGEMENT
An analysis of the various definitions of management indicates that management has certain
characteristics. The following are the salient characteristics of management.
1. Management is a Factor of Production: Manager's primary task is to secure the productive
performance through planning, direction and control. It is expected of the management to
bring into being the desired results. Rational utilisation of available resources to maximise
the profit is the economic function of a manager. Professional manager can prove his
administrative talent only by economising the resources and enhancing profit. According to
Kimball -"management is the art of applying the economic principles that underlie the
control of men and materials in the enterprise under consideration".
2. Management also implies skill and experience in getting things done through people:
Management involves doing the job through people. The economic function of earning
profitable return cannot be performed without enlisting co-operation and securing positive
response from "people". Getting the suitable type of people to execute the operations is the
significant aspect of management.
3. Management is a process: Management is a process, function or activity. This
process continues till the objectives set by administration are actually achieved.
"Management is a social process involving co-ordination of human and material
resources through the functions of planning, organising, staffing, leading and
controlling in order to accomplish stated objectives".
3. 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.
4. Management is a Science as well as an Art: Management is an art because
there are definite principles of management. It is also a science because by the
application of these principles predetermined objectives can be achieved.
5. 'Management is a Profession: Management is gradually becoming a profession
because there are established principles of management which are being applied in
practice, and it involves specialised training and is governed by ethical code arising
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out of its social obligations.
6. Management is an endeavour to achieve pre-determined objectives:Management is
concerned with directing and controlling of the various activities of the organisation to attain the
pre-determined objectives. Every managerial activity has certain objectives. In fact, management
deals particularly with the actual directing of human efforts.
8. Management is a group activity: Management comes into existence only when
there is an group activity towards a common objective. Management is always
concerned with group efforts and not individual efforts. To achieve the goals of an
organisation management plans, organises, co-ordinates, directs and controls the
group effort.
9. Management is a system of authority: Authority means power to make others
act in a predetermined manner. Management formalises a standard set of rules
and procedure, to be followed by the subordinates and ensures their compliance
with the rules and regulations. Since management is a process of directing men to
perform a task, authority to extract the work from others is implied in the very concept of
management.
10. Management involves decision-making: Management implies making decisions
regarding the organisation and operation of business in its different dimensions. The success or
failure of an organisation can be judged by the quality of decisions taken by the managers.
Therefore, decisions are the key to the performance of a manager.
11. Management implies good leadership: A manager must have the ability to lead
and get the desired course of action from the subordinates. According to R. C. Davis-
"management is the function of executive leadership everywhere". Management of
the high order implies the capacity of managers to influence the behaviour of their
subordinates.
12. Management is dynamic and not static: The principles of management are
dynamic and not static. It has to adopt itself according to social changes.
13. Management draws ideas and concepts from various disciplines: Management
is an interdisciplinary study. It draws ideas and concepts from various disciplines
like economics, statistics, mathematics, psychology, sociology, anthropology etc.
14. Management is Goal Oriented: Management is a purposeful activity. It is
concerned with the achievement of pre-determined objectives of an organisation.
15. Management is Intangible: It cannot be seen with the eyes. It is evidenced only by the
quality of the organization and the results i.e. profits, increased productivity etc.
1.5 SCOPE OF MANAGEMENT
It is very difficult to precisely state the scope of management. However, management includes

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the following aspects:-
 Subject-matter of Management
Management is considered as a continuing activity made up of basic management functions like
planning, organizing, staffing, directing and controlling. These components form the subject-
matter of management.
 Functional Areas of Management
Management covers the following functional areas:-

• Financial Management: Financial management includes forecasting, cost control,

management accounting, budgetary control, statistical control, financial planning etc.
• Human Resource Management: Personnel/Human Resource management
covers the various aspects relating to the employees of the organisation such as
recruitment, training, transfers, promotions, retirement, terminations, remuneration,
labour welfare and social security, industrial relations etc.
• Marketing Management: Marketing management deals with marketing of goods,
sales promotion, advertisement and publicity, channels of distribution, market
research etc.
• Production Management: Production management includes production planning,
quality control and inspection, production techniques etc.
• Material Management: Material management includes purchase of materials,
issue of materials, storage of materials, maintenance of records, materials control
etc,
• Purchasing Management: Purchasing management includes inviting tenders for
raw materials, placing orders, entering into contracts etc.

• Maintenance Management: Maintenance management relates to the proper care

and maintenance of the buildings, plant and machinery etc.
• Office Management: Office management is concerned with office layout, office staffing
and equipment of the office.
 Management is an Inter-Disciplinary Approach
Though management is regarded as a separate discipline, for the correct application of the
management principles, study of commerce, economics, sociology, psychology, and mathematics
is very essential. The science of management draws ideas and concepts from a number of
disciplines making it a multi-disciplinary subject.

 Principles of Management
The principles of management are of universal application. These principles are applicable to
any group activity undertaken for the achievement of" some common goals.

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 Management is an Agent of Change
The techniques of management can be improved by proper research and development.

 Essentials of Management
The essentials of management include scientific method, human relations and quantitative
techniques.

1.6 Is MANAGEMENT A SCIENCE OR AN ART?

A. question often arises whether management is a science or art. It is said that "management is
the oldest of arts and the youngest of sciences". This explains the changing nature of
management but does not exactly answer what management is? To have an exact answer to the
question it is necessary to know the meanings of the terms "Science" and "Art".

What is "Science"?

Science may be described- "as a, systematic body of knowledge pertaining to an area of study
and contains some -general truths explaining past events or phenomena".

The above definition contains three important characteristics of science. They are:
1. It is a systematized body of knowledge and uses scientific methods for observation
2. Its principles are evolved on the basis of continued observation and experiment and
3. Its principles are exact and have universal applicability without any limitation.
Judging from the above characteristics of science, it may be observed that-
1. Management is a systematized body of knowledge arid its principles have evolved on the
basis of observation.
2. The kind of experimentation (as in natural sciences) cannot be accompanied in the
area of management since management deals with the human element.
3. In management, it is not possible to define, analyse and measure phenomena by
repeating the same conditions over and over again to obtain a proof.
The above observation puts a limitation on management as a science. Management like other
social sciences can be called as "inexact science".

What is "Art"?

'Art' refers to "the way of doing specific things; it indicates how an objective is to be achieved."
Management like any other operational activity has to be an art. Most of the managerial acts
have to be cultivated as arts of attaining mastery to secure action and results.

The above definition contains three important characteristics of art. They are-

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1. Art is the application of science. It is putting principle into practice,
2. After knowing a particular art, practice is needed to reach the level of perfection.
3. It is undertaken for accomplishing an end through deliberate efforts.
Judging from the above characteristics of art, it may be observed that-
1. Management while performing the activities of getting things done by others is
required to apply the knowledge of certain underlying principles which are necessary
for every art.
2. Management gets perfection in the art of managing only through continuous practice.
3. Management implies capacity to apply accurately the knowledge to solve the problems, to
face the situation and to realise the objectives fully and timely.
The above observation makes management an art and that to a fine art.

Management is both a Science as well as an Art

Management is both a science as well as an art. The science of management provides certain
general principles which can guide the managers in their professional effort. The art of
management consists in tackling every situation in an effective manner. As a matter of fact,
neither science should be over emphasized nor art should be discounted; the science and the art
of management go together and are both mutually interdependent and complimentary.

Management is thus a science as well as an art. It can be said that-"the art of management is as
old as human history, but the science of. management is an event of the recent past."

1.7 PROFESSIONALISATION OF MANAGEMENT

There has been a growing trend towards professionalisation of management. Professionalisation

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, professionalisation makes business more efficient, dynamic and
socially responsible. The growth of management education in India has contributed to
professionalisation in the business field.

The company form of business organization which has split ownership from management and
the gaining popularity of the company form of business organization have increased the need for
professional managers.

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."

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The World Council of Management has recommended the following criteria for
professionalisation. They are:
1. Members of a profession subordinate self-interest to the client interest and the official
interest.
2. A profession is based on a systematic body of knowledge that is held to common and lends
to application.
3. Membership of a profession should depend on the observance of certain rules of conduct or
behaviour.

A critical evaluation of the above definitions show that professionalisation of business

management shows that:

1. There exists a systematic body of knowledge on management. A professional should have

formally acquired the specialized knowledge and skill for management. Management is taught as
a discipline in various educational institutes, throughout the world.

2. Membership of a profession should depend on the observance of certain rules of conduct

and behaviour. The decisions and actions of a professional are guided by certain ethical
considerations.
3. A profession is based on a systematic body of knowledge that is held in common and lends
itself to application. Thus, a profession should have no ideological bias in the discharge of
his functions.
A close scrutiny of management shows that management unlike law or medicine is not a full-
fledged profession. The reasons are -
1. It is not obligatory to possess specific qualifications for being appointed as a manager.
2. There is no single association to regulate the educational and training standards of
managers.
3. Uniform professional standards have not been set up for the practicing managers.
1.8 FUNCTIONS OF MANAGEMENT
Functions of management
A manager is called upon to perform the following managerial functions:
1. Planning
2. Organising
3. Staffing
4. Directing
5. Leadership
6. Communication
7. Motivation
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8. Supervision
9. Co-ordination
10. Controlling
1. Planning: Planning is a basic managerial function. Planning helps in determining the course
of action to be followed for achieving various organisational objectives: It is a decision in
advance, what to do, when to do how to do and who will do a particular task. Planning is a
process which involves 'thinking before doing'. Planning is concerned with the mental state of a
manager. He thinks before undertaking a work. Other functions of management such as
organising, staffing, directing, co-ordinating and controlling are also undertaken after planning.

Hart defines planning as "the determination in advance of a line of action by which certain
results arc to be achieved." According to Terry, "'Planning is the selecting and relating of facts
and the making and using of assumptions regarding the future in the visualisation and
formulations of proposed activities believed necessary to achieve desired results."
Planning is a process of looking ahead. The primary object of planning is to achieve better
results. It involves the selection of organisational objectives and developing policies, procedure,
programmes, budgets and strategies. Planning is a continuous process that takes place at all
levels of management. A detailed planning is done in the beginning but the actual performance is
reviewed and suitable changes are made in plans when actual execution is done. Plans may be of
many kinds, such as short range plans, medium range plans, long range plans, standing plans,
single use plans, strategic plans, administrative plans and operational plans.

The process of Planning involves a number of steps : (i) gathering information ; (ii) laying down
objectives; (iii) developing planning premises; (iv) examining alternative courses of action; (v)
evaluation of action patterns ; (vi) reviewing limitations (vii) implementation of plans.

2. Organising. Every business enterprise needs the services of a number of persons to look after
its different aspects. The management sets up the objectives or goals to be achieved by its
personnel. The energy of every individual is channelised to achieve the enterprise objectives.
The function of organising is to arrange, guide, co-ordinate, direct and control the activities of
other factors of production, viz., men, material, money and machines so as to accomplish the
objectives of the enterprise. In the words of Koontz and O'Donnel, "Organising that part of
managing that involve establishing and intentional structure of roles for people in an enterprise to
fill." Organisation provides the necessary framework within which people associate for the
attainment of business objectives.

Louis A. Allen describes organisation as, "the process of identifying and grouping work to be
performed, defining and delegating responsibility and authority and establishing relationships for
the purpose of enabling people to work most effectively together in accomplishing objectives."
The process of organisation involves the following steps:

(i) to identify the work to be performed;

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(ii) to classify or group the work ;
(iii) to assign these groups of activities or work to individuals;
(iv) to delegate authority and fix responsibility and
(v) to co-ordinate these authority-responsibility relationships of various activities.
The character and type of organisation depends upon the size and nature of the enterprise.
Though there are many types of organisations but generally three types of organisations are in
vogue :

(i) Line organisation

(ii) Functional organisation; and
(iii) Line and staff organisation
In line organisation authority flows vertically from the top of the hierarchy to the bottom. Under
functional organisation, the work is divided into different departments. Each department deals in
one type of work and it specialises in one work only. A workman has to work under many
superiors who specialise in different functions. Line and staff organisation provides for
specialists with line executives. It is a combination of line and functional form of organisation.

A sound organisation contributes greatly to the continuity and success of the enterprise.
However, an organisation is not an end in itself. The organisation structure should be flexible.

3. Staffing. The function involves manning the positions created by organisation process. It is
concerned with human resources of an organisation. In the words of Koontz and O'Donnel,
"staffing is filling, and keeping filled, positions in the organisation structure through defining
work-force requirements, appraising, selecting, compensating and training. Thus, staffing
consists of the following:

(i) Manpower planning i.e., assessing manpower requirements in terms of quantity and
quality.
(ii) recruitment, selection and training:
(iii) Placement of man power;
(iv) development, promotion, transfer and appraisal
(v) determination of employee remuneration.
Every manager in an organisation has to perform the staffing function in one form or the other,
in order to get things done through others. But, it is decidedly a difficult managerial function as
it concerns human beings whose behaviour and actions cannot be predicted, and that is why it
has become a distinct and specialised branch of management.

4. Directing. Directing is concerned with carrying out the desired plans. It initiates organised
and planned action and ensures effective performance by subordinates towards the
accomplishment of group activities. Direction is called management in action. In the words of
George R. Terry, "Direction is moving to action and supplying stimulative power to the group."

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After planning, organising and staffing, the manager has to guide and supervise his subordinates.
According to Massie, "Directing concerns the total manner in which a manager influences the
actions of subordinates. It is the final action of a manager in getting others to act after all
preparations have been completed."

5. Leadership. A manager has to issue orders and instructions and guide and counsel his
subordinates in their work with a view to improve their performance and achieve enterprise
objectives. Leadership is the process by which an executive or manager imaginatively
directs/guides and influences the work of others in choosing and attaining specified goals by
mediating between the individual and organisation in such a manner that both will get maximum
satisfaction.

Leadership is the ability to build up confidence and zeal among people and to create an urge in
them, to be led. To be a successful leader, a manager must possess the qualities of foresight,
drive, initiative, self-confidence and personal integrity. Different situations may demand
different types of leadership, viz., autocratic leadership, democratic leadership and free rein
leadership.

6. Communication. Communication constitutes a very important function of management. u is

said to be the number one problem of management today. It is an established fact that managers
spend 75 to 90 per cent of their working time in communicating with others. Communication is
the means by which the behaviour of the subordinate is modified and change is effected in their
actions.

The word 'communication' has been derived from the Latin word 'communis' which means
'common'. Thus, communication means sharing of ideas in common. The essence of
communication is getting the receiver and the sender tuned together for a particular message. It
refers to the exchange of ideas, feelings, emotions and knowledge and informations between two
or more persons. Nothing happens in management till communication takes place.

Communication is a two-way process as it involves both information and understanding. It may

be written, oral, gestural. Communication is said to be formal when it follows the formal
channels provided in the organisation structure. It is informal communication, when it does not
follow the formal channels. Communication flows downward from a superior to subordinates
and upward from subordinates to a superior. It also flows between two or more persons operating
at the same level of authority.

Communication is essential at all levels of management for decision- making and planning. It
increases managerial capacity and facilitates control. It has been rightly said that good managers
are good communicators and poor managers are poor communicators.

7. Motivation. The term motivation is derived from the word 'motive' which means a need, or an
emotion that prompts an individual into action. Motivation is the psychological process of
creating urge among the subordinates to do certain things or behave in the desired manner. It is a
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very important function of management. The importance of motivation can be realised from the
fact that performance of a worker depends upon his ability and the motivation.
There are many strategics adopted by managers for increasing the motivation of subordinates.
According to Michel Jucius, Motivation means the act of stimulating some one or oneself to get
a desired course of action to push the right button to get a desired reaction, a compliment, dollar
raise, a smile, a promise of a rise, a new typewriter, a preferred location or a new desk." Thus, a
manager has to provide some personal incentive to the subordinates to motivate, persuade and
inspire them for contributing their best towards the achievement of enterprise objectives. The
incentives to be proved may be financial such as increase in wages, or non-financial, like better
working conditions, job security, recognition, etc. A sound motivational system must be
productive, competitive, comprehensive and flexible, and it must consider the psychological,
social, safety, ego and economic needs of the workers.

8. Supervision. Supervision is another important element of directing function of management.

After issuing instructions, the manager or the supervisor has to see that the given instructions are
carried out. This is the aim of supervision. Supervision refers to the job of overseeing
subordinates at work to ensure maximum utilisation of resources to get the required and directed
work done and to correct the subordinates whenever they go wrong. Though supervision is
performed at all levels of management, the major responsibility for supervision lies with the first
line of management. Sound organisational set up, effective delegation, human approach,
effective communication and management by exception make supervision effective.

9. Co-ordination. Co-ordination is one of the most important functions of management. It is

essential to channelise the activities of various individuals in the organisation for the
achievement of common goals. Every department or section is given a target to be achieved and
they should concentrate only on their work and should not bother about the work of other
organs. It is left to the management to see that the work of different segments is going according
to pre-determined targets and corrective measures have to be taken if there is any deviation. Co-
ordination creates a team spirit and helps in achieving goals through collective efforts. It is the
orderly arrangement of group effort to provide unity of action in the persuit of common
objectives.

Dalton McFarland defines co-ordination as the "process whereby an executive develops an

orderly pattern of group effort among his subordinates and secures unity of action in the pursuit
of common purposes."

Co-ordination can be classified under two categories: (i) vertical and horizontal co-ordination,
and (ii) internal and external co-ordination. Whereas vertical co-ordination is the co-ordination
between different levels of management, the term horizontal co-ordination is used when co-
ordination has to be achieved between departments of the same level of authority. Co-ordination
is internal when it is between different sections of the same concern and external when it is
required with persons outside the organisation.

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10. Controlling. Controlling can be defined as "determining what is being accomplished, that is
evaluating the performance, if necessary, applying corrective measures so that the performance
takes place according to plans.

Control is essential for achieving objectives of an enterprise. The planning of various activities
does not ensure automatic implementation of policies. Control is the process which enables
management to get its policies implemented and take corrective actions if performance is not
according to the predetermined standards. If planning is the beginning of the management
process, controlling may be said to be the final stage. If planning is looking ahead, controlling is
looking back. Control is not possible without planning and planning is meaningless without
control.

Control is a line function and executives at various levels of management continuously assess the
performance of their subordinates. The main purpose of control is to see that the activity is
achieving the desired results. A control system, to be effective, must conform to the nature of
activity, report deviations promptly, reflect organisation structure, assure corrective action and be
economical.

The process of controlling involves the following steps :

(i) establishing standards of performance ;

(ii) measuring actual performance ;
(iii) comparing the actual performance with the standard.;
(iv) finding variances or deviations, if any ; and
(v) taking corrective action or measures.
1.9 SKILLS OF A MANAGER
A. Technical Skills
Robert Katz has put various management skills into three broad categories; technical skills,
human skills, conceptual skills. It refer to knowledge and proficiency in processes, procedures,
methods and techniques which are used in doing a work. These skills are hard skills and are
easily visible in a person. Technical skills are developed by accountants, engineers, managers,
and other persons through the actual practice by doing things.
B. Human Skills
Human skills, also known as human relations skills or administrative skills, are the ability of a
person to work with others on a person-to-person basis and to build cooperative group relations
to achieve group objectives and, consequently, organizational objectives.
C.Conceptual Skills
Conceptual skills, also known as general management skills, are related to concepts and mental
perception conceptual framework intended to develop new ideas, products, etc. Conceptual skills

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refer to the ability to see the whole picture to recognize significant elements in a situation and to
understand the relationship among these elements.
In short, technical skills deal with things, human skins deal with people, and conceptual skills
deal with ideas. Managers require these skills. However, what "will be proportion of these skills
in managers depends on the management levels at which they work. Managers at lower level
require technical skills more; managers at middle level require human skills more, and managers
at top level require conceptual skills more.
Besides these three skills, various writers and researchers have provided other skill sets for
various levels of management.
Top Management Skills: As per need of the world, much attention has been focused on the
skills and their development in top management because this level is the major driving force in
an organization. In a survey of 90 global chief executives, conducted by Anderson Consulting, a
US-based consultancy firm shows that the chief executives require fourteen skills. Accordingly,
a chief executive thinks globally, anticipates opportunities, creates a shared vision, develops and
empowers people, appreciates cultural diversity, builds teamwork and partnership, embraces
changes, shows technological savvy, encourages constructive challenge, ensures customer
satisfaction, achieves a competitive advantage, demonstrates personal mastery, shares
leadership, and lives the values.7 In Indian context, one such study of 125 chief executives has
identified various relevant personal skills as analytical skills, creativity, sense of high
achievement, risk-taking aptitudes, business aptitudes, leadership; job-related skills such as
corporate perspective, knowledge of external environment, outside contacts, planning processes,
and accuracy in work.

Middle Management Skills: In middle management group, there may be managers at different
levels placed between the top management and supervisors. Usually, they are concerned with a
particular functional area of the organization. There is a tendency of faster movement of this
group of managers. Therefore, they require a variety of skills which must be relevant for their
entire career. While at the lower end of middle management, more of technical and human skills
are required; at the higher end of middle management, more creative and integrative skills are
required. Thus, the managers in the middle management require human relations skill, leadership
skill, motivating skill and integrative skill.

Supervisory Management Skills: Supervisors may also be classified into front-line,

intermediate, and senior. Since they are directly concerned with operatives where the actual
operations of the organization take place, supervisors should possess skills which help them to
get things done by operatives. Every supervisor in the organization should have sound technical
knowledge of his field to provide proper instructions and guidance to operatives, interpersonal
skill to develop cohesive operative-management relations, accuracy in work, motivational skill
for creating proper work environment, and communication skill for interacting with higher
management.

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1.10 CHARACTERISTICS OF QUALITY MANAGERS
Quality managers (or good managers) are those managers who continuously strive for success
and ultimately achieve it. Though success of managers depends on their own characteristics as
well as on the contextual variables which affect their working as discussed earlier, managers
having characteristics of quality managers tend to be successful even in unfavourable situations
as they have qualities to convert unfavourable situations into favourable situations. Various
academicians and practitioners have made attempts to describe characteristics of quality/
effective/successful managers. As a result, there is lot of literature on this issue. In a
comparatively recent publication, Rao has identified dimensions of managers who make a
difference: versatility, efficacy, internality, values, creativity, interpersonal engagement, team
building, time and talent management, communication and motivation, and leadership styles.
Based on this and other literature, it may be concluded that the characteristics of quality
managers are as follows:

1. Professional Competence. Professional competence refers to having thorough

knowledge of the field concerned. In the case of management, professional competence
involves being well-versed in management principles and how these principles can be
applied in the given situations.
2. Belief in High Achievement. Quality managers have belief in high achievement. They have
internal locus of control implying that they feel that they can control situations and the situations
cannot control them. They have a feeling that if others can do something exceptional, they can
also do the same way. This belief instills confidence in them for doing better and better.
3. Creativity. Creativity involves conceiving of original and unique alternatives to the
solution of a problem. Creativity is required because nature of problems goes on changing
requiring innovative solutions.
4. Analytical Skills. Managers have to work in complex situations which contain both
significant and insignificant factors. With analytical skills, quality managers may be able to
identify those factors which are more relevant for their work.
5. Decisive. Quality managers are quite decisive. They make decisions after careful analysis of
the contextual variables well in time. They do not waver between 'what to do' or 'what not to do'
in a given situation.
6. Excellent Communication Skills. Communication involves sharing of ideas and
understanding with others. In order to understand others and making himself understood by
others, excellent communication skills are required. Further, persuasive communication may
influence others favourably.
7. Leading from the Front. Quality managers lead from the front. They do not speak about
themselves but their work speaks on their behalf. This feature leads the followers to follow the
leaders enthusiastically.

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8. Openness. Quality managers have quality of openness. They are change-prone and not
change-resistant. Being open, they appreciate any idea which is fruitful and accept it from
whatever source it comes.
9. High Integrity. Quality managers have high integrity and adopt ethical practices in all types
of decisions and dealings. Similarly, they expect the same pattern to be followed by others.
10. Team-based Approach. Quality managers adopt team-based approach. For work
performance,-they adopt 'give and take' approach. They believe in developing themselves as well
as others.

1.11 Universality of Management

There is a controversy about the universality of management. The question whether management
is universally applicable or not has attracted attention of management scholars and practitioners
alike. Settlement of this controversy is necessary to determine the extent to which management
knowledge developed in on country can be transmitted to other countries. If it is universal, there
is no problem in transferability of management knowledge. In its absence, there is serious
question on the universal use of management knowledge developed in a country. However,
opinions about the universal applicability of management are not uniform. There are two
divergent types of arguments; one suggests that management is universally applicable and
another suggests that it ft not universally applicable. Therefore, it is essential to overcome this
problem so that Indian managers can take adequate precautions while applying management
concepts developed in other countries, mostly in developed countries.

1.12 PROCESS OF MANAGEMENT

The process of management involves the determination of objectives and putting them into
action. Management is an activity consisting of a distinct process which is primarily concerned
with the important task of goal achievement. No business enterprise can achieve its objectives
until and unless all the members of the enterprise make an integrated and planned effort under
the directions of a central coordinating agency. This central coordinating agency is technically
known as management and the methodology of getting things done is known as Management
Process.
According to G.R. Terry “Management is a distinct process consisting of planning, organsing,
actuating and controlling performed to determine and accomplish stated objectives by the use of
human beings and other resources”
Under management as a process, management is considered as a continuing activity made up of
basic management functions. The process is ongoing and continuing. It assumes a cyclic
character.
1. Planning: Denotes the determination of short-to-long range plans to achieve the objectives
of organization.

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2. Organising: Indicates the development of sound organization structure according to
predetermined plans.
3. Direction: Means stimulating and motivation of personnel of the organization according to
predetermined plans.
4. Controlling: Offers assurance that directs action i.e., plan in-action is taking place as per
plan.
We have an ongoing cycle of planning-action-control replanning Control function closes the
system loop by providing adequate and accurate feedback of significant deviations from planned
performance in time. Feedback can affect the inputs or any of the managerial functions or the
process so that deviations can be removed and goals can be accomplished.
1.13 DEVELOPMENT OF MANAGEMENT THOUGHT
The origin of management can be traced back to the days when man started living in groups.
History reveals that strong men organized the masses into groups according to their intelligence,
physical and mental capabilities. Evidence of the use of the well-recognized principles of
management is to be found in the organization of public life in ancient Greece, the organization
of the Roman Catholic Church and the organization of military forces. Thus management in
some form or the other has been practiced in the various parts of the world since the dawn of
civilization. With the on set of Industrial Revolution, however, the position underwent a radical
change. The structure of industry became extremely complex. At this stage, the development of
a formal theory of management became absolutely necessary. It was against this background
that the pioneers of modern management thought laid the foundations of modem management
theory and practice.
Evolution of management thought may be divided into four stages
(1) Pre-scientific management period.
(2) Classical Theory
• Scientific Management of Taylor
• Administrative Management of Fayol
(b) Bureaucratic Model of Max Weber
(3) Neo-classical Theory or Behaviour Approach
(4) Modern Theory or Systems Approach

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Evolution of Management Thought

13.1 Pre-scientific Management Period

The advent of industrial revolution in the middle of the 18th century had its impact on
management. Industrial revolution brought about a complete change in the methods of
production, tools and equipments, organization of labour and methods of raising capital.
Employees went to their work instead of receiving it, and so, the factory system, as it is known
today, become a dominant feature of the economy. Under this system, land and buildings, hired
labour, and capital are made available to the entrepreneur, who strives to combine these factors
in the efficient achievement of a particular goal. All these changes, in turn, brought about
changes in the field of management. Traditional, conventional or customary ideas of
management were slowly given up and management came to be based on scientific principles. In
the words of L. F. Urwick - "Modern management has thrown open a new branch of human
knowledge, a fresh universe of discourse". During the period following the industrial revolution,
certain pioneers tried to challenge the traditional character of management by introducing new
ideas and character of management by introducing new ideas and approaches. The notable
contributors of this period are:
(A) Professor Charles Babbage (UK 1729 -1871): He was a Professor of
Mathematics at Cambridge University. Prof Babbage found that manufacturers
made little use of science and mathematics, and that they (manufacturers) relied
upon opinions instead of investigations and accurate knowledge. He felt that the
methods of science and mathematics could be applied to the solution of methods in

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The place of guess work for the solution of business problems. He advocated the use
of accurate observations, measurement and precise knowledge for taking business
decisions.. He urged the management of an enterprise, on the basis of accurate data
obtained through rigid investigation, the desirability of finding out the number of times
each operation is repeated each hour, the dividing of work into mental and physical
efforts, the determining of the precise cost for every process and the paying of a
bonus to the workers in proportion to his own efficiency and the success of enterprise.
(B) James Watt Junior (UK 1796-1848 and Mathew Robinson Boulton (1770-
1842): James Watt Junior and Mathew Robinson Boulton contributed to the
development of management thought by following certain management techniques in
their engineering factory at Soho in Birmingham. They are:
 Production Planning
 Standardization of Components
 Maintenance
 Planned machine layout
 Provision of welfare for personnel
 Scheme for executive development
 Marketing Research and forecasting
 Elaborate statistical records

(C) Robert Owens (UK. 1771 - 1858): Robert Owens, the promoter of co-operative
and trade union movement in England, emphasized the recognition of human element
in industry. He firmly believed that workers' performance in industry was influenced
by the working conditions and treatment of workers. He introduced new ideas of
human relations - shorter working hours, housing facilities, training of workers in
hygiene, education of their children, provision of canteen etc. Robert Owen, managed
a group of textile mills in Lanark, Scotland, where he used his ideas of human
relations. Though his approach was paternalistic, he carne to be regarded as the
father of Personnel Management.
(D) Henry Robinson Towne (USA 1844 -1924): H.R Towne was the president of
the famous lock manufacturing company "Yale and Town". He urged the combination
of engineers and economists as industrial managers. This combination of qualities,
together with at least some skill as an accountant, is essential to the successful
management of industrial workers. He favoured organized exchange of experience
among managers and pleaded for an organized effort to pool the great fund of

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accumulated knowledge in the art of workshop management.

(E) Seebohm Rowntree (UK 1871- 1954): Rowntree created a public opinion on the
need of labour welfare scheme and improvement in industrial relations. The Industrial
Welfare Society, The Management Research Groups and the Oxford Lecture
Conferences in the U.K owed their origin and progress to the interest and zeal of
Rowntree.

13.2 Classical Theory

Prof. Charles Babbage, James Watt Junior and Mathew Robinson Boulton, Robert Owen, Henry
Robinson Towne and Rowntree were, no doubt, pioneers of management thought. But, the
impact of their contributions on the industry as a whole was meagre. The real beginning of the
science of management did not occur until the last decade of the 19th century. During this
period, stalwarts like F.W. Taylor, H.L. Gantt, Emerson, Frank and Lillian Gilberth etc., laid the
foundation of management, which in due course, came to be known as scientific management.
This epoch in the history of management will be remembered as an era in which traditional ways
of managing were challenged, past management experience were scientifically systematized and
principles of management were distilled and propagated. The contributions of the pioneers of
this age have had a profound impact in furthering the management know-how and enriching the
store of management principles.

F.W. Taylor and Henry Fayol are generally regarded as the founders of scientific management
and administrative management and both provided the bases for science and art of management.

Features of Management in the Classical Period:

1. It was closely associated with the industrial revolution and the rise of large-scale
enterprise.
2. Classical organization and management theory is based on contributions from a
number of sources. They are scientific management, administrative management
theory, bureaucratic model, and micro-economics and public administration.
3. Management thought focused on job content division of labour, standardization,
simplification and specialization and scientific approach towards organization.
A. Taylor’s Scientific Management: Started as an apprentice machinist in Philadelphia, USA.
He rose to be the chief engineer at the Midvale Engineering Works and later on served with the
Bethlehem Works where he experimented with his ideas and made the contribution to the
management theory for which he is so well known. Frederick Winslow Taylor well-known as the
founder of scientific management was the first to recognize and emphasis the need for adopting a
scientific approach to the task of managing an enterprise. He tried to diagnose the causes of low
efficiency in industry and came to the conclusion that much of waste and inefficiency is due to

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the lack of order and system in the methods of management. He found that the management was
usually ignorant of the amount of work that could be done by a worker in a day as also the best
method of doing the job. As a result, it remained largely at the mercy of the workers who
deliberately shirked work. He therefore, suggested that those responsible for management should
adopt a scientific approach in their work, and make use of "scientific method" for achieving
higher efficiency. The scientific method consists essentially of

(a) Observation
(b) Measurement
(c) Experimentation and
(d) Inference.
He advocated a thorough planning of the job by the management and emphasized the necessity
of perfect understanding and co-operation between the management and the workers both for the
enlargement of profits and the use of scientific investigation and knowledge in industrial work.
He summed up his approach in these words:

• Science, not rule of thumb

• Harmony, not discord
• Co-operation, not individualism
• Maximum output, in place of restricted output
• The development of each man to his greatest efficiency and prosperity.
Elements of Scientific Management: The techniques which Taylor regarded as its essential
elements or features may be classified as under:

1. Scientific Task and Rate-setting, work improvement, etc.

2. Planning the Task.
3. Vocational Selection and Training
4. Standardization (of working conditions, material equipment etc.)
5. Specialization
6. Mental Revolution:
1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic,
objective and critical examination of all the factors governing the operational efficiency of any
specified activity in order to effect improvement. Work study includes.

(a) Methods Study: The management should try to ensure that the plant is laid out in the best
manner and is equipped with the best tools and machinery. The possibilities of eliminating or
combining certain operations may be studied.
(b) Motion Study: It is a study of the movement, of an operator (or even of a machine) in
performing an operation with the purpose of eliminating useless motions.
(c) Time Study (work measurement): The basic purpose of time study is to determine the
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proper time for performing the operation. Such study may be conducted after the motion study.
Both time study and motion study help in determining the best method of doing a job and the
standard time allowed for it.

(d) Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue,
it may either be beyond the workers or the workers may over strain themselves to attain it. It is
necessary, therefore, to regulate the working hours and provide for rest pauses at scientifically
determined intervals.
(e) Rate-setting: Taylor recommended the differential piece wage system, under which workers
performing the standard task within prescribed time are paid a much higher rate per unit than
inefficient workers who are not able to come up to the standard set.
2. Planning the Task: Having set the task which an average worker must strive to perform to
get wages at the higher piece-rate, necessary steps have to be taken to plan the production
thoroughly so that there is no bottlenecks and the work goes on systematically.
3. Selection and Training: Scientific Management requires a radical change in the methods
and procedures of selecting workers. It is therefore necessary to entrust the task of selection to a
central personnel department. The procedure of selection will also have to be systematised.
Proper attention has also to be devoted to the training of the workers in the correct methods of
work.
4. Standardization: Standardization may be introduced in respect of the following.
(a) Tools and equipment: By standardization it is meant the process of bringing about
uniformity. The management must select and store standard tools and implements which will be
nearly the best or the best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to
result in damage to machinery.
(c) Conditions of Work; To attain standard performance, the maintenance of standard
conditions of ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
(d) Materials; The efficiency of a worker depends on the quality of materials and the method of
handling materials.
5. Specialization: Scientific management will not be complete without the introduction of
specialization. Under this plan, the two functions of 'planning' and 'doing' are separated in the
organization of the plant. The 'functional foremen' are specialists who join their heads to give
thought to the planning of the performance of operations in the workshop. Taylor suggested eight
functional foremen under his scheme of functional foremanship.

(a) The Route Clerk: To lay down the sequence of operations and instruct the workers
concerned about it.

(b) The Instruction Card Clerk: To prepare detailed instructions regarding

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different aspects of work.
(c) The Time and Cost Clerk: To send all information relating to their pay to the workers and
to secure proper returns of work from them.
(d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
(e) The Gang Boss: To assemble and set up tools and machines and to teach the workers to
make all their personal motions in the quickest and best way.
(f) The Speed Boss: To ensure that machines are run at their best speeds and
proper tools are used by the workers.
(g) The Repair Boss: To ensure that each worker keeps his machine in good order and
maintains cleanliness around him and his machines.
(h) The Inspector: To show to the worker how to do the work.

6. Mental Revolution: At present, industry is divided into two groups - management and labour.
The major problem between these two groups is the division of surplus. The management wants
the maximum possible share of the surplus as profit; the workers want, as large share in the form
of wages. Taylor has in mind the enormous gain that arises from higher productivity. Such gains
can be shared both by the management and workers in the form of increased profits and
increased wages.

Benefits of Scientific Management: Taylor's ideas, research and recommendations brought into
focus technological, human and organizational issues in industrial management. Benefits of
Taylor's scientific management included wider scope for specialization, accurate planning,
timely delivery, standardized methods, better quality, lesser costs, minimum wastage of
materials, time and energy and cordial relations between management and workers. According
to Gilbreths, the main benefits of scientific management are "conservation and savings, making
an adequate use of every one's energy of any type that is expended". The benefits of scientific
management are:-

(a) Replacement of traditional rule of thumb method by scientific techniques.

(b) Proper selection and training of workers.
(c) Incentive wages to the workers for higher production.
(d) Elimination of wastes and rationalization of system of control.
(e) Standardization of tools, equipment, materials and work methods.
(f) Detailed instructions and constant guidance of the workers.
(g) Establishment of harmonious relationship between the workers.
(h) Better utilization of various resources.

(i) Satisfaction of the needs of the customers by providing higher quality products at lower
prices.

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Criticism
1. Worker's Criticism:

(a) Speeding up of workers: Scientific Management is only a device to speed

up the workers without much regard for their health and well-being.
(b) Loss of individual worker's initiative: Scientific Management reduces workers
to automatic machine by taking away from them the function of thinking.
(c) Problem of monotony, By separating the function of planning and thinking from that of
doing, Scientific Management reduces work to mere routine.
(d) Reduction of Employment: Scientific Management creates unemployment
and hits the workers hard.
(e) Weakening of Trade Unions: Under Scientific Management, the important
issues of wages and working conditions are decided by the management
through scientific investigation and the trade unions may have little say in the matter.
(f) Exploitation of workers: Scientific Management improves productivity
through the agency of workers and yet they are given a very small share of
the benefit of such improvement.

Employer's Criticism:

(a) Heavy Investment: It requires too heavy an investment. The employer has
to meet the extra cost of the planning department though the foreman in this
department do not work in the workshop and directly contribute towards
higher production.
(b) Loss due to re-organization: The introduction of Scientific Management
requires a virtual reorganization of the whole set-up of the industrial unit.
Work may have to be suspended to complete such re-organization.
(c) Unsuitable for small scale firms: various measures like the establishment
of a separate personnel department and the conducting of time and motion
studies are too expensive for a small or modest size industrial unit.
Contributions of Scientific Management; Chief among these are:
1. Emphasis on rational thinking on the past of management.
2. Focus on the need for better methods of industrial work through systematic study and
research.
3. Emphasis on planning and control of production.
4. Development of Cost Accounting.
5. Development of incentive plans of wage payment based on systematic study of work.
6. Focus on need for a separate Personnel Department.
7. Focus on the problem of fatigue and rest in industrial work.

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B. Administrative Management Theory: Henry Fayol was the most important exponent of this
theory. The pyramidal form, scalar principle, unity of command, exception principle, span of
control and departmentalisation are some of the important concepts set forth by Fayol and his
followers like Mooney and Reiley, Simon, Urwick, Gullick etc.
Henry Fayol (France, 1841 -1925): Henry Fayol was born in 1941 at Constantinople in France.
He graduated as a mining engineer in 1860 from the National School of Mining. After his
graduation, he joined a French Coal Mining Company as an Engineer. After a couple of years, he
was promoted as manager. He was appointed as General Manager of his company in 1888. At
that time, the company suffered heavy losses and was nearly bankrupt. Henry Fayol succeeded in
converting his company from near bankruptcy to a strong financial position and a record of
profits and dividends over a long period.
Concept of Management: Henry Fayol is considered the father of modern theory of genera] and
industrial management. He divided general and industrial management into six groups:

1. Technical activities - Production, manufacture, adaptation.

2. Commercial activities - buying, selling and exchange.
3. Financial activities - search for and optimum use of capital.
4. Security activities - protection of property and persons.
5. Accounting activities - stock-taking, balance sheet, cost, and statistics.
.6. Managerial activities - planning, organization, command, co- ordination and control.

These six functions had to be performed to operate successfully any kind of business. He,
however, pointed out that the last function i.e., ability to manage, was the most important for
upper levels of managers.
The process of management as an ongoing managerial cycle involving planning, organizing,
directing, co-ordination, and controlling, is actually based on the analysis of general management
by Fayol. Hence, it is said that Fayol established the pattern of management thought and
practice. Even today, management process has general recognition.
Fayol's Principles of Management: The principles of management are given below:

1. Division of work: Division of work or specialization alone can give maximum productivity
and efficiency. Both technical and managerial activities can be performed in the best manner
only through division of labour and specialization.
2. Authority and Responsibility: The right to give order is called authority. The obligation to
accomplish is called responsibility. Authority and Responsibility are the two sides of the
management coin. They exist together. They are complementary and mutually
interdependent.
3. Discipline: The objectives, rules and regulations, the policies and procedures must be
honoured by each member of an organization. There must be clear and fair agreement on the
rules and objectives, on the policies and procedures. There must be penalties (punishment)

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for non-obedience or indiscipline. No organization can work smoothly without discipline -
preferably voluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict, each member of
an organization must receive orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organization must work together to accomplish
common objectives.
6. Emphasis on Subordination of Personal Interest to General or Common Interest: This is
also called principle of co-operation. Each shall work for all and all for each. General or
common interest must be supreme in any joint enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the best incentive or
motivator for good performance. Exploitation of employees in any manner must be
eliminated. Sound scheme of remuneration includes adequate financial and non-financial
incentives.
8. Centralization: There must be a good balance between centralization and decentralization
of authority and power. Extreme centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of command
linking all members of the organization from the top to the bottom. Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything. Order or system alone can
create a sound organization and efficient management.
11. Equity: An organization consists of a group of people involved in joint effort. Hence,
equity (i.e., justice) must be there. Without equity, we cannot have sustained and adequate
joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new work and
demonstrate efficiency in due course. Hence, employees and managers must have job
security. Security of income and employment is a pre-requisite of sound organization
and management.
13. Esprit of Co-operation: Esprit de corps is the foundation of a sound organization.
Union is strength. But unity demands co-operation. Pride, loyalty and sense of
belonging are responsible for good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial
planning and execution of predetermined plans.
C. Bureaucratic Model: Max Weber, a German Sociologist developed the bureaucratic model.
His model of bureaucracy include
(i) Hierarchy of authority.
(ii) Division of labour based upon functional specialization.
(iii) A system of rules.
(iv) Impersonality of interpersonal relationships.
(v) A system of work procedures.
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(vi) Placement of employees based upon technical competence.

(vii) Legal authority and power.
Bureaucracy provides a rigid model of an organization. It does not account for important human
elements. The features of Bureaucracy are:-
1 . Rigidity, impersonality and higher cost of controls.
2. Anxiety due to pressure of conformity to rules and procedure.
3. Dependence on superior.
4. Tendency to forget ultimate goals of the organization.
Bureaucratic Model is preferred where change is not anticipated or where rate of change can be
predicated. It is followed in government departments and in large business organizations.
1.13.3 Neoclassical Theory
Neo-classical Theory is built on the base of classical theory. It modified, improved and extended
the classical theory. Classical theory concentrated on job content and management of physical
resources whereas, neoclassical theory gave greater emphasis to individual and group
relationship in the workplace. The neo- classical theory pointed out the role of psychology and
sociology in the understanding of individual and group behaviour in an organization.
George Elton Mayo (Australia, 1880 - 1949): Elton Mayo was born in Australia. He was
educated in Logic and Philosophy at St. Peter's College, Adelaide. He led a team of researchers
from Harvard University, which carried out investigation in human problems at the Hawthorne
Plant of Western Electrical Company at Chicago. They conducted some experiments (known as
Hawthorne Experiments) and investigated informal groupings, informal relationships, patterns
of communication, patterns of informal leadership etc. Elton Mayo is generally recognized as
the father of Human Relations School. Other prominent contributors to this school include
Roethlisberger, Dickson, Dewey, Lewin etc.
Hawthorne Experiment: In 1927, a group of researchers led by Elton Mayo and Fritz
Roethlisberger of the Harvard Business School were invited to join in the studies at the
Hawthorne Works of Western Electric Company, Chicago. The experiment lasted up to 1932.
The Hawthorne Experiments brought out that the productivity of the employees is not the
function of only physical conditions of work and money wages paid to them. Productivity of
employees depends heavily upon the satisfaction of the employees in their work situation.
Mayo's idea was that logical factors were far less important than emotional factors in
determining productivity efficiency. Furthermore, of all the human factors influencing employee
behaviour, the most powerful were those emanating from the worker's participation in social
groups. Thus, Mayo concluded that work arrangements in addition to meeting the objective
requirements of production must at the same time satisfy the employee's subjective requirement
of social satisfaction at his work place.

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The Hawthorne experiment consists of four parts. These parts are briefly described below:-
1. Illumination Experiment.
2. Relay Assembly Test Room Experiment.
3. Interviewing Programme.
4. Bank Wiring Test Room Experiment.

1. Illumination Experiment: This experiment was conducted to establish relationship

between output and illumination. When the intensity of light was increased, the
output also increased. The output showed an upward trend even-when the illumination
was gradually brought down to the normal level. Therefore, it was concluded that
there is no consistent relationship between output of workers and illumination in the
factory. There must be some other factor which affected productivity.
2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only
the impact of illumination on production but also other factors like length of the
working day, rest hours, and other physical conditions. In this experiment, a small
homogeneous work-group of six girls was constituted. These girls were friendly to
each other and were asked to work in a very informal atmosphere under the
supervision of a researcher. Productivity and morale increased considerably during
the period of the experiment. Productivity went on increasing and stabilized at a
high level even when all the improvements were taken away and the pre-test
conditions were reintroduced. The researchers concluded that socio-psychological
factors such as feeling of being important, recognition, attention, participation,
cohesive work-group, and non-directive supervision held the key for higher
productivity.
3. Mass Interview Programme: The objective of this programme was to make a
systematic study of the employees' attitudes which would reveal the meaning which
their "working situation" has for them. The researchers interviewed a large number
of workers with regard to their opinions on work, working conditions and supervision.
Initially, a direct approach was used whereby interviews is asked questions considered
important by managers and researchers. The researchers observed that the replies
of the workmen were guarded. Therefore, this approach was replaced by an indirect
technique, where the interviewer simply listened to what the workmen had to say.
The findings confirmed the importance of social factors at work in the total work
environment.
4. Bank Wiring Test Room Experiment: This experiment was conducted by Roethlisberger
and Dickson with a view to develop a new method of observation and obtaining more exact
information about social groups within a company and also finding out the causes which restrict
output. The experiment was conducted to study a group of workers under conditions which were
as close as possible to normal. This group comprised of 14 workers. After the experiment, the

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production records of this group were compared with their earlier production records. It was
observed that the group evolved its own production norms for each individual worker, which was
made lower than those set by the management. Because of this, workers would produce only that
much, thereby defeating the incentive system. Those workers who tried to produce more than the
group norms were isolated, harassed or punished by the group. The findings of the study are:-

(i) Each individual was restricting output.

(ii) The group had its own "unofficial" standards of performance.

(iii) Individual output remained fairly constant over a period of time.

(iv) Informal groups play an important role in the working of an organization.

Contributions of the Hawthorne Experiment: Elton Mayo and his associates conducted their
studies in the Hawthorne plant of the western electrical company, U.S.A., between 1927 and
1930. According to them, behavioural science methods have many areas of application in
management. The important features -of the Hawthorne Experiment are:-

1. A business organization is basically a social system. It is not just a techno-economic

system.
2. The employer can be motivated by psychological and social wants because his
behaviour is also influenced by feelings, emotions and attitudes. Thus economic
incentives are not the only method to motivate people.
3. Management must learn to develop co-operative attitudes and not rely merely on
command.
4. Participation becomes an important instrument in human relations movement. In
order to achieve participation, effective two-way communication network is essential.
5. Productivity is linked with employee satisfaction in any business organization.
Therefore management must take greater interest in employee satisfaction.
6. Group psychology plays an important role in any business organization. We must
therefore rely more on informal group effort.
7. The neo-classical theory emphasizes that man is a living machine and he is far
more important than the inanimate machine. Hence, the key to higher productivity
lies in employee morale. High morale results in higher output.
Elements of Behavioural Theory or Human Relation Approach: There are three elements of
behavioural theory.

1. The Individual: The neoclassical theory emphasized that individual differences

must be recognised. An individual has feelings, emotions, perception and attitude.

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Each person is unique. He brings to the job situation certain attitudes, beliefs and
ways of life, as well as skills. He has certain meaning of his job, his supervision,
working conditions etc. The inner world of the worker is more important than the
external reality in the determination of productivity. Thus human relations at work
determine the rise or fall in productivity. Therefore human relationists advocate the
adoption of multidimensional model of motivation which is based upon economic,
individual and social factors.
2. Work Groups: Workers are not isolated; they are social beings and should be treated
as such by management. The existence of informal organization is natural. The neo- classical
theory describes the vital effects of group psychology and behaviour on motivation and
productivity.

3. Participative Management: The emergence of participative management is inevitable

when emphasis is laid on individual and work groups. Allowing labour to participate in decision
making primarily to increase productivity was a new form of supervision. Management now
welcomes worker participation in planning job contents and job operations. Neoclassical theory
focuses its attention on workers. Plant layout, machinery, tool etc., must after employee
convenience and facilities. Therefore, neoclassical approach is trying to satisfy personal security
and social needs of workers.

Limitations of Human Relations Approach:-

1. The human relationists drew conclusions from Hawthorne studies. These conclusions
are based on clinical insight rather than on scientific evidence.
2. The study tends to overemphasize the psychological aspects at the cost of the
structural and technical aspects.
3. It is assumed that organizational problems are amenable to solutions through
human relations. This assumption does not hold good in practice.

4. The human relationists saw only the human variables as critical and ignored other
variables.

5. The human reiationists overemphasize the group and group decision-making. But in
practice, groups may create problems and collective decision-making may not be
possible.

1.13.4. Modern Theory (System Approach)

The systems approach to management indicates the fourth major theory of management thought
called modern theory. Modern theory considers an organization as an adaptive system which has
to adjust to changes in its environment. An organization is now defined as a structured process in
which individuals interact for attaining objectives.
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Meaning of "System": The word system is derived from the Greek word meaning to bring
together or to combine. A system is a set of interconnected and inter-related elements or
component parts to achieve certain goals. A system has three significant parts:

1. Every system is goal-oriented and it must have a purpose or objective to be attained.

2. In designing the system we must establish the necessary arrangement of

components.
3.
Inputs of information, material and energy are allocated for processing as per plan
so -that the outputs can achieve the objective of the system.
Characteristics of Modern Management Thought:

1. The Systems Approach: An organization as a system has five basic parts -

(1) Input
(2) Process
(3) Output
(4) Feedback and
(5) Environment.
It draws upon the environment for inputs to produce certain desirable outputs. The success of
these outputs can be judged by means of feedback. If necessary, we have to modify out mix of
inputs to produce as per changing demands.

2. Dynamic: We have a dynamic process of interaction occurring within the structure

of an organization. The equilibrium of an organization and its structure is itself
dynamic or changing.
3. Multilevel and Multidimensional: Systems approach points out complex multilevel and
multidimensional character. We have both a micro and macro approach. A company is
micro within a business system. It is macro with respect to its own internal units.
Within a company as a system we have:-
(1) Production subsystem
(2) Finance subsystem
(3) Marketing subsystem
(4) Personnel subsystem.
All parts or components are interrelated. Both parts as well as the whole are equally important.
At all levels, organizations interact in many ways.

4. Multimotivated: Classical theory assumed a single objective, for instance, profit.

Systems approach recognizes that there may be several motivations behind our actions
and behaviour. Management has to compromise these multiple objectives

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e.g. economic objectives and social objectives.
5. Multidisciplinary: Systems approach integrates and uses with profit ideas emerging
from different schools of thought. Management freely draws concepts and
techniques from many fields of study such as psychology, social psychology,
sociology, ecology, economics, mathematics, etc.
6. Multivariable: It is assumed that there is no simple cause-effect phenomenon. An event
may be the result of so many factors which themselves are interrelated and interdependent.
Some factors are controllable, some uncontrollable. Intelligent planning and control are
necessary to face these variable factors.
7. Adaptive: The survival and growth of an organization in a dynamic environment
demands an adaptive system which can continuously adjust to changing conditions.
An organization is an open system adapting itself through the process of feedback.
8. Probabilistic: Management principles point out only probability and never the
certainty of performance and the consequent results. We have to face so many
variables simultaneously. Our forecasts are mere tendencies. Therefore, intelligent
forecasting and planning can reduce the degree of uncertainty to a considerable
extent.
1.14 SUMMARY
Management plays very important role in the modern world and the welfare of the people
and the destiny of the country are very much influenced by it. Management is necessary for a
business firm, government enterprises, education and health services, military organizations,
trade associations and so on. The origin of management can be traced back to the days when man
started living in groups. Henry Fayol is considered the father of modern theory of general and
industrial management. F.W. Taylor well known as the founder of scientific management was
the first to recognize and emphasis the need for adopting a scientific approach to task of
managing as enterprise. The process of management involves the determination of objectives and
putting them into action.
How throne studies proved social factors were responsible for deciding the level of output,
motivation influences both money and bonus, leadership is important for directing group
behavior, communication plays an important role etc.
1.15 SELF ASSESSMENT QUESTIONS
1. Define management.
2. Discuss management as a process.
3. Management is what a manager does? Explain.
4. Is management an Art?
5. Is management s social science?
6. Briefly describe the professionalization of management in India.

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7. Distinguish between administration and management.
8. Explain the skills required by a manager.
9. What is the interpersonal role of a manager?
10. Bring out a case for universality of management?
11. Define management. Describe its main characteristics.
12. What is management? Is there a difference between management and administration?
13. “Management is the art of getting things done through people”. Explain.
14. “Mangers are born, not made”. Do you agree with this statement?
15. Is management an art or science?
16. Is management a profession? Give reasons for your answer. What is the position of
management as profession in India?
17. What is the concept of universality of management? Give arguments for and against this
concept.
18. Discuss the role played by a manager in the present context of business.
19. Discuss the challenges being faced by management in the current globalization trends.
20. Discuss various functional areas of management.

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