3140709

Principles of Economics and

Management

Unit-6
Introduction to
Management

Prof. Mayur K. Parmar

 Outlines
 Introduction to Management
• Definitions, Nature, Scope
 Management & Administration
• Skills, Types and Roles of managers
 Management Principles
• Scientific principles, Administrative principles,
 Maslow’s Hierarchy of needs theory

Unit: 6 Introduction to Management 2

 Definition of Management given by different experts
 According to F.W. Taylor
“Management is an art of knowing what to do, when to do and see that
it is done in the best and cheapest way.”

 According to Mary Parker Follett

“Management is an art of getting things done through people.”

 According to Henri Fayol

“Management is to forecast (estimate), to plan, to organize, to
command, to co-ordinate and control activities of others.”

Unit: 6 Introduction to Management 3

 Scope of Management
1) Production management:
• Production means creation of utilities by converting raw material
into final product by various scientific methods and regulations.
• Area of management which deals with production is known as
production management.
2) Marketing management:
• Marketing management involves distribution of the product to the
buyers.

Source: www. prodintec.es Source: www.shutterstock.com

Unit: 6 Introduction to Management 4

 Cont…
3) Finance and accounting management:
• Financial and accounting management deals with managerial
activities related to obtaining and utilization of fund for business
purpose.
4) Personnel / Human resource management:
• Personnel management is the phase of management which deals
with effective use and control of manpower.

Source: www.fadelsoft.com

Source: www.isdc.edu.in
Unit: 6 Introduction to Management 5
 Nature of Management
1) Management is a science
2) Management is an art

Unit: 6 Introduction to Management 6

 1) Management is a Science
 Science is a systematic body of knowledge based on certain
principles.
 Science knowledge is obtained through the process of
observation, experimentation and testing.
 We can say management is a science by following arguments:
1) Universally acceptance principles
E.g. Principle of unity of command.
2) Inquiry & Observation
E.g. Principles of henry fayol of fair remuneration. He observed the fair
remuneration to personal helps in creating a satisfied work force.
3) Cause & Effect Relationship
E.g. If workers are given bonuses, fair wages they will work hard.

Unit: 6 Introduction to Management 7

 Cont…
4) Test of validity & predictability
E.g. Principle of unity of command can be tested by comparing two
persons-one having single boss and one have to report two bosses.
5) Experimentation
E.g. Henry fayol developed principles on certain experiments.

Unit: 6 Introduction to Management 8

 2) Management is an Art
 An art is defined as an application of personalized and general
knowledge, how to do things creatively and skillfully.
 It can be improved through constant practice only.
 We can say management is an art by following arguments:
1) Practical Knowledge
2) Personalized Skill
3) Creative Art
4) Continuous Practice
5) Goal-Oriented

Unit: 6 Introduction to Management 9

 Management v/s Administration.
Management Administration
It is an art of getting things It is concerned with formulation
done through others by of goal, plans & policies.
directing their efforts towards
achievement of predetermined
goals.
It is an executing function. It is a decision making function.

It decides who will do it & how It decides what is to be done &

will do it. when is to be done.
Technical and Human skills Conceptual and Human skills
required. required.
Middle & lower level function. Top level function.
Unit: 6 Introduction to Management 10
 Types of Managers

Top Management
[Chairman, Board of
Director, CEO, General
Manager]

Middle level Management

[Head of the Department,
Deputy Manager]

Lower level Management

[Supervisors, Inspectors,
Section officers]

Unit: 6 Introduction to Management 11

 Top Level Management
 The top management is the ultimate source of authority.
 They give more time on planning and coordinating function.
 They control and coordinate the activities of all the organization.
 They prepare goals, strategic plans and policies for the
organization.
 They also provide directions.
 They also maintain the contacts with outside world.
 E.g. board of directors, CEO, managing director etc.

Unit: 6 Introduction to Management 12

 Middle Level Management
 They devote more time to implement policies and strategies.
 They make plans for the sub-units of the organization.
 They interpret and explain policies from top level management to
lower level.
 They also send important reports and other important data to top
level management.
 They are also responsible for inspiring lower level managers
towards better performance.
 E.g. branch managers, departmental managers etc.

Unit: 6 Introduction to Management 13

 Lower/ supervisory / operative Level Management
 They are responsible for the quality as well as quantity of
production.
 They communicate workers problems and suggestions to the
higher level and higher level goals and objectives to the workers.
 They help to solve the grievances of the workers.
 They are responsible for providing training to the workers.
 They arrange necessary materials, machines, tools etc.
 They prepare periodical reports about the performance of the
workers.
 They ensure discipline in the enterprise as well as motivate
workers.
 E.g. supervisors, foreman, section officers, superintendent etc.
Unit: 6 Introduction to Management 14
 Managerial (Management) Skills

Source: www.study.com

Unit: 6 Introduction to Management 15

 Cont…
Top
Management Conceptual
Skills

Middle Human
management Skills

Technical
Lower
Skills
Management

Unit: 6 Introduction to Management 16

 Cont…
 Conceptual Skills
• A conceptual skill is related with top level management.
• It includes creativity, analytical and initiative skills.
• It helps the manager to fix goals or objective for whole organization
and plan for every situation.
• According to Prof. Daniel Katz
“Conceptual skills are mostly required by the top level management
because they spend more time in planning, organizing and problem
solving.”

Unit: 6 Introduction to Management 17

 Cont…
 Human Skills
• Human relations skills are also called interpersonal skills and it is
related with all level of management.
• It is an ability to work with people.
• Manager also lead, motivate, direct, communicate and develop team
spirit.
 Technical Skills
• It is capacity to use the different tools (machinery) and techniques in
an area in which a person is specialized.
• Technical skills required particularly with lower level management.

Unit: 6 Introduction to Management 18

 Role of Manager Given by Mintzberg
 These roles can be grouped into three categories
• Interpersonal role
• Informational role
• Decisional role

Interpersonal Provide Information

Feedback

Informational Process Information

Decisional Use Information

Unit: 6 Introduction to Management 19

 Interpersonal Role
1) Figurehead
• The manager is a symbol and represents the organization in matters
of formality.
• He performs official duties like:
o The signing of legal documents on behalf of the company.
o Greet visitors and customers.
o Being available for people (agencies) that will only deal with him
because of status and authority.

Unit: 6 Introduction to Management 20

 Cont…
2) Leader
• The leader role is to motivate and direct their subordinates.
• The manager also looks after the interest of his subordinates and
also tries to solve their work related problems.
• He also sets goals for his followers and co-ordinates the individual
goals with the organizational goals.
3) Liaison
• The liaison role is to get connected between organization and
outsiders.
• The manager’s networking skills to maintain internal and external
contacts for information exchange are essential.
• Top level manager uses it to gain favors and information, while the
supervisor uses it to maintain the routine flow of work.
Unit: 6 Introduction to Management 21
 Informational Role
1) Monitor
• The manager must establish and maintain information system by
building contacts both within and outside the organization.
• Training staff and deliver information.
2) Disseminator
• The manager receives, interprets, and transmits external information
through the liaison role into the organization, and Internal
information through the leader role between subordinates.
3) Spokesperson
• The manager spreads the organization’s information into the general
public, such as customers, suppliers, government and the press.

Unit: 6 Introduction to Management 22

 Decisional Role
1) Entrepreneur
• The manager initiates and plans the controlled change in the
organization through exploiting opportunities or solving problems
and taking action to improve existing operation.
2) Disturbance Handler
• The manager reacts to spontaneous situations and unpredictable
events which pose threats to the organization and must take action
to correct the situation.
3) Resource Allocator
• The manager decides where the organization will expand its efforts
and makes choices on the allocation of resources such as capital
fund, time, materials and manpower.

Unit: 6 Introduction to Management 23

 Cont…
4) Negotiator
• The manager negotiates on behalf of the organization with other
individuals or organizations for a new sales contract or cooperation
agreement.

Unit: 6 Introduction to Management 24

 Responsibilities of CEO
1) Board administration and support
• Advising and informing board members
• Interfacing between board and staff
• Supporting board's evaluation as chief executive.
2) Program, product and service delivery
• Supervises design, marketing, promotion, delivery and quality of
programs, products and services.
3) Financial, tax, risk and facilities management
• Recommends yearly budget for board approval.
• Carefully manages organization's resources within those budget
guidelines according to current laws and regulations.

Unit: 6 Introduction to Management 25

 Cont…
4) Human resource management
• Effectively manages the human resources of the organization
according to current laws and regulations.
5) Community and public relations
• Assures the organization and its mission, programs, products and
services are consistently presented in strong, positive image to
relevant stakeholders.
6) Fundraising (nonprofit-specific)
• Oversees fundraising planning and implementation including:
o Identifying resource requirements.
o Exploring funding sources, and creating policies to approach them.
o Submitting proposals and administrating fundraising records and
documentation.

Unit: 6 Introduction to Management 26

 Scientific Approach of Management
 It is given by Frederick Winslow Taylor (1856-1915).
 He is considered “father of scientific management”.
 It is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the
workers.
 Elements of scientific approach given by F.W. Taylor are:
1) Scientific task planning
2) Time study
3) Motion study
4) Functional foremanship
5) Standardization
6) Differential piece rate system

Unit: 6 Introduction to Management 27

 Elements of Scientific Approach
 Scientific Task Planning
• Scientific task planning is all about the total amount of work an
average worker can do during a day under normal conditions.
• Management should decide in advance what work is to be done, by
whom, where and when.
 Time Study
• The time study indicates that minimum time required finishing a
particular job.
• The time study would indicate the time taken by workers to finish
particular job is being recorded first and this information is being
used to develop standard time.

Unit: 6 Introduction to Management 28

 Cont…
 Motion study
• Motion study is useful to find out best order of activity to do a
particular job to minimize movement of workers.
 Functional Foremanship
• In order to achieve better production control, Taylor has given the
concept of foremanship.
• Where the factory has divided into various department.
• Each department has in-charge of specialist.
• These functional foremanship playing role of specialist and provide
expert advice to workers.

Unit: 6 Introduction to Management 29

 Cont…
 Standardization
• In scientific Management standards have to be set well in advance
for the task, materials, work method, quality, time, cost and working
condition etc.
• It helps in simplifying the process of production by reducing waste,
improving quality of product and maximum utilization of available
resources.

Unit: 6 Introduction to Management 30

 Cont…
 Differential piece rate system
• In order to motivate workers, incentive based wage system has been
developed.
• This concept of piece rate system is based on competence of
workers.
• The competent workers are paid more wages than incompetent one.
• It also encourages incompetent workers to improve their
performance and achieve their standards.

Unit: 6 Introduction to Management 31

 Limitations of Scientific Approach
1) Unfair mechanism
• Scientific Management’s main objective is to increase workers’
productivity but management did not share the benefits of
increased productivity with workers.
2) Depersonalized Work
• Workers have to do work repeatedly.
• These generate monotony and boredom.
3) Un-psychological
• In scientific Management there is no specific information given that
how wages should be distributed as a result it becomes un-
psychological.

Unit: 6 Introduction to Management 32

 Cont…
4) Unoriginal
• Some people says F. W. Taylor has copied this approach from
someone else’s approach.
5) Unrealistic
• F. W. Taylor has not believed in motivation, financial needs also.
That is the reason why this concept is unrealistic.

Unit: 6 Introduction to Management 33

 Business Operation
 According to Fayol, the business operations of an organization
could be divided into six activities.
1) Technical: Producing and manufacturing products.
2) Commercial: Buying, selling and exchange.
3) Financial: Search for an optimal use of capital.
4) Security: Protecting an employees and property.
5) Accounting: Recording and taking stick of costs, profits and
liabilities, maintain balance sheets, and compiling statistics.
6) Managerial: Planning, organizing, commanding, coordinating and
controlling.

Unit: 6 Introduction to Management 34

 Principles of Management
 Fourteen principles of management given by Henry Fayol.
1) Division of Work
• Work should be divided with various individual according to their
expertise skills and knowledge in a particular area.
• With division of work it helps individual in acquiring speed, accuracy
in his performance.
• Specialization leads to efficiency and effectiveness for organization.
2) Authority and Responsibility
• Authority was defined by Fayol as the right to give orders and
powers to assign duty.
• Responsibility involves being accountable, and is therefore naturally
associated with authority.
• Whoever accepts authority also accepts responsibility.
Unit: 6 Introduction to Management 35
 Cont…
3) Unity of Command
• Subordinates should receive orders and be answerable to one and
only one boss at a time.
• Unity of command provides the enterprise of disciplined, stable and
orderly existence.
• It creates melodious relationship between superiors and sub-
ordinates.
4) Unity of Direction:
• According to this principle, efforts of all the members of the
organization should be directed towards common goal.
5) Subordination of Individual Interests to the General Interests
• The interests of one person should not take priority over the
interests of the organization as a whole.
Unit: 6 Introduction to Management 36
 Cont…
6) Equity
• Equity means all employees should be treated in organization as
equally as possible.
• Equity is combination of fairness, kindness and justice.
7) Order
• This principle is concerned with proper and systematic arrangement
of things and people.
• Arrangement of things is called material order and people are called
social order.
• Material order – there should be safe, appropriate and specific
place for every material or machinery.
• Social order – selection and appointment of most suitable person
on the right place.
Unit: 6 Introduction to Management 37
 Cont…
8) Scalar Chain
• Managers in hierarchies are part of a chain like authority scale.
• Each manager, from the first line supervisor to the president,
possesses certain amounts of authority.
• Employee will communicate with lower level manager.
• Lower level managers should always keep upper level managers
informed of their work activities.
9) Discipline
• According to Fayol, “Discipline means sincerity, respect of authority
and observance of rules and regulation of the enterprise”.
• This principle applies that subordinate should respect their
superiors and obey their order.

Unit: 6 Introduction to Management 38

 Cont…
10) Initiative
• Workers should be encouraged to take initiative in the work
assigned to them.
• Fayol advised that management should provide opportunity to its
employees to suggest ideas, experiences and new method of work.
11) Fair Remuneration
• Fayol suggested that remuneration to be paid to the workers should
be fair, reasonable, satisfactory and rewarding of the efforts.
• As far as possible remuneration should satisfy employer as well as
employee.
• Fayol also recommended provision of other benefits such as free
education, medical and residential facilities to workers.

Unit: 6 Introduction to Management 39

 Cont…
12) Stability
• Fayol highlighted that employees should not be moved frequently,
from one job to another.
13) Stability of Tenure of Personnel
• Retaining productive employees should always be a high priority of
management.
• Recruitment and Selection Costs, as well as increased product-reject
rates are usually associated with hiring new workers.
14) Espirit de Corps
• Management should encourage coordination and generate good
feelings among employees.

Unit: 6 Introduction to Management 40

 Maslow’s Hierarchy of Need Theory

Morality,
Creativity,
Spontaneity,
Problem Solving
Self-Actualization etc.

Self-esteem, Confidence,
Esteem achivement etc.

Social Needs/ Love Friendship, Family etc.

Safety Security of body, employment, resources etc.

Physiological Needs Breathing, Food, Water, Sleep etc.

Unit: 6 Introduction to Management 41

 Physiological Needs
 Physiological needs are those required to sustain life, such as air,
water, nourishment, sleep etc.
 According to Maslow's theory, if such needs are not satisfied then
one's motivation will arise from the mission to satisfy them.
 Higher needs such as social needs and esteem are not felt until
one has met the basic needs.

Source: www.pinterest.com

Unit: 6 Introduction to Management 42

 Safety Needs
 Once physiological needs are met, one's attention turns to safety
and security.
 Such needs might be fulfilled by Living in a safe area, Medical
insurance, Job security, Financial reserves.

Source: www.slideshare.net/dhruvkd786/maslows-hierarchy-of-needs-theory-47991651
Unit: 6 Introduction to Management 43
 Social Needs
 Once a person has met the lower level physiological and safety
needs, higher level needs become important, the first of which are
social needs.
 Social needs are those related to interaction with other people
and may include Need for friends, Need to give and receive love
etc.

Source: www.slideshare.net/sidbarat/maslows-theory-of-hierarchy-of-needs
Unit: 6 Introduction to Management 44
 Esteem Needs
 Once a person feels a sense of "belonging", the need to feel
important arises.
 Esteem needs may be classified as internal or external.
 Internal esteem needs are those related to self-esteem such as
self-respect and achievement.
 External esteem needs are those such as social status and
recognition.
 Maslow later refined his model to include a level between esteem
needs and self-actualization: the need for knowledge and
aesthetics.

Source: www.slideplayer.com/slide/8751700/
Unit: 6 Introduction to Management 45
 Self-Actualization
 Self-actualization is the peak of Maslow's hierarchy of needs.
 It is the journey of reaching one's full potential as a person.
 Unlike lower level needs, this need is never fully satisfied.
 Self-actualized people tend to have needs such as Truth, Justice,
Sense, Importance etc.
 Self-actualized persons have frequent occurrences of peak
experiences, which are energized moments of profound happiness
and harmony.
 According to Maslow, only a small percentage of the population
reaches the level of self-actualization.

Source: www.loopa.co.uk/maslows-hierarchy-of-needs/
Unit: 6 Introduction to Management 46
 Qualities of Leader
1) Proactive vs. Reactive
• The brilliant leader is always thinking three steps ahead.
• Working to his own environment with the goal of avoiding problems
before they arise.
2) Flexible/Adaptable
• How do you handle yourself in unexpected or uncomfortable
situations?
• An effective leader will adapt to new surroundings and situations,
doing his/her best to adjust.
3) Respectful
• Treating others with respect will ultimately earn respect.
4) Quiet Confidence
• Be sure of yourself with humble intentions.
Unit: 6 Introduction to Management 47
 Cont…
5) A Good Communicator
• As a leader, one must listen a lot.
• Leader have to understand the needs and desires of others.
• A good leader asks many questions, considers all options, and leads
in the right direction.
6) Enthusiastic
• Excitement is transmittable.
• When a leader is motivated and excited about the cause people will
be more inclined to follow.
7) Open-Minded
• A strong leader will consider all options when making decisions.
8) Well Educated

Unit: 6 Introduction to Management 48

 Cont…
9) Resourceful
• Utilize the resources available to you.
• If you don't know the answer to something find out by asking
questions.
• A leader must create access to information.
10) Rewarding
• An brilliant leader will recognize the efforts of others and support
those actions.
11) Open to Change
• A leader will take into account all points of view and will be willing to
change a policy, program, cultural tradition that is outdated, or no
longer beneficial to the group as a whole.

Unit: 6 Introduction to Management 49

 Cont…
12) Interested in Feedback
• View feedback as a gift to improve.
13) Evaluative
• Evaluation of events and programs is essential for an organization
(group) to improve and progress.
• An brilliant leader will constantly evaluate and change programs and
policies that are not working.
14) Consistent
• Confidence and respect cannot be attained without your leadership
being consistent.
• People must have confidence that their opinions and thoughts will
be heard and taken into consideration.

Unit: 6 Introduction to Management 50

 Cont…
15) Delegator
• An exceptional leader realizes that He/She cannot accomplish
everything on his own.
• A leader will know the talents and interests of people around him,
thus delegating tasks accordingly.
16) Initiative
• A leader should work to be the motivator, an initiator.
• He/she must be a key element in the planning and implementing of
new ideas, programs, policies, events, etc.

Unit: 6 Introduction to Management 51

 GTU Questions
1. Who is the father of Scientific Management? Discuss his
contribution in Theory of Management.
2. Describe principles of management.
3. Explain Maslow’s theory of Hierarchy of Needs with necessary
diagram.
4. Elaborate types of manager.
5. What is management? Elaborate the difference between
administration and management.
6. Management is an art. Justify your answer.

Unit: 6 Introduction to Management 52

Darshan Institute of Engineering & Technology