Principles and Practices of Management
Importance of Management
From our studies so far we have understood the concepts viz. management and administration. Business management is very important in any business. This importance will be made clearer from the following points.
Possibility of Successfully Facing World Competition
Today we live in an age of razor-sharp competition. It is essential to reduce the cost of production for survival in this cut-throat competition. It is necessary to take care of the utility and quality of products while reducing the cost of production. The cost of production can be reduced in the following ways.
- Financial control
- Production control
- Control over sales
- Control over accounts
Deep scientific knowledge of management is necessary to reduce the cost of production. It is not possible to face the competition in the world market without a thorough knowledge of management and skills.
Change After Industrial Revolution
Before the industrial revolution, goods were manufactured manually. At that time, land was very important among the various factors of production. After the industrial revolution, almost all goods began to be manufactured with the help of machines. Huge capital was needed to buy machines. Therefore the importance of land as a factor of production relatively reduced and capital as a factor of production gained more importance.
Co-ordination Between Various Factors of Production
Management does the job of co-ordinating various factors of production. Large-scale production is possible due to proper management of co-ordination between various factors of production like men, machine, capital and raw material.
Adoption of New Technology
Changes are taking place very fast in the method of production. Every time new technology is used for production. The products which are produced through new technology have more demand in the world market.
Nature of Management
While studying the term management it is necessary to understand all aspects of management, especially:
- Management — as a technique
- Management — as a process
- Management — as a development work
- Management — as an abstract process
- Management — as a process of justice
- Management — as an art or a science
- Management — as a business
Management — as a Technique
Management means, getting the work done from employees by directing their efforts, by motivating and directing and by keeping control over them, to achieve common objectives of the organization. In short, management is a special technique of getting the work done from others. But there are many shortcomings in this style of thinking.
The first shortcoming is, due to the word ‘technique’, the work of management sounds a little tricky or cunning. But in reality, it is not so. Management implies certain estimates, judgments of understanding human nature, skills of maintaining inter-personal relationships, etc. One can learn the art of management with practice. But it will not be proper to call it only a technique.
Management – as a Process
In this process, generally the following things are included:
- Determine objectives.
- Decide general policies to attain objectives.
- Planning of proper programme to execute policies.
- Build proper organization/ machinery to implement the programme.
- Direct employees in the organization to do the work.
- Control and co-ordinate the work done by employees.
- Estimate the level of efficiency necessary for achieving the final results of the work to be done and the expenditure to be incurred and make any changes in them, if required.
Although for convenience this process is divided into various parts, all of them are to be considered in totality. All these parts are interrelated to one another e.g. if we consider the process of planning then in this process also we have to decide objectives and policies.
Management — as a Development Work
First, let us see, what development means in the case of an individual.
Every person gathers knowledge in his life and gets experience by working consciously. This makes him mature.
Management — as an Abstract Process
Management is a process which cannot be shown concretely. The reason for this is that it is a mental process. One can feel the existence of this process based on its results e.g. satisfactory production and sales, lack of strikes and lock-outs, responsible behaviour, enthusiastic and happy environment,
Management — as a Process of Justice
Employees expect just behaviour from management. The decisions taken by the management should not be unjust.
Management — an Art or a Science
We must first know what is a science and what is an art. First, we shall see whether management is a science.
Management — as a Profession
Earlier we have seen what management is. Now we shall examine the meaning of profession and whether the work of management is a profession or not.
Scope of Management
Management is a widespread and continuous process. It is not only useful in business but is essential in all the walks of life. Therefore it is said that management is universal. Management is required in all social, political, economic, cultural and administrative fields. Management is related to human factors. Therefore management is required in the fields or businesses wherein several persons are working. Theo Haiman has stated that the theories of management are applicable where human efforts are to be co-ordinated. Therefore management is essential in all small, big, private, public,
professional, non-professional organizations. Socialist countries require management equally as is required by the capitalist countries.
Some writers have mentioned that management is required more in professional organizations than in non-professional organizations. Objectives of professional and other organizations are different. The main objective of a professional organization is to earn profit whereas the main objective of a non- professional organization is to render service. Although objectives of professional and non- professional organizations are different, functions like planning, organization, co- ordination, direction, control are to be common for all types of organizations. Therefore management is essential for non-professional organizations too. As the theories of management are elastic, they can be proved to be useful to all organizations by making necessary changes in it.
Principles of Scientific Management
Scientific management means changing the old management system by applying modern
management techniques. Important principles of scientific management are as follows:
Functional Organization
Before the advent of scientific management, only one of the following two methods was used for building factory organization:
- Departmental or chain organization
- Chain and employee organization
In both these methods, the responsibility to get the work done from workers lies with only one person i.e. the foreman. It was not possible for one foreman to supervise all workers and to get the work done from them. To solve this main problem he proposed the method of functional organization.
In the functional organization method, the responsibility to get the work done from workers did not rest with only with one foreman but with eight persons selected for this purpose. Out of these, four others worked in the office and four foremen worked in the factory.
Need for Professionalisation of Management
We have seen who is called a professional manager. Now, we shall see the reasons for the professionalisation of management.
Industrial Revolution
There was a complete change in the industrial field due to the industrial revolution. As a result of this change, it became impossible for one person to look after all functions. Therefore the need for a professional manager was felt.
Development of Technology
With the increase in technology, the nature of production became technical. Goods were manufactured with the help of machines. For this purpose, individuals with technical knowledge were required.
Nature of Management
Due to general changes in society, the nature of management has changed to a large extent. Management has become a challenge due to new production techniques, quality of products, competition, employee’s morale, strikes, sudden calamities, etc. A Professional manager is an important factor to give direction to industrialization. It is a challenge to the modern manager to enhance the economic level of the society. No organization can succeed without efficient management.
Increased Domination by the Government
Due to open financial policies, the interference of the government in the industrial field has increased. Government controls have also risen. Therefore, management needed skilled managers with detailed knowledge of law and government rules.
Efficient Use of Resources
The nature of the industrial field changed rapidly due to technology. Competition increased, It became essential to produce good quality products with minimum possible cost. Therefore, to efficiently use available resources, capital and labour became a highly skillful job. Here again, professional managers were sought.
Separation of Ownership from Management
Earlier, Indian businesses were dominated by owners. But, as the owner, alone cannot undertake all responsibilities, ownership and management were separated from one another.
Pace of Change
Today, science, technology, government policies, regulations and social values change very fast. A skilled managerial class is required to keep pace with these changes, estimate their effects and accordingly make changes in functions. professional management.
Functions of Middle Level Management
Middle level management has a wide range of functions. Some of the important functions are as follows:
- Achieving objectives, targets given to departments; organising work, labour and other factors for this purpose.
- To prepare plans for their respective departments, implementing them, keeping control and achieving co- ordination.
- Selecting skilled and expert persons for the subordinate, selecting the right person for the right job, making efforts to create confidence and leadership qualities in them.
- Contacting other departments, co- ordinating with various departments and bringing uniformity in the work.
- Assessing work done by employees, in the department.
- Keeping control over the expenditure of the department by avoiding unnecessary expenditure.
- Tackling as much work as possible, so that senior most executives get ample time and freedom to tackle more important responsibilities.
- Giving the benefit of training and experience to the people working at the lower level and developing future leaders from them.
The central problem of management is to achieve balance. And to solve this problem precisely, the middle level can contribute quite a lot. Middle-level management can very responsibly do the important work of influencing and balancing upward, downward and horizontal encouragements. The success of the organization depends upon the efficiency of this level as it actually implements the objectives and policies of the organization. The responsibility of solving day-to-day routine problems lies with this level and the lower level. The proper way of doing the work is also done by the middle-level management.
Lower Level Management
This type of management is also called ‘Supervisory Management’. In the lower level of management foreman, jobber, supervisor and such persons are included. Their primary job is to get the work done from semi-skilled, unskilled and other workers. All of them come in daily contact with these workers. Workers need their support for their orders, suggestions, encouragement, progress, increase in wages, etc.
Principles of Rationalisation
To actually implement rationalisation in practice, it is essential to think about rationalisation and to accept its principles. The principles of rationalisation are as follows:
- Simplification of work.
- Standardisation of work.
- Optimum and better utilization of resources.
- Mechanisation of production.
- Use of scientific management techniques.
- Specialisation.
- Satisfaction of employees.
- Right selection of form of organization.
- Provision of adequate capital.
In short, rationalisation is a process of improving productivity by using available resources rationally and optimally and by reducing the cost of production.
Types of Decisions
In every organization, a manager has to take various decisions. All the managerial decisions are not of the same type. Some main types of decisions are mentioned below:
- Basic and Routine Decisions
- Organizational and Personal Decisions
- Programmed and Non-programmed Decisions
- Planned and Unplanned Decisions
- Policy and Operative Decisions
- Tactical and Strategic Decisions
- Enterprise, Interdepartmental and Departmental Decisions
- Policy, Administrative and Executive Decisions
- Individual and Group Decisions
- Short Term and Long Term Decisions
- Economic and Non-economic Decisions
- Major and Minor Decisions
Nature of Planning
We have studied various definitions of planning. From the contents of these definitions, we get the idea about the nature of planning. What is to be done in the future is decided through planning in advance. Various functions like estimating, determining objectives, policies, designing programmes, fixing methods, etc. are included in planning.
While doing a certain function, if many alternatives are available then it becomes easy to select the appropriate alternative through planning. Planning is an intellectual and continuous process.
To get more clarity about the nature of planning, it is essential to study the following points.
Primacy of Planning
To achieve a certain objective, management has to perform various functions. E.g. setting objectives, doing planning, deciding policies, organizing, programming, fixing methods, preparing budgets, controlling, etc.
All these functions are complementary to each other. Amongst all these functions, it is very difficult to show the independent existence of any particular function. Still, due to planning, all other further functions get direction; therefore planning is known as the backbone /support of all other functions.
Contribution to Objectives
There are specific objectives behind establishing any organization. The objective behind the establishment of a business organization is to earn a profit. The objective behind establishing any service organization is to provide service to the society.
Pervasiveness of Planning
Planning is all-pervasive. A manager at every level in an organization is required to do the planning. Although every person or manager in an organization does not have equal authorities and responsibilities, still every manager is required to do the planning within the limits of his authorities.
Efficiency of Plans
A plan is made to achieve the objectives of an organization. It becomes easy to achieve the objectives, since planning is made. The success of an organization depends upon the efficiency of implementing the plans. That means achieving objectives depends upon the efficiency of the plan.
Importance of Planning
Planning is very important in all the fields. People, organizations and government do the planning as per their requirement. Business organizations need planning intensely to achieve predetermined objectives. Due to planning, all the functions are performed in a specific direction to achieve the objectives. Due to planning other functions also get specific direction. The importance of planning can be clear from the following points.
Possibility of Facing Uncertainty
The main purpose behind the establishment of any business is to make a profit. To achieve this objective many functions have to be performed. Eg. Organizing, Directing, Controlling, etc. Even if all these functions are properly implemented, it is likely that all the predetermined objectives may not be achieved. Business is affected by internal as well as external factors. Due to their effects, business also changes.
Unanimity in Policies and Method of Functioning
An organization has many departments. The functions of every department are independent and separate. Due to planning, all the departments know the objectives of the organization.
Increases Efficiency of an Organization
Many functions have to be performed to achieve the predetermined objectives of an organization. Many alternatives are available amongst these functions. Due to planning, it is easier to select the proper alternative amongst many alternatives.
It is Possible to Control Equipment
The concept of planning is wide. Planning is not only relating to administration but it is also related to control over materials and equipment. Due to the planning of materials, various functions are handled efficiently like making common purchases for various departments, supplying equipment as per the need, handling materials properly, etc. Therefore, materials are handled properly and its wastage is avoided.
Less Wastage in Production Factors
If wastages in production factors increase, the cost of production increases and as a result profit decreases. Therefore, while doing production there should not be any wastage in machines, raw materials, finished goods and labour.
Functional Type of Organization
The credit of finding and implementing the Functional Type of Organization goes to the founder of the Scientific Management Method, Mr. Fredric Winslow Taylor. This type is suggested as one part of the Scientific Management Method. In the opinion of Dr. Taylor, in the line type of method, the appointment of only one person to look after purchases, sales, and capital raising pertaining to production is a wrong thing. Because one person cannot have all the qualities like eligibility, efficiency and intelligence required for modern production. Therefore, for the efficient implementation of production-related functions, Taylor has suggested Functional Organization. He also suggested that in this method instead of appointing one foreman, separate foremen should be appointed for various functions (Taylor’s Plan of functional foremanship). This scheme is based on the principle of specialization to a large extent. Independent foremen are appointed for different functions. Foremen are expected to do specific work. It is essential to appoint a minimum of eight foremen in a Production Company. Taylor suggested that every organization must have a Planning Department and a Factory Department. Taylor separated planning from manufacturing. Apart from it, too much specialization created many problems.
As per ‘Functional type of Organization’ suggested by Taylor, the following eight types of foremen are required to be appointed.
Planning Department
- Order of work or Route clerk
- Instruction card clerk
- Time and cost clerk
- Disciplinarian / Regulator
Factory
- Gang Boss
- Speed Boss
- Repair Boss
- Inspector
In this scheme, the work in the factory is entrusted to the experts and they not only act as consultants but also accept the responsibility of implementing the work. The worker is responsible not only to one foreman but he gets advice from many foremen. (One worker has to face many foremen and at times it becomes difficult to do the work practically)
Principles of Delegation of Authority
Delegation of authority is one important process. Precaution has to be taken while delegating the authority. The success of the organization depends upon the distribution of authority. Some important theories or principles responsible for the distribution of authority are as under.
Theory of Expected Results
As per this theory, the expectations of the manager about the completion of the work are told at the time of entrusting the work and required authorities are to be given to the assistants to get the work done as per expectation. If this theory is used, expected results would be seen by determining the objectives, giving required information for the achievement of objectives and entrusting the work to the efficient and capable officer in this manner. E.g. if the work of bringing rice from the market is to be entrusted then the expected result of cooking pulao has also to be informed. Similarly, the authority of choice of purchasing the right quality of rice, place of purchase, price has to be entrusted to the assistant. Then only expected Basmati rice will be purchased.
Theory of Authority and Accountability
We have already studied that due to authority, accountability is created. The principle of maintaining balance between authority and accountability is the theory of Authority and Accountability. Without delegating authority, no assistant can be held responsible. In addition, if authority is delegated automatically accountability is created.
Theory of Unanimity of Accountability
Making one junior officer responsible only to one senior officer is creating unanimity of accountability. If he remains responsible to more than one senior, then there will be an environment of confusion and uncertainty in the organization. One cannot please two bosses.
Theory of Determination of Authority
Any type of delegation of authority to the junior like written, oral, general, etc. has to be of a fixed nature and has to be clearly expressed. From this angle, the written and specific type of delegation of authority proves to be more appropriate. It leads to the efficiency of juniors, as
there are no confusions in their minds.
Types of Leadership
The persons practising leadership as imparting actions are different. Therefore, different types of leaders are found. Generally, leaders are of the following types.
Individual Leadership
This type of leadership is found where the size of the business is small. A direct relationship is established between a leader and his follower. Individual leadership is developed from this type of relationship. In individual leadership, good relations are established between a leader and employees. In individual leadership, management/leader tries to impress employees with its qualities and motivate them to do the work.
Impersonal/Organizational Leadership
In individual leadership, we have seen that it is more effective when the size of the business is small. However, if the business expands and is divided into sub-divisions, then the number of employees also increases. Personal contact is not possible with so many employees. Therefore, they can be communicated with a written letter that is why it is known as organizational leadership.
Positive Leadership
In positive leadership, the leader thinks about the benefit of employees. He makes efforts for making schemes for the benefit of workers, he guides them to take the benefit of these schemes, and he tries to compensate them properly for their work.
Negative Leaderships
This type of leader is having exactly opposite qualities /traits of a positive leader. This type of leader uses his authorities and controls his employees. Employees are pressurized to do the work. He does not make schemes for the benefit of employees. He compels his workers to do the maximum work with minimum compensation.
Autocratic Leadership
This is also a type of negative leadership. In this method, the leader uses his authority and position to dictate terms to the employees. He keeps strict control over employees. He does not take decisions after taking employees into confidence and after discussing with them. He does not think about employee’s problems, needs, likings. He is afraid that if he takes his employees into confidence, he may lose his authority and power.