BUSINESS

MANAGEMENT
Unit I
 What is Management

Management is a purposive activity. It is something

that directs group efforts towards the attainment of
certain pre-determined goals. It is the process of
working with and through others to effectively achieve
the goals of the organization, by efficiently using
limited resources in the changing world. Of course,
these goals may vary from one enterprise to another.
MANAGEMENT

E.g.: For one enterprise it may be launching

of new products by conducting market
surveys and for other it may be profit
maximization by minimizing cost
Definition of MANAGEMENT

According to Harold Koontz, “Management is

an art of getting things done through and
with the people in formally organized groups.
It is an art of creating an environment in
which people can perform and individuals
and can co-operate towards attainment of
group goals”.

According to F.W. Taylor, “Management is an

art of knowing what to do, when to do and
see that it is done in the best and cheapest
way”.
Characteristics of Management

01
Management is goal
oriented process
02
Management is
Universal
03
Management is a
continuous process

04
Management is
Intangible
05
Management is an
Integrative force
06
Management is
multidisciplinary
Management
vs
Administration
 BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

Meaning An organized way of managing The process of administering an

people and things of a business organization by a group of people is
organization is called the known as the Administration.
Management.

Authority Middle and Lower Level Top level

Role Executive Decisive

Concerned with Policy Implementation Policy Formulation

Area of operation It works under administration. It has full control over the activities of
the organization.

Applicable to Profit making organizations, i.e. Government offices, military, clubs,

business organizations. business enterprises, hospitals,
religious and educational
organizations.
 BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

Decides Who will do the work? And How What should be done? And When is
will it be done? should be done?

Work Putting plans and policies into Formulation of plans, framing policies
actions. and setting objectives

Focus on Managing work Making best possible allocation of

limited resources.

Key person Manager Administrator

Represents Employees, who work for Owners, who get a return on the
remuneration capital invested by them.

Function Executive and Governing Legislative and Determinative

 Management administration
Management is defined as an act of The nature of administration is
managing people and their work, bureaucratic. It is a broader term as it
for achieving a common goal by involves forecasting, planning,
using the organization’s resources. organizing and decision-making
It creates an environment under functions at the highest level of the
which the manager and his enterprise. Administration represents
subordinates can work together for the top layer of the management
the attainment of group objective. hierarchy of the organization
MANAGEMENT AS AN ART
The main elements of an art are –
• Personal Skills
• Practical know-how
• Application of knowledge
• Result orientation
• Creativity
• Constant practice aimed at perfection

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MANAGEMENT AS AN ART
MANAGEMENT IS BASICALLY AN ART BECAUSE OF THE FOLLOWING
REASONS –
• A manager applies his knowledge and skills to coordinate the efforts

of his people

• Mgt seeks to achieve concrete practical results

• Mgt is creative. It brings out new situation and converts into output

Effective Mgt lead to realization of Organizational and other goals.

Mastery in Mgt requires a sufficiently long period of experience in, managing.

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MANAGEMENT AS A PROFESSION
The essential attribute of a profession

• A well-defined and organized body of knowledge

• Learning and Experience

• Entry restricted by qualification

• Recognized national body

• Ethical code of conduct

• Dominance of service motive

MANAGEMENT AS A PROFESSION
MGT IS NOT A FULL FLEDGED PROFESSION NOW DUE TO THE
FOLLOWING SHORTCOMINGS

• Skills not fully developed

• No uniform method of entry

•Objective is monetary rather than service

•Ethical code is not strict

•Associations are not statutory bodies

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MANAGEMENT AS SCIENCE
The essential elements of Science

• Systematized body of Knowledge

• Underlying principles and theories developed through continuous observation, inquiry,

experimentation and research.

• Universal truth and applicability.

• Organized body of knowledge can be taught and learnt in class room

and outside.

• Mgt is a social science. It contains all the essentials of science. It is

an inexact science.

• PERT, CPM, Cost A/C, Finance, MBO etc

Importance of management

1. It helps in achieving group goals

2. It results in optimum utilization of resources

3. It reduces costs

4. Establishes sound organization

5. Establishes equilibrium

6. Essentials for prosperity of society

Levels of Management

Top level Middle Level Lower Level

board of directors, chief branch managers and supervisory / operative
executive or managing departmental managers level of management
director.
Top Level of Management

The role of the top management can be summarized as follows -

1. Top management lays down the objectives and broad policies of the enterprise.

2. It issues necessary instructions for preparation of department budgets,

procedures, schedules etc.

3. It prepares strategic plans & policies for the enterprise.

4. It appoints the executive for middle level i.e. departmental managers.

5. It controls & coordinates the activities of all the departments.

6. It is also responsible for maintaining a contact with the outside world.

7. The top management is also responsible towards the shareholders for the
performance of the enterprise.
Middle Level of Management
● They execute the plans of the organization in accordance with the policies and
directives of the top management.

● They make plans for the sub-units of the organization.

● They participate in employment & training of lower level management.

● They interpret and explain policies from top level management to lower level.

● They are responsible for coordinating the activities within the division or
department.

● It also sends important reports and other important data to top level
management.

● They evaluate performance of junior managers.

● They are also responsible for inspiring lower level managers towards better
performance.
Lower Level of Management
● They execute the plans of the organization in accordance with the policies and directives of the
top management.

● They make plans for the sub-units of the organization.

● They participate in employment & training of lower level management.

● They interpret and explain policies from top level management to lower level.

● They are responsible for coordinating the activities within the division or department. Assigning
of jobs and tasks to various workers.

● They guide and instruct workers for day to day activities.

● They are also entrusted with the responsibility of maintaining good relation in the organization.

● They communicate workers problems, suggestions, and recommendatory appeals etc to the
higher level and higher level goals and objectives to the workers.
01
Managerial
Skills
Managerial Skills by Robert L. Katz

According to Robert L. Katz

“if managers have the necessary

management skills then they will probably
perform well and be relatively successful. On
the other hand, if managers do not have the
necessary management skills, they will
probably perform poorly and be relatively
unsuccessful in their careers. There are three
types of primary skills that are important for
successful management performance. "In
1955, Robert L. Katz published a book named
“Skills of an Effective Administrator”.
Managerial Skills by Robert L. Katz
Conceptual skills
● Conceptual skills are related to concepts and mental conception. It is a conceptual framework
intended to develop a new product and or idea.

● Since conceptual skills are in the form of imagination. – chimerical, fantasy, or vision. Boulton
has called these soft skills and is hardly visible in a person.

● Conceptual skills are also known as general management skills in an organization. It refers to the
ability to see the whole picture to recognize significant elements in a situation.
Human Skills
● Human Skills also referred to as human relations skills or interpersonal skills.

● Human Skills can be defined as one’s ability to work effectively with others on a
person-to-person basis and to build up cooperative group relations to accomplish organizational
objectives.

● Management in process of getting things done with and through people and no manager can be
effective without suitable human skills irrespective of his being technically and conceptually
competent.

● Human skills are required for the effective performance of the following Managerial Roles:
Technical Skills
● Technical Skills are concerned with what is done, it shows an ability to use tools, procedures, or
techniques in a specialized area.

● These skills pertain to knowledge and proficiency in procedures, methods, and techniques which
are used in doing work.

● Matthew Boulton has called these skills hard skills and is easily visible in a person.

● Technical skills learned by Accountants, Engineers, Managers, Operators, and other persons are
developed by the actual practice on the job.
Managerial Skills Summary

1. Technical skills deal with

things,

2. Human skills deal with

people, and

3. Conceptual skills deal with

ideas.
Who are managers?

Managers are responsible for the processes

of getting activities completed efficiently with
and through other people and setting and
achieving the firm’s goals through the
execution of four basic management
functions: planning, organizing, leading, and
controlling.
 02
Roles of a
Manager
 Interpersonal Roles of Manager
The interpersonal role is all about interacting with
people inside and outside the organization.

There are three types of interpersonal roles of a

manager in an organization;

• Figurehead role,

• Leader role

• Liaison role
Interpersonal Roles of Manager
Figurehead

● A manager plays a figurehead role when he performs activities such as attending ceremonial
functions which have symbolic nature.

● Sometimes managers greet visitors, attend social functions involving employees, and handling
out merit certificates and other awards to outstanding employees.

Leader

● The leader role of a manager involves leading and motivating his subordinates for willing
contribution. Managers perform leader roles when they perform activities such as Hiring,
Training, motivating, and guiding subordinates.

Liaison

● In the Liaison role, the manager act as a mediator between the organization and the outsider.

● He serves as a connecting link between his units and organizational units, and sometimes with
people from the external environment.
 Informational role of a manager
The informational role of a manager is like serving as a
focal point for the exchange of information. It includes
communication, giving, and receiving information, both
within and outside the organization. Information is
required at every level in an organization to make
decisions effective.

There are three types of informational roles of a

manager in an organization.

● Monitor role

● Disseminator role

● Spokesperson role
Informational role of a manager
Monitor

● The manager seeks and receives information about those factors which affect his activities.
These factors may be within the organization as well as outside it.

● By playing a monitor role, Managers gain an understanding of the Organization and its
environment.

Disseminator

● In the disseminator role, the manager transmits information to subordinates, peers, and
superiors within the Organization.

● The manager has to act as a disseminator and distributes the information to his subordinates
because they may not be in a position to collect it.
Informational role of a manager
Spokesperson

● In the spokesperson role, the manager represents his organization or unit while interacting with
outsiders.

● More precisely, the Spokesperson Speaks on behalf of the Organization and transmits
information on Organization plans, policies, and actions to outsiders.
 Decisional Roles of Manager
Decisional roles of a manager involve choosing the most
appropriate and best alternative out of the available
ones so that the organization achieves its objectives
when the chosen alternative is put into action.

In his decisional roles, the Manager performs four

different roles as follows;

● Entrepreneur role

● Disturbance handler role

● Resource allocator role

● Negotiator role
Decisional Roles of Manager
Entrepreneur

● Manager as an Entrepreneur role, take initiative and make changes or improvements in the
activities of the Organization.

● The manager assumes certain risk which is involved in terms of the outcomes of action because
these are affected by a variety of external factors.

Disturbance handler

● As a role of disturbance handler, the manager has in charge and takes corrective action when
Organization faces unexpected crises.

● The manager is required to tackle those forces and events which tend to disturb the
organizational equilibrium and normal functioning.

● These forces and events may be strikes by Employees and the Trade/Labor Union, shortage of
raw material, employee complaints and grievances, etc.
Decisional Roles of Manager
Resource allocator

● A manager as the resource allocator role must divide work and delegate authority among his
subordinates. He must decide who will get what work.

● The manager allocates resources such as human, physical and financial among his subordinates.

Negotiator

● the manager represents the organization in bargaining and negotiations with outsiders as well
as insiders.

● In the negotiator role, the manager negotiates with various interest groups in the organization.
Such interest groups are shareholders, employees, and outside agencies.
The Evolution of
Management Theory
The driving force behind the evolution of

management theory is the search for

better ways to utilize organizational

resources.
 03
Scientific
Management
F.W. Taylor(1856-1915)
Scientific Management
● The systematic study of relationships between people and tasks for the purpose of
redesigning the work process to increase efficiency.

● Taylor believed that if the amount of time and effort that each worker expends to
produce a unit of output can be reduced by increasing specialization and division
of labor, the production process will become more efficient.
Taylor’s Principles
● Study the way workers perform their tasks, gather all informational job knowledge that workers
possess, and experiment with ways of improving how tasks are performed

● Codify the new methods of performing tasks into written rules and standard operating
procedures.

● Carefully select workers who possess skills and abilities that match the needs of the task, and
train them to perform the task according to the established rules and procedures.

● Establish a fair or acceptable level of performance for a task, and then develop a pay system that
provides a reward for performance above the acceptable level.
Taylor’s Principles
This scientific management became nationally known, but the selective implementation of the
principles created more harm than good.

● Workers felt that as their performance increased, managers required them to do more work for
the same pay.

● Increases in performance meant fewer jobs and greater threat of layoffs

● Monotonous and repetitive

● Dissatisfaction
 03
Fayol’s
Principles of
Management
Henri Fayol (1841-1925)
14 Principles of Management:
● Division of Labor ● Order

● Authority and Responsibility ● Initiative

● Unity of Command ● Discipline

● Scalar Chain ● Remuneration

● Centralization ● Stability

● Unity of Direction ● Subordination of Individual

Interests
● Equity
● Esprit de Corps
 03
Hawthrone
Experiments
George Elton Mayo (1880 –
1949)
Hawthrone Experiments

● The Hawthorne Experiment brought out that the productivity

of the employees is not the function of only physical
conditions of work and money wages paid to them.

● Productivity of employees depends heavily upon the

satisfaction of the employees in their work situation. Mayo’s
idea was that logical factors were far less important than
emotional factors in determining productivity efficiency.
Hawthorne Experiment

● The Hawthorne experiment were first conducted in November, 1924 at Western Electric
Company’s Hawthorne plant in Chicago

● The initial tests were sponsored by The National Research Council (NRC) of the National Academy
of Sciences

● In 1927, a research team from Harvard Business School was invited to join the studies after the
illumination test drew unanticipated results

● A team of researchers led by George Elton Mayo from the Harvard Business School carried out
the studies

● (General Electric originally contributed funding, but they withdrew after the first trial was
completed)
Hawthrone Experiments

● 1. Illumination Experiments ( illumination affected

Productivity)

● 2. Relay assembly Test room Experiments ( Working

conditions and Productivity), piece work, rest pauses, shorter
working hours,

● 3. Mass interviewing Programme ( Direct Questions),

Grievances, deep rooted disturbance, satifactory level

● [Link] Wiring Test Room Experiment.

Hawthrone Experiments

● 1. Illumination Experiments ( illumination affected

Productivity)

● 2. Relay assembly Test room Experiments ( Working

conditions and Productivity), piece work, rest pauses, shorter
working hours,

● 3. Mass interviewing Programme ( Direct Questions),

Grievances, deep rooted disturbance, satifactory level

● [Link] Wiring Test Room Experiment.

 Illumination Experiments
● 1924-1927 ,Funded by General Electric

● Conducted by The National Research Council (NRC) of the National Academy of Sciences with engineers from
MIT

● Measured Light Intensity vs. Worker Output

● Result :

● Higher worker productivity and satisfaction at all light levels

● Worker productivity was stopped with the light levels reached moonlight intensity.

● Conclusions:

● Light intensity has no conclusive effect on output

● Productivity has a psychological component

 Relay Assembly Test Experiments
● 1927-1929

● Experiments were conducted by Elton Mayo

● Manipulated factors of production to measure effect on output:

○ Pay Incentives (Each Girls pay was based on the other 5 in the group)

○ Length of Work Day & Work Week (5pm, 4:30 pm, 4pm)

○ Use of Rest Periods (Two 5 minutes break)

○ Company Sponsored Meals (Morning Coffee & soup along with sandwich)
 Relay Assembly Test Experiments

● Results:

● Higher output and greater employee satisfaction

● Conclusions:

● Positive effects even with negative influences – workers’ output will increase as a response to attention

● Strong social bonds were created within the test group. Workers are influenced by need for recognition,
security and sense of belonging
 Mass Interview Program
● Conducted 20,000 interviews.

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

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

● Results

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

● - Complaints were symptoms of deep-rooted disturbances.

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

● Social groups created big impact on work.

● Production was restricted by workers regardless all financial incentives offered as group pressure are on
individual workers.
 Mass Interview Program
● 1931-1932

● Limited changes to work conditions

○ Segregated work area

○ No Management Visits

○ Supervision would remain the same

○ Observer would record data only – no interaction with workers

○ Small group pay incentive

● Result:

● No appreciable changes in output

Hawthrone Experiments - OUTCOMES

● Workers working in a group develop bond of relationships

● Behaviour at workplace depens on their mental state,

emotions and prejudices

● Emotional factors play an important role in determining

● Human and liberal attitude of supervisor helps in improving

performance

● Managerial skills and technical skills are not necessary to be

a successful leader.
What is Systems
Approach?
Systems approach is a
management perspective which
advocates that any business
problem should be seen as system
as a whole which is made up of an
hierarchy of
sub-systems.

It was first initiated by Ludwing

Von Bertalanfty.
Factors in Systems Approach

Dependency Responsiveness
Each part of the system derives inputs The system changes as per
and information from other system the environment and reacts
to the changes in the
environment.

Results Focus
Systems approach is The focus of each part of
focused on producing right the system should be
results for the overall clearly and well defined.
system.
 Factors in Systems Approach
● Advantages of Systems approach

● 1. It helps to see the problem at holistic level and resolves the issues

● 2. Systems approach helps understand the problem in a better way and comes up with more efficient solution

● 3. It clearly defines the scope or the boundary for systems and problems where in influence of internal and
external factors can be seen

● Disadvantages of Systems Approach

● 1. Sometimes problems are too complex and needs focus on the sub-systems rather than keep seeing system as a
whole.

● 2. While designing from bottom to top, focus on sub-systems is required and important details can be left in case
focus is only kept on overall system

● 3. Many a times while solving a specific issue leads to focus on a component and not on overall system