Introduction

Management is a vital aspect of the economic life of man, which is an

organised group activity. A central directing and controlling agency is
indispensable for a business concern. The productive resources -
material, labour, capital etc. are entrusted to the organising skill,
administrative ability and enterprising initiative of the management.
Thus, management provides leadership to a business enterprise.
Without able managers and effective managerial leadership the
resources of production remain merely resources and never become
production. Under competitive economy and ever-changing
environment the quality and performance of managers determine
both the survival as well as success of any business enterprise.
Management occupies such an important place in the modern world
that the welfare of the people and the destiny of the country are very
much influenced by it.

Management can be defined as a process of getting things done with

the aim of achieving goals effectively and efficiently. Some important
terms in this definition are:
1. Process: Process means the primary functions or activities that
management performs to get things done. These functions are
planning, organising, staffing, directing and controlling.
2. Effectiveness: Effectiveness is concerned with the end result. It
basically means finishing the given task. Thus Effectiveness in
management is concerned with doing the right task, completing
activities and achieving goals
3. Efficient: Efficiency means doing the task correctly and with
minimum cost. Management is concerned with the efficient use
of input resources which ultimately reduce costs and lead to
higher profits.
it is important for management to achieve goals (effectiveness) with
minimum resources i.e., as efficiently as possible while maintaining a
balance between effectiveness and efficiency.

Definition of Management

Management may be defined in many different ways. Many eminent

authors on the subject have defined the term “management”, some
of these definitions are reproduced below:
According to Lawrence A Appley, “Management is the development
of people and not the direction of things”
. According to Joseph Massie, “Management is defined as the process
by which a co-operative group directs action towards common goals”
. In the words of George R Terry, “Management is a distinct process
consisting of planning, organising, actuating and controlling
performed to determine and accomplish the objectives by the use of
people and resources”.
According to James L Lundy, “Management is principally the task of
planning, co-ordinating, motivating and controlling the efforts of
others towards a specific objective”.
In the words of Henry Fayol, “To manage is to forecast and to plan,
to organise, to command, to co-ordinate and to control”.
According to Peter F Drucker, “Management is a multi-purpose organ
that manages a business and manages managers and manages
worker and work”.
In the words of Koontz and O’Donnel, “Management is defined as
the creation and maintenance of an internal environment in an
enterprise where individuals working together in groups can perform
efficiently and effectively towards the attainment of group goals”.

Nature of Management
An analysis of the various definitions of management indicates that
management has certain characteristics. The following are the salient
characteristics of management.
1. Management aims at reaping rich results in economic terms:
Manager’s primary task is to secure the productive performance
through planning, direction and control. It is expected of the
management to bring into being the desired results. Rational
utilisation of available resources to maximise the profit is the
economic function of a manager. Professional manager can prove his
administrative talent only by economising the resources and
enhancing profit. According to Kimball, “management is the art of
applying the economic principles that underlie the control of men
and materials in the enterprise under consideration”.
2. Management also implies skill and experience in getting things
done through people: Management involves doing the job through
people. The economic function of earning profitable return cannot be
performed without enlisting co-operation and securing positive
response from “people”. Getting the suitable type of people to
execute the operations is the significant aspect of management. In
the words of Koontz and O’Donnell, “Management is the art of
getting things done through people in formally organised groups”.
3. Management is a process: Management is a process, function or
activity. This process continues till the objectives set by
administration are actually achieved. “Management is a social
process involving co-ordination of human and material resources
through the functions of planning, organising, staffing, leading and
controlling in order to accomplish stated objectives”.
4. Management is a universal activity: Management is not
applicable to business undertakings only. It is applicable to political,
social, religious and educational institutions also. Management is
necessary when group effort is required.
5. Management is a science as well as an art: Management is an art
because there are definite principles of management. It is also a
science because by the application of these principles predetermined
objectives can be achieved.
6. Management is a profession: Management is gradually becoming
a profession because there are established principles of management
which are being applied in practice, and it involves specialised
training and is governed by ethical code arising out of its social
obligations.
7. Management is an endeavour to achieve pre-determined
objectives: Management is concerned with directing and controlling
of the various activities of the organisation to attain the pre-
determined objectives. Every managerial activity has certain
objectives. In fact, management deals particularly with the actual
directing of human efforts.
8. Management is a group activity: Management comes into
existence only when there is an group activity towards a common
objective. Management is always concerned with group efforts and
not individual efforts. To achieve the goals of an organisation
management plans, organises, co-ordinates, directs and controls the
group effort.
9. Management is a system of authority: Authority means power to
make others act in a predetermined manner. Management formalises
a standard set of rules and procedure to be followed by the
subordinates and ensures their compliance with the rules and
regulations. Since management is a process of directing men to
perform a task, authority to extract the work from others is implied
in the very concept of management.
10. Management involves decision-making: Management implies
making decisions regarding the organisation and operation of
business in its different dimensions. The success or failure of an
organisation can be judged by the quality of decisions taken by the
managers. Therefore, decisions are the key to the performance of a
manager.
11. Management implies good leadership: A manager must have the
ability to lead and get the desired course of action from the
subordinates. According to R. C. Davis, “management is the function
of executive leadership everywhere”. Management of the high order
implies the capacity of managers to influence the behaviour of their
subordinates.
12. Management is dynamic and not static: The principles of
management are dynamic and not static. It has to adopt itself
according to social changes.
13. Management draws ideas and concepts from various
disciplines: Management is an interdisciplinary study. It draws ideas
and concepts from various disciplines like economics, statistics,
mathematics, psychology, sociology, anthropology etc.
14. Management is goal oriented: Management is a purposeful
activity. It is concerned with Notes the achievement of pre-
determined objectives of an organisation.
15. Different levels of management: Management is needed at
different levels of an organisation namely top level, middle level and
lower level.
16. Need of organisation: There is the need of an organisation for
the success of management. Management uses the organisation for
achieving pre-determined objectives.
17. Management need not be owners: It is not necessary that
managers are owners of the enterprise. In joint stock companies,
management and owners (capital) are different entities.
18. Management is intangible: It cannot be seen with the eyes. It is
evidenced only by the quality of the organisation and the results, i.e.,
profits, increased productivity etc.

Administration and Management:

Scholars of Management are having different opinions regarding the
terms ‘Administration’ and ‘Management’. There are three different
views holding three different schools of thought, which are as
follows.
1) ‘Administration’ and ‘Management’ are different functions:
According to American school of thought, Oliver Sheldon, W.R.
Spriegel, Milward, William Schulze, Tead, Lansberg and Florence have
advocated the view that there is distinction between these two
terms. They believe that ‘Administration’ involves the overall framing
of major objectives, deciding policies and taking decisions while
‘Management’ works as a secondary function, which looks after the
execution of these policies and decision framed by the top
administration.

2) ‘Management’ is a generic term, includes Administration :

British school of thought, E.F.L. Brech, Kimball and Kimball uses
the term ‘Administration’ as a part of ‘Management.’ In first
function of management (i.e. planning) decisions are taken, plans
 and policies are made; these same functions carried out by
administration are inclusive in management that’s-why this school
regards as ‘administration’ as part of management. As
‘management’ is used in the sense of an all inclusive function;
management is regarded as the generic term.

3) ‘Administration’ and ‘Management’ are one/synonymous:

French school of thought, Henry Fayol, Koontz and O’Donnell,
Allen, Strong, Terry, Newman, Chester Barnard etc. make no
distinction between the two terms and use ‘Administration’ and
‘Management’ as one/synonymous or use these terms
interchangeably. They hold the view that the term ‘Administration’
is used for the higher executive functions in government and
other non-business or social institutions, whereas the term
‘Management’ is used for the same functions in the business
world.
From the above discussion it is quite evident that there is no exact
line of demarcation between the functions of ‘thinking’ and
‘doing.

Distinction between ‘Administration’ and ‘Management’

BASIS Administration ‘Management’

1. Nature Administration is a Management is an
determinative or executive or doing
thinking function. function.

2. Scope
Administration is Management is related
related with the with the implementation
deciding of major of objectives and policies.
3. Level
 objectives and
4. Skills policies. Management is largely a
middle and lower level
Administration is function
5. Main mainly a top level
function Technical and human skills.
Functions

Conceptual and Directing and organizing

6. Example human skills
are the main functions in
it.

Planning and control

are the main
functions involved in Managing Director,
it. General Manager,
7. Usage Secretary Sales Manager,
Branch Manager, HOD,
Minister, Supervisors, workers.
Commander,
Commissioner,
Registrar,
ViceChancellor,
Governer, Owner,
Chairman, Board of Used mainly in business
Director etc. organizations.

Used largely in
government and
public-sector.

Is Management a Science or an Art?

A question often arises whether management is a science or art. It
is said that “management is the oldest of arts and the youngest of
sciences”. This explains the changing nature of management but
does not exactly answer what management is? To have an exact
answer to the question it is necessary to know the meanings of
the terms “Science” and “Art”.

What is “Science”?
Science may be described, “as a systematic body of knowledge
pertaining to an area of study and contains some general truths
explaining past events or phenomena”. The above definition
contains three important characteristics of science. They are:
1. It is a systematized body of knowledge and uses scientific
methods for observation,
2. Its principles are evolved on the basis of continued observation
and experiment, and
3. Its principles are exact and have universal applicability without
any limitation.

Judging from the above characteristics of science, it may be

observed that:
1. Management is a systematized body of knowledge and its
principles have evolved on the basis of observation.
2. The kind of experimentation (as in natural sciences) cannot be
accompanied in the area of management since management
deals with the human element.
3. In management, it is not possible to define, analyse and
measure phenomena by repeating the same conditions over and
over again to obtain a proof.
The above observation puts a limitation on management as a
science. Management like other social sciences can be called as
“inexact science”.
What is “Art”?
‘Art’ refers to “the way of doing specific things; it indicates how
an objective is to be achieved.” Management like any other
operational activity has to be an art. Most of the managerial acts
have to be cultivated as arts of attaining mastery to secure action
and results. The above definition contains three important
characteristics of art. They are:
1. Art is the application of science. It is putting principle into
practice.
2. After knowing a particular art, practice is needed to reach the
level of perfection.
3. It is undertaken for accomplishing an end through deliberate
efforts.
Judging from the above characteristics of art, it may be observed
that:
1. Management while performing the activities of getting things
done by others is required to apply the knowledge of certain
underlying principles which are necessary for every art.
2. Management gets perfection in the art of managing only
through continuous practice.
3. Management implies capacity to apply accurately the
knowledge to solve the problems, to face the situation and to
realise the objectives fully and timely.
The above observation makes management an art and that to a
fine art.

Management is both a Science as well as an Art

Management is both a science as well as an art. The science of

management provides certain general principles which can guide
the managers in their professional effort. The art of management
consists in tackling every situation in an effective manner. As a
matter of fact, neither science should be over-emphasised nor
should be the art discounted; the science and the art of
management go together and are both mutually interdependent
and complimentary. Management is thus a science as well as an
art. It can be said that-”the art of management is as old as human
history, but the science of management is an event of the recent
past.”

Management as a Profession

Profession means occupation that requires specialised knowledge

and a practice of formal education, which is acquired from the
respective professional body. The basic features of a profession
are:
(i) Systematised body of knowledge A profession is based on a
systematised body of knowledge.
Restricted entry Entry into a profession - restricted through
an examination or degree.
(ii) Professional association All professionals are bound to be a
part of a professional association.
(iii) Code of conduct All professionals are subject to an ethical
code of conduct.
(iv) Service motive The basic motive of each professional is to
render committed service to the society.
Following points clarify whether management is a
profession or not:
(i) Like profession, management has well defined body of
knowledge. It has its own principles, which are based
on experiments.
 (ii) In management, no such restriction is there for managers
to clear an examination or hold a degree.
(iii) In management, no such rules and regulations are framed
to guide the managers.
(iv) Membership to a professional association like AIMA, is not
mandatory for managers.
(v) All managers, directly or indirectly work for the
development of society. Conclusion Thus, management
does not possess all the essential attributes of a
profession. No doubt, management though not a full
fledged profession, is emerging as a profession.

Schools of Management Thoughts

Introduction

Management practice is as old as human civilization when people

started living together in groups. Every group requires
management and the history of human beings is full of
organisational activities. However, the study of how managers
achieve results is predominantly a twentieth century phenomenon.
Earlier, management concepts were applied in the field of business
only and the researchers did not pay much heed to it. The situation
started changing with the beginning of twentieth century,
especially the World War I created the situation when people
started thinking of the solution to the problem of how limited
resources could be applied in better way. The World War II added
further problem to this end. Growing competition and complexity
of managing large business organisations further provided impetus
to developing systematic management concepts and principles.
This led to emergence of a variety of approaches in management.

The evolution of the schools of management thoughts can be

grouped in the following categories, although some overlapping
can be there. Similarly, a particular school of thought did not
really start with the end of the previous one, as far as the time
period is concerned. As L. M. Prasad has rightly stated, this
classification is time specific because what is modern in today’s
context, may not remain the same in future.

Classification of Management thoughts

Classical theory
1. Scientific Management School 1900-1930.
2. Operational/administrative Management School 1916-
1940.
3. Bureaucratic School ( 1930-1945).
Neo classical theory
4. Human Relations School (1930-1950).
5. Social Systems School (1940-1950).
6. Decision Theory School 1945-1965.
7. Management Science School 1950-1960.
Morden theory
8. Human Beahviour School 1950-1970.
9. Systems School 1960 onwards
10. Contingency School 1970 onwards
11. Learning Organisation School 1970 onwards..

Fayol’s Principles of Management:

The credit of developing the administrative theory of
management goes mainly to Henri Fayol. Henri Fayol was born
 in 1841 in France. He studied engineering in France. He worked
first as a mining engineer in a large French mining and
metallurgical company. Later on he became its Managing
Director. Based on his rich administrative experience he wrote a
monograph titled as General and Industrial Management,
published in UK
The principles of management are given below:
1. Division of work: Division of work or specialization alone can give
maximum productivity and efficiency. Both technical and managerial
activities can be performed in the best manner only through division
of labour and specialization
2. Authority and Responsibility: The right to give order is called
authority. The obligation to accomplish is called responsibility.
Authority and Responsibility are the two sides of the management
coin. They exist together. They are complementary and mutually
interdependent.
3. Discipline: The objectives, rules and regulations, the policies and
procedures must be honoured by each member of an organisation.
There must be clear and fair agreement on the rules and objectives,
on the policies and procedures. There must be penalties (punishment)
for non-obedience or indiscipline. No organisation can work smoothly
without discipline - preferably voluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and
conflict, each member of an organisation must received orders and
instructions only from one superior (boss).
5. Unity of Direction: All members of an organisation must work together
to accomplish common objectives.
6. Emphasis on Subordination of Personal Interest to General or
Common Interest: This is also called principle of co-operation. Each
shall work for all and all for each. General or common interest must be
supreme in any joint enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the
best incentive or motivator for good performance. Exploitation of
 employees in any manner must be eliminated. Sound scheme of
remuneration includes adequate financial and non-financial
incentives.
8. Centralization: There must be a good balance between
centralization and decentralization of authority and power. Extreme
centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or
hierarchy of command linking all members of the organisation from
the top to the bottom. Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything.
Order or system alone can create a sound organisation and efficient
management.
11. Equity: An organisation consists of a group of people involved
in joint effort. Hence, equity (i.e., justice) must be there. Without
equity, we cannot have sustained and adequate joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with
the new work and demonstrate efficiency in due course. Hence,
employees and managers must have job security. Security of income
and employment is a pre-requisite of sound organisation and
management.
13. Esprit of Co-operation: Esprit de corps is the foundation of a
sound organisation. Union is strength. But unity demands co-
operation. Pride, loyalty and sense of belonging are responsible for
good performance.
14. Initiative: Creative thinking and capacity to take initiative can
give us sound managerial planning and execution of predetermined
plans.

F. W. Taylor’s Scientific Management

Frederick Winslow Taylor, known popularly as the ‘Father of
Scientific Management’ is one of the great contributors of the
classical theory of management. He was the first person to insist on
introduction of scientific methods in management. His contribution is
largely regarding improvement of productivity at shop level. Born in
1856 at Philadelphia, Taylor took his early education at French and
German Schools. Later he obtained degree in engineering from
Stevens Institute of Technology at New Jersy. Taylor started his career
as an apprentice in a small machinery making shop. Afterwards he
became the Chief Engineer in Midvale Steel Company at Philadelphia.
He also worked as a consultant engineer in Bethelham Steel
Company. He developed the scientific management theory from his
observations and experiments conducted mostly in Midvale and
Bethleham Steel companies. His famous works are Shop
Management (1903) and Principles of Scientific Management (1911).
The great management thinker Taylor died in 1915.

Scientific management means “the use of scientific method to define

‘one best way’ for a job to be done”. Taylor’s philosophy of scientific
management is based on the following principles.
1) Science, not rule of thumb : The manager should develop a
science for each element of man’s work and replace the old rule of
thumb method. Decisions should be based on facts and not on
intuition.
2) Harmony, not discord : There should be complete group harmony
in the organization. This can be achieved through satisfying the needs
of group members and eliminating their dissatisfaction and
frustration. Clashes or conflicts should be avoided as far as possible
and proper co-ordination should be established among the different
groups/departments.
3) Co-operation, not individualism : For achieving the objectives of
organization there should be co-operation between the management
and workers. Importance should be given to co-operative efforts and
not individual efforts.
4) Maximum, not restricted output : Instead of giving restricted
output, workers should be asked to give maximum output. As output
increases the cost per unit will decrease and productivity will
improve.
5) Development of each man to his greatest efficiency and
prosperity : The workers should be scientifically selected, properly
trained and developed to their maximum potential. This will not only
increase workers' efficiency but also their wages and prosperity.
Prosperity to workers will bring prosperity to the employers.
Techniques of Scientific Management : Based on his experience
at shop floor Taylor has suggested the following techniques to bring
the philosophy of scientific management into practice.
1) Scientific Study and Planning of Work : The management should
study each element of work scientifically and decide the daily
standard output for each worker. For this purpose time and motion
study should be conducted. Time study will help to determine the
standard time required to do a job. Motion study will help to remove
unnecessary movements of workers in doing the job. With the help
of this technique the management can give precise idea to the
workers on what is to be done and how it can be done efficiently.
2) Scientific Selection, Placement and Training : The workers should
be selected by using scientific methods and not relying on intuition
and judgement of the foreman. They should be placed on the right
job by matching job requirements with their capacity and attitude.
Further, they should be trained on a regular basis to do the task in
the best manner and give maximum output at minimum cost.
3) Satandardisation : Taylor alvocated the importance of
standardization of tools, equipments, raw materials, quality of work
and physical working conditions.
4) Separation of Planning From Doing : Planning function should be
separated from doing function to secur the benefits of division of
work and specialisation. Planning of work should be the
responsibility of management. The management should plan,
organize and direct the work where as the workers should implement
the plans.
5) Functional Foremanship : Taylor was the first to introduce and
practice the concept of functional foremanship. According to Taylor,
instead of having one foreman, there should be four Supervisors in
the shop room namely, the gang boss, the speed boss, the repair
boss and inspector. In the planning office there should be four
specialists namely the time and cost clerk, the instruction card clerk,
the order of work and route clerk and the shop disciplinarian. Under
functional foremanship each worker should recieve orders directly
from these eight different supervisors dealing with different aspects
of his job.
6) Wage Incentives : Taylor suggested to pay workers according to
their efficiency. Workers producing more should be given higher
wages. He devised differential price rate plan which implies different
rates of wages for different levels of efficiency of workers. The
efficient worker should get more wages than the average worker.
Introduction of wage incentive scheme will reward the efficient
worker and punish the inefficient worker.
7) Mental Revolution : For getting the desired results of scientific
management Taylor emphasised the need of a mental revolution i.e.
a fundamental change of outlook on the part of both employer and
employees. The workers should change their attitude, outlook and
behaviour as to their duties, their work, their fellowmen and their
amployer. At the same time the management should change its
attitude, outlook and behaviour towards the workers and their
problems. Instead of having a hostile attitude and engaging in
continuous conflict, management and workers should co-operate
each other and work for their mutual benefit. They should give up
the perception that any gain by one is at the expense of other. Their
relationship should be cordial, cooperative and positive. There should
be no hostility, distrust and suspicion between them.

3 Max Weber’s Concept of Bureaucracy

Max Weber, a German Social Scientist and Philosopher made
valuable contribution to the general administration theory through
his concept of Bureaucracy. According to Weber there are three types
of authority systems as follows.
1) Charismatic Authority System : It is based on the extra-ordinary
qualities or magnetic personality of the leader, e.g. Henri Ford of
Ford Motors. However, this type of authority structure suffers
from the problem of instability. It comes to end with the leader.
People may not accept the successor of such person as a leader.
2) Traditional Authority : Here a person enjoys authority because of
his status derived by inheritance. The extent of authority is
decided by the custom. Traditional authority system ignores
whether the parti
3) Bureaucracy : According to Weber both the charismatic and
traditional authority systems are not suitable to large business
organizations because they are person-centered and instable in
nature. Hence, Weber has advocated Bureaucracy model based on
rationality and legality. The model bureaucracy suggested Weber
has the following characteristics.
1) Division of Labour : In bureaucracy jobs are broken into simple
routine and well-defined tasks and assigned to various employees
on the basis of their abilities, skills and aptitudes.
2) Hierarchy of authority : Bureaucracy works on a well-defined
hierarchy of authority. Higher officials or offices supervise lower
officials or offices and the lower officials/offices have the right of
appeal.
3) Formal selection : All persons in the organization are selected
and placed on the basis of their technical qualifications.
4) Formal rules and regulations : The organization functions
according to formal rules and regulations. These rules and
regulations are in written form and communicated to all
employees. Use of formal rules and regulations ensures
uniformity in action and helps the management to control the
employees.
5) Impersonality : There is no place for emotions, sentiments and
personal attachment. Rules and regulations supersede the
persons in the organization and are applied uniformally avoiding
involvement with personalities and personal preferences of
employees.
6) Career orientation : In bureaucratic organisation the officers
are ‘professionals’ rather than owners of the organization. They
derive authority because of the office/post they hold and work for
fixed salary. They have the prospects of regular advancement in
the organisation. They are appointed on full time basis.
7) Continuity : The official business is conducted on continuous
basis. The organization enjoys continuity of operations because of
rational-legal anthority structure.
8) Separation between official business and personal affairs : The
official business of employees and their personal affairs are
treated as two separate things. There is separation between
official revenue and personal incomes. Officials do not own the
resources required for performing their duties. However, they are
accountable for the use of official resources.
9) Rational-legal Structure : Weber’s bureaucracy model is
characterized by rationality and legality. It is rational in the sense
that means are expressly allotted for achieving predetermined
goals. It is called ‘legal’ because authority is attached to the office
and is exercised impersonally through the system of rules and
regula

Functional Areas of Management

1. Personnel Management
2. Financial Management
3. Marketing Management
4. Production Management
5. Purchase Management
6. Development Management
7. Maintenance Management
8. Office Management

1.Personnel Management

Personnel Management is that branch of management which is

concerned with the recruitment, selection, development and the
optimum use of the employees. In other words, personnel
management is concerned with the employees engaged at all
levels of an organisation.
Objectives of Personnel Management:
Main objectives of personnel management are as follows:
(1) To Provide able Employees:
First objective of personnel management is to provide able
employees to the organisation. Able employees alone can
contribute to the achievement of the objectives of the
organisation.
(2) To Increase Employees’ Efficiency:
Proper selection of the employees is not sufficient for the success
of the organisation. Rather it is necessary to add to their efficiency
continuously. Personnel manager performs this function by
arranging training for the employees.
(3) To Develop Team-Spirit:
It is the objective of personnel management to inculcate team-
spirit among all the persons employed in the organisation.
Objectives of the enterprise can easily be achieved in this way.
(4) To Develop Cordial Industrial Relations:
The aim of the personnel management is to develop a spirit of
goodwill, confidence and mutual respect between the labourers
and the employers. Such a spirit makes industrial relations cordial.
(5) To Develop Congenial work Environment:
The environment of work in which the employees have to work
has great effect on their efficiency. Clean and healthy environment
increase their efficiency. It is, therefore, the function of personnel
management to provide good work environment.
Nature of Personnel Management:
(1) It is Related with People:
Personnel management is concerned with human resource. Its
scope extends to employees working in an organisation at all
levels. It includes recruitment of employees, selection, training,
job evaluation, determination of remuneration, provision of good
working conditions etc. In short, every activity of personnel
management relates with people.
(2) It is a Pervasive Function:
Nature of personnel management is all pervasive. Pervasive here
means that the function of personnel management is performed
at all levels of management. In other words, managers at all levels
perform this function with respect to their employees. In fact, the
function of personnel management is performed by a separately
established personnel department.
But it is necessary here to make it clear that establishment of this
department does not relieve other managers of their personnel
management function. Rather the objective of the establishment
of this department is only to help other managers to accomplish
their function of personnel management. However, its final
responsibility remains with all the concerned managers.
(3) It is a Multiple-Objective Function:
Nature of personnel management is multi-objective.
It has to achieve three objectives at the same time:
(i) Organisational Objective:
As an organisational objective, personnel management has to
make maximum utilisation of the available labour resources
possible in an organisation.
(ii) Employee Satisfaction Objective:
Another objective of personnel management is to satisfy the
employees by ensuring proper remuneration, promotion, training,
etc.
(iii) Social Objective:
To maintain industrial peace is the social objective of personnel
management.
(4) It is a Group of Personnel Activities:
Under personnel management comes several activities concerning
employees. It is therefore called a group of personnel activities.
Main personnel activities are recruitment, selection, training, job
evaluation, fixation of remuneration, etc.
(5) It Requires the knowledge of Psychology:
Personnel management deals with human resource of production.
Every individual working in an organisation has his own desires,
expectations and tastes. In order to get maximum work out of his
subordinates, a manager has to keep in mind all these things.
Managers must, therefore, have knowledge of human psychology.
Role of Personnel Manager:
(1) As a Line Executive:Personnel manager is the head of
personnel department. In order to discharge the responsibility of
his department when he performs the functions of recruitment,
selection, training, etc. he acts as a line executive. The
characteristic of a line executive is that he is directly responsible
for his activities.
(2) As a Staff Executive:
When a personnel manager advises heads of other departments
regarding solution to the problems relating to their employees,
then he acts as a staff executive. It is the feature of a staff
executive that he is not answerable for the results of his advice.
(3) As a Counsellor:
When a personnel manager listens to the problems of different
employees working in the organisation and brings the same to the
notice of general manager, then he plays the role of a counsellor.
He gives his advice to the general manager regarding solution to
these problems.
(4) As a Mediator:
When a personnel manager seeks to solve dispute between
management and employees, then he plays the role of a mediator.
(5) As a Representative:
A personnel manager represents his organisation in the meeting
convened by the government and non-government organisations
to find solution to the problems of employees. Thus he also plays
the role of a representative.
2. Financial Management:
The major objective of any business concern is to make profit for
its owners by selling goods or services. To reach this goal finance
is required. In this context it can be said that finance is the soul of
any business concern. Keeping this in view, the proper
management of finance is absolutely necessary.
In every business, three main questions which arise regarding
finance are – (i) How much finance will be required for different
business activities? (ii) How much of it will be obtained from
different sources? and (iii) How profit earned from different
business activities will be distributed? Answer to all these
questions is inherent in financial management.
In other words, it can be said that under financial management,
first of all, need for finance is estimated and then different
sources of obtaining finance and its quantum are determined and
finally arrangements are made for the distribution of profit.
To conclude, it can be said that under financial management,
financial needs of a business are met in such a manner that its
goals can easily be achieved.
three important decisions taken by a financial manager.
1) Investment Decision:
Investment decision refers to the selection of those assets in
which investment is to be made by the business or the assets
which are to be purchased for running the business.
Assets which are obtained by the business are of two types:
(i) Fixed assets and
(ii) Current assets.

(2) Financing Decision:

The other decision by financial manager relates to different
sources from where finance is to be procured to meet the
requirements of the business. He is to ascertain the different
sources from where the necessary finance is to be mobilized and
in what amount. This question relates to capital structure. Capital
structure is the sum of debt capital and share capital.
(3) Dividend Decision:
How much of the total profit be distributed among the
shareholders as dividend and how much be retained by the
business as reserve, is another decision that a financial manager
has to take. Shareholders want that they should get maximum
dividend and the managers want that maximum profit be retained
as reserve to meet the future requirements of the business.
3. Marketing Management:
Marketing management refers to all managerial activities relating
to marketing. Marketing includes all those activities ranging from
knowing the needs of the consumers to their satisfaction. On the
other hand, management includes planning, organising, staffing,
directing and controlling. Performing of all managerial functions in
the context of marketing is called Marketing Management.
Thus, main activities of marketing management are as under:
(i) Planning of marketing activities.
(ii) Organising of marketing activities.
(iii) Staffing for accomplishing marketing activities.
(iv) Directing of marketing activities.
(v) Controlling of marketing activities.
Objectives of Marketing Management:
Main objectives of marketing management are as under:
(1) To Ensure Consumer Satisfaction:
Prime objective of marketing management is to ensure consumer
satisfaction. To achieve this objective, marketing manager makes
an intensive study of the needs of the consumers. Production and
distribution of goods are in tune with their needs.
(2) To Serve the Society:
Under marketing management, marketing manager plays an
important role in discharging the social obligation of the business.
To this end, his constant endeavour is to produce good quality
products, to supply goods and services at reasonable prices, to
avoid false promises through publicity media, to ensure good
behaviour to the customers, etc. As a result of this effort, on the
one hand, social obligation of the business is fulfilled and on the
other, its goodwill is enhanced.
(3) To Increase the Market Share:
Increase in market share means increase in sales. Aim of a
marketing manager is to bring under his possession a large part of
the market. With a view to increasing the sale of goods and
services, he adopts all means of sales promotion, such as, free
samples, exhibition, discount sales, etc.
(4) To Generate Maximum Earning for the Business:
Marketing alone is such a business activity as yields income. It is
quite clear, that in the absence of profit no business can last for
long. It is, therefore, the objective of the marketing manager to
generate maximum earning for the business while keeping in
mind full satisfaction of the consumers.
(5) To Perform the Marketing Function Efficiently:
Marketing functions include – marketing research, product
planning, purchase, sale, branding, packing, pricing, advertising,
etc. Marketing manager is responsible for performing all these
functions. He is expected to accomplish it efficiently. Thus, an
important function of the marketing manager is to perform
efficiently all these functions.
(6) To Perform the Managerial Activities in Reference to the
Marketing Efficiently:
With a view to performing marketing functions, marketing
manager has to plan, organise, direct and control them. It is the
objective of the marketing manager that he should perform all
managerial activities efficiently.
Functions of Marketing Management:
Functions of marketing management refer to those activities
which are carried out to achieve the objectives of marketing. In
the first instance, marketing objectives are determined. Then to
achieve the same, need is felt for planning, organising, staffing,
directing and controlling of marketing activities. These are, as a
matter of fact, functions of marketing management.
Their brief description is as under:
(1) Planning of Marketing Activities:
First of all, planning of marketing activities is done in order to
achieve marketing goals or to perform marketing activities. Here
planning means to determine when, how, where and by whom
different marketing activities are to be conducted.
(2) Organising of Marketing Activities:
In order to conduct different activities (purchase, assemble, sale,
storage, transportation, packing, pricing, advertising, marketing
research, etc.) the same are divided into some groups. Under
grouping, a special post is created to carry out similar kind of
activities. Rights and duties of different posts so created are
clearly defined. Who will be the officer and who will be the
subordinates are also decided?
(3) Staffing for Marketing Activities:
Under this function, appointments are made to do different
marketing activities. In big organisations, personnel department is
established for making appointments. Marketing manager helps
personnel manager to secure staff for his department.
(4) Directing of Marketing Activities:
Directing refers to giving of proper guidance to persons working
on different posts so that they may discharge their duties
efficiently. Under this function, marketing manager supervises his
subordinates, provides them good leadership and from time to
time motivates them.
(5) Controlling of Marketing Activities:
By controlling of marketing activities is meant review of marketing
activities from time to time so that deviations could be traced out.
In case of negative deviation, the same is removed by taking
corrective action immediately.
4. Production Management:
The production management is needed by the manufacturing
organisations. These organisations change the form of the raw
material and make it more useful.
This functional area of management includes the following
activities:
(i) To anticipate the production activities,
(ii) To determine the kind and quantity of the goods to be
produced,
(iii) To make provision for the raw material well in time,
(iv) To plan and control production,
(v) To determine the need of the employees of the production
department and arrange for the recruitment and selection
process,
(vi) To conduct the time and motion study,
(vii) To determine the method of production,
(viii) To control the quality of the goods produced, etc.
5. Purchase Management:
Purchase management means planning and controlling purchase.
It means to determine as to what goods are to be purchased,
where to purchase from, when to purchase, etc.
The following are the main functions to be performed under the
purchase management:
(i) To obtain the requisition letter of purchase,
(ii) To make enquiry before purchase,
(iii) To place orders for purchase of goods,
(iv) To receive the goods,
(v) To arrange for the storing of goods,
(vi) To control the receipt of goods, its stock and issue.
6. Development Management:
Development management is related with the management of
research activities.
The following activities are performed under it:
(i) To develop new production process,
(ii) To carry on research in relation to the goods, machines and
implements used in the process of production,
(iii) To develop new products,
(iv) To discover new substitutes for raw material, etc.
7. Maintenance Management:
It is the responsibility of this functional area of management to
keep the organisation in working condition. If the building and the
machines of the factory are not in proper condition, the efficiency
of the employees will certainly be reduced. It will, therefore, not
be satisfying both for the owner and the employees. Therefore,
maintenance management is important for both the categories.
The chief functions of the maintenance management are given
below:
(i) To keep the machines and implements in proper condition,
(ii) To ensure the cleanliness of the building,
(iii) To plan for ensuring maintenance,
(iv) To control the maintenance activities, etc.
8. Office Management:
Office means a place for where the different activities of the
organisation are planned and controlled. To run this place in a
planned manner is called office management. It is the place from
where the employees are given directions and guidance.
The office management includes the following activities:
(i) To prepare accounts and keep them safe,
(ii) To provide for effective communication,
(iii) To lay down plans,
(iv) To establish coordination among different departments
(v) To provide all the necessary equipments in the office,
(vi) To correspond, and
(vii) To ensure the best use of the services of employees, and of all
other sources.
Thus Functional areas of management mean the sum total of all
those activities which are performed in an organisation to achieve
the objectives of the organisation. These functions can be of
different types but personnel, finance, marketing and production
activities have a special importance.