CC106 : Principles of

Management (POM)
 MODULE : 1

HISTORICAL DEVELOPMENT
 Historical Development

Definition of Management

Functions of Management

Science or Art

Management and Administration

Contribution of Taylor and Fayol

Development of Management Thought

Types of Business Organization

Business Ethics and Social Responsibility : Concept, Shift to Ethics,

Tools of Ethics
 Meaning of Management

“Management is the art of getting things done by a

group of people with the effective utilization available
resources.”
 Why Management Require?
Wants are unlimited

Resources are limited

Wants can be arranged in the order of priority

Resources can be put into alternative uses

So, resources need to be managed so that prioritized

wants can be satisfied
 Definition of Management

“Management is the art of getting things done through

and with the people in formally organized groups”

-Harold Koontz
“Management is the process of planning, organizing,
directing, co-ordinating and controlling”

-Henry Fayol
 Definition of Management
“Management is the art of knowing what you want to
do and then seeing that is done in the best and
cheapest way”
-Frederick Winslow Taylor
“Management is simply the process of decision
making and control over the action of human beings
for the express purpose of attaining pre-determined
goals”
-Stanley Vance
 Definition of Management
“Management is a process of planning, organizing,
actuating and controlling to determine and
accomplish the objectives by the use of people and
resources”

-George Terry
“Management is what a manager does”

-Louis Allan
 Features / Characteristics of Management
Management is a science as well as an art.

Management is a continuous process.

Management is an activity.

Management is a factor of production.

Management is dynamic.

Management is an organized activity.

Management is a purposeful activity.

 Features / Characteristics of Management
Management is a profession.

Management is a discipline.

Management is universal application.

Management achieving pre-determined objectives.

Management aims at maximizing profit.

Management is needed at all levels.

Management is a social process.

 Functions of Management
Planning

Organising

Staffing

Directing

Co-ordinating

Controlling

Motivation
 Functions of Management
Innovation

Decision Making

Communication.

Representation

Reporting

Budgeting
Luther Gullik classifies the functions of management as:

POSDCORB

where,

P  Planning

O  Organizing

S  Staffing

D  Directing

Co  Co-ordinating

R  Reporting

B  Budgeting
 Management : Science or Art ?
The controversy with regard to the nature of
management , as to whether it is a science or an art, is
very old. Specification of exact nature of management
as science or art or both is necessary to specify the
process of learning of management. It is to be noted
that the learning process in science differs from that of
art. Learning of science basically involves the
assimilation of principles while learning of art involves
its continuous practice.
 Management : Science or Art ?
Now, Before the discussing whether management is a
Science or an Art? We should know what is a Science
and what is an Art.
What is a Science?
Science is an Organized or Systematized body of
knowledge pertaining to a specific field of enquiry.
This knowledge is obtained through the process of
observation, experimentation and testing. The
knowledge provides principles, theory and laws.
 Management : Science or Art ?
What is an Art?

Art is the application of knowledge and personal skills

to achieve results. It is a way of living. Art is basically
concerned with application of knowledge, how to do
things creatively and skillfully. It can be improved
through conscious effort and practice. Example:
Printing, Music, Writing, etc.
 Management : Science or Art ?
[A] Management as a Science.
Management is a Science because it has all the
characteristics of a Science. (Arguments in favour of
management as a Science)
(1)Management is a Systematized body of
knowledge.
(2)Management is a Social Science.
(3)Management is an Inexact Science.
 Management : Science or Art ?
[B] Management as an Art.
Management is an Art because it has all the
characteristics of an Art. (Arguments in favour of
management as an Art)
(1)Management involves the use of knowledge and
skills.
(2)Management is Creative.
(3)Management is a personalized activity.
(4)Constant Practice.
 Management : Science or Art ?
[C] Management: Science as well as Art.
Management is a Science as well as an Art. The art of
management is as old as civilization. The science of
management is young and developing. Both are
complementary and mutually supportive. A
successful manager requires the knowledge of
management principles and also the skills of how the
knowledge can be utilized. Absence of either will
result in inefficiency.
 Management : Science or Art ?
[C] Management: Science as well as Art.
George Terry has given the comparison between
Science and Art, is presented in below table which
suggests that a manager requires both aspects of
management to be successful.
Science Art
Advance by Knowledge Advance by Practice
Proves Feels
Predicts Guesses
Defines Describes
Measures Opines
Impresses Expresses
Management and Administration
There are lots of controversy in this point. Some
author say that management and administration both
are same and some author say that management and
administration both are different. Now lets see the
some experts opinions.
Management and Administration
[A] Management is the part of Administration.
According to Ordway Tead, Oliver Sheldon, William
Spriegel and William Schulze, Management is the
part of administration. It means administration is
broader than management. Administration is a policy
making function and on the other hand, management
is a policy executing function.
Management and Administration
[B] Administration is the part of Management.
According to E.F.L.Brech, Henry Fayol and Kimball
and Kimball, Administration is the part of
management. It means management is broader than
administration. Management is the rule making and
rule enforcing body and on the other hand
administration is just an implementing agency.
Management and Administration
[C] Management and Administration are Identical.
According to William Newman, Harold Koontz,
Dalton E. McFarland and Earnest Dale, Management
and Administration both are same. Both are
performing same functions. In organization, there is
no need to appoint two individuals for performing
management and administration functions.
Management and Administration
After the lots of discussion on this point, Now the final
conclusion is Management is the part of
Administration.
Difference between Administration and Management:
Point of Distinction Administration Management

Nature Thinking function(what Doing function(who

is to be done and when) should do it and how)

Scope Policy formulation and Policy execution and

Objective determination Objective achievement
Management and Administration
Point of Administration Management
Distinction

Level in Top level Middle and Low level

Organization

Level of Owners, Board of Directors Managers, Supervisors and

Executive Workers

Position Acts as a Principal Acts as an Agency

Skills needed Conceptual skill Technical Skill
Usage Mostly in government, Mostly in Business
military, educational organizations
institutes, social and
cultural organizations
 Contribution of Henry Fayol
The concept of Administration Management was
developed by Henry Fayol.
Administration Management means an approach that
focuses on principles that can be used by managers to
co-ordinate the internal activities of organization.
Henry Fayol classify the business operations into six
major activities: Technical (Production), Commercial
(Buying and selling), Financial (Use of Capital),
Security (Protection of property), Accounting
(Keeping financial records) and Managerial.
 Contribution of Henry Fayol
Henry Fayol says that Manager should perform five
function at the managerial level: Planning,
Organizing, Commanding, Co-ordinating and
Controlling.
Henry Fayol says that Manager requires certain
qualities like physical, mental, moral, educational and
Technical.
 Fayol's 14 Principles of Management
(1)Division of Work:
-Work should be divided among individuals and
groups.
-One task divided into small parts.
-Give advantage of specialization.
-Avoids waste of time.
-Increase organization output.
-Best way to use the human resources.
 Fayol's 14 Principles of Management
(2)Authority and Responsibility:
-Authority means right to give orders.
-Responsibility means obligation for performance.
-Responsibility involves being answerable.
-H.A. means H.R.(More Expert)
-L.A. means L.R.(Less Expert)
(3)Discipline:
-Employee must respect the rules that govern the
organization.
 Fayol's 14 Principles of Management
- Good discipline is the result of effective leadership.
- Fair Agreements
(Provisions for rewarding superior performance)
- Penalties for violation of the rules.
(4)Unity of Command:
- “One boss at a one time”
- Employee should receive orders from one superior
only.
- Dual command generates confusion, tension and
conflict.
 Fayol's 14 Principles of Management
(5) Unity of Direction:
- “One goal at a one time”
- Organizational activities must have one central
authority and one plan of action.
(One manager & One plan)
(6) Subordination of Individual interest to group
interests:
- The interest of the employee should not take priority
over the interests of the organization’s as a whole.
 Fayol's 14 Principles of Management
(7) Remuneration of Personnel:
- Employees must be paid a fair reasonable wage for
their services.
(8) Centralization:
- Centralization means the degree to which authority rests
at the top of the organization.
(9) Scalar Chain:
- Scalar Chain is the chain of superior to other
subordinates, it means highest to the lowest position.
- Gang Plank. (Communication b/w two
 Fayol's 14 Principles of Management
(10) Order:
-Organizational order for materials and personnel is
essential.
-Right materials and the right employees are necessary
for each organization function and activity.
-Materials and people should be in the right place at
the right time.
(11) Equity:
-Equity is the combination of justice and kindliness.
-All employees should be treated as equally as
possible. (Equal rules and penalty)
 Fayol's 14 Principles of Management
(12) Stability of Tenure of personnel:
-High employee turnover is inefficient.
-Stable work force is needed that improve the
organization’s performance.
(13) Initiative:
-Employee should be given the freedom to conceive
and carry out their plans.
-Initiative on the part of employees is a source of
strength for the organization because it provides new
and better ideas.
 Fayol's 14 Principles of Management
(14) Esprit de Corps:
- German Word.
- “Union is strength”
- Promoting team spirit will give the organization a
sense of unity.
-Focus on building and maintaining staff and
management morale and unity.
Contribution of Frederick Winslow Taylor
“The Father of Scientific Management”
Contribution of Frederick Winslow Taylor
 Scientific management concept was introduced by
Frederick Winslow Taylor in USA in the beginning of
20th century.
 F.W.Taylor is popularly known the father of Scientific
management.
 SM means an approach that emphasis the scientific
study of work in order to improve worker efficiency.
 SM concerned with improving the performance of
individual workers.
 Principles of Scientific Management
(1) Science, not rule of thumb:
- Each task must be scientifically designed.
- Replacing old rule of thumb methods.
- F.W.Taylor suggests
# Doing the work systematically
# Determining the work clearly and sequentially
# Standardization of motions and time for each
worker
# Allotment of fair work to each worker
 Principles of Scientific Management
(2)Harmony in Group Action:
-F.W.Taylor emphasis on group harmony which can be
achieved though
#Satisfying the needs of the group members
#Eliminating the dissatisfaction and frustration of
group members
#Maintaining the sound interpersonal relations
among the group members
#Involving the group members in various group
activities
 Principles of Scientific Management
(3)Co-operation between Workers and Management:
-F.W.Taylor emphasis on sound employee-employer
relations which should result in co-operation between
workers and the management.
-Sound employee-employer relations can be achieved in
the following ways:
#Management should understand the workers
needs and take steps to satisfy them
#Workers should understand the organizational
requirements like increasing productivity, sales,
profitability, etc and maximizing their
contribution.
 Principles of Scientific Management
(4)Maximum Output:

-F.W.Taylor suggests that attaining maximum output

in place of restricted output.

(5)Development of Workers:

-F.W.Taylor suggests that development of each worker

to his greatest efficiency and prosperity.

-Scientific selection and scientific training

 Tools or Elements or Features of Scientific
Management
(1)Separation of planning and doing.
(2)Scientific task setting
(3)Functional foremanship
(4)Time Study
(5)Motion Study
(6)Standardization
(7)Financial Incentive
(Differential piece rate system)
(8)Scientific Selection and Training
Development of Management Thought
 There are two broad Approaches:

(1) Classical Approach

- Administrative Management

- Scientific Management

- Bureaucratic Management

(2) Neo-Classical Approach

 Classical Approach or Theory
Focuses on
the
individual Focuses
worker’s on the
productivity overall
organizati
onal
system

Focuses
on the
functions
of
manageme
nt
Bureaucratic Management
Max Weber: German Sociologist
 Bureaucratic Management
 Bureaucracy means a structure with highly routine
operating tasks achieved through specialization, very
formalized rules and regulations, tasks that are
grouped into functional departments, centralized
authority, narrow span of control and decision making
that follows the chain of command.
Elements or Features of Bureaucracy
 Hierarchy of Authority

 Division of work

 Rules, Regulations and Procedures

 Record keeping

 Impersonal relationships

 Administrative Class
Advantages & Disadvantages of Bureaucracy
Advantages
 Specialization
 Optimum utilization of human resources
 No conflict
Disadvantages
 Rigidity
 Impersonal nature of work
 Red Tape
 No mutual understanding
 Neo- Classical Approach or Theory
 Also called Human relations theory
 Human relations theory means a movement in
management thinking and practice that emphasized
satisfaction of employees basic needs as the key to
increased worker productivity.
 Human relations theory gained popularly after the
famous studies of human behavior in work situations
conducted at the western electric company from 1924
to 1933. These studies known as the “Hawthorne
Studies.”
Hawthorne Studies or Experiments

Phase 1: Illumination Experiments

 Phase 2: Relay Assembly Test Group

 Phase 3: Interviewing Programme

 Phase 4: Bank Wiring Observation Room Experiment

 Managerial Roles
 A role is a set of specific tasks that a person

performs because of the position they hold. Roles

are directed inside as well as outside the

organization.

 According to Henry Mintzberg, Managerial roles

are classified into three categories:

 Managerial Roles
[A] Interpersonal Roles:
- primarily concerned with interpersonal relationships
- help the manager keep the organization smoothly
(1) Figurehead:
- Manager perform duties that are ceremonial,
social, legal and symbolic in nature.
- Greeting the visitors, attending social
functions, etc
(2) Leader:
- hiring, training, motivating and directing the
employees.
 Managerial Roles
(3) Liaison:
- Interacting with peers and people outside the
organization and developing external links.
[B] Informational Roles:
- Primarily concerned with the information aspects of
managerial work
(1) Monitor:
- Receiving and collecting information; utilizing
the channels through which information comes.
 Managerial Roles
(2) Disseminator:
- Transmitting information within the
organization.
(3) Spokesman:
- Transmitting information to people outside the
organization.
[C] Decisional Roles:
- Primarily concerned with the making significant
decisions.
(1) Entrepreneur:
- Introducing change, initiating projects to
improve the organization.
 Managerial Roles
(2) Disturbance Handlers or Trouble shooter :
- Handling unexpected disturbance
- Ex: Strikes, Complaints, Grievances, etc
(3) Resource Allocator:
- Deciding where the organization will expend
its efforts and what resources will be
expended.
- Allocating human, physical and monetary
resources. Ex. Budgeting
 Managerial Roles
(4)Negotiator:

- Negotiations with other units to gain advantages

for their own unit.

- Ex: Contracts
 Levels of Management
 There are three levels of management in any

organization.

(1) Top level Management

(2) Middle level Management

(3) Lower level Management

 Levels of Management
(1) Top Managers:
Managers who are responsible for overall direction
and operations of an organization.
- Determines objectives and polices
- Designs the basic operating and financial structure of
an organization.
- Provides guidance and direction
- lays down standards of performance
- Maintains good public relations.
 Levels of Management
(2) Middle Managers:

Managers who receive overall strategies and polices

from top managers and translate them into specific
goals and plans for first line managers to implement.

- Interprets and explains the polices framed by the top

- Participates in operating decisions

- Trains other managers.

 Levels of Management
(3) Lower level or First line Managers:
Managers responsible for the production of goods and
services.
- Plans day to day operations
- Assigns jobs to workers
- Provides supervision and control over work
- Arranges material tools and equipment
- Maintains discipline
 Managerial Skills
 According to Robert L. Katz,

There are three types of Managerial Skills.

(1) Technical Skill

(2) Human Skill

(3) Conceptual Skill

 Managerial Skills
(1) Technical Skill:
- Ability to use the tools, procedures, techniques and
knowledge of specialized field.
- Ex: Engineers, Musicians, etc
(2) Human Skill:
- Ability to understand, motivate and get along with
other people.
(3) Conceptual Skill:
- Ability to coordinate and integrate all of an
organization’s interests and activities.
Management Levels and Skills
 Ethics
 The word ethics is derived from the Greek work
“Ethos”. Ethos means Character.
 Ethics means the principles of behavior that
distinguish between good and bad ; right and wrong.
 Ethics is a branch of philosophy which is concerned
with human character and behavior.
 According to Webster,
Ethics is defined as “ the discipline dealing with what
is good and bad and with moral duty and obligation.”
 Business Ethics
 Business ethics refers to the principles and standards
that define acceptable business behavior.
 The acceptability of behavior in business is
determined by customers, competitors, government
regulators, interest groups, and the public, as well as
each individual’s personal moral principles and values.
 Business Ethics
 Business ethics relates to an individual’s decisions that
society evaluates as right or wrong.
Business Ethics is important because it builds trust
and confidence in business relationships. Unethical
actions may result in negative publicity, declining
sales, and even legal action.
 Need for Business Ethics
 Business ethics is necessary to protect the interest of
the society and to maximize human welfare.
 Business ethics is needed to convince the business to
respect its competitors role in the economy.
 Business ethics force the business to respect the
customers interest and their role in the business
operations.
 Need for Business Ethics
 Business ethics improves the confidence of
customers, employees, suppliers, bankers, etc .,in the
process of protecting their interests.
 Business ethics regulates the roles and activities of all
the players in the business activities.
 Business ethics makes the business to discharge its
role towards government more fairly.
 Social Responsibility
 Social responsibility is a business’s obligation to
maximize its positive impact and minimize its
negative impact on society.
 Social responsibility is a broader concept that
concerns the impact of the entire business’s activities
on society.
Socially responsible businesses win the trust and
respect of their employees, customers and society and,
in the long run, increase profits.
 NatureorPyramidofSocialResponsibility

 There are four dimensions of social responsibility:

(1) Economic Responsibilities

(2) Legal Responsibilities

(3) Ethical Responsibilities

(4) Voluntary Responsibilities

Nature or Pyramid of Social Responsibility
Arguments For Social Responsibility
 It is in the best interest of a business to promote and
improve the communities where it does business.
 Social Action can be profitable.
 It is an ethical thing to do.
 It improves the public image of the firm.
 It increases the viability of the business system.
 It is necessary to avoid government regulation.
 It is in the stockholders best interest. It will improve
the price of stock in the long run.
Arguments Againt Social Responsibility
 It might be illegal.
 Social actions cannot be measured.
 Participation in social programs gives businesses greater
power, perhaps at the expense of particular segments of
society.
 Many people believe that social problems are the
responsibility of government agencies and officials.
 It would weaken the balance of payments because price of
goods will have to go up to pay for social programs.
 Social Responsibility of Business
 Social Responsibilities of business towards different
groups are given below:
(1) Responsibility Towards Customers:
- Fair Price
- Superior Quality
- Superior Service
- Superior Product Design
- Quick and Complete information
 Social Responsibility of Business
(2) Responsibility Towards Employees:
- Fair salaries and Benefits
- Best quality of worklife
- Meaningful work
- Job satisfaction
- Provide adequate participation to employees
(3) Responsibility Towards Owners/Shareholders:
- Optimum use of resources
- Fair Dividend
 Social Responsibility of Business
- Solvent and Efficient Business
- Fair and honest reporting of business operations
from time to time
(4) Responsibility Towards Government:
- Payment of Taxes, Custom Duties, etc
- Obey the laws
- Follow fair trade policies and practices
- Maintain law & Security
- Discourage unhealthy practices
 Social Responsibility of Business
(5) Responsibility Towards Society:
- Elimination of poverty
- Provision of quality health care
- Providing equal employment and educational
opportunities to all
- Providing sufficient number of jobs and career
opportunities and facilities to all
- Maintaining pollution free environment
- Maintaining ecological Balance
 Social Responsibility of Business
(6) Responsibility Towards Inter-Business:
- Fair Competition
- Cooperation for sharing of scarce resources and
facilities
- Collaboration for maximization
(7) Responsibility Towards Suppliers:
- Providing technical know-how and assistance
- Providing fare price
- Assuring continuous purchase of inputs.
- Helping them in expansion and development
 Tools of Ethics
(1) Values:
- Values are relatively permanent desires that seem to
be good in themselves.
- A value is something that has worth or importance to
an individual.
(2) Rights and Duties:
- A right is a claim that entitle a person to take a
particular action.
 Tools of Ethics
- A duty is an obligation to take specific steps or obey

to law in other respects.

(3) Moral Rules:

- Moral rules means rules for behavior that often

become internalized as values.

(4) Human Relationships:

Types of Business Organization
Basis or Criterion Types of Business Organizations
Size Small, Medium and Large Organizations
Ownership Sole Proprietorship, Partnership, Private limited,
Public limited, Cooperatives, Trusts and
Associations
Purpose Profitable and Non-Profitable Organizations
Activity Manufacturing, Trading and Services
Origin Domestic and Multinational, Global, Joint
Ventures and Alliances
Sector Public And Private Sector
Reach of markets Local, Regional, National, International, Global
Types of Business Organization
Basis or Criterion Types of Business Organizations
Style of Management Traditionally Managed, Managed as per
western models, Managed using adapted or
Hybrid Management models
Decision making Centralized and Decentralized
Product Offering Standard and Coordinated product offering
in different markets or Uncoordinated
product offering in different markets
Source of Finance Ownership capital or debt-financed,
domestic funds or financed through Foreign
Direct Investment (FDI)
Listing on the stock exchange Listed or unlisted
 External Exam Questions
(1) Thought contribution of Taylor & Fayol’s Principals of
Management. (7 Marks)
(2) Define Ethics and Social Responsibility. What are the
different tools of Ethics? (7 Marks)
(3) “Managers at all levels requires some competence in
each of the technical, human and conceptual skills,
albeit with difference in emphasis”. Analyze this
statement with suitable examples from your work
experience. (7 Marks)
 External Exam Questions
(4) Define Social Responsibility Of Business. (7 Marks)

(5) Distinguish between Management and

Administration. How far is this distinction justified

in your opinion? (7 Marks)

(6) Briefly describe the general principles of

management as laid down by Henri Fayol. (7 Marks)