Principle of Management

UNIT — I

Introduction
A universal concept that is needed in every organisation whether it is a business organisation or
a non-business organisation such as hospital school, etc., is known as Management. An
organisation’s success depends on the successful functioning of its management and is always
required whenever human and non-human resources of an organisation work together for the
accomplishment of any objective. In present times, with an increase in the size and complexities
of modern organisations. the concept of management has gained immense importance.
“Management refers to the process of planning, organizing, leading, and controlling an
organization's resources (human, financial, physical, and informational) to achieve specific goals
efficiently and effectively. It involves coordinating and overseeing the work of others to ensure
that organizational objectives are met.”

Definitions
• Management is the accomplishment of results through the efforts of other people. (Lawrence.
A. Appley)
• Management is the art of getting things done through and with the people in formally organized
groups. (Koontz. H).

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• Management is a process of planning, organising, actuating and controlling to determine and
accomplish the objectives by the use of people and resources. (Terry G)
• Management is the process by which managers create, direct, maintain and operate purposive
organisations through systematic, coordinated, cooperative human effort. (Mc Fariand)
• It is the coordination of all resources through the process of planning organising, directing and
controlling in order to attain stated objectives. (Sisk)

Nature of Management
Management is related to regulating human and physical resources in order to achieve
organisational goals.
The nature of management can be highlighted as:
1. Management is Goal-Oriented: The accomplishment of several management activities
advances by its appearance of its planned aims or objective. Management is involved in
descriptive action. It continues a facility which supports the operation of communal as well as
corporal revenues to fulfil the pre-determined approaches. For simulation, the objective of a
business is to claim maximum customer engorgement by developing specialty article
additionally at feasible charges. This can be apprehended by exercising desirable persons
furthermore bringing about favourable usage connectedly minimal reserves.

2. Management integrates Human, Physical and Financial Resources: In an organisation,

communal presence functions with non-human reserves like instruments, components, financial
inventories, frameworks etc. The entire establishment sticks together communal actions with
those reserves. It carries about a conspicuous consonance among the communal, corporal as
well as financial reserves.

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3. Management is Continuous: Management is basically an on-going approach which
encompasses responding of difficulties as well as handling various consequences. It exists while
considering the determination of difficulties which will achieve adequate grades to recognize it.
It is analysed that the objective of an establishment continues as utmost development
mechanism. For arresting this destination, complex mechanisms are to be conveyed away
furthermore which endures without conclusion. Marketing and broadcasting continues
furthermore to be endeavoured for comprehension generally which instructions acquire to be
arranged, so this is called as an on-going mechanism.

4. Management is all Pervasive: Management continues imperative in conclusive categories of

organisations whether it continues political, communal and cultural or business which will
handle and commands complex behaviours towards a perfect approach. We see that clubs,
hospitals, political parties, colleges, hospitals, business firms all require management. If more
that an individual person is engaged in common work, then under such situation, management
plays an important role. It is immaterial of the small firm in trading or large firm, all requires
management.

5. Management is a Group Activity: Management is not as concerned with individual efforts as it

is about groups and team work. It involves the use of teamwork to achieve predetermined goal
of management.

6. Principles are Dynamic in Nature: Principle is a fundamental truth, which establishes cause and
effect relationships of a function within a set- up. Based on integration and supported by
practical evidences, the management has framed certain principles. However, these principles
are flexible in nature and keep changing with the environment in which the organisation exists.
Because of the continuous development in the field, many older principles are replaced by new
principles. Continuous researches are being carried out to establish principles in changing
society and no principle can be regarded as a final truth. In fact, there is nothing permanent in
the landslide of management.

7. Principles are Relative, not absolute: Management principles are relative, not absolute and
they should be applied according to the need of the organisation. The organisational difference
between organisations may exist because of time, place, socio-cultural factors, etc. However,
individuals working within the same organisation may also differ. Thus, a particular
management principle has different strengths in different conditions. Therefore, principles of
management should be applied in the light of prevailing conditions. Allowance must be made
for different changing environment.

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8. Management is a Science, Art and Profession: There is a controversy whether management is
science or art. However, management is both a science and an art because it follows principles
of science and requires the skills of an art. Management has been regarded as a profession by
many while many have suggested otherwise.

9. Management is Decision-Making: Management process involves decision-making at various

levels. This usually includes delegation of work.. Decision-making basically involves selecting the
most appropriate alternative out of the several alternatives available. If there is only one
alternative, the question of decision-making does not arise. The quality of the alternative that a
manager selects determines the organisation’s performance and the future of the entire
organisation rests on the degree of right decisions are made by this class of executives.
Therefore, the success or failure of managers can be judged by the quality of decisions that they
make.

Process of Management
The process of management involves a series of steps that managers use to coordinate and
oversee the resources of an organization to achieve its goals efficiently and effectively. This
process is typically broken down into five primary functions: Planning, Organizing, Leading,
Controlling, and Coordinating. Here’s a detailed explanation of each function:

1. Planning— Planning is the first and most fundamental step in the management process. It
involves setting objectives and determining the best course of action to achieve them. Planning
provides direction and reduces uncertainty by laying out a roadmap for the organization.

• Key Activities in Planning:

o Setting Objectives: Define clear, specific, and achievable goals that the organization aims
to accomplish.
o Analyzing Opportunities: Evaluate internal and external factors that might impact the
achievement of these goals.
o Developing Strategies: Formulate strategies and action plans to reach the objectives,
considering available resources and constraints.
o Forecasting: Predict future conditions and trends that could affect the organization.
o Decision-Making: Choose the best plan of action from various alternatives.

2. Organizing— Organizing involves arranging resources and tasks in a structured way to

implement the plans. This step is about creating a formal structure that facilitates coordination
and efficient use of resources.

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• Key Activities in Organizing:
o Creating Organizational Structure: Define roles, responsibilities, and reporting
relationships within the organization.
o Delegating Authority: Assign tasks and authority to individuals or teams to ensure that
tasks are carried out effectively.
o Resource Allocation: Distribute resources, including human, financial, and physical
resources, to different departments and teams.
o Establishing Coordination Mechanisms: Develop processes for integrating and
coordinating tasks across different parts of the organization.

3. Directing— Directing is the process of guiding and motivating employees to work towards
achieving the organization's objectives. This involves influencing and directing the behavior of
others to ensure effective performance.

• Key Activities in Directing:

o Motivation: Encourage employees to perform at their best by understanding their needs
and applying appropriate motivational techniques.
o Communication: Facilitate clear and effective communication within the organization to
ensure that everyone is aligned with the goals.
o Leadership: Adopt different leadership styles depending on the situation and the needs
of the team. Effective leadership involves inspiring and influencing employees to work
together towards common goals.
o Team Building: Foster collaboration and teamwork to achieve organizational objectives.
o Conflict Resolution: Address and resolve conflicts within the organization to maintain a
positive work environment.

4. Controlling— Controlling involves monitoring and evaluating the progress towards the
organization's goals and making necessary adjustments. It ensures that the organization's
activities are aligned with the plans.

• Key Activities in Controlling:

o Setting Performance Standards: Establish criteria for measuring the performance of
employees, processes, and the organization as a whole
o Measuring Actual Performance: Regularly assess performance using various tools and
metrics to gather data on actual outcomes.
o Comparing Performance: Compare actual performance with the established standards to
identify any deviations.

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 o Taking Corrective Action: Implement changes or adjustments to address any deviations
and bring performance back in line with the objectives.
o Feedback: Use the insights gained from the controlling process to make continuous
improvements in the organization's operations

5. Coordinating— Coordinating is the process of ensuring that all parts of the organization work
together harmoniously towards the achievement of the objectives. It involves integrating
activities across different departments and ensuring that resources are used effectively
• Key Activities in Coordinating:
o Synchronization of Activities: Align tasks and activities across various departments to
avoid duplication of efforts and ensure consistency.
o Communication and Collaboration: Ensure effective communication and collaboration
between different teams and departments.
o Resolving Interdepartmental Conflicts: Address conflicts that may arise between
different parts of the organization to ensure smooth operations.

Significance of Management
Management is crucial for the success of any organization, and its significance can be seen in
various aspects:
1. Achievement of Goals:
Management ensures that the organization’s objectives are clearly defined and achieved
efficiently and effectively. It helps in setting realistic goals and devising strategies to accomplish
them.
2. Optimum Utilization of Resources:

Through effective management, organizations can make the best use of their resources—
human, financial, and material leading to higher productivity and reduced wastage.
3. Competitive Advantage:
Good management practices provide a competitive edge by fostering innovation, improving
customer satisfaction, and enhancing the overall performance of the organization.
4. Adaptability to Change:
Management helps organizations navigate through changes in the external environment, such
as economic shifts, technological advancements, and competitive pressures. It ensures that the
organization remains flexible and responsive.

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5. Improved Decision-Making:
Management involves systematic analysis and evaluation, leading to better decision-making
processes. This results in more effective solutions to problems and the efficient achievement of
goals.
6. Employee Motivation and Development:
Management plays a key role in motivating employees, ensuring their job satisfaction, and
providing opportunities for professional development. This leads to a more committed and
productive workforce.
7. Social Impact:
Effective management contributes to the economic and social well-being of society by creating
jobs, fostering innovation, and producing goods and services that meet the needs of people

Role of Management
The role of management in an organization is multifaceted and essential for ensuring that the
organization operates effectively and achieves its objectives. The primary roles of management
include:
1. Leadership:
Management acts as a leader, guiding and motivating employees to achieve the organization's
goals. This involves setting a vision, inspiring action, and leading by example.
2. Decision-Making:
Managers are responsible for making decisions that affect the entire organization. This includes
strategic decisions about the direction of the organization, as well as operational decisions
related to day-to-day activities
3. Resource Allocation:
Management determines how resources (human, financial, material) are allocated within the
organization. This involves prioritizing tasks, budgeting, and ensuring that resources are used
efficiently.
4. Interpersonal Role:
Managers must interact with employees, clients, suppliers, and other stakeholders. This role
involves communication, networking, and maintaining positive relationships to foster a
collaborative environment.

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5. Informational Role:
Managers collect, process, and disseminate information within the organization. They act as a
conduit for information flow, ensuring that all parts of the organization are informed and
aligned.
6. Liaison Role:
Management acts as a bridge between different departments, teams, or even external
organizations. This involves coordinating efforts and ensuring that all parts of the organization
work together towards common goals.

Functions of Management

Management is defined as the procedure of organising, directing, planning and controlling the
efforts of organisational members and of managing organisational sources to accomplish
particular goals.
1. Planning

Planning involves setting objectives and determining the best course of action to achieve them.
It requires analyzing current situations, forecasting future conditions, and making decisions
about resource allocation. Effective planning helps organizations anticipate challenges and
identify opportunities. Setting objectives and determining a course of action to achieve them.
This includes forecasting future conditions and deciding on the best strategies.

2. Organizing

Organizing entails arranging resources and tasks to implement the plans. This includes defining
roles, responsibilities, and the structure of the organization. It ensures that resources are
effectively allocated and that there is a clear framework for collaboration. Arranging resources

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(people, finances, materials) to implement the plan. This involves defining roles, responsibilities,
and the structure of the organization.

3. Directing

Directing involves leading and motivating team members to work towards the organization's
goals. This includes communicating effectively, inspiring employees, and guiding teams. Good
directing fosters a positive work environment and encourages teamwork. Motivating and
directing team members to work towards the organization's goals. This includes communication,
leadership styles, and team dynamics.

4. Staffing

Staffing focuses on recruiting, selecting, training, and developing employees. This process
ensures that the organization has the right people in the right positions. It includes workforce
planning and performance management, aiming to build a skilled and motivated workforce.

5. Coordinating

Coordinating ensures that different parts of the organization work together seamlessly. It
involves facilitating communication and collaboration among departments or teams to achieve
common goals. Effective coordination helps prevent duplication of efforts and aligns activities.

6. Reporting

Reporting involves collecting and analyzing information about organizational performance. This
process provides feedback on progress toward goals and highlights areas needing
improvement. Regular reporting ensures transparency and accountability within the
organization.

7. Budgeting

Budgeting is the process of allocating financial resources to different activities and departments
based on the organization's plans. It involves forecasting revenues and expenses, setting
financial goals, and monitoring expenditures to ensure financial health and support strategic
initiatives.

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 Responsibilities of Management
Management carries several responsibilities, which are crucial for the success and sustainability
of the organization. These responsibilities include:

1) Strategic Planning:
Management is responsible for developing the long-term vision and strategy of the
organization. This involves analyzing market trends, identifying opportunities and threats, and
setting strategic goals that align with the organization’s mission.
2) Operational Efficiency:
Ensuring that the organization operates efficiently is a key responsibility. This involves
streamlining processes, optimizing resource use, and improving productivity to achieve better
results with fewer resources.

3) Financial Management:
Management is responsible for the financial health of the organization. This includes budgeting,
forecasting, managing cash flow, and ensuring that the organization is financially sustainable.
4) Human Resource Management:
This involves recruiting, training, and developing employees to ensure that the organization has
the right talent to achieve its objectives. Management is also responsible for creating a positive
work environment and maintaining employee satisfaction.
5) Risk Management:
Identifying, assessing, and mitigating risks is a critical responsibility of management. This
includes both internal risks (e.g., operational failures) and external risks (e.g., market changes,
economic downturns).
6) Compliance and Ethics:
Management is responsible for ensuring that the organization complies with all relevant laws
and regulations. Additionally, they must uphold ethical standards and promote a culture of
integrity within the organization.

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 7) Innovation and Change Management:
In a rapidly changing business environment, management must foster innovation and be
prepared to implement changes. This includes adapting to new technologies, shifting market
conditions, and evolving customer needs.
8) Stakeholder Communication:
Management is responsible for maintaining open and transparent communication with all
stakeholders, including employees, shareholders, customers, and suppliers. This involves
providing regular updates, addressing concerns, and building trust.

Approaches of Management

Classical
Neo classical
Approach of
Approach
Management

Contingency
approaches

The Classical, Neoclassical, and Contingency approaches of management represent three

significant phases in the evolution of management theory. Each of these approaches offers
distinct perspectives on how organizations should be managed and provides various principles
and practices that have shaped modern management thought.

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 1. Classical Approach of Management

The Classical approach to management, developed during the late 19th and early 20th
centuries, focuses on increasing efficiency, productivity, and output. It emphasizes a systematic
approach to work, the division of labor, and the establishment of clear hierarchical structures.
The Classical approach can be further divided into three main schools of thought: Scientific
Management, Administrative Management, and Bureaucratic Management
a) Scientific Management-
• Founder: Frederick W. Taylor
• Key Concepts:
o Time and Motion Studies: Taylor introduced the concept of studying tasks to identify the most
efficient way of doing work. By analyzing and optimizing every step in a task, he believed
workers could be more productive.
o Standardization of Work: Taylor advocated for the standardization of tools, methods, and
processes to ensure consistency and efficiency across the organization.
o Division of Labor: He promoted the specialization of tasks, where workers would focus on
specific tasks to improve speed and efficiency.
o Piece-Rate Pay System: Taylor suggested that workers should be paid based on their output,
which would motivate them to work more efficiently.

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.

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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.
1) Science, not the Rule of Thumb
This rule focuses on increasing the efficiency of an organisation 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 also
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 organisation. 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 similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and
the management. Managers and workers should have mutual 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.

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b) Administrative Management
• Founder: Henri Fayol
• Key Concepts:
o 14 Principles of Management: Fayol introduced 14 principles of management, such as division
of work, authority, discipline, unity of command, unity of direction, centralization, and scalar
chain. These principles provide a framework for managing organizations efficiently.
o Focus on Management Functions: Fayol emphasized the importance of planning, organizing,
commanding, coordinating, and controlling as the key functions of management.
o Top-Down Approach: Fayol’s approach was top-down, with a focus on the role of management
in maintaining order, discipline, and coordination within an organization.

Henri Fayol's 14 Principles of Management

Henry Fayol, also known as the Father of Modern Management Theory, gave a new perception
on the concept of management. He introduced a general theory that can be applied to all levels
of management and every department. He envisioned maximising managerial efficiency. Today,
Fayol’s theory is practised by the management to organise and regulate the internal activities of
an organisation.

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 The fourteen principles of management created by Henri Fayol are explained below.
1) Division of Work: Henri believed that segregating work in the workforce amongst the workers
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
facilitates the management to work efficiently, and 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.
4) Unity of Command: This means an employee should have only one boss and follow his
command. If an employee has to 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 people 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: This indicates a company should work unitedly towards
the interest of a company rather than personal interest. Be subordinate to the purposes of an
organisation. 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. Ideally, it should be according to an
individual’s efforts they have put forth.
8) Centralization: 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 organisation. Henri
Fayol stressed on the point that there should be a balance between the hierarchy and division
of power.
9) Scalar Chain: Fayol, on this principle, highlights 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: 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: 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 organisation. It will help them to increase their motivation and morale

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14) Esprit de Corps 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. In conclusion, the 14 Principles of Management the
pillars of any organisation. They are integral for prediction, planning, decisionmaking, process
management, control and coordination.

c) Bureaucratic Management
• Founder: Max Weber
• Key Concepts:
o Hierarchy of Authority: Weber emphasized a clear and well-defined hierarchical structure where
authority and responsibilities are clearly specified.
o Formal Rules and Regulations: Weber advocated for a system of formal rules and procedures to
ensure consistency, predictability, and fairness in organizational operations.
o Impersonality: Weber believed that decisions should be made based on objective criteria rather
than personal preferences or relationships.
o Merit-Based Advancement: He suggest
o ed that employees should be selected and promoted based on their abilities and performance
rather than on personal connections.

2. Neo classical Approach

The Neoclassical approach, emerging in the 1930s, sought to address some of the limitations of
the Classical approach, particularly its focus on mechanistic aspects of work. The Neoclassical
approach emphasizes human relations, the social needs of workers, and the importance of
communication within organizations.
A. Human Relations Movement
• Key Contributors: Elton Mayo, Abraham Maslow, Douglas McGregor
• Key Concepts:
o Hawthorne Studies: Conducted by Elton Mayo, these studies revealed the importance of
social factors, such as group dynamics and worker attitudes, on productivity. The studies
showed that employees' productivity increased when they felt valued and involved.
o Social Needs of Workers: The Human Relations Movement emphasized that workers
have social needs, such as belonging, esteem, and self-actualization, which are
important for their motivation and productivity.
o Participative Management: The movement advocated for involving employees in
decision-making processes to enhance their sense of belonging and commitment to the
organization.
B. Behavioral Sciences Approach
• Key Contributors: Chester Barnard, Herbert Simon

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• Key Concepts:
o Organizational Behavior: The Behavioral Sciences approach focuses on understanding
human behavior within organizations. It examines how individuals and groups interact,
the impact of motivation, leadership, communication, and group dynamics on
organizational effectiveness.
o Decision-Making Process: Herbert Simon introduced the concept of "bounded
rationality," suggesting that managers often make decisions based on limited
information and rationality.
o Informal Organizations: Chester Barnard emphasized the importance of informal
organizations (unofficial networks and relationships) and their influence on formal
organizational structures.

3. Contingency Approach of Management

The Contingency approach, which gained prominence in the 1960s and 1970s, challenges the
"one-size-fits-all" mentality of earlier management theories. It posits that there is no single best
way to manage an organization. Instead, management practices and structures should be
contingent on various factors, such as the environment, technology, and organizational size.

Key Concepts of the Contingency Approach:

• Situational Analysis: The Contingency approach advocates for analyzing the specific
situation or context in which the organization operates before deciding on the
management practices or structures to implement.
• Fit Between Structure and Environment: It emphasizes that organizational structures
and management practices should fit the external environment. For example, a stable
environment may require a mechanistic structure, while a dynamic environment may
require a more organic structure.
• Adaptive Management: Managers should be flexible and adaptable, changing their
strategies, leadership styles, and organizational structures in response to changes in the
external environment.
• No Universal Principles: Unlike the Classical approach, which suggests universal
management principles, the Contingency approach argues that the effectiveness of
management practices depends on various contingencies, such as the nature of the task,
the workforce, technology, and the external environment.

Conclusion
• Classical Approach: Focuses on efficiency, productivity, and a top-down hierarchical
structure. It is more mechanistic and emphasizes formal structures and processes.
• Neoclassical Approach: Emerged as a response to the limitations of the Classical
approach, emphasizing human relations, social needs, and the importance of informal
networks within organizations. It brings a more human-centric view to management.

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 • Contingency Approach: Recognizes that there is no one-size-fitsall solution in
management. It emphasizes the need for flexibility and adaptation, arguing that
management practices should be tailored to the specific circumstances of the
organization.
Each of these approaches has contributed to the evolution of management theory, providing
valuable insights that continue to influence modern management practices. The integration of
these approaches allows managers to take a more holistic and flexible approach to managing
organizations, balancing efficiency with attention to human factors and the specific context in
which they operate.

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