Management can be defined as the organization and coordination of activities of a business to achieve set objectives. Management is incorporated as a factor of production together with materials, machines, and money. According to Peter Drucker, the primary task of management consists of innovation and marketing. Modern management practices originated in the 16th century.
Management involves engaging and connecting functions of generating corporate policies, planning, organizing, directing and controlling the resources to achieve the objectives of that policy.
The magnitude of management varies from one person in a small organization to hundreds and thousands in multinational companies. In bigger organizations, the board of directors defines the company policy which is later taken forward by the Chief Executive Officer. The quality and experience of the managers in the organization are the primary factors to evaluate a company’s worth at the given time and in the near future.
Large organizations have three levels of managers that are typically organized in a hierarchical pyramid structure.
Senior Managers are the Board of Directors and the President or the Chief Executive Officer of an organization. These managers set strategic goals for an organization and take decisions in the operation of the organization. Senior managers manage and control middle managers who report to them indirectly or directly. Managers in this level are mostly the executive-level professionals.
Middle Managers are generally branch managers, department managers, section managers, and regional managers who assist the front-line managers. Middle managers correspond the strategic goals of the senior managers to the front-line managers.
Lower Managers are front-line team leaders and supervisors, who monitor the jobs of regular employees and assist with directions to their work.
In Small enterprises, individual managers have multi-tasks. One manager may perform numerous roles or at times all roles perceived in larger organizations.
Importance of Management
A business evolves over a period with a lot of complexities. Managing the business has become a complicated task, with increasing convolutions. Management is important not just for businesses but also for schools, hospitals, colleges, trusts, banks and for every other enterprise that requires some coordination and organization of activities. Mangement is not concerned with performing specified jobs. Management motivates others to perform certain tasks. Management integrates the 6Ms namely material, machines, market, money, men and methods, which aids in achieving the expected results economically and quickly in terms of sales, profit, production, and goodwill.
Management is a thinking organ that furnishes the business a positive vision. It is a force that integrates accomplishment of business objectives.
The significance of management in the modern business are outlined below:
Accomplishment of Goals
Management regulates the goals of an organization of various functional groups and departments. The objectives are conveyed to the employees to seek cooperation in achieving them. All the activities in the organization are directed towards organizational objectives. Having clear-cut goals for the success of any organization is elementary.
Management assembles and organizes resources, arranges the factors of production, and integrates the resources effectively to achieve the goals. It directs group efforts towards the achievement of goals. The six Ms of an effective organization are coordinated in such a way that the organization works towards attaining its goals.
Effective Utilization of Resources
Management promotes optimum utilization of physical and human resources through organization, planning, and management, which leads to prosperity and progress of a business. Employees are motivated to perform their best at all stages so that wastages of all kinds are minimized or eliminated.
Establishes Sound Organization
Establishing a sound organization means no overlapping of efforts. A sound organization establishes effective responsibility and authority. It clarifies authority and responsibility relationships in various positions in the enterprise. Makes clear policies and specifies who is accountable to whom, who are the subordinates and superiors, who can give instructions to whom, and so on. Management recruits the right person possessing the right skills, qualification, and training. Management also provides workers with a sound environment for work and encourages cooperation.
Management ensures a foresight and a vision for the enterprise by keeping in touch with the external environment. It analyses the future which influences the current working of the organization. It also takes the necessary steps to ensure that the organization is meeting the demands of the changing environment.
Management establishes maximum results through minimum input by efficient planning. The management employs human, financial, and physical resources in the best combination, which ensures cost reduction.
National Growth And Prosperity
Efficient management of resources becomes very important at the national level. Management is very important in the economic and social development of a nation. Development of the nation depends on the resource management quality. The key to the right economic growth, better standard of living, and prosperity is the efficient management.
Cordial Industrial Relations And Competitive Strengths
Management facilitates cordial industrial relations and competitive strengths in an enterprise. It ensures the welfare and better life for employees and raises their morale by providing suitable incentives. It encourages employees to put in more interest and take more initiative concerning work so that it results in the increased profitability and productivity of the organization.
Evolution of Management Thought
Management is as old as human civilization itself. The civilizations of Rome, Egypt, and Greece exhibited astounding results of great management practices. The origin of management can be traced back to the late 19th century. Management is considered as an integral part of understanding all business functions and operations. People have been redesigning and changing management techniques for centuries. Management thinkers are trying to find ways to classify and organize the extensive information that is dispersed and collected. The classification attempts have precipitated the recognition of management approaches.
There are various approaches to management namely the Classical approach, Behavioral approach, Quantitative approach, System approach, and the Contingency approach.
The classical approach is the senior most approach to management thought. It originated back in the 20th century. The classical approach is concerned with the strategies and techniques to manage organizations and work more efficiently and effectively. The classical approach comprises of scientific management, administrative management, and bureaucratic management.
Frederick Winslow Taylor is known as the father of scientific management. Scientific management is referred to as Taylorism. The theory of scientific management had a humongous impact on business at the beginning of the 20th century. Scientific management is a management theory that synthesizes and analyses workflows with the objectives of enhancing the productivity of labor. Approaches to scientific management are initiated for standardization of jobs and efficiency of workers.
Henry Fayol is known as the father of modern management. Henry Fayol was a great manager and a popular industrialist. He presented an analytical framework of the management processes. He categorized the activities of the business into six groups namely Financial, Accounting, Technical, Managerial, and Administrative. He clarified that the management functions remain the same at all levels of organizations.
Administrative management highlights the functions of the management and the manager. Its main objective is to define the management philosophy and processes that are concerned with jobs at the individual level.
The Bureaucratic management emphasizes on an ideal organization. Max Weber is one of the major contributors to bureaucratic management. According to Weber, most organizations are inefficiently managed, with decisions rooted in loyalty and personal relations. He proposed a form of management characterized by hierarchy, the division of labor, formalized rules, impersonality, and promotion and selection of employees based on their ability which could result in efficient management. Max Weber also explained that the manager’s authority must be devised by the position held by the managers in the organizational hierarchy and not on the tradition.
Various theorists supplemented the behavioral approach of management thought since they noticed several weaknesses in the classical theory. The classical approach focuses on principles, processes, and efficiency. This theory ignores significant aspects of organizational life concerning human behavior at work. Behavioral approach is an improvised theory of the human relations approach.
The behavioral approach was developed in parts because of the weaknesses perceived in the classical approach. It emphasizes understanding the factors that affect human behavior at work.
Human Relations Approach
Human Relations approach defines the human aspects in business. It signifies that the human factor and the organization in the social system are the most important elements.
The Hawthorne Experiments originated in the early 1924 and continued till the 1930s. The important conclusions of the Hawthorne studies were that the workplace is a social system and the attitudes of the workers are associated with productivity, the group influences would have a powerful impact on the individual behavior, and the method of supervision was significant in improving job satisfaction.
Study of organizational behavior and behavioral science evolved in the 1950s and 1960s. Behavioral science emphasized the natural progression of human relations moment. It concentrated applying analytical and conceptual tools in predicting and understanding human behavior at work. The behavioral science approach contributed to understanding management by concentrating on attitudes, personality, values, group behavior, leadership, conflict, and communication.
The Quantitative Approach
The quantitative approach emphasizes improvising decision making by applying quantitative techniques.
Management Science employs statistical and mathematical approaches to resolve issues in management. It was developed around the Second World War as the analysts tried to implement scientific methods and knowledge to compound war problems.
Production And Operations Management
This management system emphasizes the control and operation of the production process that converts resources into finished goods. Production and operations management focuses on quality and productivity of service and manufacturing process of an organization. W. Edwards Deming has a major influence in transforming modern ideas concerning improved quality and productivity. Various aspects of production and operations management comprise of facilities layout, material requirement planning, purchasing and inventory control, flexible manufacturing systems, scheduling, just in time inventory systems, quality control, facility layout, and capacity planning.
The system approach emphasizes understanding the organization as an open system that converts inputs into outputs. The System approach originated in the 1960s. It is a process of thinking about managing tools that require managers to regard various specialties and parts of the organization to one another along with the factors affecting the external environment.
The contingency approach emphasizes applying management principles, concepts and processes that have no universal or general application and are directed by the unique characteristics of every situation. It accentuates that there is no one right way to manage and it is determined by various situational factors like technology, organizational characteristics, characteristics of the manager, and the characteristics of the subordinates. Contingency theory states that management is situational and that the management study identifies the crucial variables in any given situation. Contingency theorists explicitly or implicitly criticize the classical approach. Nevertheless, few classical theorists understood the need for considering the situation while applying management principles.
All the above are the important theories of management, and every theory highlights specific knowledge and information of what managers do.
Principles of Management
The principles of management are the underlying indispensable factors that form the foundation for successful management. There are 14 Principles of Management according to Henri Fayol.
Division of Work
Employees are specialized in different sectors and are skilled differently. It signifies the importance of division and subdivision of jobs according to employee expertise in that area. According to Henri Fayol specialization contributes to efficiency in the workplace and improves productivity, which in turn increases accuracy and speed. This principle is appropriate for both managerial and technical jobs.
Authority and Responsibility
Authority and Responsibility co-exist in an organization. It claims that the organization has the authority to order its employees and with authority, there comes greater responsibility. Authority is the right of the seniors to get the job done. The responsibility can be measured back from the performance. The two should go hand in hand, authority without responsibility results in incautious behavior and responsibility without authority is unproductive.
Discipline is essential for the smooth functioning of an enterprise. According to Henri Fayol, discipline signifies respect of authority, observing rules and regulations in an organization and sincerity. Discipline is essential at both managerial and subordinate levels. Discipline can be implemented when there are great supervisors at all levels when there are fair and clear agreements between workers and when sanctions are judiciously applied.
Unity of Command
It emphasizes on subordinates being accountable and receiving orders from one superior because of instructions from more than one seniors, likely to create conflict and confusion. It leads to a better superior-subordinate relationship.
Unity of Direction
It relates to the functioning of departments or the organization as a whole. Unity of direction is essential for the sound organization. It avoids overlapping efforts and wastage of resources. It pilots the smooth running of the enterprise.
Subordination of Personal Interest
The management must prioritize its interests and considerations and put the company objectives on top of its list. There exist all kinds of interests in an organization, and for the success of an organization, Henry Fayol suggested subordination of personal interest to the organization’s interest.
Productivity and motivation go hand in hand. Henri Fayol suggests a substantial amount of remuneration to keep employees motivated to work. The remuneration must be reasonable, fair, rewarding and satisfactory of efforts. Appropriate and logical wages deter differences between the management and employees. Henri Fayol also suggested provisions for various other benefits like free education and medical and residential facilities for workers.
Degree of Centralization
Centralization is the concentration of authority at the top level. Authority and the management must be properly balanced for decision-making purposes in the organization. According to Henri Fayol, the degree of centralization and decentralization depends on many factors like the business size, dependability, experiences of the superiors and the ability of subordinates. Anything that expands the role of the subordinates is decentralization, and anything that narrows the role of the subordinates is centralization.
Scalar chain refers to a chain of superiors from the top management to the lowest rank. This principle emphasizes a clear line of authority from top to bottom; connecting all managers at all levels. Every instruction, order, explanation, request, message, and so on, must pass through the scalar chain. In cases of emergency and at times, for the sake of convenience, this chain can have a shortcut which is referred to as a Gang Plank. A Gang Plank is a temporary arrangement between two different points to accommodate easy and quick communication. Gang Plank signifies that the management principles are flexible and not rigid.
This approach ensures a systematic arrangement of people and things in an organization. The arrangement of things is called the material order, and the placement of people is known as the social order.
Material order: A specific place for every employee.
Social order: Appointment and selection of the right person for the right job.
It specifies that there should be a specific place for everyone and everyone must have a specific place to establish contacts whenever necessary.
Stability of Tenure
According to Henry Fayol, the employees must not be shifted from one job to another. The service period for a job needs to be fixed. Employees should, therefore, be appointed keeping in mind the principles of selection and recruitment and once appointed, their services must be accepted. In turn, the effort, time, and money spent on employees should not be a waste. Job stability imbibes a sense of belongingness and team spirit amongst the employees, which results in improved quality and quantity of work.
According to Henri Fayol, employees must be encouraged to take initiatives in work allocated to them; initiative means eagerness for action without being reminded to do so. He proposed that the management must provide opportunities for the employees and welcome their suggestions, ideas, new work techniques, and experiences that promote an environment of understanding and trust in the organization. He also suggests encouraging employees with non-monetary and monetary benefits.
Equality is the core value of an organization. Employees must be treated equally, and the management must be fair. Henry Foyal suggests that the managers must be impartial and fair to its subordinates and there must be no room for discrimination concerning caste, sex, ego, relations, religion, and so on. Equality promotes a cordial relationship between the subordinates and the mangers. Fayol also specified that at times, force and being harsh is essential for the sake of equality.
Esprit De Corps
Esprit De Corps refers to harmony at work in work groups and mutual understanding among its members. Esprit De Corps encourages its workers to work harder. Henri Fayol warned the managers against the employee division into competing groups as there are possibilities of damage of the interest of the undertaking and the morale of the employees. Efforts to create enthusiasm amongst the subordinates must be initiated so that they can work up to their maximum ability. Employees who are efficient must be rewarded, and the others who are not up to the mark must be given another chance to work on their performance. A conscious awareness among the subordinates must be created and acknowledged that whatever they are doing is of great significance to the society and the business. Henry Fayol also encouraged face to face communication and that the managers infuse belongingness and team spirit. It is important that the employees celebrate and appreciate the work they do and give their best to the organization in turn.
The 14 principles of management are used to manage organizations and are useful techniques for planning, process management, decision making, organization management, control, and forecasting. However, it is obvious that most of these matters are used based on common sense in the current practices of management. The 14 principles of Henri Fayol linger is a practical list that is applicable for all organizations even to this day.
Management Process And Functions
The senior management in the organization is responsible for carrying out the managerial process.
The five fundamental function of management-
- Directing and
When the management is reviewed as a process, planning is the initial step taken by the manager. The managerial functions begin with forming the goals and objectives if the organization in every area of business. Planning deals with underlining the course of action and determining in advance the best course of action to achieve the pre-determined goals. Planning bridges the gap between where we are now and where we want to be. Planning can thus be defined as a systematic thinking technique regarding the means and ways to accomplish pre-determined goals. Planning is crucial to determine the effective utilization of non-human and human resources. Planning is an intellectual activity which aids in avoiding uncertainties, wastages, risks, and confusion. Planning must take into account the availability of resources and flexibility of personnel as they guarantee continuity.
An organization can function to its fullest when it is well-organized, which indicates adequate staff, capital, and raw materials so that the organization can function smoothly and build a great work structure. Organizing is the process of integrating human, physical, and financial resources. According to Henry Fayol, ‘To organize a business is to provide it with everything useful for its functioning, i.e., raw materials, capital, tools, and the workforce’. Organizing encompasses identification of activities, classification or grouping of activities, assignment of duties, the delegation of authority and creation of responsibility and coordinating authority and responsibility relationships.
According to Kootz & O’Donnell, “Managerial function of staffing involves managing the organizational structure through proper and effective selection, appraisal and development of personnel to fill the roles designed in the structure.”
Staffing is a process of hiring and retaining a suitable workforce for the business at the managerial and non-managerial levels. Staffing encompasses recruiting, training, developing, compensating and evaluating employees and balancing the workforce with adequate perks and incentives. It is crucial to appoint the right personnel since the human element is a vital factor.
Staffing is a complex process since people vary in their knowledge, intelligence, skills, attitudes, physical condition, and experience.
Directing is a key managerial function, which is directly concerned with the human factors of an organization. Directing is concerned with leadership, motivation, supervision, and communication, facilitating employees to function at their best to achieve the end goals.
Leadership involves instructing and guiding subordinates regarding methods and procedures.
Directing facilitates two-way communication, so the information is passed on to the subordinates concerning methods and procedures.
Motivation is very essential because a motivated workforce delivers extraordinary performance with minimal directions from their seniors.
Supervising is an ongoing process which results in continuous progress reports and ensures that the directions are being rightly followed.
Controlling can be defined as measuring accomplishments against the standards and deviation if any to ensure achievement of organizational goals. Control makes sure that everything happens in conformities with standards. Efficient control aids in predicting deviations even before they occur.
According to Theo Haimann, ‘Controlling is a process of measurement and correction of performance activities of subordinates in order to ensure that the objectives of the enterprise and the plans designed to obtain them as being accomplished’.
The functions of controlling involve-
- Establishment of standard performance.
- Measurement of actual performance.
- Measuring actual performance with the pre-determined standards and figuring out deviations if any.
- Taking corrective action.
All the functions of management are interrelated. Nevertheless, the functions are virtually indistinguishable and highly unrecognizable on the surface.
System View of Management
The system view of management encompasses the division of management in an organization; assuming all organizations as systems, while all the systems are subsystems of bigger systems.
A system can either be open or closed, however, almost all approaches look at the organization as an open system. An open system relates to the environment with the help of outputs, inputs, and throughputs.
A system can be defined as a set of interdependent and interconnected arranged in a way that produces an unfulfilled whole. It is a concept taken from physical science and applied to organizations.
There are two types of systems closed systems and open systems.
System View of Management Theory
The system theory treats the organization as a system. It is one of the most prominent and note-worthy theories in management. The system’s view of management theory is a tool established believing that the organizations are correlated parts or subsystems to be managed as a whole for the accomplishment of similar goals and targets.
The major components of the system are
- Transformation processes
Inputs refer to a variety of human, financial, equipment, informational and material resources that are necessary to produce products and services.
Transformational processes refer to the organization’s technological and material abilities employed to convert inputs to outputs.
Outputs refer to the goods, services and other outcomes produced by the organization.
Feedback refers to the information regarding the organizational status and results relating to the environment.
Closed System And Open System
The degree of interaction of the systems with its environment is explained through closed and open systems.
The system that cannot be influenced or interacted with the environment is known as the closed system.
A system that dynamically interacts with its environment is called an open system. Organizations are open systems i.e., it constantly interacts with its environment. When an organization is connected to its environment, it facilitates a deep insight into the approaches, needs, new trends, and the manners of the environment. It aids the organization in building a new innovative goal that would benefit both the organization and the environment.
Characteristic features of the open system-
Negative entropy is referred to as the ability of the open system imbibing a new zeal in the form of inputs and feedback mechanisms from the environment.
Synergy is the capability of the whole to equal furthermore than the total parts.
The System Viewpoint
It interprets that the managers are more successful when they operate on their units as open systems rather than closed systems.
Management is all about getting jobs done, and Leadership is about designing a direction for business and motivating its employees to take initiatives and responsibilities leading to right decisions.