CHAPTER I

FUNDAMENTALS OF MANAGEMENT

1.1. Definition Of Management

There are several definitions of Management; but they all are fundamentally the same. Among
the many, some are:
a) Management is the process of coordinating all resources through the five major functions of
planning, organizing, staffing, directing /leading and controlling to achieve organizational
goals/desired objectives.
In the above definition there are three key concepts
i) Coordination of all resources – managers should coordinate the resources of an
organization. These resources may be human or non human.
ii) The five managerial functions – To coordinate the resources of an organization a
manager should employ/use the five managerial functions.
iii) Objectives – are the reason for the establishment of organizations and management is
useful for achieving these goals. Managing/management is concerned with
productivity: effectiveness and efficiency. There are points to be meet, targets to be
shot or places to be reached. All organizations establish a variety of goals and direct
their energies and resources to achieve them.
- Profit oriented business → Return on Investment (ROI) goals
- Hospital → Patient care
- Educational institution → Teaching, research & community service.
All organizations also have resources that can be used to meet these objectives. Such resources
can be classified into: human and non-human, and management is the force that unifies these
resources. It is the process of bringing them together and coordinating them to help accomplish
organizational goals.
b) Management is the art of getting things done through other people by making the atmosphere
conducive for others. It is the process of getting things done through others, and this process
puts emphasis on both the objectives to be attained and the people who will be pursuing
them.
→ an effective manager focuses on both work and people.

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 → the job of every manager is to achieve organizational goals through the combined
efforts of people.
c) Management is the utilization of scientifically derived principles to examine and improve
collective efforts or production.
- Management applies to any kind of organization, to managers at all organizational
levels.
- Without management, virtually no business could survive.
- Management increases the values of our resources.
d) Management is the process of achieving organizational goals through engaging in the five
major functions of planning, organizing, leading, staffing and controlling. This definition
recognizes that:
- Management is an ongoing activity
- Entails reaching important goals, and
- Involves knowing how to perform the five major functions of management.
Managers – are those persons in the position of authority who make decisions to commit (use)
their resources and the resources of others towards the achievement of
organizational objectives.
* Everybody is the manager of his/her time, energy and talents.
Organization – is a group of two or more people brought together to achieve common stated
objectives.
Organization – two or more persons engaged in a systematic effort to produce goods and/or
services.
1.2. Significance Of Management
Why do we study management?
Management has been important to the daily lives of people and to the organizations. The
importance of management may be traces with the following.
1) Effective utilization of Resources: Management tries to make effective utilization of various
resources. The resources are scarce in nature and to meet the demand of the society, their
contribution should be more for the general interests of the society. Management not only
decides in which particular alternative a particular resource should be used, but also takes
actions to utilize it in that particular alternative in the best way.

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2) Development of Resources: Management develops various resources. This is true with
human as well as non-human factors. Most of the researchers for resource development are
carried on in an organized way and management is involved in these organized activities.
3) It ensures continuity in the organization: Continuity is very important in the organizations.
Where there are no proper guidelines for decision making continuity cannot be guaranteed. It is
quite natural that new people join while some others retire or leave the organization. It is only
management that keeps the organization continuing.
4) Integrating various interest groups: In the organized efforts, there are various interest
groups and they put pressure over other groups for maximum share in the combined output. For
example, in case of a business organization, there are various pressure groups such as
shareholders, employees, govt. etc. these interest groups have pressure on an organization.
Management has to balance these pressures from various interest groups.
5) Stability in the society: Management provides stability in the society by changing and
modifying the resources in accordance with the changing environment of the society. In the
modern age, more emphasis is on new inventions for the betterment of human beings. These
inventions make old systems and factors mostly obsolete and inefficient. Management provides
integration between traditions and new inventions, and safeguards society from the unfavorable
impact of these inventions so that continuity in social process is maintained.
1.3. Managerial Functions an Overview
Regardless of the type of firm and the organizational level, all managers perform certain basic
functions. These managerial functions are Planning, organizing, staffing, directing/leading/ and
controlling.
i. Planning is the primary function of management. It is looking ahead and preparing for
the future. It determines in advance what should be done. It is conscious determination of
future course of action. This involves determining why to take action? What action? How
to take action? When to take action? Planning involves determination of specific
objectives, programs, setting policies, strategies, rules and procedures and preparing
budgets.

Planning is a function which is performed by managers at all levels – top, middle and
supervisory. Plans made by top management for the organization as a whole may cover

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 periods as long as five to ten years, whereas plans made by low level managers cover much
shorter periods.
ii. ORGANIZING: is the process of distributing the work among the group members and
establishing the relationships that are needed to ensure smooth accomplishment of jobs. It
involves identification of activities to be carried out, grouping these activities into
working units, assignment of responsibilities to each unit with corresponding authority.
iii. STAFFING involves managing various positions of the organizational structure. It
involves selecting and placing the right person at the right position. Staffing includes
identifying the gap between manpower required and available, identifying the sources
from where people will be selected, selecting people, training them, fixing the financial
compensation and appraising them periodically. The success of the organization depends
upon the successful performance of staffing function.
iv. DIRECTING Planning, organizing and staffing functions are concerned with the
preliminary work for the achievement of organizational objectives. The actual
performance of the task starts with the function of direction. This function can be called
by various names namely “leading”, “directing”, “motivating”, “activating” and so on.
Directing involves these sub functions:
1.Communicating: It is the process of passing information from one person to
another.
2.Leading: It is a process by which a manager guides and influences the work of his
subordinates.
3.Motivating: It is arousing desire in the minds of workers to give their best to the
enterprise.
CONTROLLING Planning, organizing, staffing and directing are required to realize
organizational objectives. To ensure that the achieved objectives confirm to the preplanned
objectives controlling function is necessary.
Controlling is the process of checking to determine whether or not proper progress is being
made towards the objectives and goals and acting if necessary to correct any deviations.
Controlling involves three elements:
Establishing standards of performance.
Measuring current performance and comparing it against the established standard.
Taking action to correct any performance that does not meet those standards.

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 1.4. Levels of Management and Types of Managers
A. Levels of management
Levels here refer to hierarchical arrangement of managerial positions in an organization. The
number of levels of management, among other things, depends on the size of the organization. In
general, there are three managerial levels. These are listed below and presented graphically in
figure.
a) Top level management
b) Middle level management
c) First level (operating level) management

top level management

middle level management

perating level management

Top level management

Top-level managers are managers who are at the top of the organizational hierarchy and are
responsible for the entire organization. The top level management includes the board of directors
and the chief executives. They are usually few in number and include the organization‟s most
important managers - the CEO or the president and his/her immediate subordinates usually called
vice-presidents. This level determines the objectives of the Business as a whole and lays down
policies to achieve these objectives (making of policy means providing guide lines for action and
decision). The top management also exercises an overall control over the organization.

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They are few in number because of the nature of the work they perform and economic problem.
They deal with the big picture, not with the nitty-gritty. They are responsible for the overall
management of the organization. They establish company wide objectives or goals &
organizational policies. Furthermore, top management:
 Develop overall structure of the organization.
 Direct the organization in accordance with the environment.
 Are persons who are responsible for making decisions and formulating policies that affect
all aspects of the firm‟s operations.
 Provide overall leadership of the organization towards accomplishment of its objectives.
 They are responsible for the organization because objectives are established and policies
are formulated at the top. Top-level managers take the credit or blame for organizational
success and failures respectively.
 Represent the organization in community affairs, business deals, and government
negotiations.
 Spent much of their time in planning and dealing with middle level managers and other
subordinates.
 Work long hours and spend much of their time in meetings and on telephone.
ii. Middle Level Managers

Middle level managers occupy a position in an organization that is above first-line management
and below top management. They interpret and implement top management directives and
forward messages to and from first-line management.

Middle Level Managers:

 Receive broad/overall strategies from top managers and translate it into specific
objectives and plans for First-Line Mangers/operating managers.
 Are responsible for the proper implementation of policies and strategies defined by top
level managers. They interpret and implement top management directives and forward
messages to and from first-line management.
 Middle level managers are particularly concerned with the activities of their respective
departments.

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  Regardless of their title, their subordinates are managers.
 Often coordinate and supervise the activities of lower level managers.
 Their principal responsibility is to direct the activity that implement the policies of the
organization.
E.g. Academic deans, Division Head, Plant managers, Army captain
iii. First Level Managers/Supervisory Level managers
 Are those at the operating level or at the last level of management.
 Their subordinates are non managers.
 Are in charge of carrying out the day-to-day activities within the various departments to
ensure that short-term goals are met.
 They are responsible for overseeing and coordinating the work of operating employees.
 Assign operating employees to specific tasks.
 Are managers on which management depends for the execution of its plan since their job
is to deal with employees who actually produce the organization‟s goods and services to
fulfill the plan.
 Are directly responsible for the production of goods and services.
 Motivate subordinates to change or improve their performance.
 Serve as a bridge between managers and non-managers.
 Spent much of their time in leading and little in planning.
E.g. Section Heads, supervisory personnel, Sales managers, Loan officers, Foreman.
 - Are often neither fish nor fowl – neither management nor labor because they feel great
deal of empathy for their subordinates (which stems from close personal contact and the
fact that most supervisors have come up from the ranks of labor) and they are there to
reflect the company‟s point of view to their subordinates. And that is why First-Line
Mangers are called “People in the Middle”.
All managers carry out managerial functions. However, the time spent for each function varies
according to their managerial hierarchy. Top-level managers spend more time on planning and
organizing than lower-level managers. Leading, on the other hand, takes a great deal of time for
first-line managers. The difference in time spent on staffing and controlling varies only slightly
for managers at various levels.
B .Types of manager

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Based on the scope of responsibility/activities they manage, managers are divided into two:
i. Functional Managers
Functional managers are managers who are responsible for a department that performs a single
functional task and has employees with similar training and skills. Supervise employees
(managers + workers) with specialized skills in specific areas of operations such as accounting,
payroll, finance, marketing, production, or sales etc. They are responsible for only one
organizational activity; i.e. their responsibility is limited to their specialization/specification.
ii. General Managers
General Managers are managers who are responsible for several departments that perform
different functions. They are responsible for the entire operations of the organization without
being specific.
Oversee a complex unit, such as a company, a subsidiary, or an independent operating division.
S/he will be responsible for all activities of that unit, such as its production, marketing, sales and
finance.

1.5. Managerial Roles and Skills

A .managerial roles .Role is an organized set of behaviors that is associated with a
particular position or office. It is a pattern of behavior expected by others from a person
occupying a certain position in an organizational hierarchy. A role is any one of several
behaviors a manager displays as s/he functions in the organization.

When a manager tries to carryout the management functions, s/he must behave in a
certain way – to fill certain role. Managerial roles represent specific tasks that managers
undertake to ultimately accomplish the five managerial functions. Factors which affect
managerial roles are: manager‟s formal job description, and the values & expectations of
other managers, subordinates and peers.

Henry Mintzberg identified 10 managerial roles which are in turn grouped into three
categories: Interpersonal, Informational and Decisional Roles.
I. Interpersonal Roles involve developing and maintaining positive relationships with
significant others in the organization. It is communication oriented. It includes:

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 i. Figurehead Role: managers perform symbolic duties of a legal or social nature.
The manager is the head of his work unit, be it division, section or department.
Because of this “lead person” position the manager represents his work unit at
ceremonial or symbolic functions.
The top level managers represent the company legally and socially to those outside of the
organization. The superior represents the work group to higher management and higher
management to the work group.
E.g. Signing documents, presiding at a ceremonial event, greeting visitors, attending a
subordinate‟s weeding, taking a customer to lunch, university president hands out a diploma
for graduates – in all these cases the manager is representing his/her organization.
ii. Leadership Role: is directing and coordinating the activities of subordinates to accomplish
objectives. It includes some aspects like creating a vision that employees can identify with.
The manager is the environment creator – s/he makes the environment conducive for work by
improving working conditions, reducing conflicts, providing feedback for performance and
encouraging growth. The leader builds relationship and communicates with employees,
motivates & coaches them. As a leader, the manager is responsible for hiring, training,
motivating and encouraging employees/ subordinates. The leadership role is evident in the
interpersonal relationship between manager and his/her subordinates.
iii. Liaison Role: The liaison maintains a network of contacts outside the work unit to obtain
information. It refers to dealing with the member of the organization superiors, subordinates,
peer level managers in other departments, staff specialists and outside contacts such as
clients. It helps to seek support from people who can affect the organization‟s success.

The top management uses this role to gain favors and information, while the superiors use it
to maintain the routine flow of work. The manager serves as a link between the organization
and the informants who provide favors and information. S/he fulfills this role through
community service, conferences, social events, etc, participation is meetings with
representatives of other divisions.
II. Informational Roles: focuses on the transmission of important information to and from
internal and external sources. It involves the following activities:

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 i. Monitor role: is also called information gathering role. This role refers to seeking,
receiving, screening and getting information. The manager is constantly monitoring the
environment to determine what is going on. The monitor seeks internal and external
information about issues that can affect the organization. S/he seeks and receives wide
variety of special information to develop through understanding of the organization and
the environment. Information is gathered from news reports, trade publications,
magazines, clients, associates, and a host of similar sources, attending seminars &
exhibitions.
ii. Disseminator Role: What does the manager do with the information collected? As the
disseminator, the manager passes on to subordinates some of the information that would
not ordinarily be accessible to them. After the information has been gathered (by monitor
role), it has to be disseminated to superiors, subordinates, peers and other concerned
clients. The types of information to be forwarded to members could be facts, opinions,
interpretations, and influences.
iii. Spokesperson/representative Role: the spokesperson transmits information about
the organization to outsiders. The manger is the person who speaks for her/his work unit
to people outside the work unit.
One aspect of this role is to keep superiors well informed and a second aspect is to
communicate outside the organization like press, government agencies, customers and
labor unions. Although the roles of spokesperson and figurehead are similar, there is one
basic difference between them. When a manager acts as a figurehead, the manager‟s
presence is as a symbol of the organization, whereas, in the spokesman role, the manager
carries information and communicates it to others in a formal sense.
Thus, the manager seeks information in the monitor role, communicates it internally in
the disseminator role and transmits it externally in the spokesperson role. The three
informational roles, then, combine to provide important information required in the
decisional roles.
III. Decisional Roles: involve making significant decisions that affect the organization.
i. Entrepreneur Role: (initiator of change) the manager acting as an entrepreneur
recognizes problems and opportunities and initiates actions that will move the

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 organization in the desired direction. The entrepreneur acts as an initiator, designer, and
encourager of change and innovation.
In the role of entrepreneur, the manager tries to improve the unit. Often s/he creates new
projects, change organizational structure, and institutes other important programs for
improving the company‟s performance.
ii. Disturbance Handler Role: solution seeking role. In the role of disturbance handler, the
manager responds to situations over which s/he has little control, i.e. that are beyond
his/her control and expectation such as conflict between people or groups, strikes, breach
of contract or unexpected events outside the organization that may affect the firm‟s
performance.
The disturbance handler is responsible for taking corrective action when the organization
faces important, unexpected difficulties.
iii. Resource Allocator Role: deciding on the allocation of the organization‟s physical,
financial and human resources. As a resource allocator, the manager is responsible for
deciding how and to whom the resources of the organization and the manager‟s own time
will be allocated.
This involves assigning work to subordinates, scheduling meetings, approving budgets,
deciding on pay increases, making purchasing decisions and other matters related to the
firm‟s human, financial, and material resources. The resource allocator distributes
resources of all types, including time, funding (finance), equipment and human resources.
iv. The Negotiator Role: representing the organization in all important/major negotiations.
Managers spend a great deal of their time as negotiators, because only they have the
information and authority that negotiators require.

E.g. negotiations to buy firms, to get credit, with government, with suppliers, etc.
The Ten Managerial Roles
Category Role Activity
Interpersonal Figurehead Perform ceremonial and symbolic duties such as
greeting visitors, signing legal documents

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 Leader Direct and motivate subordinates; training,
counseling, and communicating with
subordinates.
Liaison Maintain information links both inside and outside
organization; use mail, phone calls, meetings.
Informational Monitor Seek and receive information, scan periodicals
and reports, maintain personal contacts.
Disseminator Forward information to other organization
members; send memos and reports, make phone
calls.
Spokesperson Transmit information to outsiders through
speeches, reports, memos.
Decisional Entrepreneur Initiate improvement projects; identify new ideas,
delegate ideas, delegate responsibility to others.
Disturbance Take corrective action during disputes or crises;
handler resolve conflicts among subordinates; adapt to
environmental crises.
Resource Decide who gets resources; scheduling, budgeting,
allocator setting priorities
Negotiator Represent department during negotiation of union
contracts, sales, purchases, budgets; represent
departmental interests.

B. Managerial Skills
In addition to fulfilling numerous roles, managers also need a number of specific skills if they
are to succeed. Skills are abilities to do something expertly and well, and they are necessary to
operate activities successfully. Management success depends both on: a fundamental
understanding of the principles of management and the application of skills. Consequently,
managers must be highly skilled to succeed. The skills managers need to possess can be
classified as:

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 1. Technical skill
2. Human Relations skill
3. Conceptual skill
1.TECHNICAL SKILL
Technical skill is the skills necessary to accomplish or understand the specific kind of work
being done in an organization or ability to perform work using specific knowledge, methods,
procedures, techniques and resources in a specialized field. For instance; engineers, market
researchers, accountants, musicians, and computer programmers etc…Technical skill is highly
important for first line managers. E.g. A surgeon, an engineer, a musician, a quality controller or
an accountant all have technical skill in their respective areas.
2 Human Relations /Interpersonal Skill the ability to interact effectively with people. It is the
ability to work with, understand and motivate other people, either as individuals or as groups.
Managers need enough of human relationships skill to be able to participate effectively and lead
groups. These skills are demonstrated in the way a manager relates to other people, including the
way s/he motivates, facilitates, coordinates, leads, communicates, and resolves conflicts. A
manager with human skills allows subordinates to express themselves without fear of ridicule
and encourages participation. A manager with human skills likes other people and is liked by
them. This skill is a reflection of the manager‟s leadership ability. Because all work is done when
people work together, human relation skills are equally important at all levels of management.
3.Conceptual skills – involve the formulation of ideas. It refers to the ability to see the big
picture – to view the organization from a broad perspective and to see the interrelations among
its components. It includes recognizing how the various jobs in an organization depend on one
another and how a change in any one part affects all the others. It also involves the manager‟s
ability to understand how a change in any given part can affect the whole organization, ability to
understand abstract relationships, solve problems creatively, and develop ideas.
Conceptual skills are more important in strategic (long range) planning; therefore, they are more
important to top-executives than middle managers and supervisors.
Although all three of these skills are essential to effective management, their relative importance
to specific manager depends on his/her rank in the organization. Technical skill is of greatest
importance at supervisory level; it becomes less important as we move up the chain of command.
Even though human skill is equally important at every level of the organization, it is probably

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most important at the lower level, where the greatest number of management–subordinate
interactions is likely to take place.

On the Other hand, the importance of conceptual skill increases as we rise in the rank of
management. The higher the manager is in the hierarchy, the more s/he will be involved in the
broad, long term decisions that affect large parts of the organization. For top management, which
is responsible for the entire organization, conceptual skill is probably the most important skill of
all.

 Technical skill deals with things, human skill concerns people and conceptual skill has to do
with ideas.

Conceptual Skills
Top
Technical Skills

Human Skills
Middle

First-line

Managerial Levels Managerial Skills

Fig. 1.1 Variation of skills necessary at different management levels

1.6 Is Management an art, Science, or profession?

Science is characterized by making conclusions based on actual facts and verifies knowledge
through cause-effect relationship. It can be generally learnt, thought, and researched to know the
universal truth. Managers can work better by using the organized knowledge about management,
and it is this knowledge that constitutes a science.
Art is characterized by using common sense, personal feeling, beliefs, impulses, etc.
Management/Managing, like all other practices- music composition, engineering, accountancy or
baseball- is an art. It is know-how, skill or how to accomplish the desired objectives with
insufficient data and information or when there is limited use of secondary sources of
information. It is doing things in the light of realities of a situation. Thus, management as a

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practice is an art; the organized knowledge underlying the practice may be referred to as a
science. In this sense/context science and art are not mutually exclusive but are complementary.
Therefore, management in actual sense is neither an art nor science, but it requires both to be
successful, i.e., it is not pure art because it uses scientific methods e.g. computer and it is not
pure science because it uses intuition, judgment, and creativity. Management is one of the most
creative arts as it requires a vast knowledge and the innovative skills to apply. Managers should
develop new ideas, techniques and strategies and be able to communicate them effectively in the
work environment. They should be able to make decisions even when there is shortage of data.
This leads us to the conclusion that „the art of management begins where the science of
management stops’. This underlines the importance of making managerial decisions in the
absence of sufficient data and information by using the decision maker‟s common sense.

1.7. Universality of Management

Regardless of title, position, or management level, all managers do the same job. They execute
the five managerial functions and work through and with others to set and achieve organizational
goals. Managers are the same whether the organization is private or public, profit making or non-
profit making, manufacturing or service giving, and industrial or small firms. Hence,
management is universal for the following reasons.

1. All managers perform the five managerial functions even if with different emphasis.
2. It is applicable for all human efforts; be it business, non-business, governmental, private. It
is useful from individual to institutional efforts.
3. Management utilizes scientifically derived operational principles.
4. All managers operate in organizations with specific objectives.
5. Management, in all organizations, helps to achieve organizational objectives.

In sum, management theories and principles have universal application in all kinds of organized
and purposeful activity and at all levels of management.

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