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Principles Of Management Unit 2


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Information age - F.W.Taylor - Management as science, Henry Fayol 14 Principles of
management, Beyond Scientific Management - The mythology of managerial work; Peter
Drucker - The Prophet of change - Knowledge Management - Decision Theory.

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Principles Of Management Unit 2

  1. 1. 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.
  2. 2. 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.
  3. 3. (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.
  4. 4. (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.
  5. 5. 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.
  6. 6. (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.
  7. 7. (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.
  8. 8. (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.
  9. 9. 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.
  10. 10. 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
  11. 11. 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
  12. 12. Interdependent Managerial problem Directing Staffing Organizing Planning Controlling Efforts Solution
  13. 13. 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
  14. 14. 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.
  15. 15. 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.
  16. 16. 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.
  17. 17. 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.
  18. 18. 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
  19. 19. 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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. 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.
  24. 24. 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.
  25. 25. 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.
  26. 26. 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.
  27. 27. 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
  28. 28. 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.
  29. 29. 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.
  30. 30. 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.
  31. 31. 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.
  32. 32. 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.
  33. 33. 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.
  34. 34. 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.
  35. 35. 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.
  36. 36. 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.
  37. 37. 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.
  38. 38. 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
  39. 39. 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.”
  40. 40. 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.
  41. 41. 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.
  42. 42. 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.”
  43. 43. 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
  44. 44. 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
  45. 45. 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.
  46. 46. 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.
  47. 47. 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.
  48. 48. 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.
  49. 49. 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.
  50. 50. 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: