Here is a compilation of notes on management. After reading these notes you will learn about:- 1. Meaning of Management 2. Features of Management 3. Objectives 4. Nature 5. Importance 6. Functions 7. Tasks 8. Aspects 9. Levels.
Contents:
- Notes on the Meaning of Management
- Notes on the Features of Management
- Notes on the Objectives of Management
- Notes on the Nature of Management
- Notes on the Importance of Management
- Notes on the Functions of Management
- Notes on the Tasks of Management
- Notes on the Aspects of Management
- Notes on the Levels of Management
1. Notes on the Meaning of Management:
In today’s world of complex and fast internationalization of business, most companies are going global. Unless they are effectively managed, they cannot survive in the fast changing international business environment. Management helps in doing and getting things done through others. It is the process that optimizes human, material and financial resources of the organisation for effective achievement of its goals.
The process involves a series of actions (functions) by managers, optimisation refers to getting maximum output (goods and services) out of minimum inputs (men, materials, money, machine etc.) and goals are the results or ends that managers and other stakeholders (shareholders, consumers, suppliers, workers etc.) wish to achieve.
Terry and Franklin:
“Management is a distinct process consisting of activities of planning, organising, actuating and controlling, performed to determine and accomplish stated objectives with the use of human beings and other resources.”
Koontz and Weihrich:
“Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.”
F. W. Taylor:
“Management is an art of knowing what is to be done and seeing that it is done in the best possible manner.”
Henri Fayol:
Management is to forecast, to plan, to organise, to command, to co-ordinate and control activities of others. Every organisation, at every level, needs management, be it an organisation as small as a family, temple or church or big organisations such as Schools, Colleges, Universities, business houses or even the Government. It is important for both profit and non-profit organisations and also for manufacturing and service organisations.
Labour unions and research organisations, hospitals and armed services are also guided by management principles. All these institutions (whether profit or service) consider management as the effective organ which plans the activities, makes people responsible to carry out those activities, co-ordinates and controls their activities through an effective system of feedback.
Management is the art of getting things done through others. It is an activity which co-ordinates the human and non-human resources (men, material, machines etc.) for achieving the desired results. Although different views are given on the functions of management, the most commonly accepted functions are planning; organising; staffing; leading and controlling.
Though management is essential for both business and non-business organisations, it is primarily linked with business management. The arguments in support are given by Peter F. Drucker.
1. Of all institutions in the modern society, business institutions were the first to be set up and management was meant to be part of these institutions on a continuous basis.
2. Though management is important for non-profit organisations also, the main criterion for testing the efficiency of management is economic surplus (though not accurate) and this criterion is generally satisfied by business organisations.
3. With economic reforms initiated in 1991, business has become’ open in international boundaries and the economy has become free and liberalised. The performance of business houses is bringing the nations together and the focus on business management is, thus, evident.
“Without institution there is no management. But without management there is no institution. Management is the specific organ of the modern institution. It is the organ on the performance of which the performance and the survival of the institution depends.” — Peter F. Drucker
2. Notes on the Features of Management:
Management is characterised by the following features:
(i) An activity:
It is an activity of getting things done through others. It involves coordinated efforts of a group of people towards a common end in highly structured organisations like Reliance or Infosys or social organisations like a club or an NGO. Working with and through people establishes superior-subordinate relationships where work is assigned to individuals and authority-responsibility relationships are established amongst them.
(ii) A process:
Management gets things done through others by the management process. It helps to achieve organisational goals through functions of management.
(iii) Required for all organisations:
Both business and non-business organisations (such as Government or service organisations, irrespective of their size; large or small) need effective management to achieve their objectives.
(iv) Required at all organisational levels:
Management is required at all the levels — top, middle and lower levels of the organisation, though degree of management is different at different levels.
(v) Goal-oriented:
Success of an organisation is measured by achievement of its goals and management plays significant role in goal achievement. Since organisations are deliberately created structures, they exist for a purpose or goal. Objectives are the desired state of results that all organisational members agree to achieve through coordinated efforts.
(vi) Intangible:
Management cannot be seen or felt. The result of management can be observed by comparing a well-managed organisation with a poorly managed organisation. The difference in results can be attributed to management concepts.
(vii) Dynamic:
Management is an ever-changing discipline of knowledge. It was not very important during the early years of 1900s even in highly institutionalized countries. The main decision-making authority used to be the Government.
The changing business scenario requires innovations, research and development in the business sector and, thus, highlights the changing role that management plays in this environment. Effective management is situational i.e., managers assess the facts and circumstances of each situation and use a managerial approach that best applies in the situation to attain the individual and organisational goals.
(viii) A discipline:
Though management seeks ideas and concepts from other fields of study, such as psychology, behavioural sciences, sociology etc., yet it is a complete discipline in itself. Managers acquire specific managerial skills, knowledge and fundamentals to practice management.
(ix) Management and society:
Though management is a separate discipline which aims to accomplish pre-determined organisational goals, yet its impact on society cannot be overlooked. Management is governed by social values, culture and beliefs. It is a function that transforms the society. It preserves the society and promotes its interests.
(x) Group effort:
Management as a function, activity or a process is not undertaken by a single person. It is the co-ordinated effort of a group of people that envisions future of the organisation, sets its goals, makes plans and policies, implements them and controls its working through an effective feedback mechanism. Management does not exist to achieve personal goals of people. Though, however, personal objectives are important, they should contribute to objectives of the group and the organisation.
(xi) Global function:
Management is not confined to a specific society, culture or country. It is a global phenomenon. In the contemporary business environment, the concept of national boundaries, as far as business is concerned, is fading away. With the kind of reforms coming in, the world has become a single economy, a single market. The multinational character of management is, thus, evident and in fact, inescapable.
3. Notes on the Objectives of Management:
How effectively an organisation achieves its objectives (profit or service) depends upon how effectively it is managed.
Management serves the following objectives to help organisations meet their goals:
(i) Helps organisation achieve its objectives:
Management helps in managing the organisations to achieve their objectives at minimum cost. It enables managers to work efficiently, that is, achieve maximum output at minimum cost. It also aims to coordinate the organisational resources (physical, financial and human) so that human knowledge and expertise can be geared towards optimum utilisation of non-human resources.
(ii) Promotes effectiveness:
Efficiency means ‘doing things right’ and effectiveness means ‘doing the right things’. It means choosing the most appropriate organisational objectives out of multiple objectives. Lack of effectiveness or choosing wrong objectives will result in inefficiency, howsoever hard managers may work. Management, thus, helps to find out the right things to do and to concentrate on those things efficiently.
(iii) Develops the ability of managers:
Managers should not only be skilled in problem-solving, they should be equally skilled in problem-finding. They should anticipate problems before they arise. They should take advantage of opportunities to make their organisations competitive. Management develops analytical abilities of managers (problem solving) and the ability to find problems and exploit gainful business opportunities.
(iv) Human welfare:
Management helps in knowing the needs of employees and satisfies them through suitable motivators.
(v) Social welfare:
Organisations operate in the larger social system. The performance of business organisations largely affects the welfare of society and through it, the welfare of the nation. Management develops business organisations as socially acceptable institutions which give gainful employment to people.
(vi) Interaction with environment:
Business operates in the larger environment that consists of economic and non-economic variables. Firms secure inputs from the environment, transform them into outputs and give them back to the environment. They survive if they adapt their plans to the environmental requirements and change their operations according to changes in the environment. Management helps firms to successfully frame and alter their policies to profitably interact with the larger environment.
4. Notes on the Nature of Management:
Management is viewed as:
1. Science,
2. Art, and
3. Profession.
1. Management as Science:
What is Science:
Science is a branch of knowledge that involves systematized observation and experiment with phenomena. It involves “the systematic development and testing of theories based on observation of behaviour”. It creates a general body of knowledge evolved through continuous testing and experiments. Testing of hypothesis evolves principles which establish cause and effect relationship amongst variables.
Features of Science:
Science is characterised by the following features:
(a) Clarity of concepts:
Science is characterised by universal concepts evolved through experiments.
(b) Scientific methods:
Scientific methods involve study of phenomena through systematic procedure of observation, formulation of hypothesis and experiment. Repeated observation of similar facts leads to generalisations as to what will happen in similar situations. Scientific methods, thus, help in predictions.
(c) Clarity of theory:
Grouping of interdependent concepts and principles that evolve an area of acknowledge is known as theory. Theory is a generalized set of principles and concepts.
(d) Causal relationship:
It explains relationship between two forces: one, the cause and other, the effect. It explains relationship between application of principles and its end result.
(e) Systematized theory of knowledge:
Science is not just a theory of knowledge. It is a systematized theory of knowledge. Scientific principles are applied in a systematic and scientific manner.
(f) Universal application:
Scientific principles are universally applicable. They apply in all situations, all countries and all cultures. They do not change according to situations.
Is Management a Science?
(a) Clarity of concepts:
Concept is a “mental image of anything formed by generalization from particulars.” Management, as a discipline, has a number of concepts (management, administration, levels of management, functional areas of management, managerial planning, organisation charts and manuals etc.) evolved through the experience of managers in various organisations.
Management, therefore, can aptly be called a management science. Concepts like organisation charts, organisation manuals, managerial planning etc. have gained widespread popularity and management can, thus, be called a science.
(b) Scientific methods:
The study of scientific problem through systematic multistep procedure of observation, formulation of hypothesis, experiment and development of a theory is known as scientific method. “A scientific method involves the determination of facts through observation.” Repeated observation of similar facts and situations leads to certain generalizations which help in making predictions about what will happen in similar situations.
While dealing with people, managers repeatedly observe human behaviour, analyze their physiological and psychological needs and frame policies to satisfy those needs. Financial incentives, for example, can satisfy physiological needs and non-financial incentives satisfy psychological needs of human beings, is an aspect of motivation that has evolved through constant observation of human behaviour. Management can, therefore, be described as a ‘Science’.
(c) Clarity of theory:
When scientific methods are tested for their accuracy, they result into principles. “Theory is a systematic grouping of interdependent concepts and principles that gives a framework to, or ties together, a significant area of knowledge.” Management has evolved over a period of years as a theory with generalized set of principles and concepts that support the organisation structure.
The principles of management are a universally accepted set of knowledge which have evolved through constant observation and experimentation (case studies on management) for dealing with managerial resources. They can be applied to different organisations. The principles of unity of command, unity of direction, scalar chain, esprit de corps, for example, have made management a universally accepted science or theory. Management can, thus, be called a science.
(d) Causal relationship:
The principles of science usually explain relationship between two forces; the cause and the effect. There is some evidence of causal relationship (as in Science) between managerial practices and their end results. Financial management, for example, invests in assets (long-term and short-term) for wealth maximisation.
The principle of unity of command results in loyalty towards superiors is a management principle that holds good in almost all organisations. Though not universally true (a subordinate may, at times, have to report to more than one boss), it is a generally accepted principle. Management, thus, satisfies this principle of science.
(e) Systematized theory of knowledge:
Science is not just a set of principles (theory). It applies principles in a systematic and scientific manner to attain certain goals. Management is “a field of knowledge that seeks to systematically understand why and how men work together to accomplish objectives and to make these co-operative systems more useful to mankind.”
Management concepts and principles have evolved over a period of time and have systematized into well-defined management theories being practiced in all successful organisations. Management can, therefore, be rightly called a systematized body of knowledge. “Management science is a body of systematized knowledge accumulated and accepted with reference to the understanding of general truths concerning management.”
(f) Universal application:
Though not always true, management principles are universally applicable. The principles of ‘Esprit de Corps’ — unity is strength is applied in almost every organisation and every situation. On this basis also management can be called a science.
Management is not an exact science:
Though management can be described as science of applying scientific concepts and methods in a systematized manner, with specific rules and regulations to achieve organisational goals, it is not an exact science. It is not as exact as physical science (Physics or Chemistry). Physical science has no direct or practical application in studying human welfare. It is studied only for understanding the natural phenomenon.
Management is not as pure as physical science. It is applied science. It deals with problems and finds solutions to these problems to maximise human welfare. Management is social science (study of human beings) based on accumulation of data, past experience, tradition and reasoning. It deals with human behaviour which changes in different situations.
It is a social science that maximises human welfare in specific situations. Management principles change with change in situations and human behaviour. These principles are, thus, flexible and change according to situations. Management, therefore, can be called a behavioural science, social science or soft science.
“The field of management would truly become a science, when theory would be able to guide managers by telling them what to do in a particular situation and enabling them to predict the consequences of their actions”.
2. Management as an Art:
What is Art: Art is know-how. It is a branch of knowledge that gives personal expression to feelings, thoughts and ideas. It is a means to creative growth and does not depend on scientific experiments and testing. It applies personal aptitude and skill in assessing how best can one utilise resources to get maximum benefit out of them.
Features of Art: Art is characterised by the following features:
(a) Vision:
An artist has clear vision of what he wants to make. He strives to achieve a definite goal.
(b) Knowledge:
Art requires practical knowledge. It applies theoretical knowledge to achieve the goal.
(c) Communication:
An artist can fulfill his objectives by communicating with his artists. He alone cannot attain his goal.
(d) Creativity:
Art requires creativity. Since there are no defined procedures and methods to achieve goals, the artist uses imagination, skill and creativity to do so. Creativity can be enhanced through motivation and training.
(e) Skilled performance:
Art requires application of personal skill. It differs for each artist and for each artistic situation. Every artist has his own way of performing the job.
(f) Practice:
Artist can improve his performance through constant practice. His work is not based on scientific methods.
Is Management an Art?
(a) Artist’s vision:
As an artist (while he composes a painting or a musical note) has clear vision or picture of what he strives to achieve; management theorist also has to envision the future and frame the objectives and plans. “Management art involves envisioning an orderly whole from chaotic parts, communicating the vision and achieving the goal. It is the ‘art of arts’ because it organises and uses human talent.”
(b) Knowledge:
As in Art, managers must clearly know their objectives and how they wish to achieve them. This results in optimum allocation of scarce resources over varied organisational objectives.
(c) Communication:
Similar to Art, successful managers need to effectively communicate the objectives, plans, procedures, orders and instructions to the subordinates (top-down communication) and listen to their grievances and complaints patiently (bottom-up communication). This helps to achieve the objectives efficiently.
(d) Creativity:
Management is a behavioural science. It deals with people. Managers, therefore, must have the art of knowing human needs and devise motivational plans to satisfy them. Art is always creative. Artist’s creativity can be enhanced through training and motivation. Management is also creative. It requires managerial skills to forecast opportunities in the environment and exploit them gainfully. Managers need to be creative to coordinate the resources (human and non-human) for achieving the practical results.
(e) Skilled performance:
As ‘Art’ applies personal aptitude and skills for different artistic situations, managers also possess managerial skills to deal with different problem-solving situations. This helps to optimally utilise the scarce organisational resources over different managerial activities.
Experience, observation and study of results, all contribute to skilled performance. “In that art requires a personal aptitude or skill, managers who must make organisational decisions about how best to position their resources in certain future markets are surely involved in an artistic process.”
(f) Practice:
Managers expertise in the art of management through constant practice. The more they practice, the more they learn and become successful business entrepreneurs. One may, thus, conclude that management is an art of applying skill, knowledge, creativity, personal judgement and innovativeness to understand the behaviour of subordinates and application of suitable devices to allocate scarce resources over organisational objectives. Scientific principles and theories cannot always solve organisational problems.
Management — Both A Science and Art:
Management is both, Science and Art. It cannot, however, be clearly defined as to when it is science and when art. As science, it has principles and theories on the basis of which managers act, and as Art, it deals with decision-making processes through application of practical and personal skills.
The art of management begins where the science of management ends. Science provides knowledge and art helps in application of knowledge. Science provides the knowledge of management principles and art helps in skillfully applying those principles to solve managerial problems.
While science explains ‘why’ of a situation, art explains ‘how’ of it. Art explains how the problem can be solved once it is known why it has occurred. There is no best way to solve that problem. Every manager has individual approach and solves it to the best of his experience, knowledge, skill and creativity.
A successful manager has knowledge and skill of applying management principles in specific situations. The power of management lies in application of management science. Success in management comes not from knowledge of management but from how well that knowledge is applied in business situations.
3. Management as Profession:
What is a Profession?
Profession means occupation in some branch of advanced learning or science (for example, medical profession). It refers to application of specialised knowledge acquired after formal education and training programmes.
Features of Profession:
A profession is characterised by the following features:
(a) General principles or specialised knowledge:
Professionals base their decisions on certain principles. These principles grow out of specialised knowledge that a person acquires through formal education and training programmes.
(b) Professional status through performance:
A person becomes a professional by continuously rendering services of specialised nature. Professionals acquire their status through work and not favouritism.
(c) Code of ethics:
A specific code of ethics governs the functions of professionals. Professionals work within the rules and regulations of that code. This ensures fair and honest dealings on their part. Ethical code ensures that professionals are committed to their work in the best interest of society. Violation of this code is subject to punitive actions.
(d) Dedication:
Though professionals practice for financial gains, they are guided by the service motive also. True professionals work with complete dedication, commitment and loyalty.
(e) Association:
Every professional is guided by the norms of the association or council under which he exercises his profession. After attaining formal education in medicine, for example, a doctor is registered under the Medical Council of India. The association or council establishes the standards of performance for the professionals.
(f) Professional qualification:
A person can exercise profession only after acquiring formal qualification and training. Chartered accountants, doctors, lawyers etc. exercise their professions after acquiring formal education in their respective fields.
Is Management a Profession?
(a) General principles or specialised knowledge:
As management is a separate discipline, there are management principles and theories formally taught in management schools. These principles and theories help in efficiently discharging organisational duties, though application of these principles and theories changes according to situations. Management can, thus, be called a profession.
(b) Professional status through performance:
In this regard management is not truly considered to be a profession, though gradually it is moving towards professionalism Though management is formally taught in management schools, one can find people who hold managerial positions not by virtue of their performance but through favouritism.
People attain managerial positions through personal and political links. In today’s world where competition is intense, we are moving towards the end where management will become a full-fledged profession, that is, only those holding formal degree in management will acquire managerial positions.
(c) Code of ethics:
Although code of ethics has been established by the All India Management Association, there is no strict adherence to it. Non-compliance to the code is not followed by punitive action. Though managers should look after the interests of the owners and other stakeholders, there is no universally accepted code of ethics for managers.
There is no controlling body which ensures that ethical code in management is strictly observed. The All India Management Association does not fully represent the professional managers. Management cannot, therefore, strictly be termed as a profession on this ground. Though not compulsory, managers follow this code and perform ethical business practices to prosper in the competitive business world.
(d) Dedication:
In almost every organisation, managers practice principles and theories with complete dedication and commitment. They constantly integrate organisational resources to harmonies organisational goals with goals of individuals. They dedicatedly work towards the attainment of organisational and individual goals. Management is, thus, a profession on this basis.
(e) Association:
Although All India Management Association exists to govern the smooth conduct of managerial practices, it is not compulsory for managers to become members of this Association. On the basis of an association establishing the standards of performance for managers to exercise managerial activities, management cannot be completely called a profession.
(f) Professional qualification:
Though there are many institutions providing formal education and training in management programmes, yet it is not rare to find practicing managers who have not acquired formal degree in the management courses but still prove to be successful managers. This is because of the experience they gained by holding various managerial positions. No formal code of ethics is, therefore, followed by all successful managers. In this sense of the term, management may not qualify to be termed as a profession.
It may be concluded that management is a profession on the basis of features like general principles or specialised knowledge and dedication, but it cannot truly be termed as a profession on the grounds of professional status, code of ethics and management association. Nevertheless, management being a distinct field of study is moving towards a full-fledged profession.
In this regard, Peter F. Drucker remarks:
“Management is professional — Management is a function, a discipline, a task to be done; and managers are the professionals who practice this discipline, carry out the functions, and discharge these tasks.”
Management is fast moving towards professional status as is evidenced by:
(i) Growing body of systematized knowledge.
(ii) Growing number of professional institutes providing knowledge of management.
(iii) Growing awareness of ethical practices followed by business organisations.
(iv) Growing emphasis on management being practiced by management experts or consultants.
Professionalization of Management:
The society of 1900s had few, small-sized institutions managed by the family heads. Government looked after the needs of the society. There were almost no or very few business institutions. Small workshops, small educational and health centres and professions (medicine, law or engineering) were practiced at the individual level.
Institutions were owned by individuals who fulfilled their financial and non-financial needs. These individuals, as heads and owners of the institutions were also the managers of the institutions. Development, at that time, was a function of savings and capital investment.
Management was primarily family-managed as:
(i) Both ownership and control of business were in the hands of the family heads, and
(ii) The focus was an profit than social values.
As control was in the hands of family heads with delegated positions to other members of the family, they managed the business according to value system of the family, and since different families had different value systems, the organisations headed by different families were managed differently.
Though professional services like those of accountants, engineers and lawyers were hired, these professional were paid for their services. They did not have the decision-making authority as that was centralised with the head of the family who managed the business on the basis of his knowledge and judgment rather than professionalism.
Even in the public sector, management was more or less non-professional. Bureaucracy prevailed and the top-level managers represented the voice of the bureaucrats. The professional competence was, thus, lacking which largely contributed to low performance at the micro level and economic development at the macro level. Though resources were not scarce, they were not optimally utilised for lack of professional competence.
1. Competition was not intense and organisations were not very large in size. Profit was the major yardstick used to measure organisational success which was often achieved even without professionalization of management. This developed a belief that family heads and bureaucrats could achieve organisational success even without professionalization of management.
2. Being small in size, ownership and management remained in the same hands. Even in large organisations, though the Board was legally constituted, control was in the hands of few influential people who were the owner entrepreneurs. While the flavour of professionalisation was missing, the centralised approach to management proved successful. This did not encourage professionalisation of management.
3. Public sector organisations were managed by civil servants appointed by the Government. These civil servants were better technocrats than managers. Though, however, they managed the business enterprises, they did not adopt professional managerial practices.
Professional management was, thus, almost unknown to most of the business enterprises until after the outbreak of World War I. After the First World War, management came to be recognised as a distinct field of study. Herbert Hoover (1874-1964) and Thomas J. Masaryk (1850-1937) were amongst the pioneers who felt the need for principles of management to restore the economies destroyed during the war.
With emergence of large scale business and non-business organisations (schools, hospitals, research organisations etc.) during mid 1900s, our society became a society of institutions. It became a pluralist society in the sense that people relied on a number of institutions to satisfy their varied needs, like economic goods, health care, social and security needs, education, research etc. These institutions became so large in size that owners could neither meet their financial requirements nor manage them effectively. There was, thus, diversion of ownership from management.
Managers were appointed who helped these enterprises by:
1. Increasing their productivity.
2. Analysing the impact of organisational activities on social values, culture and beliefs.
3. Creating new business opportunities rather than optimising the existing ones. This created manager-entrepreneurs.
4. Improving the performance in the field of economic tasks, health care, education or environment.
5. Producing economic and social development along with savings and capital investment.
In the era of globalisation, management is viewed as a:
1. Force to bring economic, organizational and social reforms.
2. Work with its own tools, skills and techniques.
3. Discipline with an organised body of knowledge which can be applied in almost every situation and every organisation — business or non-business.
4. Culture with a set of traditional values, customs and beliefs. This helps in moulding cultural aspects of the society.
5. Practice where management as a discipline is not just a codified set of knowledge. Management is practiced, performed and is result-oriented.
6. Multi-institutional force, where the need for management is felt in all institutions, business as well as non-business.
7. Multinational discipline. The world today is a single market and management cannot be confined within the boundaries of the country. Management is becoming an institution of a global economy.
“Management is independent of ownership, rank or power. It is an objective function and ought to be grounded in the responsibility for performance. Professional-management is a function, a discipline, a task to be done; and mangers are the professionals who practice this discipline, carry out the functions, and discharge these tasks. It is no longer relevant whether the manager is also an owner; if he is, it is incidental to his main function, which is to be a manager.” — Peter F. Drucker
Management is becoming a professional discipline because of the following reasons:
1. As business firms grew in size, it became difficult to manage them in the traditional way. The management policies were re-examined and sophisticated management techniques were applied which required professionalisation of management.
2. Initially the public sector was managed by non-professional managers. With increase in their complexity and growing internationalization, the market did not remain protective and free from competition. Ownership and management got separated and professionally qualified managers were appointed to manage these enterprises.
3. Trained, skilled and educated managers also led to professionalisation of management. Management education is imparted on full-time and part-time basis. Short-term management development courses are offered by many institutes.
Many business organisations in the private and public sector have management development centres to train the managers. Even small companies prefer their managers to attend the short- term management development programmes. The entire viewpoint is changing from owner-managers to professional managers.
5. Notes on the Importance of Management:
Management plays important role in shaping the culture of organisation. The performance and survival of organisation depends on its management.
Peter F. Drucker, in this regard remarks:
“Management is the specific organ of the modern institution. It is the organ on the performance of which the performance and the survival of the institution depends.”
The modern society is dependent upon organisations for its survival. Organisations help the society in the following ways:
1. They help in the attainment of individual goals.
2. They preserve knowledge by maintaining records of past achievements and provide knowledge for future generations.
3. They provide career opportunities to individuals.
A well-managed organisation can effectively utilise its resources (human, physical and financial) and achieve its objectives as well as meet the society’s needs. Effectiveness (doing the right things) along with efficiency (doing things right) is the fundamental key to managerial success.
As Drucker puts it, the manager’s need to make the most of opportunities “implies that effectiveness rather than efficiency is essential to business. The pertinent question is not how to do things right, but how to find the right things to do, and to concentrate resources and efforts on them.” It was the effectiveness of management that helped the economies restructure their operations in the post World War II period.
The importance of management is as follows:
(i) Achievement of organisational goals:
Management helps to effectively design the goals and frame plans to achieve them efficiently.
(ii) Optimum utilisation of organisational resources:
Management helps the organisation utilise its scarce resources (human, physical and financial resources) efficiently.
Human resources are the people with their talent, skill, knowledge, experience and abilities for effective conversion of inputs into outputs.
Material or physical resources are the raw material or plant and machinery for producing goods and services.
Financial resources are the funds needed to meet organisational short-term and long-term requirements of current and fixed assets.
(iii) Develop analytical and conceptual ability of managers:
Management helps to analyse the organisational problems, link them with other organisational matters and arrive at solutions geared towards organisational goals.
(iv) Balance between multiple goals:
At a point of time, managers face multiple goals. Deciding about what is more important so that scarce organisational resources can be optimally allocated to different organisational goals, is facilitated through management.
(v) Economic and social development:
Drucker asserts that “developing countries are not underdeveloped, they are undermanaged.” If knowledge of management is transferred from developed to developing countries, developing countries will develop their entrepreneurial ability, managerial excellence, rate of savings, capital formation and, thus, economic and social development.
“Savings and capital investment do not produce management and economic development. On the contrary, management produces economic and social development, and with it savings and capital investment.” — Drucker
(vi) Coordination between individual and organisational goals:
Effective management coordinates individual goals with formal goals of the organisation. It motivates employees to put their best efforts to contribute to organisational goals and through it, achieve their personal goals.
(vii) Face competition:
Management helps to face tough competition in the contemporary business environment. Effectively managed firms outperform those which are not effectively managed and, thus, capture bigger share of the market.
Management promotes innovation as fast changing technology, social processes and organisation structures have become inevitable part of organisational working. It helps to adopt the complex environmental changes and promote their level of competence.
(viii) Social upliftment:
Management promotes social development by generating and directing human energies towards the needs of the society such as health care, education, clean environment etc.
(ix) Reform Government and society:
Management teaches respect for individual values, tradition and social culture. “It will increasingly stand for the quality of life of a society as much as for its standard of living.”
“Management will increasingly be concerned as much with the expression of basic beliefs and values as with the accomplishment of measurable results.” — Drucker
(x) Social innovation:
The social and economic development is more a result of social innovation than technical innovation. The needs of our society, educare, health care, clean environment, entrepreneurship, productivity etc. are fulfilled through able and skilled managers.
Management, therefore, plays important role in the social upliftment of society. “Economic and social development are the result of management. Development is a matter of human energies rather than of economic wealth. And the generation and direction of human energies is the task of management. Management is the mover and development is a consequence.”
(xi) Foundation to organisation:
Clearly defined tasks, their distribution to people with authority provides foundation to the organisation. It assigns right task to the right person to avoid duplication and confusion in organisational activities.
(xii) Environmental analysis:
Management enables an organisation to analyse its strengths and weaknesses and relate them with environmental threats and opportunities. (This is done with the help of SWOT analysis). It helps to minimize risks and maximise environmental opportunities and business gains.
6. Notes on the Functions of Management:
“Management is the coordination of all the resources through the process of planning, organising, directing and controlling in order to attain stated objectives.”
“Management is principally the task of planning, coordinating, motivating and controlling the efforts of others towards specific objectives.”
Management is a process because it involves a series of inter-related functions. The management process includes planning, organising, staffing, directing and controlling functions.
Management as a process has the following implications:
1. Management as social process:
Management process involves interaction amongst people. Goals can be achieved only when relations between people are productive.
2. Management as integrated process:
Management process brings together human, physical and financial resources. Management process also integrates human efforts to maintain harmony.
3. Management as iterative process:
All managerial functions are contained within each other for example, when a manager prepares plans, he is also making standards for control.
4. Management as continuous process:
Management involves continuously identifying and solving problems. It is performed again and again. Management process is identified as a set of functions performed by managers to accomplish organisational goals, that is, management functions explain the process of management.
Management functions provide structure to management service, theory and practice. The knowledge of management revolves around management functions. Functions mean activity and management functions mean activities performed by managers.
There are two types of functions performed by managers:
(i) Operative functions are the operations performed by managers:
Four basic operative functions performed in a manufacturing organisation are production, finance, personnel and sales. The nature of functions varies from organisation to organisation. In a trading organisation, these functions are buying and selling. In a banking organisation, these are lending and borrowing.
(ii) Managerial functions are universal in nature:
Whatever be the nature of organisation, manufacturing or trading, they are performed for each operative function. Whichever operative function manager performs (product or finance), these functions are performed in all functional areas.
7. Notes on the Tasks of Management:
Peter F. Drucker defined three important tasks that management should perform:
(i) Purpose and objectives of the organisation:
Every institution exists for a specific purpose. Business institution exists to achieve economic results and non-business institution exists to accomplish the non-economic goals. Their basic purpose is social tasks, e.g., education or health care.
Business management deals with business goals, i.e., the economic goals. The practice of management can be felt only if the objective of profit maximisation or wealth maximisation is achieved. The institution must achieve its economic goals and provide quality goods to consumers at the right price.
(ii) Making work productive and the worker possessing a sense of achievement:
An institution is efficient if it makes the work productive. It implies efficient conversion of inputs (materials) into outputs (goods and services). The basic force that helps in conversion is the human factor. Without human resource, inputs would remain as inputs only. Development cannot be achieved, whatever be the resources, unless human force acts upon it. It is, thus, an important task of management to make work productive by making the human resource productive.
The human element not only helps to achieve the organisational goals but also provides a sense of accomplishment to workers. People work to earn a living and achieve some status in society. This is reflected in worker achievement.
Making the worker achieving implies “consideration of human being as an organism having peculiar physiological and psychological properties, abilities and limitations and a distinct mode of action.” It is, thus, an important task of managers to ensure that within the physical and mental abilities and limitations, people achieve satisfaction out of their jobs.
(iii) Social responsibilities:
The business enterprise or a non-business enterprise does not operate in isolation. Though it provides a living to workers and gives them social status in the society, it is also answerable to other sections of the society i.e. consumers (providing quality goods and services), Government (paying taxes regularly), general community (environment protection) and shareholders (regularly paying dividends). Though profit or wealth maximisation is the main objective of an enterprise, social responsibilities are also important for its survival.
8. Notes on the Aspects of Management:
Management is a multidisciplinary field of study and draws its concepts and principles from various disciplines such as economics, anthropology, sociology, psychology, etc.
Considering these diverse views, management is viewed as:
(i) An Activity
(ii) A Process
(iii) A Discipline
(iv) A Group
(v) An Economic Resource
(i) Management as an Activity:
Activity means exercising some kind of action. It refers to actions performed by managers to achieve organisational objectives within the constraints of internal and external environmental variables.
Management as an activity is “the art of getting things done through people” — Mary Parker Follett.
Management as an activity refers to what managers actually do rather than what they should do to achieve organisational goals. What managers actually do defines the role of managers.
Management as an activity, thus, defines the role of managers. Empirical evidence has proved that managers perform ten roles which can be broadly classified into three.
These are described below:
1. Interpersonal roles or activities:
Management is the art of getting things done through others. In dealing with others, managers contact their superiors, peers, subordinates and outside parties. They greet people; attend functions; receive official visitors; hire, train and motivate employees; solve their psychological and work-related problems and communicate with people within (superiors, subordinates and peers) and outside (consumers, suppliers, government etc.) the organisation. Though these activities are routine in nature, they help in running the organisation smoothly.
2. Informational roles or activities:
In dealing with people within and outside the organisation, managers communicate with stakeholders like consumers, creditors, employees, suppliers, Government etc. They need information to make right decisions and communicate them to members.
In this context, managers perform activities like collect information from various journals and conduct tours; transmit information to members through meetings, notices and circulars and interact with people outside the organisation to communicate the company’s plans and policies.
3. Decisional roles or activities:
The information collected by managers in informational roles is not only communicated to others but also used by them as inputs for making decisions. In this regard, managers use market information to launch a new product, solve organisational disturbances like strikes, lock outs etc., allocate scarce resources over business activities in the order of priority and negotiate amongst parties within (employees and employers) and outside (organisation and suppliers or union representatives) the organisation.
(ii) Management as a Process:
This is the practitioner’s view of management. Process means a course of action or proceeding. “Management is the process of planning, organising, leading, and controlling the efforts of organisation members and of using all other organisational resources to achieve stated organisational goals.” Process defines management as a set of functions performed by managers regardless of their level, aptitude and skills.
Functions performed by managers while they regard management as a process are briefly explained below:
1. Planning:
In planning, managers think in advance, the goals of the organisation and the ways to achieve these goals.
2. Organising:
In organising, managers coordinate financial and non-financial resources of the organisation to achieve its goals.
3. Leading:
It refers to activities performed by managers to direct and influence the behaviour of subordinates. This is done through motivation, leadership and communication.
4. Controlling:
It refers to measuring actual organisational performance and ensuring that it conforms to planned performance. It attempts to find deviations and take measures to correct them.
Since management continuously deals with people and integrates the human resource with non-human resources (men, money, material, machines), it is generally defined as:
(a) A social process:
Management deals with people. It makes best use of human resource to convert the inactive resources into productive outputs (goods and services). It understands human needs and satisfies them through various motivational factors, both financial (money) and non-financial (power, prestige, recognition etc.).
(b) A continuous process:
Managers continuously perform the functions of management. Organisations strive to achieve their goals and, therefore, continuously need management to integrate their resources.
(c) An integrating process:
Management coordinates the activities of departments (production, personnel, marketing and finance) and resources (human and non-human) to maximise output at minimum cost.
(iii) Management as a Discipline:
Management, as a discipline, is a distinct field of study with well defined concepts and principles. These principles help in practicing management as Art or Science.
Though management practices ideas from other fields of study as psychology, sociology etc., it is a complete discipline in itself.
Management, which was introduced as a distinct field of study in the year 1886, has grown to an enormous size today.
Some of the important characteristics of management as a discipline are as follows:
1. The increasing importance of management is evidenced by the fact that number of students enrolling in management study is on a constant increase. Around 20-30% of students today join management institutions.
2. The number of articles, journals, text-books and reference books on management is on a constant increase.
3. Management is formally taught in Universities as “Management of Business Administration (MBA)”. In fact, many institutes are named as Institutes of Management.
4. Though management still remains to be called a profession in the true sense of the term, as medicine and engineering, it is fast moving towards professionalization.
(iv) Management as a Group:
Management is a group effort. An individual cannot manage the organisation alone. Managers at all levels — top, middle and low, coordinate their efforts to establish organisational goals and frame policies to achieve them.
The performance of organisation depends upon collective performance of managers. Top managers are responsible for overall management of the enterprise. They frame plans and integrate its working with the external environment. Top managers are titled as chief executives, presidents or vice-presidents of a company.
Middle level managers mediate between top level and lower level managers. They integrate plans and policies, guide and motivate the subordinates to excel in organisational performance.
Lower level managers are also known as first-line managers. They directly instruct the employees to work according to plans.
Management as a group defines performing organisational tasks with and through others.
“Management is defined as the process by which a co-operative group directs actions towards common goals”. — J.L. Massie
The group effort achieves efficiency in resource utilisation and effectiveness in achieving goals. Efficiency means producing the same units of output with lesser number of inputs and effectiveness means achieving the organisational goals successfully.
This is also the sociologist’s view of management. As the organisation becomes more complex, there is need for a class of brains to manage these complexities. This can be done by a group of people with specialised knowledge and education in the field of management. Management is, thus, a separate class of people with specialised knowledge that deals with complexities of an organisation.
(v) Management as an Economic Resource:
This is the economist’s view of management. Development depends upon the effective utilisation of resources like men, material, capital, entrepreneurial ability etc. Co-ordination of these resources is reflected in the end results of the organisation.
As the organisation moves from lower to higher levels of management, there is need for research, development, innovation and invention. This can be done if the resources (human and non-human) are effectively managed by the executives.
The management is, thus, viewed as a separate resource which largely determines the productivity of the organisation. It is one of the factors of production together with land, labour and capital. As Peter F. Drucker puts, “The greatest opportunity for increasing productivity is surely to be found in knowledge, work itself, and especially in management.”
The progressing industries, thus, view management as a separate factor of production which is increasingly required in industries which experience innovations and growth.
On this basis, “management is concerned with ideas, things and people”.
Management is concerned with ideas:
Ideas or thoughts are the route to organisational survival and success. Once an organisation starts operations according to planned courses of action, it constantly changes its plans and policies to exploit environmental opportunities and adapt to environmental changes.
Managers think of new ideas that lead to development and innovations, new markets and customers, new technologies and product lines in the dynamic and changing environment. It is necessary that managers are aware of internal and external environment and generate new ideas to adapt to the changing environment. Generation of ideas helps in becoming market leaders.
Management is concerned with things:
Ideas would remain ideas if not converted into outputs. In order to convert ideas into reality, managers use resources like men, material, money, technology etc. Management of things means effective utilisation of organisational resources to produce outputs at minimum cost.
Management of people:
All ideas and things would remain inactive if people do not convert them into outputs. Workers are not mere inputs of an organisation. They are active participants of the organisation who attain its goals. Unless workers are satisfied with their jobs, they do not contribute effectively to organisational output.
It becomes the duty of managers, therefore, to ensure that workers are satisfied both as individuals and as members of groups (formal and informal). Satisfied workers merge individual and group goals with formal goals and maximise organisational output.
Managers should devise effective methods of recruitment, selection, training and development, offer them the jobs they are best suited for and provide them suitable motivators (financial and non-financial) to keep them satisfied. This managerial effort is known as management of people.
9. Levels of Management:
Managers perform various managerial (planning, organising, staffing, directing and controlling) and operative (production, personnel, finance and marketing) functions. The levels create a hierarchy or scalar chain in the organisation structure.
The levels of management differentiate different managerial positions in the organisation. With growth in size of the organisation and increase in the number of employees, there is increase in the number of levels of the organisation and vice versa.
According to levels, managers and, accordingly management can be classified as follows:
I. Top level managers or Top management.
II. Middle level managers or Middle management.
III. Lower level managers or Lower management.
This distinction is based on authority, responsibility and nature of functions performed by managers.
(i) Top Management:
Top management consists of managers who work at the highest level of the organisational hierarchy. The number of managers in this group is generally the least. It is responsible for the overall management of the organisation. Managers in this level are generally ‘chief executive officers’, ‘president’, ‘vice-president’, ‘General Manager’, ‘managing director’ etc. though the exact title varies from organisation to organisation.
Functions performed by top managers:
The top level management generally performs planning and co-ordination function. It lays down the broad policies and goals of the organisation and is also accountable to the shareholders for functioning of the organisation. All important decisions are made at this level.
Top managers perform the following functions:
(a) They lay the objectives, plans, policies and procedures for the organisation.
(b) They manage the organisation by performing the managerial functions of planning, organising, staffing, directing and controlling.
(c) They appoint the executives for middle level i.e. departmental managers.
(d) They co-ordinate activities of various departments of the organisation.
(e) They integrate internal activities of the organisation with the external environment. They update the internal environment according to changes in the external environment.
(f) They assemble the resources needed to put plans into action.
(g) They issue instructions for preparation of departmental budgets and procedures
(h) They decide future courses of action taking into consideration economic policies and other social, national and international factors.
(i) They cater to the demands of various groups of stakeholders who interact with the organisation, like Government, consumers, creditors, suppliers, owners, employees etc. and try to harmonies their goals with organisational goals.
(ii) Middle Management:
Middle management consists of departmental heads. They serve as a link between top-level and lower-level managers. It implements the organisational goals and plans according to directions of the top management. They act as mediator between top and lower- levels management by clarifying and explaining policies from top to lower-levels and communicate reports from lower-level to the top-level management.
It also trains and boosts the lower-level managers for better performance. Middle-level managers bridge the gap between two. It removes misunderstanding and creates cordial relationships amongst the top and lower levels of management.
The organisation is divided into departments and middle level managers act as heads of their respective departments. They are the ‘departmental managers’, ‘plant managers’,’ assistant managers’ etc., the exact title, however, differs from organisation to organisation.
The heads of the various departments receive orders from the top level managers and they pass it to their subordinates (lower-level managers). They supervise, direct and control the activities of foremen, inspectors and supervisors. The middle- level management is answerable to the top management for functioning of their departments. A large sized organisation has a fairly large number of middle-level managers.
Functions performed by middle-level managers:
Middle-level managers perform the following functions:
(a) They communicate policy decisions of top managers to lower-level managers and guide lower-level managers to implement them. Thus, they direct the activities of lower-level and operating employees.
(b) They lay the goals, plans and policies for their respective departments and ensure their successful accomplishment.
(c) They spend major part of their time (about 15%) in managing day-to-day operations of the company. They do not actively interact with the outside parties (customers, suppliers etc.)
(d) They balance the demands of superiors with the capabilities of subordinates. They observe the activities of lower-level managers and report them to top managers.
(e) They participate in employment and training of lower-level management.
(f) They coordinate the activities within their division or department.
(g) They send important reports and other important data to top management and evaluate performance of junior managers.
(h) They inspire lower-level managers towards better performance.
(i) They motivate subordinates for higher productivity and award them for their outstanding performance.
(j) They recommend amendments in policies of their respective departments.
(iii) Lower Management:
It is also called as operational level management. It consists of first-line managers or supervisors. They serve as a link between middle-level managers and non-managerial employees. They supervise the activities of non-managerial employees and co-ordinate their work with those operating at higher levels of hierarchy.
They train the workers, look after their problems and try to solve them. They operate as the last level of management. These managers are ‘foremen’, ‘supervisors’, ‘office managers’, ‘operating managers’, superintendents, etc. They may be technical supervisors, production supervisors, financial supervisors or marketing supervisors. An organisation has the largest number of managers at the lower- level.
Functions performed by lower-level managers:
Lower-level managers perform the following functions:
(a) They supervise the activities of employees, issue instructions and help them execute those instructions.
(b) They coordinate the work of employees with the organisational resources (financial and non-financial).
(c) They train employees to perform better to ensure smooth conduct of business operations.
(d) They evaluate the performance of employees and send their reports to higher-level managers.
(e) They plan day-to-day operations of the business and do not deal with the outside world.
(f) They assign jobs and tasks to various workers. They also provide training to the workers.
(g) They are responsible for the quality and quantity of production.
(h) They help to solve grievances of the workers.
(i) They prepare periodical reports about the performance of the workers.
(j) They communicate workers’ problems, suggestions and appeals to higher levels.
(k) They receive instructions from middle-level management and implement them to achieve routine functions of the business.
(I) They ensure safety of tools, machines and equipment’s on which workers perform the operations.
(m) They create a sense of belongingness amongst workers which helps in building the image of the enterprise.