PRINCIPLES AND PRACTICES OF MANAGEMENT

MODULE-1
INTRODUCTION TO MANAGEMENT

Definition of Management:
According to Harold Koontz and Heinz Weinrich “Management is the process of designing
and maintaining an environment in which individuals, working together in groups, efficiently
accomplish selected aims.”
Meaning of management
Management is the process of getting things done with the aim of achieving goals effectively
and efficiently.
Nature and significance of Management
1. Management helps in achieving group goals: Management helps to achieve group goals.
It integrates and gives common direction to individual efforts for achievement of
organisational goals.
2. Management increases efficiency: The main aim of every manager is to increase
efficiency to maximise output with minimum cost. This can be done by better planning,
organising, staffing, directing and controlling the activities of the organisation.
3. Management creates a dynamic organisation: All organisations are functioning in an
environment which is constantly changing. An effective management helps people to adopt
the changes, so that an organisation is able to maintain its competitive edge.
4. Management helps in achieving personal objectives: Management of the organisation is
also required to help individual employees to achieve their personal objectives through
motivation.
5. Management helps in the development of society: An effective management accepts its
commitment to workers, investors, customers and general public. It fulfils all the objectives
for the growth and development of society.
DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

Levels of Management
The term "Levels of Management" refers to a line demarcation between various managerial
positions in an organisation.
The levels of management can be classified into three broad categories as under
1. Top Level of Management

It consists of board of directors, chief executive or managing director.

The top management is the ultimate source of authority and it manages goals and policies for
an enterprise. It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows -

Top management lays down the objectives and broad policies of the enterprise.

a. It issues necessary instructions for preparation of department budgets, procedures,

schedules etc.
b. It prepares strategic plans & policies for the enterprise.
c. It appoints the executive for middle level i.e. departmental managers.
d. It controls & coordinates the activities of all the departments.
e. It is also responsible for maintaining a contact with the outside world.
f. It provides guidance and direction.
g. The top management is also responsible towards the shareholders for the performance of
the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote more
time to organizational and directional functions.

In small organization, there is only one layer of middle level of management but in big
enterprises, there may be senior and junior middle level management. Their role can be
emphasized as -

a. They execute the plans of the organization in accordance with the policies and directives
of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower-level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower-level managers towards better performance.

3. Lower Level of Management

Lower level is also known as supervisory/operative level of management. It consists of

supervisors, foreman, section officers, superintendent etc.
In other words, they are concerned with direction and controlling function of management.
Their activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to
the higher level and higher-level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the
workers.

Managerial Roles

In carrying out the responsibilities of planning, organizing, leading, and controlling,

managers take on many different roles.

A role is a set of behavioural expectations or a set of activities that a person is expected to

perform.

Managers’ roles fall into three basic categories: informational roles, interpersonal
roles, and decisional roles.

In an informational role, the manager may act as an information gatherer, an information

distributor, or a spokesperson for the company.

A manager’s interpersonal roles are based on various interactions with other people.
Depending on the situation, a manager may need to act as a figurehead, a company leader, or
a liaison.

When acting in a decisional role, a manager may have to think like an entrepreneur, make
decisions about resource allocation, help resolve conflicts, or negotiate compromises.

Managerial Skills

To be a successful manager, you’ll have to master a number of skills. To get an entry-level

position, you’ll have to be technically competent at the tasks you’re asked to perform. To
advance, you’ll need to develop strong interpersonal and conceptual skills. The relative
importance of different skills varies from job to job and organization to organization, but to
some extent, you’ll need them all to forge a managerial career.

Technical Skills

You’ll probably be hired for your first job based on your technical skills—the ones you need
to perform specific tasks—and you’ll use them extensively during your early career. If your
college major is accounting, you’ll use what you’ve learned to prepare financial statements. If
you have a marketing degree and you join an ad agency, you’ll use what you know about
promotion to prepare ad campaigns. Technical skills will come in handy when you move up
to a first-line managerial job and oversee the task performance of subordinates. Technical
skills, though developed through job training and work experience, are generally acquired
during the course of your formal education.

Interpersonal Skills

As you move up the corporate ladder, you’ll find that you can’t do everything yourself: you’ll
have to rely on other people to help you achieve the goals for which you’re responsible.
That’s why interpersonal skills, also known as relational skills—the ability to get along with
and motivate other people—are critical for managers in mid-level positions. These managers
play a pivotal role because they report to top-level managers while overseeing the activities
of first-line managers. Thus, they need strong working relationships with individuals at all
levels and in all areas. More than most other managers, they must use “people skills” to foster
teamwork, build trust, manage conflict, and encourage improvement.

Conceptual Skills

Managers at the top, who are responsible for deciding what’s good for the organization from
the broadest perspective, rely on conceptual skills—the ability to reason abstractly and
analyze complex situations. Senior executives are often called on to “think outside the
box”—to arrive at creative solutions to complex, sometimes ambiguous problems. They need
both strong analytical abilities and strong creative talents.

Communication Skills

Effective communication skills are crucial to just about everyone. At all levels of an
organization, you’ll often be judged on your ability to communicate, both orally and in
writing. Whether you’re talking informally or making a formal presentation, you must
express yourself clearly and concisely. Talking too loudly, rambling, and using poor grammar
reduces your ability to influence others, as does poorly written communication. Confusing
and error-riddled documents (including emails) don’t do your message any good, and they
will reflect poorly on you.
Time-Management Skills

Managers face multiple demands on their time, and their days are usually filled with
interruptions. Ironically, some technologies that were supposed to save time, such as
voicemail and email, have actually increased workloads. Unless you develop certain time-
management skills, you risk reaching the end of the day feeling that you’ve worked a lot but
accomplished little. What can managers do to ease the burden? Here are a few common-sense
suggestions:

• Prioritize tasks, focusing on the most important things first.

• Set aside a certain time each day to return phone calls and answer emails.
• Delegate routine tasks.
• Don’t procrastinate.
• Insist that meetings start and end on time, and stick to an agenda.
• Eliminate unnecessary paperwork.

Decision-Making Skills

Every manager is expected to make decisions, whether alone or as part of a team. Drawing on
your decision-making skills is often a process in which you must define a problem, analyze
possible solutions, and select the best outcome. As luck would have it, because the same
process is good for making personal decisions.

Evolution of Management Thought

Management has grown in leaps and bounds from a virtually trivial subject in the past centuries,
to one of the most essential topics. Management has developed into a robust and revolutionary
force on which our modern society relies for material support and national well-being.
Management, as a theoretical discipline, goes back only to the end of the 19th century, when
the 1st large industrial company was started, and the challenges of coordinating and managing
numerous people in the search for a common set of objectives first became evident.

History of Management Thought

Management thought has many approaches:

1) The classical approach to management theory

The attempt to understand work, and just how employees can be made more efficient &
productive, marked the beginning of the study of modern management. This initial research
produced theories, concepts, and practices which are referred to as classical approach.
The classical school writers such as Frederick W Taylor, Henri Fayol and Lyndall Urwick
decided to evaluate the corporate organisation in terms of its purpose and structure.
The classical approach has two perspectives: scientific management and classical organization
theory.

❖ Scientific management theory: It focuses on the difficulties of lower-level managers

managing the everyday problems of the staff. Classical organization theory focuses on the
challenges which top-managers face in managing the organization as a whole.
 Scientific management places emphasis on the technical specification of each individual’s
job and on the ability of monetary rewards to encourage each job holder. Tasks are standardized
wherever possible. Employees are rewarded and punished. This approach works well for
companies with assembly lines and other mechanistic, routinized activities.

❖ Classical organization theory: It specializes in the management of organization and has

two key objectives:
• To develop basic principles that can guide the creation, design and maintenance of big
organizations
• To find out the basic functions of managing organizations.

2) Behavioural Approach

The Behavioural approach to management evolved mainly because the practicing managers
discovered that adopting the ideas of the classical approach failed to achieve total efficiency
and workplace harmony. The behavioural approach to management highlighted what the
classical advocates overlooked – the human aspect. The classical theorists looked at the
organization from a production perspective, the behavioural advocates viewed it from the
individual’s viewpoint. The behavioural approach to management highlighted individual
behaviour & group processes, and acknowledged the importance of behavioural processes at
work. The Hawthorne studies in the late 1920 and early 1930 helped to lend credence to the
behavioural approach.
Some of the main behavioural researchers who made considerable contributions to the
progression of the behavioural approach to management are: Mary Parker Follett, Douglas
McGregor, Kurt Lewin, Chester Barnard, Abraham Maslow, George Romans, etc.

Branches of Behavioural Approach to Management

The behavioural approach has been divided into two branches: the Human relations approach
and the behavioural science approach. In the human relations approach managers should know
why their subordinates behave as they do and what psychological and social factors have an
impact on them. Supporters of this approach make an effort to show how the process and
functions of management are influenced by differences in individual behavior and the influence
of groups in the office.

1. Human Relations Approach

The term human relations means the way in which managers connect to subordinates.
Managers face many difficulties because staff members usually do not stick to predetermined
and balanced patterns of behavior. Supporters of Human relations approach feel that
management should recognize employees need for recognition and social acceptance.
Management should look upon the work group as a positive force which can be used
productively.
2. Behavioral Science Approach

The Behavioral Science Approach is actually an extension of the Human Relations

Approach. It gave value to attitudes, behavior and performance of people and groups within
the organisations. The advocates of the behavioral science approach consider that humans are
much more complex than the economic man description of the classical approach and the social
man description of the human relations approach. This approach focuses on the nature of work,
and the degree to which it will satisfy the human need to show skills and expertise.
To get better employee performance, communication, motivation, participative management,
leadership and group dynamics are integrated in this approach. The behavioral approach
acknowledges the quality of leadership as a major element in management success. It
concentrates on group relationship and recognizes the part of individual mindset and group
behavior in organisational effectiveness.

Abraham Maslow, Fredrick Herzberg, Douglas McGregor, Victor Vroom, James March,
Herbert Simon, Chestar Barnard, etc., made significant contributions towards the behavioural
science approach.

Contributions of the Behavioural Approach

a. Improved usage of teams to achieve organizational goals.

b. Emphasis on training and development of staff
c. Use of innovative reward and incentive technique

Limitations of the Behavioural Approach to Management

1. Challenges for managers in difficult situations and the reality that human behaviour is
complex.
2. This complicated the problem for managers attempting to use insights from the behavioural
sciences that regularly changed when different behavioural scientists offered distinct
alternatives.

The Quantitative Approach of Management Thought

The quantitative approach aimed at enhancing the process of decision-making through the use
of quantitative techniques. It is evolved from the principles of scientific management.

1. Management Science (Operations Research): Management science which is also known

as operations research utilized mathematical and statistical approaches to resolve
management issues. It was developed during World War II as strategists attempted to apply
scientific knowledge and methods to the intricate troubles of war. The industry started to
apply management science after the war. The introduction of the computer technology
made many management science tools and concepts more practical for industry
2. Production and Operations Management: W. Edwards Deming exercised a great
influence in developing contemporary ideas to improve productivity and quality. Major
areas of study within operations management include capacity planning, facilities location,
facilities layout, materials requirement planning, scheduling, purchasing and inventory
control, quality control, the computer integrated manufacturing, just-in-time inventory
systems, and flexible manufacturing systems.

SYSTEM APPROACH

This is newly developed approach which came in to existence in 1960. This approach was
developed by Chester I Bernard, Hervert A, Simon and their colleagues.

The system approach means a group of small inter related units. A group different units
which means a complete unit is called system, while the small units are themselves
independent, but somehow or the other is connected with the sub systems of the related
system. All the sub systems influence one another. For example- a scooter is a system which
has many subsystems in the form of engine, shaft, gear, wheels etc. All these sub systems are
inter related with one another and if one of them fails the whole process stops working.

According to the system approach, the whole organization is a system and it various
departments are its sub systems. All the subsystems work in union. Then only the
organization objective can achieved.

Key concepts of system approach

1. Sub systems : Every system happens to be a combination of many subsystems. All the
sub systems are interrelated. It means that whenever we take some decision regarding
a particular sub system, we should always keep in mind the possible effect of the
decision might have on the other sub-systems. In the context of the company, all its
departments (e.g., purchase, sales, finance, production, personnel, research and
development) happen to be its sub systems.

2. Holism: A major characteristic of the system approach is that it is looked upon as a

whole. It clearly means that a decision taken with regard to a particular sub system
does influence or affect other subsytems. Therefore, every decision is taken keeping
in the view the entire organisation, meaning thereby, that all the subsytems are kept in
the mind while taking a decision.

3. Synergy: It means that the whole is greater than the sum of its parts. This can be better
understood with the help of an example. Suppose there are five persons in a group.
Everybody has a capacity to carry a load of five quintal each. When they are told to
lift a load one quintal, everybody will be able to lift only one quintal of load. But if
that they are told to lift weight collectively, they would certainly be able to lift a load
in excess of five quintal. It is thus, clear that if job is performed collectively rather
than individual, it is certainly well-performed with better results.
 4. Closed and Open System:

(i) Closed System: This is a system that remains unaffected by the environmental
factors. Traditional management experts consider an organisation as a closed
system. They believed that an organisation worked without being influenced by
the outside factors, e.g., a watch is not influenced by the outside factors and it
works continuously without getting interrupted. This is goof example of the closed
system.
(ii) Open System: An open system means a system which remains constantly in touch
with its environment and is influenced by it. The chief factors of the environment
of an organisation happen to be a raw material, power, finance, machine, man-
power, technique, market, new products, government policies, etc. All these
factors of environment enter an organisation as input. Within the organisation, as
input/ Within the organisation, they are converted into products through the
process of various activities.

5. System Boundary
This means a certain dividing line which seperates a system from its environment.
The dividing line in a closed system is rigid while in respect of open system it is
flexible.

CONTIGENCY OR SITUATIONAL APPROACH

Contingency approach to management is an important modern approach. This approach

originated in around 1970. According to it, the managers should take decisions not according
to principles but according to the situations. It means that there cannot be any single
principle/formula/managerial activity which can be suitable in all the situations. Its chief
reason is the constantly changing nature o environment. Here environment means the sum
total all the factors which influence the organisation. These factors are both internal and
external. The internal factors include objectives, policies, organisation structure,
management, information system etc. The external factors include customers, suppliers,
competitors, government policies etc.

The system approach failed to establish a relationship between the organisation and
environment. The contingency approach has made an attempt to remove this weakness.

Features of contingency approach

1. The managerial action influences of the environment.

2. The managerial action changes according to the situations
3. There is essentially coordination between the organization and environment.

Limitations of contingency approach

1. It is not sufficient to say that the managerial action depends on the situation. It is essential
to say what action should be taken in a particular situation.
2. A situation can be influenced by factors, it is difficult to analyse these factors.
Functions areas of management

1. Production management
Production means creation of utilities by converting raw material in to final product
by various methods. Various sub areas of production department are as follows:
• Plant layout and location
• Production planning
• Research and development
• Material management
• Quality control

2. Marketing management

Marketing management involves distribution of the product to the buyers. It may need the
number of steps. Sub areas are as follows:

• Advertising
• Sales management
• Market research

3. Financial management
Financial management deals with managerial activities related to procurement and
utilization of fund for business purpose. Its sub areas are as follows:

• Financial accounting
• Management accounting
• Taxation
• Costing

4. Personnel Management
Personnel management is the phase of management which deals with effective use and
control of manpower. Following are the sub areas:

• Personnel planning
• Recruitment and selection
• Training and development
• Wage administration
• Industrial relation
MANAGEMENT AS ART SCIENCE AND PROFESSION

Management as an art

Art is the skillful and personal application of existing knowledge to achieve desired results. It
can be acquired through study, observation and experience.

The basic features of an art are as follows:

a) Existence of theoretical knowledge: Art presupposes the existence of certain theoretical

knowledge.

b) Personalised application: The use of this basic knowledge varies from individual to
individual. Art, therefore, is a very personalised concept.

c) Based on practice and creativity: All art is practical. Art involves the creative practice of
existing theoretical knowledge.

Management can be said to be an art since it satisfies the following criteria:

a) A successful manager practices the art of management in the day-to-day job of managing
an enterprise based on study, observation and experience.

b) There are various theories of management, a manager applies these scientific methods and
body of knowledge to a given situation, an issue or a problem, in his own unique manner.

c) A manager applies this acquired knowledge in a personalized and skillful manner.

Management as a science

Science is a systematised body of knowledge that explains certain general truths or the
operation of general laws.

The basic features of science are as follows:

1 Systematised body of knowledge: Science is a systematic body of knowledge. Its principles

are based on a cause and effect relationship.

2 Principles based on experimentation: Scientific principles are first developed through

observation and then tested through repeated experimentation under controlled conditions.

3 Universal validity: Scientific principles have universal validity and application.

Based on the above features, we can say that management has some characteristics of
science.

a) Management has a systematised body of knowledge. It has its own theory and principles
that have developed over a period of time.
b) The principles of management have evolved over a period of time based on repeated
experimentation and observation in different types of organisations.

c) Since the principles of management are not as exact as the principles of science, they have
to be modified according to a given situation.

Management as both science and art. The management has features of both art and science.
The practice of management is an art. However, managers can work better if their practice is
based on the principles of management. These principles constitute the science of
management. Management as an art and a science are therefore not mutually exclusive, but
complement each other.

Management as a Profession:

Profession refers to an occupation that requires specialized knowledge and intensive

academic preparation to which entry is regulated by a representative body.

A profession has the following characteristics:

1) Specialised knowledge: All professions are based on a well-defined body of knowledge

that can be acquired through instruction. Every professional must take deliberate efforts to
expertise in the principles and techniques.

2) Formal education and training: The entry to a profession is restricted through an

examination or through acquiring an educational degree. There are no. of institutions and
universities to impart education and training for a profession. No one practice a profession
without going through a prescribed course.

3) Representative association: All professions are affiliated to a professional association

which regulates entry, grants certificate of practice and formulates and enforces a code of
conduct.

4) code of conduct: All professions are bound by a code of conduct which guides the
behaviour of its members.

5) Service motive: The basic motive of a profession is to serve their client’s interests by
rendering dedicated and committed service.

From the above discussion. It is quite clear that management fulfils several essentials of a
profession, even then it is not a fully-fledged profession because:

a. No minimum qualifications have been prescribed for managers

b. All the managers are supposed to abide by the code formulated by AIMA
c. Competent education and training facilities does not exist
d. Managers are known by their performance and not mere degrees
e. The ultimate goal of business is to maximize profit or service.
Fayol's Principles of Management:

Henry Fayol, (1841-1925), a French management theorist, is considered as the "Father of

General Management",

The 14 principles of management propounded by him were discussed in detail as below. The
fourteen principles of management given by Fayol are:

1. Division of work: It is possible to divide any work into small jobs. Each job should be
performed by a specialist. If every job is assigned to the right person, the quantity and quality
of production will improve. So division of work leads to specialisation.

2. Authority and responsibility: Authority is the power to command employees and instruct
them to perform a job. Authority determines the superior subordinate relationship. It flows
from top to bottom. Responsibility is the obligation of a subordinate to perform the assigned
duty. It arises from a superior-subordinate relationship, responsibility flows upwards.. 9 If
anybody is made responsible he should also have the sufficient authority. There should be a
balance between these two. Excess authority may lead to misuse of power. Responsibility
without authority may leads to slaverism and may not work effectively. So there should a
parity between authority and responsibility.

3. Discipline: It means obedience to the organisational rules and employment agreements.

One should have good relationship with others, following rules and regulations, performing
of assigned tasks honestly with interest, all come under discipline.

4. Unity of command: There should be only one boss for every individual employee. Each
one should be commanded by one and responsible to that one only. If an employee gets
orders from two or more superiors at a time, the principle of unity of command is violated.

5. Unity of direction: All the units of an organisation should be moving towards the same
objectives through coordinated and focused efforts. Each group of activities having the same
objective must have one head and one plan. This ensures unity of action and coordination.

6. Subordination of individual interest to general interest: The interest of the organisation

should take priority over the interest of any one individual employee. Every worker should
show interest towards the achievement of organisational goals.

7. Remuneration of Employees: The remuneration should be just and equitable. This will
ensure congenial atmosphere and good relationship between workers and management. It also
helps for smooth working of the organisation.

8. Centralisation and decentralisation: The concentration of decision making power in the

hands of one or few is called centralisation of authority or power. Thus, under centralisation
the top level management only takes the decisions. The lower levels of management have to
follow it. Dispersal of decision making power among more persons is called decentralization.
Authority being centralised in few hands is spread over to a number of employees. The
degree of centralisation or decentralisation will depend upon the circumstances in which the
organisation is working. Fayal does not favour centralisation or decentralisation of authorities
but suggests that there should be a proper adjustment between centralisation and
decentralisation in order to achieve maximum objectives of the business.
9. Scalar Principle: An organisation consists of superiors and subordinates. The formal lines
of authority from highest to the lowest ranks are known as scalar chain. According to Fayol,
"Organisation should have a chain of authority and communication from top to bottom and
should be followed by managers and subordinates". This can be violated only in case of
emergency to facilitate rapid and easy communication without delay. This is called 'gang
plank'.

Gang plank is a shorter route in a scalar chain which allows employees at the same level to
communicate with each other directly. It should be ensured that gang plank doesn't become a
normal practice. Gang plank should be used only in case of emergency to prevent any likely
distortion of message and to facilitate speedy co-ordination.

10. Order: According to Fayol, "People and Materials must be in suitable places at
appropriate time for maximum efficiency". This principle states that "There is a place for
everything and everything must be in its place". If there is a fixed place for everything and it
is present there, there is no hindrance in the activities. This will lead to increased productivity
and efficiency.

11. Equity: Fayol emphasises kindliness and justice in the behaviour of managers towards
workers. All should be treated equally. There should not be any discrimination against any
one on account of sex, religion, region, language, caste, belief or nationality etc. He opined
that good sense and experienced personnel are needed to induce just and equitability.

12. Stability of personnel: "Employees turnover should be minimised to maintain

organisational efficiency". So employees should be selected and appointed through various
procedure. He should be kept at their post for a minimum fixed period. They should be given
reasonable time to show their results.

13. Initiative: According to Fayal, workers should be encouraged to develop and carry out
their plans for improvement. So that they can come forward and use their skills to achieve
expected goals. But initiative should not go against the established practices of the
organisation.

14. Espirit de corps (Spirit of co-operation): Management should take necessary steps to
promote team spirit among the employees. It has to develop the mentality of one family
members. There should be a mutual confidence and understanding.

Principles of scientific management

In the words of F W Taylor, "Scientific Management means knowing exactly what you want
men to do and seeing that they do it in the best and cheapest way".

Scientific Management refers to the use of scientific and standardized tools, methods and
trained workers in all organisational activities in order to increase the total production with
minimum cost and wastage. It aims at improving the efficiency of the workers and the quality
of goods produced.
Principles of Scientific management.

Following are the principles of scientific management contributed by F.W Taylor. He said
that these are the outcomes of his experiments and observations.

1. Science, not Rule of thumb: Taylor believed that there was only one best method to
maximise efficiency i.e. scientific management. "Scientific Management is an attempt to
increase production by reducing the efforts of employees". This reduces the practice of rule of
thumb. This Principle includes scientific selection of workers, placement and training,
gradation of equipment and machinery, payment of wages according to work etc.,

2. Harmony, not discord: There should be a harmonious relationship between management

and workers. Both should realise that each one is important.

3. Co-operation, not individualism: There should be a complete co- operation between the
labour and the management instead of individualism. Competition should be replaced by co-
operation. Both should realise that they need each other.

4. Development of each and every person to his greatest efficiency and prosperity:
Industrial efficiency largely depends on personnel competencies. So each person should be
scientifically selected. Work should be assigned according to his mental and intellectual
capabilities. To bring efficiency proper training should be given. This will contribute to their
greatest efficiency and prosperity for both organisation and workers.

5. Optimum production: Scientific Management involves continuous increase in

production. It means production and productivity should not be controlled either by the
manager or by workers.

Contributions of Peter F Drucker in the field of management

Among the contemporary management thinkers, Peter Drucker outshines all. He has varied
experience and background which include psychology, sociology, law, and journalism.
Through his consultancy assignments, he has developed solutions to number of managerial
problems. Therefore, his contributions cover various approaches of management. He has
written many books and papers.

Some of the major contributions of Peter Drucker are as follows: 1. Nature of Management 2.
Management Functions 3. Organisation Structure 4. Federalism 5. Management by
Objectives 6. Organizational Changes.

1. Nature of Management:
Drucker is against bureaucratic management and has emphasised management with creative
and innovative characteristics. The basic objective of management is to read towards
innovation. The concept of innovation is quite broad. It may include development of new
ideas, combining of old and new ideas, adaptation of ideas from other fields or even to act as
a catalyst and encouraging others to carry out innovation.
He has treated management as a discipline as well as profession. As a discipline, management
has its own tools, skills, techniques and approaches. However, management is more a
practice rather than a science.

While taking management as a profession. Drucker does not advocate to treat management as
a strict profession but only a liberal profession which places more emphasis that managers
should not only have skills and techniques but should have right perspective putting the
things into practice.

2. Management Functions:
According to Drucker, management is the organ of its institution. It has no functions in itself,
and no existence in itself. He sees management through its tasks. Accordingly, there are three
basic functions of a manager which he must perform to enable the institution to make its
contribution for:

(i) the specific purpose and mission of the institution whether business, hospital or university;

(ii) making work productive and the worker achieving; and

(iii) managing social impacts and social responsibilities.

All these three functions are performed simultaneously within the same managerial action. A
manager has to act as administrator where he has to improve upon what already exists and s
already known. He has to act as an entrepreneur in redirecting the resources from seas of tow
or diminishing results to areas of high or increasing results.

Thus, a manager has to perform several functions: setting of objectives, making, organising
and motivating. Drucker has attached great importance to the objective setting function and
has specified eight areas where clear objective setting is required. These are: market standing,
innovation, productivity, physical and financial resources, profitability, managerial
performance and development, worker performance and attitude, and public responsibility.

3. Organisation Structure:
Drucker has decried bureaucratic structure because of its too many dysfunctional effects.
Therefore, it should be replaced. He has emphasised three basic characteristics of an effective
organisation structure.

These are:
(i) Enterprise should be organised for performance;

(ii) it should contain the least possible number of managerial levels;

(iii) it must make possible the training and testing of tomorrow’s top managers—
responsibility to a manager while still he is young.

He has identified three basic aspects in organising activity analysis, decision analysis, and
relation analysis. An activity analysis shows what work has to be performed, what kind of
work should be put together, and what emphasis is to be given to each activity in the
organisation structure.
Decision analysis takes into account the four aspects of a decision: the degree of futurity In
the decision, the impact of decision over other functions, number of qualitative factors that
enter into it, and whether the decision is periodically recurrent or rare. Such an analysis will
determine the level at which the decision can be made. Relation analysis helps in defining the
structure and also to give guidance in manning the structure.

4. Federalism:
Drucker has advocated the concept of federalism. Federalism refers to centralised control in
decentralised structure Decentralised structure goes far beyond the delegation of authority. It
creates a new constitution and new ordering principle. He has emphasised the close links
between the decisions adopted by the top management on the one hand and by the
autonomous unit on the other.

5. Management by Objectives:
Management by objectives (MBO) is regarded as one of the important contributions of
Drucker to the discipline of management. He introduced this concept in 1954. MBO has
further been modified by Schleh which has been termed as management by results’. MBO
includes method of planning, setting standards, performance appraisal, and motivation.

According to Drucker, MBO is not only a technique of management but it is a philosophy of

managing. It transforms the basic assumptions of managing from exercising cattalo to self-
control.

6. Organizational Changes:
Drucker has visualised rapid changes in the society because of rapid technological
development. Though he is not resistant to change, he feels concerned for the rapid changes
and their impact on human life. Normally, some changes can be absorbed by the organisation
but not the rapid changes.

Since rapid changes are occurring in the society, human beings should develop philosophy to
face the changes and take them as challenges for making the society better. This can be done
by developing dynamic organizations which are able to absorb changes much faster than
static ones. Drucker’s contributions have made tremendous impact on the management
practices. His contributions have been recognised even by the management thinkers of
Socialist Bloc.