Concept and Nature of Management
Mgt is a process whereby scarce resources (human, material, & financial) are combined to achieve organizational goals. Without management, people would pursue their own objectives independently and this would lead to waste & inefficiency.
Administration – part of the management process concerned with the institution and carrying out of procedures by which the program is laid down & communicated, and the progress of activities is regulated & checked against targets & plans.
Evolution Of Management Thought
Classical Management
Contributions
– Laid the foundation for later developments.
– Identified important management processes, functions, and skills.
– Focused attention on management as a valid subject of scientific inquiry.
Limitations
– More appropriate approach for use in traditional, stable, simple organizations.
– Prescribed universal procedures that are not appropriate in some settings.
– Employees are viewed as tools rather than as resources.
Scientific Management
Fredrick Winslow Taylor - “father” of scientific management
• The theory of scientific management
– Using scientific methods to define the “one best way” for a job to be done:
» Putting the right person on the job with the correct tools and equipment.
» Having a standardized method of doing the job.
» Providing an economic incentive to the worker.
– Develop rules of motion, standardized work implements, and proper working conditions for every job.
– Carefully select workers with the right abilities for the job.
– Carefully train workers and provide proper incentives.
– Support workers by carefully planning their work and removing obstacles.
Scientific management - Frank and Lillian Gilbreth
Both developed techniques and strategies for eliminating inefficiency
Studied fatigue caused by lighting, heating, and the design of tools and machines.
Time and motion studies (Science of reducing a job or task to its basic physical motions)
• Breaking up each job action into its components.
• Finding better ways to perform the action.
• Reorganizing each job action to be more efficient.
– Focused on increasing worker productivity through the reduction of wasted motion
– Frank reduced the number of movements in bricklaying, resulting in increased output of 200%.
– Lillian made substantive contributions to the fields of industrial psychology and personnel management
Today’s Managers Use Scientific Management
– Use time and motion studies to increase productivity
– Hire the best qualified employees
– Design incentive systems based on output
Taylor’s Four Principles of Management
Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
Scientifically select, train, and develop each employee rather than passively leaving them to train themselves.
Provide "Detailed instruction and supervision of each worker in the performance of that worker's discrete task
Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasks.
Disadvantages of Scientific Management
Workers felt exploited because their social aspect of life was disregarded.
(Workers were treated as machines and not humans)
Management stereotyped workers and did not allow them to prove their skills in other areas.
Workers were not allowed to form innovative ways to perform their tasks.
General Administrative Theory
Henri Fayol
– Believed that the practice of management was distinct from other organizational functions
– Developed fourteen principles of management that applied to all organizational situations
Max Weber
– Developed a theory of authority based on an ideal type of organization (bureaucracy)
• Emphasized rationality, predictability, impersonality, technical competence, and authoritarianism
Henri Fayol (French, 1916)
Suggested 5 Functions of management
Foresight — to complete plan of action for the future
Organisation — to provide and mobilise resources to implement the plan
Command — to select, lead and evaluate workers to get the best work towards the plan
Coordination — to fit diverse efforts together, ensure information is shared and problems solved
Control — to make sure things happen according to plan and to take necessary corrective action
Fayol’s 14 Principles of Management
Division of work.
Authority.
Discipline.
Unity of command.
Unity of direction.
Subordination of individual interests to the general interest.
Remuneration.
Centralization.
Scalar chain.
Order.
Equity.
Stability of tenure of personnel.
Initiative.
Esprit de corps.
Bureaucratic organization (Max Weber)
Characteristics of bureaucratic organizations:
– Clear division of labor
– Clear hierarchy of authority
– Formal rules and procedures
– Impersonality
– Careers based on merit
Possible disadvantages of bureaucracy:
– Excessive paperwork or “red tape”
– Slowness in handling problems
– Rigidity in the face of shifting needs
– Resistance to change
– Employee apathy
Behavioral Management Perspective
Emphasized individual attitudes and behaviors, and group processes, and recognized the importance of behavioral processes in the workplace.
– Hugo Munsterberg (1863–1916)
• A German psychologist, “the father of industrial psychology”, - advocated applying psychological concepts to employees selection and motivation industrial settings.
– Mary Parker Follett (1868–1933)
• Recognized the importance of the role of human behavior in the workplace.
Human Resource Approaches
Suggested that jobs should be designed to meet higher levels needs by allowing workers to use their full potential.
Human resource approaches include:
– Hawthorne studies
– Maslow’s theory of human needs
– McGregor’s Theory X and Theory Y
– Argyris’s theory of adult personality
Hawthorne Studies
Time: 1924—the early 1930s
Place: Hawthorne plant in the Western Electric Company
Designer: Western Electric industrial engineers
Elton Mayo and his associates
Mayo’s Finding:
v Changes in worker output were psychological not physiological
v Behavior and sentiments are closely related.
v Group influences significantly affect individual behavior.
v Group standards establish individual worker output.
v Money is less a factor in determining output than are group standards, group sentiments, and security.
Relay Assembly Test Room -April 1927
v Women who assembled telephone relays
v Five units produced every six minutes
v Chosen because even a slight alteration in the environment would show immediately in output
v 6 women – 5 assemble and 1 provides supplies
v Work set-up in the second room as exactly the same as the set-up on the main floor
Comparison and contrast
• Workers felt no pressure from supervision
• Had periodic conferences with the superintendent and were allowed to veto proposed changes
• Felt important being part of an experiment
• Developed informal social organizations
• Organized in co-operation in management
Conclusions :
Work is a group activity.
The social world of an adult is primarily patterned by their work activity.
The need for recognition, security and belonging is more important than physical conditions of the work environment.
An employee is a person whose attitudes and effectiveness are conditioned by social demands from both outside and inside work environment.
Informal groups with an organization creates a strong social control over the work habits and attitudes of an individual.
Groups collaboration must be planned and developed, then a cohesion within an organization would be formed thus resisting the disrupting effects of a continuously adaptive society.
Modern Approach to management
Organization as an Open System
MANAGEMENT - ART OR A SCIENCE
Management is both an art and a science
Evidence based management involves:
observing events and gathering facts
posing solutions or explanations based on those facts
making predictions of future events
testing predictions under systematic conditions
Management is far from being an exact science at present but, by understanding & applying accepted principles can be greatly improved.
It is most probable that management will never become wholly an exact science as personal judgment will always be needed to supplement available knowledge; therefore, as a practice, management will always be an art.
Management: a PROFESSION
There must exist a body of principles, skills & techniques and specialized knowledge.
There must be formal methods of acquiring training & experience.
An organization should be established which forms ethical codes for the guidance & conduct of members.
If the above standards are considered, then management cannot really be called a profession.
There are no licenses for managers, nor is there an accepted code of ethics, but there are tendencies towards professionalization and these will undoubtedly increase.
Authority and Power
Authority:
It is the rights inherent in a managerial position to give orders and expect subordinates to be obeyed.
– Flows down the vertical hierarchy
– Prescribed by the formal hierarchy
Responsibility:
It is an obligation to perform assigned activities.
Power:
It is an individual’s capacity to influence decisions.
Authority is power, but power is not necessarily authority.
– Power is the ability to get others to do what you want.
– Authority is legitimate power.
3 TYPES OF AUTORITY
Line authority
The direct authority of a superior over a subordinate in the scalar chain of command.
E.g.: department manager’s Authority over own staff.
Staff authority‘expert’ influence, by which a manager or department has (limited) authority to advise another E.g.: an HR manager advising a department manager on selection techniques.
Functional authority
‘expert’ influence formalized as authority or direct or control relevant activities in line departments. E.g.: an HR manager introducing equal opportunity policies to which line
managers. must adhere.
Line Authority and Staff Authority
Line authority entitles a manger to direct the work of an employee.
A manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone
Staff authority – based on expertise – advise line managers; support and assist holders of line authority.
Team authority – committees or work teams involved in daily operations; empowered employees
Conflicts Between Staff and Line
Basic staff-line struggles
– Conspicuous ambition and individualistic behavior among staff officers
– Complication arising from staff efforts to justify its existence and get acceptance of its contributions
Avoiding conflicts
q Understanding of authority relationships
q Proper use of staff
q Completed work staff
q Setting congenial organizational climate
Scope of Authority
The degree of authority assigned to a position in an organisation; scope broadens at higher organisational levels.
Power
Refers to a capacity that A has to influence the behavior of B so that B does something he or she would not otherwise do
Coercive power: power on fear.
Reward power: power based on the ability to distribute something that others value.
Legitimate power: power based on one’s position in the formal hierarchy.
Expert power: power based on one’s expertise, special skills, or knowledge.
Reference power: power based on identification with a person who has desirable resources or personal traits.
Information power: comes from access to and control over information
Controlling
“Controlling is determining what is being accomplished-that is, evaluating performance and, if necessary, applying corrective measures so that performance takes place according to plans” – Franklin
Importance:
Adjustment in operations
Policy verification
Managerial responsibility
Coordination in action
Psychological pressure
Positive and necessary role in the management process
Organizational learning and after-action review.
Internal control - Allows motivated individuals and groups to exercise self-discipline in fulfilling job expectations.
External control - Occurs through personal supervision and the use of formal administrative systems.
Stages of Control
Feedforward controls
– Employed before a work activity begins.
– Ensures that:
• Objectives are clear.
• Proper directions are established.
• Right resources are available.
– Focuses on quality of resources.
Concurrent controls
– Focus on what happens during work process.
– Monitor ongoing operations to make sure they are being done according to plan.
– Can reduce waste in unacceptable finished products or services.
Feedback controls
– Take place after work is completed.
– Focus on quality of end results.
– Provide useful information for improving future operations.
Steps In Control Process
Step 1- establish objectives and standards
Output standards- Measure performance results in terms of quantity, quality, cost, or time.
Input standards- Measure effort in terms of amount of work expended in task performance.
Step 2 — measure actual performance
§ Goal is accurate measurement of actual performance results and/or performance efforts.
§ Must identify significant differences between actual results and original plan.
Step 3 — compare results with objectives and standards
§ Need for action reflects the difference between desired performance and actual performance
Step 4 — take corrective action as needed
§ Taking action when a discrepancy exists between desired and actual performance
Essentials of effective control system
Reflecting organizational needs
Forward looking
Promptness in reporting deviations
Objective
Flexible
Economical
Simple
Motivating
Reflecting organizational pattern
Coordination
“Process of directing efforts of employees towards common goal”.
Orderly arrangement of group efforts to provide unity of action in pursuit of common purpose.
ELEMENTS
Timing
Balancing
Integrating
Features:
Relevant for group efforts and not individual efforts
Continuous and dynamic process
Emphases unity of efforts
Higher degree of integration-higher degree of coordination
Responsibility of every manager
Need for coordination
Large number of personnel
Specialization
Functional differentiation
Interdependence
Individual vs organizational interests
Types of coordination
Internal coordination
Vertical and horizontal coordination
Substantive and procedural coordination
External coordination – organization’s external relationship with various parties.
Techniques of effective Coordination
Coordination by chain of command
Coordination by leadership
Coordination by committee
Staff meetings
Special coordinators
Self-coordination
Essentials for coordination
Well-defined authority and responsibility
Effective communication system
Well-defined work procedures
Provisions of check and inspection
Proper organizational climate
Principles of Coordination
Principle of direct contact
Coordination at early stage
Principle of continuity
Principle of dynamism
Principle of timing
Principle of reciprocal relationship
Delegating
Transferring responsibility for the performance of an activity from one individual to another while retaining the accountability for the outcome
Delegation is the only way to “multiply” own output
Degrees of Delegation
Zero
Low -superior states a particular task to his subordinates and tells them to investigate on that task and report back
Moderate- superior states the task to his subordinate. He tells him to investigate on that task and report back with an action plan
High - task is specified to a subordinate and he is told to investigate on that task, make an action plan, formulate the plan and then report back with the results and reasons
Fifth degree -Investigate and take action; full delegation.
Reasons for Inadequate Delegation
- Attitude of Supervisor
- Desire to Influence
- Absence of Democratic Leadership Style
- Subordinates not Competent
- With-holding of Authority
- Managerial Shortcomings Exposed
Reasons for delegation (advantages)
Managers have limited workload capacity.
Managers need to be free for higher-level tasks.
Delegation can enhance employee satisfaction, flexibility, responsiveness to customers.
Managers can be relieved of less important of less immediate responsibilities.
Makes subordinate’s job more interesting
Allows career development
Brings together skills and ideas
Team aspect is motivational
Allows performance appraisal
Disadvantages of delegation
Decisions are taken at a lower level who may not have enough experience
Increase in administration costs
Managers may take more time to correct errors resulting from delegation
Problems of delegation
Many managers are reluctant to delegate for the following reasons:
Low confidence and trust in the abilities of their staff
Burden of accountability for the mistakes of subordinates
Feeling threatened
Organizational culture which failed to recognize effective delegation
Lack of understanding of what delegation involves
Desire to ‘stay in touch’
Managers don’t have full confidence in staff.
Feel threatened by staff capability.
Lack delegation skills.
Lack understanding: fear loss of control.
Overcome the reluctance of managers to delegate
Train the subordinates to be capable
Set up an open communication sys. to enable free interchange between supervisor and assistant
Ensure that a system of control is established.
Reasons Leaders Fail to Delegate
Strong need for power
Doubt in subordinate ability
Perception of different values and objectives in a subordinate
Manager has exceptional task expertise, self-confidence, and desire to maintain quality of work
Situational constraints
Protection of confidential information
Highly interdependent subordinate jobs
Symptoms of Poor Delegation
• Staff turnover/low morale
• Extended hours/burnout
• Crisis management/missed deadlines
• Continued interruptions/constant approvals
• Redoing initial work/wasted time
• External promotions/inadequate internal talent
5 Steps to Effective Delegating
1. Decide what to delegate
2. Decide who will do the task 3. Assign responsibility 4. Grant authority 5. Establish accountability
Guidelines for Effective Delegation
Shift authority commensurate with the responsibilities
Provide necessary support systems
Establish reasonable checkpoints and deadlines
Review results, not methods
Proper Control Techniques
Intelligent Planning
Define Authority & Responsibility
Confidence in Performance
How to Be a More Effective Delegator
1. Trust your staff to do a good job
2. Avoid seeking perfection
3. Give effective instructions
4. Know your true interests
5. Follow up on progress
6. Praise the efforts of your staff
7. Don’t wait until the last minute to delegate
8. Ask questions, expect answers and assist employees
9. Provide sufficient resources
10. Delegate to the lowest possible level
Directing
Using authority to cause plans to be implemented
Delegating authority to increase efficiency and effectiveness
Coordinating a company’s activities
Selecting and training employees
Preparing organization charts
Importance of Directing
Direction initiates action
Integrates employee’s efforts
Provides stability and balance in orgn.
Facilitates change in orgn.
Attempts to get maximum out of individuals.
Coordinate diverse activities and human resources
Implement planned objectives
Provide incentives to motivate employees
Hire and train employees including executives, managers, and supervisors
Principles of Directing
Principles relating to purpose of Direction
Principle of maximum Individual contribution
Principle of Harmony of Objectives
Principle of efficiency of Direction
Principles relating to purpose of Direction
Principle of unity of command
Principle of appropriateness of direction technique
Principle of managerial communication
Principle of comprehension
Principle of use of informal orgn.
Principle of leadership
Principle of Follow Through
Directing and Human Factor
Man is motivated by complex variables.
Man is capable of learning new motives out of interaction with orgn.
Variations among people in same orgn.
Understanding of human needs is not understanding of human behavior
Response to various managerial actions of man is not uniform.
Models for Directing
Behavioral model
Autocratic model
Custodial model
Supportive model
Collegial model
Management model
Traditional model
Human relations model
Human resource model
Organizing
Greek Organon: a tool or instrument.
An organization is defined as two or more people, working together cooperatively within identifiable boundaries, to accomplish a common goal or objective.
Implicit in the definition are four concepts:
Organizations are made up of people.
The necessity of the division of labor
Organizations have identifiable boundaries.
Organizations are purposeful, goal seeking work arrangements.
Entity
Group of people
Structure
Process
Organizing and organization structure
– Organizing
• The process of arranging people and other resources to work together to accomplish a goal.
– Organization structure
• The system of tasks, workflows, reporting relationships, and communication channels that link together diverse individuals and groups.
Importance of organizing
Discipline
Division of work
Better coordination
Increased efficiency
Security and support
Avoid duplication of work
Adaptability
Better human relations
Achievement of goals
Organizational Structure: The Basic Dimensions of Organizations
Hierarchy of Authority - a configuration of the reporting relationships within organizations (i.e., who reports to whom)
Tall organizations - have many levels in the hierarchy
Flat organizations - have few levels in the hierarchy
- many organizations have been restructuring by flattening their hierarchy
- results in job losses, particularly among middle-level managers
Division of Labor - process of dividing the many tasks in an organization into specialized jobs
- the more tasks are divided into separate jobs, the more those jobs are specialized, i.e., the narrower the range of activities
Organization as entity
Identifiable aggregation of human beings
Deliberate and conscious creation
Purposive creation
Coordination of activities
Structure
Rationality
Organization as structure
Permanent with provision of incorporating changes whenever required.
Organization as a process
Departmentation
Linking departments
Defining authority and responsibility
Prescribing authority relationships
Importance of organizing
Discipline
Division of work
Enhance coordination
Increased efficiency
Security and support
Avoid duplication of work
Adaptability
Better human relations
Achievement of goals
Departmentation (Grouping)
assignment of jobs to departments
represents one of the core aspects of the horizontal division of labour.
Methods of departmentation- Functional, product, matrix, geographic, customer, and hybrid.
Common bases for departmentation
Knowledge and Skill - People are grouped by what they know. E.g., hospitals have different departments like Cardiology, Internal Medicine, Gastroenterology, etc.
Work Process - Workers are grouped based on the process or activity used by the worker. E.g. a manufacturing company may create separate casting, welding and machining groups., a print shop may have separate letterpress and offset departments -- two different processes for getting the same outputs.
Business Function - Grouping by the basic function in the organization: purchase supplies, raise capital, generate research, etc. This leads to the familiar departments of manufacturing, marketing, engineering, finance, and so on.
Time - When work is done. For example, shifts in a factory or hospital or hotel.
Output - Grouping based on the products or services that the employee works on. For example, a manufacturer may have different divisions for each of its product lines.
Client - Grouping based on the type of clients their work is ultimately sold to. For example, computer companies often have different sales departments for home, small business, educational, government and large business customers.
Place - Groups are based on the geographical areas that they serve. For example, during WW2, the US War Dept. was organized into 7 "theatres" corresponding to regions of the world where the US was fighting. Similarly, Post Offices are often divided by regions and zip codes.
Departmentalization by function - organizes by the functions to be performed, reflect the nature of the business. Advantage - obtaining efficiencies from consolidating similar specialties and people with common skills, knowledge and orientations together in common units.
Departmentalization by product - assembles all functions needed to make and market a particular product are placed under one executive. E.g. major department stores are structured around product groups such as home accessories, appliances, women's clothing, men's clothing, and children's clothing.
Departmentalization by geographical regions - groups jobs on the basis of territory or geography. E.g., Merck, a major pharmaceutical company, has its domestic sales departmentalized by regions such as Northeast, Southeast, Midwest, Southwest, and Northwest.
Departmentalization by process - groups jobs on the basis of product or customer flow. Each process requires particular skills and offers a basis for homogeneous categorizing of work activities. Patient undergoing surgery.
Departmentalization by customer - groups jobs on the basis of a common set of needs or problems of specific customers. E.g. a plumbing firm may group its work according to whether it is serving private sector, public sector, government, or not-for-profit organizations, using cross-functional teams, a cross-functional team consisting of managers from accounting, finance, and marketing is created to prepare a technology plan.
Criteria for choosing
An organization can divide itself into departments any way it wants using any criteria it wants -- there is no law about it. It doesn't have to be rational. However, there is a theory (developed by James Thompson) about what is the best way to do it. According to the theory, there are 4 basic rational criteria for choosing the bases for departmentation:
Work-flow interdependence - flow of product from person to person as it is being constructed.
Pooled: sharing of resources and consequences only.
Sequential: work is fed from one position to the next, like an assembly line
Reciprocal: work passed back and forth between a pair of positions/tasks
Team: work flows around and through a network of positions, like the ball in a basketball game.
KEY IDEA: where work-flow interdependence is critical, rational organizations try to group tasks/positions together which are more tightly interdependent.
Process interaction -consultations among people about how to do things.
Economies of scale- Groups formed in order to achieve economies of scale. ms.
Social considerations - Groups are formed in order to minister to people's social needs.
Types of Organization
Line Organization
- Scalar
- Military
- Departmental
- Vertical
- Pure Line of Organization
- Departmental Line Organization
Staff Organization
- Staff Specialists Advise
- Advice Provided to Line Mangers
- Can recommend without Authority
Common Organization Designs
Simple Structure
A structure characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization.
Bureaucracy
A structure of highly operating routine tasks achieved through specialization, very formalized rules and regulations, tasks that are grouped into functional departments, centralized authority, narrow spans of control, and decision making that follows the chain of command.
Matrix Structure
A structure that creates dual lines of authority and combines functional and product departmentalization.
Virtual Organization
A small, core organization that outsources its major business functions.
Highly centralized with little or no departmentalization.
Tall Versus Flat Organizations
Tall Organizations
• characteristic of centralized companies with multiple layers of management and relatively narrow spans of control
• Are more expensive because of the number of managers involved.
• Foster more communication problems because of the number of people through whom information must pass.
Flat Organizations
characteristic of decentralized companies with relatively few layers of management and relatively wide spans of control
– Lead to higher levels of employee morale and productivity.
– Create more administrative responsibility for the relatively few managers.
– Create more supervisory responsibility for managers due to wider spans of control.
Decentralization and Centralization
Decentralization
– The process of systematically delegating power and authority throughout the organization to middle- and lower-level managers.
Centralization
– The process of systematically retaining power and authority in the hands of higher-level managers.
Centralization and decentralization of authority are management philosophies of delegation: where decisions are made
Factors affecting (de)centralization:
Cost attached to the decision
Requirement for consistency
Organization culture/personalities
Availability of capable managers
Control mechanisms
Environmental influences
Size of organization: volume of decisions
Advantages of decentralization
Frees up top management
Develops lower levels of management
Decisions made where info is available
Fosters an achievement atmosphere
Managers enjoy higher status from being
independent and thus are better motivated
Creates ownership for decisions at lower levels
Improves speed of decision making
Types of Decentralization
Ø Political - providing citizens or their representatives with additional public decision-making power, in particular through democratic processes
Ø Administrative - transfer of responsibility for planning, financing, and managing from the high authorities to subordinate, regional or functional authorities.
Ø Fiscal – self-financing, co-financing, expansion of local revenues through monetary contributions.
Ø Economic or market (Business outsourcing) – privatization and deregulation.
Decentralization
Advantages
– Better Adaptation to Customer Wants
– More Empowerment of Workers
– Faster Decision Making
– Higher Morale
Disadvantages
Less Efficiency
Complex Distribution System
Less Top-Management Control
Weakened Corporate Image
Centralization
Advantages
Greater Top-Management Control
More Efficiency
Simpler Distribution System
Stronger Brand/Corporate Image
Disadvantages
– Less Responsiveness to Customers
– Less Empowerment
– Interorganizational Conflict
– Lower Morale Away from Headquarters
Span of ControlThe number of subordinates a manager can efficiently and effectively direct.
Refers to the optimum number of subordinates a manager supervises or should supervise
At lower levels, a WIDE SPAN OF CONTROL is possible.
Trend is to expand the span of control as organizations get rid of middle managers.
Span of control can be increased through empowerment and the use of technology.
Narrow Span Drawbacks:
Expense of additional layers of management.
Increased complexity of vertical communication.
Encouragement of overly tight supervision and discouragement of employee autonomy.
Span of Control - Narrow
Advantages
More Control by Top Management
More Chances for Advancement
Greater Specialization
Closer Supervision
Disadvantages
Less Empowerment
Higher Costs
Delayed Decision Making
Less Responsiveness to Customers
Span of Control - Broad
Span of Control - Broad
Disadvantages
Fewer Chances for Advancement
Overworked Managers
Loss of Control
Less Management Expertise
Student of Rai Business School-New Delhi
Sanjeev Kumar Singh
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