Principles Of Management & Organizational Behaviour (MS201) 60 classes

Objective: Objective of the course is to give a basic perspectives of Management

theories and practices. This will form foundation for further study of functional
areas of management and give a conceptual framework for understanding.
UNIT I - 14 Hrs
1. Introduction to Management: Concept of management
2. Nature of management importance of management
3. Functions of management
4. Evolution of management thought - scientific management Modern
management
5. Human relations theories management Vs administration.
UNIT II - 12 Hrs
6. Planning: Importance advantages disadvantages
7. Types of plans
8. Process of planning steps involved in planning,
9. Techniques of planning
10. Decision Decision Making Process.
UNIT III - 10 Hrs
11. Organizing: Principles of organization
12. Types of organization structures,
13. Merits, demerits and suitability
14. Departmentation, Centralization and decentralization
UNIT IV - 14 Hrs
15. Directing and Controlling: Meaning and Nature of Directing
16. Leadership,
17. Communications - formal and informal communication.
18. Controlling: Importance Process and
19. Techniques of controlling.
UNIT V - 10 Hrs
20. Organizational Behaviour: Organizational Behaviour Meaning Nature
and Scope
21. Contributions of different disciplines of OB
22. Context of OB Organizational and Environmental context.
Text Books:
1. Rama Swamy, Principles of Management, Himalaya Publication.
2. L.M.Prasad, Principles and Practices of Management, Sultan Chand.
3. Weirich & Koontz, Essential of Management, TMH.
4. Massie, Essentials of Management.

Reference Books:
1. Jonus A. F. Stoner, Management, Thomson.
2. Heinz Weihrich, Harold Koontz, Management A Global Perspective, TMH,
10/e, 2002.
3. Stephen P. Robbins Mary Coulter, Management, PHI, 8/e, 2006






UNIT I - 14 Hrs
1. Introduction to Management: Concept of management
2. Nature of management importance of management
3. Functions of management
4. Evolution of management thought - scientific management Modern
management
5. Human relations theories management Vs administration.

1. Introduction to Management: Concept of management

Case Study-1: Management at HCL
At a time when India had a total of 250 computers, Shiv Nadar led a young
team which passionately believed in the growth of the indigenous IT industry.
That vision in 1976, born out of a Delhi barsaati, has resulted three decades later
in creating a US $ 3.5 billion global enterprise. HCL is today a leader in the IT
industry, employing 41,000 professionals and having a global presence in 16
countries spanning locations in the US, Europe, Japan, ASEAN and the Pacific Rim.
HCLs business today spans IT hardware manufacturing and distribution, system
integration, technology and software services, business process outsourcing, and
infrastructure management. HCL Enterprises is a leader in global technology and IT
services.
HCLs basic plan of developing an indigenous microcomputer bore fruit in
1978 at the same time as Apple and three years before IBM. This was considered by
many industry observers as the birth of the Indian computer industry. Under the able
direction of its founding fathers it commenced global operations in the US in 1988.

Shiv Nadars risk-taking ability is legendary and he has often made daring
forays based on his conviction of the future. At a time when hardware was the name
of the game, Nadar foresaw the huge potential in the area of IT education and learning
from which NIIT was born. Yet again when software development was still in the
nascent stages, Shiv Nadar took the lead and today HCL is a force to reckon with in
the global markets. The organisation structure of HCL Enterprises consists of two
listed companies in India HCL Technologies and HCL Infosystems. Shiv Nadar,
Chairman and CEO, attributes the success of the group to its management team
and their entrepreneurial spirit, which together have enabled it to handle rapid
changes in environments and technologies, and to transform threats into
opportunities. Fundamental to the process has been the development of new
paradigms for the unprecedented situations into which the group ventures. These
include guidelines for organisation restructuring, market creation, technology
leveraging and business up-scaling. Like any other business enterprise profits are
important for the survival and growth of HCL as an enterprise. At HCL the
management believes that a satisfied employee creates a satisfied customer, who in
turn creates profits that lead to satisfied shareholders.
HCL has a strong sense of social responsibility. It has set up
educational institutions in the fields of management, engineering and computer
education, in which one-third of the students are girls. According to Shiv Nadar, the
future belongs to the global enterprise which is able to transform itself according to
the challenges of global economy.























Introduction
Management is required in all kinds of organisations whether they are
manufacturing computers or handlooms, trading in consumer goods or
providing hairstyling services and even in non-business organisations.
For Example: Suhasini is the branch manager of Fabmart
They (Suhasini of Fabmart, Nusli Wadia of Bombay Dyeing, Bill Gates of
Microsoft, Shiv Nadar of HCL Enterprises, Indra Nooyi of Pepsico and
the Principal of our university.) all manage organisations. Schools,
hospitals, shops and large corporations are all organisations with diverse goals
that are aimed at achieving something.
No matter what the organisation is or what its goals might be, they all have
something in common management and managers.
You have observed that Suhasinis work as a manager consists of a series
of different activities or functions aimed at achieving the goals of the
organisation.
These interconnected and interdependent functions are part of management.
Successful organisations do not achieve their goals by chance but by
following a deliberate process called management
Management is essential for all organisations big or small, profit or non-
profit, services or manufacturing.
Management is necessary so that individuals make their best contribution
towards group objectives.
Management consists of a series of interrelated functions that are
performed by all managers.
Shiv Nadar, the CEO of HCL Enterprises performs all these functions and
so does Suhasini at Fabmart. Later in this chapter you will understand that
although both of them are managers, they function at different levels in the
organisation.
Case Study-2: Suhasini the branch manager of Fabmart
Suhasini is the branch manager of Fabmart, an organisation that promotes
the sales of Indian handloom and handicraft products while providing equitable
employment to traditional artisans. Fabmart sources its products from over 7500 craft
persons and artisans across India. Planning the products is a difficult task that is done by
a team of marketing and design experts to ensure that whatever is produced is
according to market demand. These plans are then communicated by Suhasini to the
rural artisans who actually implement them.
Fabmart is a private limited company with several branches all over the
country. It has a complex organisation structure in which actual production is in the
hands of several skilled artisans and marketing is done by staff at branches such as the
one managed by Suhasini. This means constantly providing direction and motivation
to her employees. She also has to ensure that production is carried out according to
plans in order to ensure regular sales.
A typical day in Suhasinis life consists of a series of interrelated and
continuous functions. She has to plan a special festive collection for Diwali and
Christmas. This means organising more funds and recruiting more artisans. She
also has to regularly communicate with her suppliers to ensure that deadlines regarding
delivery of goods are met. In the course of the day she meets customers for a
general feedback and any suggestions that they may have.
The time spent by managers in different functions however is different.
Managers at the top level spend more time in planning and organising than
managers at lower levels of the organisation.

Concept of Management
Management is a very popular term and has been used extensively for all
types of activities and mainly for taking charge of different activities in any
enterprise.
















Management is an activity which is necessary wherever there is a group of
people working in an organisation. People in organisations are performing
diverse tasks but they are all working towards the same goal.
Management aims at guiding their efforts towards achieving a common
objective a goal.
Thus, management has to see that tasks are completed and goals are achieved
(i.e., effectiveness) with the least amount of resources at a minimum cost (i.e.,
efficiency).
Management, has therefore, been defined as a process of getting things done
with the aim of achieving goals effectively and efficiently.
We need to analyse this definition. There are certain terms which require
elaboration. These are (a) process, (b) effectively, and (c) efficiently.
Process in the definition means the primary functions or activities that
management performs to get things done. These functions are planning,
organising, staffing, directing and controlling which we will discuss later in
the chapter and the book.
Being effective or doing work effectively basically means finishing the
given task.
Effectiveness in management is concerned with doing the right task,
completing activities and achieving goals. In other words, it is concerned with
the end result.
But it is not enough to just complete the tasks. There is another aspect also,
i.e., being efficient or as we say doing work efficiently.
Efficiency means doing the task correctly and with minimum cost.
There is a kind of cost-benefit analysis involved and the relationship
between inputs and outputs. If by using less resources (i.e., the inputs)
Definitions of Management
Management is the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently accomplish
selected aims. --- Harold Koontz and Heinz Weihrich

Management is defined as t he process of planning, organising, actuating and
controlling an organisations operations in order to achieve coordination of the
human and material resources essential in the effective and efficient attainment
of objectives. ---Robert L. Trewelly and M. Gene Newport

Management is the process of working with and through others to effectively
achieve organisational objectives by efficiently using limited resources in the
changing environment. ---Kreitner

more benefits are derived (i.e., the outputs) then efficiency has increased.
Efficiency is also increased when for the same benefit or outputs, fewer
resources are used and less costs are incurred. Input resources are money,
materials, equipment and persons required to do a particular task.
Obviously, management is concerned with the efficient use of these
resources, because they reduce costs and ultimately lead to higher profits.
Therefore, it is important for management to achieve goals (effectiveness)
with minimum resources i.e., as efficiently as possible while maintaining a
balance between effectiveness and efficiency.
Usually high efficiency is associated with high effectiveness which is the
aim of all managers. But undue emphasis on high efficiency without being
effective is also not desirable. Poor management is due to both inefficiency
and ineffectiveness.





































Case Study-3: Characteristics of Management
The Management Mantra from GE
Jack Welch was appointed CEO of GE in 1981. At that time the firm
had a market capitalisation of $13 billion. In 2000 when he stepped
down the firms turnover had increased multifold to $500 billion. What was
the secret of Welchs success? He has laid down the following pointers for
managers to be successful:
Create a vision and then ignite your organisation to make this vision a
reality. Get people so passionate about what they are doing that hey cannot
wait to execute this plan. Have great energy, competitive spirit and the
ability to spark excitement and achieve results. Search for leaders who have
the same qualities.
Focus on strategic issues. Your job is to understand the vital issues within
each of your businesses. Recognise the talent needed to win in those
markets.
Focus on the main issue . Your job is to see the big picture. Dont manage
every detail. Dont get caught up in the minute details, but instead inspire
others to execute some of your vision. Surround yourself with great people
and trust them to do their job and contribute their best to the organisation.
Involve everyone and welcome great ideas from everywhere.
Anyone can be a leader, just so long as they contribute, and the most
meaningful way for anyone to contribute is to come up with a good idea.
Business is all about getting the best ideas from veryone. New ideas are the
lifeblood of the organisation, the fuel that makes it run. The hero is the
person with a new idea. There is simply nothing more important to an
organisation than expressing ideas and creating a vision.
Lead by example. To spark others to perform, you must lead by example.
Jack Welchs mastery of the four Es of leadership Energy, Energise,
Edge, and Execution was always in evidence. He had great energy,
sparked others, had incredible competitive spirit, and had a record of
execution that was second to none. This is a key of the Welch phenomenon.
Had he been lacking in any of the traits he espoused, he would not have
commanded such acclaim

Characteristics of Management
After going through some of the definitions we find some elements that
may be called the basic characteristics of management:
1. Management is a goal-oriented process:
An organisation has a set of basic goals which are the basic reason for
its existence. These should be simple and clearly stated. Different
organisations have different goals. For example, the goal of a retail store
may be to increase sales, but the goal of The Spastics Society of India is
to impart education to children with special needs. Management unites
the efforts of different individuals in the organisation towards
achieving these goals.
2. Management is all pervasive:
The activities involved in managing an enterprise are common to all
organisations whether economic, social or political. A petrol pump needs
to be managed as much as a hospital or a school. What managers do in
India, the USA, Germany or Japan is the same. How they do it may be
quite different. This difference is due to the differences in culture,
tradition and history.
3. Management is multidimensional:
Management is a complex activity that has three main dimensions. These
are:
(a) Management of work: All organisations exist for the performance
of some work. In a factory, a product is manufactured, in a garment
store a customers need is satisfied and in a hospital a patient is
treated. Management translates this work in terms of goals to be achieved
and assigns the means to achieve it. This is done in terms of problems
to be solved, decisions to be made, plans to be established, budgets to be
prepared, responsibilities to be assigned and authority to be delegated.
(b) Management of people: Human resources or people are an
organisations greatest asset. Despite all developments in technology
getting work done through people is still a major task for the manager.
Managing people has two dimensions
(i) it implies dealing with employees as individuals with diverse needs
and behavior;
(ii) it also means dealing with individuals as a group of people.
The task of management is to make people work towards achieving the
organisations goals, by making their strengths effective and their
weaknesses irrelevant.
(c) Management of operations: No matter what the organisation, it has
some basic product or service to provide in order to survive. This requires
a production process which entails the flow of input material and the
technology for transforming this input into the desired output for
consumption. This is interlinked with both the management of work and
the management of people.
4. Management is a continuous process:
The process of management is a series of continuous, composite, but
separate functions (planning, organising, directing, staffing and
controlling). These functions are simultaneously performed by all
managers all the time. You may have observed that Suhasini at Fabmart
performs several different tasks in a single day. Some days she may spend
more time in planning a future exhibition and on another day she may
spend time in sorting out an employees problem. The task of a manager
consists of an ongoing series of functions.
5. Management is a group activity:
An organisation is a collection of diverse individuals with different needs.
Every member of the group has a different purpose for joining the
organisation but as members of the organisation they work towards
fulfilling the common organisational goal. This requires team work and
coordination of individual effort in a common direction. At the same time
management should enable all its members to grow and develop as needs
and opportunities change.
6. Management is a dynamic function:
Management is a dynamic function and has to adapt itself to the
changing environment. An organisation interacts with its external envi-
ronment which consists of various social, economic and political
factors. In order to be successful, an organisation must change itself
and its goals according to the needs of the environment. You probably
know that McDonalds, the fast food giant made major changes in its
menu to be able to survive in the Indian market.
7. Management is an intangible force:
Management is an intangible force that cannot be seen but its presence can
be felt in the way the organisation functions. The effect of management
is noticeable in an organisation where targets are met according to plans,
employees are happy and satisfied, and there is orderliness instead of chaos.


























Case Study-4: Objectives of Management
ITC Empowering Rural India ITC
A quiet digital revolution is reshaping the lives of farmers in remote Indian
villages.In these villages, farmers grow soyabeans, wheat and coffee in small plots of
land, as they have done for thousands of years. A typical village has no reliable
electricity and has antiquated telephone lines. The farmers are largely illiterate and
have never seen a computer. But farmers in these villages are conducting e-business
through an initiative called E-Choupal, created by ITC, one of Indias largest
consumer product and agribusiness companies.
ITCs E-Chaupal initiative is a fine example of a business organisation
fulfilling corporate social responsibility. The basic aim of the programme is to
provide farmers in rural India with the opportunity to make use of a direct
marketing channel eliminating multiple intermediation and wasteful handling and
unnecessary transaction costs. It is the single-largest information technology-based
intervention by a corporate entity in rural India, transforming the Indian farmer into a
progressive knowledge-seeking citizen, enriching him with knowledge and elevating
him to a new order of empowerment.
E-Choupal delivers real-time information and customised knowledge to
improve the farmers decision-making ability, thereby better aligning farm output to
market demands; securing better quality, productivity and improved price discovery.
Given the low levels of literacy in the rural sector, the role of the Choupal Sanchalak,
the lead farmer of the village, in facilitating physical interface between the computer
terminal and the farmers is central to the project. E-Choupal Smart Cards enable
farmer identification to provide customised information on the E-Choupal website.
Online transactions are captured to reward farmers for volume and value of usage.
The E-Chaupal initiative has found its way into the Harvard Business School
as a leading case study illustarating the use of modern technology by a leading
business house for the benefit of the rural poor.
Objectives of Management
Management seeks to achieve certain objectives which are the desired result
of any activity. They must be derived from the basic purpose of the business. In
any organisation there are different objectives and management has to achieve
all objectives in an effective and efficient manner. Objectives can be classified
into organisational objectives, social objectives and personal or individual
objectives.
1. Organisational Objectives:
Management is responsible for setting and achieving objectives for the
organisation. It has to achieve a variety of objectives in all areas considering
the interest of all stakeholders including, shareholders, employees,
customers and the government. The main objective of any organisation should
be to utilise human and material resources to the maximum possible
advantage, i.e., to fulfill the economic objectives of a business. These are
survival, profit and growth.
Survival: The basic objectives of any business is survival. Management
must strive to ensure the survival of the organisation. In order to survive, an
organisation must earn enough revenues to cover costs.
Profit: Mere survival is not enough for business. Management has to ensure
that the organisation makes a profit. Profit provides a vital incentive for the
continued successful operation of the enterprise. Profit is essential for
covering costs and risks of the business.
Growth: A business needs to add to its prospects in the long run, for this it
is important for the business to grow. To remain in the industry,
management must exploit fully the growth potential of the organisation.
Growth of a business can be measured in terms of sales volume increase
in the number of employees, the number of products or the increase in
capital investment, etc. There can be other indicators of growth.
2. Social objectives: It involves the creation of benefit for society. As a
part of society, every organisation whether it is business or non-business,
has a social obligation to fulfill. This refers to consistently creating
economic value for various constituents of society. This includes using
environmental friendly methods of production, giving employment
opportunities to the disadvantaged sections of society and providing basic
amenities like schools and crches to employees.
3. Personal objectives: Organisations are made up of people who have
different personalities, backgrounds, experiences and objectives. They all
become part of the organisation to satisfy their diverse needs. These vary
from financial needs such as competitive salaries and perks, social needs
such as peer recognition and higher level needs such as personal growth
and development. Management has to reconcile personal goals with
organisational objectives for harmony in the organization.








Importance of Management
Having understood that management is a universal activity that is integral to any
organisation we now examine some of the reasons that have made management so
important:
1. Management helps in achieving group goals: Management is required not
for itself but for achieving the goals of the organisation. The task of a
manager is to give a common direction to the individual effort in achieving the
overall goal of the organisation.
2. Management increases efficiency: The aim of a manager is to reduce
costs and increase productivity through better planning, organising,
directing, staffing and controlling the activities of the organisation.
3. Management creates a dynamic organisation: All organisations have to
function in an environment which is constantly changing. It is generally
seen that individuals in an organisation resist change as it often means moving
from a familiar, secure environment into a newer and more challenging one.
Management helps people adapt to these changes so that the organisation is
able to maintain its competitive edge.
4. Management helps in achieving personal objectives: A manager motivates
and leads his team in such a manner that individual members are able to
achieve personal goals while contributing the overall organisational
objective. Through motivation and leadership the management helps
individuals to develop team spirit, cooperation and commitment to group
success.
5. Management helps in the development of society: An organisation has
multiple objectives to serve the purpose of the different groups that
constitute it. In the process of fulfilling all these, management helps in
the development of the organisation and through that it helps in the
development of society. It helps to provide good quality products and
services, creates employment opportu nities, adopts new technology for the
greater good of the people and leads the path towards growth and
development.

Nature of Management
Management is as old as civilisation. Although modern organisations are of
recent origin, organised activity has existed since the time of the ancient
civilisations. In fact, organisations may be considered the distinguishing feature
that separated civilised society from uncivilised ones. The earliest management
practices were a set of rules and regulations that grew out of the experiences
of governmental and commercial activities. The development of trade and
commerce gradually led to the development of management principles and
practices.
The term management today has several different connotations that
highlight the different aspects of its nature. The study of management has evolved
over a period of time along with the modern organisations; based both on the
experience and practice of managers and a set of theoretical relationships. Over a
period of time, it has grown into a dynamic subject with its own special
characteristics. However, one question that needs to be addressed pertaining
to the nature of management is whether it is a science or an art or both?
In order to answer this let us examine the features of both science and art to
see how far management fulfills them.
I. Management as an art
What is art? Art is the skillful and personal application of existing
knowledge to achieve desired results. It can be acquired through study,
observation and experience. Since art is concerned with personal
application of knowledge some kind of ingenuity and creativity is required
to practice the basic principles learnt. The basic features of an art are as
follows:
1. Existence of theoretical knowledge: Art presupposes the existence of
certain theoretical knowledge. Experts in their respective areas have
derived certain basic principles which are applicable to a particular form of
art. For example, literature on dancing, public speaking, acting or music is
widely recognised.
2. Personalised application: The use of this basic knowledge varies from
individual to individual. Art, therefore, is a very personalised concept.
For example, two ancers, two speakers, two actors, or two writers will
always differ in demonstrating their art.
3. Based on practice and creativity: All art is practical. Art involves the
creative practice of existing theoretical knowledge. We know that all music is
based on seven basic notes. However, what makes the composition of a
musician unique or different is his use of these notes in a creative
manner that is entirely his own interpretation.
II. Management as a science: Science is a systematised body of
knowledge that explains certain general truths or the operation of general
laws. The basic features of science are as follows:
1. Systematised body of knowledge: Science is a systematic body
knowledge. Its principles are based on a cause and effect relationship.
For example, the phenomenon of an apple falling from a tree towards the
ground is explained by the law of gravity.
2. Principles based on experimentation: Scientific principles are first
developed through observation and then tested through repeated
experimentation under controlled conditions.
3. Universal validity: Scientific principles have universal validity and
application. Based on the above features, we can say that management
has some characteristics of science.
III. Management as a profession
You have understood so far that all forms of organised activity need to be
managed. You would also have observed that organisations look for
individuals with specific qualifications and experience to manage them. It
has also been observed that there has been an increase in the corporate
form of business on the one hand and increasing emphasis on managed
business concerns. Does this imply that management is a profession? To
answer this question let us examine the salient features of a profession
and see whether management satisfies them.
A profession has the following characteristics:
1. Well-defined body of knowledge: All professions are based on a well-
defined body of knowledge that can be acquired through instruction.
2. Restricted entry: The entry to a profession is restricted through an
examination or through acquiring an educational degree. For example, to
become a chartered accountant in India a candidate has to clear a specified
examination conducted by the Institute of Chartered Accountants of India.
3. Professional association: All professions are affiliated to a professional
association which regulates entry, grants certificate of practice and
formulates and enforces a code of conduct. To be able to practice in India
lawyers have to become members of the Bar Council which regulates and
controls their activities.
4. Ethical code of conduct: All professions are bound by a code of conduct
which guides the behaviour of its members. All doctors, for example,
take the oath of ethical practice at the time they enter the profession.
5. Service motive: The basic motive of a profession is to serve their
clients interests by rendering dedicated and committed service. The task
of a lawyer is to ensure that his client gets justice. Management does not
meet the exact criteria of a profession.

Levels of Management
Shiv Nadar and Suhasini are both managers of an enterprise. Shiv Nadar is the
CEO of HCL and Suhasini is a branch manager at Fabmart. They manage their
enterprise at different levels. Management is a universal term used for certain
functions performed by individuals in an enterprise who are bound together in a
hierarchy of relationships. Every individual in the hierarchy is responsible for
successful completion of a particular task. To be able to fulfill that responsibility he is
assigned a certain amount of authority or the right to take a decision. This
authority-responsibility relationship binds individuals as superiors and
subordinates and gives rise to different levels in an organisation. Generally
speaking there are three levels in the hierarchy of an organisation.
1.Top Management: They consistof the senior-most executives of the organisation
by whatever name they are called. They are usually referred to as the chairman,
the chief executive officer, chief operating officer, president and vice-president.
Top management is a team consisting of managers from different functional
levels, heading finance, marketing etc. For example chief finance officer, vice
president (marketing). Their basic task is to integrate diverse elements and
coordinate the activities of different departments according to the overall objectives
of the organisation. These top level managers are responsible for the welfare
and survival of the organisation. They analyse the business environment and
its implications for the survival of the firm. They formulate overall
organisational goals and strategies for their achievement. They are responsible
for all the activities of the business and for its impact on society. The job
of the top manager is complex and stressful, demanding long hours and
commitment to the organisation.
2.Middle Management: is the link between top and lower level managers. They are
subordinate to top managers and superior to the first line managers. They are
usually known as division heads, for example production manager. Middle
management is responsible for implementing and controlling plans and
strategies developed by top management. At the same time they are responsible
for all the activities of first line managers. Their main task is to carry out the plans
formulated by the top managers. For this they need to: (i) interpret the policies
framed by top management, (ii) ensure that their department has the necessary
personnel, (iii) assign necessary duties and responsibilities to them, (iv)
motivate them to achieve desired objectives, and (v) co operate with other
departments for smooth functioning of the organisation. At the same time they
are responsible for all the activities of first line managers.
3.Supervisory or Operational Management: Foremen and supervisors comprise
the lower level in the hierarchy of the organisation. Supervisors directly oversee
the efforts of the workforce. Their authority and responsibility is limited according
to the plans drawn by the top management. Supervisory management plays
a very important role in the organisation since they interact with the actual work
force and pass on instructions of the middle management to the workers.
Through their efforts quality of output is maintained, wastage of materials is
minimised and safety standards are maintained. The quality of workmanship and
the quantity of output depends on the hard work, discipline and loyalty of the
workers.

Functions of Management
Management is described as the process of planning, organising, directing and
controlling the efforts of organisational members and of using organisational
resources to achieve specific goals.
1. Planning is the function of determining in advance what is to be done and
who is to do it. This implies setting goals in advance and developing a way
of achieving them efficiently and effectively. In Suhasinis organisation the
objective is procurement and sale of traditional Indian handloom and handicraft
items. They sell fabrics, furnishings, readymades and household items made out
of traditional Indian fabrics. Suhasini has to decide quantities, variety, colour
and texture of all the above and then allocate resources for their purchase
from different suppliers or for their inhouse development. Planning cannot
prevent problems, but it can predict them and prepare contingency plans to deal
with them if and when they occur.
2. Organising is the management function of assigning duties, grouping tasks,
establishing authority and allocating resources required to carry out a specific
plan. Once a specific plan has been established for the accomplishment of an
organisational goal, the organising function examines the activities and resources
required to implement the plan. It determines what activities and resources are
required. It decides who will do a particular task, where it will be done, and
when it will be done. Organising involves the grouping of the required tasks into
manageable departments or work units and the establishment of authority and
reporting relationships within the organisational hierarchy. Proper organisational
techniques help in the accomplishment of work and promote both the efficiency
of operations and the effectiveness of results. Different kinds of business
require different structures according to the nature of work. You will read more
about this in a later chapter.
3. Staffing simply stated, is finding the right people for the right job. A very
important aspect of management is to make sure that the right people with
the right qualifications are available at the right places and times to
accomplish the goals of the organisation. This is also known as the human
resource function and it involves activities such as recruitment, selection,
placement and training of personnel. Infosys Technologies which develops
software needs systems analysts and programmers, whereas Fabmart needs a
team of designers and craftspeople.
4. Directing involves leading, influencing and motivating employees to perform
the tasks assigned to them. This requires establishing an atmosphere that
encourages employees to do their best. Motivation and leadership are two key
components of direction. Directing also involves communicating effectively as
well as supervising employees at work. Motivating workers means simply
creating an environment that makes them want to work. Leadership is
influencing others to do what the leader wants them to do. A good manager directs
through praise and criticism in such a way that it brings out the best in the
employee. Suhasinis design team developed some prints for bedcovers in
bright colours on silk. Although they looked very impressive, the use of silk
made the product too expensive for the average customer. Praising their
effort, Suhasini suggested that they keep the silk bedcovers for special
occasions like Diwali and Christmas and offer the cotton bedcovers on a regular
basis.
5. Controlling is the management function of monitoring organisational
performance towards the attainment of organisational goals. The task of
controlling involves establishing standards of performance, measuring current
performance, comparing this with established standards and taking corrective
action where any deviation is found. Here management must determine what
activities and outputs are critical to success, how and where they can be
measured and who should have the authority to take corrective action. When
Suhasini discovered that her team of designers had produced bedcovers that
were more expensive than they had planned to sell, she decided to change the
fabric to keep costs in check.
The various functions of a manager are usually discussed in the order given
above, suggesting that a manager first plans, then organises, puts staff in
position, then directs, and finally controls. In reality, managers are rarely
able to carry out these functions in isolation. The activities of a manager
are interrelated and it is often difficult to pinpoint where one ended and the
other began.
























Case Study-5: Evolution of management thought
Business Principles of Toyota Motor Corporation Business
Toyota follows certain well-defined business principles guiding its functioning. These
are:
1. Honour the language and spirit of law of every nation and undertake open and fair
corporate activities to be a good corporate citizen around the world.
2. Respect the culture and customs of every nation and contribute to economic
and social development through corporate activities in local communities.
3. To provide clean and safe products and to enhance the quality of life
everywhere.
4. Create and develop advanced technologies and provide outstanding products
and services that fulfil the needs of customers worldwide.
5. Foster a corporate culture that enhances individual creativity and teamwork value,
while honouring mutual trust and respect between management and labour.
6. Pursue growth and harmony with global community through innovative
management.
7. Work with business partners in research and creativity to achieve stable, long-term
growth and mutual benefits and be open to new partnerships. These principles, will
guide the company in its global vision 2010. This global vision envisages continuous
innovations in future, use of environment friendly technologies, respecting and
working with different sections of society and establishing an interactive relationship
with society.
Evolution of management thought: Scientific & Modern management
Introduction
It is clear from the foregoing case that managerial pursuits at Toyota Motor
Corporation are driven by principles that serve as broad guidelines for stating
the vision as well as the ways to achieve it. Similarly, many other business
enterprises have followed various principles in their working over a period
of time.
A number of management thinkers, and writers have also studied principles
of management from time-to-time. In fact, there is a long history of
management thought. Management principles have evolved and are in the
continuous process of evolution.
The Fredrick Winslow Taylor and Henri Fayol are associated with the classical
management theory. Both of them contributed immensely towards the study of
management as a discipline. Whereas F.W. Taylor was an American mechanical
engineer, Henri Fayol was a French mining engineer. Taylor gave the
concept of Scientific Management whereas Fayol emphasised
Administrative Principles. But before we go into the details of their
contributions let us study the meaning of the principles of management

Concept of Principles of Management
A managerial principle is a broad and general guideline for decision-making
and behaviour. For example while deciding about promotion of an employee one
manager may consider seniority, whereas the other may follow the principle of
merit.
One may distinguish principles of management from those of pure science.
Management principles are not as rigid as principles of pure science. They
deal with human behaviour and, thus, are to be applied creatively given the
demands of the situation. Human behaviour is never static and so also technology,
which affects business. Hence all the principles have to keep pace with
these changes. For example, in the absence of Information and
Communications Technology (ICT), a manager could oversee only a small work
force that too within a narrow geographical space. The advent of ICT has
expanded the capability of the managers to preside over large business
empires spread across the globe. Infosys headquarters in Bangalore boast of
the Asias largest flat screen in their conference room from where their
managers can interact with their employees and customers in all parts of the
world.
In developing an understanding of the meaning of principles of management,
it is also useful to know what these are not. The principles of management
should be distinguished from techniques of management. Techniques are
procedures or methods, which involve a series of steps to be taken to accomplish
desired goals. Principles are guidelines to take decisions or actions while
practicing techniques. Likewise, principles should also be understood as being
distinct from values. Values are something, which are acceptable or desirable.
They have moral connotations. Principles are basic truths or guidelines for
behaviour. Values are general rules for behaviour of individuals in society formed
through common practice whereas principles of management are formed after
research in work situations, which are technical in nature. However, while
practicing principles of management values cannot be neglected, as businesses
have to fulfil social and ethical responsibilities towards society.


















































Evolution of Management Principles
In tracing the history of management, one comes across various schools of thought
that have outlined principles to guide management practices. These schools of
thought may be divided into 6 distinctive phases:
1. Early Perspectives;
2. Classical Management Theory;
3. Neo Classical Theory Human Relations Approach;
4. Behavioural Science Approach Organisational Humanism;
5. Management Science/Operational Research;
6. Modern Management.
EARLY PRESPECTIVES
The first known management ideas were recorded in 3000-4000 B.C. One
Pyramid built by Egyptian ruler Cheops required work to be done by 100,000 men for
over twenty years in 2900 B.C. It covered 13 acres of land and measured 481 meters
in height. The stone slabs had to be moved thousands of kilometres of distance. As
folklore goes, even the sound of a hammer was not heard in the villages in the vicinity
of the site of these pyramids. Such monumental work could not be completed without
adherence to principles of sound management.
CLASSICAL MANAGEMENT THEORY
Rational economic view, scientific management, administrative principles, and
bureaucratic organisation characterise this phase. While the rational economic view
assumed that people are motivated by economic gains primarily; scientific
management of F.W. Taylor and others emphasised one best way of production
etc; administrative theorists personified by Henri Fayol etc looked at the best way to
combine jobs and people into an efficient organisation; bureaucratic organisation
theorists led by Max Weber looked at ways to eliminate managerial inconsistencies
due to abuse of power which contributed to ineffectiveness. This was the era of the
industrial revolution and factory system of production. Large scale production would
not have been possible without adherence to the principles governing organising
production based on division of labour and specialisation, relationship between man
and the machine, managing people and so on.
NEO CLASSICAL THEORY HUMAN RELATIONS APPROACH
This school of thought developed between 1920s to 1950s felt that employees
simply do not respond rationally to rules, chains of authority and economic
incentives alone but are also guided by social needs, drives and attitudes.
Hawthorne Studies at GEC etc., were conducted then. It was quite natural that
in the early phases of the industrial revolution, the emphasis was on development
of techniques and technology. The attention to the human factor was the salient
aspect of this school of thought. This attention was to serve as a precursor to the
development of behavioural sciences.
BEHAVIOURAL SCIENCE APPROACH ORGANISATIONAL HUMANISM
Organisational behaviourists like Chris Argyris; Douglas McGregor, Abraham
Maslow and Fredrick Herzberg used the knowledge of psychology, sociology
and anthropology to develop this approach. The underlying philosophy of
organisational humanism is that individuals need to use all of their capacities and
creative skills at work as well as at home.
MANAGEMENT SCIENCE/OPERATIONAL RESEARCH
It emphasises research on operations and use of quantitative techniques to aid
managers to take decisions.
MODERN MANAGEMENT
It sees modern organisations as complex systems and underlies contingency
approach and use of modern techniques to solve organisational and human
problems.



Nature of Principles of nature of Principles of Management
By nature is meant qualities and characteristics of anything. Principles are
general propositions, which are applicable when certain conditions are
present. These have been developed on the basis of observation and
experimentation as well as personal experiences of the managers. Depending
upon how they are derived and how effective they are in explaining and
predicting managerial behaviour, they contribute towards the development of
management both as a science and as an art. Derivation of these principles may be
said to be a matter of science and their creative application may be regarded as
an art. These principles lend credibility of a learnable and teachable discipline to
the practice of management. As such, ascent to managerial position may not
be a matter of birth, but a matter of requisite qualifications. Clearly,
management principles have gained importance with increasing
professionalisation of management.
These principles are guidelines to action. They denote a cause and effect
relationship. While functions of management viz., Planning, Organising,
Staffing, Directing and Controlling are the actions to be taken while
practising management, Principles help managers to take decisions while
performing these functions. The following points summarise the nature of
principles of management.
1. Universal applicability: The principles of management are intended to
apply to all types of organisations, business as well as non-business, small as
well large, public sector as well as private sector, manufacturing as well as
the services sectors. However, the extent of their applicability would vary
with the nature of the organisation, business activity, scale of operations and
the like. For example, for greater productivity, work should be divided into
small tasks and each employee should be trained to perform his/her
specialised job. This principle is applicable to a government office where there
is a diary/dispatch clerk whose job is to receive and send mail or documents, a
data entry operator whose task is to input data on the computer, a peon and
an officer etc. This principle is also applicable to a limited company where
there are separate departments like Production, Finance, Marketing and
Research and Development etc. Extent of division of work, however,
may vary from case to case.
2. General guidelines: The principles are guidelines to action but do not
provide readymade, straitjacket solutions to all managerial problems. This
is so because real business situations are very complex and dynamic and
are a result of many factors. However, the importance of principles cannot
be underestimated because even a small guideline helps to solve a given
problem. For example, in dealing with a situation of conflict between
two departments, a manager may emphasise the primacy of the overall
goals of the organisation.
3. Formed by practice and experimentation: The principles of management
are formed by experience and collective wisdom of managers as well as
experimentation. For example, it is a matter of common experience that
discipline is indispensable for accomplishing any purpose. This principle
finds mention in management theory. On the other hand, in order to
remedy the problem of fatigue of workers in the factory, an experiment may
be conducted to see the effect of improvement of physical conditions to
reduce stress.
4. Flexible: The principles of management are not rigid prescriptions, which
have to be followed absolutely. They are flexible and can be modified by the
manager when the situation so demands. They give the manager enough
discretion to do so. For example, the degree of concentration of authority
(centralisation) or its dispersal (decentralisation) will depend upon the
situations and circumstances of each enterprise. Moreover individual
principles are like different tools serving different purposes, the manager
has to decide which tool to use under what circumstances.
5. Mainly behavioural: Management principles aim at influencing behaviour
of human beings. Therefore, principles of management are mainly
behavioural in nature. It is not that these principles do not pertain to
things and phenomenon at all, it is just a matter of emphasis. Moreover,
principles enable a better understanding of the relationship between human
and material resources in accomplishing organisational purposes. For
example, while planning the layout of a factory, orderliness would require
that workflows are matched by flow of materials and movement of men.
6. Cause and effect relationships: The principles of management are
intended to establish relationship between cause and effect so that they
can be sed in similar situations in a large number of cases. As such, they
tell us if a particular principle was applied in a particular situation, what
would be its likely effect. The principles of management are less than
perfect since they mainly apply to human behaviour. In real life,
situations are not identical. So, accurate cause and effect relationships may
be difficult to establish. However principles of management assist
managers in establishing these relationships to some extent and are
therefore useful. In situations of emergencies, it is desirable that someone
takes charge and others just follow. But in situations requiring cross-
functional expertise, such as setting up of a new factory, more participative
approach to decision-making would be advisable.
7. Contingent: The application of principles of management is contingent or
dependent upon the prevailing situation at a particular point of time. The
application of principles has to be changed as per requirements. For
example, employees deserve fair and just remuneration. But what is just
and fair is determined by multiple factors. They include contribution of the
employee, paying capacity of the employer and also prevailing wage rate
for the occupation under consideration. Having described the inherent
qualities and characteristics of management principles, it should be easy
for you to appreciate the significance of these principles in managerial
decision-making.




































Significance of Principles of Management
The principles of management derive their significance from their utility. They
provide useful insights to managerial behaviour and influence managerial practices.
Managers may apply these principles to fulfil their tasks and responsibilities.
Principles guide managers in taking and implementing decisions. It may be
appreciated that everything worthwhile is governed by an underlying principle. The
quest of the management theorists has been and should be to unearth the underlying
principles with a view to using these under repetitive circumstances as a matter of
management habit. The significance of principles of management can be discussed
in terms of the following points:
1. Providing managers with useful insights into reality: The principles of
management provide the managers with useful insights into real world
situations. Adherence to these principles will add to their knowledge, ability
and understanding of managerial situations and circumstances. It will also
enable managers to learn from past mistakes and conserve time by solving
recurring problems quickly. As such management principles increase
managerial efficiency. For example, a manager can leave routine decision
making to his subordinates and deal with exceptional situations which require
her/his expertise by following the principles of delegation.
2. Optimum utilisation of resources and effective administration: Resources
both human and material available with the company are limited. They have to
be put to optimum use. By optimum use we mean that the resources should be
put to use in such a manner that they should give maximum benefit with
Case Study-6: Significance of Principles of Management
The story of Dr. Kiran Mazumdar
The story of Dr. Kiran Mazumdar Shaw is very inspiring. She foresaw the
tremendous potential of biotechnology when no one dared to think about it.
She started her own company Biocon India in her garage with a meagre capital of
Rs 10,000 in collaboration with Biocon Biochemicals limited of Ireland.
When she wanted to take loans no financial institution was willing to help her
because of three reasons: biotechnology was a new area of operation; her company
lacked assets and thirdly women entrepreneurs were a rarity at that time in 1978. She
even faced problems recruiting people. The initial operation of the company consisted
of extracting an enzyme from papaya.
Now Biocon limited is an integrated biotechnology enterprise focused
on the development of biopharmaceuticals, custom research, clinical research and
enzymes. It delivers products and solutions to partners and customers in over 50
countries.
According to the companys website, At Biocon our success has been our
ability to develop innovative technologies and products and to leverage them to
adjacent domains. This unique integrated innovation approach has yielded a host of
patented products and technologies that have enabled multilevel relationships with
our global clientele. It has two subsidiary companies. The first one is Syngene
International Private limited, which provides chemistry and molecular based custom
research services in early stage drug discovery and development. The second
subsidiary company is Clinigene International Private Limited, which conducts
longitudinal research in diabetes and offers a wide range of comprehensive services in
drug development and clinical trials. Biocon was the first biotechnology company
of India to receive ISO 9001 certification.
Biocon Limited is what it is today due to adherence to the principles
underlying good management practices.
minimum cost. Principles equip the managers to foresee the cause and effect
relationships of their decisions and actions. As such the wastages associated
with a trial-and-error approach can be overcome. Effective administration
necessitates impersonalisation of managerial conduct so that managerial power
is used with due discretion. Principles of management limit the boundary of
managerial discretion so that their decisions may be free from personal
prejudices and biases. For example, in deciding the annual budgets for different
departments, rather than personal preferences, managerial discretion is bounded
by the principle of contribution to organisational objectives.]
3. Scientific decisions: Decisions must be based on facts, thoughtful and
justifiable in terms of the intended purposes. They must be timely, realistic
and subject to measurement and evaluation. Management principles help in
thoughtful decision-making. They emphasise logic rather than blind faith.
Management decisions taken on the basis of principles are free from bias and
prejudice. They are based on the objective assessment of the situation.
4. Meeting changing environment requirements: Although the principles are in
the nature of general guidelines but they are modified and as such help
managers to meet changing requirements of the environment. You have already
studied that management principles are flexible to adapt to dynamic business
environment. For example, management principles emphasise division of work
and specialisation. In modern times this principle has been extended to the
entire business whereby companies are specialising in their core competency
and divesting non-core businesses. In this context, one may cite the decision
of Hindustan Lever Limited in divesting non-core businesses of chemicals
and seeds. Some companies are outsourcing their non-core activities like
share-transfer management and advertising to outside agencies. So much so, that
even core processes such as R&D, manufacturing and marketing are being
outsourced today. You might heard of proliferation of Business Process
Outsourcing (BPO) and Knowledge Process Outsourcing (KPO)?
5. Fulfilling social responsibility: The increased awareness of the public, forces
businesses especially limited companies to fulfill their social responsibilities.
Management theory and management principles have also evolved in
response to these demands. Moreover, the interpretation of the principles also
assumes newer and contemporary meanings with the change in time. So, if
one were to talk of equity today, it does not apply to wages alone. Value
to the customer, care for the environment, dealings with business associates
would all come under the purview of this principle. As an application of this
principle, we find that Public Sector Undertakings have developed entire
townships as, for example, BHEL has developed Ranipur in Hardwar
(Uttaranchal).
6. Management training, education and research: Principles of management
are at the core of management theory. As such these are used as a basis
for management training, education and research. You must be aware that
entrance to management institutes is preceded by management aptitude tests.
Do you think that these tests could have been developed without an understanding
of management principles and how they may be applied in different situations?
These principles provide basic groundwork for the development of management
as a discipline. Professional courses such as MBA (Master of Business
Administration), BBA (Bachelor of Business Administration) also teach these
principles as part of their curriculum at the beginners level.
These principles enable refinement of management practices as well by
facilitating the development of new management techniques. Thus, we see that
techniques like Operations Research (OR), cost accounting, Just in Time,
Kanban and Kaizen have developed due to further research on these
principles.
In conclusion it can be said that understanding the meaning, nature and
significance of principles of management will help us to appreciate their
applicability in real life situations.
As stated at the beginning of the chapter, management principles have
undergone a long history of evolution. And, they continue to evolve. What follows
is a description of the management principles pertaining to the classical school;
more precisely, those propounded by F.W. Taylor and Henri Fayol.






































Case Study-7: Fulfilling social responsibility
Shri Mahila Griha Udyog Lijjat Papad Combining Business with Social
Responsibility (An Organisation Of the Women, By the Women and For the
Women)
The story of Shri Mahila Griha Udyog lijjat Papad is very inspiring for
would be managers. It shows how an organisation can combine business with social
responsibility and make its stakeholders self-reliant. The stakeholders are various
women who, numbering over 40,000, are given the task of making lijjat papads,
which are famous for their quality throughout the world. The organisation which
started with a modest loan of Rs 80 now has a turnover of over Rs 301 crores. Its
exports exceed Rs 10 crores. The profits are distributed to the stakeholders in
proportion to their contribution. It has struck to its core values for over 40 years. It
has shown how it is possible to combine Gandhian values with business. The
company has at least 61 branches. Any woman subscribing to these core values
can become a member of the organisation. According to the website of the
organisation www.lijjat.com, Shri Mahila Griha Udyog Lijjat Papad is synthesis of
three different concepts (core values) namely:
1. The concept of business
2. The concept of family
3. The concept of devotion
All these concepts are completely and uniformly followed in this institution.
As a result of this synthesis, a peculiar Lijjat way of thinking has developed therein.
The institution has adopted the concept of business from the very beginning.
All its dealings are carried out on a sound and pragmatic footing-production of quality
goods and at reasonable prices. It has never and nor will it in the future accept any
charity, donation, gift or grant from any quarter. On the contrary, the member-sisters
donate collectively for good causes from time-to-time according to their capacity.
Besides the concept of business, the institution along with all its member
sisters has adopted the concept of mutual family affection, concern and trust. All the
affairs of the institution are dealt with in a manner similar to that of a family carrying
out its own daily household chores.
But the most important concept adopted by the institution is the concept of
devotion. For the member-sisters, employees and well-wishers, the institution is never
merely a place to earn ones livelihood it is a place of worship to devote ones
energy not for his or her own benefits but for the benefit of all. In this institution work
is worship. The institution is open to everybody who has faith in its basic concepts.

Taylors Scientific Management
Scientific management refers to an important stream of one of the earlier schools of
thought of management referred to as the Classical school. The other two
streams belonging to the classical school are Fayols Administrative Theory and
Max Webers Bureaucracy. We will not be describing bureaucracy here. A
discussion of Fayols principles, however, will follow the discussion of scientific
management.
Fredrick Winslow Taylor (March 20,1856 March 21, 1915) was an American
mechanical engineer who sought to improve industrial efficiency. In 1874, he
became an apprentice mechanist, learning factory conditions at the grass roots
level. He earned a degree in mechanical engineering. He was one of the
intellectual leaders of the efficiency movement and was highly influential in
reshaping the factory system of production. You must appreciate that he belonged
to the era of the industrial revolution characterised by mass production.

























Taylor thought that by scientifically analysing work, it would be possible to
find one best way to do it. He is most remembered for his time and motion
studies. He would break a job into its component parts and measure each to the
second.
Taylor believed that contemporary management was amateurish and
should be studied as a discipline. He also wanted that workers should cooperate
with the management and thus there would be no need of trade unions. The best
results would come from the partnership between a trained and qualified
management and a cooperative and innovative workforce. Each side needed the
other.
Fredrick Winslow Taylor Founder of Scientific Management Movement
LIFE TIME: March 20,1856 to March 21, 1915
PROFESSION: American mechanical engineer
EDUCATION: Degree in Mechanical Engineering from Stevens Institute of
Technology in 1883.
POSITIONS HELD
1. Apprentice Machinist in 1874.
2. Executive at Midville Steel Company in 1884.
3. At Bethlehem Iron Company in 1898, which later became Bethlehem
Steel Company.
4. Professor at Tuck School of Business founded in 1900.
5. President of American Society of Mechanical Engineers from 1906 to
1907.
WRITINGS:1. The Principles of Scientific Management series of articles
published in The American Magazine During march-may 1911, later published in
book form.
1. Concrete, Plain and Reinforced in 1906.
2. Notes on Belting in 1893
3. On the Art of Cutting Metals December 1906.
4. A Piece Rate System in June 1895.
5. The making of a putting green a series of articles published in 1915.
6. Not for the genius but for the average man published in The
American Magazine in March 1918.
He is known for coinage of the term Scientific Management in his
article The Principles of Scientific Management published in 1911. After being
fired from Bethlehem Steel Company he wrote a book Shop floor which sold well.
He was selected to be the president of the American Society of Mechanical Engineers
(ASME) from 1906 to 1907. He was a professor at Tuck School of Business at
Dartmouth College founded in 1900.
In 1884 he became an executive at Midvale Steel Company by
demonstrating his leadership abilities. He instructed his fellow workers to work in
phases. He joined the Bethlehem Iron Company in 1898, which later became
Bethlehem Steel Company. He was originally employed to introduce piece rate
wage system. After setting up the wage system, he was given authority and
more responsibilities in the company. Using his newfound resources he increased the
staff and made Bethlehem a show place for inventive work. Unfortunately, the
company was sold to another group and he was discharged.
In 1910 his health started to fall. He died in 1915 due to pneumonia.



































Taylors Contribution to Scientific Management
The following extracts are taken from Taylors testimony before the U.S.
House of Representatives Special Committee in 1912 and also from his most
important work THE PRINCIPLES OF SCIENTIFIC MANAGEMENT
published in 1911.
Scientific management requires first, a careful investigation of each of the many
modifications of the same implement, developed under rule of thumb; and second,
after time and motion study has been made of the speed attainable with each of these
implements, that the good points of several of them shall be unified in a single
standard implementation, which will enable the workman to work faster and with
greater ease than he could before. This one implement, then is adopted as standard in
place of the many different kinds before in use and it remains standard for all
workmen to use until superseded by an implement which has been shown, through
motion and time study, to be still better. (Scientific management, page 119)
The main elements of the Scientific Management are: (page 129-130 sci-mgt)
Time Studies
Functional or specialised supervision
Standardisation of tools and implements
Standardisation of work methods
Separate Planning function
Management by exception principle
The use of slide-rules and similar time-saving devices
Instruction cards for workmen
Task allocation and large bonus for successful performance
The use of the differential rate
Mnemonic systems for classifying products and implements
A routing system
A modern costing system etc. etc.
Taylor called these elements merely the elements or details of the
mechanisms of management He saw them as extensions of the four principles of
management. (Page 130, scientific management)
1. The development of a true science.
2. The scientific selection of the workman.
3. The scientific education and development of the workman.
4. Intimate and friendly cooperation between the management and the
employees.
Principles of scientific Management
In the earlier days of the Industrial Revolution, in the absence of an established
theory of factory organisation, factory owners or managers relied on personal
judgment in attending to the problems they confronted in the course of managing
their work. This is what is referred to as rule of thumb. Managing factories by rule
of thumb enabled them to handle the situations as they arose but suffered from
the limitation of a trial and error approach. For their experiences to be emulated,
it was important to know what works and why does it work. For this, there was a
need to follow an approach that was based on the method of science defining a
problem, developing alternative solutions, anticipating consequences, measuring
progress and drawing conclusions.
In this scenario, Taylor emerged as the Father of Scientific Management.
He proposed scientific management as opposed to rule of thumb. He broke up
human activity into small parts and found out how it could be done effectively, in
less time and with increased productivity. It implies conducting business activities
according to standardised tools, methods and trained personnel in order to
increase the output, improve its quality and reduce costs and wastes.
In the words of Taylor, Scientific management means knowing exactly
what you want men to do and seeing that they do it in the best and cheapest way. The
Bethlehem Steel company where Taylor himself worked achieved three-fold
increase in productivity by application of scientific management principles.
Therefore, it would be in order to discuss these principles.
1. Science not Rule of Thumb: Taylor pioneered the introduction of the
method of scientific inquiry into the domain of management practice. We
have already referred to the limitations of the rule of thumb approach of
management. As different managers would follow their indigenous rules of
thumb, it is but a statement of the obvious that all would not be equally
effective. Taylor believed that there was only one best method to maximise
efficiency. This method can be developed through study and analysis. The
method so developed should substitute Rule of Thumb throughout the
organisation. Scientific method involved investigation of traditional methods
through work-study, unifying the best practices and developing a standard
method, which would be followed throughout the organisation. According
to Taylor, even a small production activity like loading pigs of iron into
boxcars can be scientifically planned and managed. This can result in
tremendous saving of human energy as well as wastage of time and materials.
The more sophisticated the processes, greater would be the savings. In the
present context, the use of internet has brought about dramatic
improvements in internal efficiencies and customer satisfaction.
2. Harmony, Not Discord: Factory system of production implied that managers
served as a link between the owners and the workers. Since as managers
they had the mandate to get work done from the workers, it should not be
difficult for you to appreciate that there always existed the possibility of a
kind of class-conflict, the mangers versus workers. Taylor recognised that
this conflict helped none, the workers, the managers or the factory owners.
He emphasised that there should be complete harmony between the
management and workers. Both should realise that each one is important.
To achieve this state, Taylor called for complete mental revolution on the part
of both management and workers. It means that management and workers
should transform their thinking. In such a situation even trade unions will
not think of going on strike etc.
Management should share the gains of the company, if any, with the
workers. At the same time workers should work hard and be willing to
embrace change for the good of the company. Both should be part of the
family. According to Taylor, Scientific management has for its foundation
the firm conviction that the true interests of the two are one and the same;
that prosperity for the employer cannot exist for a long time unless it is
accompanied by prosperity for the employees and vice versa.
Japanese work culture is a classic example of such a situation. In
Japanese companies, paternalistic style of management is in practice. There is
complete openness between the management and workers. If at all workers
go to strike they wear a black badge but work more than normal working
hours to gain the sympathy of the management.
3. Cooperation, Not Individualism: There should be complete cooperation
between the labour and the management instead of individualism. This
principle is an extension of principle of Harmony not discord.
Competition should be replaced by cooperation. Both should realise that they
need each other.
For this, management should not close its ears to any constructive
suggestions made by the employees. They should be rewarded for their
suggestions which results in substantial reduction in costs. They should be
part of management and, if any important decisions are taken, workers
should be taken into confidence.
At the same time workers should desist from going on strike and
making unreasonable demands on the management. In fact when there will
be open communication system and goodwill there will be no need for even a
trade union. Paternalistic style of management, whereby the employer takes
care of the needs of employees, would prevail as in the case of Japanese
companies.
According to Taylor, there should be an almost equal division of
work and responsibility between workers and management. All the day long
the management should work almost side by side with the workers helping,
encouraging and smoothing the way for them.
4. Development of Each and Every Person to His or Her Greatest
Efficiency and Prosperity: Industrial efficiency depends to a large extent
on personnel competencies. As such, scientific management also stood for
worker development. Worker training was essential also to learn the best
method developed as a consequence of the scientific approach. Taylor
was of the view that the concern for efficiency could be built in right from
the process of employee selection. Each person should be scientifically
selected. Then work assigned should suit her/his physical, mental and
intellectual capabilities. To increase efficiency, they should be given the
required training. Efficient employees would produce more and earn
more. This will ensure their greatest efficiency and prosperity for both
company and workers.From the foregoing discussion it is clear that Taylor
was an ardent supporter of use of scientific method of production in business.
Techniques of scientific techniques Management
Let us now discuss techniques as specified by him. These are based on the
various experiments he conducted during his career.
Functional foremanship
In the factory system, the foreman represents the managerial figure with whom
the workers are in face-to-face contact on a daily basis. In the first chapter of the
book, you have seen that the foreman is the lowest ranking manager and the
highest ranking worker. He is the pivot around whom revolves the entire
production planning, implementation and control. Thus, Taylor concentrated
on improving the performance of this role in the factory set-up. In fact, he
identified a list of qualities of a good foreman/supervisor and found that no single
person could fit them all. This prompted him to suggest functional foremanship
through eight persons.Taylor advocated separation of planning and execution
functions. This concept was extended to the lowest level of the shop floor. It
was known as functional foremanship. Under the factory manager there was a
planning incharge and a production incharge. Under planning incharge four
personnel namely instruction card clerk, route clerk, time and cost clerk and a
disciplinarian worked. These four personnel would draft instructions for the
workers, specify the route of production, prepare time and cost sheet and
ensure discipline respectively.Under Production incharge, personnel who would
work were speed boss, gang boss, repair boss, and inspector. These
respectively were responsible for timely and accurate completion of job,
keeping machines and tools etc., ready for operation by workers, ensure proper
working condition of machines and tools and check the quality of work.
Functional foremanship is an extension of the principle of division of work and
specialisation to the shop floor. Each worker will have to

































UNIT II - 12 Hrs
1. Planning: Importance advantages disadvantages
2. Types of plans
3. Process of planning steps involved in planning,
4. Techniques of planning
5. Decision Decision Making Process.

Planning: Importance advantages disadvantages