Principles of Management

Session 1

Prof. Nidhi Jena

Some Thoughts…..

• Virtual Vs Traditional learning…..

• Reliance on technology

• Different levels of interaction

• Potential for distraction

• Other Issues……

The History of Management Thought

Management in the Past

• Management existed, but…..

– Often hereditary (usually male…)

– One-trial learning

– But, some thought about management

• First large state

• Centralized government – Provincial governors (nomarchs)

– Bureaucrats (taxation, irrigation)

– Based on writing (first Information Revolution)

• Large scale construction projects – Pyramids, Sphinx, temples

– Workforce: thousands of peasants, possibly slaves (prisoners of war)

The Case of Egypt

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Sun Tzu and The Art of War

• A renowned Chinese general

• The Art of War a work on military strategy, but seen in Asia as a guide to management

• Principles: – Moral cause for battle

– Leadership – wise, courageous, benevolent yet strict

– Awareness of environmental conditions – events and the playing field

– Organization and discipline

– Espionage

Farming in Rome

• Cato the Elder (234 - 149 BC)

• De re rustica or Roman Farm Management

• Instructions for the management of a commercial farm – Absentee landlord

– Based on slave labor

– Wine grapes or olives

The Industrial Revolution

• A long-term process, not a single event – Political changes (American, French revolutions)

– Invention of steam power

• Some important figures: – Adam Smith (1776)

– James Watt, Eli Whitney

The Industrial Revolution – New Technology

• Manufacturing – Steam engines – Cotton gin – Mass production through standardization and

specialization

• Transportation – Steam powered ships – Railroads

• Communications – Telegraph

Large Organizations and New Approaches to Management

• Economic transformation – Previously – family farms, small workshops – After Industrial Revolution – large organizations, requiring

management skills

• New demands on management – Need for professional managers (as opposed to owners) – Need to plan, structure, and schedule activities – Push to efficiency – Need for worker training and socialization to factory work

Classical Management

• Time period: last half of 1800’s, first part of 1900’s

• Environment:

– Social / Political: little restraint (Robber Barons)

– Economic: manufacturing economy, focus on efficiency

– Technology: most jobs relatively simple

• Major schools

– Scientific management

– Administrative management theory

Scientific Management

• Bottom- up approach

• Focus on efficiency, primarily in industrial settings

• Today: industrial engineering, production management

• Key players: – Frederick W. Taylor

– Frank and Lillian Gilbreth

General Principles

• Standard methods for performing jobs

• Push to efficiency

• Employee selection and training

• Management control over work processes

• Wage incentives for output

F. W. Taylor and Scientific Management

• Worked at Midvale Steel (beginning as a common laborer, rising to chief engineer, in 6 years)

• Identified “soldiering” – Workers doing less than they were capable of

– Due to lack of training, fear of losing work or rate cuts

• Began with time study and incentive plans

Frank and Lillian Gilbreth: The One Best Way

• Focus on work simplification and efficiency

– Reduce time and fatigue (Frank)

– Involve workers (Lillian)

• “The One Best Way”

Scientific Management: Recap

• Contributions: – Pay for performance

– Careful examination of job tasks

– Importance of training and selection

• But……..* – Assumed workers were robots without social needs or higher order

needs

– Assumed all individuals were the same

– Ignored worker’s potential to contribute ideas, not just labor

* These are Taylor’s ideas; Gilbreths thought differently

Administrative Management Theory

• Top-down approach

• Focus on rationality, no matter what the setting

• Today: basis of most management texts

• Key players:

– Henri Fayol

– Max Weber

Henri Fayol

• French manager (coal mining)

• Published Industrial and General Administration in 1916 (not translated into English until 1930’s)

• Elements of management

– Planning

– Organizing

– Command, Coordination, Control

• Fourteen principles

• Universality of management

• Management as a skill can be taught

Fayol’s 14 Principles

1. Specialization of labor

2. Authority

3. Discipline

4. Unity of command

5. Unity of direction

6. Subordination of individual interests

7. Remuneration

8. Centralization

9. Scalar chain (line of authority)

10. Order

11. Equity

12. Personnel tenure

13. Initiative

14. Esprit de corps

Max Weber and Authority

• Traditional

– Inherited - monarchs

• Charismatic

– Based on the individual

• Rational – Legal

– Based on the position

Max Weber and Bureaucracy

• Bureaucracy = management by the office (Büro)

• Weber well aware that bureaucracy could become an end in itself

• Bureaucracy – Clearly defined division of labor, authority, responsibility

– Offices organized in a hierarchy

– Recordkeeping (organizational memory and continuity separate from individuals)

– Selection on the basis of qualifications

– Officials appointed, not elected

– Administrators work for fixed salaries, on a career basis

– Administrators are not owners

– Administrators subject to impersonal rules, discipline, control

Human Relations Movement and Subsequent Developments

• Hawthorne Studies

• Mary Parker Follett

• Chester Barnard

The Last Fifty Years

• Management science

• Systems theory

• Motivation and leadership

• Contingency models

Management Science

• Different from "scientific management”

• Formative years: 1940's to 1960's

• Operations research

• Uses a quantitative basis for decision making - mathematical models

• Emphasis on managing production and operations

Systems Approach

• Formative years: 1950's to 1970's

• Views an organization as a group of inter-dependent functions contributing to a single purpose

Motivation and Leadership (1950’s and 1960’s)

• Late 1950's: Douglas McGregor proposed his Theory X and Theory Y assumptions of the relations between

• Early and mid 1960's: contingency models of leadership proposed a need for different styles under different circumstances (Fred Fiedler)

• 1964: Vroom's VIE theory (valence, instrumentality, expectancy) of motivation proposed

• Mid 1960's: David McClelland proposed need for achievement theory

• Late 1960's: Frederick Herzberg proposed his two-factor theory of motivation (motivators and hygiene factors)

• Late 1960's: Edwin Locke outlined his goal setting approach to motivation

Definition

• Management can be defined as all the activities and tasks undertaken by one or more persons for the purpose of planning and controlling the activities of others in order to achieve an objective or complete an activity that could not be achieved by the others acting independently

It contains the following components:

• Planning

• Organizing

• Staffing

• Directing (Leading)

• Controlling

• Reporting

What Is Management?

• Management – The planning, organizing, leading, and controlling of

human and other resources to achieve organizational goals effectively and efficiently.

• Managers – The people responsible for supervising the use of an

organization’s resources to meet its goals.

• Resources are organizational assets – People Skills Knowledge

Information – Raw materials Machinery Financial capital

Efficiency, Effectiveness, and Performance in an Organization

Figure 1.1

Organizational Performance

• Organizational Performance – A measure of how efficiently and effectively managers

are using organizational resources to satisfy customers and achieve goals.

• Efficiency – A measure of how well or productively resources are

used to achieve a goal.

• Effectiveness – A measure of the appropriateness of the goals an

organization is pursuing and the degree to which they are achieved.

To get the right things done!

To do the things right!

Why Study Management?

• Proper management directly impacts improvements in the well-being of a society.

• Studying management helps people to understand what management is and prepares them accomplish managerial activities in their organizations.

• Studying management opens a path to a well-paying job and a satisfying career.

Four Functions of Management

Figure 1.2

Managerial Functions

• Henri Fayol

– First outlined the four managerial functions in his book General Industrial Management.

– Managers at all levels in all organizations perform each of the functions of planning, organizing, leading, and controlling.

Planning

• Identifying and selecting appropriate goals and courses of action for an organization. – The planning function determines how effective

and efficient the organization is and determines the strategy of the organization.

• Three Steps in the Planning Process: – Deciding which goals to pursue.

– Deciding what courses of action to adopt.

– Deciding how to allocate resources.

Management Key Concepts

• Organization – People working together and coordinating their

actions to achieve specific goals.

• Goal/objective – A desired future condition that the organization seeks

to achieve.

• Strategy – A cluster of decisions about what goals to pursue,

what actions to take, and how to use resources to achieve goals.

Organizing

• Structuring working relationships in a way that allows organizational members to work together to achieve organizational goals.

• Organizational Structure – A formal system of task and reporting relationships

that coordinates and motivates organizational members.

– Creating organizational structure: • Grouping employees into departments according to the

tasks performed. • Laying out lines of authority and responsibility for

organizational members.

Leading

• Articulating a clear vision to follow, and energizing and enabling organizational members so they understand the part they play in attaining organizational goals.

– Leadership involves using power, influence, vision, persuasion, and communication skills.

– The outcome of leadership is highly motivated and committed organizational members.

Controlling

• Evaluating how well an organization is achieving its goals and taking action to maintain or improve performance. – Monitoring individuals, departments, and the

organization to determine if desired performance standards have been reached.

– Taking action to increase performance as required.

– The outcome of control is the ability to measure performance accurately and to regulate the organization for efficiency and effectiveness.

Types of Managers

• Levels of Management – First-line managers

• Responsible for day-to-day operations. Supervise people performing activities required to make the good or service.

– Middle managers

• Supervise first-line managers. Are responsible to find the best way to use departmental resources to achieve goals.

– Top managers

• Responsible for the performance of all departments and have cross-departmental responsibility.

• Establish organizational goals and monitor middle managers.

• Form top management team along with the CEO and COO.

Levels of Management

Figure 1.3

Relative Amount of Time That Managers Spend on the Four Managerial Functions

Figure 1.4

Being a Manager

Brevity

High Variety Fragmentation

Managerial Problems

Compensation to be a manager

Managerial Skills

• Conceptual Skills – The ability to analyze and diagnose a situation and

distinguish between cause and effect.

• Human Skills – The ability to understand, alter, lead, and control

the behavior of other individuals and groups.

• Technical Skills – The specific knowledge and techniques required

to perform an organizational role.

What should be the right thing?

How can we do better?

Skill Types Needed by Managerial Level

Challenges for Management in a Global Environment

• Increasing Number of Global Organizations.

• Building a Competitive Advantage.

• Maintaining Ethical Standards.

• Managing a Diverse Workforce.

• Utilizing IT and E-commerce.

Building a Competitive Advantage

• Increasing Efficiency – Reducing the quantity of resources used to produce

goods and services.

• Increasing Quality – Introducing Total Quality Management (TQM) to

improve quality.

• Increasing Speed, Flexibility, and Innovation – Adapting to bring new products to market faster.

• Increasing Responsiveness to Customers – Empowering employees to deal with customers.

Building Blocks of Competitive Advantage

Figure 1.5

Maintaining Ethical Standards • Factors Influencing Behaviors:

– External pressures from stockholders/stakeholders for increased organizational financial performance.

– Internal pressures from top management to lower-level managers to increase the organization’s competitive performance and profitability.

– Societal, cultural, and environment demands on the organization.

Hurt somebody unintendedly vs. illegally

Managing a Diverse Workforce

• The Increasing Diversity of the Workforce

• Non-Discriminatory Employment Practices

• Performance-Enhancing Benefits of a Diverse Workforce

The opportunities for specialization

MANAGEMENT

• The act of getting people together to accomplish desired goals/objectives effectively/efficiently

MANAGEMENT FUNCTIONS

PLANNING

ORGANIZING

STAFFING LEADING

CONTROLLING

MANAGEMENT FUNCTIONS

• Planning • Predetermining a course of action

• Organizing

• Arranging the relationships among work units

• Staffing

• Selecting and training people for positions

• Leading

• Create an atmosphere that will motivate people

• Controlling

• Measuring/evaluating performance toward planned objectives

Universality of Management

• The concept and activities of MANAGEMENT applies to

– all levels of management,

– as well as to all type of organizations.

• It is needed wherever

– People work together

– Strive to achieve a goal

Universality of Management

What Is An Organization?

• An Organization Defined

– A deliberate arrangement of people to accomplish some specific purpose (that individuals independently could not accomplish alone).

• Common Characteristics of Organizations

– Have a distinct purpose (goal)

– Composed of people

– Have a deliberate structure

Types of Organizations

• For-Profit-Organizations

• Not-For-Profit-Organizations

• Governmental Organizations

– Non-Governmental Organizations

PROFIT=REVENUE-COST

Time spent in carrying out managerial functions

Why do we need Organizations/Management?

• PRODUCTIVITY

▫ Output/Input

• EFFICIENCY

▫ To get the most output from the least amount of input

▫ Scarce resources -> efficient use -> eliminate waste

▫ DOING THINGS RIGHT

• EFFECTIVENESS

▫ To get/reach aimed goals

▫ DOING RIGHT THINGS

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

EFFICIENCY VS. EFFECTIVENESS

Managerial Skills

• Technical Skills Knowledge and proficiency in a specific field

• Human Skills

The ability to work well with other people

• Conceptual & Design Skills

The ability to think and conceptualize about abstract and complex situations concerning the organization

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Skills versus Management Levels

Managerial Roles

– Roles are specific actions or behaviors expected of a manager.

– Mintzberg identified 10 roles grouped around interpersonal relationships, the transfer of information, and decision making.

Managerial Roles

• Interpersonal Roles • Figurehead

The manager performs ceremonial and symbolic duties as the head of the organization, greetings visitors or signing papers.

• Leader

fosters a proper work atmosphere, directs and motivates subordinates, train, advice, influence.

• Liaison

develops and maintains a network of external contacts to gather information, such as business correspondences, participation in meetings with representatives of other divisions or organizations.

Managerial Roles

• Informational Roles • Monitor

gathers internal and external information relevant to the organization; scan periodicals, news, reports, attend seminars.

• Disseminator

communicates factual and value based information to subordinates; sends memos and reports, inform staff

• Spokesperson

represents the unit to outsiders, communicates to the outside world on performance and policies, transmit information to outsiders through speeches, reports, memos, participates in conferences/meetings and report progress

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Managerial Roles

• Decisional Roles • Entrepreneur

designs and initiates change in the organization, identify areas of business development.

• Disturbance handler

deals with unexpected events and operational breakdowns, takes corrective action, resolves conflicts among subordinates

• Resource allocator

controls and authorizes the use of organizational resources, decides who gets resources, scheduling, budgeting, setting priorities

• Negotiator

participates in negotiation activities with other organizations and individuals, represents the unit during negotiation of union contracts, sales, purchases, budgets

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