Principles of Management Module I

PRINCIPLES OF PRINCIPLES OF MANAGEMENTMANAGEMENT

A principle is a basic statement or A principle is a basic statement or fundamental truth that provides fundamental truth that provides understanding and guidance to thinking understanding and guidance to thinking and action.and action.

Nature of Management PrinciplesNature of Management Principles

• Ordinary Statement• Elasticity• Need based• Cautious use• Universality of applications• Aimed at influencing human behaviour• Equal importance• Cause – effect relationship

Evolution of Management ThoughtEvolution of Management Thought

PRE SCIENTIFIC MANAGEMENT

PERIOD

Contributions made by

•Roman Catholic Church

•Military organizations

•Writers like Charles Babbage, James Watt Etc.

CLASSICAL THEORY

•Scientific Management•Administrative Management Theory•Bureaucratic Model

NEO-CLASSICAL

THEORY

•Hawthrone Experiment

MODERN THEORY

•Systems Approach•Contingency Approach

FW Taylor and Scientific FW Taylor and Scientific ManagementManagement

• The concept of scientific management was introduced by Frederick Winslow Taylor in USA .

• He put the emphasis on solving managerial problems in a scientific way.

• “Scientific Management is concerned with knowing exactly what you want men to do and then see in that they do it in the best and cheapest way” – FW Taylor.

Elements and tools of Scientific Elements and tools of Scientific ManagementManagement

Taylor conducted various experiments at his work places to find out how human beings could be made more efficient by standardizing the work and better method of doing the work.

a. Seperation of planning a. Seperation of planning and doing

• Taylor seperated planning aspect from the actual doing of work.

• Before Taylor’s contribution, it is the duty of workmen to think how he can work.

• But taylor seperated planning and doing

b. Functional Foremanshipb. Functional Foremanship

• Based on the specialization of functions.• In this system eight persons are involved to

direct the activities of workers.

- Four persons are for planning

- route clerk, instruction card clerk, time and cost clerk, disciplinarian.

- Remaining four persons are for doing

- speed boss, inspector, maintenance foreman, gang boss.

c. Job Analysisc. Job Analysis

• To find out the one best way of doing the thing

• Time Study: To study about the minimum time to complete a movement.

• Motion Study: To eliminate the unnecessary movements

• Fatigue Study: To find out the frequency of rest required in completing the work.

d. Standardizationd. Standardization

Based on job analysis standardization should be maintained in respect of instruments and tools, period of work, amount of work, working conditions, etc.

e. Scientific selection and training e. Scientific selection and training of workersof workers

Workers should be selected on scientific basis taking into account their education, experience, aptitude, physical strenght, etc

Proper training should be given to make them more efficient and effective.

f. Financial Incentivesf. Financial Incentives

It can motivate workers to put in their maximum efforts.

Taylor suggested the differencial piece rate system in which a worker who completes the normal work gets wages at higher rate per piece and one who does not complete gets at lower rate.

g. Economyg. Economy

Techniques of cost estimates and control should be adopted.

The economy and profits can be achieved by making the resources more productive as well as by eliminating the wastages.

h. Mental Revolutionh. Mental Revolution

The success of scientific management depends on the mutual co-operation between management and workers.

A mental change is necessary to avoid conflicts

In its absence no principles of scientific management can be applied.

PRINCIPLES OF SCIENTIFIC PRINCIPLES OF SCIENTIFIC MANAGEMENTMANAGEMENT

a. Replacing Rule of thumb with a. Replacing Rule of thumb with ScienceScience

Organized knowledge should be applied which will replace rule of thumb.

Rule of thumb is mere estimation and workers are compelled to work.

But standardization is not a mere estimation

b. Harmony in group actionb. Harmony in group action

There should be mutual give and take situation and proper understanding.

Group as a whole can contribute maximum

c. Co-operationc. Co-operation

Scientific management is based on mutual confidence, co-operation and good will.

Co-operation between management and workers can be developed through mutual understanding and a change in thinking.

d. Maximum outputd. Maximum output

Taylor advised the management and workers to turn their attention towards increasing the size of surplus.

e. Development of workerse. Development of workers

It requires their scientific selection and providing them training at their workplace

BENEFITSBENEFITS

• Replacement of traditional rule of thumb

• Proper selection and training

• Incentive wages to the workers

• Elimination of wastages

• Harmonious relationship between the workers

• Better utilization of resources

CRITICISMCRITICISM

• Heavy Investment

• Loss due to re-organization

• Unsuitable for small scale firms

• Weakening of trade unions

• Reduction of employment

• Only an advice to speed up the workers

Fayol’s Administrative ManagementFayol’s Administrative Management

• Known as father of modern operational management.

• His contributions first published in book form titled “Administration Industrielle at Generale” in French

• He used administration instead of management.

Activities of an Industrial groupActivities of an Industrial group

• Technical – relating to production

• Commercial – buying, selling and exchange

• Financial – search for capital and its use

• Security – protection of property and group

• Accounting – recording of transactions

• Managerial – Planning, organizing, etc.

Fayol’s three parts of managementFayol’s three parts of management

• Managerial qualities and training

• General Principles of Management

• Elements of Management

Managerial Qualities and TrainingManagerial Qualities and Training

Fayol is the first person who identified the qualities required for a manager.

• Physical• Mental• Moral• Educational• TECHNICAL• Experience

General Principles of ManagementGeneral Principles of Management

a. Division of worka. Division of work

• It is for taking the advantage of specialization

• Can be applied at all levels of management

b. Authority and Responsibilityb. Authority and Responsibility

• There should be a clarity of authority and responsibility

• Right to give orders and obligation to execute the assigned task

c. Disciplinec. Discipline

• All persons should be disciplined.

• Two types :–

Self imposed – within the person

Command discipline – through orders

• It can be ensured through experience and tact of managers.

d. Unity of commandd. Unity of command

Persons should get instructions and orders from only one superior.

e. Unity of Directione. Unity of Direction

Each group activity with the same objective must have one head and one plan.

f. Subordination of individual to f. Subordination of individual to general interestgeneral interest

• Common interest is above the individual interest

• Individual interest must be subordinate to general interest

g. Remmunaration of personnelg. Remmunaration of personnel

• Should be fair and provide maximum possible satisfaction to emploees and employers.

• Financial and non-financial benefits.

h. Centralizationh. Centralization

• Everything which increase the role of subordinates is decentralization and everything which decrease the role of subordinates is centralization.

• Fayol refers the extent to which authority is centralized and decentralized.

• For small firms – centralization Large firms - decentralization

i. Scalar Chaini. Scalar Chain

• Communication should be top to bottom and viceversa.

• Taylor suggested the ‘gang plank’ for avoiding delay between the same positioned people at different levels. a

b l

c m

d n

e o

j. Orderj. Order

• Arrangement of things and people

• There should be a place for everything and everything should be in its place.

• Also right man in the right place.

k. Equityk. Equity

There should be a combination of justice and kindness for every action

l. Stability of tenurel. Stability of tenure

There should be reasonable security of jobs. No employee should be removed within short time.

Unnecessary turnover is the result of bad management.

m. Initiativem. Initiative

• It is concerned with thinking out and execution of plan.

• Every manager should encourage employees for taking initiative.

n. Esprit de corpsn. Esprit de corps

This is the principle of union is strength. The manager should encourage esprit de corps among employees.

Elements of managementElements of management

Fayol has regarded these elements as function of management such as planning, organising, commanding, coordinating and controlling.

Human Relations ApproachHuman Relations Approach

• Also known as behavioural approach

• Positive aspect of scientific studies could not make some surprise changes.

• Researchers tried to investigate the human behaviour at work.

• They discovered a new phenomenon and is known as ‘Human Relations Approach of Management.’

a. Elton Mayo’s Theorya. Elton Mayo’s Theory

• Better physical environment or increased economic benefits are not sufficient motivator for increasing productivity.

• When workers are given special attention by mnanagement, productivity will increase.

• Implemented the concept of “Social Man”

Hawthorne StudiesHawthorne Studies

• Mayo and other researchers conducted various researches in four phases in Hawthorne Plant – a general electric company, Chicago manufacturing telephone system bell.

a. Illumination Experimenta. Illumination Experiment

• To find out the role of light at work place.

• Concluded that there is no role for illumination and productivity can not increased with higher illumination.

b.Relay Assembly Test Room b.Relay Assembly Test Room ExperimentExperiment

• Study regarding the effects of changes in working hours and other working conditions.

c. Mass Interviewing Programmec. Mass Interviewing Programme

To determine the employee’s attitude towards company, supervision, insurance plan, etc.

d. Bank Wiring Observations d. Bank Wiring Observations Room ExperimentsRoom Experiments

Informal relationship is an important one in determining the human behaviour.

Major findings of Hawthorne Major findings of Hawthorne StudiesStudies

• Social factors in output

• Group influence

• Conflicts

• Leadership

• Supervision

• Communication

CriticismsCriticisms

• No attention to trade unions, class consciousness,etc

• Result could not be valid for other plants because Hawthorne plant is not a typical one.

• This study is only a means to an end.

b. Maslow’s Theoryb. Maslow’s TheoryTheory of individual needs.The basic aim of this approach is to increase the

organizational effectiveness of its human resource. Self actualization

Esteem Social Safety

Physiological

Contributions of Peter DruckerContributions of Peter Drucker

• Through his consultancy assignments, he has developed solutions to number of managerial problems.

• The main contributions can be presented as follows:

a. Nature of Managementa. Nature of Management

Drucker has treated management as a discipline as well as profession.

He is against bureaucratic management and has emphacised management with creative and innovative characteristics.

b. Management functionsb. Management functions

• Contributions for the specific purpose and mission of the institution.

• Making work productive and worker achieving

• Managing social impacts and social responsibilities.

c. Organization structurec. Organization structure

• Three basic characteristics:

- Enterprise should be organized for performance.

- It should contain atleast possible number of managerial levels.

- It must make possible the development of future managers.

d. Federationd. Federation

• Centralised control in decentralized structure.

• Local management should also participate in the decision that set the limits of their own authority.

e. Management by Objectives - e. Management by Objectives - MBOMBO

“Superiors and subordinates jointly identify the common objectives, set the results that should be achieved by the subordinates, assess the contributions of each individual and integrate individuals with the organization so as to make best use of organizational resources.”

f. Organizational changef. Organizational change

Human beings should develop philosophy to face the changes and take them as challenges for making the society better.It can be done by developing dynamic organization which are able to absorb changes.

Schools of Management ThoughtSchools of Management Thought

a. Management Process school a. Management Process school

• Also known as the operational approach

• Henry Fayol is the father of this school.

• Management can be best studied in terms of the process that it involves.

b. Empirical schoolb. Empirical school

• Also known as management by customs school.

• According to this approach management is considered as a study of managers in practice.

c. Human Behaviour schoolc. Human Behaviour school

• Also known as Human relations school.

• Managers should understand human behaviour and emphacis on motivation through good relationship.

d. Social System Schoold. Social System School

• Closely related with human behaviour school.

• It looks upon management as a social system, which refers to a system of cultural inter-relationship.

e.Decision Theory Schoole.Decision Theory School

Decision making is the major and important duty of every manager and therefore we can say that the manager is the decision maker and the organization is the decision making unit.

f. Mathematical or Quantitative f. Mathematical or Quantitative Management SchoolManagement School

• Management as a system of mathematical models and processes.

• Acoording to this school, decision making is a logical process that can be expressed in terms mathematical symbols and relationship.

g. System Management schoolg. System Management school

• A system is a combination of parts and subparts.

• Management is regarded as a system because it consists of different elements or parts and is a input-output mediator.

h. Contingency Schoolh. Contingency School

• There can not be a particular management action which will be suitable for all situations.

• It tries to fill this gap by suggesting what should be done in response to an event in the action.