Introduction to MANAGEMENT

1. Introduction to MANAGEMENT

2. INTRODUCTION • Management is essential for the conduct of any activity in an orderly manner. • It is a vital function concerned with all aspects of working of an enterprise • In the present dynamic business world, survival, stability and prosperity of business units depends on their efficient management. • Management implies rational thinking, accurate planning, orderly execution of the plan, effective coordination of operations and control.

3. Concept of Management • An individual or group of people who accept responsibility to run an organisation and direct its activities are called “MANAGEMENT” • It is a force that unifies human as well as non- human resources in the service of organisational goals. • It is concerned with the attainment of objectives through the efforts of other people. • The application of management is not confined to business alone. Even non-profit organisations like educational institutions, hospitals, charitable organisations etc. also use management. • It brings together basis resources popularly known as 6 M’s Men, Material, Machines, Methods, Money and Market

4. Features of Management 1. Management is a process • Its is a process and not a body of individuals. • Those who perform this process are called managers • MGMT process involves planning , organising , directing and unifying human efforts for the accomplishment of a given tasks. • The process continues as long as the enterprise is operating in the business world. Recourses Process Objectives

5. 2. Management is a social process: • It takes place through people. • The importance of human factor in management cannot be ignored. • A manager’s job is to get the things done with the support and cooperation of subordinates. • BusinessManaged by People on People for a group of people 3. Management is action – based • It is always for achieving certain objectives in terms of sales, profit etc. • It is a result oriented concept. • It gives importance to actual performance.

6. 4. Management involves achieving results through efforts of others: • It is an art of getting things done through others. • Managers are expected to guide and motivate subordinates and get the expected to guide and motivate subordinates & get the expected performance from them. • It acts as an activating factor. 5. Management is a group activity: • It is not an isolated individual activity. • It aims at using group efforts for achieving objectives. • Managers manage the groups & coordinate the activities of groups functioning in an organisation.

7. 6) Management is intangible – • Its is not directly visible but its presence is noticed in the form of concrete results. • It is like invisible spirit which guides and motivates people working in a business unit. 7) Management is all pervasive • Management is comprehensive & covers all departments, activities and employees. • Managers are working at different level but their functions are identical. 8) Management aims at coordination of activities: • Coordination is the essence of management. • It gives one direction & brings unity and harmony in the whole organisation. • For such coordination effective communication at all levels is essential.

8. 9. Management is innovative : • Management techniques are dynamic and innovative. • Such techniques are adjusted as per the requirements of the situations • One manager has to change his decisions under different situations. 10. Management is decision making • Involves decision making at different levels for getting things done by others. • It involves selecting the best available alternative for achieving business objectives. • Such decisions have to be taken promptly. & correctly.

9. Importance of Management • Facilitates optimum use of resources: • Optimum use of available human &physical resources leads to progress & prosperity of a business enterprise. • Wastages of all types are eliminated. • According to Peter Drucker “Management is the dynamic life giving element in an organisation . Without it the resources of organisation remain resources & never become output.” 2. Raises competitive Strength: • No business can escape competition • Management develops competitive strength in an enterprise . • This enables an enterprise to develop &expand its assets and profit.

10. 3. Develops Cordial industrial relations: • Management develops cordial industrial relations , ensures better life & welfare to employees & raises their morale through suitable incentives.. • By maintaining peace management contributes to increase productivity. • This is achieved by striking a balance between the demand of employees & expectations of management. • Participative management in any form is found useful in maintaining cordial industrial relations. 4. Facilitates employee motivation: • Management motivates employees to take more interest & initiative in the work assigned & contribute for raising productivity & profitability of the enterprise. • It creates a work environment of trust, confidence & teamwork

11. 5) Social benefits: Society gets the benefits of efficient management in terms of industrial development, consumer satisfaction & proper discharge of social responsibility. Management has to ensure that the benefits of business are made available to every person in the society. 6) Expansion of business Expansion, growth & diversification of a business unit are possible through efficient management. Growth & expansion pursue an increase in size & enhancement of operations.

12. 7)Develops team spirit • Mgmt. develops team spirit & raises overall efficiency of a business enterprise. • Employees need the spirit of loyalty & devotion to the group to which they belong. • The manager has to develop team spirit among his subordinates. • Team spirit brings loyalty, dedication & commitment on the part of subordinates. • Harmony among the employees act as a source of strength. 8)Ensures effective use of managers: • Managers makes things happen . They do not watch things happening. • They convert scarce resources into useful output. • Their jobs are open ended. • They attend to specific issues & allocate their time to the urgent matters.

13. 9) Miscellaneous Benefits a) Sound Mgmt. ensures smooth & orderly functioning of an organisation. b) Reduces labour turnover & labour Absenteeism c) Creates sound organisation with capacity to face any adverse situation easily & with confidence.

14. Management & Administration • In the initial stage of Mgmt. Development , no distinction was made between the terms Mgmt. and administration & both the terms were used interchangeable. • It was in !923 that the terminology conflict between the two terms was raised by OLIVER SHELDON in his book “ The Philosophy of MGMT. • Where he advocated administration as Decision – making function & Management as execution function. • This view of OLIVER SHELDON was supported by others thereafter. • As a result three approaches to the relationship between management & administration developed. • These approaches are :

15. a) Administration is above Management • According to many thinkers, administration is higher level function which relates to policy formulation while management is lower level function concerned with the performing of lower level function concerned with the execution of policy within the limits set by the administration. • The top level management is concerned with the performing of administrative functions while managers at lower levels are mainly concerned with executive function. • The general view is that administration deals with policy formulation while management relates to policy execution. • Both activities are not the same.

16. This is made clear in the following figure: Top Policy Formulation Levels Of MGMT. Middle Policy Execution Lower Management Function Management Function s at different levels

17. Administration as a part of Mgmt. • Administration becomes a subordinate function to overall management function. • This approach is exactly opposite to previous analysis under which administration is above Mgmt. • Administration is concerned with day-to-day functions & is a part of mgmt. • Management is given higher status & administration is given lower / subordinate position as per this view.

18. Management And Administration are Same/identical • Both involve the same functions, objectives & principles • There is no difference between the two. • They are used interchangeably. As both involve the same principles & functions. • Practicing managers & management writers do not make any distinction between administration as determining policies & management as implementing them or vice versa. • They prefer to use only one term name “MANAGEMENT” to indicate both the determination of policies as well as their implementations. • Henry Fayol states that the term administration is used for executive functions in government departments While Mgmt. is used for same functions in business organisations. • The distinction between the terms is irrelevant in the present context as the terms are now used interchangeably

19. Levels of Management • They are Convenient /platform layers created for the purpose of managing the activities of the business in an efficient manner. • These layers/levels bring division of work within the organisation structure. • The managers at different levels are given specific functions & their functions are also properly coordinated . • Such levels are introduced in all types of organisations as they offer convenience in decision making & also in execution of decision taken. • There are three levels of management in an organisational hierarchy of authority. • These levels are : a) TOP LEVEL MGMT. b) MIDDLE LEVEL MGMT. c) LOWER LEVEL MGMT.

20. The pyramid type diagram indicates the levels of Mgmt. Levels of MGMT. Executives working • Top level Mgmt. B) Middle level Mgmt. Dept. heads / junior executives C) Lower Level Foreman/ first line supervisors BOD / Chief Executives / General managers A B C EMPLOYEES (WORKERS)

21. Top level Management • It is the ultimate authority in enterprise / business unit which is alone responsible to shareholders , to the government & to the general public. • It finalises the overall objectives & formulates the mater strategy & broad business policies. • Issues instruction for the implementation of policies formulated by board of Directors & takes necessary steps to accomplish the objectives. • The mgmt. functions of planning, organising leading, motivating controlling & coordinating are looked after by the top level mgmt. • It is an organ of overall review and control. • Concerned with overall Mgmt. of the company’s operations. • Maintains coordination among different departments of the company .

22. Middle level management • Comprises of departmental heads such as production manager, marketing manager, finance manager , personnel manager. • They serve a link between the top mgmt. & operating management. • Middle level managers are expected to understand & support the ideas & policies of the top level mgmt. • They have to maintain cordial relations with all subordinates for smooth functioning. • Coordination in the activities of the dept. is the important duty of middle level managers. • They act as a line of communication in between the top level mgmt. & supervisory staff.

23. Lower level Management. • Includes foremen, supervisors & sub- departmental executives assisted by number of workers. & clerks to carry out actual routine operations. • Their authority is limited . They have to abide by the decisions taken by higher levels of Mgmt. & are accountable to their superiors. • They procure materials, tools, etc. required for the jobs, assign duties to individuals workers & guide them to perform the job with efficiency • They raise the morale of subordinates as they are directly /closely connected with their subordinates. • They need technical & supervisory skills in order to get the work done from their subordinates. • Workers participation & involvement in the work largely depend upon the interest & initiative of lower level managers.

24. Functional Areas of Management • Scope of Mgmt. is comprehensive as it covers all activities & operations of a business unit. • Organisational functions differ from organisation to organisation as per nature, size etc. of the organisation • Marketing , production, finance etc. are organisational functions. • Organisational functions are called Functional Areas of Management& have their own functions, policies , procedures & so on. • Managers are appointed to look after the functional areas of management. • Every functional area of mgmt. has its sub-components . • For e.g marketing management deals with Pricing , sales promotion, advertising, credit policies, channels of distribution & so on.

25. Materials Management • It deals with two broad aspects, namely Purchasing & store keeping. • Purchasing relates to purchase of materials . ( raw materials, machinery, spare parts, components, etc.) required for orderly conduct of manufacturing. • Store keeping relates to systematic storage of materials for safety & also for easy & quick availability when required. • Materials mgmt. is planning directing controlling & coordinating activities concerned with materials & inventory requirement. • Material management is a basic function of the business as it adds value directly to the product itself. • Regulating the flow of materials in relation to changes in variables like demand, prices, availability deliver schedule, etc.

26. Production Management • Production is creation of utilities for meeting human wants. • Men, material & equipment's are used for creation of goods • It is process of transforming raw materials or purchased components into finished products for sale • It aims at producing the right quality goods, in the right quantity , at the right time & at the right cost.

27. Personnel Management • Deals with manpower employed in an organisation • It includes employees working at different levels & managers who guide & control the activities /work of their subordinates. • The new term used is human resource Mgmt. • Organisations are made up of people & function through people. • Efficient , capable , well trained & motivated manpower brings success , stability & prosperity to an organisation. • Available manpower needs to be trained & motivated properly. • Employees need to be treated decently & provided with attractive wages, other welfare facilities & incentives. • HRM is a management function that helps managers to recruit, select, train & develop employees for an organisation . • It is concerned with people’s dimension in organisation.

28. Financial Management • Deals with the financial aspect of the business. • Annual budget preparation, maintaining proper accounts of expenses made, calculation of gross & net profits , maintaining annual accounts of the company & audit of company accounts. Are some important activities undertaken under financial Mgmt. • Providing right type of funds at the right time & at right time & at reasonable cost. • It provides strong financial base & support to the company • It deals with planning , raising ,utilising & controlling funds of a business enterprise. • Proper estimation of financial needs of a business. • Proper management of funds.

29. Sales & Marketing Management • Sales Mgmt. is closely related to marketing management. • It means achieving sales objectives/targets through the co-operation , participation & support of sales force working in an organisation. • Sales Mgmt. is now treated out-dated & is replaced by popular term Marketing Mgmt. • It is Flow of goods/services from producers to customers. • It deals with Managing demand which in turn involves managing customer relationships. • Advertising, motivation of sales force, sales promotion techniques, personal selling etc. are some terms used in sales & Marketing Mgmt.

30. Introduction to Mgmt. thought • Management is as old as human civilization itself when people started living together in groups. • Management has been practiced in one form or the other. • Management theory, principles & concepts developed gradually after Industrial Revolution • There are different approaches to the study of mgmt. • F.W. Taylor, Henri Fayol, Elton Mayo, Max Weber & many other have made their contribution to the development of management thought. • Mgmt. thought is an evolutionary concept it has its origin in the ancient times & made gradual progress thereafter.

31. Introduction to Mgmt. Thought • The development of Mgmt. thought is broadly divided into CLASSICAL APPROACH. & MODERN APPROACH • The founders of classical approach include Max Weber, F.W. Taylor & Henry Fayol are the founders of classical thought of theory. • The classical theory of Mgmt. includes three streams . • Bureaucratic Theory developed by Max Weber. • Scientific Management theory developed by F.W Taylor • Administrative Theory developed by Henri Fayol & others. The classical approaches are followed by modern approaches to Mgmt. these approaches are more relevant to present day world.

32. Modern Approaches to Management. • The trend for modern approaches started after 1950. • These approaches have taken into consideration the rapidly changing environment & its impact on Mgmt. practices. • It covers the following broad approaches: A) Quantitative Approach to Mgmt. B) System Approach to Mgmt. C) Contingency approach to Mgmt.

33. A) Quantitative Approach to Mgmt. • Also called as Mathematical Approach as it emphasizes the use of Mathematical techniques to solve complicated mgmt. problems. • These quantitative tools popularly known as operations Research or techniques designed to help in decision making relating to operation & production. • This approach assumes that if managerial & organisational operations & decisions are based on a logical process then it can be expressed in terms of Mathematical symbols & relationship. • These techniques help the management to improve decisions by : • Increasing the number of alternatives • Assisting in faster decision making • Helping Mgmt. in evaluating the risk & results of different courses of action. • Bringing into optimum balance many diverse elements of a modern technique.

34. Systems approach to Mgmt. • It is a collection of interrelated parts acting together to achieve some goals which exists in the environment. • A system is any set of distinct parts that interact to form a complex whole • System emphasizing a fair degree of integration & a holistic view ( whole is greater than sum of its part) • The term system may also refer to a set of rules that governs behaviour or structure. • A group of interdependent but interrelated elements comprising a unified whole. • The parts of a system are called sub-systems. Each sub-system influences the other sub-system & the system as a whole. • Organisations cannot function in isolation. They have to operate in an open system, interacting with their environment.

35. Environment OUTPUTS INPUTS Transformation Process Product & services Financial Results Human Results Raw material Capital Technology Human resource FEEDBACK Organisation as an input output system Organisation as a system receives input, transforms it through a process for output & operates in an Environment

36. CONTINGENCY/SITUATIONAL Approach to Mgmt. • It is a latest addition to modern Mgmt. thought. • It is often argued whether there exist “one best way” to apply principles & to conduct the functions of mgmt. to achieve organisational effectiveness. • In the opinion of situationlists, no one best approach to mgmt. exists because each situation that a manager faces is mostly different. • A manager must evaluate each situation independently & decide what action to take. • According to Contingency approach the managers must identify “ which technique will, in a particular situation, under particular circumstances & at a particular time , best contribute to the attainment of management goals”

37. A contingency approach to Mgmt. Effectiveness Contingency View Managers must identify contingency variables : • Size of the firm • Environment • Resources • Technology • Individual differences • Group dynamics Universal view -there is one best way to manage Situationist View There are many ways to manage work

38. Styles of Management • There are different management styles developed in different countries over years. • The styles of management used in different countries are different in many respects due to historical , cultural & economic reasons. • Management styles used in Japan, America & European countries are followed by many other countries of the world but with suitable modification. • In India Mgmt. styles used are as per the socio-economic & cultural situation available in India. • Some MNCs introduce uniform management styles & practices in their head offices as well as in foreign branches, subsidiaries & so on.

39. Japanese Style of Mgmt. • Japan is one of the leading industrial nations in the world. • It is a leading country in the manufacturing of automobiles & machinery (engineering goods). • Japan has achieved spectacular economic growth & prosperity & is ranked as one SUPER INDUSTRIAL POWER in the world. • Japan has adopted managerial practices/Styles which are quite different from those of other economically advanced countries. • There are three commonly used Japanese Mgmt. practices These are 1. lifetime Employment (‘Nenko’) 2. Consensus Decision-Making (Ringi) 3. Unique Position of Quality Control Circles (QCCs)

40. 1. lifetime Employment (‘Nenko’) • Important feature of this practice is Lifetime employment for permanent employees( related to staffing function), great concern for the individual employee, & emphasis on seniority. • Majority of employees in japan spend their working life period with a single enterprise. • This gives security & feeling of belonging among the employees. • Lifetime employment concept develops close cultural ties between the company & the employer. • The’ Nenko’ system has some advantages • Avoids warfare among competing firms in the job market. • Labour turnover & cost of hiring are minimised. • High sense of commitment & loyalty to the firm is developed.

41. Demerits of Nenko system • Firstly This concept adds to business cost as employees are kept on the payroll of the company even when there may be insufficient work. • Secondly, companies find it difficult to maintain close relations with larger number of lifetime workers as such number increases gradually. • The firms operating in japan are questioning the practice of lifetime employment.Changes appear to be in the making but slowly. • This practice is used primarily by large size firms & that currently the job security system applies to only about one-third of the total force in japan.

42. Seniority system is another Mgmt. practice followed in India. It provides privileges for older employees with many years of service with the company. • However there are now indications under which seniority system may be superseded by a more open approach which provides opportunities for advancement for young people/ employees. • Sony corporation for example has team leaders (not called supervisors which is common term in India & in many other countries) who are often young women of 18 or 19 years of age.

43. Consensus Decision Making (‘Ringi’) in Japan • It is based on the idea that new changes and new concepts should come primarily from the lower levels of mgmt. • The lower level employees prepare proposals for higher level personnel. • The supervisors at higher level do not simply accept or reject the proposal submitted. • They prefer to have direct communication with the workers who submitted the proposal. • The supervisors tactfully question them, make suggestions & encourage subordinates to think more & prepare improved proposal for consideration at the higher level. • If necessary the proposal are sent back to the initiator for more information. However the top level retains its power in regard to major decisions.

44. Lower level employees initiate an idea & submit it to the next higher level until it reaches the desk of the top executive. • If the proposal is approved it is returned to the initiator for implementation. The benefits of “Ringi” are: • It results in dispersion of actual decision-making to lower levels of Mgmt. • It facilitates harmony & prevents conflicts. • It allows inputs from lower level of Mgmt. • It improves commitment to implementing decisions. “Ringi” system suffers from some drawbacks: 1. The decision-making process becomes cumbersome & slow. 2. responsibility for decisions is diffused 3.Optimun allocation of resources become difficult

45. Unique Position of Quality Control Circles (QCCs) • Under Japanese work culture, quality is given first priority & maximum possible attention. • Workers from one department form a small unofficial group headed by a foreman. • The group meets frequently, study their problems/difficulties for remedial measures for quality & productivity improvement. • Other problems such as cost control, quality improvement, elimination of wastages are discussed in group meetings & finally proposals are submitted to higher level management for consideration & approval. • If approved, they are executed by the Mgmt. with the support of employees. • This is how employees participate in the Mgmt. of the company by providing innovative ideas, suggestions, etc. which will be useful to whole organisation. • Quality circle operates on voluntary basis but get due support from the Mgmt. • The quality circle concept of japan is now introduced in India.

46. Special Features of Japanese Management style. • Job Rotation/ Non-Specialised Career paths: • Employee rotates between different jobs throughout his career period to gain exposure to various types of work. • This gives him knowledge of all major areas of Management rather than a specialised expert in one functional area of business. • These makes the outlook of employees broad 2. Collective Group Relationship (“Omikoshi”) • Team or group action is encouraged. • Group action can yield far more productive results than individual action. • Japanese personnel practices rely on cooperation not mere compliance.

47. 3.Paternalistic Human Concern: • Company shows fatherly concern to its employees. • There is family like intimacy & trust among workers & Mgmt. • The company pays regular salary & also looks after his welfare & family life. • There exist a father- child relationship between senior & junior employees. • Such holistic concern for employees promotes the morale & commitment of employees. 4. Profit-based Compensation System: • Employee remuneration is linked to corporate performance. • A large part of pay is given as bonus paid every six months. • This bonus must be five or six times of the salary. • Group bonus makes employees feel part of the company.

48. 5. Democratic Management: • Japanese Mgmt. style is democratic where workers are associated with decision- making & also in the execution of decisions taken. • There is labour participation through quality circles. • Peaceful & democratic methods are used while dealing with the problems/grievances of employees. 6. Emphasis on training: • A Japanese organisation considers character, upbringing & family background (rather than experience & skills) for selection of employees. • It fosters conformity by hiring people at entry point & giving them training.

49. 7. Gradual Evaluation & seniority- based Promotions: • Performance appraisals of employees are made on the basis of their contribution over a long period of time. • Slow evaluation & seniority based promotions is a practice used in Japanese industries. • This supports life time employment practice & also brings stability to workforce. • Promotions develop harmonious relationship among employees. 8. Focus on Self-discipline & harmony: • Japanese mgmt. style is adverse to internal competition. • Harmony & co-operation are stressed & individual show off is penalised with social disapproval.

50. 9.Company unions: • Japanese unions are generally organised on a company basis as against industry-wise unions. • Mgmt. approach to unions is co-operative. 10. Ethical conduct: • Japanese companies dedicate themselves to higher values beyond those of mere profit & recognise their responsibilities towards the society. 11. Japanese employee involvement: • Japan is regarded as exemplar of excellent organisational communication, particularly through employee participatory practices, most notably in giant corporations such as Hitachi, Honda & Toyota • The most commonly used participatory techniques has been quality circles.