CHAPTER

1
Nature and Functions of
Management

LEARNING OBJECTIVES

After studying this chapter you should be able to:

• Understand the meaning of management.
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• Analyse various definitions on management and evolve features of management.

• Discuss the functions of management viz., planning, organising, staffing, directing and
controlling.
• Have a detailed view of managerial skills and multiple managerial roles.
• Judge whether management is a Science or an Art.
• Defend how management is a profession?
• Know whether management is applicable to profit oriented organisations or non-profit
oriented organisations.

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 2 Management and Organisational Behaviour

Do WE NEED A PROFESSIONAL MANAGER?

Mr. Raghuram started a small scale venture product idea was hijacked by his competitor
of steel melting unit in 1986 in Bangalore and also the, inappropriate organisation
and later developed it into an integrated plant structure that resulted in low employee
by 1992. He was managing the plant productivity. He also pointed out that his
successfully and was the market leader in father's way of operating is concerned for
terms of pricing as he was a low cost only work but not people and its
producer. In 1998, his son, Mr. I'Jitin Sai after consequence of low employee job
completing his MBA joined him in business. satisfaction and morale.
After the completion of two months Mr. Nitin Mr. Raghuram felt very happy about his son's
told his father, at the dinning table' "Daddy", analysis and asked him: "My dear son, you
this is not the way of doin9 business." see, still I am successful. I have been
Mr. Raghuram was astonished how this fresh earning profit." Mr. Nitin replied, "My dear
MBA is discounting all his experience and father, you would have been much more
market leadership. Mr. Raghuram replied: profitable and efficient, had you introduced
"My dear son, you are wrong, it is not just professional management in your business.
your theoritical knowledge, but also the long 'Late is better than never.' Let us work in
experience that counts in business." that direction from tomorrow onwards ...... "
Then Mr. Nitin explained to his father the This case indicates that todays business
lacunas In business, starting from releasing requires professionalism and modern
a product without a plan and how the same management techniques to be competitive.

Some companies like Reliance Industries, Procter and Gamble,

3~ l-lindustan Lever, lTC, Dr.Reddy's Labs, l-IDFC Bank, Tata Iron
Gnd Steel Company (TISCO) Limited etc. are most successful
and on the other side some companies like Kolleru Paper Mills Ltd., Agrifural
Chemicals Ltd., Binny Mills and Panyam Cements belong to the unsuccessful
category. Similarly, we find some outperforming companies like Infosys
Technologies and WIPRo. While other companies like Nava Bharat Ferro Alloys
Ltd., l-lindustan Machine Tools (HMT) Ltd. and Hindustan Cables Limited are
low on the performance graph. Some companies like Tata, the Birla Group and
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Gujarat Gas Company expand and diversify their activities whereas the activities
of other companies shrink day by day, subsequently recording low performance
rates.
Companies of the same industry are being affected by the same environmental
factors. Some companies attract a number of customers while some other
companies repel them. Employees prefer to be identified with some companies
while they prefer to be unemployed in case of some other companies. Why do
companies perform differently when they operate under the same environmental
conditions, serve the same customer, use the same raw material and technology
and employ the people with similar skills? The answer for this question, invariably,
is mana~Jement practices. Thus 'Management' makes remarkable difference
between the companies regarding their performance in terms of productivity,
products, sales, profitability, service to the customer, employee welfare etc.
Management plays a vital role in deciding the destiny of business as well as non-
business organisations.

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 Nature and Functions of Management 3

This backgr, lUnd urges us to know what management is? Now, we shall discuss
the meaning of the term 'management.'

Mary Parker defines the term management as "the art of getting things done
through others."l But research studies concluded that management is a field of
endeavour that combines art and science. 2
ivancerich, Donnelly and Gibson, define the term management as "the process
undertaken by one or more persons to coordinate the ()ctivities of other persons
to achieve results not attainable by anyone person acting alone."3 Managers
perform a number of activities, in addition to coordination. Further, this definition
covers only one resource i.e., human resources and does not focus on material
resources and financial resources.
John A.Pearce and Richard B.Robinson included all kinds of resources in their
definition on management. According to them, "Management is the process of
optimizing human, material and financial contributions for the achievemer1t of
organizational goals."4 This definition ignores the integrated aspect of the
contribution of all resources towards the attainment of organizational goals.
According to Harold Koontz and Heinz and Weihrich, Management is "the process
of designing and maintaining an environment in which individuals, working
together in groups, efficiently accomplish selected aims. "5 This definition ignores
the external environment through which most of the stakeholders interact with
the company.
Now, we shall define the term management as designing, providing and
maintaining a conducive internal environment in tune with the opportunities and
challenges of the external environment through planning. organizing, directing
and controlling all resources and operations in order to achieve effective
organizational strategies efficiently.
The analysis of the above definitions provide the following aspects of management:
• The purpose of management is to formulate effective (right) organizational
strategies and to achieve them efficiently (productively) based on the missions
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objectives and goals.

• Management deals with both internal and external environment.
• Management is concerned with all kinds of resources viz., human, financial,
material, machines, technology and technical know-how.
• Management functions include: planning, organizing, directing and controlling.
• Managers should possess varied skills in order to playa variety of roles.
• It applies to managers at all levels in an organisation.
• Management is applicable to all kinds of organisations i.e., both profit and
non-profit oriented organisations.
• Management vs. Administration.
• Management is both an art and a science in order to create a surplus.
• Management needs to be a profession to achieve goals continuously with an
incremental efficipncu
Now we shall discuss each of these aspects of management.

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
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 4 Management and Organisational Behaviour

Purpose of Management: To Achieve MOST

Managers basically formulate Mission, Objectives, Strategies and Tactics (MOST).
Management is essential to achieve the MOST. The organisational mission is the
basic reason for its existence. Mission provides a statement of what the company
stands for, i.e. its purpose for existence. For example, the mission statement of a
commercial bank is: "A vibrant bank committed to excellence in performance
through customer satisfaction."
Managers formulate objectives based on this mission. Objectives are the ends
towards which the activity is aimed. This goal is precise and is expressed in clear
and specific terms. For example, the objective of a company is to earn profits
whereas the goal is to earn certain percentage of profit on capital employed.
Management formulates strategies in order to achieve the goals. Strategy is a
unified, comprehensive and integrated plan that relates the strategic advantages
of the firm with the opportunities of the environment. For example, entering the
car financing business inorder to enhance the sales is a strategy to achieve the
goal of earning profit on capital employed. Tactics is an action programme through
which strategies are executed. Thus the purpose of management is to achieve the
company's mission, objectives and strategies.
Management Deals with Internal and External Environment
Management while formulating strategies, studies and analyses both internal and
external environment. Internal environment consists of organisational structure,
finances, marketing, production and human resources. External environment
consists of STEPIN viz., Social and Cultural, Technical, Economic, Political,
International and Natural (see Fig.I.1).

• • • • • • • • • • • Management and Environment

•
•
• External
• Social Technical
• .- Internal, ,
• .-
•
•
• .- .- .-
.-'-
.- I Human
Resources
I""" ,,
• .- .- ,,
.- .- 1
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...... .- ,,
....
Cl
u:
I Matenal
Resources
I
I
Management of
Business/Non-Business
Organisation
I Machines &
I Technology
I
,, • Customers/Clients
.. .- .-
.-
.. T .- .-
.. .
. .. I Financial .- .- .-

. .. EnvironmentI.- .- .- .- .-
Resources

Economic Political
Environment

Management is concerned with all kinds of resources

Managers manage and utilise all kinds of resources like financial resources, human
resources, materials resources etc., in the process of achieving their strategies and
goals.

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 Nature and Functions of Management 5

We should know what is -science and what is an art before discussing whether
management is a science or an art?
What is a Science?: Science is a body of knowledge developed systematically,
based on observation, measurement, experimentation and drawing inferences
based on data. The knowledge can be verified through cause-effect relationship.
The knowledge provides principles, theory and laws. Management satisfies the
characteristics of science like:
• Body of knowledge is developed systematically. Management knowledge is
developed through a number of systems like input-output system,
organisational system, functional system etc.
• Management knowledge is developed through observation, measurement and
experimentation.
• Inferences are drawn based on data analysis.
Management is a developing science. However, management cannot be equated
with exact sciences like physics and chemistry. Most of the managerial activities
like decision-making, planning, organizing and directing cannot be an exact
science.
What is an Art?: Art is _understanding how a particular activity can be done.
Art can be acquired by conscious effort and practice. Management is getting
things done by and through other people. They have to continuously analyse the
environment and formulate the plans and strategies. They have to modify the
strategies based on environmental changes. The principles of management and
theories of management cannot be implemented as learnt, in the real world.
They are to be applied after making necessary modifications based on the real
life situations.
Thus, management is both a science and an art as it acquires the characteristics
of both.
The next question to be answered: Is management a profession?
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Any occupation to be called a profession should satisfy thE: following:

(i) Body of knowledge: Management knowledge is developed systematically
and scientifically based on research studies, experiments, experiences and
observations. Further, management literature is continuously developed by
researchers and practitioners.
(ii) Development and updating the knowledge: Management knowledge has
been developing continuously. Managers should update their knowledge by
learning and acquiring the latest developments through training, executive
development and formal study.
(iii) Professional Journals: There should be professional journals to publish
the findings of research studies. There are a number of professional jGurnals
all over the world to publish the findings of research studies and latest
developments in management: Harvard Business Review, Vikalpa, Decision,
Indian Management and Indian Journal of Industrial Relations.

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
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 6 Management and Organisational Behaviour

(iv) Professional Associations: There should be professional associations in

order to monitor and enable professional development. Further, they
implement the code of conduct. Management professional associations in
India include: All India Management Association (AlMA), National Institute
of Personnel Management, Institute of Chartered Accountants of India etc.
(v) Code of Conduct: The professionals should behave ethically while
discharging their duties. AlMA, National Institute of Personnel Management,
Institute of Chartered Accountants of India and other professional
organisations formulate the code of conduct.
(vi) Specialised Educational Qualifications: There should be specialised
educational qualifications for employment for profeSSional jobs. Specialised
educational institutions are established to impart specialized education. Indian
Institutes of Management and Departments of Management in the Universities
are established to provide specialized management education leading to Post-
graduate Diploma in Management (PGDM) and Master of Business
Management (MBA) degree.
Management satisfies all the characteristics of a profession. Therefore,
management is a profession like medicine and law.

Different writers and management thinkers view management and administration

differently.
There is no I..~nanimity among the writers regarding these two concepts. According
to one seck.'r~ of writers, administration involves policy making, formulation of
vision, mission, objectives and strategies. As such, administration is the function
of the top levei management. Further, administration decides the organisational
structure and prepare·s the organizational plaT'::.
Management involves executing the plans and strategies and carrying out various
activities determined by the administration. It directs and controls the subordinates.
Thus, management is the function of lower level people in the company.
The second view has been advocated by E.F.L. Brech. 6 According to E.F.L.Brech,
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management is a comprehensive and integrated term. Management includes

planning, organizing, directing cmd controlling. According to him, management
can be classified into two categories viz., administrative management and operative
management.
Administrative Management: Administrative management represents the top
level management pertaining thinking and planning functions. Administrative
management performs the functions of formulation of vision, mission and
strategies. It includes board of directors, managing director, general managers
and chief managers.
Operative Management: Operative management represents the lower level
management covering execution and implemcr.ltation functions. It performs the
f:mctions of execution, directing and controlling which involves the contribution
of middle level managers and lower level managers.
The third view has been advocated by Peter F. Drucker. According to him, thE'
term administration is applicable to non-profit organisations like government

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
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 Nature and Functions of Management 7

organisations, service-oriented hospitals and educational institutions, military.

churches, temples etc. The main activity of administration is planning, organizing.
directing controlling and rendering services. Thus, governance of non-profit
organisations is called administration. Governance of business organisations is
referred to as management. Thus. management is concerned with business
organisations and profit-oriented organisations. It is measured by the efficiency
in profit-making and administration is measured by efficiency in rendering services.

As indicated earlier, management is the process of planning,

organizing, staffing, directing and controlling the efforts of
organisation members in utilising all resources to achieve
organizational goals. objectives and mission. Management is a
process as it operates the activities systematically. Fig.l.2 presents
the management process.
• • • • • • • • • • • The Management Process
•
•
•
• Planning Organising
• Company mission is the Organising is 'he process
• basis for planning. of linking and arranging
• Planning is deciding in
• actiVities in a sequence. It
• advance what should be includes allocating work,
• done. Managers think authority and resources.
logically to achieve goals.
"!
.,....
Staffing
Staffing is acquiring, developing, utilising 14----'
and compensating human resources
necessarily to achieve organisational
r - - - ; goals. Human resources help the process
of converting inputs into output and
achieving customer satisfaction.

Directing
Controlling
Directing involves leading,
influenCing and motlvat-ing the Controlling is to make
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people to perform organisational I - - - - - - - - - - - - - - - + i sure that the organisation

tasks and to convert input into IS moving towards ItS
output. It includes: mission and objectives.
• Motivation
• Leadership
• Communication

Functions of management include planning, organising, staffing, directing and

controlling.

Planning consists of the activities involved in choosing courses of action to achieve

organisational objectives. It is deciding in advance what to do, when to do, how
to do and who will do it, in order to achieve these objectives. Both long-term and
short-term plans are necessary to achieve goals. It is necessary for the management

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Created from UNICAF on 2024-03-11 19:14:18.
 8 Management and Organisational Behaviour

to adopt certain assumptions or premises with regard to external factors that

serve as a background for the planning function. Some companies have adopted
the practice of contingency planning in view of growing difficulty of predicting
future environmental conditions. Planning is a part of the activities of all managers.

Organising involves the grouping of jobs into a framework for coordination and
direction. Formal organisations may be portrayed by use of an organisation chart.
Careful structuring of an organisation is beneficial in terms of clarifying lines of
command and eliminating gaps and overlaps. However, extremely detailed
organisation structures may be dysfunctional.
Once job content is determined, jobs and activities must be grouped to devise an
overall structure. Decisions affecting organisational structure involve values and
goals for both enterprises and individuals.
Organisations are structured based on product, function, geography, customer
and project. The matrix structure has evolved as a result of complex environments,
markets and technology. It combines both functions and projects. Organisational
culture reflects not only social values and expectations, but also the unique set of
values, beliefs and behaviours that characterise each organisation.

stafIituJ
Staffing is planning, organIsmg, directing and controlling of procurement,
development, compensation, integration and maintenance of people for the
purpose of contribt.;'·ing to individual, organisational and social goals. Thus,
building an effective organisational team requires planning and control of human
resources. This process requires the performance of the functions like job analysis,
human resources planning, recruitment, selection, induction, placement, training,
executive development, wage and salary administration, leadership, teamwork,
motivation, grievance procedure, disciplinary procedure etc.
Once the employee is employed, his development needs are identified through
performance appraisal. Once these needs are identified, the employee will be
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trained/developed with the application of on-the-job and off-the-job methods.

Staffing function is also known as human resource management.

The next logical function after completing planning, organising and staffing is the
execution of plan. The important function of management at any level is directing
the people by motivating, commanding, leading and activating them. The willing
and effective cooperation of employees for the attainment of organisational goals
is possible through direction. Tapping the maximum potentialities of the people
is possible through motivation and command. Thus, direction is an important
managerial function in securing employee's contribution. Coordination de'als with
the task of blending efforts in order to ensure successful attainment of
organisational objectives.

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 Nature and Functions of Management 9

After planning, organising, staffing and directing the various activities, the performance
is to be verified in order to know whether the activities are performed in confirmity
with the plans and objectives or not. Controlling also involves checking, verifying
and comparing of actual performance with the plans, identific~ of dewiations, if
any and correcting of identified deviations. Thus action~ and oper~tions a~e adjusted
to predetermined plans and standards th~dugh control. /"'.
The purpose of control is to ensure the effective operation of an or~'nisation by
focusing on all resources - human, material, finance and machines. Financial
control is attained fhrough a number of means viz., financial statements interpreted
through ratio analysis and budgets.
Managers should have required skills in order to perform the functions discussed
above. Now, we shall discuss managerial skills.

According to Robert L.Katz7, there are three types of

managerial skills viz., technical skills, human skills and
conceptual skills. Fig.l.3 presents the managerial skills.
• • • • • • • • • •• Managerial Skills at Different Levels
•
•
•
• Top Level
• Managers
•
• (More Conceptual Skills)
• <I) Ji> In.
• it ~ ~
• Middle Level CI) CI)

Managers j ii1

-
"'!
Dl
ii:
(More Human Skills)

C)
at
CJ
c: ~
-
c:
Ill'
.!,!
c:
-c:
-.2
,....
,

Lower Level
Managers .
(More Technical Skills)
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. Technical skills are the proficiency in working with machines, tools and techniques
in human resource management, financial management, marketing management
and production management. Managers at all levels should possess technical
skills. Those at the lower level should possess more of technical skills 'whereas
managers at the top level possess less technical skills compared to those at middle
and lower levels.

Human skills include the ability to work with people tactfully, interpersonal
proficiency, ability to build, maintain and work in teams and create an open
environment. Managers at a Jl "~'"els should possess these skills.

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 10 Management and Organisational Behaviour

Conceptual skills include the ability to draw the total, integratea, comprehensive
and the macro view of the company, situations and the ability to develop solutions
for the probable problems and challenges. Top level managers should possess
more of conceptual skills compared to those of lower level managers.

Managers perform different roles as shown in Fig.

1.4. As can be seen from the figure, formal authority
gives rise to three inter-personal roles and three informational roles. The two sets
of roles enable the manager to play the four decisional roles.

• • • • • • • • • •• Roles of a Manager
•
•
•
• Formal Authority and
• Status
•
•
•
•
•
Interpersonal Roles
• Figurehead
• Leader
• Liaison

Informational Roles
• Monitor
'9 Disseminator
• iSpokesman

Decisional Roles .
•
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Entrepreneur
• Disturbance Handler
• Resource Allocator
• Negotiator

(Source: Henry Mintzberg, "The Manager's Job", in James Brain Quinn, Henry Mintzberg and Robert
M. James, "The Strategy R[ocess," Prentice-Hall, New Jersey, 1988, p. 27).

The important interpersonal roles of managers are:

Figurehead Role: Managers perform the duties of a ceremonial nature as head
of the organisation, a strategic business unit or department. Duties of interpersonal
roles include routine, involving little serious communication and less important
decisions. However, they are important for the smooth functioning of an
organisation or department.

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 Nature and Functions of Management 11

Leader Role: The manager, in charge of the organisation/department,

coordinates the work of others and leads his subordinates. Formal authority
provides greater potential power to exercise and get the things done.
Liaison Role: As the leader of the organisation or unit, the manager has to
perform the functions of motivation, communication, encouraging team spirit
and the like. FurtJ1er, he has to coordinate the activities of all his subordinates,
which involves the activity of liaison.

Manager emerges as the nerve centre of his organisation/department in view of

his interpersonal I;nks with his subordinates, peers, superiors and outsiders.
Therefore, the manager has to play the informational role effectively to let the
information flow continuously from one corner of the organisation to other corner.
The information roles of a manager include:
Monitor's Role: As a result of the network of contacts, the manager gets the
information by scanning his environment, subordinates, peers and superiors.
Managers mostly collect information in verbal form often as gossip, hearsay,
speculation and through grapevine channels.
Disseminator's Role: The manager disseminates the information which he
collects from different sources and through various means. He passes some of
the privileged information directly to his subordinates, who otherwise have no
access to it. The manager plays an important role in disseminating the information
to his subordinates, when they don't have contact with one another.
Spokesman's Role: Some insiders and/or outsiders control the unit/department
or the organisation. The manager has to keep them informed about the
developments in his unit. He has to keep his superior informed of every
development in his unit, who in turn inform the insiders and outsiders.'Directors
and shareholders must be informed about financial performance. Customers must
be informed about the new product developments, quality maintenance,
governr.1ent officials about implementation of law etc.
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Information is an important and basic input to decision-making. The managers

playa crucial role in decision-making system of the unit. Only the manager can
commit the department to new courses of· action and he has full and current
information to initiate and implement the decisions that determine the
department's or organisational strategy. The decisional roles of the manager are:
Entrepreneurial Role: As an entrepreneur, the manager is a creator and
innovator. He seeks to improve his department, adapt to the changing
environmental factors. The manager appreciates new ideas and initiates new
developmental projects.
According to Peter F. Drucker, "the manager has the task of creating a true whole
that is larger than the sum of its parts, a prodl!ctiue entity that turns out more than
the sum of the resources put into it."

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 12 Management and Organisational Behaviour

Disturbance Handler Role: Entrepreneurial role describes the manager as the

voluntary initiator of change, the disturbance handler role presents the manager
as the involuntarily responding to pressures. Pressures of the situation are severe
and highly demand the attention of the manager and as such the manager cannot
ignore the situation. For exampll?, workers' strike, declining sales. bankruptcy of
a major customer etc.
The manager should have enough time in handling disturbances carefully, skilfully
and effectively.
Resource Allocator's Role: The most important resource that a manager
allocates to nis subordinates is his time. He should have an open-door policy and
allow the subordinates to express their opinions and share their experiences. This
process helps both the manager and his subordinates in making effective decisions.
In addition, the manager should empower his subordinates by delegating his
authority and power.
Negotiator's Role: Managers spend considerable time in the task of negotiations.
He negotiates with the subordinates for improved commitment and loyalty, with
the peers for cooperation, coordination and integration, with workers and their
unions regarding conditions of employment, commitment, productivity and with
the government about providing facilities for business expansion etc.
These negotiations are an integral part of the manager's job for only he has
authority to commit organisational resources and is the nerve centre of information.
Though the different roles of a manager are discussed separately for convenience,
they are, infact inseparable. The manager has to perform these roles
simultaneously by integrating one with the another. Thus, the major role of the
manager is integiating all the roles while playing the managerial role or performing
his tasks. Infact, the manager cannot play anyone role isolating the other roles.
As a strategist, the manager has to integrate all the roles in decision-making and
performing his tasks. (See Exhibit 1.1).
Now, we shall study another aspect of management i.e., management levels.

Management includes all the managers of a

company. Management is classified qS managers
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at different levels u'iz., top level managers, middle

level managers and lower level managers.

Top level managers are the senior level executives of the company including the
Managing Director or President Vice-Presidents, General Managers, Chief
Managers of the company, etc. Top level management particularly the Managing
Director or President of the company is responsible for the overall management
and performance of the company.
Top level management formulates objectives, polici~s and corporate level strategies
of the company. Toplevel managers lead and motivate the middle level managers.
They coordinate the activities of middle level managers.

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 Nature and Fundions of Management 13
Exhibit 1.1 Key Roles of Managers

Henry Mintzb'erg concluded that the job of a top manager contains ten interrelated roles . The importance of
each role and the amount of time demanded by each probably varies from one job to another. These roles are
as follows :
Figurehead Acts as legal and symbolic head; performs obligatory social , ceremonial or legal
duties (hosts retirement dinners, luncheons for employees, and plant dedications;
attends civic affairs; signs contracts on behalf of firm) .
Leader Motivates, develops and guides subordinates; oversees staffing, training, and
associated activities (introduces Management By Objectives [MBO). develops a
challenging work climate, provides a sense of direction, acts as a role model).
Liaison Maintains a network of contacts and information sources outside the top
management in order to obtain information and as.sistance (meets with key people
from the task environment, meets formally and informally with corporate division
managers and the CEOs of other firms).
Monitor Seeks and obtains information in order to understand the corporation and its
environments; acts as the nerve centre for the corporation (reviews status reports
from vice-presidents, reviews key indicators of corporate performance, scans
Wall Street Journal and key trade journals, joins select clubs and societies) .
Disseminator Transmits information to the rest of the top management team and other key
people in the corporation (chairs staff meetings, transmits policy letters, ;
communicates five-year plans) . '\ '
Spokesman Transmits information to key groups and people in the task environment (prepares
annual report to stockholders, talks to the Chamberof Commerce, states corporate
policy to the media, participates in advertising campaigns, speaks before
congressional committees) .
Entrepreneur Searches the. corporation and its environment for projects to improve products,
processes, procedures, and structures; then supervises the design and
implementation of these projects (introduces cOst reduction programmes, makes
plant trips to divisions, changes forecasting system, brings in subcontract work
to level the workload , reorganises the corporation) .
Disturbance Handler Takes corrective action in times of disturbance or crisis (personally talks with key
qeditors, interest groups, congressional comfTlittees, union leaders; establishes
investigative committees; revises objectives, :strategies, and policies) .
Resource Allocator Allocates corporate resources by making and/or approving decisions (reviews
budgets, revises programme, scheduling , initiates strategic planning , plans
personnel load, sets objectives.) .
Negotiator Represents the corporation in negotiating important ' a,greements; may speak
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directly with key representatives of groups in the task.environment or work through :;

a negotiator'; negotiates disagreements within the corporation by working with
conflicting division heads (works with labour as negotiator; resolves disputes,
negotiates wIth creditors, suppliers and creditors) .

(Source: H. Mintzberg, The Nature of Managerial Work, Harper & Row, New York, 1973, pp. 54-94).

Middle level managers are responsible for coordination of the activities of various
departments. Middle level managers include managers of various departments
like Production department, Marketing department, Rnance department, Human
Resource Department and Research and Development department. These
managers are responsible for the success or failure of ~heir departments.
Middle level managers formulate the objectives, goals and strategies of their
departments based on those of the organisation. In addition, middle level managers
lead, motivate and coordinate the activities bf the lower-level managers.

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
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 14 Management and Organisational Behaviour

Lower level managers are responsible for the work of the operating staff working
with them. Lower level managers are also called First-Line or First-Level or Junior
Managers. They direct, lead, motivate and coordinate the activities of the operating
employees. These managers mostly supervise the operating employees while they
perform their work. As such, the lower level managers are also called 'Supervisors.'
Fig.l.S presents management levels.
• • • • • • • • • •• Different Management Levels
•
•
•
• Top Level Managing Director/President
•
•
Management
•
• General Manager/ General Manager/
• "'
• Vice-President Vice-President
•

-M~d:': L~:e~ ---It-----...,.------r------.-----...,

Management . Manager Manager Manager Manager Manager
Production Finance Human Resources Marketing Research and
Development
----------1
----~------ I I
Lower Level Manager Manager Manager Manager
Management Materials Scheduling Quality Control Assembly

Managers are also classified based on the functional areas of management. The
functional areas of management include: production, marketing, human resource,
finance, research and development. The functional managers include: production
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manager, marketing manager, finance manager, human resource manager and

manager-research and development. Functional managers mostly perform the
activities of their respective functional area. As such, they fail to see the total
company.
General managers view the total company in an integrated and comprehensive
approach. They also see the total of-the sub-units and subsidiary companies besides
integrating and coordinating the activities of the production department, marketing
department, finance department and human resources department. General
managers formulate strategies at the corporate and the business unit level.

Organisations are baSically of two types viz., profit-oriented organisations and

non-profit oriented organisations. Business organisations are also called profit-
oriented Qrganisations. Non-business organisations belong to the second type.
They are also called social organisations.

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
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 Nature and Functions of Management 15

Non-profit organisations include colleges, universities, churches, temples,

government hospitals, clubs, service societies etc. Management principles and
functions are applicable to both profit-oriented and non-profit organisations .
There are varied differences among different t.ypes of non-profit organisations.
The differences may be both to do with the different expectations of influencing
. bodies and also the special nature of revenue generation in terms of resources .
Exhibit 1.2 presents the characteristics and difficulties of the management in non-
profit organisations. However, it can be stated that the concepts, techniques and
principles of management are applicable to both profit and non-profit
organisations. As such, it is said that management principles are applicable
universally.
Exhibit 1.2 Characteristics and Likely Difficulties of Management in
Non-Profit Organisations

Characteristics Likely Difficulties

Objectives and Expectations: • Complicates planning
• Multipl9 service objectives and
• High incidence of political lobbying.
expectations
• Difficulties in delegating/decentralizing
• Expectations of funding bodies' responsibilities and decision-making.
influence.
Market and Users:
• Service satisfaction cannot be ,messured
in financial terms
• Beneficiaries of services not
• Influence from funding bodies maybe high.
necessarily contributors of revenue/
resources.
• Emphasis may be on finance rather than
service.
Resources: • Objectives may be addressed to sponsors
.,
• High proportion from Government!
Sponsors.
as much as clients.

• Received in advance of services.

• May be multiple sources of funding

Management styles and practices vary from country to country

based on the cultures. However, there may be similar styles and
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practices in countries with more or less similar cultures. In addition,

the levels of economic development and structure of the etonomy
also determine the management styles. There is broad distinction
between the Japanese management and Americ~~ management.
Exhibit 1.3 provides the characteristics of Japanese management and American
management
Management styles and approaches vary widely between the western countries
and the eastern countries.
• Individualistic approach is more predominant in the west particularly in USA
while the group approach is more predominant in the east particularly in
Japan.
• Decisions are mostly made by the top management in USA and are pushed
downwards. Decisions in Japan are mostly made by the interaction and
participation of both top level management and lower level employees.

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
Created from UNICAF on 2024-03-11 19:14:18.
 16 Management and Organisational Behaviour

Exhibit 1.3 Characteristics of Japanese Management and

Americap Management

Japanese Managment ~ American Management

• Life Time Employment: Japanese companies

used to provide life time employment to the
• Short-term employme~t

;
people. Now this concept is changed to life
time employability. In other words the
companies continue the employment of those
employes who continuously acquire new skills _J

required by the company from time to time.

• Slow evaluation and promotion • Specialised
Rapid evaluation and promotion
• Non specified career paths • USA encourages career paths: Software industry in
multicareer paths
• Implicit control mechanisms • Explicit" control mechanism
• Collective decision-mechanisms • ' ,Individual decision making: American companies
particularly software companies have been

.'•
practicising group decision-making
• Collective responsibility Individual responsibility
• Holistic concern Segmented concern

• Employees volunteer to assist the management in the eastern countries

whereas in western countries employees do not take up the work unless
otherwise the work.is formatly assigned to them.
• Information flows freely through all directions in eastern countries, whereas
it flows with a direction though a particular channel in the western countries.
• Employees in USA strive for individual achievements and rewards whereas
the employees in Japan strive for group achievements and rewards.
• Team work is the cultUre of the Japanese firms and individual work is the
culture of American firms.
• Employees in Japan are mostly prefer empowerment while their counterparts
in USA prefer close supervision.
• Japanese organisations used to employ' the people throughout the life time.
But,the globalisation .a nd information technolt,gy made the' Japan ese
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organisation to develop the hurrian resources of their employees, enhance

their employability and provide employment. As such the employee turnover
is almost nil in Japanese firms.
" . .
• Employment in USA is for a short run. USA companies fire the employees
quite often QS they follow 'hire-and-fire' policy. As such the employee turnover
is high in USA.
• Japanese organisations follow humanistic approach in em~loying and
managing people wbile the American companies follow mechanistic approach
or 'use and throw' poli€y in managing people.
• Japanese organisations follow long run and relationship-oriented approach
whereas American companies follow short~run and pure-business (briented
approach in managing business.

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 Nature and Functions of Management 17

Different approaches to management include systems approach, the contingency

approach, human resources management approach and management science
approach. Different approaches to management have been discussed in detail in
the next chapter i.e., Development of Management Thought.

PRODUCE THE BEST AT THE FIRST TIME ITSELF

A prominent business group introduced on (i) preservatives used in the product are not
test market basis a ready-to-drink natural as per the product standards and (ii) the
fruit juice in January 1981 for the first time packing material used was also not as per
in India. The product received appreciation the planned programme of the product
from a number of quarters including the development.
doctors in the first three months itself. Later After further enquiry the company found
the company introduced the product in a that there was no checking and verification
number of other markets in the country. In of the the preservatives used in the product
fact the product posed a challenge to the, and the packing material used.
then existing local brands of soft drinks in
the country. The company realised the need for
control and immediately established a
The CEO of the company announced the quality control unit in the production
success of the company in bringing and depa rtment.
popularizing a new product at affordable
price even to the low income group people The company withdrew all the products
in a function on 30 th July 1981. TQ his from the market and tendered apology
to the customers. The company took 17
surprise the CEO saw a piece of news in
the newspaper next day morning that six months to regain the customers
around 10 people were admitted in a confidence and restore the demand.
hospital due to ill- health consequent upon The company incurred an additional
consuming his company's prod'uct. The expenditure of about Rs.100 crores for this
company received such complaints in the mistake.
following days also. We can understand from this case incident
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The company thoroughly investigated the that controlling is as ess'ential as planning,

product samples in the reputed laboratories organizing, staffing and directing in order
in the country. The laboratories reported to perform the management functions
that efficiently.

• Management • Mission • Decisional Roles

• Administration • Objectives • Science
• Resources • Strategies • Art
• Planning • Technical Skills • Profession
• Organising • Human Skills. • Staffing
• Conceptual Skills • Directing" • Interpersonal Role
• Controlling • Information Role

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
Created from UNICAF on 2024-03-11 19:14:18.
 18 Management and Organisational Behaviour

1. What is management? Critically comment on various definitions on management.

2. What are the functions of management? Explain each of them.
3. What are the managerial skills? Who should have more of conceptual skills?
4. Comment on different managerial roles.
5. Is management Science or Art? Defend your answer with' examples.
6. What are the features of a profession? Does management satisfy these features?
7. Comment on different levels of managers. Explain their functions.
8. Discuss the differences between management and administration.

1. James A.EStoner, Management, Prentice Hall of India (P) Ltd., New Delhi, 1984, p.7.
2. John A.Pearce and Richard B.Robinson, Management, McGraw Hill, 1989, p.4.
3. Ivancerich, Donnelly and Gibson, Management:Principles and Functions, Richard D.lrwin Inc.,
Homewood, 1991, p.5.
4. John A.Pearce and Richard B.Robinson, op.cit., p.4.
5. Harold Koontz and Heinz Weilinch, Essentials of Management, McGraw Hill, New York, 1990. p.4.
6. E.EL.Brech, Principles and Practice of Management, Pitman, London, 1971.
7. Robert L.Katz, Skills of an£Jjective Administrator, Harvard Business Review, January-February 1955,
pp.33-42 and Robert L.Katz., Retrospective commentary, Harvard Business Review, September-October
1974, pp.101-102.
Copyright © 2010. Himalaya Publishing House. All rights reserved.

Rao, PS 2010, Management and Organisational Behaviour, Himalaya Publishing House, Mumbai. Available from: ProQuest Ebook Central. [11 March 2024].
Created from UNICAF on 2024-03-11 19:14:18.