MANAGEMENT PROCESSES AND ORGANIZATIONAL PSYCHOLOGY

UNIT 1- Introduction

Management: Concept and Need, Managerial Functions- An overview, Evolution of

Management Thought, Classical approach- Taylor, Fayol, Neo-classical and Human Relations
Approaches, Behavioural approach, System approach, contingency approach, MBO, Business
Process Re-engineering.

Management, Need, Nature, Process

Management involves coordinating and overseeing the activities of an organization to achieve its
goals efficiently and effectively. Key concepts include planning, where goals are set and
strategies devised; organizing, which involves arranging resources and tasks; leading, or guiding
and motivating employees; and controlling, which monitors performance and makes adjustments
as needed. Effective management requires balancing short-term needs with long-term objectives,
fostering teamwork, and adapting to changes. Successful managers use skills in communication,
decision-making, and problem-solving to drive organizational success and ensure that resources
are used optimally to meet strategic goals.

Need of Management:

• Goal Achievement:

Management is essential for setting organizational goals and ensuring they are met. It provides a
structured approach to identifying objectives, developing strategies, and implementing plans.
Without management, an organization might lack direction, resulting in missed opportunities and
unfulfilled potential.

• Resource Utilization:

Effective management optimizes the use of resources—human, financial, and material. It involves
planning and allocating resources where they are most needed, avoiding waste, and ensuring that
resources are used efficiently to maximize productivity and minimize costs.
• Coordination and Integration:

Management ensures that various departments and teams within an organization work together
harmoniously. It aligns different functions, integrates efforts, and resolves conflicts, facilitating
smooth operations and fostering a collaborative work environment.

• Problem Solving and Decision Making:

Managers are responsible for making decisions and solving problems that arise. They analyze
situations, evaluate alternatives, and choose the best course of action. Effective management
involves anticipating potential issues, mitigating risks, and adapting strategies to address
challenges.

• Motivation and Leadership:

Management plays a critical role in motivating and leading employees. By setting clear goals,
providing feedback, recognizing achievements, and creating a positive work culture, managers
enhance employee morale, productivity, and job satisfaction.

• Adaptation to Change:

The business environment is constantly evolving, and management is key to adapting to these
changes. Managers need to anticipate market trends, embrace technological advancements, and
adjust strategies to stay competitive and relevant. This adaptability helps organizations navigate
uncertainties and seize new opportunities.

Nature of Management:

• Goal-Oriented:

Management focuses on achieving specific organizational goals and objectives. It involves

planning and directing activities to reach desired outcomes, ensuring that resources are utilized
effectively to meet strategic aims.
• Universal:

The principles of management apply across various types of organizations, including businesses,
non-profits, and governmental entities. Regardless of the sector or scale, the core functions of
management—such as planning, organizing, leading, and controlling—are universally relevant.
 • Dynamic:

Management must adapt to a constantly changing environment. This includes responding to shifts
in market conditions, technological advancements, and evolving organizational needs. Managers
need to be flexible and innovative to navigate these changes successfully.

• Integrated:

Management integrates different organizational functions and processes. It coordinates activities

across departments, ensures alignment with organizational objectives, and fosters collaboration to
achieve a cohesive and efficient operation.

• People-Centric:

Management involves leading and working with people. Effective management requires
understanding human behavior, motivating employees, and creating a positive work environment.
Leadership skills are crucial for inspiring teams and achieving high levels of performance.

• Process-Driven:

Management is a process involving several interrelated functions—planning, organizing, leading,

and controlling. These functions are iterative and continuous, requiring ongoing assessment and
adjustment to ensure organizational effectiveness.

• Science
and Art:
Management combines scientific principles with creative problem-solving. While it involves
systematic analysis and application of theories (the science), it also requires intuition, judgment,
and innovation (the art) to address complex and dynamic issues.

Process of Management:

The process of management is a systematic sequence of activities that involves coordinating and
overseeing resources to achieve organizational goals. It generally encompasses four key
functions: planning, organizing, leading, and controlling.

1. Planning:
 The initial stage where objectives are defined and strategies are formulated.

• Activities: Setting goals, developing plans, forecasting future conditions, and determining
the resources required.
• Purpose: To provide a roadmap for achieving organizational goals, anticipate challenges,
and prepare for contingencies.

2. Organizing:

The process of arranging resources and tasks in a structured manner to implement plans effectively.

• Activities: Designing the organizational structure, allocating resources, defining roles and
responsibilities, and establishing relationships and communication channels. • Purpose: To
create a framework that ensures efficient workflow, optimal resource utilization, and
effective coordination among team members.

3. Leading:

The act of guiding and motivating employees to achieve organizational objectives.

• Activities: Providing direction, inspiring and motivating employees, communicating goals,

and managing team dynamics.
• Purpose: To ensure that employees are engaged, motivated, and working towards the
organizational goals, fostering a positive and productive work environment.

4. Controlling:

The process of monitoring performance, comparing it with goals, and making necessary
adjustments.

• Activities: Setting performance standards, measuring actual performance, analyzing

deviations, and implementing corrective actions.
• Purpose: To ensure that organizational activities align with goals, identify and rectify
issues, and maintain effective performance.
Managerial Function

Managerial Function encompasses the activities and responsibilities involved in overseeing and
directing an organization’s operations to achieve its goals. This includes planning, where
managers set objectives and devise strategies; organizing, which involves arranging resources
and tasks to implement the plan; leading, where managers motivate and guide employees; and
controlling, which involves monitoring performance and making adjustments to stay on track.
Effective managerial functions ensure that resources are used efficiently, goals are met, and the
organization adapts to changes in its environment.

Different experts have classified functions of management. According to George & Jerry, “There
are four fundamental functions of management i.e. planning, organizing, actuating and
controlling”.

According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to
control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for
Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting
& B for Budgeting. But the most widely accepted are functions of management given by
KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.
Planning

It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-determined
goals. According to KOONTZ, “Planning is deciding in advance – what to do, when to do & how
to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of
actions. It is an exercise in problem solving & decision making. Planning is determination of
courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways &
means for accomplishment of pre-determined goals. Planning is necessary to ensure proper
utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it
also helps in avoiding confusion, uncertainties, risks, wastages etc.

Organizing:
It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals. According to
Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e.
raw material, tools, capital and personnel’s”. To organize a business involves determining &
providing human and non-human resources to the organizational structure. Organizing as a
process involves:

• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
 • Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.

Staffing

It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology, increase in
size of business, complexity of human behavior etc. The main purpose o staffing is to put right
man on right job i.e. square pegs in square holes and round pegs in round holes. According to
Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure
through proper and effective selection, appraisal & development of personnel to fill the roles
designed un the structure”. Staffing involves:

• Manpower Planning(estimating man power in terms of searching, choose the person and
giving the right place).
• Recruitment, Selection & Placement.
• Training & Development.
• Remuneration.

• Performance Appraisal.
• Promotions & Transfer.

Directing:
It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and staffing
are the mere preparations for doing the work. Direction is that inert-personnel aspect of
management which deals directly with influencing, guiding, supervising, motivating sub-ordinate
for the achievement of organizational goals. Direction has following elements:

• Supervision:

Implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.
 • Motivation:

Means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive,
negative, monetary, non-monetary incentives may be used for this purpose.

• Leadership:

May be defined as a process by which manager guides and influences the work of subordinates in
desired direction.

• Communications:

Is the process of passing information, experience, opinion etc from one person to another. It is a
bridge of understanding.

Controlling:

It implies measurement of accomplishment against the standards and correction of deviation if

any to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur. According to Theo Haimann, “Controlling is the
process of checking whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell
“Controlling is the measurement & correction of performance activities of subordinates in order
to make sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

1. Establishment of standard performance.

2. Measurement of actual performance.
3. Comparison of actual performance with the standards and finding out deviation if any.
4. Corrective action.
Evolution of Management

The practice of Management is as old as human civilization. The ancient civilizations of Egypt
(the great pyramids), Greece (leadership and war tactics of Alexander the great) and Rome
displayed the marvelous results of good management practices.

The origin of management as a discipline was developed in the late 19th century. Over time,
management thinkers have sought ways to organize and classify the voluminous information
about management that has been collected and disseminated. These attempts at classification
have resulted in the identification of management approaches. The approaches of management
are theoretical frameworks for the study of management. Each of the approaches of management
are based on somewhat different assumptions about human beings and the organizations for
which they work.

The different approaches of management are

A) Classical approach,

B) Behavioral approach,

C) Quantitative approach,

D) Systems approach,

E) Contingency approach.

The formal study of management is largely a twentieth-century phenomenon, and to some degree
the relatively large number of management approaches reflects a lack of consensus among
management scholars about basic questions of theory and practice.

A) THE CLASSICAL APPROACH:

The classical approach is the oldest formal approach of management thought. Its roots pre-date
the twentieth century. The classical approach of thought generally concerns ways to manage
work and organizations more efficiently. Three areas of study that can be grouped under the
classical approach are scientific management, administrative management, and bureaucratic
management.

(i) Scientific Management

Frederick Winslow Taylor is known as the father of scientific management. Scientific

management (also called Taylorism or the Taylor system) is a theory of management that
analyzes and synthesizes workflows, with the objective of improving labor productivity. In other
words, Traditional rules of thumb are replaced by precise procedures developed after careful
study of an individual at work.

(ii) Administrative Management

Administrative management focuses on the management process and principles of management.

In contrast to scientific management, which deals largely with jobs and work at the individual
level
of analysis, administrative management provides a more general theory of management. Henri
Fayol is the major contributor to this approach of management thought.

(iii) Bureaucratic Management

Bureaucratic management focuses on the ideal form of organization. Max Weber was the major
contributor to bureaucratic management. Based on observation, Weber concluded that many early
organizations were inefficiently managed, with decisions based on personal relationships and
loyalty. He proposed that a form of organization, called a bureaucracy, characterized by division
of labor, hierarchy, formalized rules, impersonality, and the selection and promotion of employees
based on ability, would lead to more efficient management. Weber also contended that managers’
authority in an organization should be based not on tradition or charisma but on the position held
by managers in the organizational hierarchy.

B) THE BEHAVIORAL APPROACH

The behavioral approach of management thought developed, in part, because of perceived
weaknesses in the assumptions of the classical approach. The classical approach emphasized
efficiency, process, and principles. Some felt that this emphasis disregarded important aspects of
organizational life, particularly as it related to human behavior. Thus, the behavioral approach
focused on trying to understand the factors that affect human behavior at work.

(i) Human Relations

The Hawthorne Experiments began in 1924 and continued through the early 1930s. A variety of
researchers participated in the studies, including Elton Mayo. One of the major conclusions of the
Hawthorne studies was that workers’ attitudes are associated with productivity. Another was that
the workplace is a social system and informal group influence could exert a powerful effect on
individual behavior. A third was that the style of supervision is an important factor in increasing
workers’ job satisfaction.

(ii) Behavioral Science

Behavioral science and the study of organizational behavior emerged in the 1950s and 1960s. The
behavioral science approach was a natural progression of the human relations movement. It
focused on applying conceptual and analytical tools to the problem of understanding and
predicting behavior in the workplace.

The behavioral science approach has contributed to the study of management through its focus on
personality, attitudes, values, motivation, group behavior, leadership, communication, and
conflict, among other issues.

C) THE QUANTITATIVE APPROACH:

The quantitative approach focuses on improving decision making via the application of
quantitative techniques. Its roots can be traced back to scientific management.

(i) Management Science (Operations Research)

Management science (also called operations research) uses mathematical and statistical
approaches to solve management problems. It developed during World War II as strategists tried
to apply scientific knowledge and methods to the complex problems of war. Industry began to
apply management science after the war. The advent of the computer made many management
science tools and concepts more practical for industry

(ii) Production And Operations Management

This approach focuses on the operation and control of the production process that transforms
resources into finished goods and services. It has its roots in scientific management but became
an identifiable area of management study after World War II. It uses many of the tools of
management science.

Operations management emphasizes productivity and quality of both manufacturing and service
organizations. W. Edwards Deming exerted a tremendous influence in shaping modern ideas
about improving productivity and quality. Major areas of study within operations management
include
capacity planning, facilities location, facilities layout, materials requirement planning,
scheduling, purchasing and inventory control, quality control, computer integrated
manufacturing, just-in-time inventory systems, and flexible manufacturing systems.

D) SYSTEMS APPROACH:

The simplified block diagram of the systems approach is given below.

The systems approach focuses on understanding the organization as an open system that
transforms inputs into outputs. The systems approach began to have a strong impact on
management thought in the 1960s as a way of thinking about managing techniques that would
allow managers to relate different specialties and parts of the company to one another, as well as
to external environmental factors. The systems approach focuses on the organization as a whole,
its interaction with the environment, and its need to achieve equilibrium

E) CONTINGENCY APPROACH

The contingency approach focuses on applying management principles and processes as dictated
by the unique characteristics of each situation. It emphasizes that there is no one best way to
manage and that it depends on various situational factors, such as the external environment,
technology, organizational characteristics, characteristics of the manager, and characteristics of
the subordinates. Contingency theorists often implicitly or explicitly criticize the classical
approach for its emphasis on the universality of management principles; however, most classical
writers recognized the need to consider aspects of the situation when applying management
principles.
Contribution of FAYOL and TAYLOR

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.

Taylor’s Scientific Management

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
 • Observation

• Measurement

• Experimentation

• 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 Task and Rate-setting, work improvement, etc.

• Planning the Task.
• Vocational Selection and Training
• Standardization (of working conditions, material equipment etc.)
• Specialization

• Mental Revolution.

Henry Fayol’s 14 Principles of Management:

The principles of management are given below:

• 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.
 • 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.

• 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.

• Unity of Command:

In order to avoid any possible confusion and conflict, each member of an organization must
received orders and instructions only from one superior (boss).

• Unity of Direction:

All members of an organization must work together to accomplish common objectives. •

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.

• 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.

• Centralization:
There must be a good balance between centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.

• 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.

• Order:

Fayol suggested that there is a place for everything. Order or system alone can create a sound
organization and efficient management.

• 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.

• 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.
• 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.

• Initiative:

Creative thinking and capacity to take initiative can give us sound managerial planning and
execution of predetermined plans.

Classical Management Thought

Classical Theory of Management: There are different views of management and classical views
of management or classical management theory is also one of them. Management has always
remained a challenge for people. Planning, organizing, recruiting, directing and controlling, etc
everything comes under the Responsibilities of Manager. In early 90’s, when industrialization got
boom, managers realized that there should be some scientific methods to increase productivity.
Different managers provided their views to describe the classical viewpoint, which are also
known as classical management theory, such as scientific, bureaucratic and administrative, etc.

Classical Views – Classical Management Theory

Scientific Management

There may be various ways to process one task; considering all those ways and selecting one best
way is the main purpose of scientific management. Various experiments were done by different
scientists, including Frederick W. Taylor, who is also known as “father of scientific
management”. F.W. Taylor (1856-1915) is widely recognized as first management thinker, who
tried to find out scientific methods. Taylor did different experiments from which the event of
Bethlehem Steel companies is well known. He focused to develop better understanding among
employees and managers by improving efficiency of all. The experiment at Bethlehem was
named as “pig iron”. Taylor described his principles in order to make people understand that how
to choose the one best way to increase productivity. Scientific management is also known as
“Taylorism.” It was Taylor who described managers’ functions to plan and control and workers’
functions to do as they are instructed. He improved the productivity and even achieved it up to
200 percent.

Taylor described the first ever solution to counter the problem of soldiering of workers in which
they deliberately perform below full capacity. He defined how to cut unnecessary elements from
the process in order to understand the time-and-motion study. It helps breaking a task into
different motions and defining the expected delay between two motions that improves efficiency
of productivity.
Taylor gave four principles of management that ensure the increase in productivity and those are:

1. Analyze the each portion of the task and select one best method to do it. 2. Workers should
be selected carefully and given specific training as they could perform the task according to
scientifically developed method.
3. The manager should be cooperating workers at each stage in order to make sure that
workers are going on the right path.
4. Task and responsibilities should divided among the workers and management should
develop scientific methods keeping workers in mind, in this way, everyone will be clear
about his or her task and will be answerable for his or her part.

Frank (1868-1924) and Lillian Gilbreth (1878-1972) also put their part in scientific management
following the concepts of F.W. Taylor. They focused to cut unnecessary factors for the process of
productivity and decrease the fatigue in each part of the task. While on the other hand, they also
improved the time-and-motion method that was introduced by Taylor. Frank and Lillian Gilbreth
coined the term “Therbligs” that is referred to hand, arm, and body motions used at work. “The
Psychology of Management” was the first published book by Lillian that described various
findings about psychology in the workplace. Frank proved that the productivity can be increased
up to three times by understanding the motion studies. The process of improvement in scientific
management does not end here, but many other people also contributed their views. Henry L.
Gantt (1861-1919) is known as closest associate and is famous for his work of “Gantt Chart” also
put his part. He introduced Gantt chart that helps managers to control and schedule every portion
of the task.

Because of these personalities, today companies have comprised ability to get more productivity
and make workers efficient. Various new and improved forms of previously used scientific tools
are available like business process management can be said modern form of the Gantt chart.

Bureaucratic Management
Another classical management theory is Bureaucratic views of management that may seen
everywhere in both public and private institutes and organizations. Bureaucratic management
focuses to operate the organization under a hierarchy of positions. It is well-known that
organizations have presidents, vice presidents, managers, assistant managers, supervisor and such
other posts that lie under a higher authority. In bureaucratic management, each group of
employees has to report to a higher authority that ultimately reaches to the CEO or president of
the organization. The main contributors in bureaucratic management are Henri Fayol and Max
Weber. Henri Fayol remained active in defining his perspective of management during the times
of F.W. Taylor. While performing the responsibilities of managing director in a large French
coal-mining firm, Fayol described the distinctive functions of management that makes it
different from other functions of business. However, Max Weber, a German sociologist described
how authorities work and how an organization should be operated by dividing authorities. He
wrote various papers describing his view of bureaucratic management during the early 20th
century. Weber provided the view of an ideal form of organization that is bureaucracy. He was
first to focus on the division of labor in a clearly defined hierarchy. An organization must operate
under clearly defined rules and regulations by establishing impersonal relationships.
It was very difficult to wait for the owner’s desire to divide the task among the people and who
should be rewarded in which manner. Rewards were also given on the basis of favoritism, not
according to the performance of workers. Weber made it very clear by defining organizational
rationality that can be achieved through a hierarchy and division of labor. Additionally, all job
descriptions and rules and regulations must be clearly defined at very initial stage.

Characteristics of Weber’s Ideal Bureaucracy

Weber introduced an important view of bureaucracy that is called Weber’s ideal bureaucracy and
its characteristics are:

1. Specialized labor
2. Rules and procedures should be formalized
3. Application of rules and sanctions must be impersonal
4. Authorities should be formalized into a hierarchical structure
5. The career advancement process should be totally on merit
Administrative Management

Administrative management also a one type of classical management theory and is a way to
organize things in a systematic manners. The systematic way includes clearly defined tasks,
division of labor and a hierarchical structure of the organizations. This concept of management
emphasizes improving the performance and overall function of an organization. Henri Fayol
(1841-1925) is a prominent name in this field; he gave the perspective that planning, organizing,
commanding, coordinating, and controlling are the main functions of the administration. This
approach is still in practice in various organizations; however, the functions are modified slightly.
Various books of management written today are based on these basic functions, which serve the
same purpose as it served at the time of Fayol. He was a French industrialist; therefore, he wrote
books in French. His written work was translated into English some decades after his death.

Evolution of Management Thought – Contribution Taylor

Frederick Winslow Taylor (1856–1915) is widely regarded as the father of scientific
management, a pivotal figure whose ideas revolutionized industrial practices and laid the
foundation for modern management principles. Taylor’s contributions to the evolution of
management thought are profound and continue to influence organizational management
practices globally.

Principles of Scientific Management:

Taylor’s work was primarily concerned with improving efficiency and productivity in industrial
settings. His approach, known as scientific management, aimed to systematically analyze and
optimize work processes. Key principles of scientific management:

• Systematic Observation and Analysis:

Taylor emphasized the need for scientific observation and analysis to identify the best way to
perform tasks. This involved breaking down work processes into smaller, manageable tasks and
studying each element to determine the most efficient methods.

• Time and Motion Studies:

Taylor introduced time and motion studies to measure and standardize work processes. By
analyzing the time taken for each task and eliminating unnecessary movements, he sought to
reduce inefficiencies and maximize output.

• Standardization of Tools and Equipment:

Taylor advocated for the standardization of tools, equipment, and working conditions to ensure
consistency and efficiency in operations. Standardization helped minimize variability and
improve predictability in production processes.

• Scientific
Selection and Training:
Taylor proposed that workers should be scientifically selected and trained to perform tasks
efficiently. He believed in matching workers’ skills and abilities to specific job requirements
through rigorous selection processes and providing training to enhance performance.

• Incentive and Compensation Systems:

Taylor introduced incentive systems based on performance and productivity. He argued that
financial incentives, such as piece-rate pay, could motivate workers to increase their output and
align their interests with organizational goals.

Impact on Industry:

Taylor’s principles of scientific management had a profound impact on industrial practices and
organizational efficiency:

• Increased Productivity:

Scientific management led to significant improvements in productivity by eliminating wasteful

practices, reducing idle time, and optimizing work processes.

• Standardization and Efficiency:

The emphasis on standardization and efficiency helped organizations achieve consistent output
quality and reduce production costs.
 • Worker-Management Relations:

Taylor’s approach initially faced resistance from workers who viewed it as overly mechanistic
and focused solely on productivity. However, improved efficiency often led to higher wages
through increased output, which gradually improved worker acceptance.
• Management Practices:

Taylor’s ideas laid the groundwork for modern management practices, such as process
optimization, performance measurement, and systematic analysis of work processes.

Criticisms and Controversies:

• Mechanistic Approach:

Critics argued that Taylor’s approach treated workers as mere cogs in a machine, ignoring their
individuality, creativity, and non-monetary motivations.

• Resistance from Workers:

Many workers and unions opposed scientific management, fearing job simplification, loss of
autonomy, and exploitation through increased workload without corresponding benefits.

• Overemphasis on Efficiency:

Critics contended that Taylor’s focus on efficiency overlooked broader organizational goals, such
as employee satisfaction, innovation, and long-term sustainability.

Relevance Today:

• Process Optimization:

Organizations continue to apply principles of efficiency and productivity through process

optimization, automation, and continuous improvement methodologies such as Lean and Six
Sigma.

• Performance Management:
Taylor’s emphasis on performance measurement and incentive systems remains relevant in
assessing and rewarding employee contributions.
• Management Education:

Taylor’s work is a cornerstone in management education, providing foundational principles in

courses on operations management, organizational behavior, and industrial engineering.

Henri Fayol Management

Henri Fayol (1841–1925), a French mining engineer and management theorist, is celebrated for
his contributions to the principles of management. Fayol’s ideas laid the foundation for modern
management theory and practice, emphasizing the importance of administrative principles,
organizational structure, and managerial functions.

Early Life and Career:

Henri Fayol was born in 1841 in Istanbul, Turkey, and later educated in France. He began his
career as a mining engineer and eventually rose to the position of Managing Director at a major
French mining company, Compagnie de Commentry-Fourchambault-Decazeville. Fayol’s
experiences in managing large-scale operations led him to develop his principles of management,
which he later articulated in his influential work, “General and Industrial Management” (1916).

Principles of Management:

• Division of Work:

Fayol advocated for the division of work among employees based on specialization and expertise.
Specialization enhances efficiency, improves skills, and allows individuals to focus on tasks that
align with their strengths.

• Authority and Responsibility:

According to Fayol, authority is the right to give orders and the power to exact obedience.
Responsibility, on the other hand, involves being accountable for the outcomes of tasks and
decisions. Fayol emphasized that authority should be commensurate with responsibility to ensure
effective management.

• Discipline:

Discipline refers to the adherence to organizational rules and norms by employees. Fayol stressed
the importance of fair discipline to maintain order, consistency, and respect within the
organization.

• Unity of Command:

Fayol proposed that each employee should receive orders from only one supervisor to avoid
confusion, conflicting instructions, and potential inefficiencies. This principle ensures clarity in
reporting relationships and accountability.

• Unity of Direction:

Unity of direction emphasizes the need for organizational activities to be aligned towards
common goals. Fayol argued that unified direction prevents duplication of efforts, minimizes
conflicts, and enhances organizational cohesion and efficiency.

• Subordination of Individual Interests to the General Interest:

Fayol advocated for prioritizing the collective goals of the organization over individual interests
or personal agendas. This principle fosters teamwork, collaboration, and a shared commitment to
organizational success.

• Remuneration:

Fayol recognized the importance of fair and equitable compensation for employees based on
factors such as skills, responsibilities, and performance. Competitive salaries and benefits are
essential for attracting and retaining talent.
• Centralization and Decentralization:

Centralization refers to the concentration of decision-making authority at the top levels of the
organization, while decentralization involves delegating decision-making powers to lower levels.
Fayol emphasized the need to strike a balance between centralization and decentralization based
on organizational needs and circumstances.

• Scalar Chain:

The scalar chain principle emphasizes the hierarchical structure of communication and authority
within organizations. Fayol advocated for a clear and formal chain of command through which
communication flows vertically from top management to frontline employees and vice versa.

• Order:

Order involves arranging resources and activities in an organized manner to promote efficiency
and minimize waste. Fayol emphasized the importance of systematic organization, proper
allocation of resources, and tidy workspaces to enhance productivity and morale.

• Equity:

Equity refers to fairness and impartiality in dealing with employees and stakeholders. Fayol
believed that managers should treat employees justly, provide opportunities for advancement
based on merit, and maintain impartiality in decision-making.

• Stability of Tenure of Personnel:

Fayol recognized the benefits of stable employment relationships for both employees and
organizations. Stable tenure reduces turnover, fosters employee loyalty and commitment, and
allows employees to develop expertise and contribute effectively to organizational goals.

• Initiative:
Initiative encourages employees to take independent action, demonstrate creativity, and
contribute innovative ideas to improve organizational processes and outcomes. Fayol believed
that empowering employees to exercise initiative leads to continuous improvement and
organizational adaptability.

• Esprit de Corps:

Esprit de corps, or team spirit, emphasizes the importance of fostering a positive work
environment characterized by mutual trust, camaraderie, and cooperation among employees.
Fayol believed that a cohesive team enhances morale, productivity, and organizational
effectiveness.

Impact on Management Theory and Practice:

• Organizational Structure:

Fayol’s principles laid the groundwork for understanding organizational structure, hierarchy, and
coordination of activities. His emphasis on division of labor, unity of direction, and scalar chain
influenced organizational design and effectiveness.

• Managerial Functions:

Fayol identified five primary functions of management: planning, organizing, commanding,

coordinating, and controlling. These functions provide a comprehensive framework for
managerial activities and decision-making processes.

• Administrative Theory:

Fayol’s administrative theory emphasized the importance of administrative principles, rules, and
procedures in guiding managerial behavior and organizational operations. His ideas helped
establish management as a distinct profession with its own principles and practices.
• Practical Application:

Fayol’s principles have been widely adopted by managers and organizations worldwide as
practical guidelines for improving managerial effectiveness, enhancing organizational efficiency,
and achieving strategic objectives.

Criticisms and Controversies:

• Simplistic Approach:

Critics argue that Fayol’s principles oversimplify the complexities of organizational dynamics
and fail to account for cultural, technological, and environmental factors that influence
managerial practices.

• Bureaucratic Tendencies:

Some critics suggest that Fayol’s principles promote bureaucratic tendencies, such as rigidity,
hierarchy, and formalism, which may hinder innovation, agility, and responsiveness in modern
organizations.

• Universal Applicability:

Critics question the universal applicability of Fayol’s principles across diverse industries,
organizational sizes, and cultural contexts, arguing that management practices should be tailored
to specific organizational needs and environments.

Relevance Today:

• Foundation for Management Education:

Fayol’s principles continue to serve as a foundational framework in management education and

training programs, providing aspiring managers with essential principles and practices for
effective leadership.
• Guidelines for Organizational Design:

Organizations continue to apply Fayol’s principles to design hierarchical structures, clarify roles
and responsibilities, establish communication channels, and optimize operational efficiency.

• Integration with Modern Management Practices:

Fayol’s principles have been integrated with modern management practices, such as strategic
management, total quality management (TQM), and lean management, to enhance organizational
performance and competitiveness.

• Emphasis on Managerial Functions:

Fayol’s identification of managerial functions—planning, organizing, commanding, coordinating,

and controlling—remains relevant in guiding managerial decision-making, problem-solving, and
performance evaluation.

Neo-Classical Management Thought

Neo-classical Management approaches emerged in the early 20th century as a response to the
limitations of classical management theories, which focused primarily on the formal structure and
efficiency of organizations. The neo-classical school of thought introduced a more human-centric
perspective, emphasizing the importance of social factors, employee motivation, and group
dynamics. This shift marked a significant departure from the rigid, task-oriented approaches of
classical management and sought to address the needs and well-being of employees as a means of
improving organizational effectiveness.

Key Principles of Neo-Classical Management:

1. Human Relations Emphasis:

Unlike classical management, which prioritized efficiency and task specialization, neo-classical
management places significant importance on the human element within organizations. It
recognizes that employee satisfaction, motivation, and interpersonal relationships can
significantly impact productivity and organizational success. This approach asserts that
understanding and addressing employees’ needs and emotions are critical for maintaining a
motivated and effective workforce.

2. Informal Organization:

Neo-classical management theory acknowledges the existence of informal organizational

structures alongside formal ones. Informal organizations consist of social networks and
relationships that develop naturally among employees. These informal structures can influence
work dynamics, communication, and group behavior, often affecting organizational performance
in ways not captured by formal hierarchies.

3. Motivation and Satisfaction:

Building on the insights from human relations studies, neo-classical management emphasizes that
motivation and job satisfaction are crucial for improving employee performance. Theories such as
Maslow’s Hierarchy of Needs and Herzberg’s Two-Factor Theory are integral to this approach.
These theories suggest that addressing higher-order needs (e.g., esteem and self-actualization) and
job enrichment (e.g., meaningful work and recognition) can lead to increased employee
engagement and productivity.

4. Leadership and Group Dynamics:

Neo-classical management places a strong emphasis on leadership styles and group dynamics.
Leaders are seen as crucial in fostering a positive work environment, motivating employees, and
facilitating effective communication. Understanding group behavior and dynamics helps in
managing team interactions and enhancing collaborative efforts.

Historical Context and Key Figures:

1. Elton Mayo and the Hawthorne Studies:

One of the most influential contributors to neo-classical management was Elton Mayo, whose
Hawthorne Studies (1924-1932) highlighted the importance of social factors in the workplace.
The studies revealed that employees’ productivity increased when they felt valued and when they
received attention from management. These findings challenged the classical view that
productivity was solely a function of physical working conditions and led to a greater focus on
employee morale and social interactions.

2. Chester Barnard:

Chester Barnard’s work, particularly his book “The Functions of the Executive” (1938),
contributed to neo-classical management by exploring the role of leadership and the informal
organization. Barnard argued that effective management involves understanding and leveraging
the informal networks within an organization, and that cooperation and communication are
essential for achieving organizational goals.

3. Douglas McGregor:
McGregor’s Theory X and Theory Y, introduced in the 1960s, further advanced neo-classical
management by examining different assumptions about employee motivation and management.
Theory X posits that employees are inherently lazy and require strict supervision, while Theory Y
suggests that employees are naturally motivated and seek responsibility. McGregor’s work
encouraged managers to adopt a more positive and participative approach to leadership.

Implications for Management Practice:

1. Employee Engagement and Well-being:

Neo-classical management approaches highlight the importance of fostering a positive work

environment where employees feel valued and engaged. Practices such as open communication,
participative decision-making, and recognition of achievements are essential for maintaining high
levels of employee satisfaction and motivation.
2. Organizational Culture:

Understanding the role of informal organizations and group dynamics is crucial for building a
cohesive and supportive organizational culture. Managers need to be aware of the informal
networks within their teams and work to align these with formal organizational goals.

3. Leadership Development:

Effective leadership is central to neo-classical management. Leaders should focus on developing

interpersonal skills, understanding team dynamics, and fostering a supportive environment.
Leadership training programs often emphasize emotional intelligence, communication, and
conflict resolution as key competencies.

4. Job Design and Enrichment:

To enhance job satisfaction and motivation, neo-classical management encourages the design of
jobs that are meaningful and fulfilling. Job enrichment strategies, such as increasing employee
autonomy, providing opportunities for skill development, and offering meaningful rewards, can
lead to higher levels of engagement and performance.
Criticisms and Evolution:

While neo-classical management approaches have provided valuable insights into the human
aspects of organizational life, they are not without criticisms. Some argue that the focus on
employee satisfaction and informal structures may lead to neglecting the importance of formal
organizational processes and efficiency. Additionally, the implementation of neo-classical
principles can be challenging in large, complex organizations where informal networks may be
difficult to manage.

In response to these criticisms, contemporary management theories have sought to integrate neo
classical insights with elements of classical management. Modern approaches often combine the
emphasis on human relations with a focus on efficiency, strategic planning, and technological
advancements.

Approaches to Management: Classical, Human Relations and Behavioral

1. The Classical Approach

The classical school represented the first major systematic approach to management thought. It
was distinguished by its emphasis on finding way to get the work of each employee done faster. It
is primarily based upon the economic rationality of all employees.

This evolved that people are motivated by economic incentives and that they will rationally
consider opportunities that provide for them the greatest economic gain. The classical school can
be broken down into three historical philosophies of management.

(a) Scientific management,

(b) Administrative management approach, and

(c) Bureaucratic model.

• Scientific Management: The growth of factory system led to numerous problems in

production and in labour control. Managers could not solve the problems by trail and error
methods. The results could not be predicted. So the need arose for better management
 techniques. The use of method of science for solving management problems was thought
of. The scientific management concept was first developed by F.W. Taylor in between
1895 and 1911. W. Taylor is being called as the Father of scientific, management. In 1878
he joined as a labourer at Midvale steel company in the USA. From that position he
progressed to become Chief Engineer in 1884. He published papers on “piece rate
system”, “the art of cutting metals” and “shop management”. He published a book on
“The Principles of Management” in 1911.
• Administrative Management Approach: Scientific management focused primarily on the
efficiency of production, but administrative management focused on formal
organisation structure and the delineation of the basic process of general management.
This approach is also known as functional or process approach and is based primarily on
the ideas of Henry Fayol (1841-1925).
• Bureaucratic Model: The third major pillar in the development of classical organisation
was provided by Max Weber’s bureaucratic model. Weber developed a set of rational
ideas about administrative structure of large, complex organisations that define what has
come to be known as bureaucracy.

2. Human Relations Approach

According to Human Relations Approach, management is the Study of behavior of people at work.

This approach had its origin in a series of experiments conducted by Professor Elton Mayo and
his associates at the Harvard School of Business at the Western Electric Company’s Hawthorne
Works, near Chicago.

These studies brought out for the first time the important relationships between social factors and
productivity. Before it, productivity of the employees was considered to be a function only of
physical conditions of work and money wages paid to them. For the first time it was realised that
productivity depended largely upon the satisfaction of the employees in work situations.

Following the Howthrone Experiments, a great deal of work has been carried on by behavioral
scientists belonging to a variety of disciplines including Psychology, Sociology, Philosophy and
Anthropology in studying the behavior of people at work.

Those who subscribe to the Human Relations School of Thought are of the view that the
effectiveness of any organisation depends on the quality of relationships among the people
working in the organisation.

So, according to them, the managers must concern themselves with an analysis of organizational
behavior, that is, interaction of people with the organisation. The basic assumption of this school
still remains that the goals of the organisation are achieved through and with the people.
Apart from the study of formal organisation and techniques used by such organizations, this
school studies the psychological processes in the organisations, informal organizations, conflict,
change, motivation and relationships, and the various techniques of achieving organizational
development by improving the relationships among the various groups of people constituting the
organisation and its internal environment.

Thus, it may be said that this school concentrates on people and their behavior within the formal
and informal organizations.

Features of Elton Mayo’s Human Relations Approach:

The main features of the Human Relations Approach to management are the following:

(a) Since management is getting things done through and with people, a manager must have a
basic understanding of human behavior in all respects—particularly in the context of work
groups and organizations.

(b) The managers must study the inter-personal relations among the people at work. (c) Larger

production and higher motivation can be achieved only through good human relation.

(d) The study of management must draw the concepts and principles of various behavioural
sciences like Psychology and Sociology.

3. The Behavioral Approach

The behavioral approach on the human relations approach is based upon the premise of increase
in production and managerial efficiency through an understanding of the people.
The human relations approach of management involves with the human behavior and focused
attention on the human beings in the organization. The growth and popularity of this approach is
attributable to Elton Mayo (1880- 1949) and his Hawthorne experiments.

The Hawthorne experiments were carried out at the Hawthorne plant of the western electric
company. These experiments were carried out by Elton Mayo and the staff of the Harvard
Business School, main researchers were Elton Mayo, White Head, Roethlisberger and Dickson.
The first of Mayo’s four studies took place at a Philadelphia textile mill.

The problem he investigated was excessive labour turnover in a department where work was
particularly monotonous and fatiguing. The workers tended to sink into a dejected, disconsolate
mood soon after being assigned there eventually they would lose their tempers for no apparent
reason and impulsively quit. At first Mayo thought the reason for the worker’s behavior must be
physical fatigue.

So, he instituted a series of rest periods, during the workday. In course of trying to schedule these
periods in the most efficient manner, management experimented with allowing the workers to do
the scheduling themselves. The effect was dramatic. Turnover fell sharly to about the same level
as that for the rest of the plant, productivity shot upward and the melancholy moods disappeared.

Similar results were obtained at the Hawthorne plant of the western electric company. Mayo’s
another studies made at the Bank hiring room and at an aircraft factory. Hence the Mayo’s study
showed that the role played by social needs is more responsive to the social forces operating at
work than the economic rewards.

Behavioral Management Thought

Behavioral Management thought represents a significant shift in management theory, focusing on

understanding and improving human behavior within organizational settings. Emerging in the
early 20th century, this approach addresses the limitations of classical management theories by
emphasizing the importance of employee motivation, interpersonal relationships, and
organizational culture.
Core Principles of Behavioral Management:

Understanding Human Behavior:

Behavioral management focuses on the psychological and social aspects of human behavior in the
workplace. It examines how individual and group behaviors influence productivity, job
satisfaction, and overall organizational effectiveness. This approach stresses that employees are
motivated by more than just financial incentives; factors such as recognition, personal growth,
and a supportive work environment play crucial roles.

2. Motivation Theories:

Central to behavioral management are theories of motivation, which explore what drives
individuals to perform at their best. Key theories include:

• Maslow’s Hierarchy of Needs: Abraham Maslow proposed that individuals are motivated
by a hierarchy of needs, starting with physiological needs and progressing through safety,
social, esteem, and self-actualization needs. Understanding these needs helps managers
create conditions that satisfy employees at various levels.
• Herzberg’s Two-Factor Theory: Frederick Herzberg distinguished between motivators
(factors that lead to job satisfaction, such as achievement and recognition) and hygiene
factors (elements that, if lacking, cause dissatisfaction, such as salary and working
conditions). Effective management involves enhancing motivators while ensuring hygiene
factors are adequately addressed.
• McGregor’s Theory X and Theory Y: Douglas McGregor identified two contrasting
views of employee motivation. Theory X assumes that employees are inherently lazy and
require close supervision, while Theory Y posits that employees are self-motivated and
seek responsibility. Managers influenced by Theory Y are more likely to foster a positive
work environment and encourage employee engagement.
3. Group Dynamics and Leadership:

Behavioral management also examines how group dynamics and leadership styles impact
organizational effectiveness. It highlights the importance of effective leadership in influencing
employee behavior, facilitating communication, and building cohesive teams.

4. Organizational Culture:

Behavioral management recognizes that organizational culture—comprising shared values,

beliefs, and practices—plays a vital role in shaping employee behavior and organizational
performance. A positive culture aligns with employees’ values and enhances job satisfaction and
productivity.

Key Contributors to Behavioral Management

1. Elton Mayo and the Hawthorne Studies:

Elton Mayo’s Hawthorne Studies (1924-1932) were pivotal in shifting the focus to human factors
in management. These studies revealed that employees’ productivity improved when they felt
they were being observed and valued. This led to a greater understanding of the psychological
and social aspects of work and the importance of managerial attention and interpersonal
relationships.

2. Chester Barnard:

Chester Barnard’s seminal work, “The Functions of the Executive” (1938), contributed to
behavioral management by emphasizing the role of leadership and the importance of
understanding informal organizational structures. Barnard argued that effective management
involves motivating employees and facilitating cooperation through clear communication and
understanding of organizational dynamics.

3. Douglas McGregor:
McGregor’s Theory X and Theory Y provided a framework for understanding different
managerial assumptions about employee motivation. His work encouraged managers to adopt
more participative and empowering leadership styles, recognizing that employees are motivated
by factors beyond mere financial rewards.

4. Kurt Lewin:

Kurt Lewin’s work on group dynamics and leadership styles further enriched behavioral
management. His research on leadership styles—authoritarian, democratic, and laissez-faire—
demonstrated how different approaches affect group performance and morale. Lewin’s work on
change management, including the concept of “unfreezing, changing, and refreezing,” has also
influenced how organizations manage and implement change.
Practical Applications of Behavioral Management:

1. Employee Motivation and Engagement:

Behavioral management principles are applied to develop strategies for enhancing employee
motivation and engagement. This includes creating opportunities for personal development,
recognizing and rewarding achievements, and ensuring a supportive work environment that aligns
with employees’ values and needs.

2. Leadership Development:

Effective leadership is a cornerstone of behavioral management. Training programs often focus

on developing skills such as emotional intelligence, communication, and team-building to
enhance leaders’ ability to motivate and inspire their teams.

3. Team Building and Collaboration:

Understanding group dynamics helps in designing effective team-building activities and fostering
collaboration. Managers use insights from behavioral management to create cohesive teams that
work well together, enhance problem-solving, and achieve common goals.

4. Organizational Culture Management:

Building and maintaining a positive organizational culture involves aligning organizational values
with employee expectations. Managers use behavioral management principles to shape culture
through practices that promote open communication, inclusivity, and mutual respect.

Criticisms and Evolution:

Behavioral management has been instrumental in emphasizing the human side of work, but it is
not without criticisms. Some argue that it may overlook the importance of organizational
structure and efficiency. Additionally, the focus on motivation and interpersonal relations can
sometimes lead to challenges in balancing these aspects with the need for formal processes and
accountability.
Modern management theories often integrate behavioral management insights with other
approaches, such as systems theory and contingency theory, to provide a more comprehensive
understanding of organizational dynamics. This evolution reflects a recognition that effective
management requires a balanced approach that considers both human and structural factors.
System Approach and Contingency Approach

Systems approach to management views organizations as interconnected and interdependent

components working together to achieve common goals. It emphasizes that an organization
functions as a system with inputs (resources), processes (activities), and outputs (products or
services). This approach highlights the importance of understanding how changes in one part of
the system affect the entire organization, promoting a holistic view of management. By focusing
on the relationships and interactions among components, the systems approach aims to improve
efficiency, adaptability, and overall performance within complex organizational environments.

Features of Systems Approach:

• Holistic Perspective:

The systems approach views an organization as a whole, rather than focusing on individual parts
in isolation. It emphasizes understanding the interrelationships and interactions between different
components to grasp how they collectively influence organizational performance.

• Interdependence:

In this approach, components of the organization are seen as interdependent. Changes or actions
in one part of the system can affect other parts, highlighting the importance of coordination and
integration across departments.

• Inputs, Processes, and Outputs:

The approach identifies three primary elements: inputs (resources such as labor, materials, and
capital), processes (transformations and activities that convert inputs into outputs), and outputs
(products or services produced by the organization). This framework helps in analyzing how
resources are utilized and transformed to achieve organizational goals.

• Feedback Mechanisms:
Feedback loops are integral to the systems approach. They involve receiving information about
the results of activities, which helps in adjusting processes and improving performance. Feedback
ensures that the organization can adapt and respond to changes in its environment.

• Dynamic Interaction:

The systems approach acknowledges that organizations operate in a dynamic environment, where
external and internal factors constantly interact. It focuses on how organizations can adapt to
changes and manage uncertainties effectively.

• Boundary Definition:

The approach emphasizes defining the boundaries of the system to distinguish what is inside the
organization from what is outside. This helps in understanding the organization’s interactions
with its external environment and stakeholders.

• Goal Orientation:

The systems approach is goal-oriented, focusing on achieving the overall objectives of the
organization. It aligns various components and processes towards common goals, ensuring that
all efforts contribute to the desired outcomes.

• System Subdivisions:

Organizations are often divided into subsystems, each responsible for specific functions (e.g.,
marketing, finance, production). The systems approach studies these subsystems to understand
their roles and interactions, promoting effective integration and coordination within the
organization.

Contingency Approaches to Management:

Contingency approaches to management propose that there is no one-size-fits-all solution for
managing organizations. Instead, effective management practices depend on the specific context
and circumstances of the organization. This approach emphasizes that factors such as
organizational structure, external environment, technology, and employee needs influence the
most appropriate management strategies. Managers should adapt their approaches based on
situational variables rather than relying on fixed principles or standardized solutions. By
considering the unique aspects of each situation, contingency approaches aim to provide more
flexible, responsive, and effective management solutions tailored to varying organizational
challenges and conditions.

Characteristics of the Contingency Approach to Management:

• Situational Flexibility:

The contingency approach emphasizes that there is no single best way to manage an organization.
Instead, management practices should be flexible and adapted to the specific context and
circumstances of each situation. This adaptability allows managers to respond effectively to
varying challenges and opportunities.

• Context-Specific Solutions:

Management strategies and decisions are tailored based on the unique characteristics of the
organization and its environment. Factors such as industry type, organizational size, technology,
and external market conditions influence the choice of management practices.

• Dynamic Environment:

Recognizing that organizations operate in constantly changing environments, the contingency

approach advocates for continuous assessment and adjustment of management practices.
Managers must stay attuned to external and internal changes to ensure that their strategies remain
relevant and effective.
• Emphasis on Contextual Factors:

This approach considers various contextual factors, including organizational structure, culture,
technology, and employee characteristics. By evaluating these factors, managers can implement
strategies that are more likely to succeed in their specific organizational setting.
 • Adaptive Leadership:

Leaders are expected to adapt their styles and approaches based on the situation. For instance, a
more directive style might be appropriate in a crisis, while a participative style may be more
effective in stable conditions. This flexibility enhances leadership effectiveness.

• Problem-Solving Orientation:

The contingency approach focuses on addressing specific problems or challenges that arise in
different contexts. It promotes a problem-solving mindset, where managers analyze situational
variables and implement appropriate solutions.

• Emphasis on Evidence-Based Decision-Making:

Decisions are based on an analysis of the current situation and available evidence. Managers
collect and interpret relevant data to make informed decisions that align with the specific needs of
the organization.

• Dynamic Strategy Formulation:

Strategic planning is not static but evolves based on changing conditions. The contingency
approach encourages ongoing reassessment and modification of strategies to align with the
evolving context and ensure continued organizational effectiveness.

Key differences between Systems Approach and Contingency Approach

Aspect Systems Approach Contingency Approach

Focus Interconnectedness Context-specific

Viewpoint Holistic Situational

Adaptation Continuous integration Conditional adjustments

 Flexibility Structured Adaptive

Decision Basis System-wide dynamics Situational factors

Feedback Integral to system Context-driven

Change Management System-wide adjustments Contextual adjustments

Complexity Emphasis on interactions Emphasis on conditions

Leadership System-oriented Context-sensitive

Problem Solving System-wide solutions Context-specific solutions

Structure System as a whole Variable structures

Goals Overall system goals Specific situational goals

Data Use Systemic data analysis Contextual data analysis

Strategy Integrated strategies Flexible strategies

Implementation System integration Conditional implementation

Management by Objectives

Management by Objectives

An effective management goes a long way in extracting the best out of employees and make them
work as a single unit towards a common goal.

The term Management by Objectives was coined by Peter Drucker in 1954.

What is Management by Objective ?

The process of setting objectives in the organization to give a sense of direction to the
employees is called as Management by Objectives.

It refers to the process of setting goals for the employees so that they know what they are
supposed to do at the workplace.

Management by Objectives defines roles and responsibilities for the employees and help them
chalk out their future course of action in the organization.

Management by objectives guides the employees to deliver their level best and achieve the targets
within the stipulated time frame.

Need for Management by Objectives (MBO)

• The Management by Objectives process helps the employees to understand their duties at

the workplace.
• KRAs are designed for each employee as per their interest, specialization and educational
qualification.
• The employees are clear as to what is expected out of them.
• Management by Objectives process leads to satisfied employees. It avoids job mismatch
and unnecessary confusions later on.
• Employees in their own way contribute to the achievement of the goals and objectives of
the organization. Every employee has his own role at the workplace. Each one feels
indispensable for the organization and eventually develops a feeling of loyalty towards the
organization. They tend to stick to the organization for a longer span of time and
contribute effectively. They enjoy at the workplace and do not treat work as a burden.
• Management by Objectives ensures effective communication amongst the employees. It
leads to a positive ambience at the workplace.
 • Management by Objectives leads to well defined hierarchies at the workplace. It ensures
transparency at all levels. A supervisor of any organization would never directly interact
with the Managing Director in case of queries. He would first meet his reporting boss who
would then pass on the message to his senior and so on. Every one is clear about his
position in the organization.
• The MBO Process leads to highly motivated and committed employees. • The MBO Process
sets a benchmark for every employee. The superiors set targets for each of the team
members. Each employee is given a list of specific tasks.

Limitations of Management by objectives Process

• It sometimes ignores the prevailing culture and working conditions of the organization. •
More emphasis is being laid on targets and objectives. It just expects the employees to
achieve their targets and meet the objectives of the organization without bothering much
about the existing circumstances at the workplace. Employees are just expected to perform
and meet the deadlines. The MBO Process sometimes do treat individuals as mere machines.
• The MBO process increases comparisons between individuals at the workplace. Employees
tend to depend on nasty politics and other unproductive tasks to outshine their fellow
workers. Employees do only what their superiors ask them to do. Their work lacks
innovation, creativity and sometimes also becomes monotonous.

Business Process Re-engineering, Function, Steps

Business Process Re-engineering (BPR) is a strategic approach to improving organizational

performance by radically redesigning core business processes. It involves analyzing and
rethinking existing workflows to achieve significant enhancements in efficiency, quality, and
customer satisfaction. BPR aims to streamline operations, eliminate redundancies, and leverage
technology to optimize processes. The goal is to achieve substantial improvements in
performance metrics such as cost, speed, and quality, rather than making incremental
adjustments. By re-engineering processes from the ground up, organizations can drive
transformational change, better align with customer needs, and gain a competitive advantage.

Functions of Business Process Re-engineering:

• Process Analysis:

BPR starts with a detailed analysis of existing business processes. This involves mapping out
current workflows, identifying inefficiencies, redundancies, and bottlenecks, and understanding
how processes interact with each other and with external stakeholders.

• Process
Redesign:
Based on the analysis, BPR focuses on redesigning processes to improve efficiency and
effectiveness. This may involve reconfiguring workflows, removing unnecessary steps, and
incorporating best practices to streamline operations.

• Technology Integration:

BPR often involves leveraging technology to enhance processes. This includes implementing new
software systems, automation tools, or digital platforms that can improve speed, accuracy, and
integration across processes.

• Customer Focus:

BPR emphasizes aligning processes with customer needs and expectations. The goal is to
redesign processes to enhance customer satisfaction by improving the quality of products or
services and reducing turnaround times.

• Performance Measurement:

Establishing metrics to measure the success of redesigned processes is crucial. BPR involves
defining key performance indicators (KPIs) to monitor improvements in areas such as cost, time,
and quality, ensuring that the re-engineered processes meet organizational goals.
 • Change Management:

Implementing BPR requires effective change management strategies. This includes

communicating changes to stakeholders, training employees, and managing resistance to ensure
smooth transitions and adoption of new processes.

• Continuous Improvement:
BPR promotes a culture of continuous improvement. After initial re-engineering efforts, ongoing
evaluation and refinement of processes are essential to sustain gains and adapt to evolving
business needs and market conditions.

• Cross-Functional Collaboration:

BPR often involves collaboration across different departments and functions. By breaking down
silos and fostering teamwork, organizations can ensure that redesigned processes are integrated
seamlessly and support overall business objectives.

Steps of Business Process Re-engineering:

Business Process Re-engineering (BPR) involves several key steps to effectively redesign and
optimize business processes.

1. Identify Processes to Re-engineer:

• Determine which business processes are critical to organizational performance

or are causing significant inefficiencies.
• Prioritize processes based on factors such as impact on customer satisfaction,
cost, and strategic importance.
2. Analyze Existing Processes:

• Map out current processes using flowcharts or process diagrams.

• Gather data on process performance, including cycle times, costs, and quality
metrics.
 • Identify inefficiencies, bottlenecks, redundancies, and areas for improvement.
3. Define Objectives and Goals:

• Establish clear objectives for the re-engineering effort, such as reducing costs,
improving quality, or enhancing customer satisfaction.
• Set specific, measurable goals that align with the organization’s strategic vision.
4. Design New Processes:
• Develop redesigned processes that address identified inefficiencies and align
with the defined objectives.
• Incorporate best practices, automation, and technology solutions to streamline
workflows and improve performance.
• Ensure the new design supports organizational goals and customer needs.
5. Develop a Change Management Plan:

• Create a plan to manage the transition to the new processes, including

communication strategies, training programs, and support mechanisms. • Address
potential resistance and ensure that stakeholders are engaged and informed
throughout the process.
6. Implement New Processes:

• Roll out the redesigned processes according to the change management plan. •
Coordinate with relevant departments to ensure smooth implementation and
address any issues that arise.
• Utilize pilot tests or phased rollouts if necessary to manage risks and refine the
processes.
7. Monitor and Evaluate Performance:

• Track the performance of the new processes using predefined key performance
indicators (KPIs).
• Compare performance data against the objectives and goals set at the beginning
of the project.
• Collect feedback from stakeholders to assess the effectiveness of the changes.
8. Continuously Improve:
• Based on performance evaluations and feedback, make adjustments to optimize
the processes further.
• Foster a culture of continuous improvement by regularly reviewing processes
and incorporating new insights or technologies.