Principles of management

Father of Modern Management – Peter F Drucker

Father of scientific Management- F w Taylor

MANAGEMENT PROCESS

 Planning
 Organizing
 Staffing
 Directing
 Coordinating
 Controlling

Fundamental principles that Taylor saw underlying the scientific approach to management are:

 Replacing rules of thumb with science (A rule of thumb is a principle with broad application
that is not intended to be strictly accurate or reliable for every situation. It is an easily learned
and easily applied procedure for approximately calculating or recalling some value, or for
making some determination.)
 Obtaining harmony in groups rather than discord
 Achieving cooperation of human beings rather than individualism
 Working towards maximum output
 Developing workers to the fullest extent – beneficial to worker and org.

Management Principles developed by Henri Fayol:

1. DIVISION OF WORK: Work should be divided among individuals and groups to ensure that effort
and attention are focused on special portions of the task. Fayol presented work specialization as
the best way to use the human resources of the organization.

2. AUTHORITY: The concepts of Authority and responsibility are closely related. Authority was
defined by Fayol as the right to give orders and the power to exact obedience. Responsibility
involves being accountable, and is therefore naturally associated with authority. Whoever
assumes authority also assumes responsibility.

3. DISCIPLINE: A successful organization requires the common effort of workers. Penalties should
be applied judiciously to encourage this common effort.

4. UNITY OF COMMAND: Workers should receive orders from only one manager.
 5. UNITY OF DIRECTION: The entire organization should be moving towards a common objective in
a common direction.

6. 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.

7. REMUNERATION: Many variables, such as cost of living, supply of qualified personnel, general
business conditions, and success of the business, should be considered in determining a
worker’s rate of pay.

8. CENTRALIZATION: Fayol defined centralization as lowering the importance of the subordinate

role. Decentralization is increasing the importance. The degree to which centralization or
decentralization should be adopted depends on the specific organization in which the manager
is working.

9. 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. The
President possesses the most authority; the first line supervisor the least. Lower level managers
should always keep upper level managers informed of their work activities. The existence of a
scalar chain and adherence to it are necessary if the organization is to be successful.

10. ORDER: For the sake of efficiency and coordination, all materials and people related to a specific
kind of work should be treated as equally as possible.

11. EQUITY: All employees should be treated as equally as possible.

12. 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.

13. INITIATIVE: Management should take steps to encourage worker initiative, which is defined as
new or additional work activity undertaken through self direction.

14. ESPIRIT DE CORPS: Management should encourage harmony and general good feelings among
employees.

Peter Drucker claimed that there are five basic principles of management:
  setting objectives
 organizing
 motivating and communicating
 establishing measurements of performance
 developing people

HUMAN RESOURCE MANAGEMENT:

1. Human Resource Planning/ Manpower Planning:

Manpower Planning which is also called as Human Resource Planning consists of putting right number of
people, right kind of people at the right place, right time, doing the right things for which they are suited
for the achievement of goals of the organization. Human Resource Planning has got an important place
in the arena of industrialization. Human Resource Planning has to be a systems approach and is carried
out in a set procedure. The procedure is as follows:

 Analysing the current manpower inventory

 Making future manpower forecasts
 Developing employment programmes
 Design training programmes

2. Job Analysis, Job Description, Job Specification, Job enrichment, Job Enlargement, Job Evaluation

Job Analysis is a process to identify and determine in detail the particular job duties and requirements
and the relative importance of these duties for a given job. Job Analysis is a process where judgments
are made about data collected on a job.

A broad, general, and written statement of a specific job, based on the findings of a job analysis. It
generally includes duties, purpose, responsibilities, scope, and working conditions of a job along with
the job's title, and the name or designation of the person to whom the employee reports. Job
description usually forms the basis of job specification.

A statement of employee characteristics and qualifications required for satisfactory performance of

defined duties and tasks comprising a specific job or function. Job specification is derived from job
analysis.

Job enrichment adds new sources of job satisfaction by increasing the level of responsibility of
the employee.

While job enlargement is considered a horizontal restructuring method, job enrichment is a vertical
restructuring method by virtue of giving the employee additional authority, autonomy, and control over the
way the job is accomplished. Also called job enhancement or vertical job expansion.
Job evaluation is An assessment of the relative worth of various jobs on the basis of a consistent set of
job and personal factors, such as qualifications and skills required.

RECRUITMENT: Process of searching and obtaining applicants for jobs, from among whom the right
people can be selected.

SELECTION:

Selection is the process of differentiating between applicants in order to identify and hire those with
greater likelihood of success in the job.
Training is the acquisition of knowledge, skills, and competencies as a result of the teaching
of vocational or practical skills and knowledge that relate to specific useful competencies.

Career planning
[ ] Self assessment of the skills, weaknesses and strengths
[ ] Determination of one's goals
[ ] Assessment of opportunities within and out of the organization:
[ ] Development of career strategies
[ ] Implementing various plans
[ ] Reassessment of plans and making new plans at regular intervals

Career development process

[ ] Identify individual needs n aspirations
[ ] Analysing career opportunities
[ ] Aligning needs and opportunities
[ ] Action plan n periodic review

Appraisal steps
[ ] Determining objectives
[ ] Establishing standard of performance
[ ] Communicate standards to employees
[ ] Selection of appraiser
[ ] Measurement of actual performance
[ ] Compare actual performance with standard
[ ] Consultation with supervisor and union representatives
[ ] Holding feedback sessions

Performance appraisal methods

[ ] TRADITIONAL
[ ] Ranking method You don’t need to know what exactly
[ ] Paired comparison method these are or all of these..just know
[ ] Forced distribution easiest 5 out of them..
[ ] Graphic rating scales
[ ] Critical incident method
[ ] checklist method
[ ] Confidential report
[ ] Man to man comparison
[ ] Field review
[ ] Group appraisal method
[ ] MODERN
[ ] Assessment centre
[ ] Computer simulation
[ ] Gamification
[ ] Role playing
[ ] Case studies
[ ] 360 feedback
[ ] Behaviour anchored rating scale
[ ] Mbo

Dave Ulrich competency

Credible activist
Change champion
Executor of technology
Strategic analyst
Business ally
Talent management n capability builder
Organization Behaviour

Climate touches on values about working relationships in the organization -eg communication, level of
openness, trust, etc.. Climate survey asks about the espoused values of the organization and see to
what extent members feel there are behaving in alignment to those values.

Culture is deeper shared tacit assumptions that is held by many people in the organization (there cld be
subcultures as well for different grps). It describes people's mindset about how the organization works -
the scope cld be more than just working relationships. It may be an assumption about the strategy,
customers, how money is used (ref from Schein).

Organization Structure

a. Intentionally created: In order to attain specific goals, Organisation structure is deliberately

created which converts resources (of management) into a productive enterprise.

b. Provides framework: Organisation structure usually takes the shape of a pyramid. Once
established, it acts as a framework that can either constrain or facilitate managerial actions.

c. Use of Chart: In an Organisation, the structural relationships are normally shown through
Organisation charts. These charts indicate the intended final relationships at a given time.

d. Provides formal picture: Organisation structure may be horizontal or vertical. The horizontal
aspects display basic departmentalization and vertical aspects display creation of hierarchy of
superiors and subordinate

Learning Theories:

Classical Conditioning:

Classical Conditioning is the type of learning made famous by Pavlov's experiments with dogs. Stimuli
that animals react to without training are called primary or unconditioned stimuli (US). They include
food, pain, and other "hardwired" or "instinctive" stimuli. Animals do not have to learn to react to an
electric shock, for example. Pavlov's dogs did not need to learn about food.

Stimuli that animals react to only after learning about them are called secondary or conditioned
stimuli (CS). These are stimuli that have been associated with a primary stimulus. In Pavlov's experiment,
the sound of the bell meant nothing to the dogs at first. After its sound was associated with the
presentation of food, it became a conditioned stimulus. If a warning buzzer is associated with the shock,
the animals will learn to fear it.

Operant conditioning

Operant conditioning forms an association between a behavior and a consequence. (It is also
called response-stimulus or RS conditioning because it forms an association between the animal's
response [behavior] and the stimulus that follows [consequence]) - Positive and negative
reinforcement leads to repetition or stoppage of a behavior.

Cognitive Learning Theory

implies that the different processes concerning learning can be explained by analyzing the mental
processes first. It posits that with effective cognitive processes, learning is easier and new information
can be stored in the memory for a long time. On the other hand, ineffective cognitive processes result to
learning difficulties that can be seen anytime during the lifetime of an individual.

Social learning theory

posits that learning is a cognitive process that takes place in a social context and can occur purely
through observation or direct instruction, even in the absence of motor reproduction or direct
reinforcement.

MOTIVATION THEORIES

Maslow
Maslow's hierarchy of need categories is the most famous example:

self-actualization

esteem

belongingness

safety

physiological

Specific examples of these types are given below, in both the work and home context. (Some of the
instances, like "education" are actually satisfiers of the need.)

Need Home Job

self- education, religion, hobbies,

training, advancement, growth, creativity
actualization personal growth
 approval of family, friends,
esteem recognition, high status, responsibilities
community

teams, depts, coworkers, clients, supervisors,

belongingness family, friends, clubs
subordinates

safety freedom from war, poison, violence work safety, job security, health insurance

physiological food water sex Heat, air, base salary

According to Maslow, lower needs take priority. They must be fulfilled before the others are
activated. There is some basic common sense here -- it's pointless to worry about whether a given
color looks good on you when you are dying of starvation, or being threatened with your life. There
are some basic things that take precedence over all else.

Or at least logically should, if people were rational. But is that a safe assumption? According to the
theory, if you are hungry and have inadequate shelter, you won't go to church. Can't do the higher
things until you have the lower things. But the poor tend to be more religious than the rich. Both
within a given culture, and across nations. So the theory makes the wrong prediction here.

Or take education: how often do you hear "I can't go to class today, I haven't had sex in three days!"?
Do all physiological needs including sex have to be satisfied before "higher" needs? (Besides,
wouldn't the authors of the Kama Sutra argue that sex was a kind of self-expression more like art than
a physiological need? that would put it in the self-actualization box). Again, the theory doesn't seem
to predict correctly.

Cultural critique: Does Maslow's classification really reflect the order in which needs are satisfied, or is
it more about classifying needs from a kind of "tastefulness" perspective, with lofty goals like personal
growth and creativity at the top, and "base" instincts like sex and hunger at the bottom? And is self-
actualization actually a fundamental need? Or just something that can be done if you have the leisure
time?

Alderfer's ERG theory

Alderfer classifies needs into three categories, also ordered hierarchically:

 growth needs (development of competence and realization of potential)

 relatedness needs (satisfactory relations with others)

 existence needs (physical well-being)

This is very similar to Maslow -- can be seen as just collapsing into three tiers. But maybe a bit more
rational. For example, in Alderfer's model, sex does not need to be in the bottom category as it is in
Maslow's model, since it is not crucial to (the individual's) existence. (Remember, this about individual
motivation, not species' survival.) So by moving sex, this theory does not predict that people have to
have sex before they can think about going to school, like Maslow's theory does.

Alderfer believed that as you start satisfying higher needs, they become more intense (e.g., the power
you get the more you want power), like an addiction.

Do any of these theories have anything useful to say for managing businesses? Well, if true, they
suggest that

 Not everyone is motivated by the same things. It depends where you are in the hierarchy
(think of it as a kind of personal development scale)

 The needs hierarchy probably mirrors the organizational hierarchy to a certain extent: top
managers are more likely to motivated by self-actualization/growth needs than existence
needs. (but try telling Bill Clinton that top executives are not motivated by sex and
cheeseburgers...)

Acquired Needs Theory (mcclellan)

Some needs are acquired as a result of life experiences

 need for achievement, accomplish something difficult. as kids encouraged to do things for
themselves.

 need for affiliation, form close personal relationships. as kids rewarded for making friends.

 need for power, control others. as kids, able to get what they want through controlling others.

Again similar to maslow and alderfer.

These needs can be measured using the TAT (thematic apperception test), which is a projection-style
test based on interpreting stories that people tell about a set of pictures.

Cognitive Evaluation Theory

This theory suggests that there are actually two motivation systems: intrinsic and extrinsic that
correspond to two kinds of motivators:

 intrinsic motivators: Achievement, responsibility and competence. motivators that come from
the actual performance of the task or job -- the intrinsic interest of the work.

 extrinsic: pay, promotion, feedback, working conditions -- things that come from a person's
environment, controlled by others.

One or the other of these may be a more powerful motivator for a given individual.
Intrinsically motivated individuals perform for their own achievement and satisfaction. If they come to
believe that they are doing some job because of the pay or the working conditions or some other
extrinsic reason, they begin to lose motivation.

The belief is that the presence of powerful extrinsic motivators can actually reduce a person's intrinsic
motivation, particularly if the extrinsic motivators are perceived by the person to be controlled by
people. In other words, a boss who is always dangling this reward or that stick will turn off the
intrinsically motivated people.

Two Factor theory (Herzberg)

According to Herzberg, two kinds of factors affect motivation, and they do it in different ways:

 Hygiene factors. These are factors whose absence motivates, but whose presence has no
perceived effect. They are things that when you take them away, people become dissatisfied
and act to get them back. A very good example is heroin to a heroin addict. Long term addicts
do not shoot up to get high; they shoot up to stop being sick -- to get normal. Other examples
include decent working conditions, security, pay, benefits (like health insurance), company
policies, interpersonal relationships. In general, these are extrinsic items low in the
Maslow/Alderfer hierarchy.

 Motivators. These are factors whose presence motivates. Their absence does not cause any
particular dissatisfaction, it just fails to motivate. Examples are all the things at the top of the
Maslow hierarchy, and the intrinsic motivators.

So hygiene factors determine dissatisfaction, and motivators determine satisfaction. The two scales are
independent, and you can be high on both.

Equity Theory

Suppose employee A gets a 20% raise and employee B gets a 10% raise. Will both be motivated
as a result? Will A be twice as motivated? Will be B be negatively motivated?

Equity theory says that it is not the actual reward that motivates, but the perception, and the
perception is based not on the reward in isolation, but in comparison with the efforts that went
into getting it, and the rewards and efforts of others. If everyone got a 5% raise, B is likely to
feel quite pleased with her raise, even if she worked harder than everyone else. But if A got an
even higher raise, B perceives that she worked just as hard as A, she will be unhappy.

In other words, people's motivation results from a ratio of ratios: a person compares the ratio
of reward to effort with the comparable ratio of reward to effort that they think others are
getting.
Of course, in terms of actually predicting how a person will react to a given motivator, this will
get pretty complicated:

1. People do not have complete information about how others are rewarded. So they are
going on perceptions, rumors, inferences.

2. Some people are more sensitive to equity issues than others

3. Some people are willing to ignore short-term inequities as long as they expect things to
work out in the long-term.

Reinforcement Theory
Operant Conditioning is the term used by B.F. Skinner to describe the effects of the consequences of a
particular behavior on the future occurrence of that behavior. There are four types of Operant
Conditioning: Positive Reinforcement, Negative Reinforcement, Punishment, and Extinction. Both
Positive and Negative Reinforcement strengthen behavior while both Punishment and Extinction
weaken behavior.

 Positive reinforcement. Strengthening a behavior. This is the process of getting goodies as a

consequence of a behavior. You make a sale, you get a commission. You do a good job, you get a
bonus & a promotion.

 Negative reinforcement. Strengthening a behavior. This is the process of having a stressor taken
away as a consequence of a behavior. Long-term sanctions are removed from countries when
their human rights records improve. (you see how successful that is!). Low status as geek at
Salomon Brothers is removed when you make first big sale.

 Extinction. Weakening a behavior. This is the process of getting no goodies when do a behavior.
So if person does extra effort, but gets no thanks for it, they stop doing it.

 Punishment. Weakening a behavior. This is the process of getting a punishment as a

consequence of a behavior. Example: having your pay docked for lateness.

Expectancy Theory (Vroom)

This theory is meant to bring together many of the elements of previous theories. It combines the
perceptual aspects of equity theory with the behavioral aspects of the other theories. Basically, it comes
down to this "equation":

M = E*I*V

or
motivation = expectancy * instrumentality * valence

M (motivation) is the amount a person will be motivated by the situation they find themselves in. It is a
function of the following.

E (expectancy) = The person's perception that effort will result in performance. In other words, the
person's assessment of the degree to which effort actually correlates with performance.

I (instrumentality) = The person's perception that performance will be rewarded/punished. I.e., the
person's assessment of how well the amount of reward correlates with the quality of performance.
(Note here that the model is phrased in terms of extrinsic motivation, in that it asks 'what are the
chances I'm going to get rewarded if I do good job?'. But for intrinsic situations, we can think of this as
asking 'how good will I feel if I can pull this off?').

V(valence) = The perceived strength of the reward or punishment that will result from the performance.
If the reward is small, the motivation will be small, even if expectancy and instrumentality are both
perfect (high).

http://www.b-u.ac.in/sde_book/msc_organ.pdf