Slide 1

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 2

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 3

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 4

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 5

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 6

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 7

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 8

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 9

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 10

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 11

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 12

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 13

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 14

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 15

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 16

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 17

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 18

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 19

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 20

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 21

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 22

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 23

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 24

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 25

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 26

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 27

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 28

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 29

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 30

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 31

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 32

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 33

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 34

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 35

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 36

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 37

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 38

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 39

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 40

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 41

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 42

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 43

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 44

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 45

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 46

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 47

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 48

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 49

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 50

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 51

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 52

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 53

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 54

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 55

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 56

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi


Slide 57

SECTION – 1
Chapter – 1

Concepts of Management
By: Vishal Doshi

Introduction
 Some companies like Reliance Industries, Procter and Gamble,
Hindustan Unilever, ITC, Dr. Reddy’s Labs, HDFC bank, Tata, etc., are
most successful companies.
 On other side companies like Agrifural chemicals Ltd., Binny mills, LML,
etc. belong to the unsuccessful category.
 Why do companies perform differently when they operate under the same
environmental conditions, serve the same customer, use the same raw
material and technology and employ the people with similar skills?
 The answer for this question is Management Practices.
 Thus ‘Management’ makes remarkable difference between the companies
performance in terms of Productivity, Products, Sales Profitability,
Service to customer, Employees welfare, etc.

What Management is?
 In this subject we shall discuss the meaning of the term “Management”.

Definition of Management:

Mary Parker defines the term management as
“the art of getting things done through others.”
but research studies concluded that management is a field of effort that
combines art and science.

Conti…
According to Koontz, Heinz and Weihrich, Management is
“the process of designing and maintaining an environment
in which individuals, working together in groups, efficiently
to accomplish selected aims.”

According to Peter F. Drucker
“Management is a multipurpose organ that manages a business
And manages managers and mangaes worker and work”

Need and Scope of Management
1. Management purpose is to formulate effective organizational strategies
and efficiently based on the missions objectives and goals.
2. It deals with both internal and external environment.
3. It concerned with all kinds of sources i.e. Human, Financial, Material,
Machines, Technology and Technical.
4. Management functions include: Planning, Organizing, Directing,
Staffing and Controlling.
5. Managers should possess varied skills in order to play a variety of roles.
6. It applies to managers at all levels in an organization.

Conti…
7. It is applicable to all kinds of organization i.e. both Profit and Non-profit
oriented business.
8. Management is both an Art and a Science in order to create a surplus.

9. Management needs to be a profession to achieve goals continuously with
an incremental efficiency.

Nature of Management
1. Multidisciplinary:
 It freely draws ideas and concepts from such disciplines as Psychology,
Sociology, Anthropology, Economics, Ecology. Statistics, Operations
Research, etc.

2. Dynamic Nature of Principles:
 Principle is a fundamental truth which establishes cause and effect
relationships of a function. Because of the continuous development in the
field, many older principles are being changed by new principles.
3. Relative, not Absolute Principles:
 Management principles are relative not absolute, and they should be
applied according to the need of the organization.

Conti…
4. Management as Profession:
 Management has been regarded as a profession by many ways, i.e.
Existence of Knowledge, Acquisition of Knowledge, Professional
Association, Ethical Codes, Service Motives.

5. Universality of Management:
 Management is a universal phenomenon. However, management principles
are not universally applicable but are to be modified according to the needs
of the situation.
6. Management: Science or Art:
 There is a controversy whether management is Science or Art. However,
management is both.

Management: A Science or Art
 First we should know what is science and what is an art before discussing
whether management is a science or an art?
 What is a Science?
 Science is a body of knowledge developed systematically, based on
observation, measurement, experimentations and drawing conclusion based
on data.
 The knowledge provides principles, theory and laws.
 Management is a developing science. Most of the managerial activities like
Decision-making, Planning, Organizing and Directing cannot be an exact
science

Conti…
 What is an Art?
 Art can be acquired by conscious Effort and Practice.
 Management is getting things done by and through other people. They have
to continuously analyze the environment and formulate the plans and
strategies.

 Managers have to modify the strategies based on environmental changes.
 The principles of management and theories of management cannot be
implemented as learnt, in the real world.
 They are to be applied after making necessary modifications based on the
real life situations.
 Thus, management is both a Science and an Art as it acquires the
characteristics of both.

Management Functions
Planning
Company mission is the
basis for planning, planning
is deciding in advance what
should be done. Managers
think logically to achieve
goals.

Organizing
Organizing is the process of
linking and arranging activities
in a sequence. It includes
allocating work, authority and
resources.

Staffing
Staffing is acquiring, developing, utilizing and
compensating human resources necessarily to
achieve organizational goals. HR helps the process of
converting inputs into output and achieving customer
satisfaction
Directing
Directing involves leading,
influencing and motivating the
people to perform organizational
tasks & to convert input into
output. It includes:
Motivation, Leadership,
Communication.

Controlling
Controlling is to make
sure that the organization
is moving towards its
mission and objectives.

Managerial Skills
 According to Robert L. Katz, there are three types of managerial skills, i.e.
Technical Skills, Human Skills and Conceptual Skills.

More Conceptual Skills

More Human Skills

More Technical Skills

Top
Level
Manager

Middle
Level
Manager
Lower
Level
Manager

Major Contributors

Classical
Approach

Behavioral
Approach

Quantitative
Approach

Modern
Approaches

Scientific Management

Frederick W. Taylor, Frank and Lillian.

Bureaucratic Management

Max Weber

Administrative Management

Henri Fayol

Group Influences

Mary Parker Follet

Hawthorne Studies

Elton Mayo

Maslow’s Need Theory

Abraham Maslow

Theory X and Theory Y

Douglas McGregor

Model 1 versus Model 2 Values

Chris Argyris

Management Science

Dr. George B Dantzig

Operations Management

Edward Deming

Information System Management

Charles Babbage

The Systems Theory

Churchman West

Contingency Theory

Paul Hersey

Emerging Approaches: Theory Z and Quality
Management

William Ouchi

Classical Approach

1(a). 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.”
 In other words, it is a classical management approach that emphasizes the
scientific study of work methods to improve the efficiency of the workers.
 With the growth of the industrial revolution, managers became concerned
with increasing efficiency.

Conti…
 A few managers who were mostly mechanical engineers by training
examined the causes of inefficiency and tried experiments to find more
efficient methods and procedures for control.
 From these basic experiments, a system of management thought came into
being, which is referred to as scientific management.
 Scientific management was a system that investigated and developed ways
of increasing the output by determining the ‘best way’ to solve or rating
problems.

Frederick Winslow Taylor
 Frederick Winslow Taylor, considered “Father of Scientific Management”,
wrote the Principles of Scientific Management in 1911.
 Taylor first began to experiment with new managerial concepts n 1878 while
employed at the Midvale Steel Co.
 At Midvale, he rise from laborer to chief engineer within 6 year gave him
the opportunity to tackle a serious issue faced by the organization – the
soldiering problem.
 ‘Soldiering’ refers to the practice of employees deliberately (intentionally)
working at a pace slower trap their capabilities.

Conti…
 According to Taylor, workers indulge in soldiering for three main reasons:
1. Workers feared that if they increased their productivity, other workers would
lose their jobs.
2.

Faulty wage systems employed by the organization encouraged them to work
at a slow pace.

3.

Outdated methods of working handed down from generation to generation led
to a great deal of wasted efforts.



Taylor felt that the soldiering problem could be eliminated by developing a
science of management.



The scientific management approach involved using scientific methods to
determine how a task should be done instead of depending on the previous
experiences of the concerned worker.

Conti…
 On the bases of previous experiences Taylor emphasizes scientific
management.
1. Need for developing a scientific way of performing each job.
2. Training and preparing workers to perform that particular job.
3. Establishing harmonious relations between management and workers so
that the job is performed in the desired way.


The two major managerial practices that emerged from Taylor’s approach
to management are the Piece-rate incentive system and the Time-andmotion study.

A. Piece-rate Incentive System:
 Taylor felt that the wage system was one of the major reasons for
soldiering. To resolve this problem, he advocated the use of a piece-rate
incentive system.

Conti…
 The aim of this system was to reward the worker who established standards of
performance would earn the basic wage rate set by management.

 If the worker’s output exceeded the set target, his-wages would increase
proportionately.
 The piece-rate system, according to Taylor, would motivate workers to produce
more and thus help the organization perform better.

B. Time-and-motion Study:
 Taylor tried to determine the best way to perform each and every job.


In a “time-and-motion” study, jobs are broken down into various small tasks or
activity and unnecessary activity are removed to find out the best way of doing
a job.



The objective of a TMS analysis is to ascertain a simpler, easier and better
way of performing a work or job.

Frank Gilbreth and Lillian Gilbreth
 Frank and Lillian Gilbreth made their contribution to the scientifice
management movement as a husband and wife team.
 The Gilbreths turned motion study into a exact science. They used motion
pictures for studying and streamlin-ing work motions.
 They catalogued seventeen different hand motions such as ‘Grasp’, ‘Hold’
there by paving the way for work simplification.

1(b). Administrative Theory
 While the scientific management movement concentrated on specific tasks
to be performed by the workers,
 Administrative management focused on the development of broad
administrative principles applicable to general and higher managerial levels.
 Henri Fayol:
 French industrialist Henri Fayol (1841-1925), a prominent European
management theorist, developed a general theory of management.
 Fayol believed that “with scientific forecasting and proper methods of
management, satisfactory results were inevitable.”
 He emphasized that all activities that occur in business organizations could
be divided into six main groups:

Conti…







Technical (production, manufacturing)
Commercial (buying, selling, exchange)
Financial (obtaining and using capital)
Security (protection of property and persons)
Accounting (balance sheet, stocktaking, statistics, costing)
Managerial (planning, organizing, commanding, coordinating, controlling).

 Fayol focused on the last activity, managerial activity. Within this, he
identified five major functions: Planning, Organizing, Commanding,
Coordinating and Controlling.
 Fayol’s five management functions are clearly similar to the modern
management functions – Planning, Organizing, Staffing, Leading and
Controlling.

Conti…
 Fayol set series of Fourteen Administrative Principles.
1. Division of labour
2. Authority and Responsibility
3. Discipline
4. Unity of command
5. Unity of direction
6. Subordination of individual
7. Remuneration

Conti…
8. Centralization
9. Scalar chain
10. Order – everybody & everthing should be in the right place at right time.
11. Equity – equality of fair treatment. Managers should be friendly & fair.
12. Stability of tenure of personnel – job security is necessary to motivate
13. Initiative – freedom to conceive and execute a plan by subordinates.
14. Espirit de corps – “a sense of union.” team spirit.

1(c). Bureaucratic Management
 Bureaucratic management, one of the schools of classical management,
emphasizes the need for organizations to function on a rational basis.
 Max Weber observed that nepotism (Favoritism) was common in most
organizations.
 Weber felt that nepotism was grossly unjust and stuck the progress of
individuals.
 Thus he identified the ideal bureaucracy to organizations that operated on a
rational basis.
 According to Weber, “a bureaucracy is a highly structured, formalized, and
impersonal organization.” In other words, it is a formal organization
structure with a set of rules and regulations.

Max Weber
 Weber was a German sociologist who developed the bureaucratic model of
organization.
 Weber’s rational bureaucracy states that employees performing a large
variety of tasks in any organization must follow established rules and
regulations in order to ensure uniformity and rationality of output.
 Administrative Management characteristics of an Ideal Organization:
1. Division of labour – authority and responsibility given.
2. Hierarchy of authority – hierarchical manner.
3. Formal selection – technical skill, examinations or by training.
4. Formal rules – rules and controls of official duties of administrators.

Behavioral Approach
 The behavioral school of management emphasized what the classical
theorists ignored – the human element.
 Classical theorists viewed the organization from a production point of view,
the behavioral theorists viewed it from the individual’s point of view.
 The behavioral approach of management emphasized individual attitudes,
behaviors, group processes and recognized processes at the work place.

2(a). Theory X and Theory Y
 Theory X and Theory Y, created and developed by Douglas McGregor at
the MIT Sloan School of Management in the 1960s.
 This theory pertain to employee motivation and have been used in human
resource management, organizational behavior analysis, and
organizational development.
 They describe two very different attitudes towards workforce motivation.
McGregor felt that companies followed either one of these approaches.
 McGregor viewed the typical employee as an energetic and creative
individual who could achieve great things if given the opportunity.
 This theory is also known as behavioral approach of management.

Douglas McGregor – Theory X
 In this theory management assumes employees are inherently lazy and will
avoid work if they can.
 Because of this, workers need to be closely supervised and comprehensive
systems of control put in place.
 A hierarchical structure is needed, with narrow span of control at each level,
for effective management.

 Therefore employees will show little ambition without an enticing incentive
program and will avoid responsibility whenever they can.
 The managers influenced by Theory X believe that everything must end in
blaming someone.

Conti…
 They think most employees are only out for themselves and their sole
interest in the job is to earn money.
 They tend to blame employees in most situations, without questioning the
systems, policy, or lack of training which could be the real cause of
failures.
 Managers that subscribe to Theory X tend to take a rather pessimistic view
of their employees.
 A Theory X manager believes that it is the manager's job to structure the
work and energize the employee.
 The result of Theory X is, managers naturally adopt a more authoritarian
style based on the threat of punishment.

Douglas McGregor – Theory Y
 Management influenced by this theory assumes that employees are
ambitious, self-motivated, anxious to accept greater responsibility and
exercise self-control, self-direction, autonomy and empowerment.
 Management believes that employees enjoy their work. They also believe
that, given a chance, employees have the desire to be creative at their work
place and become forward looking.
 There is a chance for greater productivity by giving employees the freedom
to perform to the best of their abilities, without being bogged down by rules.
 They believe that the satisfaction of doing a good job is a strong motivation
in itself.
 A Theory Y manager will try to remove the barriers that prevent workers
from fully actualizing themselves .

Conti…
 The Human Side of Enterprise reveals that McGregor simply argues
for managers to be open to a more positive view of workers and the
possibilities that create enthusiasm.

Difference between theory X and Y
THEORY – X

THEORY – Y

LAZY, Avoids the work

Ambitious and self motivator

Requires close supervision

No supervision required

Span of control is needed

Self control and self directed

Show little ambition

Enjoy the responsibility

Cannot solve the problem easily

Ability to solve the problem

Shows the negative view of employees

Shows the positive view of employees

2(b). Maslow’s Need Hierarchy
 Maslow's hierarchy of needs is a theory in psychology, proposed by
Abraham Maslow in his 1943 paper A Theory of Human Motivation.
Maslow subsequently extended the idea to include his observations of
humans' innate curiosity.
 Maslow had studied exemplary people such as Albert Einstein, Jane
Addams, Eleanor Roosevelt, and Frederick Douglass.
 The lower four layers of the pyramid contain what Maslow called
"deficiency needs" or "d-needs": physiological, security of position,
friendship and love, and esteem.
 With the exception of the lowest (physiological) needs, if these "deficiency
needs" are not met, the body gives no physical indication but the individual
feels anxious and tense.

Conti…

a. Physiological needs
 For the most part, physiological needs are obvious—they are the literal
requirements for human survival. If these requirements are not met (with the
exception of clothing and shelter), the human body simply cannot continue
to function.







Physiological needs include:
Breathing
Food
Water
Shelter
Clothing

b. Safety needs
 With their physical needs relatively satisfied, the individual's safety needs
take precedence and dominate behavior. These needs have to do with
people's yearning for a predictable.
 In the world of work, these safety needs manifest themselves in such things
as a preference for job security, grievance procedures for protecting the
individual from savings accounts, insurance policies, and the like.






Safety and Security needs include:
Personal security
Financial security
Health and well-being
Safety net against accidents/illness and their adverse impacts

c. Social needs
• After physiological and safety needs are fulfilled, the third layer of human needs
are social and involve feelings of belongingness. This aspect of Maslow's
hierarchy involves emotionally-based relationships in general, such as:
• Friendship
• Intimacy
• Family
• Humans need to feel a sense of belonging and acceptance, whether it comes
from a large social group, such as clubs, office culture, religious groups,
professional organizations, sports teams, or small social connections (family
members, intimate partners, mentors, close colleagues, confidants).
• They need to love and be loved by others. In the absence of these elements,
many people become susceptible to loneliness, social anxiety, and clinical
depression.
• This need for belonging can often overcome the physiological and security
needs.

d. Self – Esteem
 All humans have a need to be respected and to have self-esteem and selfrespect. Also known as the belonging need, esteem presents the normal
human desire to be accepted and valued by others.
 Most people have a need for a stable self-respect and self-esteem. Maslow
noted two versions of esteem needs, a lower one and a higher one. The
lower one is the need for the respect of others, the need for status,
recognition, fame, prestige, and attention. The higher one is the need for
self-respect, the need for strength, competence, mastery, self-confidence,
independence and freedom. Deprivation of these needs can lead to an
inferiority complex, weakness and helplessness.
 Maslow stresses the dangers associated with self-esteem based on fame and
outer recognition instead of inner competence. He sees healthy self-respect
as based on earned respect.

e. Self-actualization
 “What a man can be, he must be”. This forms the basis of the perceived need
for self-actualization. This level of need pertains to what a person's full
potential is and realizing that potential. Maslow describes this desire as the
desire to become more and more what one is, to become everything that one
is capable of becoming.
 As mentioned before, in order to reach a clear understanding of this level of
need one must first not only achieve the previous needs, physiological,
safety, love, and esteem, but master these needs. Below are Maslow’s
descriptions of a self-actualized person’s different needs and personality
traits.

David McClelland - Human Motivation
Theory
 One of McClelland’s most well known theories is that human motivation, is
dominated by three needs.
1. The need for achievement ( N-Ach),
2. The need for power ( N-Pow) and
3. The need for affiliation ( N-Affil).
• The importance of each of these needs will vary from one person to
another. If you can determine the importance of each of these needs to an
individual, it will help you decide how to influence that individual.
• McClelland asserted that a person’s needs are influenced by their cultural
background and life experiences.

The need for achievement (N-Ach)
 This is the need to achieve, excel and succeed. A person with this type of
need, will set goals that are challenging but realistic.
 The goals have to be challenging so that the person can feel a sense of
achievement.
 However the goals also have to be realistic as the person believes that when
a goal is unrealistic, its achievement is dependant on chance rather than
personal skill or contribution.
 This type of person prefers to work alone or with other high achievers. They
do not need praise or recognition, achievement of the task is their reward

The need for power (N-Pow)
 This is the need to lead others and make an impact.
 This need can exhibit itself in two ways. The first which is the need for
personal power may be viewed as undesirable as the person simply needs to
feel that they have “power over others”. They don’t have to be effective or
further the objectives of their employer.
 The second type of “need for power” is the need for institutional power.
People with the need for institutional power; want to direct the efforts of
their team, to further the objectives of their organisation.

The need for affiliation (N-Affil)
 This is the need for friendly relationships and human interaction.
 There is a need “to feel liked” and “accepted” by others. A person with a
high need for affiliation is likely to be a team player and thrive in a customer
services environment.
 They will perform best in a co-operative environment. McClelland said that
a strong need for affiliation will interfere with a manager’s objectivity.

 The “need to be liked” will affect a manager’s decisions, prompting them to
make decisions to increase their popularity rather than furthering the
interests of the organisation.

Modern Approach
1. SYSTEM APPROACH:
• It was first proposed under the name of "General System Theory”.
• By a systems approach to management is meant the study of a firm in its totality so
that the men and material resources of the firm can be organized to realize the
firm's overall objectives as efficiently as possible.
• The systems approach to management implies that every manager should be much
more precise about decision-making and information flow. For this to be
effective, a company should have an overall system of corporate objectives.

Conti…

Conti…
 Feedback is the process of getting comments from customers and clients.
 An organization that interacts little with its external environment and
because of that it receives little feedback is known as closed system.
 In contrast open system interacts continually with its internal environment.
Therefore it is well informed about the changes within its surroundings and
its position relative to this changes.

Conti…
 The systems approach is a problem-solving method which helps to:
1. Define the problem as clearly as possible.
2. Analyse the problem and identify alternative solutions.
3. Select from the alternatives and develop the most viable solution mix.
4. Implement and test the solution.
5. Evaluate the effectiveness and worth of the solution.

Modern Approach
2. Contingency Approach: (Situational approach)
 The contingency approach to management is based on the idea that is to
manage and that to be effective, planning, organizing, leading, and
controlling must be tailored to the particular circumstances faced by an
organization.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Managers have always asked questions such as:
"What is the right thing to do?
Should we have a mechanistic or an organic structure?
A functional or divisional structure?
Wide or narrow spans of management?
Tall or flat organizational structures?
Simple or complex control and coordination mechanisms?
Should we be centralized or decentralized?
Should we use task or people oriented leadership styles?
What motivational approaches and incentive programs should we use?"

Conti…
1. Environmental change and uncertainty
2. Organizational Size

3. Customer Diversity
4. Globalization

5. Contingency Perspective and Leadership

Elton Mayo
 Mayo was a professor at the a Harvard Business School. He published
several books, on human problems (1880-1949).
 He served as the leader of the team which carried out the famous Hawthorne
Experiments at the Hawthorne plant of the Western Electric Company
(USA) during 1927-32.
 These experiments proved to be a turning point in management thinking.

 These are summarized below:

Conti…
1. Illumination Experiments:
 These experiments revealed that productivity could be increased not only by
improving working conditions but through informal social relations among
the members of the work group.

2. Relay Assembly Test Room Experiment:
 In this experiment a small homogeneous work group was constituted.
 i.e. shorter working hours, appropriate rest periods, improved physical
conditions, friendly and informal supervision, free social interaction among
group members, etc.
 Productivity and morale increased consistently during the period of the
experiment.

Conti…
3. Mass Interviewing Program:
 A large number of workers were interviewed to produce information on their
perceptions and orientations on the working life.
 The results again confirmed the importance of informal relations, social and
psychological needs and their influence on the behavior of workers.
 The Hawthorne Experiments led to the following conclusions:
a. A factory is not only a techno economic unit but psycho-social organization
too.
b. Workers spontaneously form small informal groups. The norms and values
of such groups exercise significant influence on the behavior and
performance of workers.

Conti…
c. Generally workers act or react not as individuals but as members of a
group.
d. Informal leaders play an important role in setting and enforcing group
norms.
e. Workers are not mere economic beings motivated by money alone. They
respond to the total work situation including work design, recognition,
participation, etc.
f.

Management must understand and recognize interpersonal and group
relations on the job.

Management & Administration
Distinction

Administration

Management

Nature

It is a determinative or thinking
functions.

It is an executive or doing function.

Scope

It is concerned with the
It is concerned with the
determination of major objectives implementation of policies.
and policies

Level

It is mainly a top-level function.

It is largely a middle & lower level
function.

Influence

Administrative decision are
influenced mainly by public
opinion and other outside forces.

Managerial decisions are
influenced mainly by objectives
and policies of the organization.

Direction of
human
efforts

It is not directly concerned with
direction of human efforts.

It is actively concerned with
direction of human efforts in the
execution of plans.

Conti…
Distinction

Administration

Management

Main
functions

Planning and control are the main Directing and organizing are the
functions involved in it.
main functions involved in it.

Skills
required

Conceptual and human skills.

Technical and human skills.

Used largely in government and
public sector.

Used mainly in business
organizations.

Minister, commander,
commissioner, registrar, vicechancellor, governor, etc.

Managing director, general
manager, sales manager, branch
manager, etc.

Usage

Illustrations

Prepared By: Vishal Y. Doshi