MANAGEMENT PRINCIPLE

MODULE-I

Introduction
Management is a universal process in all organized, social and economic activities. Wherever
there is human activity there is management. Management is a vital aspect of the economic life
of man, which is an organized 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 organizing 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. 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.
Meaning:
Management is a technique of extracting work from others in an integrated and co-ordinated
manner for realizing the specific objectives through productive use of material resources.
Mobilising the physical, human and financial resources and planning their utilization for
business operations in such a manner as to reach the defined goals can be benefited to as
management.
Definition
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 multipurpose 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".
According to Wheeler - "Business management is a human activity which directs and controls
the organisation and operation of a business enterprise. Management is centred in the
administrators of managers of the firm who integrate men, material and money into an effective
operating limit".

Nature or Characteristics
An analysis of the various definitions of management indicates that management has certain
characteristics. The following are the salient characteristics of management.
1. Management is a Factor of Production: 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.
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
the achievement of pre-determined objectives of an organisation.
15. Management is Intangible: It cannot be seen with the eyes. It is evidenced only by the
quality of the organization and the results i.e. profits, increased productivity etc.

Management is a Science or Art?

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-
 Management is a systematized body of knowledge arid its principles have evolved on the
basis of observation.
 The kind of experimentation (as in natural sciences) cannot be accompanied in the area of
management since management deals with the human element.
 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-
 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.
 Management gets perfection in the art of managing only through continuous practice.
  Management implies capacity to apply accurately the knowledge to solve the problems,
toface 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 emphasized nor art should be 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."

Functions of Management:
A manager is called upon to perform the following managerial functions:
 Planning
 Organising
 Staffing
 Directing
 Controlling
1. Planning: Planning is a basic managerial function. Planning helps in determining the course
of action to be followed for achieving various organisational objectives: It is a decision in
advance, what to do, when to do how to do and who will do a particular task. Planning is a
process which involves 'thinking before doing'. Planning is concerned with the mental state of a
manager. He thinks before undertaking a work. Other functions of management such as
organising, staffing, directing, co-ordinating and controlling are also undertaken after planning.
Hart defines planning as "the determination in advance of a line of action by which certain
results arc to be achieved." According to Terry, "'Planning is the selecting and relating of facts
and the making and using of assumptions regarding the future in the visualisation and
formulations of proposed activities believed necessary to achieve desired results."
Planning is a process of looking ahead. The primary object of planning is to achieve better
results. It involves the selection of organisational objectives and developing policies, procedure,
programmes, budgets and strategies. Planning is a continuous process that takes place at all
levels of management. A detailed planning is done in the beginning but the actual performance is
reviewed and suitable changes are made in plans when actual execution is done. Plans may be of
many kinds, such as short range plans, medium range plans, long range plans, standing plans,
single use plans, strategic plans, administrative plans and operational plans. The process of
Planning involves a number of steps:
 gathering information ;
 laying down objectives;
 developing planning premises;
 examining alternative courses of action
 evaluation of action patterns ;
 reviewing limitations
 implementation of plans

2. Organising
Every business enterprise needs the services of a number of persons to look after its different
aspects. The management sets up the objectives or goals to be achieved by its personnel. The
energy of every individual is channelised to achieve the enterprise objectives. The function of
organising is to arrange, guide, co-ordinate, direct and control the activities of other factors of
production, viz., men, material, money and machines so as to accomplish the objectives of the
enterprise. In the words of Koontz and O'Donnel "Organising that part of management that
involve establishing and intentional structure of roles for people in an enterprise to fill."
Organisation provides the necessary framework within which people associate for the attainment
of business objectives.
The process of organisation involves the following steps:
 To identify the work to be performed;
 To classify or group the work ;
 To assign these groups of activities or work to individuals;
 To delegate authority and fix responsibility and
 To co-ordinate these authority-responsibility relationships of various activities.
3. Staffing:
The function involves manning the positions created by organisation process. It is concerned
with human resources of an organisation. In the words of Koontz and O'Donnel, "staffing is
filling, and keeping filled, positions in the organisation structure through defining work-force
requirements, appraising, selecting, compensating and training. Thus, staffing consists of the
following:
(i) Manpower planning i.e., assessing manpower requirements in terms of quantity and
quality.
(ii) recruitment, selection and training:
(iii) Placement of man power;
(iv) development, promotion, transfer and appraisal
(v) Determination of employee remuneration.
4. Directing:
Directing is concerned with carrying out the desired plans. It initiates organized and planned
action and ensures effective performance by subordinates towards the accomplishment of group
activities. Direction is called management in action. In the words of George R. Terry, "Direction
is moving to action and supplying stimulative power to the group." After planning, organising
and staffing, the manager has to guide and supervise his subordinates. According to Massie,
"Directing concerns the total manner in which a manager influences the actions of subordinates.
It is the final action of a manager in getting others to act after all preparations have been
completed."
5. Controlling:
Controlling can be defined as "determining what is being accomplished, that is evaluating the
performance, if necessary, applying corrective measures so that the performance takes place
according to plans. Control is essential for achieving objectives of an enterprise. The planning of
various activities does not ensure automatic implementation of policies. Control is the process
which enables management to get its policies implemented and take corrective actions if
performance is not according to the predetermined standards. If planning is the beginning of the
management process, controlling may be said to be the final stage. If planning is looking ahead,
controlling is looking back. Control is not possible without planning and planning is meaningless
without control.
The process of controlling involves the following steps:

 Establishing standards of performance

 Measuring actual performance
 Comparing the actual performance with the standard
 Finding variances or deviations, if any and
 Taking corrective action or measures

Apart from these basic functions the managerial functions include:

Leadership: A manager has to issue orders and instructions and guide and counsel his
subordinates in their work with a view to improve their performance and achieve enterprise
objectives. Leadership is the process by which an executive or manager imaginatively
directs/guides and influences the work of others in choosing and attaining specified goals by
mediating between the individual and organisation in such a manner that both will get maximum
satisfaction.
Communication: Communication constitutes a very important function of management. u is said
to be the number one problem of management today. It is an established fact that managers
spend 75 to 90 per cent of their working time in communicating with others. Communication is
the means by which the behaviour of the subordinate is modified and change is effected in their
actions.
Supervision: Supervision is another important element of directing function of management.
After issuing instructions, the manager or the supervisor has to see that the given instructions are
carried out. This is the aim of supervision. Supervision refers to the job of overseeing
subordinates at work to ensure maximum utilisation of resources to get the required and directed
work done and to correct the subordinates whenever they go wrong. Though supervision is
performed at all levels of management, the major responsibility for supervision lies with the first
line of management.
Co-ordination: Co-ordination is one of the most important functions of management. It is
essential to channelise the activities of various individuals in the organisation for the
achievement of common goals. Every department or section is given a target to be achieved and
they should concentrate only on their work and should not bother about the work of other organs.
It is left to the management to see that the work of different segments is going according to pre-
determined targets and corrective measures have to be taken if there is any deviation. Co-
ordination creates a team spirit and helps in achieving goals through collective efforts. It is the
orderly arrangement of group effort to provide unity of action in the pursuit of common
objectives
Levels of management
1. Top Level of Management
It consists of board of directors, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies for an
enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the
performance of the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only
one layer of middle level of management but in big enterprises, there may be senior and
junior middle level management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and
directives of the top management.
b. They make plans for the sub-units of the organization.
 c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or
department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better
performance.
3. Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists of
supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
“Supervisory management refers to those executives whose work has to be largely with
personal oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their activities
include -
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals
etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact
with the workers.
Role of Managers
Managers perform the complex task of unifying labour and other resources to achieve
organisational goals. In this process, they deal with superiors, subordinates and factors affecting
the external and internal organisational environment. They make best use of their position to
increase organisational adaptability to environment so that organisation can survive in the era of
tough competition.

The roles of managers differ from their functions. The functions describe what managers should
do while roles describe what they actually do. In 1973, Henry Mintzberg took a study of the
nature of managerial work. He studied the activities of five under three broad headings) which
managers perform. These roles are

1. Inter-personal Roles
2. Informational Roles
3. Decisional Roles
1. Inter-personal roles: The need for these roles arises because managers constantly interact
with their superiors, peers, subordinates and the outside parties. Unless he is a role model to
these parties, he cannot be called a successful manager. The three main inter-personal roles are:

(a) Manager as the figurehead: The manager occupies an official position and performs the
duties of signing certain documents, making speeches, receiving official visitors and other duties
of legal and social nature.
(b) Manager as the leader: He looks after the interests of his subordinates and solves their
psychological and work-related problems. He lays down the goals for his followers, co-ordinates
their individual goals with the organisational goals, motivates his followers to accomplish those
goals and creates a feeling of enthusiasm, loyalty and confidence amongst them for achieving the
said goals.
(c) Manager as the liaison: The manager acts as an integrating force for different groups
(superiors and subordinates and people working at the same level) within the organisation and
for the organisation with the outside world (such as society, consumers, Government, trade
unions etc.).
2. Informational roles: An organisation deal with people within and outside the organisation.
For this, the manager keeps himself informed about the activities and happenings in the internal
and external environment. In this context, he performs the following three roles:
(a) Managers as monitors: To keep themselves well informed of the internal and external
organisational environment, managers monitor the activities of the organisation by reading
journals and periodicals. They solve the problems according to the situation. They also collect
information about their environment through liaison work and conduct tours so that organisation
works effectively within the environmental constraints.
(b) Managers as disseminators: The information that managers collect as monitors is
transmitted to members of the organisation. This is done through formal and informal interaction
of managers with their subordinates by holding meetings or by circulating notices and circulars.
(c) Managers as spokespersons: Managers act as a link between their superiors and
subordinates and also between the external and the internal organisational environment and
instructions and ordinances issued by superiors are passed to the subordinates and reactions and
problems of subordinates are communicated to the superiors. Changes in plans policies and
procedures of the organisation are also intimated to the outside world. Thus, a communication
network is created by managers between different sections of society (environment) and the
organisation.
3. Decisional roles: After collecting the information from internal and external sources.
Managers use this information to solve problems in different situations. The main decisional
roles performed by managers are:
(a) Managers as entrepreneurs: Managers think of new ideas for development of the
organisation and implement them within the framework of resources. It may require changes in
products, processes, technology etc. which may not be easy to make. It is possible for managers
to do so only through innovations. Business houses are the creations of man and are expected to
continue for a long period of time. As entrepreneurs, managers ensure that the business existing
today continues to exist tomorrow and the successful businesses today continue to be successful
even tomorrow or become even more successful.
(b) Managers as disturbance handlers: Managers deal with disturbances in and outside the
organisation by reviewing the situation and making strategies to solve them. There may be
problems such as firing of employees by the superiors or demanding higher wages by the
employees or facing tough situation with the customers or suppliers which need active role of the
manager as disturbance handler to solve them.
(c) Managers as resource allocators: Managers allocate the monetary and non-monetary
resources to various activities of the organisation in the order of their priority so that
organisational goals can be achieved efficiently.
(d) Managers as negotiators: They mediate between organisation and employees. In case of
conflict, they work in the interest of both organisation and its work force:
Management School of Thought
The origin of management can be traced back to the days when man started living in groups.
History reveals that strong men organized the masses into groups according to their intelligence.
Physical and mental capabilities. Evidence of the use of the well-recognized principles of
management is to be found in the organization of public life in ancient Greece, the organization
of the Roman Catholic Church and the organization of military forces. Thus management in
some form or the other has been practiced in the various parts of the world since the dawn of
civilization. With the on set of Industrial Revolution, however, the position underwent a radical
change. The structure of industry became extremely complex. At this stage, the development of a
formal theory of management became absolutely necessary. It was against this background that
the pioneers of modern management thought laid the foundations of modem management theory
and practice.

Evolution of management thought may be divided into four stages

1. Pre-scientific management period.
2. Classical Theory
(a) Scientific Management of Taylor
(b) Administrative Management of Fayol
(c) Bureaucratic Model of Max Weber
3. Neo-classical Theory or Behaviour Approach
4. Modern Theory or Systems Approach
Pre-scientific Management Period
The advent of industrial revolution in the middle of the 18th century had its impact on
management. Industrial revolution brought about a complete change in the methods of
production, tools and equipments, organization of labour and methods of raising capital.
Employees went to their work instead of receiving it, and so, the factory system, as it is known
today, become a dominant feature of the economy. Under this system, land and buildings, hired
labour, and capital are made available to the entrepreneur, who strives to combine these factors
in the efficient achievement of a particular goal. All these changes, in turn, brought about
changes in the field of management. Traditional, conventional or customary ideas of
management were slowly given up and management came to be based on scientific principles. In
the words of L. F. Urwick -
"Modern management has thrown open a new branch of human knowledge, a fresh universe of
discourse". During the period following the industrial revolution, certain pioneers tried to
challenge the traditional character of management by introducing new ideas and character of
management by introducing new ideas and approaches. The notable contributors of this period
are:
1. Professor Charles Babbage (UK 1729 -1871): He was a Professor of Mathematics at
Cambridge University. Prof Babbage found that manufacturers made little use of science and
mathematics, and that they (manufacturers) relied upon opinions instead of investigations and
accurate knowledge. He felt that the methods of science and mathematics could be applied to the
solution of methods in the place of guess work for the solution of business problems. He
advocated the use of accurate observations, measurement and precise knowledge for taking
business decisions. He urged the management of an enterprise, on the basis of accurate data
obtained through rigid investigation, the desirability of finding out the number of times each
operation is repeated each hour, the dividing of work into mental and physical efforts, the
determining of the precise cost for every process and the paying of a bonus to the workers in
proportion to his own efficiency and the success of enterprise.
2. James Watt Junior (UK 1796-1848 and Mathew Robinson Boulton (1770-1842): James
Watt Junior and Mathew Robinson Boulton contributed to the development of management
thought by following certain management techniques in their engineering factory at Soho in
Birmingham. They are:
 Production Planning
 Standardization of Components
 Maintenance
 Planned machine layout
 Provision of welfare for personnel
 Scheme for executive development
 Marketing Research and forecasting
 Elaborate statistical records

3. Robert Owens (UK. 1771 - 1858): Robert Owens, the promoter of co-operative and trade
union movement in England, emphasized the recognition of human element in industry. He
firmly believed that workers' performance in industry was influenced by the working conditions
and treatment of workers. He introduced new ideas of human relations – shorter working hours,
housing facilities, training of workers in hygiene, education of their children, provision of
canteen etc. Robert Owen, managed a group of textile mills in Lanark, Scotland, where he used
his ideas of human relations. Though his approach was paternalistic, he carne to be regarded as
the father of Personnel Management.

4. Henry Robinson Towne (USA 1844 -1924): H.R Towne was the president of the famous lock
manufacturing company "Yale and Town". He urged the combination of engineers and
economists as industrial managers. This combination of qualities, together with at least some
skill as an accountant, is essential to the successful management of industrial workers. He
favoured organized exchange of experience among managers and pleaded for an organized effort
to pool the great fund of accumulated knowledge in the art of workshop management.

5. Seebohm Rowntree (UK 1871- 1954): Rowntree created a public opinion on the need of
labour welfare scheme and improvement in industrial relations. The Industrial Welfare
Society, The Management Research Groups and the Oxford Lecture Conferences in the
U.K owed their origin and progress to the interest and zeal of Rowntree.
Classical Theory
Prof. Charles Babbage, James Watt Junior and Mathew Robinson Boulton, Robert Owen, Henry
Robinson Towne and Rowntree were, no doubt, pioneers of management thought. But, the
impact of their contributions on the industry as a whole was meagre. The real beginning of the
science of management did not occur until the last decade of the 19th century. During this
period, stalwarts like F.W. Taylor, H.L. Gantt, Emerson, Frank and Lillian Gilberth etc., laid the
foundation of management, which in due course, came to be known as scientific management.
This epoch in the history of management will be remembered as an era in which traditional ways
of managing were challenged, past management experience were scientifically systematized and
principles of management were distilled and propagated. The contributions of the pioneers of this
age have had a profound impact in furthering the management know-how and enriching the store
of management principles.
F.W. Taylor and Henry Fayol are generally regarded as the founders of scientific management
and administrative management and both provided the bases for science and art of management.
Features of Management in the Classical Period
 It was closely associated with the industrial revolution and the rise of large-scale
enterprise.
 Classical organization and management theory is based on contributions from a number
of sources. They are scientific management, administrative management theory,
bureaucratic model, and micro-economics and public administration.
 Management thought focused on job content division of labour, standardization,
simplification and specialization and scientific approach towards organization.

A. Taylor’s Scientific Management

Started as an apprentice machinist in Philadelphia, USA. He rose to be the chief engineer at the
Midvale Engineering Works and later on served with the Bethlehem Works where he
experimented with his ideas and made the contribution to the management theory for which he is
so well known. Frederick Winslow Taylor well-known as the founder of scientific management
was the first to recognize and emphasis the need for adopting a scientific approach to the task of
managing an enterprise. He tried to diagnose the causes of low efficiency in industry and came to
the conclusion that much of waste and inefficiency is due to the lack of order and system in the
methods of management. He found that the management was usually ignorant of the amount of
work that could be done by a worker in a day as also the best method of doing the job. As a
result, it remained largely at the mercy of the workers who deliberately shirked work. He
therefore, suggested that those responsible for management should adopt a scientific approach in
their work, and make use of "scientific method" for achieving higher efficiency. The scientific
method consists essentially of
(a) Observation
(b) Measurement
(c) Experimentation and
(d) Inference.

He advocated a thorough planning of the job by the management and emphasized the necessity
of perfect understanding and co-operation between the management and the workers both for the
enlargement of profits and the use of scientific investigation and knowledge in industrial work.
He summed up his approach in these words:
 Science, not rule of thumb
 Harmony, not discord
 Co-operation, not individualism
 Maximum output, in place of restricted output
 The development of each man to his greatest efficiency and prosperity
Elements of Scientific Management
The techniques which Taylor regarded as its essential elements or features may be classified as
under: Scientific
1.Task and Rate-setting, work improvement, etc
2. Planning the Task.
3. Vocational Selection and Training
4. Standardization (of working conditions, material equipment etc.)
5. Specialization
6. Mental Revolution:
1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic,
objective and critical examination of all the factors governing the operational efficiency of any
specified activity in order to effect improvement. Work study includes.

(a) Methods Study: The management should try to ensure that the plant is laid out in the best
manner and is equipped with the best tools and machinery. The possibilities of eliminating or
combining certain operations may be studied.
(b) Motion Study: It is a study of the movement, of an operator (or even of a machine) in
performing an operation with the purpose of eliminating useless motions.
(c) Time Study (work measurement): The basic purpose of time study is to determine the proper
time for performing the operation. Such study may be conducted after the motion study. Both
time study and motion study help in determining the best method of doing a job and the standard
time allowed for it.
(d) Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue,
it may either be beyond the workers or the workers may over strain themselves to attain it. It is
necessary, therefore, to regulate the working hours and provide for rest pauses at scientifically
determined intervals.
(e) Rate-setting: Taylor recommended the differential piece wage system, under which workers
performing the standard task within prescribed time are paid a much higher rate per unit than
inefficient workers who are not able to come up to the standard set.

2. Planning the Task: Having set the task which an average worker must strive to perform to get
wages at the higher piece-rate, necessary steps have to be taken to plan the production
thoroughly so that there is no bottlenecks and the work goes on systematically.

3. Selection and Training: Scientific Management requires a radical change in the methods and
procedures of selecting workers. It is therefore necessary to entrust the task of selection to a
central personnel department. The procedure of selection will also have to be systematised.
Proper attention has also to be devoted to the training of the workers in the correct methods of
work.
4. Standardization: Standardization may be introduced in respect of the following.
(a) Tools and equipment: By standardization it is meant the process of bringing about uniformity.
The management must select and store standard tools and implements which will be nearly the
best or the best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to
result in damage to machinery.
(c) Conditions of Work: To attain standard performance, the maintenance of standard conditions
of ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
(d) Materials: The efficiency of a worker depends on the quality of materials and the method of
handling materials.
5. Specialization: Scientific management will not be complete without the introduction of
specialization. Under this plan, the two functions of 'planning' and 'doing' are separated in the
organization of the plant. The 'functional foremen' are specialists who join their heads to give
thought to the planning of the performance of operations in the workshop. Taylor suggested eight
functional foremen under his scheme of functional foremanship.
(a) The Route Clerk: To lay down the sequence of operations and instruct the workers concerned
about it.
(b) The Instruction Card Clerk: To prepare detailed instructions regarding different aspects of
work.
(c) The Time and Cost Clerk: To send all information relating to their pay to the workers and to
secure proper returns of work from them.
(d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
(e) The Gang Boss: To assemble and set up tools and machines and to teach the workers to make
all their personal motions in the quickest and best way.
(f) The Speed Boss: To ensure that machines are run at their best speeds and proper tools are
used by the workers.
(g) The Repair Boss: To ensure that each worker keeps his machine in good order and maintains
cleanliness around him and his machines.
(h) The Inspector: To show to the worker how to do the work.
 6. Mental Revolution: At present, industry is divided into two groups - management and
labor. The major problem between these two groups is the division of surplus. The
management wants the maximum possible share of the surplus as profit; the workers
want, as large share in the form of wages. Taylor has in mind the enormous gain that
arises from higher productivity. Such gains can be shared both by the management and
workers in the form of increased profits and increased wages.

Contributions of Scientific Management

Chief among these are:
1. Emphasis on rational thinking on the past of management.
2. Focus on the need for better methods of industrial work through systematic study and
research.
3. Emphasis on planning and control of production.
4. Development of Cost Accounting.
5. Development of incentive plans of wage payment based on systematic study of work.
6. Focus on need for a separate Personnel Department.
7. Focus on the problem of fatigue and rest in industrial work

B. Administrative Management Theory

Henry Fayol was the most important exponent of this theory. The pyramidal form, scalar
principle, unity of command, exception principle, span of control and departmentalisation are
some of the important concepts set forth by Fayol and his followers like Mooney and Reiley,
Simon, Urwick, Gullick etc. Henry Fayol (France, 1841 -1925): Henry Fayol was born in 1941 at
Constantinople in France. He graduated as a mining engineer in 1860 from the National School
of Mining. After his graduation, he joined a French Coal Mining Company as an Engineer. After
a couple of years, he was promoted as manager. He was appointed as General Manager of his
company in 1888. At that time, the company suffered heavy losses and was nearly bankrupt.
Henry Fayol succeeded in converting his company from near bankruptcy to a strong financial
position and a record of profits and dividends over a long period.
Concept of Management: Henry Fayol is considered the father of modern theory of general and
industrial management. He divided general and industrial management into six groups
1. Technical activities - Production, manufacture, adaptation.
2. Commercial activities - buying, selling and exchange.
3. Financial activities - search for and optimum use of capital.
4. Security activities - protection of property and persons.
5. Accounting activities - stock-taking, balance sheet, cost, and statistics.
6. Managerial activities - planning, organization, command, co- ordination and control

These six functions had to be performed to operate successfully any kind of business. He
however, pointed out that the last function i.e., ability to manage, was the most important for
upper levels of managers. The process of management as an ongoing managerial cycle involving
planning, organizing, directing, co-ordination, and controlling, is actually based on the analysis
of general management by Fayol. Hence, it is said that Fayol established the pattern of
management thought and practice.

Even today, management process has general recognition. Fayol's Principles of Management:
The principles of management are given below:

Fayol's Principles of Management: 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 organization. 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 organization 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
organization must receive orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organization 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 organization 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 organization and efficient management.
11. Equity: An organization 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 organization and management.
13. Esprit of Co-operation: Esprit de corps is the foundation of a sound organization. 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 plan
C. Bureaucratic Model
Max Weber, a German Sociologist developed the bureaucratic model. His model of bureaucracy
include
 Hierarchy of authority.
  Division of labour based upon functional specialization.
 A system of rules.
 Impersonality of interpersonal relationships.
 A system of work procedures.
 Placement of employees based upon technical competence.
 Legal authority and power.

Bureaucracy provides a rigid model of an organization. It does not account for important human
elements. The features of Bureaucracy are:
 Rigidity, impersonality and higher cost of controls.
 Anxiety due to pressure of conformity to rules and procedure.
 Dependence on superior.
 Tendency to forget ultimate goals of the organization

Bureaucratic Model is preferred where change is not anticipated or where rate of change can be
predicated. It is followed in government departments and in large business organizations.
Neoclassical Theory
Neo-classical Theory is built on the base of classical theory. It modified, improved and extended
the classical theory. Classical theory concentrated on job content and management of physical
resources whereas, neoclassical theory gave greater emphasis to individual and group
relationship in the workplace. The neo- classical theory pointed out the role of psychology and
sociology in the understanding of individual and group behaviour in an organization.
Hawthorne Experiment: 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 Experiments 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 behaviour, 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: This experiment was conducted to establish relationship

between output and illumination. When the intensity of light was increased, the output
also increased. The output showed an upward trend even-when the illumination was
gradually brought down to the normal level. Therefore, it was concluded that there is no
consistent relationship between output of workers and illumination in the factory. There
must be some other factor which affected productivity.

2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only the
impact of illumination on production but also other factors like length of the working
day, rest hours, and other physical conditions. In this experiment, a small homogeneous
work-group of six girls was constituted. These girls were friendly to each other and were
asked to work in a very informal atmosphere under the supervision of a researcher.
Productivity and morale increased considerably during the period of the experiment.
Productivity went on increasing and stabilized at a high level even when all the
improvements were taken away and the pre-test conditions were reintroduced. The
researchers concluded that socio-psychological factors such as feeling of being important,
recognition, attention, participation, cohesive work-group, and non-directive supervision
held the key for higher productivity.

3. Mass Interview Programme: The objective of this programme was to make a systematic
study of the employees' attitudes which would reveal the meaning which their "working
situation" has for them. The researchers interviewed a large number of workers with
regard to their opinions on work, working conditions and supervision. Initially, a direct
approach was used whereby interviews is asked questions considered important by
 managers and researchers. The researchers observed that the replies of the workmen were
guarded. Therefore, this approach was replaced by an indirect technique, where the
interviewer simply listened to what the workmen had to say. The findings confirmed the
importance of social factors at work in the total work environment.

4. Bank Wiring Test Room Experiment: This experiment was conducted by Roethlisberger
and Dickson with a view to develop a new method of observation and obtaining more
exact information about social groups within a company and also finding out the causes
which restrict output. The experiment was conducted to study a group of workers under
conditions which were as close as possible to normal. This group comprised of 14
workers. After the experiment, the production records of this group were compared with
their earlier production records. It was observed that the group evolved its own
production norms for each individual worker, which was made lower than those set by
the management. Because of this, workers would produce only that much, thereby
defeating the incentive system. Those workers who tried to produce more than the group
norms were isolated, harassed or punished by the group. The findings of the study are:-
(i) Each individual was restricting output.
(ii) The group had its own "unofficial" standards of performance.
(iii) Individual output remained fairly constant over a period of time.
(iv) Informal groups play an important role in the working of an organization

Elements of Behavioural Theory or Human Relation Approach: There are three elements of
behavioural theory.
1. The Individual: The neoclassical theory emphasized that individual differences must be
recognised. An individual has feelings, emotions, perception and attitude. Each person is unique.
He brings to the job situation certain attitudes, beliefs and ways of life, as well as skills. He has
certain meaning of his job, his supervision, working conditions etc. The inner world of the
worker is more important than the external reality in the determination of productivity. Thus
human relations at work determine the rise or fall in productivity. Therefore human relationists
advocate the adoption of multidimensional model of motivation which is based upon economic,
individual and social factors.
2. Work Groups: Workers are not isolated; they are social beings and should be treated as such
by management. The existence of informal organization is natural. The neo-classical theory
describes the vital effects of group psychology and behaviour on motivation and productivity.
3. Participative Management: The emergence of participative management is inevitable when
emphasis is laid on individual and work groups. Allowing labour to participate in decision
making primarily to increase productivity was a new form of supervision. Management now
welcomes worker participation in planning job contents and job operations. Neoclassical theory
focuses its attention on workers. Plant layout, machinery, tool etc., must after employee
convenience and facilities. Therefore, neoclassical approach is trying to satisfy personal security
and social needs of workers.
Modern Theory (System Approach)
The systems approach to management indicates the fourth major theory of management thought
called modern theory. Modern theory considers an organization as an adaptive system which has
to adjust to changes in its environment. An organization is now defined as a structured process in
which individuals interact for attaining objectives.
Meaning of "System": The word system is derived from the Greek word meaning to bring
together or to combine. A system is a set of interconnected and inter-related elements or
component parts to achieve certain goals. A system has three significant parts:
1. Every system is goal-oriented and it must have a purpose or objective to be attained.
2. In designing the system we must establish the necessary arrangement of components.
3. Inputs of information, material and energy are allocated for processing as per plan so -that the
outputs can achieve the objective of the system.
Characteristics of Modern Management Thought
1. The Systems Approach: An organization as a system has five basic parts -
 Input
 Process
 Output
 Feedback and
 Environment
It draws upon the environment for inputs to produce certain desirable outputs. The success of
these outputs can be judged by means of feedback. If necessary, we have to modify out mix of
inputs to produce as per changing demands.
2. Dynamic: We have a dynamic process of interaction occurring within the structure of an
organization. The equilibrium of an organization and its structure is itself dynamic or changing.
3. Multilevel and Multidimensional: Systems approach points out complex multilevel and
multidimensional character. We have both a micro and macro approach. A company is micro
within a business system. It is macro with respect to its own internal units. Within a company as
a system we have:-
 Production subsystem
 Finance subsystem
 Marketing subsystem
 Personnel subsystem.
All parts or components are interrelated. Both parts as well as the whole are equally important.
At all levels, organizations interact in many ways.
4. Multimotivated: Classical theory assumed a single objective, for instance, profit. Systems
approach recognizes that there may be several motivations behind our actions and behaviour.
Management has to compromise these multiple objectives e.g. economic objectives and social
objectives.
5. Multidisciplinary: Systems approach integrates and uses with profit ideas emerging from
different schools of thought. Management freely draws concepts and techniques from many
fields of study such as psychology, social psychology, sociology, ecology, economics,
mathematics, etc.
6. Multivariable: It is assumed that there is no simple cause-effect phenomenon. An event may
be the result of so many factors which themselves are interrelated and interdependent. Some
factors are controllable, some uncontrollable. Intelligent planning and control are necessary to
face these variable factors.
7. Adaptive: The survival and growth of an organization in a dynamic environment
demands an adaptive system which can continuously adjust to changing conditions. An
organization is an open system adapting itself through the process of feedback.
8. Probabilistic: Management principles point out only probability and never the certainty
of performance and the consequent results. We have to face so many variables
simultaneously. Our forecasts are mere tendencies. Therefore, intelligent forecasting and
planning can reduce the degree of uncertainty to a considerable extent