Management Concepts and Organizational Behavior

BMB101

UNIT 1
NOTES

Nisha Sharma
 MANAGEMENT CONCEPTS & ORGANIZATIONAL BEHAVIOUR
UNIT 1

What is Management?
Management is the process of planning and organising the resources and activities of a business to achieve specific
goals in the most effective and efficient manner possible

Nature of Management:

 Universal Process: Wherever there exists human pursuit, there exists management. Without
effective management, the intentions of the organisation cannot be accomplished.
 The factor of Production: Equipped and experienced managers are necessary for the utilisation of funds
and labour.
 Goal-Oriented: The most significant aim of all management pursuit is to achieve the purposes of a firm.
The aims must be practical and reachable.
 Supreme in Thought and Action: Managers set achievable goals and then direct execution on all aspects
to achieve them. For this, they need complete assistance from middle and lower degrees of management.
 The system of authority: Well-defined principles of regulation, the regulation of proper power and
efficiency at all degrees of decision-making. This is important so that each self must perform what
is required from him or her and to whom he must report.
 Profession: Managers require to control managerial expertise and education, and have to adhere to
a verified law of demeanour and stay informed of their human and social responsibilities.
 Process: The management method incorporates a range of activities or services directed towards an object.

MANAGEMENT PRACTICES FROM PAST TO PRESENT:-

1910s-1940s: Management as science

Management as Science was developed in the early 20th century and focused on increasing productivity and
efficiency through standardisation, division of labour, centralisation and hierarchy. A very “top down” management
with strict control over people and processes dominated across industries.

1950s-1960s: Functional organisations

Due to growing and more complex organisations, the 1950s and 1960s saw the emergence of functional
organisations and the Human Resource (HR) movement.
Managers began to understand the human factor in production and productivity. Tools such as goal setting,
performance reviews and job descriptions were born.

1970s: Strategic planning

In the 1970s, we changed our focus from measuring function to resource allocation and tools such as Strategic
Planning (GE), Growth Share Matrix (BCG) and SWOT were used to formalise strategic planning processes. After
several decades of “best practice” and “one size fits all” solutions, academics began to develop contingency
theories.

1980s: Competitive advantage

As the business environment grew increasingly competitive and connected, and with a blooming
management consultancy industry, Competitive Advantage became a priority for organisations in the 1980s.
Tools like Total Quality Management (TQM), Six Sigma and Lean were used to measure processes and
improve productivity.

Nisha Sharma
 Employees were more involved by collecting data but decisions were still made u200bu200bat the top, and goals
were used to manage people and maintain control.

1990s: Process optimisation

Benchmarking and business process reengineering became popular in the 1990s and by the middle of the decade, 60
per cent of Fortune 500 companies claimed to have plans for, or have already initiated such projects. TQM, Six Sigma
and Lean remained popular and a more holistic, organisation-wide approach and strategy implementation took the
stage with tools such as Strategy Maps and Balance Scorecards.

2000s: Big Data

Largely driven by the consulting industry under the banner of Big Data, organisations in the 2000s started to focus
on using technology for growth and value creation. Meanwhile, oversaturation of existing market space drove to
concepts such as Blue Ocean Strategy and Value Innovation.

How we lead our people and how we solve problems and innovate, are some of the most important aspects of
Management to get right. In our research, we ve therefore looked specifically at two aspects of Management
throughout history, and how these will develop in the future:

Objectives of Management

(i) Organisational Objectives: Management is responsible for setting and achieving objectives for the
organisation. It has to achieve a variety of objectives in all areas considering the interest of all stakeholders
including, shareholders, employees, customers and the government. The main objective of any organisation
should be to utilise human and material resources to the maximum possible advantage, These are survival, profit
and growth.

(ii) Social objectives: It involves the creation of benefit for society. As a part of society, every organisation whether
it is business or non-business, has a social obligation to fulfil.

(iii) Personnel objectives: Organisations are made up of people who have different personalities, backgrounds,
experiences and objectives. They all become part of the organisation to satisfy their diverse needs. These vary
from financial needs such as competitive salaries and perks, social needs such as peer recognition and higher level
needs such as personal growth and development. Management has to reconcile personal goals with
organisational objectives for harmony in the organisation

Levels of Management

In an organisation managers differ in their status and power. There is a line of demarcation that distinguish
managers on the basis of powers and authority they enjoy. There are generally three levels of management in any
organisations.

Top Level Management:

 Top level management, also called functional management or strategic management,

 It is the topmost decision-making body in the organization.
 It is the ultimate source of power and authority.

Functions of Top-Level Management:

 Planning & Decision Makings are main function of top-level management. which includes formulating of
basic policies, making corporate plan, deciding the corporate goal and take decisions regarding survival,
growth and profitability of the organization as a whole.
 They decide the structure or the organization and appoint various executives.
 It comprises of directors selected by the owners or shareholders of the organization along with chief
executives officer (CEO), general managers, managing directors, chairman etc.

Middle Level Management

 The managers in the middle level are appointed to act as a channel of communication between the top level
and lower-level management.
 They are responsible for communicating and interpreting the policies made at the top level to the
lower management along with coordination between various units at the lower level.

Functions of Middle-Level Management:

 Their main function is concerned with overall functioning of their respective departments which includes
departmental plans, establish departmental goals and perform various activities for smooth functioning of
their department.
 This level comprises of departmental heads, deputy managers etc.

Lower-Level Management

 Lower-level management, also called operative management or supervisory management

 consists of supervisors, foremen, superintendents etc.
 They are responsible for taking decisions which are of routine nature.
 They directly guide, instruct and supervise the job of workers.
 The managers at lower level responsible to ensure discipline among the workers, evaluate their performance
and report to the higher authorities.
 They are also entrusted with communication of workers’ grievances to the higher management. They act as a
link between the middle management and the workers at the lowest level.

Managerial Skills

1. Conceptual, Human and Technical Skills

According to Robert Katz, successful management of an organization depends on application of three skills by the
managers. These are:

i. Conceptual Skills

Conceptual skills refer to the problem-solving ability of managers. This requires managers to treat the organization
as a whole, understand the functioning of various sub-systems of the organization and foresee any changes that
may affect the organization.

ii. Human Skills

Human skill or interpersonal skill is related to manager’s attitude towards others. It refers to the ability of a manager
to understand and empathise with his superiors, peers and subordinates. Thus, human skill reflect the ability to
work as a group member and encourage team work.

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iii. Technical Skills

Technical skill refers to the ability to use special skills, understand the techniques and handle materials, tools and
equipment. It is primarily concerned with the methods and procedures related to various activities of the
organization.

Hard and Soft Skills

i. Hard Skills

Hard skills represent the special skills required to perform a job. These are acquired and developed through studying
and training. For example: proficiency in accounting or a software such as Tally is acquired by study, practice and
training.

ii. Soft Skills

These skills are not job-specific and can be applied to a wide range of activities. These are self-taught and self-
developed through experience and do not require any kind of training. For example: communication skills, problem-
solving skills, ability to lead etc.

Management Functions

Management is a continuous process composed of different functions that mangers have to perform for attainment
of desired goals. These functions are broadly classified into two parts:

1. Primary Functions

Following are the main functions of management:

1. Planning
2. Organising
3. Staffing
4. Directing, and
5. Controlling
6. Coordination

2. Secondary Function:-

1. Decision-making
2. Innovation
3. Representation
4. Reporting
5. Budgeting
6. Forecasting

Henry Fayol: According to Fayol, the process of management includes five functions: Planning, Organising,
Commanding, Coordinating and Controlling.

George R. Terry: According to Terry, the four functions of management include, Planning, Organising, Actuating and
Controlling.
Meaning of Planning
Planning is a continuous process and the primary function of management. Planning in management is all about
outlining a future course of action in order to achieve organizational objectives.
Planning is the basic function by which we use to select our goals and objectives and make plans to achieve them. A
large amount of data and information has to be gathered and processed before a plan is formulated.
Planning Objectives

 Planning increases the efficiency of an organization.

 It reduces the risk factors in modern business activities.
 It facilitates proper coordination within an organization.
 It aids in organizing all available resources.
 It provides the right direction to the organization.
 It identifies future opportunities and threats.
 It is important to maintain good control.
 It helps to fulfill the objective of the organization.
 It motivates the personnel of an organization.
 It encourages managers’ creativity and innovation.
 It also helps in decision-making.

Process of Planning
Below are the important processes of planning.
1. Setting the Objectives: The manager of the planning function begins by establishing the goals because all
policies, procedures, and methods are designed solely to achieve the goals. When establishing the
company's objectives, the managers carefully considered the company's ambitions, as well as its physical
and financial resources. Managers tend to set goals that can be completed quickly and within a specific
time frame. After the goals have been established, they are communicated to all employees.

2. Making Assumptions about the future is referred to as premises. On-site plans are created from the
ground up. It is a type of forecast that is created by taking current plans and any prior knowledge about
various policies into account. There should be a complete agreement on every premise. The assumptions
are established based on forecasting. Forecasting is the method of gathering information. Forecasts are
commonly used to determine the demand for a product, a change in a competitor's or government policy,
the tax rate, and so on.

3. A List of the Various Options for Achieving the Objectives: After establishing the organisation's goals,
managers develop a list of alternatives because there are numerous ways to achieve a goal, and
managers must be aware of these options.

4. Evaluation of Numerous Alternatives: The manager begins by compiling a list of potential options and
the underlying assumptions. The manager then begins evaluating each alternative, noting its benefits
and drawbacks. When the manager begins to exclude those with greater negative aspects, the option
with the greatest positive aspect and the most plausible assumption is chosen as the best alternative.
When evaluating each alternative, its viability is taken into account.

5. Follow-up: Because planning is a continuous process, the manager's job does not end with the plan's
execution. The plan's execution is closely monitored by management. Monitoring a plan is critical because
it confirms whether or not the assumptions made about the conditions and outcomes are still valid today.
If these predictions do not come true, the strategy is immediately modified.
 What is MBO?

Management by Objectives (MBO) is a strategic approach to enhance the performance of an organization. ‘MBO’ is
known as Management by Objectives. It is a process where the goals of the organization are defined and
conveyed by the management to the members of the organization. Organizational structures with the intention to
achieve each objective.
MBO is a strategic management model aimed at clearly defining the performance of an organization by defining the
objectives that are agreed upon by both management and employees.

What are the steps in MBO?

 Top’s management support and commitment.
 Establishing long range objectives and plans.
 Establishing specific shorter term organizational objectives.
 Appraisal of results of organization (Implementation and maintaining self-control, reviewing progress
periodically, appraising performance).
 Taking corrective actions.

Advantages of MBO
 Establishing managers to think about planning for results than merely planning for work.
 Motivates managers to accept and achieve the set goals.
 Directs work activity towards organizational goals/objectives.
 Encourages personal commitment from employees to achieve their goals/objectives.
 Provides clear standards for control.
 Reduces role conflict and role ambiguity.
 Provides more objective appraisal criteria.
 Identifies problem better by frequent performance review.
 MBO aids in development of personnel.

Disadvantages of MBO
 It is time-consuming.
 It involves enormous paper work and documentation.
 Failure to implement MBO.
 Contradictory objectives

Decision Making?
Management decision making is choosing a course of action after considering different options to accomplish
an organization’s goals. Management involves problem-solving, budgeting, coaching, planning, organizing,
staffing, controlling. Therefore, the process that goes into management decision making serves as a
continuous, dynamic check and balance system to steer an organization to sustained success.

Decision Making Process?

 Step 1: Identify the decision – Define the problem and determine if a decision is required.

 Step 2: Gather relevant information – This step involves gathering internal and external data. Gather internal
information with self-assessment and consider your motivations. Capture external information colleagues,
online, books, and other resources.

 Step 3: Identify the alternatives – Identify and list all possible courses of action as they arise.
 Step 4: Weigh the evidence – Visualize the possible consequences of taking each course of action, drawing
on your information and emotions. Consider if the situation in Step 1 would be addressed or solved with
each alternative. Rank your possible decisions based upon your value system.

 Step 5: Choose among alternatives – Select the best course of action to take. It may even be a combination
of other options.

 Step 6: Take action – Implement your decision.

 Step 7: Review your decision and its consequences - Last, evaluate the results of your decision and determine if
it addressed the issue identified in Step 1.

Decision Making Techniques and Tools

Up to this point, we’ve merely mentioned the need for research in coming up with alternatives for management
decision making. The following is a list of techniques and tools a manager can use to explore different options
to land upon a chosen decision:

Marginal Analysis
Marginal analysis helps organizations allocate resources to increase profitability and benefits and reduce costs. An
example from indeed.com is if a company has the budget to hire an employee, a marginal analysis may show that
hiring that person provides a net marginal benefit because the ability to produce more products outweighs the
increase in labor costs.

SWOT Diagram
This tool helps a manager study a situation in four quadrants:
 Strengths: Where does the organization excel compared to its competition? Consider the internal and
external strengths.
 Weaknesses: What could the organization improve?
 Opportunities: How can the organization leverage its strengths to create new avenues for success. How
could addressing a specific weakness provide a unique opportunity?
 Threats: Determine what obstacles prevent the organization from achieving its goals.

Decision Matrix
A decision matrix can provide clarity when dealing with different choices and variables. It is like a pros/cons list,
but decision-makers can place a level of importance on each factor. According to Dashboards, to build a decision
matrix:
 List your decision alternatives as rows
 List relevant factors as columns
 Establish a consistent scale to assess the value of each combination of alternatives and factors
 Determine how important each factor is in choosing a final decision and assign weights accordingly
 Multiply your original ratings by the weighted rankings
 Add up the factors under each decision alternative
 The highest-scoring option wins

Pareto Analysis
The Pareto Principle helps identify changes that will be the most effective for an organization. It’s based on the
principle that 20 percent of factors frequently contribute to 80 percent of the organization’s growth. For example,
suppose 80 percent of an organization’s sales came from 20 percent of its customers. A business can use the Pareto
Principle by identifying the characteristics of that 20 percent customer group and finding more like them. By
identifying which small changes have the most significant impact, an organization can better prioritize its decisions
and energies.