BBALLB Sem I

Fundamentals of Management

Unit 1 : Management & evolution of

management thought
 Introduction
Management is the act of getting people
together to accomplish desired goals and
objectives using available resources efficiently
and effectively.
Management comprises planning, organizing,
staffing, leading, coordinating and controlling an
organization (a group of one or more people or
entities) or effort for the purpose of
accomplishing a goal..
 Definition Of Management
• 1. According to George R. Terry, "Management
is a distinct process consisting of planning,
organising, actuating and controlling, performed
to determine and accomplish stated objectives
by the use of human beings and other
resources".
• 2. According to Henry Fayol, "To manage is to
forecast and to plan, to organise, to
command, to coordinate and to control".
3.According to Peter Drucker, "Management is a
multi-purpose organ that manages business and
manages managers and manages workers and
work".
4.According to Harold Koontz, "Management is
the art of getting things done through and with
people in formally organized groups‖.
5.According to Mary Parker Fallett, "Management
is the art of getting things done through people".
 Features of Management
• Management is a process,
• It is Pervasive in nature
• It is Goal oriented
• Distinct Activity
• Needed at all levels
• A system of authority
• It is a Group effort
• Influences behaviour
 Nature of Management
• Multidisciplinary,
• Dynamic nature of principle,
• Relative and not absolute principle,
• Management Science or Art,
• Management as a profession, it needs
technical knowledge, human skills both
 Importance of Management
• Minimises Risk
• Minimises organisational Disputes
• Minimises & controls the cost of
production
• Bridges past & future
• Increases effectiveness of joint
efforts
• Works as assistant to the
administrator.
 Need Of Management
1. Direction, coordination and control of
group efforts:
2. Orderly achievement of business
objectives:
3. Performance of basic managerial
functions:
4. Effective communication at all levels:
5. Motivation of employees:
6. Success and stability of business
enterprise:
Management - A Science or An Art
 Evolution of Management
The origin of Evolution management can be traced back to
the days when man started living in groups.
History reveals that strong men organized the masses into
groups according to their intelligence, physical and
mental capabilities.
Evidence of the use of the well recognized principles of
management is to be found in the organization of public life
in ancient Greece, the organization of the Roman Catholic
Church and the organization of military forces.
Thus management in some form or the other has been
practiced in the various parts of the world since the dawn of
civilization.
With the on set of Industrial Revolution, however, the
position underwent a radical change.
The structure of industry became extremely
complex.
At this stage, the development of a formal theory
of management became absolutely necessary.
It was against this background that the pioneers of modern
management thought laid the foundations of modern
management theory and practice.
Classical Theory
Neo classical
Theory Modern
Theory
 Classical approach is the oldest formal
school of thought which began around
1900 and continued into the 1920s.
Its mainly concerned with increasing the
efficiency of workers and organizations
based on management practices, which
were an outcome of careful
observation.
Classical approach mainly looks for the
universal principles of operation in the
striving for economic efficiency.
Classical approach includes scientific.
Administrative & bureaucratic
management.
 classical Theory
o Scientific management
o Administrative
management
o Bureaucratic
management
F. W Taylor’s
contribution ( 1856 -
1915 )

oScientific management focus

on
workers and machine
relationship.
oOrganizational productivity can
be increased by increasing the
efficiency of production processes.
 Administrative Management
Theory
Henry Fayol was the most important exponent of this theory.
Henry Fayol (France, 1841 - 1925): Henry Fayol was born in 1941 at
Constantinople in France.
He graduated as a mining engineer in 1860 from the National School
of Mining. After his graduation, he joined a French Coal Mining
Company as an Engineer. After a couple of years, he was promoted
as manager. He was appointed as General Manager of his company
in 1888. At that time, the company suffered heavy losses and was
nearly bankrupt. Henry Fayol succeeded in converting his company
from near bankruptcy to a strong financial position and a record of
profits and dividends over a long period.
 Technical activities
Classification of business
Commercial activities
activities
Financial activities
Fayol divided activities
Security activities
into following six groups
Accounting activities
Managerial activities
Fayol's Principles of Management:
Division of work: Division of work or specialization
alone can give maximum productivity and efficiency.
Authority and Responsibility: The right to give order
is called authority. The obligation to accomplish is called
responsibility.
Discipline: The objectives, rules and regulations, the
policies and procedures must be honoured by each
member of an organization. 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.
• Remuneration: Fair pay with non-financial rewards can act as the
best incentive or motivator for good performance.
• Centralization: There must be a good balance between
centralization and decentralization of authority and power.
• 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.
• Stability of Tenure: A person needs time to adjust
himself with the new work and demonstrate efficiency in
due course.
• Esprit of Co-operation: Esprit de corps is the
foundation of a sound organization. Union is strength.
But unity demands co-operation.
• Initiative: Creative thinking and capacity to take initiative
can give us sound managerial planning and execution of
predetermined plans.
 Bureaucratic management

Max Weber [1864-1920 ].

• Rules and regulations to eliminate managerial inconsistencies.
Authority is the power to hold people accountable for their actions.
• Positions in the firm should be held based on performance not social
contacts.
• Position duties are clearly identified. People should know what is
expected of them.
• Lines of authority should be clearly identified. Workers know who
reports to who.
o Division of work
Hierarchy of position
o Rules and regulations
Impersonal conduct
o Staffing
Technical
o competence
Official records
o

o
Contribution of classical management
o The identification of mgt functions such as planning, decision making,
organising and controlling provide.
o The contributions of the classical school go beyond the important work
and identifying mgt field and its functions and principles.

Limitations
The classical school of mgt throught heavily on the concept or economic
man, which placed emphasis on an individuals related pursuit or economic
objective. However the social needs or employees were neglected.
 Neo Classical Approach

•Neo-Classical theory is called human relations and behavioural

science approach.
•It is built on the base of classical theory. It modified, improved
and extended the classical theory. Classical theory concentrated
on job content and management of physical resources.

•Neo-Classical theory gave greater emphasis to man behind the

machine and stressed the importance of individual as well as
group relationship in the plant or workplace.
 Experiments
Conducted
The Hawthorne studies were conducted in order to find out
the role of human resource in increasing the production of
an organization.

The Hawthorne studies included the following

experiments..

• Illumination Experiment
• Relay Assembly Test Experiments
• Relay Assembly Room #2
• Mica Splitting Test Group
• Plant Interview Group
• Bank Wiring Observation Group
 HAWTHORNE EXPERIMENT

Conducted between 1924-1932

Conducted at WESTERN ELECTRIC

COMPANY, Chicago, USA

Conducted by,
 Elton Mayo
White Head
Roethlisberger
 George Elton Mayo
He was an Australian Psychologist, Sociologist
and Organization Theorist.

Lectured at University of Queensland before

moving to the University of Pennsylvania

Spent most of his career at Harvard Business

School and was the Professor of Industrial
Research

Known as the founder of Human Relations

Movement

Also known for his research including

 Hawthorne Experiment

The Hawthorne experiment were first conducted in

November, 1924 at Western Electric Company’s Hawthorne
plant in Chicago

The initial tests were sponsored by The National Research

Council (NRC) of the National Academy of Sciences

In 1927, a research team from Harvard Business School

was invited to join the studies after the illumination test drew
unanticipated results

A team of researchers led by George Elton Mayo from the

Harvard Business School carried out the studies
(General Electric originally contributed funding, but they
withdrew after the first trial was completed)
Illumination Studies
1924-1927
Funded by General Electric
Conducted by The National Research Council (NRC) of the National
Academy of Sciences with engineers from MIT
Measured Light Intensity vs. Worker Output
Result :
Higher worker productivity and satisfaction at all light levels
Worker productivity was stopped with the light levels reached moonlight intensity.

Conclusions:
Light intensity has no conclusive effect on output
Productivity has a psychological component

Concept of “Hawthorne Effect” was created

Relay Assembly Test Experiments

•1927-1929
•Experiments were conducted by Elton Mayo
•Manipulated factors of production to measure effect on output:
– Pay Incentives (Each Girls pay was based on the other 5 in the group)
– Length of Work Day & Work Week (5pm, 4:30 pm, 4pm)
– Use of Rest Periods (Two 5 minutes break)
– Company Sponsored Meals (Morning Coffee & soup along with sandwich)
•Results:
– Higher output and greater employee satisfaction

•Conclusions:
– Positive effects even with negative influences – workers’ output will increase as a
response to attention
– Strong social bonds were created within the test group. Workers are influenced by need
for recognition, security and sense of belonging
 Relay Assembly Room #2

1928-1929

Measured effect on output with compensation rates

Special observation room
1st Session- Relay Assemblers changed from departmental
incentive to small group incentive
2 Session - Adjusted back to large group incentive
nd

Results:
‘Small group incentives’ resulted in highest sustained level of production –Output
dropped in 2nd session

Conclusion:
Pay relevant to output but not the only factor
 Mica Splitting
Test Group
1928-1931

Measured output with changes to work conditions only:

Special Observation Room
Length of Work Day
Use of Rest Periods
Workers stayed on established Piece-rate compensation

Result:
Productivity increased by 15% over standard output base

Conclusions:
Productivity is affected by non-pay considerations
Social dynamics are a basis of worker performance
 Mass Interview
Program
Conducted 20,000 interviews.

Objective was to explore information, which could be used to improve supervisory

training.

Initially used the method of Direct Questioning and changed to Non Directive.

Results

- Giving an opportunity to talk and express grievances would increase the

morale.

- Complaints were symptoms of deep-rooted disturbances.

-Workers are governed by experience obtained from both inside and outside
the company.
 Mass Interview
Program (Contd)
- The workers were satisfied or dissatisfied depending upon how they regarded their
social status in the company.

- Social groups created big impact on work.

- Production was restricted by workers regardless all financial incentives offered as

group pressure are on individual workers.
 Bank Wiring Observation Group

1931-1932
Limited changes to work conditions
Segregated work area
No Management Visits
Supervision would remain the same
Observer would record data only – no interaction with workers

Small group pay incentive

Result:
No appreciable changes in output

Conclusions:
Preexisting performance norms
Group dictated production standards –
Work Group protection from management changes.
 CONCLUSION
•The Hawthorne studies have had a remarkable impact on
management in organizations and how workers react to various
situations.

•The research carried out at the Western Electrics Hawthorne plant

during the 1920’s and early 1930’s helped to initiate a whole new
approach to human behaviour studies.

•The final result was “the organization of teamwork-that is, of

sustained cooperation leads to success”.
 Contribution of
Dr. Peter Drucker
• Among the contemporary management thinkers
outshines all.
• Varied experience in Psychology, Sociology,
Law and Journalism.
• Books – * The Practice of Management (1954)
* Managing by Results (1964)
* The Effective Executive (1967)
* The Age of Discontinuity (1969)
* Management : Tasks, Responsibilities and
Practices (1974)
Management Thinker of 20th
Century
 Contribution of
Dr. Peter Drucker
1. Nature of Management :
Creative and Innovative Management,
Management as Profession
2. Management Functions : Manager has to contribute to i) the specific
purpose or mission of the organisation, ii) making work productive
and workers achieving, iii) managing social impact and social
responsibility.
3. Organisation Structure : i) No bureaucratic structure, ii) organised for
performance, iii) least possible number of managerial levels, iv)
must make possible the training and testing of tomorrows’
managers.
4. Federalism : Centralised Control of Decentralised Structure.
5. Organisational Changes : Due to social change
 Contribution of
Dr. Peter Drucker
6. Management By Objective (M.B.O.) :
i) Most important contribution,
ii) Introduced in 1954,
iii) Includes – a) Methods of Planning,
b) Setting Standards,
c) Performance Appraisal,
d) Motivation.
Management By Objectives (MBO)
• Definition :
“MBO is a result-centred, non-specialist,
operational managerial process for the
effective utilisation of material, physical
and human resources of the organisation
by integrating the individual with the
organisation and the organisation with the
environment.”
Management By Objectives (MBO)
• Features :
1. An approach & philosophy to
management and not just a technique,
2. Related with all other management
techniques,
3. Emphasis on objectives,
4. Periodic review of performance,
5. Provides guidelines for appropriate
systems & procedures.
Management By Objectives (MBO)
• Process :
1. Setting of organisational purpose and
objectives,
2. Key result areas,
3. Setting subordinates objectives,
4. Matching resources with objectives,
5. Appraisal,
6. Recycling.
Management By Objectives (MBO)
• Limitations / Problems :
1. Time and Cost,
2. Failure to teach MBO Philosophy,
3. Problems in objectives setting,
4. Emphasis on short term objectives,
5. Inflexibility.