Principles of Management

Historical Development and Overview of Management
Reporters:
Elissa L. Importante Nochelle S. Urboda, REB Bon Carlo M. Melocoton, CPA
Management
The verb manage comes from the
Italian word managgiare which means to handle, train, be in charge of Latin word manus which means hand French word mesnagement later turned to mnagement
Management
Is the art of getting things done through other. Harold Koontz definition is the process of designing and maintaining an environment in which individuals, working together in groups efficiently to accomplish selected aims
Management Concepts
Managers carry out their managerial function Applies to any kind of Organization Applies to managers at all Organizational level Aims to create surplus Concerned with productivity, implies effectiveness and efficiency Management of 4 Ms in the Organization
MEN MATERIALS MACHINE MONEY
Characteristics of Management
Management is
Universal Integrative Function Multi Disciplinary Intangible Purposely Social Process Continuous Process ART as well as SCIENCE
Management as an ART
Art involves the physical application of personal skills and knowledge to achieve concrete results
It is a practical way of doing specific things Art is a practice based and perfection in it requires continuous practice over a long period of time
Art is a personalized process and every artist has his own style. Art is essentially creative and the success of an artist is measured by the results he achieves
The main elements of an art are
Personal Skills Result Orientation Practical Know-how Creativity
Constant practice aimed at perfection
Management is basically an art because of the following reasons
1. A manager applies his knowledge and skills to coordinate the efforts of his people 2. Management seeks to achieve concrete practical results
Management is basically an art because of the following reasons
3. Management is creative. It brings out new situation and converts into output 4. Effective Management lead to realization of Organizational and other goals. Mastery in Management requires a sufficiently long period of experience in managing
Management as SCIENCE
The essential elements of Science
1. is a systematized body of knowledge 2. contains underlying principles and theories developed through continuous observation, experimentation and research
The essential elements of Science
3. universal applicability 4. organized body of knowledge can be taught and learnt in class room and outside
Management is a science because it contains all the essential of science, Thus, the theory (Science) and practice (Art) of Management go side by side for the efficient functioning of an organization.
Management as a PROFESSION
The essential attribute of a profession
A well-defined and organized body of knowledge
Learning and Experience Recognized national body

Dominance of service motive
Entry restricted by qualification

Ethical code of conduct
Management as a PROFESSION
However, Management cannot be a FULLY PLEDGED PROFESSION due to the following shortcomings
Skills not fully developed No uniform method of entry Objective is monetary rather than service Ethical code is not strict Associations are not statutory bodies
Administration VS Management
# Administration 1 It is the higher level functions 2 It refers to the owners of the organization 3 Concerned with decision making 4 It acts through the management 5 Lays down broad policies and principles for guidance Management It is the lower level functions
It refers to the employees Concerned with execution of decision
It acts through the organization Executes these policies into practice
Levels of Management
Top Management
To analyze, evaluate and deal with the environmental forces To establish overall long term goals and broad policies of the company including the master budget To appoint departmental and other key executives To represent the company to the outside world To coordinate the activities and efforts of different department
Middle Management
Lower Management
To interpret and explain the policies framed by top management To compile and issue detailed instruction regarding operations To cooperate among themselves so as to integrate various parts of the division or a department To motivate supervisory personnel to work for organizations goals To develop and train supervisory and operative personnel
Top Management
Middle Management
Lower Management
Top Management
Middle Management
Lower Management
Also known as Supervisory and Operating Management To plan day to day production within the goals lay down by higher authority To assign jobs to workers and to make arrangement for their training and development To supervise and control workers and to maintain personal contact with them
Roles of Manager
FIGUREHEAD
- as a symbolic head of an organization, the manager performs routine duties of a legal nature
Interpersonal
LEADER
Informational
- Hiring, Training, Motivating and Guiding subordinates
LIAISON
Decisional
- Interacting with other managers outside the organization to obtain favors and information
Roles of Manager
MONITOR Interpersonal
- seeks and receive information concerning internal & external events so as to gain understanding of the organization and its environment
Informational
DISSEMINATOR
- transmits information to subordinates, peers and superiors within the Organization
SPOKESPERSON
Decisional
- speaking on behalf of the Organization and transmitting information on Organization plans, policies and actions to outsiders
Roles of Manager
ENTREPRENEUR Interpersonal
- initiating changes or improvements in the activities of the organization
DISTURBANCE HANDLER
- taking charge and corrective action when organization faces unexpected crises
Informational
RESOURCE ALLOCATOR
- distributing organizations resources like money, time, equipment, and labor
Decisional
NEGOTIATOR
- representing the organization in bargaining and negotiations with outsiders and insiders
Importance of Management
Management is the dynamic life giving element in every business. Without it the resources of production remain resources and never become production.
Sound Management provides the following benefits:
Achievement of group goals Fulfillment of social obligations Stability Meets the challenge of change Optimum utilization or resources Economic growth Human development
Need for Management

To increase efficiency
To crystallize the nature of Management job To improve research in Management To attain social goals
Management Timeline
MANAGEMENT APPROACH DATES EMPHASIS
1. Classical Approach Scientific Approach 1880s Traditional rules of thumb are replaced by precise procedures developed after careful study of an individual work
Gives idea about the primary functions of management and the 14 principles of management Replaces traditional leadership and charismatic leadership with legal leadership Workers attitudes are associated with productivity
Administrative Management Bureaucratic Management 2. Behavioral Approach Human Relations
1940s
1920s
1930s
Management Timeline
MANAGEMENT APPROACH DATES EMPHASIS
Behavioral Science
1950s
Gives idea to understand human behavior in the organization

Uses mathematical & statistical approaches to solve management problems
3. Quantitative Approach Management Science (Operation Research) 1940s
Production & Operations Management
1940s
This approach focuses on the operation & control of the production process that transforms resources into finished goods & services
Management Timeline
MANAGEMENT APPROACH Systems Approach
DATES
EMPHASIS
4. Recent Developments 1950s Considers the organization as a system transforms inputs into outputs while in constant interaction with its environment Applies management principles and processes as dictated by the unique characteristics of each situation
Contingency Approach
1960s
FEED BACK
INPUT PROCESS EXTERNAL ENVIRONMENT INPUT
Henry Fayol (1841-1925)

Division of Work Authority and Responsibility Discipline Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization Scalar Chain
Henry Fayol (1841-1925)
He is a French Industrialist known to be the Father of Management He contributed the 14 Principles of Management which is widely applied in all the organizations
Order
Equity Stability of Tenure of Personnel Initiative Esprit-de-corps
14 Principles of Management
Division of Work
Authority and Responsibility Discipline Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization Scalar Chain
Division of Work
Order
Work should be divided in proper way with reference to the available time. In general worker on the same job and the managers on the same duty acquire ability sureness and accuracy which increase their output.
Division of Work
Authority and Responsibility

Discipline Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization Scalar Chain
Authority and Responsibility

AUTHORITY it is the power given to a person to get work from his subordinates RESPONSIBILITY It is the kind and amount of work expected of from a man by his superior. One of the essential elements of a good management is delegation of authority to the lower levels of management and fixing responsibility on town
Order
Division of Work Authority and Responsibility
Discipline
Discipline
Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization Scalar Chain
Order
Discipline is very essential for the smooth running of organizations. To Fayol, discipline will result from good leadership at all levels of the organization, fair agreements and judiciously enforced penalties for infractions.
Division of Work Authority and Responsibility Discipline
Unity of Command
Unity of Command
Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization Scalar Chain
Order
An employee must receive orders and instructions from one supervisor only. Multiple commands will cause conflicts and confusions. A sound management should avoid dual commands.
Division of Work Authority and Responsibility Discipline Unity of Command
Unity of Direction
Unity of Direction
Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization Scalar Chain
Order
Unity of direction signifies each group of activities having the same objectives must have one head and one plan. All the groups should coordinate and work together to achieve the common goal.
Division of Work Authority and Responsibility Discipline Unity of Command Unity of Direction
Subordination of Individual Interest to General Interest

Every employee is working in an organization and his interest is to earn money to meet his personal needs. The general interest of the organization is development and the progress of the organization. The employees should give importance first to the general interest than his individual interest. It will lead to effective management of the organization.
Subordination of Ind. Int. to Gen. Int.

Remuneration of Personnel Centralization Scalar Chain
Order
Division of Work Authority and Responsibility Discipline Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int.
Remuneration of Personnel
Remuneration of Personnel
Centralization Scalar Chain
Remuneration should be fair for both the employees and employers. The wage payment systems should satisfy the employees.
Order
Division of Work Authority and Responsibility Discipline Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel
Centralization
The organization is centralized when the power is connected with one person. If the power is fully distributes to the subordinates of the organization is fully decentralized. For effectives management of people decentralization is necessary. Decentralization helps to take a quick decision on all important problems.
Centralization
Scalar Chain
Order
Division of Work Authority and Responsibility Discipline Unity of Command Unity of Direction Subordination of Ind. Int. to Gen. Int. Remuneration of Personnel Centralization
Scalar Chain
Scalar Chain
Order
Scalar chain principles states that instructions and orders should be sent from the top management to the lower management.
Order
Two types of order 1) Materials order 2) Social order. In any organization materials and for men are correct places provided. So that materials can be easily taken out and men easily located and also save time. Materials order: A place for everything in its place Social order: A place for everyone and everyone in place.
Order
Equity
Equity refers to the treatment of employees equally. Equal treatment of the employees helps to achieve organizational goals.
Order
Equity
Stability of Tenure of Personnel Initiative Esprit-de-corps
Stability of Tenure of Personnel
A high employee turnover rate is not good for the efficient functioning of any organization.
Order
Equity
Stability of Tenure of Personnel

Initiative Esprit-de-corps
Initiative
Order
Equity Stability of Tenure of Personnel
It is concerned with thinking and execution of a plan. When employees come forward with new ideas, they must be encouraged by the superiors. It will create the morale of the employees.
Initiative
Esprit-de-corps
Esprit-de-corps
This means union is strength. In organization employees should be harmony and unity. It improves employee morale.
Order
Equity Stability of Tenure of Personnel Initiative
Esprit-de-corps
Critical Evaluation
Critical Evaluation to H. Fayol
Order
Too formal Not pay adequate attention to workers Vagueness His principle hinted but did not elaborate that management can and should be taught
F.W. Taylor (1856-1915)

F.W. Taylor (1856-1915)
Principles of Scientific Management Techniques of Scientific Management
He is an American Mechanical Engineer known to be the Father of Scientific Management
The art of knowing exactly what you want men to do and see that they do it in the best and cheapest way.
Scientific Management
Principles
Principles of Scientific Management Techniques of Scientific Management Science not rule of thumb Harmony not discord Cooperation not individualism Maximum output in place of restricted output Development of each individual to his greatest efficiency and prosperity Mental Revolution Mental attitude of the two parties
Scientific Management
Techniques/Elements
Principles of Scientific Management Techniques of Scientific Management
Scientific task and Rate-setting Planning the task Selection and training Standardization and simplification Specialization (functional foremanship) Mental Revolution
Critical Evaluation
Critical Evaluation to F.W. Taylor
Principles of Scientific Management Techniques of Scientific Management Mechanistic Approach
Unrealistic Assumptions
Narrow View
Impracticable
Exploitation of Labor
Other Contributors
G.E. Mayo (1880-1949)
George Elton Mayo
Henry Lawrence Gantt
Professor of Industrial Psychology at the Harvard Business School Hawthrone Experiments

1. Illumination experiments 2. Relay assembly test room experiments 3. Mass interviewing programme
Frank Bunker Gilbreth
Other Contributors
Outcome of Hawthrone Experiments
George Elton Mayo
Workers working in a group develop bond of relationships Behavior at workplace depends on their mental state, emotions and prejudices Human and liberal attitude of supervisor helps in improving performances Managerial skills and technical skills are not necessary to be a successful leader
Other Contributors
H.L. Gantt (1861-1919)
George Elton Mayo An American Mechanical Engineer and Management Consultant who is famous for his Gantt Chart used for scheduling and control of work Task and Bonus plan (Minimum wages is guaranteed to all workers irrespective of output, Extra wages are paid for extra work)
Other Contributors
F.B. Gilbreth (1868-1924)
George Elton Mayo Was an early advocate of scientific management and a pioneer of time and motion study, and fatigue study Work simplification 3 positional promotion plan - Present position - Position to be held before promotion to his present position - The next higher position
Function of Management
FUNCTIONS Planning
Forecasting Policy making Programming Problem solving Innovation
SUB FUNCTIONS
Decision making Strategy formulation Scheduling/Budgeting Investigation Research
Organizing
Staffing
Grouping of functions Delegation Decentralization

Manpower planning Job analysis Recruitment Selection Supervision Motivation Fixation of standard Recording
Departmentalize Activity analysis Task allocation

Training Placement Compensation Promotion/Appraisal Communication Leadership Measurement Reporting corrective action
Directing Controlling
Function of Management
Planning
Controlling
Managerial Function
Organizing
Directing
Staffing
Types of Business Organization

Sole Proprietorship Partnerships
Corporations
Joint Stock Company Public Corporations Government Companies
When organizing a new business, one of the most important decisions to be made is choosing the structure of a business

Sole Proprietorship
Partnerships Sole Proprietorship
Corporations
The individual entrepreneur supplies the entire capital, employs labor and machine Individual uses his own skill in the management of affairs and is solely responsible for the good or bad result of its operation and working

Sole Proprietorship
Partnerships Sole Proprietorship
MERITS Easiest and least expensive from of ownership to organize Sole proprietor are in complete control, within the law, to make all decisions Sole proprietor receives all income generated by the business to keep or reinvest Profits from the business flowthrough directly to the owners personal tax return The business is easy to dissolve, if desired DEMERITS Unlimited liability and are legally responsible for all debts against the business Their business and personal assets are 100% at risk Are limited to using funds from personal savings Have a hard time attracting high-caliber employees Have a hard time to raise investment funds
Corporations

Partnerships
Corporations
Two or more persons come together and start a business with their own funds, the parties agree to share the profits as well as bear the losses in the agreed proportion.

MERITS Partnerships are relatively easy to establish, however time should be invested in developing the agreement DEMERITS Partners are jointly and individually liable for the actions of the other partners
Partnerships
Corporations
With more than one owner, the ability to raise funds may be increased
The profits from the business flow directly through to the partners personal taxes Prospective employees may be attracted to the business if given the incentive to become a partner
Profits and decisions must be shared with others, disagreements can occur
Some employee benefits are not deductible from business income on tax returns The partnerships have a limited life; it may end upon a partner withdrawal or death

Sole Proprietorship Partnerships Corporations
Corporations
A corporation is considered by law to be unique entity, separate and apart from those who own it A corporation can be taxed, sued, or enter into contractual agreements

MERITS Shareholders have limited liability for the corporations debts
Corporations
DEMERITS The process of incorporation requires ,ore time and money than other organization forms
Corporations
Generally, shareholders can Corporations are monitored by only be held accountable for state and some local agencies their investment in stock of the company Corporations can raise additional funds through the sale of stock A corporation may deduct the cost of benefits it provides to officers and employees Incorporating may result in higher overall taxes Dividends paid to shareholders are not deductible from busn income, thus can be taxed twice

Sole Proprietorship Partnerships Joint Stock Company
Corporations
Joint Stock Company

Public Corporations Government Companies
Capital is contributed by a large number of person in the form of shares of different values
Private Limited Company Public Limited Company

Private Limited Company - can be formed by 2 to 50 persons. In this, transfer of shares is limited to members only. The government does not interfere in the working of the company Public Limited Company - membership is open to general public. The minimum required number to form such company is 7, but there is no upper limit
Corporations
Joint Stock Company


MERITS The liability, being limited, of the shareholder bear no risk and therefore more persons are encourage to invest capital Because of large number of investors, the risk of loss is divided Joint stock companies are not affected by the death or the retirement of the shareholders DEMERITS It is difficult to preserve secrecy in these companies
Corporations
Joint Stock Company

It requires a large number of legal formalities to be observed Lack of personal interest

Sole Proprietorship Partnerships Public Corporations
Corporations
Joint Stock Company
Public Corporations
Government Companies
Wholly owned by the Government. It is usually established by a Special Act of the parliament Special statute also prescribes its management pattern power duties and jurisdictions

Sole Proprietorship Partnerships Public Corporations
MERITS These are expected to provide better working conditions to the employees and supported to be better managed DEMERITS Any alteration in the power & Constitution of Corporation requires an amendment in the particular Act, which is difficult and time consuming
Corporations
Joint Stock Company
Quick decisions can be possible, because of absence of bureaucratic control
Public Corporations
More flexibility as compared to Public corporations possess departmental organization monopoly & in the absence of competition, these are not Since the management is in interested in adopting new the hands of experienced & techniques & in making capable managers, these are managed more efficiently than improvements in their work that of government departments

Sole Proprietorship Partnerships Government Companies
Corporations
Joint Stock Company Public Corporations
Share capital is held by the government or partly by government and partly by one or more state government Managed by the elected board of directors which may include private individuals

Sole Proprietorship Partnerships Government Companies
MERITS It is easy to form DEMERITS Misuse of excessive freedom cannot be ruled out The directors are appointed by the government so they spend more time in pleasing their political masters & top government officials, which results in inefficient management
Corporations
Joint Stock Company Public Corporations
The directors of a government company are free to take decisions & are not bound by certain rigid rules and regulation
Classification of Environmental Factors

MACRO Environment
EXTERNAL
MICRO Environment
INTERNAL Environment
On the basis of the extent of intimacy with the firm, the environmental factors may be classified into different types namely internal and external

MACRO Environment INTERNAL ENVIRONMENTAL FACTORS - has a direct impact on the business - generally controllable because the company has control over these factors - these factors are as follows: a. Resources - these can be tangible, intangible and human resources b. Capabilities - firms capacity for undertaking a particular productive activity c. Culture - specific collection of values and norms that are shared by people and groups in an organization
EXTERNAL
MICRO Environment

MACRO Environment EXTERNAL ENVIRONMENT FACTORS - indirect influence on the business - uncontrollable by the business - two types of this factor are as follows 1. MICRO ENVIRONMENTAL FACTORS External factors close to the company that have a direct impact on the organizations process 2. MACRO ENVIRONMENTAL FACTORS Consists of non specific aspects in the organizations surroundings that have potential to affect the organizations strategies
EXTERNAL
MICRO Environment

MICRO ENVIRONMENTAL FACTORS MACRO Environment a. Shareholders Any person or company that owns at least one share in a company b. Suppliers Individual or an organization involved in the process of making a product or service available for use or consumption by a customer c. Distributor Entity that buys non-competing products, warehouse them and resells them to retailers or direct end user d. Customers A person, company, or other entity that buys goods and services produced by other person, company or other entity
EXTERNAL
MICRO Environment

MICRO ENVIRONMENTAL FACTORS MACRO Environment e. Competitors A company in the same industry or a similar industry which offers a similar product or services f. Media Positive or adverse media attention on an organizations product or service can in some cases make or break an organization
EXTERNAL
MICRO Environment

MACRO ENVIRONMENTAL FACTORS MACRO Environment a. Political Factors Include government regulations and legal issues and define both formal and informal rules under which the firm must operate tax policy; employment laws; environmental regulations, trade restrictions and tariffs; political stability b. Economic Factors Affects the purchasing power of potential customers and the firms cost of capital economic growth; interest rates; exchange rates; inflation rate
EXTERNAL
MICRO Environment

MACRO ENVIRONMENTAL FACTORS MACRO Environment c. Social Factors Include demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets health consciousness; population growth rate; age distribution; career attitudes; emphasis on safety d. Technological Factors This can lower barriers to entry, reduce minimum efficient production levels and influence outsourcing decisions R&D activity; technology changes technology incentives; automation
EXTERNAL
MICRO Environment
Trends and Challenges of Management in Global Scenario

The management functions are planning, organizing, directing, and controlling are just as relevant to international managers as to domestic managers. International managers need to
Have a clear view of where they want their firm to be in the future Organize to implement their plans Motivate those who work to them Develop appropriate control mechanisms

Planning in a Global Scenario to effectively plan and make decisions in a global economy, managers must have the following
Broad-based understanding of both environmental issues and competitive issues Need to understand local market conditions and technological factor that will affect their operations At the corporate level, executives need a great deal information to function effectively Variety of strategic decisions about their organizations

Organizing in a Global Scenario
Managers in international business must also attend to a variety of organizing issues The firm has made the decision to give local managers a great deal of responsibility for how they run their business Managers in an international business must address the basic issues of organization, structure and design, managing change, and dealing with human resources

Directing in a Global Scenario
Individual managers must be prepared to deal with cultural and other factors as they interact people from different cultural backgrounds Managers must understand How cultural factors affect individuals How motivational processes vary across cultures How the role of leadership changes in different cultures How communication varies across cultures How interpersonal and group processes depend on cultural background

Controlling in a Global Scenario
Managers in international organizations must also be concerned with control Distances, time zone differences, and cultural factors also play a role in control Basic control issues for the international manager revolve around operations management productivity, quality, technology and information system
They say that dedicating is one of the most beautiful acts of love one can perform.
I would argue that it is even more beautiful to dedicate this to you without saying my name
Historical Development and Overview of Management
END OF PRESENTATION

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Principles of Management

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Historical Development and Overview of Management

Constant practice aimed at perfection

Learning and Experience Recognized national body

Entry restricted by qualification

It acts through the organization Executes these policies into practice

Need for Management

Administrative Management Bureaucratic Management 2. Behavioral Approach Human Relations

Gives idea to understand human behavior in the organization

3. Quantitative Approach Management Science (Operation Research) 1940s

Production & Operations Management

Henry Fayol (1841-1925)

Henry Fayol (1841-1925)

Authority and Responsibility

Authority and Responsibility

Subordination of Individual Interest to General Interest

Subordination of Ind. Int. to Gen. Int.

Stability of Tenure of Personnel

Stability of Tenure of Personnel

Critical Evaluation to H. Fayol

F.W. Taylor (1856-1915)

He is an American Mechanical Engineer known to be the Father of Scientific Management

Henry Lawrence Gantt

Professor of Industrial Psychology at the Harvard Business School Hawthrone Experiments

Frank Bunker Gilbreth

Henry Lawrence Gantt

Frank Bunker Gilbreth

Henry Lawrence Gantt

Frank Bunker Gilbreth

Henry Lawrence Gantt

Frank Bunker Gilbreth

Grouping of functions Delegation Decentralization

Departmentalize Activity analysis Task allocation

Types of Business Organization

Types of Business Organization

Types of Business Organization

Types of Business Organization

Types of Business Organization

Types of Business Organization

Types of Business Organization

Types of Business Organization

Joint Stock Company

Types of Business Organization

Joint Stock Company

Types of Business Organization

Joint Stock Company

It requires a large number of legal formalities to be observed Lack of personal interest

Types of Business Organization

Types of Business Organization

Quick decisions can be possible, because of absence of bureaucratic control

Types of Business Organization

Types of Business Organization

Classification of Environmental Factors

Classification of Environmental Factors

Classification of Environmental Factors

Classification of Environmental Factors

Classification of Environmental Factors

Classification of Environmental Factors

Classification of Environmental Factors

Trends and Challenges of Management in Global Scenario

Trends and Challenges of Management in Global Scenario

Trends and Challenges of Management in Global Scenario

Trends and Challenges of Management in Global Scenario

Trends and Challenges of Management in Global Scenario

Historical Development and Overview of Management