Principles of Management

1. Nature and Significance of
Management
Akhila Ramesh, M.Com; MBA

2. Learning Objective
• Describe the charateristics of
management and its important function
• Explain the nature of management as
an art, science and profession
• Explain the functions of management
• Appreciate the nature and importance
of coordination
After studying this chapter you should be able to

3. MANAGEMENT CONCEPT
Essential for all organisations – big or small / profit or
non-profit / services or manufacturing
Consists of a series of inter-related functions
performed by all managers
Management is the process of getting things done with
the aim of achieving goals effectively & efficiently

4. Effectiveness Vs Efficiency
Two sides of a coin
Achieving goals  effectiveness
With minimum resources  efficiency
High efficiency + high effectiveness  aim of all
managers
Inefficiency + ineffectiveness  poor management

5. Characteristics of Management
Management is a Goal oriented process
• Different organisations have different goals
• Goals should be simple and clearly stated
• Unites the efforts of all individuals in achieving the goals
Management is all pervasive
• Common to all organisation types – economic / social / political
• Common to all departments within the organisation
Management is multi-dimensional
• Management of work – quantum of work translated in to goals to be achieved
and assigns means to achieve the same
• Management of people – employees as individuals / individuals as group of
people; making their strengths effective and their weaknesses irrelevant
• Management of operations – production process – flow of raw materials –
production technology – desired output for consumption – interlinked with work
and people

6. Management is a continuous process
• Continuous, composite separate functions like planning organising, staffing,
directing & controlling
Management is a group activity
• Collection of diverse individuals with different needs
• Coordination of individual efforts into achieving common organisational goal
Management is a dynamic process
• A dynamic function – has to adapt itself to changing environment
• External environment – social, economic and political factors
Management is an intangible force
• Cannot be seen but its presence can be felt
• Effect can be seen – where targets are met, employees are happy, orderliness
everywhere instead of chaos

7. Objectives
Organisational
• Fulfill variety of objectives in all areas considering the interest of
all stakeholders
• Main objective to utilise human and material resource to the
maximum possible advantage – economic objective like survival,
profit & growth
• In order to survive – to earn enough revenue to cover the
expenses / cost
• Profit – essential for survival as well as covering the risks of
business
• Growth – to remain in the market, a business should utilise
opportunities and grow. Growth can be measured in terms of
increase in sales volume, number of employees or capital
investment

8. Social
• Creation of benefit for the society
• Consistently creating economic values for all the segments of the society like
• Environmental friendly production methods
• Employment opportunities for the disadvantaged sections
• Providing basic amenities like schools, creches for the employees
Personal
• Organisations are made up of people with different personalities, background, experiences &
objectives
• Fullfilling needs
• Financial – salaries, perks etc.,
• Social – peer recognition
• Personal growth and development
Management must reconcile personal objectives with
organisational objectives for harmony in the organisation

9. Importance of Management
Helps in achieving group goals
Increases efficiency
Creates dynamic organisation
Helps in achieving personal objectives
Helps in development of society

10. Nature of Management
Management is as old as civilisation
Differentiating factor between civilised and uncivilised
society
Earliest practices were a set of rules and regulations grew out of
experiences of government and commercial organisations
Development of trade and commerce led to development of management
principles
Study of management evolved along with modern
organisations
Grown into a dynamic subject with its own special
charateristics
Is Management a Science or an art or both?

11. Management as science
SCIENCE MANAGEMENT
Systematised body of knowledge –
based on cause and effect relationship
• Has its own theory and principles which have
been developed over a period of time
• Draws principles from other disciplines like
economics, sociology, psychology etc
Principles based on Experimentation • Principles have evolved after repeated
experimentation and observation in different
type of organisation
• Can be called “Inexact “ science because it deals
with human beings which cannot be predicted
or replicated
Universal validity and application • Since management is inexact science, their
application is not universal. They have to be
modified according to the situation.
• But these principles provide basic standardised
techniques which can be used by all for training
and development purpose.
Hence it can be concluded that Management is an “Inexact” Science

12. Management as an art
ART MANAGEMENT
Existence of theoretical
knowledge
• Existence of theoretical knowledge
• Lots of literature available based on study,
observations and experience
• A good manager practices the art of management
based on the materials available in various areas
Personalized application • A good manager works through a combination of
practice , creativity, imagination, initiative and
innovation
Based on practice and
creativity
• One can achieve perfection after long practice and
based on his own creativity
• Involvement in the activities of the organisation, study
of critical situation and formulation of theories unique
to the situation in concern
All management practices are based on the same set of principles.
Distinguishing factor between a successful and less successful manager is the
level of application of these principles

13. Management as a profession
PROFESSION MANAGEMENT
Well defined body of
knowledge
• Management has a systematic body of knowledge
comprising well defined principles
• Knowledge can be acquired through different colleges
professional institutes and exclusive management institutes
• Variety of books and journals are available
Restricted entry • There is no restriction. Anyone can become a manager
irrespective of his educational qualification
Professional association • AIMA – All India Management Association
• But no compulsion for managers to become members of
such association
Ethical code of conduct • There is no specified ethical code of conduct
Service motive • Basic purpose of business is to achieve its goal – profit
maximisation
• In modern parlance, along with profit maximisation, an
organisation also has to serve the society where it is located
– providing basic amenities, education, etc

14. Levels of Management
Top Management
•President, VP, Chairman, MD, CEO, CFO, CMO, COO
Middle Management
•Functional managers like, HR, Finance, Production, Plant,
Marketing, Operations
Operational / Supervisory Management

15. Functions
• Coordinating the activities of different departments
• Welfare & survival of the organisation
• Overall goals and strategies for the organisation
• Framing policies
• Responsible for the activities of the business
• Interpret the policies framed by the organisation
• Ensure that their department has required personnel
• Assign necessary duties and responsibilities
• Motivate them for higher productivity to achieve desired objectives
• Cooperate with other departments for smooth functioning of the
organisation
• Interact with the actual workforce and communicate the instructions of
the middle management
• directly oversee the work of the personnel
• Quality maintenance, minimised wastage of material etc.,
• Maintains discipline and communicate workers grievances
• Maintains the work area and working conditions

16. Functions of Management
Planning
Organising
StaffingDirecting
Controlling
• Primary function of Management
• Where we are to where we want to go
• Cannot prevent problems but predict
them & prepare contingency plans
• Assigning duties,
grouping tasks,
establishing authority &
allocating resources
• Who, what & where
• Different type of
organisations require
different organisation
structures
• Monitoring performance
towards attainment of goals
• Establishing standards of
performance, measuring
current performance,
comparing and taking
corrective measures
• Leading, influencing & motivating
employees
• Effective commnication techniques
which will create conducive
environment
• Praise & criticism – to bring out the
best in the employees
• Finding the right people for the right job
• Training & development, career planning,
compensation etc
• Human resource function of management

17. Coordination – the essence of management
Synchronising the activities of various departments
Basic force binding all the functions of management
Process of coordinating begins at the planning stage
itself
Coordination therefore involves synchronisation of the different actions
or efforts of various units of the organization. This provides the requisite
amount, quality, timing and sequence of efforts which ensures that
planned objectives are met with minimum conflict

18. Characteristics
Integrate
s group
efforts
Ensures
unity of
action
Is a
continuo
us
process
All
pervasive
function
Responsi
bility of
all
managers
Deliberat
e
function

19. Importance
Growth in size
• As the company grows, number of employees increase
• Each individual differ in habit of work, effort, background, approaches,
relationship with others etc.,
• Each will have their own goals and aspirations
Functional differentiation
• Functions of an organisation is divided into department, divisions / sections
• Each department will have their own objectives
• All departments are interdependent in terms of work and information
• Coordination links all the departments to attain common objective
Specialisation
• High degree of specialisation in modern organisations
• Ego clashes arise among the specialists based on their professional criteria
• Coordination is required by an independent person to reconcile the differences in
approach, interest or opinions

20. Coordination vs Cooperation
Basis Coordination Cooperation
Meaning Process of achieving unity of action
among interdependent activities
Implementing plans harmoniously
for the achievement of desired
goals
Voluntary efforts of individuals to
work together
Nature Does not arise automatically
Conscious and deliberate action of
manager to provide unity of action
Willingness of the employees to help
each other voluntarily
Requirem
ent
Essential for achieving
organisational goal where group of
people are working together
Arises out of desire of people to work
together
Scope Includes cooperation and has
wider scope
Narrow scope.
Helps towards establishing
coordination