Principles Of Management Unit 2

Unit-II
EVOLUTION OF MANAGEMENT THOUGHT
The practice of management is as old as human civilization. The ancient civilizations
of Egypt (the great pyramids), Greece (leadership and war tactics of Alexander the
great) and Rome displayed the marvelous results of good management practices.
The origin of management as a discipline was developed in the late 19th century.
The approaches of management are theoretical frameworks for the study of
management. Each of the approaches of management are based on somewhat
different assumptions about human beings and the organizations for which they
work.

The different approaches of management are
a) Classical approach
b) Behavioral approach
c) Quantitative approach
d) Systems approach
e) Contingency approach
a) THE CLASSICALAPPROACH:
The classical approach is the oldest formal approach of management thought. Its
roots pre-date the twentieth century.
The classical approach of thought generally concerns ways to manage work and
organizations more efficiently.
Three areas of study that can be grouped under the classical approach are
1. scientific management
2. administrative management
3. bureaucratic management.

(i) Scientific Management.
Frederick Winslow Taylor is known as the father of scientific management.
Scientific management (also called Taylorism or the Taylor system) is a
theory of management that analyzes and synthesizes workflows, with the
objective of improving labor productivity.
In other words, Traditional rules of thumb are replaced by precise
procedures developed after careful study of an individual at work.
(ii) Administrative Management.
Administrative management focuses on the management process and principles of
management.
In contrast to scientific management, which deals largely with jobs and work at
the individual level of analysis, administrative management provides a more
general theory of management.
Henri Fayol is the major contributor to this approach of management thought.

(iii) Bureaucratic Management.
Bureaucratic management focuses on the ideal form of organization.
Max Weber was the major contributor to bureaucratic management. Based on
observation, Weber concluded that many early organizations were inefficiently
managed, with decisions based on personal relationships and loyalty.
He proposed that a form of organization, called a bureaucracy, characterized by
1. division of labor,
2. hierarchy,
3. formalized rules,
4. impersonality,
5. selection and
6. promotion of employees based on ability, would lead to more efficient
management.

Weber also contended that managers‘ authority in an organization should be based
not on tradition or charisma but on the position held by managers in the
organizational hierarchy
THE BEHAVIORALAPPROACH:
The behavioral approach of management thought developed, in part, because of
perceived weaknesses in the assumptions of the classical approach.
The classical approach emphasized efficiency, process, and principles. Some felt
that this emphasis disregarded important aspects of organizational life, particularly
as it related to human behavior.
Thus, the behavioral approach focused on trying to understand the factors that affect
human behavior at work.

(i) Human Relations.
The Hawthorne Experiments began in 1924 and continued through the early 1930s.
A variety of researchers participated in the studies, including Elton Mayo.
One of the major conclusions of the Hawthorne studies was that workers' attitudes
are associated with productivity.
Another was that the workplace is a social system and informal group influence
could exert a powerful effect on individual behavior.
A third was that the style of supervision is an important factor in increasing workers'
job satisfaction.

(ii) Behavioral Science.
Behavioral science and the study of organizational behavior emerged in the 1950s
and1960s.
The behavioral science approach was a natural progression of the human relations
movement. It focused on applying conceptual and analytical tools to the problem of
understanding and predicting behavior in the workplace.
The behavioral science approach has contributed to the study of management
through its focus on personality, attitudes, values, motivation, group behavior,
leadership, communication, and conflict, among other issues.

(i) Management Science (Operations Research)
Management science (also called operations research) uses mathematical and statistical
approaches to solve management problems. It developed during World War II as strategists
tried to apply scientific knowledge and methods to the complex problems of war. Industry
began to apply management science after the war. The advent of the computer made many
management science tools and concepts more practical for industry
(ii) Production And Operations Management.
This approach focuses on the operation and control of the production process that transforms
resources into finished goods and services.
It has its roots in scientific management but became an identifiable area of
management study after World War II.
It uses many of the tools of management science. Operations management emphasizes
productivity and quality of both manufacturing and service organizations.
W. Edwards Deming exerted a tremendous influence in shaping modern ideas
about improving productivity and quality.

Major areas of study within operations management
include capacity planning
facilities location
facilities layout
materials requirement planning
scheduling
purchasing and inventory control
quality control, computer integrated
Manufacturing
just-in-time inventory systems
and flexible manufacturing systems.

SYSTEMS APPROACH
One of the modern approach to understand management is the system approach . Here the
organization is viewed as a system.
Every department of the organization is considered as a sub system .
It is also possible that every department can be viewed as a system and every section in the
department can be viewed as subsystem .
Thus systems approach helps to study the basic features and functions of the organization
A system by concept is a collection of interrelated parts called subsystem, which constitute one
whole unit.
Example: human body is often cited as the best example for a system . In human body we
have different subsystems such as digestive system, central nervous system and so on.
Every part of the body such as the eyes , brain, heart and so on. A study of each of the
parts of the body is necessary to understand the whole body

From the system point of view, the functions of management are:
1. Interlinked
2. Interdependent
3. Complex and intertwined that each function of management can be found in other
functions
planning
organising
controlling
staffing
directing

Interdependent
Managerial
problem
Directing
Staffing
Organizing
Planning
Controlling
Efforts Solution

P O S D C
P X
O X
S X
D X
C X
It shows that in the planning function (shown horizontally across or vertically down ) ,
there are other functions of management such as organising , staffing , directing ,
controlling.
The letter X shows the overlapping area and hence , it is to be ignored this shows
that each of the management functions can be found in the other functions also

CONTINGENCYAPPROACH
The contingency approach focuses on applying management principles and
processes as dictated by the unique characteristics of each situation.
It emphasizes that there is no one best way to manage and that it depends
on various situational factors, such as the external environment, technology,
organizational characteristics, characteristics of the manager, and characteristics of
the subordinates.
Contingency theorists often implicitly or explicitly criticize the classical
approach for its emphasis on the universality of management principles; however,
most classical writers recognized the need to consider aspects of the situation when
applying management principles.

MANAGEMENT APPROACHS Beginning Dates Emphasis
CLASSICAL APPROACH
Scientific Management 1880s Traditional rules of thumb are
replaced by precise procedures
developed after careful study of an
individual at work.
Administrative
Management
1940s Gives idea about the primary
functions of management and The 14
Principles of Administration
Bureaucratic Management 1920s Replaces traditional leadership and
charismatic leadership with legal
leadership
Human Relations 1930s workers' attitudes are associated with
productivity
Behavioral Science 1950s Gives idea to understand human
behavior in the organization.
QUANTITATIVE APPROACH
Management Science
(Operation research)
1940s Uses mathematical and statistical
approaches to solve management
problems.

Production and Operations
Management
1940s This approach focuses on the operation and
control of the production process that
transforms resources into finished goods and
services
RECENT DEVELOPEMENTS
SYSTEMS APPROACH 1950s Considers the organization as a system that
transforms inputs into outputs while in
constant interaction with its' environment.
CONTINGENCY APPROACH 1960s Applies management principles and processes
as dictated by the unique characteristics of
each situation.

Administrative management / Fayol’s 14 principles of management
Henry fayol was a major contributor to administrative management
approach .
Henry fayol a French industrialist has been regarded as the real father of
modern management.
He was mining engineer and worked at all positions to the position of the
managing director in a coal mining company.
Fayol looked at the problem of managing with the management point of
view and not with the workers point of view , as was done by Taylor.

Fayol divided the activities of an industry into six groups
1. Technical ( production)
2. Commercial (buying and selling)
3. Financial (working capital)
4. Security (safety for materials and so on)
5. Accounting (book keeping)
6. Managerial (planning and controlling)
Fayol’s 14 principles of management
1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Emphasis on Subordination of Personal Interest to General or Common Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of Tenure 13. Initiative 14. Esprit de corps

Scientific management
Scientific management became increasingly popular in the early 1900s.
In the early 19th century , scientific management was defined as that kind of
management which conducts a business or affairs by standards established , by facts or truths
gained through systematic observation ,experiment or reasoning.
Contribution of taylor
The concept of scientific management was introduced by Frederick Winslow Taylor in USA in
the beginning of 20th century .
This concept was further carried on by Frank and Lillian Gilbreth , Henry Gantt, George Berth
etc.
scientific management was concerned essentially with improving the operational
efficiency at the shop floor level

According to Taylor scientific management is concerned with exactly what you want men to
do and then see in that they do it in the best and cheapest way.
F . W. Taylor was the pioneer of the scientific management theory . He was a scientist and
made researches how men can be used efficiently at work.
During his research he found that the main cause of inefficiency and wastage in factories was
ignorance on the part of both workers and managers of scientific methods.
For this purpose he developed a theory known as scientific management
Features of scientific management
Separation of planning and doing
Functional foremanship for supervision and direction
Planning
1. Route clerk
2. Instruction clerk
3. Time and cost clerk
4. disciplinarian
Operational
1. Speed boss
2. Inspector
3. Maintenance
4. Gang boss

Elements of SM
1. Work study , motion study , method study
2. Standardization of tools and equipment for workmen , machine speeds and working
conditions
3. Scientific selection , placement and training of workers by a centralized personnel
department.
Financial incentives
Economy
Mechanism of management
1. Time study
2. Functional foremanship
3. Standardization of tools and equipment
4. The desirability of a planning room
5. Instruction cards for the workman
6. Differential rate
7. Modern cost system

Criticism of Taylor's contribution
1. Scientific management is nothing but an approach to management
2. His principles mostly confined to production management
3. His functional foreman ship violates the principle of unity of command
4. Trade unions criticized Taylor's

Management as a Science and as an Art and as both
According to the nature of management, there is a controversy that whether
management is a science or an art.
This controversy is very old & is yet to be settled. It should be noted that, learning
process of science is different from that of art.
Learning of science includes principles while learning of art involves its
continuous practice.
Management as a Science
Science is a systematic body of knowledge relating to a specific field of study that
contains general facts which explains a phenomenon.
It establishes cause and effect relationship between two or more variables and
underlines the principles governing their relationship.
These principles are developed through scientific method of observation
and verification through testing.

Science is characterized by following main features:
Universally accepted principles – Scientific principles represents basic truth about a
particular field of enquiry.
These principles may be applied in all situations, at all time & at all places.
E.g. – law of gravitation which can be applied in all countries irrespective of the time.
Management also contains some fundamental principles which can be applied universally
like the Principle of Unity of Command i.e. one man, one boss.
This principle is applicable to all type of organization – business or non business.
Experimentation & Observation –
Scientific principles are derived through scientific investigation & researching i.e. they are
based on logic.
E.g. the principle that earth goes round the sun has been scientifically proved.
Management principles are also based on scientific enquiry & observation and not only on
the opinion of Henry Fayol. They have been developed through experiments & practical
experiences of large no. of managers.
E.g. it is observed that fair remuneration to personal helps in creating a satisfied work force.

Cause & Effect Relationship – Principles of science lay down cause and effect
relationship between various variables.
E.g. when metals are heated, they are expanded. The cause is heating & result is
expansion.
Similarly if workers are given bonuses, fair wages they will work hard but
when not treated in fair and just manner, reduces productivity of organization.
Test of Validity & Predictability –
Validity of scientific principles can be tested at any time or any number of times i.e.
they stand the time of test. Each time these tests will give same result.
E.g. H2 & O2 will always give H2O.
Principles of management can also be tested for validity.
E.g. principle of unity of command can be tested by comparing two persons – one
having single boss and one having 2 bosses. The performance of 1st person will be
better than 2nd.

Management as an Art
Art means application of knowledge & skill to get the desired results. An art may be
defined as personalized application of general theoretical principles for achieving
best possible results. Art has the following characters
Practical Knowledge:
Every art requires practical knowledge therefore learning of theory is not sufficient. It is very
important to know practical application of theoretical principles.
E.g. to become a good painter, the person not only should know about the different
colour and brushes but different designs, dimensions, situations etc to use them appropriately.
A manager can never be successful just by obtaining degree or diploma in
management; he must have also known how to apply various principles in real situations, by
functioning as a manager.

Personal Skill:
Although theoretical base may be same for every artist, but each one has his own
style and approach towards his job.
That is why the level of success and quality of performance differs from one person to
another.
E.g. there are several qualified painters but M.F. Hussain is recognized for his style.
Similarly management as an art is also personalized.
Every manager has his own way of managing things based on his knowledge,
experience and personality

Creativity:
Every artist has an element of creativity in line. That is why he aims at producing something
that has never existed before which requires combination of intelligence & imagination.
Management is also creative in nature like any other art. It combines human and
non-human resources in an useful way so as to achieve desired results. It tries to produce
sweet music by combining chords in an efficient manner.
Perfection through practice:
Practice makes a man perfect. Every artist becomes more and more proficient through
constant practice.
Goal-Oriented:
Every art is result oriented as it seeks to achieve concrete results.
In the same manner, management is also directed towards accomplishment of
pre-determined goals.
Managers use various resources like men, money, material, machinery & methods
to help in the growth of an organization.

Management as both Science and Art
Management is both an art and a science.
The above mentioned points clearly reveal that management combines features of
both science as well as art.
It is considered as a science because it has an organized body of knowledge which
contains certain universal truth.
It is called an art because managing requires certain skills which are personal
possessions of managers. Science provides the knowledge & art deals with the application of
knowledge and skills.

Peter Drucker to Management
Some of the major contributions of Peter Drucker are as follows:
1. Nature of Management
2. Management Functions
3. Organisation Structure
4. Federalism
5. Management by Objectives
6. Organizational Changes.
He has varied experience and background which include psychology, sociology, law, and
journalism.
Through his consultancy assignments, he has developed solutions to number of managerial
problems.
Therefore, his contributions cover various approaches of management. He has written many
books and papers.

The more important books are; Practice of Management (1954), Managing by Results (1964),
The Effective Executive (1967), The Age of Discontinuity (1969), Management: Tasks,
Responsibilities and Practices (1974), and Management Challenges for 2Century (1999),
1. Nature of Management:
Drucker is against bureaucratic management and has emphasised management with creative
and innovative characteristics. The basic objective of management is to read towards
innovation. The concept of innovation is quite broad.
He has treated management as a discipline as well as profession. As a discipline,
management has its own tools, skills, techniques and approaches. However, management is
more a practice rather than a science.
While taking management as a profession. Drucker does not advocate to treat
management as a strict profession but only a liberal profession which places more emphasis
that managers should not only have skills and techniques but should have right perspective
putting the things into practice.

2. Management Functions:
Accordingly, there are three basic functions of a manager which he must perform to enable
the institution to make its contribution for:
(i) the specific purpose and mission of the institution whether business, hospital or
university;
(ii) making work productive and the worker achieving; and
(iii) managing social impacts and social responsibilities.
Thus, a manager has to perform several functions:
1. setting of objectives,
2. making,
3. organizing
4. motivating.

Drucker has attached great importance to the objective setting function and has specified
eight areas where clear objective setting is required. These are:
1. market standing,
2. innovation,
3. productivity,
4. physical and financial resources,
5. profitability,
6. managerial performance and development,
7. worker performance and attitude,
8. and public responsibility.

Organisation Structure:
Drucker has decried bureaucratic structure because of its too many dysfunctional (not
operating properly) effects. Therefore, it should be replaced. He has emphasized three basic
characteristics of an effective organization structure.
These are:
(i) Enterprise should be organized for performance;
(ii) it should contain the least possible number of managerial levels;
(iii) it must make possible the training and testing of tomorrow’s top managers—
responsibility to a manager while still he is young.
He has identified three basic aspects in organising
1. activity analysis,
2. decision analysis,
3. and relation analysis.

An activity analysis shows what work has to be performed, what kind of work
should be put together, and what emphasis is to be given to each activity in the organisation
structure.
Decision analysis takes into account the four aspects of a decision: the degree of
futurity In the decision, the impact of decision over other functions, number of qualitative
factors that enter into it, and whether the decision is periodically recurrent or rare.
Relation analysis helps in defining the structure and also to give guidance in
manning the structure.
Federalism:
Drucker has advocated the concept of federalism. Federalism refers to centralised
control in decentralised structure Decentralised structure goes far beyond the delegation of
authority. It creates a new constitution and new ordering principle.

Federalism has certain positive values over other methods of organising. These are as
follows:
(i) It sets the top management free to devote itself to its proper functions;
(ii) It defines the functions and responsibilities of the operating people;
(iii) It creates a yardstick to measure their success and effectiveness in operating jobs; and
(iv) It helps to resolve the problem of continuity through giving the managers of various
units education in top management problems and functions while in an operating position.
Management by Objectives:
Management by objectives (MBO) is regarded as one of the important contributions of
Drucker to the discipline of management. He introduced this concept in 1954. MBO has
further been modified by Schleh which has been termed as management by results’.
MBO includes method of
1. planning,
2. setting standards,
3. performance appraisal,
4. and motivation.

Organizational Changes:
1. Drucker has visualised rapid changes in the society because of rapid technological
development.
2. Though he is not resistant to change, he feels concerned for the rapid changes and their
impact on human life.
3. Normally, some changes can be absorbed by the organisation but not the rapid changes.
4. Since rapid changes are occurring in the society, human beings should develop
philosophy to face the changes and take them as challenges for making the society
better.
5. This can be done by developing dynamic organizations which are able to absorb changes
much faster than static ones.

What is Knowledge Management?
“Knowledge management involves the capture of your organization’s information and
experience so that it becomes part of your organization’s know-how and expertise which can
be pooled, disseminated and used by your skilled staff in doing and winning profitable
business.”
Knowledge Hierarchy
Knowledge
Information
Data

Data
Raw data is the simplest and most abundant (rich) component of a knowledge
management system
“Data on its own has no meaning…”
Information
Once organized and defined, data becomes information.
“Data on its own has no meaning, only when interpreted by some kind of data processing
does it take on meaning and become information.”
Knowledge
Information that has been processed.
“If information is data plus meaning then knowledge is information plus processing.”

Two Kinds of Knowledge
1. Explicit Knowledge
2. Tacit Knowledge
Explicit Knowledge
“As a general rule of thumb, explicit knowledge consists of anything that can be documented,
archived and codified, often with the help of IT.”
Examples of Explicit Knowledge include:
1. Any step-by-step process that has been documented
2. Company policies and manuals
Tacit Knowledge
We think of knowledge as something that can be recorded in words, visualized and taught.
However, this isn't always the case.
Tacit knowledge is a class of knowledge that's difficult to communicate.

Definition: Tacit Knowledge
Tacit knowledge is knowledge that's difficult to write down, visualize or transfer from one
person to another.
1. Tacit knowledge is a particular challenge for knowledge management.
2. Firms would like to prevent knowledge loss due to employee turnover.
3. However, tacit knowledge almost always goes with the employee.
Tacit knowledge is essential to competitive advantage because it's difficult for
competitors to copy. It's the reason some firms pump out innovation after innovation
while other firms struggle.

Different Aspects of Knowledge Management
1. Creation and Capture of knowledge
2. Sharing of information
3. Codification of information
4. Protection of information
5. Retrieval of information
6. Ability to update information easily
Why Knowledge Management?
Old Knowledge Equation:
“Knowledge = Power, so hoard it.”
New Knowledge Equation:
“Knowledge = Power, so share it and it will multiply.”

Most important KM Objective to organizations
• Build Knowledge Sharing Culture for employees
• Support product innovation and development with information resources
• Accelerate new product innovation and development
• Facilitate organizational learning
• Manage actionable information for analytics
• Boost collaboration and knowledge sharing between employees
• Boost collaboration and knowledge sharing with outside partners/customers
• Bring outside innovation and knowledge resources into the organization
• Collect and share information and knowledge on best practices
• Enhance individual employee productivity / output
• Manage intellectual property rights
• Managing Knowledge Assets both implicit and explicit

This major process... Includes these activities....
Gathering
•Data entry
•OCR and scanning
•Voice input
•Pulling information from various sources
•Searching for information to include
Organizing
•Cataloging
•Indexing
•Filtering
•Linking
Refining
•Contextualizing
•Collaborating
•Compacting
•Projecting
•Mining
Disseminating
•Flow
•Sharing
•Alert
•Push

Mythology of Managerial work
Being a good manager takes hard work and dedication. No one knows how it happens or
where it starts, but there are several persistent management myths in continuous circulation.
A manager who leads by myth can easily misread actual events and quickly lose the
confidence and trust of his or her employees.
Management Myth #1:
Today’s employees perform best when allowed to work autonomously; getting too
involved will give you a reputation as a micromanager.
Management Fact: Autonomy must be balanced with guidance.
Management Tip: In terms of performing discrete tasks, employees should certainly be
permitted to come up with the most efficient methods and devise their own solutions.
But it’s unrealistic to expect workers to take on major projects or function as a cohesive team
without the guidance they need to do their jobs.

Management Myth #2:
The best managers follow expert management strategies.
Management Fact: The best managers adapt what they’ve learned to suit their own
workplaces (not vice versa).
Management Tip: Rather than getting locked into a specific “vision” or “strategy” of how to
manage their staff, smart supervisors cherry-pick among a variety of methods. They’re
flexible enough to try many different approaches and willing to modify or discard tested
approaches if they don't work.
Management Myth #3:
When a vacancy occurs in your team, hire a full-time replacement.
Management Fact: It’s better to hire strategically by looking at needs, not vacancies.
Management Tip: When a full-time staff member leaves, the default reaction is to replace
him or her with another full-time hire. While this is sometimes the best course of action,
taking a step back before beginning your search can give you an opportunity to re-evaluate
the open position in terms of your overall current and projected staffing needs.

Management Myth #4: A good manager treats all employees the same.
Management Fact: A good manager treats all employees fairly.
Management Tip: Some managers make the mistake of thinking that all employees should
be treated alike, regardless of their unique skills, strengths, shortcomings and work styles.
Rather than creating a harmonious work environment, this approach tends to sabotage
employee motivation. It can also have an adverse effect on productivity.

Management Myth #5:
Managers who delegate give up too much control over quality and outcomes.
Management Fact:
Delegating allows you to maximise the talents of staff members while letting you focus on
tasks only you have the expertise to handle.
Management Tip:
If you’re not delegating, you’re not managing. As a manager, your responsibility is to
establish goals, clarify objectives and set expectations. When conducted properly,
delegating frees you to attend to higher-level duties, such as recruiting, marketing or new
product development. Delegating is also an excellent way to help your employees grow
and develop new skills.

Decision theory
Decision theory approach in management is an approach that uses logical concepts to
help managers to formulate decisions.
When using this type of approach, one will identify values and uncertainties while they are
trying to make decisions that will affect their business.
They will also use all the facts that are at their disposal.
This will include various data. The manager will want to be as informed on the facts, as
well as any pros and cons that comes with the decision before any decision is made.
Features
· Management is essentially decision-making.
· Members of the organization are decision-makers and problems solvers.
· Organization can be treated as a combination of various decision centers.

The level and importance of organization members are determined on the basis of
importance of decisions, which they make.
· Quality of decision affects the organization effectiveness.
· All factors affecting decision-making are the subject matter of study of management.
Besides processes and techniques in decision making factors affecting decisions are
information systems, social and psychological aspects of decision-makers.
Uses
It demonstrates how managers can discharge their functions effectively and for this
approach it provides various tools
.Decision theorists have grappled with decisions pertaining to diagnosis and the resulting
prescriptions for improving communication, incentives, reactions of the individuals to
group and analysis of human values write stated objectives.
Limitation:

Principles Of Management Unit 2

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Principles Of Management Unit 2