Principles and Techniques of Management

Nature Of Management

Management, as a discipline and a practice, possesses characteristics that lead to its classification as an art, a science, and potentially a profession. Understanding its nature is crucial for appreciating its complexities and effectiveness.

Management As An Art

Art refers to the practical application of knowledge and personal skill to achieve desired results. It is subjective, creative, and requires continuous practice for improvement. Management can be considered an art for the following reasons:

1. Existence of Theoretical Knowledge

Any art requires the existence of theoretical knowledge. For example, a musician learns about musical scales, notes, and instruments. Similarly, management has a vast body of theoretical knowledge comprising principles, concepts, theories, and techniques developed by management thinkers.

2. Personalised Application

The application of theoretical knowledge in art is personalised. Two painters may learn the same technique, but their paintings will differ based on their individual style and creativity. In management, while managers learn common principles, they apply them differently based on their experience, intuition, leadership style, and the specific situation. This personalised application distinguishes a successful manager.

3. Based on Practice and Creativity

Art requires constant practice and creativity to become proficient. A musician practices scales, a painter experiments with colours. Similarly, management skills are honed through continuous practice and experience. Managers face unique situations that require creative solutions and adaptive application of principles.

Thus, managing is not just applying formulas but also involves skill, creativity, and experience in dealing with complex human and organisational dynamics.

Management As A Science

Science is a systematic body of knowledge based on logical observation, facts, and principles derived from experimentation. It aims to establish cause-and-effect relationships and has universal applicability (though social sciences differ from pure sciences). Management exhibits characteristics of science:

1. Systematised Body of Knowledge

Management has an organised and systematised body of knowledge accumulated over time through research and analysis. It consists of well-defined principles, theories, and concepts (e.g., principles of planning, organising, motivation theories).

2. Principles Based on Experimentation

Management principles are developed through observation and repeated experimentation in various organisational settings. While not as controlled as experiments in physical sciences, these observations help in formulating general guidelines.

3. Cause-and-Effect Relationship

Management principles attempt to establish cause-and-effect relationships (e.g., lack of unity of command may lead to confusion). However, due to the complexity of human behaviour, these relationships are not always as precise or universally predictable as in physical sciences.

4. Universal Validity (Limited)

Management principles provide general guidelines that are applicable in various types of organisations and situations. However, their application needs to be modified according to the specific context, making their universality less absolute compared to the laws of physics or chemistry.

Therefore, management is often regarded as a 'social science' or an 'inexact science' because it deals with human behaviour, which is dynamic and less predictable than matter or energy. It is not a pure or exact science.

Management As A Profession

A profession is an occupation that requires specialised knowledge and skills, formal education, restricted entry, adherence to a code of ethics, and service motive. Let's examine if management fits this criteria:

While management is moving towards professionalisation, it does not yet fully meet all the strict criteria of a profession, particularly restricted entry and mandatory ethical code adherence. However, the trend is towards professional management, especially in larger and organised sectors.

In conclusion, management is best understood as a combination of science and art, with increasing attributes of a profession.

Objectives Of Management

Management aims at achieving various objectives that are crucial for the survival, growth, and sustainability of the organisation, while also considering its impact on society and employees.

Organisational Objectives

These are the core economic objectives necessary for the viability and success of the business entity itself.

• Survival: The most basic objective is to ensure the continued existence of the enterprise in the competitive environment. Management must strive to cover costs and avoid losses to survive in the long run.
• Profit: Profit is essential for survival, as well as for growth and expansion. It is the reward for risk-taking and a measure of efficiency. Management must aim to earn a reasonable profit.
• Growth: A successful business must grow over time. Growth can be measured by metrics like increased sales, market share, production volume, number of products, or expansion into new markets. Management must formulate strategies and allocate resources to achieve growth.

Achieving these objectives requires efficient and effective use of the organisation's resources.

Social Objectives

These objectives relate to the responsibility of the business towards society. Businesses operate within a social context and impact various groups. Management must consider the welfare of society.

• Providing Quality Products at Fair Prices: Ensuring consumers get value for their money.
• Generating Employment Opportunities: Contributing to the economic well-being of the community.
• Environmental Protection: Minimising pollution and adopting sustainable practices.
• Community Welfare: Contributing to social causes, education, healthcare, etc.
• Fair Business Practices: Avoiding unethical practices like hoarding, adulteration, and tax evasion.

Fulfilling social objectives helps build a positive image and ensures long-term acceptance and sustainability.

Personnel Objectives (Individual Objectives)

These objectives are concerned with the welfare and development of the employees who are vital resources of the organisation.

• Ensuring Fair Wages and Benefits: Providing competitive compensation and good working conditions.
• Providing Training and Development: Helping employees improve their skills and career prospects.
• Promoting Employee Motivation and Satisfaction: Creating a positive work environment, recognising contributions, and addressing grievances.
• Ensuring Safety and Security: Providing a safe workplace and job security to the extent possible.

Satisfied and motivated employees are more productive and loyal, contributing to organisational success.

Effective management balances these diverse objectives, ensuring that the pursuit of one does not significantly undermine the others.

Importance Of Management

Management is essential for the success of any organisation. Its importance stems from its role in effectively combining resources and directing efforts towards achieving goals. Key points highlighting the importance of management are:

1. Helps in Achieving Group Goals

Management unifies the efforts of different individuals in the organisation towards achieving common organisational objectives. It creates a sense of purpose and coordination, ensuring that everyone works together effectively.

2. Increases Efficiency

Management aims at reducing costs and increasing productivity through better planning, organising, staffing, directing, and controlling of resources. It ensures that work is done efficiently, getting maximum output with minimum effort and resources.

3. Creates a Dynamic Organisation

Organisations operate in a dynamic and changing environment. Management helps the organisation adapt to these changes (technological, social, economic, political) by formulating new strategies and implementing changes in the organisational structure and operations.

4. Helps in Achieving Personal Objectives

Effective management helps employees achieve their personal goals (like financial security, career growth, job satisfaction) by aligning them with the organisational goals. When organisational goals are met, it creates opportunities for rewarding employees.

5. Contributes to Development of Society

By efficiently managing resources, producing quality goods and services, creating employment, adopting new technologies, and fulfilling social responsibilities, management contributes significantly to the overall development and well-being of society.

In essence, management is the driving force behind the successful performance and growth of organisations and plays a vital role in harnessing resources for collective prosperity.

Levels Of Management

In most organisations, especially large ones, managers are arranged in a hierarchy based on their authority, responsibility, and the scope of their decision-making. This hierarchy constitutes the levels of management. Typically, there are three levels:

Top Management

This is the highest level of management, consisting of the most senior executives who are responsible for the overall functioning and success of the organisation.

• Composition: Board of Directors, Chairman, Chief Executive Officer (CEO), Managing Director, President, Vice Presidents, General Manager.
• Responsibilities:
  • Formulating overall mission, vision, goals, and strategies.
  • Taking major policy decisions.
  • Organising and integrating the entire organisation.
  • Appointing key executives at the middle level.
  • Controlling and coordinating the activities of various departments.
  • Interacting with the external environment (government, investors, public, media).
  • Responsible for the financial performance and long-term survival of the business.

Middle Management

This level acts as a crucial link between top management and lower (supervisory) management. They are responsible for implementing the plans and policies formulated by top management.

• Composition: Departmental Managers (e.g., Production Manager, Marketing Manager, Finance Manager, Human Resource Manager), Divisional Managers, Branch Managers, Plant Superintendents.
• Responsibilities:
  • Interpreting the policies framed by top management and translating them into departmental objectives and plans.
  • Organising activities of their department and recruiting/training departmental staff.
  • Assigning duties and responsibilities within their department.
  • Motivating employees to achieve departmental goals.
  • Coordinating with other departments.
  • Reporting performance and issues to top management.

Supervisory Or Operational Management (Lower Level Management)

This is the lowest level of management, directly overseeing the work of the operating employees (non-managerial staff). They are responsible for the day-to-day execution of tasks.

• Composition: Supervisors, Foremen, Section Officers, Team Leaders.
• Responsibilities:
  • Directly supervising and guiding workers.
  • Assigning specific jobs to workers.
  • Ensuring quality and quantity of output.
  • Maintaining discipline and good relations among workers.
  • Providing training and necessary resources to workers.
  • Communicating problems, grievances, and suggestions of workers to middle management.
  • Ensuring safety and security in the workplace.

These levels form a hierarchy where authority flows downwards and accountability flows upwards. Effective communication and coordination between these levels are essential for organisational success.

Functions Of Management

Management is described as a process because it involves a series of interrelated functions. While different management experts have slightly different classifications, the generally accepted functions are:

1. Planning

This is the primary function. It is the process of deciding in advance what is to be done, when, how, and by whom. Planning involves setting objectives, formulating policies, procedures, strategies, programs, and budgets to achieve those objectives. It provides direction and reduces uncertainty.

2. Organising

This function involves identifying the activities required to achieve plans, grouping similar activities into departments, assigning duties and responsibilities to individuals, and establishing authority and reporting relationships. Organising creates the framework of the organisation and facilitates coordination.

3. Staffing

This function is concerned with obtaining and maintaining a competent workforce. It involves activities like manpower planning, recruitment, selection, placement, training and development, performance appraisal, promotion, and compensation of employees.

4. Directing (Leading)

This function involves leading, influencing, and motivating employees to perform efficiently and contribute to organisational objectives. It includes elements like supervision (overseeing subordinates' work), motivation (inducing employees to work with zeal), leadership (influencing others), and communication (exchanging information and understanding).

5. Controlling

This function involves ensuring that actual performance conforms to planned performance. It includes establishing performance standards, measuring actual performance, comparing actual performance with standards, analysing deviations, and taking corrective actions. Controlling ensures that activities are proceeding as planned and helps in taking timely corrective measures.

These functions are performed by managers at all levels and are interdependent. They are not performed in a strict sequence but are often carried out simultaneously, influencing each other.

Coordination — The Essence Of Management

Coordination is the process of bringing together the activities of different individuals, sections, and departments and synchronising them to ensure unity of action towards the common organisational goal. It is not a separate function of management but is considered the essence of management because it is required at all levels and in all functions of management to ensure harmonious working.

Coordination is the thread that weaves together the different elements of management and ensures that all parts of the organisation work together smoothly towards achieving the desired objectives.

Characteristics Of Coordination

• Integrates Group Efforts: Coordination is necessary when a group of people work together. It ensures that individual efforts are aligned with collective goals.
• Ensures Unity of Action: It prevents different departments or individuals from working in conflicting directions. It provides a common focus for group efforts.
• Is a Continuous Process: Coordination is required throughout the planning, organising, staffing, directing, and controlling process. It is not a one-time activity.
• Is All-pervasive: Coordination is needed in all departments (production, sales, finance, etc.) and at all levels of management (top, middle, supervisory).
• Is the Responsibility of All Managers: Top management coordinates the overall plan, middle management coordinates within departments and with other departments, and operational management coordinates the activities of workers.
• Is a Deliberate Function: Coordination does not happen automatically or by chance. Managers must consciously and deliberately coordinate efforts.

Importance Of Coordination

Coordination is important due to the following reasons:

• Growth in Size: As organisations grow, the number of employees increases, leading to diversity in individual goals and approaches. Coordination is needed to harmonise these diverse efforts towards common goals.
• Functional Differentiation: Modern organisations are divided into various departments, each performing a specialised function (e.g., purchase, production, sales). These departments might have conflicting interests. Coordination ensures that their activities are integrated to achieve overall organisational goals.
• Specialisation: With increasing specialisation, individuals focus on their specific area of expertise. Specialists might feel their judgment is superior and resist coordination with others. Coordination is necessary to reconcile the efforts of specialists and integrate them into a cohesive whole.

Without coordination, the various parts of an organisation would function in isolation, leading to chaos, duplication of efforts, delays, and failure to achieve objectives. Therefore, coordination is rightly called the essence of management.

Taylor’S Scientific Management

Frederick Winslow Taylor (1856-1915) is known as the 'Father of Scientific Management'. He pioneered a management theory that emphasised efficiency and productivity in the workplace. His approach was based on scientific investigation and experimentation to determine the 'one best way' of performing a task.

Taylor's scientific management focused primarily on improving the efficiency of the workers and the shop floor level management.

Principles Of Scientific Management

Based on his experiments and observations, Taylor developed four main principles of scientific management:

1. Science, Not Rule of Thumb

Taylor advocated replacing the old 'rule of thumb' methods (based on tradition and trial-and-error) with scientific investigation. He believed that every task should be studied scientifically to determine the most efficient way to perform it. This involved collecting data, experimenting with different methods, and identifying the optimal technique.

2. Harmony, Not Discord

Taylor emphasised the need for complete harmony between the management and the workers. Both should realise the importance of each other. Management should share the gains of the company with workers, and workers should work with full dedication. He called for a 'mental revolution' on the part of both management and workers to shift their focus from increasing profit shares to increasing total production.

3. Cooperation, Not Individualism

Scientific management requires complete cooperation between management and workers. Instead of competition, there should be mutual cooperation. Management should encourage workers and provide them necessary support and training. Workers should cooperate with management in implementing scientific methods.

4. Development of Each and Every Person to His or Her Greatest Efficiency and Prosperity

Taylor believed that the efficiency of every person depends on their abilities and training. Workers should be scientifically selected and trained for the jobs they are best suited for. Their efficiency and prosperity should be developed to the maximum possible extent, as this benefits both the workers and the company.

Techniques Of Scientific Management

To implement his principles, Taylor developed several techniques:

Functional Foremanship

Taylor advocated for the separation of planning and doing functions. Instead of one foreman overseeing all aspects of a worker's job, he suggested having multiple specialists (foremen) to supervise different aspects of work. He proposed eight specialist foremen in a factory – four in the planning department and four in the production department.

Planning In-charge:

• Route Clerk: Specifies the sequence of operations.
• Instruction Card Clerk: Drafts instructions for workers.
• Time and Cost Clerk: Prepares time and cost sheets.
• Disciplinearian: Ensures discipline.

• Gang Boss: Arranges machines, tools, etc., for workers.
• Speed Boss: Ensures workers are performing at the standard speed.
• Repair Boss: Ensures machines are in good working condition.
• Inspector: Checks the quality of work.

This technique aimed to leverage specialisation and provide expert guidance to workers.

Standardisation And Simplification Of Work

Standardisation involves setting standards for every business activity to make it efficient and consistent. This includes standardising tools, equipment, materials, methods, working conditions, and output. For example, standard sizes and weights for products.

Simplification aims at eliminating unnecessary varieties, sizes, and grades of products. This reduces costs, improves efficiency, and avoids waste of resources.

Method Study

This technique aims to find the 'one best way' of performing a job. It involves analysing all the methods used to perform a task (from procuring raw materials to delivering the finished product) and identifying the most efficient and cost-effective method. This study eliminates unnecessary operations and improves efficiency.

Motion Study

This study involves careful observation of the movements of a worker while performing a task. The objective is to identify and eliminate unnecessary, wasteful, or unproductive motions and retain only those motions that are essential for efficient performance. This reduces fatigue and improves efficiency.

Time Study

This technique determines the standard time required to perform a well-defined task. It involves observing and recording the time taken by workers to complete a task, often using a stopwatch, and taking the average time. Standard time is set after considering rest periods and other factors. Time study helps in fixing the performance target for workers, determining the number of workers required, and calculating labour costs.

$ \text{Standard Time} = \text{Average Time} \times (1 + \text{Percentage of allowances for fatigue, etc.}) $

Fatigue Study

This study seeks to determine the amount and frequency of rest periods required by a worker to regain energy and avoid fatigue. Working for long hours without rest can lead to physical and mental fatigue, reducing productivity and increasing chances of accidents. By providing appropriate rest intervals, fatigue can be minimised, and productivity maintained.

Differential Piece Wage System

Taylor advocated for a differential wage system to motivate workers. He proposed different wage rates for those who performed above the standard output and those who performed below the standard output. Workers who meet or exceed the standard receive a higher piece rate per unit, while those who fall below the standard receive a lower piece rate. This system rewards efficient workers and penalises inefficient ones, motivating them to achieve standard output.

Example: Standard Output = 10 units per day. Rate 1 = ₹50 per unit (for output $\ge$ 10 units) Rate 2 = ₹40 per unit (for output < 10 units)

Worker A produces 12 units: Earning = $12 \times ₹50 = ₹600$ Worker B produces 8 units: Earning = $8 \times ₹40 = ₹320$

This technique linked wages directly to productivity and aimed at boosting output.

Taylor's scientific management provided a systematic approach to improving efficiency at the shop floor level but was often criticised for being too mechanistic and ignoring the human element.

Fayol’S Principles Of Management

Henri Fayol (1841-1925), a French mining engineer and industrialist, is considered the 'Father of Modern Management' or 'Father of General Management'. While Taylor focused on shop floor efficiency, Fayol focused on the overall administration of the organisation. He identified various managerial activities and proposed 14 general principles of management applicable to all types of organisations.

Fayol viewed management as a universal process applicable to all types of organisations.

Division Of Work

Work should be divided into small tasks or jobs. This leads to specialisation, as each person performs only a part of the work. Specialisation increases efficiency and productivity by improving skill and speed.

Authority And Responsibility

Authority is the right to give orders and obtain obedience. Responsibility is the obligation to perform a task. According to Fayol, there must be a balance or parity between authority and responsibility. Giving authority without responsibility can lead to irresponsible behaviour, while assigning responsibility without adequate authority makes it difficult to perform the task.

Discipline

Discipline refers to obedience to organisational rules and employment agreements which are necessary for the smooth functioning of the business. Good discipline requires good supervisors at all levels, clear and fair agreements, and judicious application of penalties.

Unity Of Command

An employee should receive orders from only one superior. If an employee receives orders from multiple superiors, it can lead to confusion, conflict, and difficulty in accountability. This principle ensures clear reporting relationships.

Unity Of Direction

All units of an organisation should be moving towards the same objectives through coordinated and focused efforts. Each group of activities having the same objective must have one head and one plan. This principle ensures unity and coordination of efforts across the organisation.

Subordination Of Individual Interest To General Interest

The interests of an individual or a group of employees should not override the interests of the organisation as a whole. Management should always prioritise organisational goals. This requires managers to set a good example, ensure fair agreements, and provide supervision.

Remuneration Of Employees

Employees should receive fair wages and salaries. Remuneration should be just and equitable, providing a reasonable standard of living for employees and being affordable for the company. Fair remuneration motivates employees and ensures a good relationship between management and workers.

Centralisation And Decentralisation

Centralisation refers to the concentration of authority at the top level, while decentralisation means the dispersal of authority to lower levels. Fayol suggested that there should be a proper balance between centralisation and decentralisation, depending on the size and nature of the organisation. The objective should be the optimum utilisation of the capabilities of personnel.

Scalar Chain

This is the chain of authority and communication that runs from the top management to the lowest level in the organisation. Orders and communication should generally pass through every level in this chain. However, for faster communication between employees at the same level, Fayol proposed the concept of 'Gang Plank', allowing direct communication between employees of different departments at the same level after informing their immediate superiors.

Order

According to Fayol, there should be a place for everything and everyone should be in their appointed place. This principle refers to 'materials and social order'. 'Right man in the right place' ensures efficient use of human resources, and 'a place for everything and everything in its place' ensures efficient use of physical resources.

Equity

Equity means fair treatment and justice for all employees. Managers should be kind, fair, and impartial in dealing with their subordinates. This helps in creating a friendly and cordial relationship between the management and workers.

Stability Of Personnel

Employees should be provided security of tenure. Frequent transfers and high employee turnover are detrimental to the efficiency of the organisation. Stability in employment encourages employees to learn their job well and work with dedication.

Initative

Initiative means taking the first step with self-motivation. Employees should be encouraged to take initiative in formulating and executing plans. Management should welcome suggestions from employees and provide them with the opportunity to take initiative within the limits of authority and discipline.

Espirit De Corps (Union is Strength)

This principle emphasises the need for teamwork, unity, and harmony among employees. Management should promote a spirit of unity and mutual understanding among employees to achieve collective goals. Using 'We' instead of 'I' can help in building a team spirit.

Fayol's principles provide a general framework for effective management and are applicable to various organisational situations.

Fayol Versus Taylor — A Comparison

While both F.W. Taylor and Henri Fayol are considered pioneers in the field of management and their contributions are complementary, their approaches and focus differed significantly.

Both Taylor and Fayol made invaluable contributions to the evolution of management thought. Taylor provided specific techniques to improve efficiency at the operational level, while Fayol provided a universal framework for understanding the management process and its principles. Their work is considered foundational and is still relevant today.

Management In The Twenty-First Century

Management in the 21st century faces a highly dynamic, complex, and interconnected global environment. The traditional principles and functions remain relevant, but their application and emphasis have evolved significantly.

Key Aspects of 21st Century Management:

1. Globalisation and Cross-Cultural Management

Managing businesses that operate across national borders requires understanding diverse cultures, adapting management styles, and navigating complex international regulations and markets.

2. Technology and Digital Transformation

The rapid pace of technological change (AI, big data, automation, e-commerce) requires managers to embrace digital tools, manage technological adoption, ensure cybersecurity, and leverage technology for innovation and efficiency.

3. Emphasis on Ethics, Social Responsibility, and Sustainability (ESG)

Stakeholders demand greater ethical conduct, social responsibility, and environmental sustainability (often referred to as ESG - Environmental, Social, and Governance). Management must integrate these aspects into core strategy and decision-making.

4. Agile and Adaptive Management

The volatile and uncertain business environment requires organisations and managers to be agile, flexible, and capable of rapid response to change. Hierarchical structures are becoming flatter.

5. Managing Knowledge Workers and Diversity

The increasing proportion of knowledge workers requires management approaches that focus on empowering employees, fostering creativity, and providing flexible work arrangements. Managing a diverse workforce with varying backgrounds and expectations is also crucial.

6. Innovation and Entrepreneurship

Continuous innovation and fostering an entrepreneurial mindset within the organisation are essential for staying competitive.

7. Data-Driven Decision Making

Managers increasingly rely on data analytics and insights to inform strategic and operational decisions.

8. Focus on Relationships and Stakeholder Management

Building and maintaining strong relationships with all stakeholders (employees, customers, suppliers, investors, community, government) is critical for long-term success.

Management in the 21st century is thus a complex interplay of traditional principles, technological leverage, ethical considerations, global awareness, and the ability to lead diverse teams in a rapidly changing world.