Business Management ethics and communication Notes

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STUDY MATERIAL FOUNDATION PROGRAMME BUSINESS MANAGEMENT ETHICS AND COMMUNICATION PAPER 2 ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727 email infoicsi.edu website www.icsi.eduPART A Business Management LESSONS LEARNING OBJECTIVES Students manage their studies; Parents manage a family; and Business Tycoons 1. Nature of Management and its Process manage their Businesses. Unlike these familiar uses of the word management, the object of this unit is to give an understanding of the various 2. Planning concepts of management, as they are used in organisations today. Management textbooks since long have tended to obscure the wealth 3. Organisation creation aspect of management by focusing narrowly on what managers do; planning, organizing, directing, coordinating, and controlling 4. Human Resource Management or emphasizing its social character: The function of getting things done through others ( Harold Koontz and Cyril ODonnell). 5. Direction and Co-ordination What these definitions fail to capture is that the concept of management has developed with the modern business organisations, and that it is a 6. Controlling unique and a specific idea. As Peter Drucker has observed, management is universally popular as a discipline of study. 7. Recent Trends in Management Management as a profession has expanded its impact beyond business into non-profit and government organizations as well. Simply put, management has been responsible for developing new businesses and for building global firms. Management has been instrumental in wealth creation of great nations.  12 FP-BMEC Lesson 1 Nature of Management and its Process LESSON OUTLINE LEARNING OBJECTIVES  Concept of Management We are all involved in management of somekind :  Objectives of Management managing our own self, managing social and  Importance of Management economic activities, even managing society at large.  Management  Science or Art  Features of Management as Science To understand this concept better, lets take a simple example. Suppose you have to appear  Features of Management as Art for the CS examination in a few months. You have  Management as Profession all four papers to clear. The objective is very clear  Features of Management as Profession that you have to pass the examination, but a  Schools of Management good time plan and its proper implementation is what is required. Your success will depend on a  Management Functions lot of things like the study plan, the books to be  Planning referred to and also the discipline in adhering to  Organising the time plan.  HRM/Staffing All through this exercise, managing of affairs ( t ime  Direction plan, books to be referred to and discipline) is  Control the most important. Now this is what is called  Review Questions managing and all that is done in the process of managing is called management.  Innovation and a Manager However, in business world, management is  Goals of a Manager defined as the art of getting things done from  Coordination, the Essence of Management others. In todays business environment, the  Principles of Coordination professional manager is responsible for the  Development of Management Theory activities carried out by the organization.  Principles of Management Thus, the objective of this unit is to enable the  Frederick Taylor students to understand that management is the specific organ of a modern institution on which  Henri Fayol the very performance and survival of that institution  Administration and Management depends. It is the function of management to use  Managerial Skills all resources available to their organization for  Lesson Round Up the realization of results, so as to enable the firm to earn surplus funds to meet the growth and  Glossary expansion it needs.  Self-Test Questions Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall. Stephen R. Covey 2Lesson 1 Nature of Management and its Process 3 CONCEPT OF MANAGEMENT The economic environment around us consists of three basic entities  Households ( the consumers) , Firms ( the producers) and Government ( the co-coordinator) . In the present-day society, every household engages into some or the other economic activity in a firm to earn a livelihood in order to attain the ultimate objective - satisfaction of human wants. Thus households and firms are inter-related as : "households provide their service to firms and get paid for the same in the form of wages/salaries, whereas, "firms provide goods and services to the household and get paid in the form of prices. This mutual give-n-take becomes a complex phenomenon if there is no one to oversee the activities of these entities. To be effective with minimum adverse consequences, it is essential that group efforts are properly organized, directed and coordinated, i.e., there is a need for management. This role is played by the third entity  the government. The word management has its origin in th G ereek word  nomos which means management. It is concerned with human beings whose behavior is highly unpredictable. Ever since people have begun forming groups to achieve individual goals, management has become the essence coordinating the individual efforts. It involves not only a function but also the people who discharge it. A group of people, who accept the responsibility to run an organization and direct its activities, form the management of that organization. Management denotes not only a special position and a rank but also a discipline and field of study. It is management that provides planning, organization and direction which are necessary for business operations. In a more important sense, management is a vital function concerned with all aspects of the working of an enterprise. Management, in this sense, may be defined as the art of getting things done. Various economists have given different definitions of Management. Hick defines management as  the process of getting things done by the people and through the people. Koontz and ODonne ll state that management means,  Getting things done through and with people. According to Henry Fayol, To Manage is to forecast, and to plan, to organize, to command and to coordinate. Haimann observes,  Management is the function of getting things done through people and directing the efforts of individuals towards a common objective. OBJECTIVES OF MANAGEMENT Every human being has the potential to do remarkable things. To enable every person to understand, develop and utilize his/her potential, management should provide an environment whereby maximum output can be extracted from an individual. The following are the objectives of management: (i) Achieving Maximum Output with Minimum Efforts: The main objective of management is to attain maximum results with minimum efforts and resources. Management is basically concerned with discovering and utilizing human, material and financial resources in such a manner that they result in best combination. This combination results in the reduction of various costs. ( ii) Optimum Use of Resources: Through proper utilization of various factors of production, their efficiency can be increased to a great extent which can be obtained by reducing spoilage, wastages and breakages of all4 FP-BMEC kinds. This in turn leads to the saving of time, effort and money, which is essential for the growth and prosperity of any enterprise. (iii) Maximum Prosperity: Management ensures smooth and coordinated functioning of the enterprise. This in turn helps in providing maximum benefits to the employees in the shape of good working conditions, suitable wage system, incentive plans on the one hand and higher profits to the employer on the other. ( iv) Human Betterment & Social Justice: Management serves as a tool for the upliftment as well as betterment of the society. Through increased productivity and employment, management ensures better standards of living for the society. It provides justice through its uniform policies. IMPORTANCE OF MANAGEMENT To a very large extent the success of an organization is dependent on its management. Therefore, it is essential to understand the importance of management and its wider scope. This will also help us in understanding how good management helps in the growth and progress of an enterprise in the long run. Importance of management is given hereunder: ( i) Achieving Group Goals: It arranges the factors of production, assembles and organizes the resources, integrates the resources in an effective manner to achieve the goals. It directs group efforts towards achievement of pre-determined goals. By defining the objectives of an organization clearly there would be no wastage of time, money and effort. Management converts disorganized resources of men, machines, money, etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that the enterprise works towards the attainment of goals. (ii) Optimum Utilization of Resources: Management utilizes all the physical and human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. It makes use of experts and professionals, their services and optimum use of their skills and knowledge, thus avoiding wastage of any kind. If employees and machines are producing their maximum, there would not be under employment of any resource. (iii) Reduces Costs: It gets maximum results through minimum input by proper planning. Management uses physical, human and financial resources in such a manner that it results in best combination. This helps in cost reduction. ( iv) Establishes Sound Organization: To establish sound organizational structure is one of the objectives of management which should be in tune with the objectives of the organization. For the fulfillment of this, it establishes effective authority and responsibility relationship, i.e., who is accountable to whom, who can give instructions to whom, who are seniors and who are subordinates. Management fills up various positions with right persons with right skills, training and qualifications. All jobs should be clear to everyone. ( v) Establishes Equilibrium: Management enables the organization to survive in changing environment by keeping in touch with the changing environment. With the change in external environment, the initial coordination of their organization must be changed. Hence, it adapts the organization to the changing demand of market / changing needs of societies. It is responsible for the growth and survival of the organization. ( v i) Prosperity of Society: Efficient management leads to better economic production which in turn is beneficial for the welfare of the people. Good management makes a difficult task easier by avoiding wastage of scarce resources. It improves standard of living and increases the profit which is beneficial to business and society at large. MANAGEMENT  SCIENCE OR ART Science may be defined as a body of knowledge systematized through application of scientific methods in any department of enquiry. Science is systematic in the sense that certain relationships, principles and their limitationsLesson 1 Nature of Management and its Process 5 have been discovered, tested and established into theories, laws and principles But it does not mean that the principles and laws so established are immutable for all times to come. Discovery of new knowledge and phenomena can always change any principle, irrespective of its nature, standing and application. Science includes physical sciences, such as physics, chemistry, mathematics ( also known as exact sciences) and social sciences, such as economics, sociology, psychology ( known as variable sciences) as they are based on human behaviour which is unpredictable. Management can then well be described as a science, albeit a variable one, if compared to the nature of exact physical sciences. Management has now a theoretical base with a number of principles relating to coordination, organization, decision-making and so on. It is true that we cannot have the same kind of experimentation in management as is possible in natural sciences. But same is the case with economics, political science, military science and a number of other sciences dealing with the complex structure of group-norms and behaviour. When there is no objection to use the term science for these disciplines, there should not be any controversy about its use to the activity described as management. It is better to emphasise here that management is still a growing science. Features of Management as a Science The following features of management as a science are required to be properly understood: ( a) Management is an inexact science because it deals with complex human phenomena about which knowledge is still limited; ( b) Management is still a developing science; and ( c) Management is an inter-disciplinary science-it draws freely from other disciplines, such as economics, sociology and psychology. There should also be not much of dispute over describing management as an art. The function of art is to effect change or accomplish goals by deliberate efforts. Practical application of theoretical knowledge is reflected in art. In this sense, management is an art as well. Management principles have been evolved not for the sake of knowledge alone but for their application in concrete situations as well. In fact, skill in the application of principles to work situations is so important to the job of an executive that some authorities regard management to be essentially an art. The practicing manager can be compared to a carpenter who has to cut, refashion, and combine the pieces of wood to execute the order. Features of Management as an Art Management is an art because of the following attributes: 1. The process of management involves the use of knowhow and skills; 2. The process of management is directed towards the accomplishment of concrete results; 3. It is creative in the sense that it is the function of creating productive situations needed for further improvements; 4. Management is personalized in the sense that every manager has his own approach to problems. But it does not mean that science and art are mutually exclusive. The fact is that science is a body of knowledge, while art denotes the mode of practical application of knowledge. Evidently both are complementary to each other. Thus, theory and practice of management are mutually helpful and go side by side for the efficient functioning of any organization.6 FP-BMEC The most productive art is always based on an understanding of the science underlying it. Actually, managing, like all other arts, makes use of underlying organized knowledge-science-and applies it in the light of realities to gain a desired practical result. MANAGEMENT AS PROFESSION Growing administrative complexities, emergence of the corporate form of organizations with separation of ownership from management and development of an organized body of systematic knowledge of management are factors of great importance responsible for raising management to the status of a distinct profession. But there are people who still do not agree to management being a profession. To comment on this issue, therefore, one has to be conversant with important features of a profession. Features of Management as Profession A field is normally characterized as profession when the following special features are present in it: (i) Systematic body of knowledge; ( ii) Need for learning and proper organization; ( iii) Entry restricted on the basis of examination or education; and (iv) Dominance of service motive. Except for restricted entry, management qualifies all other tests of a profession. It is now backed by a systematic body of knowledge. A number of management principles have been developed which need proper learning and education. Besides, in a number of countries management institutes, associations and universities are now imparting knowledge relating to management. Moreover, social and moral climate have thrown new challenges before management. Management of today must be creative rather than adaptive and conscious of its ethical and social responsibilities to the society. Another important development in the field of management has been that the professional management consultants are growing both in number and quality. But management fails to qualify the test of professionalism relating to restricted entry. Though there is growing awareness in the society to employ properly educated and trained people for managing business enterprises, still self-made managers cannot altogether be eliminated. Thus, being different from the legal or medical professions, management in the strictest sense may fail to satisfy its standing as a profession. But professional overtones are very much present here. SCHOOLS OF MANAGEMENT Many management scholars and practitioners believe that the theories on management are aimed at establishing the best way of doing things. But it is to be appreciated that management theories and science do not advocate the best way to do things in the light of every situation. In fact, they are meant as a search for fundamental relationships for basic techniques, and for organization of available knowledge based on understanding of the concept. And undeniably the situational need determines their mode of application. Clearly therefore, effective management is always situational management - the application of knowledge to realities with a view to attaining desired results. However, after World War II, the literature on management has grown at an unprecedented rate. This, in turn, has greatly helped in improving management research, teaching and practice. But such a growth has also added to differences of opinion and controversies. Ranging from the operational school of management thought to the mathematical school, one comes across the human behaviour school, the systems school and the decision theory school. These divergent views relating to management have made the task of defining management extremely difficult. In the following paragraphs we present a brief review of some approaches to management analysis.Lesson 1 Nature of Management and its Process 7 Empirical Approach Scholars belonging to this school believe that clear understanding of the management theories can only be developed by the study and analysis of cases and comparative approach. They have a strong conviction that it is through the study of successes and failures of managers in individual instances and their endeavour to solve specific problems that it is possible to apply effective techniques in comparable situations. In their approach they intend to make some generalizations from case studies with a view to establish theories as useful guides for future course of action. Interpersonal Behaviour Approach Since managing involves getting things done with and through people, scholars belonging to this school feel that study of management should be based on interpersonal relations. This approach is termed as behavioural science, leadership or human relations approach by different group of scholars. In the presentation and study of the theories, this school attaches significance to interpersonal relations, personality dynamics, relations of the cultures of individuals and groups. In other words, this approach leans too heavily on the human aspect of management. Their attention is primarily on the individual and his or her motivations as a socio-psychological being. Group Behaviour Approach In fact, this approach is closely related to interpersonal behaviour approach. But this school of thought is basically centered on studying the behavioural pattern of members and groups in an organization. The ultimate objective is to indicate the ways of achieving relatively effective organizational behaviour. Belief and thinking of the scholars with this approach move around the behavioural dynamics of small and large groups in any organization. Besides, recognition of the organised enterprise as a social organism, institutional foundations of organization authority, influence of formal organization, and social factors are the main areas of their attention which considerably help management practitioners in their real life situation. Decision Theory Approach The exponents of the decision theory emphasise that decision-making is the core of management. They concentrate on rational decision-making, selection from among possible alternatives of a course of action or policy. The approach of this school of opinion is concerned with the persons, or organizational groups making decisions, or with the analysis of the decision-making process. Besides the economic rationale of decisions, this theory also attempts to cover the social and psychological aspects, and the environment affecting the decisions and the decision makers. Mathematical Approach There cannot be any two opinions that mathematical tools and methods can be used by any school of management. But some management scholars and practitioners have viewed management exclusively as a system of mathematical models and processes. Operation researchers and analysts primarily belong to this group. They are of the opinion that if planning, decision-making, organizing, etc. conform to logical processes, then the same can easily and suitably be presented in mathematical symbols. The leaning of this school is heavily on expressing and interpreting the basic relationship of the problems in terms of determined goals. In a way, it is thus closely related to decision theory approach. But if differs from it in the sense that it emphasizes extensive use of mathematics in management. Operational Approach This approach consolidated the vital thinking of all the approaches to management in order to identify and8 FP-BMEC highlight what relates to actual managing and which can be most useful in real life situations. The operational approach thus fundamentally recognises that there is a central core of knowledge about managing which exists only in managements. Its applicability can be brought to bear at all levels of management irrespective of the nature and size of the organization. But at the same time this approach does recognize that the problems faced by the executives and managers in their real life normally vary with the nature, size and level of enterprise. Further, operationalists have drawn and developed their concepts from all possible disciplines which have direct or indirect effect on human behaviour and organizational functioning. And in this way, the basic theory for the various facets of management has generally been established. Thus, we see that the various approaches to interpret the term management may at best be described as window in as much as they emphasize a particular aspect of management while portraying its total picture. That management draws heavily from a variety of disciplines further creates interpretational problems. Nevertheless, the various approaches described above encourage holistic appreciation of the concept whose emergence has been described as having even more profound influence than the industrial revolution of nineteenth century. MANAGEMENT FUNCTIONS Functions related to activities, such as producing, purchasing, selling, advertising, accounting and engineering differ from one enterprise to the other. However, the functions of management are common to all business units and even non-profit organizations. Hence, it is important to know about these functions in some details. Henry 1 Fayol , the French industrialist and popularly known as the  founder of modern management theory, divided all activities of industrial undertakings into six groups:  Technical  Commercial  Financial  Security  Accounting  Managerial Fayol distinguished between the principles and the elements of management. He said that the principles of management are used for formulating rules and guidelines, whereas the elements help in deciding its functions. He grouped these elements into five managerial functions such as:  Planning  Organising  Commanding  Coordinating  Controlling Fayols classification of managerial functions is widely acknowledged and acclaimed, though other classifications also exist. 2 For example, Luther Gulick coined the word POSDCORB using the initial letters of management functions: planning ( P), organising ( O), staffing ( S) , directing ( D), coordinating ( CO) , reporting ( R), and budgeting ( B) . Reporting is a part of control function, while budgeting represents both planning and controlling. Similarly, Newmann and Summer classified managing process as the functions of ( i) organizing, ( ii) planning, ( iii) leading, and ( iv) controlling. 1. Henry Fayol, General and Industrial Management. 2. Quoted by Earnest Dale in his work Management Theory and Practice.Lesson 1 Nature of Management and its Process 9 REVIEW QUESTIONS Choose the correct option: 1. Which of the following word did Luther Gulick coin using the initial letters of management functions: ( a) POSBRD (b) POSDCORB State True or False: 2. Success on the part of the executives essentially calls for a capability to promote self-appraisal. Answers: 1. (b)2. False Still another useful method of classifying managerial functions is to group them around the components of planning, organizing, staffing, directing and controlling. Circular flow of these functions may be presented as follows: Management Process The above functions of management are common to all business enterprises and organizations in other fields but the manner in which these are carried out are generally not the same in all organizations. Similarly, though all these functions constitute the job of a manager, relative importance of each of them varies from time to time, as well as across the hierarchical levels. Thus, economic conditions may force a firm to lay more emphasis on control for the time being, while a growing concern may have to devote more time to organizational problems. Likewise, top management is generally required to spend more time in planning, the middle level on organizing and the lower level managers may be more concerned with directing. Planning Planning is deciding in advance what is to be done, and how and when it is to be done. It involves projecting the10 FP-BMEC future course of action for the business as a whole and also for different sections within it. Planning is thus the preparatory step for actions and helps in bridging the gap between the present and the future. In a more realistic sense, planning process comprises of determination and laying down of (i) objectives, (ii) policies, ( iii) procedures, ( iv) rules, ( v) programmes, (vi) budget, and ( vii) strategies. Management might plan for a short period as well as for a long run. For improved efficiency and better results, short-range plans should be properly coordinated with the long-range ones. Planning is a fundamental function of management and all other functions of management are greatly influenced by the planning process. Importance of planning is amply manifested in the increasing interest evinced in it in business, government and other organizations. Very often planning process is erroneously described to be the prerogative of top management. But the fact is that planning permeates to all levels in the organization and every manager, irrespective of his position in the management hierarchy, must plan within the limits of his authority and according to the decisions of his seniors. Organising Organising is concerned with both the orderly assemblage of human and material resources as well as the process of development of a structure of formally identified and distinguished tasks, roles and relationships that are attributable to the various members so that they can work effectively as a group. In order to achieve this following steps become important :  Determination of activities of the enterprise keeping in view its objectives.  Classification of such activities into convenient groups for the purpose of division.  Assignment of these groups of activities to individuals.  Delegation of authority and fixing of responsibility for carrying out the assigned duties.  Coordination of these activities and authority relations throughout the organization. Thus, the division of work among people and coordination of their efforts to achieve specific objectives are the fundamental aspects of organization. It needs no mention that the problem of organising arises only when group efforts are involved. One person a sctivities cannot possibly be organised in the sense in which we use this term. Similarly, organization is always intended to achieve objectives and as such it is a means to an end and never an end in itself. For better results therefore, it is implied that organization should be based upon practical prudence and sound applications of organizational principles. Human Resource Management/Staffing Organization as a function of management helps the executive to establish positions and lay down their functional relations to one another. However, it is through HR function, the different positions in the organization structure are kept manned. HR process, therefore, provides the organization with adequate number of competent and qualified personnel at all levels in the enterprise. Since successful performance by individual largely determines the success of the structure, HR function of the manager deserves sufficient care and attention of the management. It implies that managers should properly estimate manpower requirements of the organization consistent with the qualifications expected for the proper the and efficient discharge of duties on existing and possible jobs in the organization. It should lay down suitable selection and placement procedures and develop employee skill through training and appraisal schemes, and devise suitable schemes of compensation. HR is a continuous function. A new enterprise needs to employ people to fill positions established in the organization. In an established concern also such factors as death, retirement, resignation, termination, promotion, demotion, transfer, change in objectives as well as methods, etc. necessitate continuous performance of this function.Lesson 1 Nature of Management and its Process 11 Direction Mere planning, organising and staffing are not sufficient to set the tasks in motion. Management may have well coordinated plans, properly established duties and authority relations and able personnel, yet it is through the function of direction that managers are able to get the employees accomplish their tasks by making them integrate their individual efforts with the interest and objectives of the enterprise. It calls for properly motivating, communicating, leading and supervising the subordinates. Along these broad aspects, directing the subordinates embraces the following activities :  issuing orders and instructions;  guiding, counselling and instructing the subordinates about the proper way of doing the job;  supervising the work of subordinates to ensure that their performance conforms to the plan;  motivating the subordinates to direct their behaviour towards accomplishing organizational objectives;  maintaining discipline and rewarding effective performance. Control While directing, the manager explains to subordinates the work expected of each of them and also helps them to do their respective jobs so that enterprise objectives can be achieved according to the best of their abilities. But even then there is no guarantee that work will always proceed according to plans, and this possibility of drifting away from plans calls for constant observation of actual performance, so that appropriate steps may be taken to cause the events to conform to the plans. The important steps to be initiated in this regard are as follows:  Measurement of actual performance against the standard and recording deviations.  Analyzing and probing the reasons for such deviations.  Fixing of responsibility in terms of person responsible for negative deviations.  Correction of employees performance so that group goals and plans are accomplished. Control is thus closely related to the planning job of the manager. But it should not be viewed merely as a post- mortem of past achievements and performance. In fact, a good control system should suggest corrective measures so that negative deviations may not reoccur in future. The principle of feedback when incorporated in the system can be of great use in this respect. INNOVATIONS AND MANAGER Business conditions, both internal and external, do not remain constant for long. A true manager therefore, cannot continue to manage the same way as he has been doing in the past. Considerations of efficiency and survival require that a manager should be constantly engaged in the task of innovation, i.e., continually introducing new changes. In this sense, management is a creative and also an adaptive process. A manager can be innovative by developing new ideas, adapting ideas from fields other than his own combining old ideas with new ones, or even inspiring subordinates to develop new ideas. That management should be creative is an easily acceptable proposition. However, to emphasize innovation to the extent of regarding it as a distinct function of management is debatable. The fact is that planning function itself includes innovation because in the event of planning the manager not only adjusts his organization by foreseeing future conditions but also attempts to effect changes in these conditions. Sometimes a question is raised about the order in which different functions of planning, organizing, staffing, direction and controls are performed. Theoretically planning is done first followed by organizing, staffing, direction12 FP-BMEC and control. However, since management is a dynamic process where all its functions are repeated and performed continuously, no such order in practice is adhered to and followed. It is, therefore, futile to insist on a particular time or an order sequence for different functions of management. Goals of a Manager Traditionally it has been believed that managers act as convenient subordinates to the masters of industry and as such pursue their (owners) goal of profit maximization. Reasoning offered was that since they are employed by the owners, risk of losing jobs compels them to the single-minded pursuit of absentee owners objective. However, with the widening divorce of management from ownership and with the growing professionalization of management, it is not difficult to understand that managers may have objectives of their own which may even be in conflict with those of the owners. These objectives could be higher remuneration, prestige, power, status, etc. Further, organizational goal-setting in todays environment is essentially an exercise in bargaining, reconciliation and ordering because of a variety of influences from such groups as worker-unions, government, consumers, suppliers, environment activists, equal-opportunity enthusiasts, etc. Indeed, harmonisation of divergent group interests through various forms of side payments in itself becomes an objective for the managers. Hence, managers do not manifest the diktat of a dominant group, rather they represent a collective view or varied interests. COORDINATION- THE ESSENCE OF MANAGEMENT Many scholars view coordination as a separate function of management. But Henry Fayol included coordination amongst the elements of management. However, since coordination is all pervasive and permeates through every function of management, it is better to consider it as the overall function or the essence of management. In fact, every managerial function represents an exercise in coordination. Thus, planning, organising, staffing, direction and control all help the managers to achieve proper coordination. Failure to perform any of the above functions is evidently reflected in poor coordination. Coordination deals with harmonising the work relations and efforts at all levels for common purpose. It may be described as an exercise in unifying and harmonising individual efforts for the purpose of accomplishing group goals. The whole idea of coordination is to adjust, reconcile and synchronise individual efforts to make group efforts more effective and help achieve some common objectives. Sometimes coordination is confused with cooperation and it is believed that if cooperation exists, coordination will automatically follow. Though cooperation helps to achieve coordination, it is by no means the sole condition for the latter to follow. One can take the example of a football or hockey match as a case in point. A team comprising of best players may find itself hamstrung due to lack of coordinated efforts on the part of its players. If individual efforts are properly coordinated, the group can be more effective than the sum total of its part. But it does not mean that coordination is spontaneous. In fact, differences in understanding, approach, timing, interest, or efforts have to be reconciled in any attempt to synchronise the individual efforts. Principles of Coordination A manager coordinates the work of his subordinates while managing. Following are the useful principles of coordination: ( 1 ) Coordination should be viewed as a responsibility of every manager right from the bottom to the top. Every individual should know how his job contributes towards accomplishing objectives of his department and also the dominant goals of the enterprise. Even when a supervisor is able to accomplish the objectives of his department he should be made to realise that his achievement is nothing unless it is combined with achievements of other units and it contributes to the attainment of the higher level objectives of the organization. Thus, every manager should understand and appreciate hierarchy of objectives or means-ends chain.Lesson 1 Nature of Management and its Process 13 ( 2) Individual efforts are more easily synchronised if coordination is achieved in the early stages of planning and policy-making. Thus, where production and marketing policies are at cross ends, coordination between the two groups of activities will be a serious problem. (3) Coordination is better achieved through understanding interpersonal and horizontal rather than the vertical relationships of people in the organization, and then issuing orders for coordination. ( 4) Good communication is another useful principle of coordination. As a result of constant change in business environment, plans and policies are frequently revised and compromises and adjustments made. If required information is not communicated well in time, unifying individual efforts for the accomplishment of enterprise goals shall become a difficult task for the management. DEVELOPMENT OF MANAGEMENT THEORY Management in some form or the other has been a concern for organised cooperation ever since the dawn of civilization. Thus, one can witness recognition of organization and management in the Buddhist order and the Sangha as far back as 530 B.C. Roman Catholic Church and military organizations also offer good examples of early application of management principles. However, systematic study and examination of management is largely the product of the present century and more specifically of the past four decades. Ever since the great contributions of Taylor and Fayol was made to the management theory, the science of management has grown constantly at a fast rate. Principles of Management Various management principles defined by different authors are given below: Frederick Taylor Frederick Taylor, who is popularly known as the father of scientific management, began his career as an apprentice in a small machine shop and rose to the level of an engineer. Naturally, his writings reflect the practical wisdom and work experience. Taylors main concern was management at shop level and he was mainly concerned with efficiency of workers and managers at the production level. The major principles and elements of his scientific management can be summarised as follows: 1. Separation of planning and action, equal division of work and responsibility between labour and management. 2. Replacement of old rule of thumb method of management by scientific method, i.e. scientific determination of each element of a persons job. 3. Scientific selection and training of workers. 4. Absolute cooperation between labour and management in work performance. 5. Determining time standard for each job through stopwatch study of all the essential elements of the job. 6. Introduction of the system of functional foremanship at supervisory level. 7. Differential piece rates of wage payment  workers attaining or exceeding the standard should draw their pay at a higher rate and those falling short of the standard be compensated at a lower wage rate. The scientific management movement early in the twentieth century was hailed as a second industrial revolution. Since scientific management meant an innovation in the field of management, it generated tremendous opposition even during the life time of Taylor. Public criticism and opinions compelled him to appear before the special Congressional Committee hearings in 1912. The industrial psychologists challenged his assumption of the best method of job performance. Although Taylor gave a very lucid explanation of management as a separate and14 FP-BMEC identifiable discipline, his stress on time and motion study and on efficiency at the shop level led to the overlooking of other general aspects of management, particularly in the U.K. and the U.S.A. In fact, the enthusiasm for Taylorism and scientific management had the unfortunate effect of overshadowing the work of Henry Fayol. Though Taylor pioneered the scientific management movement, he was by no means the lone contributor. Henry Lawrence Gantt, for instance, corrected to some extent the difficulties of Taylorsd i fferential piece rate system (where two rates of wages, one lower and one higher are fixed. Those who fail in attaining the standard, are paid at a lower rate and those exceeding the standard or just attaining the standard get a higher rate) by devising a new method known as the task and bonus plan(  a wage incentive plan in which high task efficiency is maintained by providing a percentage bonus as a reward for production in excess of standard) . Similarly, Franck Gilbreth and his wife Lillian Gilbreth, stressed the importance of giving greater attention to minute details of work, and also developed the principles of motion economy intended to eliminate redundant motions and produce a rhythm by scientific development of essential motions. Henry Fayol Henry Fayol is popularly known as the father of modern management theory, since he laid down the theory of general management applicable equally to all kinds of administration and to all fields whether social, political or economic. Henry Fayol started his career as a coal mine engineer in 1860 in a French coal mine and was its chief executive ( Managing Director) from 1883 and 1918, during which he brought the enterprise from the verge of bankruptcy to high success. As a manager he came to the conclusion that there was a single administrative science applicable to all types of organizations. In the year 1916, he published his well-known work in French entitled  Administration Industrielle et Generale ( Industrial and General Administration) . However, no English translation of his work was available until the year 1929, and in that year also only a few hundred copies were distributed in the U.K. Fayol divided all activities of industrial enterprises into the following six groups: 1. Technical activities concerning production; 2. Commercial activities of buying and selling; 3. Financial activities intended to seek optimum use of capital; 4. Accounting activities pertaining to final accounts, costs and statistics; 5. Security activities relating to protection of property; and 6. Managerial activities. The first five are quite well known and as such his work is largely devoted to the description and explanation of the managerial activities. He referred to the functions of management as its elements and grouped them around the activities of planning, organising, commanding, coordinating and controlling. Fayol observed that the importance of managerial ability increases as one goes up the echelons of management hierarchy. He also emphasised the need for training in management for which development of management theory is essential. On the basis of his experiences and foresight into the field of management, Fayol suggested the following fourteen principles of management. 1. Division of Work: So as to produce more and secure better performance with the same effort. 2. Authority and Responsibility: Whenever authority is used responsibility arises, and the two are co-extensive. 3. Discipline: To ensure obedience and respect for superiors. 4. Unity of Command: An employee shall receive orders from one senior only. 5. Unity of Direction: A group of activities with common objectives shall have one head and one plan.Lesson 1 Nature of Management and its Process 15 6. Subordination: Subordination of individual interest to general interest. 7. Remuneration: It should be fair and afford maximum satisfaction to the firm and employees as well. 8. Centralization: Top management should decide the extent to which authority is to be dispersed in the organization or retained at higher levels. Centralisation or decentralisation should be viewed as a question of proportion. 9. Scalar Chain: It refers to superior-subordinate relations throughout the organization. It should be short- circuited and not be carried to the extent that it proves detrimental to the business. 10. Order: There must be a place for everything, and each thing must be in its appointed place. Similarly, there must be appointed place for each employee and every employee must be in his appointed place. 11. Equity: Management must have the desire for equity and equality of treatment while dealing with people. Equity is the combination of kindliness and justice in a manager. 12. Stability of Tenure of Personnel: Management should strive to minimise employee turnover. 13. Initiative: It refers to thinking out and executing a plan. 14. Espirit de Corps: This principle emphasises the need for teamwork and the importance of effective communication in obtaining it. Fayol described the above principles as a matter of convenience. He did not intend to close the list or make the principles inflexible. Contributions of the Behaviouralists, Sociologists and Psychologists The contribution of behavioral scientists to management principles and practices has been recognised all over the world after the Hawthorne experiments (1928-32) were conducted by Elton Mayo and his associates. According to the behaviouralists, the study of management should be concerned with human behaviour in organizations and related matters; organizational effectiveness depends on the quality of relationship among people working in it good management rests on the ability of managers to develop interpersonal competence among members and to support collaborative efforts at all levels of the organization. With its major emphasis on human relations, informal group communication, employee motivation and leadership styles, the behavioural approach to management has drawn attention to a wide range of socio-psychological phenomena, like the dynamics of organizational behaviour, group dynamics, organizational conflict, change and techniques of organizational development. Psychologists and sociologists have made significant contributions to the behavioural school of thought. Psychologists like A.H. Maslow, McGregor, Leavitt, Chris Argyris, Herzberg and McClelland, and Sociologists like Bakke, Dubin, Katz, Gouldner and Etzioni, through their research findings, have laid the foundations of interdisciplinary approaches to the study of organization and management. Systems Approach A significant contribution has been made to the theory and practice of management in recent years by the introduction of the systems approach, which prior to World War II was considered applicable and meaningful exclusively to the physical sciences. A system is a set of things connected or interdependent so as to form a complex unity, a whole composed of parts in orderly arrangement according to some scheme or plan. The systems approach defines organization as a complex whole consisting of mutually interdependent parts or sub- systems and interacting with the environment of which it is a part. It views management as a system of inter- relationships involving the processes of decision-making, communication and balancing. The systems theorists contribution to management thought is based on the recognition of organizations as open, adaptive system16 FP-BMEC subject to all the pressures and conflicts of the environment. Chester I Barnard viewed the executive as a component of a formal organization, and the latter as a part of entire cooperative system involving physical, biological, social and psychological elements. Management is an open system. It affects and is in turn affected by the environment in which it operates. Neither objectives nor plans can possibly be set in the vacuum of a closed company system. Markets, government regulations, competitors, technology, and many other elements of an enterprise environment affect plans and objectives and cannot be overlooked. Likewise, no manager can disregard the fact that they are products of, and are influenced by a large cultural environment. Systems approach to management enables us to see the critical variables and constants and their interaction with one another. Importance of Management Theory The need for knowing the theory and techniques of management is important in order to:  Increase efficiency.  Crystallize the nature of management.  Improve research in management.  Attain social goals by way of coordinating the efforts of people so that individual objectives become translated into social attainments. Contingency Management Management theory and science do not advocate the one best way to do things in the light of every situation. Internal states and processes of organization are contingent upon external requirements and members needs. Therefore, the actual practice and solution of varied problems differs depending upon the circumstances. The idea of contingency management is that the internal functioning of the organization must be consistent with the demands of organization task, technology, or external environment and the needs of the members, if the organization is to be effective. Different organizations with different tasks and different competitive environments require different plans. The task of a manager is to apply his knowledge to realities in order to attain the desired results. Responsibilities of Management All the three levels of management, viz. top management, middle management and lower management have obligations towards three social groups: ( a) those who have appointed them; ( b) those whom they manage; and ( c) the general community. Drucker assigns three jobs to management: Managing a business; managing managers; and managing workers and work. He feels that management must place economic performance above everything else. It is by the economic results which it produces that it can justify its existence and its authority. While managing, a manager plays many roles. According to Henry Mintzberg, a managers work role has three phases: 1. Interpersonal Role: It relates to his contacts and dealings with other people. 2. Informational Role: Because of his interpersonal role, the manager is in a unique position to get information. His contacts with outside world and his leadership position make him a focal point of information. In this role, a manager has to receive and transmit information so that he can develop a thorough understanding of his organization.Lesson 1 Nature of Management and its Process 17 3. Decisional Role: There are four decisional roles that a manager has to perform: (a) He has to perform the entrepreneurs role by initiating change and taking risk which is involved in introducing change. (b) He has to assume the role of a disturbance handler by taking charge whenever the organization is threatened either due to external or internal reasons. (c) He performs the role of an allocator of resources. (d) He performs the negotiators role in which he deals with those situations where he has to enter into negotiations on behalf of the organization. ADMINISTRATION AND MANAGEMENT A clear distinction may be made between administration and management in the following way: 1. Administration is concerned with policy making, whereas management with policy implementation. 2. Functions of administration are legislative and largely determinative, while that of the management are executive and governing. 3. Broadly speaking, administration is concerned with planning and organizing, but motivating and controlling functions are involved in management. 4. Board of directors of any company is normally concerned with administration, whereas personnel below that level are in charge of management. So viewed, management is more important at lower levels, as has been depicted below: ADMINISTRATION TOP MANAGEMENT MANAGEMENT FOREMAN/ SUPERVISOR Thus, the basic distinction between the two terms is that whereas administration is a process of laying down broad policies and objectives of the organization, management directs and guides the operations of an organization towards realizing the objectives set-forth by the former. It is also said that administration is a top-level function while management is a lower-level function. As of today, management is thought of as comprising both the process of planning and policy-making, and their execution as well. Thus, management includes administrative management (i.e. administration) and operative management.18 FP-BMEC The conceptual distinction between administration and management hardly serves any purpose. In fact, management process is the same in all enterprises and at all levels in the organization. Management is as much responsible for planning as is administration. The above point is clearly borne out by the fact that no two separate set of personnel are required to discharge the administrative and managerial functions. It is true that planning is more important and broad at higher levels of organization, but it is equally true that every manager irrespective of his position or level in the organization must plan, and planning process is essentially the same at all levels. MANAGERIAL SKILLS Managerial skills are classified as technical, human and conceptual by Katz. Assuming that a manager is one who directs the activities of other persons and undertakes the responsibility for the achievement of objectives through such efforts, the successful management seems to rest on three basic developable skills: technical, human and conceptual. The relative importance of these three skills varies with the level of managerial responsibility. Thus, essential skills which every manager needs for doing better management are called as Managerial Skills. According to Prof. Katz, all managers require the above mentioned three managerial skills. However, the degree of these skills required varies from levels of management and from one organization to another. The top-level managers require more conceptual skills and less technical skills. The lower-level managers require more technical skills and less conceptual skills. Human relations skills are required equally by all three levels of management. ( i ) Conceptual Skills: Conceptual skill is the ability to visualise the organization as a whole. It includes analytical, creative and initiative skills. It helps the manager to identify the causes of the problems and not the symptoms. It helps him to solve the problems for the benefit of the entire organization. It helps the manager to fix goals for the whole organization and to plan for every situation. According to Prof. Katz, conceptual skills are mostly required by the top-level management because they spend more time in planning, organising and solving the problems. (ii) Human  Relations Skills Hu : man relations skills are also called Interpersonal skills. It is an ability to work with people. It helps the managers to understand, communicate and work with others. It also helps the managers to lead, motivate and develop team spirit. Human relations skills are required by all managers at all levels of management. This is so, since all managers have to interact and work with people. (iii) Technical Skills: A technical skill is the ability to perform the given job. Technical skills help the managers to use different machines and tools. It also helps them to use various procedures and techniques. The low-level managers require more technical skills. This is because they are incharge of the actual operations. Besides three managerial skills eloborated by Prof. Kartz, a manager also needs the following additional managerial skills. (iv) Communication Skills: Communication skills are required equally at all three levels of management. A manager must be able to communicate the plans and policies to the workers. Similarly, he must listen and solve the problems of the workers and also encourage a free-flow of communication in the organization. ( v) Administrative Skills: Administrative skills are required at the top-level management. The top-level managers should know how to make plans and policies and how to get the work done. They should be able to co-ordinate different activities of the organization and to control the full organization. (v i) Leadership Skills: Leadership skills is the ability to influence human behaviour. A manager requires leadership skills to motivate the workers. These skills help the Manager to get the work done through the workers. ( vii) Problem  Solving Skills : Problem solving skills are also called as design skills. A manager should know how to identify a problem and possess the ability to find a best solution for solving any specific problem. This requires intelligence, experience and up-to-date knowledge of the latest developments.Lesson 1 Nature of Management and its Process 19 ( viii) Decision  Making Skills : Decision-making skills are required at all levels of management. However, it is required more at the top-level of management. A manager must be able to take quick and correct decisions and also be able to implement his decisions wisely. The success or failure of a manager depends upon the correctness of his decisions. Competent Managerial Personnel The overwhelming significance of competent managerial personnel for the development of any country should, in no circumstances, go unaccounted. Those small professional elite (of entrepreneurs and executives) can go a long way towards initiating economic growth has also been accepted in the writings of W.W. Rostorw, R.N. Farmer and B.M. Richman. In fact, the problem of economic development is management oriented. No amount of capital investment and sophisticated technology can succeed in generating national wealth, if such wealth-producing resources are badly handled because of incompetent management. Loan and transfer can, at the best, help to mitigate temporary problems. But if an organization does not possess a garrison of competent managers, how can it maintain a 3 sustained rate of growth and contribute to the countrys economic development? It is needless to mention that in underdeveloped and developing countries, the scarcity of able and competent managers is a severe constraint to the growth and development of industrial and business enterprises, and the country at large. Indeed, people are available but those with intellectual potentialities and distinct managerial trait are rare. The search for capable men and women of outstanding managerial ability has not come to an end yet. Rather the problem is ever increasing with rapid industrial development and has further been accentuated due to fast changing socio-economic-political value of the people, growing complexities in the industrial world and the increased knowledge of management itself. The magnitude of this problem may well be understood from the observation of George R.Terry. He remarked: The demand for competent administration has always been strong, but for the several decades the executive manhunt has acquired greater and greater emphasis. Obviously, the pertinent question is, what role do managers play in any organization? Why so much of importance has been attached to them that it is contended that business are made or broken in the long run not by markets, or capital, patents or equipment but by men..... (Urwick). There is no denying the fact that executives and managers play the most vital role in determining the future of any concern in a specific industrial complex and society at large. On no account should it be forgotten that as victory or defeat in a battle largely depends on the performance of area commanders, likewise fulfillment of the desired mission of any organization requires effectiveness and efficiency of its higher-up, both individually and collectively. Hence, as a natural corollary, job involvement of these executives can better be highlighted under two broad heads  ( i) distinct functions concerning ones specific area, and ( ii) general functions related to overall prosperity of the concern. No matter, whether people belong to sales or purchase, production or publicity, or any other branch of activity of the organization, it is evident that executives and managers have to deal with very many forces, as well as with the limitations in the pursuit of a common purpose. Indeed, they handle a very complex type of job. They owe an overwhelming responsibility to the concern. And naturally to achieve success in their strides, they have to design a course of action from among alternatives of programmes, procedures and methods, verifying whether everything occurs in conformity with a plan adopted, instructions issued and principles established, and make orderly arrangement of individual and group effort to secure unity of action. It is not difficult, therefore, to realise the responsibility of executives and managers of any organization. From a rational point of view leadership can be looked upon as their essential character, and decision-making their primary job. 3. S. Das, Impact of Social Milieu in the Development of Management Classes (Capital, 1974) .

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