Fundamental of Management - Coggle Diagram
Fundamental of Management
The process of using various resources (inputs) to produce some results (outputs) is known as management.
Management refers to the process of using men, money, machines, material and processes through proper direction, coordination and integration of several activities so as to get desired results and achieve goals.
In other words, management consists of a series of activities classified into various functions like planning, organising, staffing, directing and controlling.
Management helps in efficient and effective use of available resources of an organisation.
Some of its objective are :
Optimum Utilisation of Resources: Management should try to secure maximum outcome.This can be done by efficiently utilising the human and material resources available in an organisation for reaching the best results.
Increase in Productivity of All Factors of Production : Management should minimise the wastage of time, money and efforts through proper utilisation of various factors of production like capital and labour, and instead increase its capacity to full usage.
Fair Return on Capital : Management has to provide a fair return to the owners on the capital invested by them. Management must maintain the investment and should also attract further investments for growth and expansion.
Create Goodwill : Management should aim at building the reputation of the firm through various activities like popularising products by advertising, reasonable price, good quality products etc.
Meet Challenges of the Changing Environment : Management should frame steps to meet the challenges of the changing environment. Thus, management can help an organisation for its survival and growth.
Characteristics of management
The various characteristics of management are:
(a) Management is Universal : It means that management is required for every type of organisation. It may be a business organisation or social or political, a small firm or a large one. It is required by a school, college or university, hospital, a big firm like Reliance Industries Limited or a small variety store in your locality.
(b) Management is Goal Directed : Management of an organisation is always aimed at achievement of the organisational goals. Success of management is determined by the extent to which these goals are achieved.
(c) Management is a Continuous Process : Management is an ongoing process. For activities like production, sale, storage, operation etc. management is required. So, as long as these activities continue the process of management also continues to operate.
(d) Management is an Integrating Process : All the functions, activities, processes and operations are intermixed among themselves. It is the task of management to bring them together and proceed in a coordinated manner to achieve the desired result.
(e) Management is Intangible : Management is not a place like a graphic showing a Board meeting or a graphic showing a school Principal at her office desk which can be seen. It is an unseen force and you can feel its presence in the form of rules, regulation, output, work climate, etc
(f) Management is Multidisciplinary : Management of an organisation requires wide knowledge about various disciplines as it covers handling of man, machine, material and looking after production, distribution, accounting and many other functions.
(g) Management is a Social Process : All managerial actions are primarily concerned with relations between people and so it is treated as a social process. This involves developing and motivating people at work and taking care of their satisfaction as social beings.
(h) Management is Situational : The success of management depends on, and varies from, situation to situation. There is no one way of managing, it can differ from situation to situation.
a) Attainment of Goals : Through proper management – by well thought of planning, good direction and proper coordination and control that effectiveness to the efforts of each group to achieve given goals can be ensured.
(b) Stability and Growth : Management controls the activities and operations, integrates the functions, motivates the employees, maintains the health of the organisation in the ever changing environment. It thus, ensures stability to the working of the organisation and contributes to its growth.
(c) Change and Development : Management keeps itself in touch with the changes in the environment and foresees development in the future. Accordingly, plans are made to keep the organisation ready to meet the challenges.
(d) Efficiency and Effectiveness : By proper planning, staffing, organising, coordinating, directing, and its controlling activities, the management helps in achieving efficiency and effectiveness to human efforts and operations.
PRINCIPLES OF MANAGEMENT
Principles are the basic truths generally stated in the form of cause effect relationship. Management principles are the broad guidelines for the managers for decision making. Principles of management establish cause and effect relationships and serve as a guide to thought and action.
Nature of Principles of management
Universal : The management principles are applicable to all types of organisations like government enterprises, educational institutions, business enterprises etc.
Flexible : Management principles are modified and applied according to the changing situations. For example, when an organisation started its functioning, it may have adopted the principle of centralisation. When the organisation becomes a large enterprise, it will apply the principle of decentralization.
Aimed to Influence Human Behaviour : Human behaviour is complex and unpredictable. Management principles influence human behaviour so that human resources give their best to an organisation. For example, the principle of order is followed, so that wasteful movement of workers can be avoided.
Cause and effect relationship : Management principles indicate clearly the cause of various actions and consequences of various decisions. For example, according to the principle of discipline, smooth running of business is the result of discipline.
Significance of Principles of Management
Management principles have considerable importance in all group efforts. Following are the points of importance of management principles.
Act as a Guide for Research in Management : The principles so far developed can be tested in new situations and management practices can be made more effective. For example, in earlier days workers were motivated by their salary, but nowadays family health, education of the children etc. should be considered by the organisation in order to motivate and retain the workers.
Improve Understanding : The knowledge of principles of management helps the managers to manage an enterprise properly. The principles of management help the managers to make correct decisions. Managers can handle situations smoothly.
Identify the Areas for Training of Managers : The principles of management help in identifying the areas where the managers should be trained.
Act as Reference for Managers : Principles act as reference for the managers and help to evaluate whether the decisions taken by him are appropriate and accurate.
Increases efficiency : Principles are guidelines for managers for taking accurate decisions. Principles help the manager for solving problems of an enterprise and thus increase the overall efficiency.
Principles of Scientific Management
Fredric Winslow Taylor identified that the existing management practices were based on trial and error methods. F.W. Taylor is known as the father of Scientific Management.
Scientific management means the application of scientific methods of study and analysis to the problems of management. Taylor developed the following principles for guiding the managers of an organisation. These principles are known as the principles of Scientific Management.
Development of Science for Each Element of Man’s Work : According to this principle, decisions should be based on facts rather than rule of thumb. The work assigned to a worker should be observed. Each element (time taken, fatigue of worker etc.) of work should be analysed. The purpose of such observation is to decide the best way of performing the job. Taylor stressed that each job should be based on scientific study.
Scientific Selection, Training and Development of Workmen : F.W.Taylor suggested that if an organisation wants to improve efficiency, it is necessary that workmen are appointed with due care scientifically on the basis of job analysis and job description. So that their skills and experience match with the jobs.
Close Co-operation between Workers and Management : F.W. Taylor is of the view that there should be close cooperation between workers and management to carry out the work in accordance with the plans and standards.
Mental Revolution : According to F.W. Taylor, without a complete mental revolution of workers and managers, scientific management will not be successful. The workers and managers should have a complete change of outlook with respect to their relations and work efforts. This is called mental revolution.
Maximum Prosperity : As per this principle, the aim of every management should be to secure maximum prosperity for the employers and employees. This is possible only when each worker is given the opportunity for maximum output rather than restricted output.
Division of Responsibility : Taylor emphasized that there should be clear cut division of responsibility between management and workers. Planning of work should be the responsibility of managers. Execution work should be done by workers.
Taylor is best known for the techniques of scientific management, particularly in the production department and that too at the shop level. Following are the techniques of Scientific Management as given by Taylor.
Work Studies: Work study is the systematic, objective and critical examination of all the factors governing the operational efficiency of any specified activity in order to effect improvement. It includes time study, motion study, fatigue study and method study.
a. Time Study : It is a technique of observing and recording the time required to do a piece of work and developing the best way of doing it.
b. Motion Study : Under motion study, the movement of men, machines and materials are observed and analysed. Motion study eliminates wasteful motions and helps to find the best method of doing a particular job.
c. Fatigue Study : Fatigue study means the systematic, objective and critical examination of the causes and consequences of fatigue. This study is aimed to determine the amount and frequency of rest required in completing the work with full capacity.
d. Method Study : Method study is concerned with analysing and evaluating the methods (capital intensive or labour intensive) of performing a job. Management should select the best method after considering the following factors : labour cost, availability of capital, material cost etc.
Standardisation : It refers to the methods of selecting standard materials, machines and tools for use by workers and standardisation of working conditions with respect to lighting, ventilation etc. It will improve the efficient performance of jobs.
Functional Foremanship : Under functional foremanship, a worker is supervised by several specialist foreman. Eight foremen control various aspects of production.
Foreman under the Planning Department are :
Route Clerk : He will determine the process of production and the route through which the raw materials will pass.
Instruction Card Clerk : He lays down the instructions for workers, who have to follow them to perform their jobs.
Time & Cost Clerk : He sets the time table for doing various jobs and specify the labour cost and material cost for each operation.
Shop Disciplinarian :He has the responsibility to maintain discipline in the factory.
Foremen under the Production Department are :
Gang Boss : He arranges workers, machines, tools and materials etc. for the jobs.
Speed Boss : He has the responsibility of maintaining the planned speed of production. In case of delay, he investigates the causes and tries to resolve them.
Repair Boss :He has the responsibility of maintaining (cleaning, greasing, oiling etc.) the machines, tools and equipment.
Inspector : He has to ensure that output agrees to the standards of quality set by the planning department.
Differential Piece Rate Plan:
F.W. Taylor suggested higher payment for those workers who produced standard output or more and lower payment to those who fail to produce standard output. Workers are paid on the basis of the number of pieces produced. Due to different rates for different sets of workers, it is known as a differential piece rate plan.
GENERAL PRINCIPLES OF MANAGEMENT
Scientific management was primarily concerned with increasing the efficiency of individual workers at the shop floor. It did not give adequate attention to the role of managers and their functions.
However, around the same time Henry Fayol, Director of a coal mining company in France made a systematic analysis of the process of management. He strongly felt that managers should be guided by certain principles, and evolved 14 general principles of management which are still considered important in management.
Division of Work : This principle suggests that work should be assigned to a person for which he is best suited. Work should be divided into compact jobs to be assigned to individuals. This facilitates specialisation and improves efficiency.
Authority and Responsibility : Responsibility means the work assigned to any person, and authority means rights that are given to him to manage people and things to ensure performance. In other words, authority should go hand in hand with the responsibility for effective results.
Discipline : This principle emphasises that subordinates should respect their superiors and obey their orders. On the other hand, superiors’ behaviour should be such that they make subordinates obedient. If such discipline is observed, there will be no problem of industrial disputes.
Unity of Command : A subordinate should work under the supervision of one superior only from whom he gets instructions and to whom he is accountable. It avoids confusion in authority and instructions.
Unity of Direction : Each group of activities having the same objective must have one head and one plan of action. Otherwise, there may be wastage, over expenditure and useless rivalry among the managers.
Subordination of Individual Interest to General Interest : While taking any decision, the collective good and collective interest of the organisation as a whole should be preferred to individual interests. The individual’s interest should be subordinated to the overall interest of the organisation. This ensures welfare of the organisation as well as its individual members.
Remuneration : Management should try to give fair wages to the employees so as to ensure reasonable satisfaction of workers and productivity for the organisation.
Centralisation : When a single person controls the affairs of an organisation, it is said to be complete centralisation. In small concerns, a single manager can supervise the work of the subordinates easily, while in a big organisation, control is divided among a number of persons to facilitate operational decision making at various levels. Fayol’s opinion was that there should be a proper balance between centralisation and delegation of authority in an organisation.
Scalar Chain : This is the chain of authority relationship from the highest to the lowest ranks. This implies that subordinates report to their immediate supervisors who, in turn, report directly to their own boss. The order of this chain should be maintained when some instructions are to be passed on or enquiries are to be made.
Order : Placement of men and materials should be properly made. Proper space should be made available where materials can be kept safely. Each man should be provided the work for which he is best suited.
Equity : This principle requires the managers to be kind and just to workers. This promotes a friendly atmosphere between superiors and subordinates and motivates them to perform their duties efficiently.
Stability of Tenure : Employees should be provided stability and continuity of their tenure of employment. There should not be frequent termination of employees. This could be achieved through attractive remuneration and honourable treatment of personnel.
Initiative : This implies encouraging initiative among its personnel to chalking out and execution of a plan to achieve the desired results.
Esprit de Corps : These French words mean team spirit. Managers should infuse the spirit of teamwork and cooperation among the employees. It helps in developing an atmosphere of mutual trust and a sense of unity.
NATURE OF MANAGEMENT
The nature of management can be better appreciated by looking at it
(a) Management as a Process : Management consists of a series of interrelated activities of planning, organising and controlling. All activities are undertaken in a proper sequence with a systematic approach to achieve the common goals. Thus, it is regarded as a process of organising.
(b) Management as a Discipline : Management has become a separate field of study with its own principles and practices and thus, evolved as an independent discipline with its own techniques and approaches.
(c) Management as a Group : Management normally refers to a group of managers working in an organisation. It includes the top executive as well as the first line supervisors. These managers perform their functions jointly as a group. The success of business does not depend on the efficiency of one, but of all managers taken together. Managers work as a team so that objectives of the business are fully achieved.
(d) Management as a Science as well as an Art : Management is regarded as a science as well as an art. Science refers to a studying of “ why”, it establishes a cause and effect relationship between variables. Any subject of study called a science should have the following characteristics:
(i) There must be a systematised body of knowledge that includes concepts, people and theories.
(ii) We should be able to establish a cause and effect relationship.
(iii) Its principles should be verifiable.
(iv) It should ensure predictable results.
(v) It should have universal application.
Management as a subject of study fulfils almost all the above characteristics. Theories and techniques like scientific management, PERT and CPM, break even analysis, budgeting etc. are all scientific in nature. However, since it deals with human beings, we cannot predict a definite cause - effect relationship. Hence management is not treated as a pure or full-fledged science.
As for the art, you know that it refers to bringing about the desired result through application of skill. It is a personalised process and states that there is no best way of doing a thing. Management also applies a lot of skills (like technical, conceptual, human etc.) and it is also creative in nature. Nobody can say that this is the best way of managing. It varies from one manager to another. The more one manages, the more experienced and expert he becomes.
Thus, management is a combination of both science and art.
(e) Management as Profession : Any occupation that satisfies the following requirements is called a profession.
(i) It must be an organised and systematised body of knowledge, this means it requires specialized knowledge.
(ii) Individuals, to pursue a specific profession, must acquire the specialised knowledge through some formal institutions. For example, you need to get a degree in law or engineering to pursue the profession of a lawyer or engineer.
(iii) This code of conduct lays down norms to be observed by the professionals while doing their job. Violation of the prescribed code can lead to derecognising the professional to practise.
(iv) A profession is no doubt an occupation to earn one’s livelihood but the financial reward is not the main measure of their success, they also have to remember their social responsibilities towards society.
Though management may not meet all the requirements of a profession in strict sense of the term, it meets most of the above requirements and is, nowadays, regarded as a full- fledged profession. A number of institutions have come up to teach management in a formal way and train future managers.
Managers performing different types of duties may be divided into three categories:
Top Level :The diagram shows that the top level management includes the Board of Directors and the Chief Executive. The chief executive may have the designation of Chairman, Managing Director, President, Executive Director or General Manager. This level determines the objectives of the business as a whole and lays down policies to achieve these objectives. The top management also exercises an overall control over the organisation.
Middle Level : The middle-level management includes heads of various departments, e.g., production, sales, etc., and other departmental managers. The department heads take the organisation objectives into their respective departments.
Lower Level: The lower-level management consists of foremen and supervisors who look after the operative workers, and ensure that the work is carried out properly and on time. They have the primary responsibility for the actual production of goods and services in the organisation.
In every organisation, the managers perform certain basic functions. These are broadly divided into six categories viz., planning, organising, staffing, directing, coordinating and controlling.
(a) Planning : Planning is deciding in advance what is to be done, when it is to be done, how it is to be done. It is basically concerned with the selection of goals to be achieved and determining the effective course of action from among the various alternatives.
(b) Organising : After the plans have been made, goals have been decided, management has to organise the activities, and physical resources of the firm to carry out the selected programmes successfully.
(c) Staffing : Staffing is concerned with employing people for the various activities to be performed. The objective of staffing is to ensure that suitable people have been appointed for different positions.
(d) Directing :The directing function of management includes guiding the subordinates, supervising their performance, communicating effectively and motivating them. A manager should be a good leader.
(e) Controlling : This function of management consists of the steps taken to ensure that the performance of work is in accordance with the plans. It involves checking the actual performance with the standards set. If differences are noticed, corrective steps are taken.
Coordination : Characteristics and Importance
Management has to ensure that all the activities contribute to the achievement of the
objectives of the business as a whole. This requires integration of activities and
synchronisation of efforts. The heads of each department should coordinate with each other and achieve the organisational objectives.
Characteristics of Coordination
Coordination is the essence of Management : Management objectives can be achieved only if there is unity of action among employees.If the activities of an enterprise are not integrated, there is lack of coordination. Lack of coordination may lead to duplication of work, overlapping of work, conflicts etc. Hence, coordination is the essence of management.
Coordination is Needed at All Levels of Management : The activities of various departments, units and various individuals in an organisation are interdependent in nature and needs coordination. For example the activities of purchase, production and marketing are interrelated.
Coordination is a Continuous Activity : Continuous activities like purchase, production, finance and marketing are interrelated and have to be coordinated all the time, hence coordination is a continuous process.
Coordination is a Conscious Action : In order to unite, integrate and harmonize the different activities in an enterprise, coordination is an intentional effort of the management.
Coordination Attempts to Achieve Objectives : Individual goals are integrated with organisational goals with levels for common purpose. Coordination brings efficiency in operations by achieving the objectives of an enterprise.
Importance of Coordination
The meaning and characteristics of coordination indicate that it is of great importance. Without proper Coordination human efforts may get jeopardized and objectives may not be effectively achieved. The importance of coordination can be explained with the help of the following points:
Coordinations help in maintaining harmony among workers in an organisation.
Coordination prevents overlapping of work and conflict among workers so as to achieve unity of action.
In large organisations, various departments and units are located at different places, close interaction among people will be very difficult. So a conscious effort of management is needed to coordinate the activities of such organisations. Coordination attempts to achieve cordial human relations.
Coordination helps to achieve the ultimate objective of the organisation by establishing direct contact between management and employees.
Coordination helps in reducing time and cost of operations.
It increases efficiency and morale of the employees.
Coordination is the orderly arrangement of group efforts to provide unity of action for the attainment of a common purpose. Coordination synchronises the activities of an organisation. It is the essence of management and is not a separate function of management. It is performed while performing all other functions of management.