MODULE 1:

INTRODUCTION TO MANAGEMENT AND HISTORY OF MANAGEMENT

THEORY

MEANING
Management is the art of getting things done through and with people in
formally organized groups.

DEFINITION
According to Henry Fayol, "To manage is to forecast and to plan, to
organize, to command, to coordinate and to control"

NATURE OR CHARCTERISTICS OF MANAGEMENT

1. Management is an art as well as science
2. Management is an activity (Effective utilization of resources i.e.,
Men, Money, Material, and Machine)
3. Management is a continuous process (to forecast and to plan, to
organize, to command, to coordinate and to control)
4. Management is achieving pre-determined objectives
5. Management is a factor of production (Land, labor, capital and
entrepreneurs)
6. Management aims at maximizing profits
7. Management deals with decision making (decision arises when we
have alternative course of actions)
8. Management is getting things done

FUNCTIONS OF MANAGEMENT
The most widely accepted are functions of management given by
KOONTZ and O’DONNEL
1. Planning
Planning is determination of courses of action to achieve desired goals.
Thus, planning is a systematic thinking about ways & means for
accomplishment of predetermined goals. Planning is necessary to
ensure proper utilization of human & non-human resources.
2. Organising
It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
 achievement of organizational goals. To organize a business is to
provide it with everything useful or its functioning i.e. raw material,
tools, capital and personnel’s
3. Staffing
The main purpose of staffing is to put right man on right job.
“Managerial function of staffing involves manning the organization
structure through proper and effective selection, appraisal &
development of personnel to fill the roles designed in the structure”
Staffing involves: Manpower Planning (estimating man power in terms
of searching, choose the person and giving the right place).
Recruitment, Selection & Placement. Training & Development.
Remuneration. Performance Appraisal. Promotions & Transfer.
4. Directing
It is that part of managerial function which actuates the organizational
methods to work efficiently for achievement of organizational
purposes. Direction is that inert-personnel aspect of management
which deals directly with influencing, guiding, supervising, motivating
sub-ordinate for the achievement of organizational goals.
Direction has following elements such as Supervision, Motivation,
Leadership, Communication & Controlling.
5. Controlling
Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives
and plans are accomplished”.
Therefore controlling has following steps:
a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and
finding out deviation if any.
d. Corrective action.
LUTHER GULLICK has given a keyword ’POSDCORB’ where,
1. P - Planning
2. O - Organizing
3. S - Staffing
4. D - Directing
5. Co - Co-ordination
6. R - Reporting
7. B - Budgeting
MANAGEMENT AS AN ART
Art refers to skill full and personal application of existing
knowledge to achieve desired results. It can be acquired through
study, observation and experience.

1. Application of knowledge & skill (Art occupies existence of some

theoretical knowledge, though it is not compulsory for every field.
Education in Management is imparted with the help of theoretical
knowledge in various colleges and universities.)
2. It is based on practice and creativity (Art involves in consistent and
creative practice of theoretical knowledge. Performance in any is
purely based on practice and creativity of an individual, it
varies from person to person. Similarly, every manager has his/her
own unique style of functioning and delivers results differently.)

3. Personalized process (The use of basic knowledge differs from

person to person and thus, art is very personalizing concept. Art is
purely a personalized application of knowledge to a particular field.
Similarly getting the work done by the managers is purely
personalised application of their knowledge and experience
and their effectiveness vary from person to person.)

CONCULSION: Since Management attends all the above three points, we

can conclude by saying management is an art.

MANAGEMENT AS A SCIENCE
Science is a systematic body of knowledge that is based on general
truths which can be tested anywhere, anytime. Ex: Physics, Chemistry,
Botonny,
1. Contains a systemized body of knowledge (based on
principles and experiments.)
2. Scientific principles are developed through experiments
and observation. (You conduct experiment to get the exact
results)
3. Scientific principles has universally validity and application
CONCULSION: Management has systematic body of knowledge and its
principles are developed over a period based on repeated experiments
and observations which are universally applicable but they must be
modified according to the given situation. As a principle of management
are not as exact as the principles of pure science, so it may be called an
inexact science. The prominence of human factor in the management
makes it a social science.

MANAGEMENT AS A PROFESSION
Profession means an occupation for which specialized knowledge and
skills are required and entry is restricted. Not all the people are qualified
and eligible for a particular profession. Eg. Doctor, Lawyer, Teacher etc..
1. Well defined knowledge (All professions are based on Well-
defined body of knowledge. Specified with qualification and
experience)
2. Restricted entry (The entry in every profession is restricted
through examination or through some minimum
educational qualification. E.g. MBBS, BE, Bed)
3. Professional association (All professionals are affiliated to
professional association which regulates entry and frames
code of conduct relating to the profession)
4. Ethical code of conduct (All professions are bound by a
code of conduct which guides the behavior of all its
members.)
5. Service motive (The main of a profession is to serve its
client)
CONCLUSION: Management does not fulfil all the features of a profession
and thus its not a full-fledged profession like Doctor, Lawyer etc... But
very soon it will be recognized as full-fledged profession.

MANAGEMENT AND ADMINISTRATION

CONCLUSION:
Theoretically, it can be said that both are different terms, but practically,
you will find that the terms are same. You would have noticed that a
manager performs both administrative and functional activities. Although
the managers who are working on the top most level are said to be the
part of administration whereas the managers working on the middle or
lower level represents management. So, we can say that administration is
above management.

ROLE OF MANAGER

Henry Mintzberg identified ten different roles, separated into three

categories. The categories he defined are as follows
a) Interpersonal Roles The ones that, like the name suggests, involve
people and other ceremonial duties. It can be further classified as follows
 Leader – He must act as leader when he must sort out the
activities of subordinates. He has not only to motivate the
employees but is also involved in hiring, staffing and discipline
employees.
 Figurehead – The symbolic head of the organization. He may
receive the guests from outside or preside over a social function of
employees. He may have to sign some legal documents as head of
the organization.
 Liaison – Maintains the communication between all contacts and
informers that compose the organizational network. He must
contract outside agencies for collecting business related
information. The outside information providers may be individuals or
groups.

b) Informational Roles Related to collecting, receiving, and disseminating

information
 Monitor – Managers must collect information from organizations and
institutions outside their own. Personally seek and receive
information, to be able to understand the organization.
 Disseminator – Managers also play the role of disseminators when
they supply information to subordinates in the organization.
Transmits all important information received from outsiders to the
members of the organization. This information is factual as well as
with interpretations for the benefit of users.
 Spokesperson – A manager acts as a spokesperson when he
represents the organization to outsiders. On the contrary to the
above role, here the manager transmits the organization’s plans,
policies and actions to outsiders.
c) Decisional Roles that revolve around making choices.
 Entrepreneur – Manager initiates and oversees new projects for the
improvement of organizational performance. Seeks opportunities,
basically they search for change, respond to it, and exploit it.
 Negotiator – Represents the organization at major negotiations.
 Resource Allocator – Makes or approves all significant decisions
related to the allocation of resources. He also acts as resource
allocator when he assigns and monitors the allocation of human,
physical, and monetary resources.
 Disturbance Handler – As disturbance handler, manager takes
corrective actions in response to previously unforeseen problems.
Responsible for corrective action when the organization faces
disturbances.
MANAGERIAL SKILLS
There are four skills of managers are expected to have ability of:
 Technical skills: A manager must have the necessary technical
skills or the ability to work with the resources, tools, techniques,
procedures etc. First line managers as well as many middle
managers have involved in technical aspects of the organization’s
operations. Technical skills include knowledge of and proficiency in
certain specialized such as engineering, computers, finance or
manufacturing. Even though the need for technical skills is less
when a manager moves higher in hierarchy but still technical
proficiency helps in taking decisions. For example, a manager may
have technical skills in accounting, finance, engineering,
manufacturing, or computer science.
 Human Skills: Human skills are skills associated with manager’s
ability to work well with others, both as a member of a group and as
a leader who gets things done through other.
It is the ability to work well with other people both individually and
in a group. Managers with human skills can get best out of the
people working with them. They know how to communicate,
motivate, lead and inspire enthusiasm and trust. These skills are
needed by managers at every level but top managers need them
the most.
 Concept Skills: Conceptual skills related to the ability to visualize
the organization, discern interrelationships among organizational
parts, and understand how the organization fits into the wider
context of the industry, community, and world.
Conceptual skills are the ability to integrate and coordinate various
activities. Managers must have the ability to think and to
conceptualize about abstract solutions. They must be able to see
the organization as a whole and the relationships among its various
subunits and to visualize how the organization fits into its broader
environment. Conceptual skills are helpful in decision-making. Since
all managers must take decisions so these skills are essential for all
managers but these become more important as they make up the
organizational hierarchy.
 Design Skills: It is the ability to solve the problems in ways that
will benefit the enterprise. Managers must be able to solve the
problems.
EVLOUTION OF MANAGEMENT THOUGHT
PRE-SCIENTIFIC MANAGEMENT
If we look at recorded history, several monumental examples of
management can be traced. The Sumerian civilization, Egyptian, Chinese,
Greek and Roman civilizations represent significant practices in
management. They represent management concepts that helped in
smooth administration of these civilizations. Though famous even today,
they do not provide significant information about the way these
civilizations were managed.
These concepts did not provide important insight into management of
business (or economic) institutions. No important techniques were
available to solve organizational problems until the end of 15th century. It
was in 1494 that the technique of double entry book-keeping was
introduced to maintain financial records of the business. In 1800s,
management theories developed as a systematic field of knowledge. Until
formal management theories developed, pre-scientific management
theories contributed to the management thought.
Contribution made by some of the management thinkers is as follows:
1. CHARLES BABBAGE: One of the early British thinkers on
management, Babbage, was the forerunner of scientific
management. His work was closely related to that of Adam Smith
(an economist), as he emphasized on work measurement, cost
determination, bonus plans and profit-sharing specialization
(dividing the work into various jobs) to increase managerial
efficiency. His findings are also reflected in Taylor’s scientific
management. He introduced methods like work measurement, cost
determination, bonus plans and profit sharing to improve industrial
productivity.
2. JAMES MONTGOMERY: He was a textile owner-manager in
Scotland. He focused on planning, organizing and controlling of
business and wrote management texts for their efficient working.
3. ROBERT OWENS: He was a textile entrepreneur and is known as
the father of Personnel Management. His emphasis was not on the
process of industrialization or division of labor but on development
of people. He advocated that workers should be treated as human
beings and their values and beliefs should be respected. If working
conditions and needs of the workers are satisfied, they work to
achieve the organizational goals. He advocated improving living
conditions (both factory and domestic conditions) of employees by
upgrading the streets, houses, sanitation facilities etc. He also
brought social and educational reforms for the employees. He
believed that higher wages for workers, participation in managerial
decision-making and positive motivation can increase productivity.
His ideas on management to coordinate economic performance with
human relations are found in Hawthorne experiments also.
4. ANDREW URE: He was an English industrialist and focused on
educating managers through training and moral education to make
them contribute to organizational goals.
5. CHARLES DUPIN: He was an industrial educator in France.
According to him, besides technical knowledge for contributing to
organizational output, managers also needed broader management
skills to maximize industrial output. He emphasized more on
management education than technical education.

EVALUATION OF PRE-SCIENTIFIC MANAGEMENT THEORIES:

These theories were primarily related to the organizational
environments. They focused on specific organizational problems in
specific ways. As each manager had his own way of viewing the
organization, some emphasized on production and others on human
relations.

There was no single universally accepted management theory that

could always apply to all organizations. It was by the end of the 19th
 century that management became a systematic field of study. The
early contributions include those made by Taylor in the early 20th
century as scientific management.

SCIENTIFIC MANAGEMENT: F.W.TAYLOR

MEANING:
“Scientific management is the substitution of exact scientific
investigations and knowledge for the old individual judgment or opinion in
all matters relating to the work done in the shop”. —F.W. Taylor
“The core of scientific management is the organized study of work, the
analysis of work into its simplest elements and the systematic
improvement of the worker’s performance of each element.” —Peter F.
Drucker
Scientific management implies the application of science to the job
management of an industrial concern. It aims at replacement of traditional
techniques by scientific techniques. Scientific management is a
thoughtful, organized human approach to the job of management as
contrasted with hit or miss, rule of thumb. “It is the art of knowing exactly
what you want men to do and then seeing that they do it in the best and
cheapest way.” Scientific management includes finding the most efficient
methods of production, scientific selection and training of worker, proper
allotment of duties and work and achieving cooperation between workers
and management.
OBJECTIVES TO SCIENTIFIC MANAGEMENT:
The objectives or aims of scientific management may be summarized as
under:
(а) Higher Productivity: Increase in the rate of production by use of
standardized tools, equipment’s, methods, and training of the workers.
(b) Cost Reduction: Reduction in the cost of production by rational
planning and regulation, and cost control techniques.
(c) Elimination of Wastes: Elimination of wastes in the use of resources
and methods of manufacturing.
(d) Quality Control: Improvement in the quality of output by research,
quality control inspection devices.
(e) Right Men for Right Work: Placement of right persons on the right
jobs through scientific selection and training of workers.
(f) Incentive Wages: Relating wage payments to the efficiency of the
workers, i.e., giving wages at the higher rates to the efficient workers.

PRINCIPLES OF SCIENTIFIC MANAGEMENT BY TAYLOR:

F.W. Taylor or Fredrick Winslow Taylor, also known as the ‘Father of
scientific management’ proved with his practical theories that a scientific
method can be implemented to management. Taylor gave much
concentration on the supervisory level of management and performance
of managers and workers at an operational level. Let’s discuss in detail
the five principles of management by F.W Taylor.
The following five (5) principles of scientific management process involved
experiments, observation, analysis, and inference and were applied to
create a cause-and-effect relationship.
1. Science, not the Rule of Thumb
This rule focuses on increasing the efficiency of an organization through
scientific analysis of work and not with the ‘Rule of Thumb’ method. Taylor
believed that even a small activity like loading paper sheets into boxcars
can be planned scientifically. This will save time and human energy. This
decision should be based on scientific analysis and cause and effect
relationships rather than ‘Rule of Thumb’ where the decision is taken
according to the manager’s personal judgement.
2. Harmony, Not Discord
Taylor indicated and believed that the relationship between the workers
and management should be cordial and completely harmonious.
Difference between the two will never be beneficial to either side.
Management and workers should acknowledge and understand each
other’s importance. Taylor also suggested the mental revolution for both
management and workers to achieve total harmony.
3. Mental Revolution
This technique involves a shift of attitude of management and workers
towards each other. Both should understand the value of each other and
work with full participation and cooperation. The aim of both should be to
improve and boost the profits of the organization. Mental Revolution
demands a complete change in the outlook of both the workers and
management; both should have a sense of togetherness.
4. Cooperation, not Individualism
It is like ‘Harmony, not discord’ and believes in mutual collaboration
between workers and the management. Managers and workers should
have cooperation and confidence and a sense of goodwill. The main
purpose is to substitute internal competition with cooperation.
5. Development of Every Person to his Greatest Efficiency
The effectiveness of a company also relies on the abilities and skills of its
employees. Thus, implementing training, learning best practices and
technology, is the scientific approach to brush up the employee skill. To
assure that the training is given to the right employee, the right steps
should be taken at the time of selection and recruiting candidates based
on a scientific selection.

FAYOL’S MODERN MANAGEMENT

Henry Fayol is popularly known as the father of modern management as
he suggested the 14 principles of management in the 20th century. His
research and findings helped several enterprises scale their production
and work in an efficient manner. He concentrated on the essential parts of
a manager’s work in ensuring the production cycle. These management
principles are universally applicable rules and recommendations that
guides the behavior or decision making of an organization.
Fourteen Principles of Management By Henry Fayol
1. Division of Work: Henry believed that segregating work in the
workforce amongst the worker will enhance the quality of the product.
Similarly, he also concluded that the division of work improves the
productivity, efficiency, accuracy, and speed of the workers. This principle
is appropriate for both the managerial as well as a technical work level.
2. Authority and Responsibility: These are the two key aspects of
management. Authority refers to right to give command and receive
obedience from subordinate. Authority facilitates the management to
work efficiently, and Responsibility is when a person is accountable for the
duties assigned to him responsibility makes them responsible for the work
done under their guidance or leadership.
3. Discipline: Without discipline, nothing can be accomplished. It is the
core value for any project or any management. Good performance and
sensible interrelation make the management job easy and
comprehensive. Employees good behaviour also helps them smoothly
build and progress in their professional careers. Every employee must
follow the rules of the organization and comply to the employment
agreement.
4. Unity of Command: This means an employee should have only one
boss and follow his command. If an employee must follow more than one
boss, there begins a conflict of interest and can create confusion.
5. Unity of Direction: Whoever is engaged in the same activity should
have a unified goal. This means all the person working in a company
should have one goal and motive which will make the work easier and
achieve the set goal easily.
6. Subordination of Individual Interest to general interest: This
indicates a company should work unitedly towards the interest of a
company rather than personal interest. Be subordinate to the purposes of
an organization. This refers to the whole chain of command in a company.
7. Remuneration: This plays an important role in motivating the workers
of a company. Remuneration can be monetary or non-monetary. However,
it should be according to an individual’s efforts they have made. Fair and
equitable wages are to be paid to the employee to ensure their
satisfaction and increase productivity.
8. Centralization: Centralization is when the top level retains authority.
Decentralization is when there is delegation of authority at all levels. In
any company, the management, or any authority responsible for the
decision-making process should be neutral. However, this depends on the
size of an organization. Henri Fayol stressed on the point that there should
be a balance between the hierarchy and division of power.
9. Scalar Chain: A chain of authority and communication must exist, that
flows from highest to the lowest level, to avoid chaos and delays. Fayol on
this principal highlight that the hierarchy steps should be from the top to
the lowest. This is necessary so that every employee knows their
immediate senior also they should be able to contact any, if needed.
10. Order: Men and material must be at the designated place at the right
time this avoid hindrances in operation and improves efficiency of the
employees. A company should maintain a well-defined work order to have
a favourable work culture. The positive atmosphere in the workplace will
boost more positive productivity.
11. Equity: All employees should be treated equally and respectfully. It’s
the responsibility of a manager that no employees face discrimination.
12. Stability: Employee turnover should be reduced to ensure
effectiveness and efficiency. An employee delivers the best if they feel
secure in their job. It is the duty of the management to offer job security
to their employees.
13. Initiative: The management should support and encourage the
employees to take initiatives in an organization. It will help them to
increase their interest and make then worth.
14. Esprit de Corps: This is the French word which means team spirit.
Manager should promote peace and harmony in teamwork to maintain
coordination. It is the responsibility of the management to motivate their
employees and be supportive of each other regularly. Developing trust
and mutual understanding will lead to a positive outcome and work
environment.

Lillian and Gilberth – Human relation

Frank and Lillian Gilbreth
Two more pioneers in the field of management theory were Frank and
Lillian Gilbreth, who conducted research about the same time as Taylor.
Like Taylor, the Gilbreths were interested in worker productivity,
specifically how movement and motion affected efficiency.
Gilbreths used films to analyze worker activity. They would break the
tasks into discrete elements and movements and record the time it took
to complete one element. In this way, they were able to predict the most
efficient workflow for a particular job. The films the Gilbreths made were
also useful for creating training videos to instruct employees in how to
work productively.
Taylor and the Gilbreths belonged to the classical school of management,
which emphasized increasing worker productivity by scientific analysis.
They differed, however, on the importance of the worker. Taylor’s
emphasis was on profitability and productivity; the Gilbreths were also
focused on worker welfare and motivation. They believed that by reducing
the amount of motions associated with a particular task, they could also
increase the worker’s well-being. Their research, along with Taylor’s,
provided many important principles later incorporated into quality
assurance and quality control programs begun in the 1920s and 1930s.
Eventually, their work led to the science of ergonomics and industrial
psychology. (Ergonomics is the study of people in their operating
environment, with the goal of increasing productivity and reducing risk of
work-related injury.)
Elton Mayo

The term “Hawthorne” is a term used within several behavioral

management theories and is originally derived from the western electric
company’s large factory complex named Hawthorne works. Starting in
1905 and operating until 1983, Hawthorne works had 45,000 employees
and it produced a wide variety of consumer products, including telephone
equipment, refrigerators and electric fans. As a result, Hawthorne works is
well-known for its enormous output of telephone equipment and most
importantly for its industrial experiments and studies carried out.
Hawthorne Experiment by Elton Mayo
In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger
of the Harvard Business School were invited to join in the studies at the
Hawthorne Works of Western Electric Company, Chicago. The experiment
lasted up to 1932. The Hawthorne Experiment brought out that the
productivity of the employees is not the function of only physical
conditions of work and money wages paid to them. Productivity of
employees depends heavily upon the satisfaction of the employees in
their work situation. Mayo’s idea was that logical factors were far less
important than emotional factors in determining productivity efficiency.
Furthermore, of all the human factors influencing employee behavior, the
most powerful were those emanating from the worker’s participation in
social groups. Thus, Mayo concluded that work arrangements in addition
to meeting the objective requirements of production must at the same
time satisfy the employee’s subjective requirement of social satisfaction
at his work place.
The Hawthorne experiment consists of four parts. These parts are briefly
described below:-
1. Illumination Experiment.
2. Relay Assembly Test Room Experiment.
3. Interviewing Programme.
4. Bank Wiring Test Room Experiment.

Refer PDF for explanation.