This document provides an overview of management principles and theories from classical to modern approaches. It discusses classical thinkers like Taylor, Fayol, and Weber and their contributions to scientific management, administrative theory, and bureaucratic management. It also summarizes human relations movement thinkers like Mayo and Maslow's hierarchy of needs theory. Key modern approaches covered include systems theory, contingency theory, and management science. The five main functions of management - planning, organizing, staffing, directing, and controlling - are also outlined.

1. Principles of Management
1

2. Management
• Management is the process of designing
and maintaining an environment in which
individuals work together in groups
efficiently to accomplish the selected aims.
2

3. 3

4. Management theories
• Classical
• Neo classical
• Modern
4

5. The Evolution of Management
Theory
5

6. Major Classification Of
Management Approaches
CLASSICAL
APPROACH
SCIENTIFIC
MANAGEMENT
BUREAUCRATIC
MANAGEMENT
ADMINISTRATIVE
MANAGEMENT
NEO-
CLASSICAL
APPROACH
BEHAVIORAL
APPROACH
HUMAN
RELATION
MOVEMENT
MODERN
APPROACH
THE SYSTEMS
THEORY
CONTINGENCY
THEORY
MANAGEMENT
SCIENCE
6

7. Classical Approach
• Forms the foundation for the field of management
• The classical management thoughts are:
 Scientific Management
 Administrative Theory
 Bureaucratic Management
7

8. Scientific Management
Early 1900s
• It is defined as “that kind of management which
conducts a business or affairs by standards
established, by facts or truths gained through
systematic observation, experiment, or reasoning.”
• Major contributors:
 Frederick Winslow Taylor
 Frank and Lillian Gillbreth
 Henry L.Gantt
 Harrington Emerson 8

9. Principles of Scientific
Management
• Develop of science for each work
• Scientifically select, train and develop workforce
• Division of labor (separation of planning function from doing
function)
• Standardization of methods, procedures, tools and equipment
• Use of time and motion study
• Differential wage system
• Cooperation between labor and management
9

10. Four Principles of Scientific
Management
• Principles to increase efficiency:
1. Study the ways jobs are performed now and determine new
ways to do them.
• Gather detailed time and motion information.
• Try different methods to see which is best.
2. Codify the new methods into rules.
• Teach to all workers the new method.
3. Select workers whose skills match the rules.
4. Establish fair levels of performance and pay a premium for
higher performance.
• Workers should benefit from higher output
10

11. F. W Taylor
• “Father of scientific management”(1878)
Two major managerial practices:
• Piece-rate incentive system
• Time-and-motion study
11

12. F.W. Taylor and Scientific
Management
• Scientific Management
– The systematic study of the relationships between people
and tasks for the purpose of redesigning the work process
for higher efficiency.
• Defined by Frederick Taylor in the late 1800’s to
replace informal rule of thumb knowledge.
• Taylor sought to reduce the time a worker spent on each
task by optimizing the way the task was done.
12

13. Frank and Lillian Gillbreth
(1868-1924)
• Motion study involves finding out the best sequence and
minimum number of motions needed to complete a task.
• Explore new ways for eliminating unnecessary motions
and reducing work fatigue.
• To them the ultimate aim of scientific management was to
help workers reach their full potential as human beings
13

14. Henry L.Gantt(1861-1919)
• Well known for Task – and - bonus system -The Gantt
chart
• If the worker completed the work fast, i.e., in less than the
standard time, he received a bonus.
• It is a Simple daily balance chart that compares actual and
planned performances.
• Introduced the concept of industrial responsibility.
• Emphasis should be placed on services rather than on
profits.
• Wider recognition of the human factor in management.
14

15. Harrington Emerson
• First to use the term “Efficiency Engineering”
• “Right thing is done in the right manner , by
the right man ,at the right place ,in the right
time.”
15

16. Limitations of
Scientific Management
• Do not focus on the management of an organization from a
manager’s point of view.
• people were “rational” and were motivated primarily by the
desire for material gain.
• It also ignored the human desire for job satisfaction.
• Fails to recognize the ideas and suggestions of workers.
• Treat workers as machine.
16

17. Administrative Theory:
• It focused on principles that could be used by
managers to coordinate the internal activities
of organizations.
• Henri Fayol (1841-1925)
17

18. Six groups of work done in
business enterprises
• Technical
• Commercial
• Financial
• Security
• Accounting
• Managerial
18

19. Fayol’s Principles of
Management
• Division of work: allows for job specialization.
– noted jobs can have too much specialization
leading to poor quality and worker dissatisfaction.
• Authority and Responsibility
– Fayol included both formal and informal authority
resulting from special expertise.
• Unity of Command
– Employees should have only one boss.
19

20. Fayol’s Principles of
Management (cont’d)
• Line of Authority
– A clear chain of command from top to bottom of
the firm.
• Centralization
– The degree to which authority rests at the top of
the organization.
• Unity of Direction
– A single plan of action to guide the organization.
20

21. 2–21
Fayol’s Principles of
Management (cont’d)
• Equity
– The provision of justice and the fair and impartial
treatment of all employees.
• Order
– The arrangement of employees where they will be
of the most value to the organization and to
provide career opportunities.
• Initiative
– The fostering of creativity and innovation by
encouraging employees to act on their own.

22. Fayol’s Principles of Management
(cont’d)
• Discipline
– Obedient, applied, respectful employees are necessary
for the organization to function.
• Remuneration of Personnel
– An equitable uniform payment system that motivates
contributes to organizational success.
• Stability of Tenure of Personnel
– Long-term employment is important for the
development of skills that improve the organization’s
performance.
22

23. Fayol’s Principles of Management
(cont’d)
• Subordination of Individual Interest to the
Common Interest
– The interest of the organization takes precedence
over that of the individual employee.
• Esprit de corps
– Comradeship, shared enthusiasm foster devotion to
the common cause (organization).
23

24. Limitations
• Too formal system.
• Based on a few studies and they are not empirically
tested.
• Based on the assumption that organizations are closed
system.
• Insensitive to employees social and psychological
needs.
24

25. Bureaucratic Management
Weber (1864-1920)
Characteristics of Weber’s ideal Bureaucracy:
• Work specification and division of labor
• Abstract rules and regulations and well defined methods
for all types of works.
• Formal and Impersonal relations among the members of
organization.
• Interpersonal relations are based on positions and not on
personalities.
• Hierarchy of organization structure.
• Selection and promotion is based on technical
qualifications.
25

26. Limitations of Bureaucratic
Management
• Not universally applicable to today’s complex
organizations.
• Principle characteristic of bureaucracy changes in the global
environment.
• Classical theorists ignored the problems of leadership,
motivation, power or information relations.
• Excessive regulation may lead to unpleasant experiences
and also to inefficient operations.
• Machine like treatment make employees unconcerned about
the organization.
26

27. Neo-Classical approach
• Focused on the factors that affect human
behavior at work.
• Human relation movement
• Behavioral approach
27

28. Human relation movement
• Elton Mayo : father of the human relations movement.
• Hawthrone studies : a series of experiments on workers
productivity in 1924 at the Hawthrone plant of Western
Electric company
• Contributions of Hawthrone studies:-
• The way people were treated had an important impact on
performance.
• Trend towards power equalization .
• Conflict free inter-relations among the members of the
organizations.
28

29. Behavioral Approach
• The behavioral approach to management emphasized
individual attitudes and behaviors and group
processes, and recognized the significance of
behavioral process in the workplace.
• Focused mainly on psychological needs as a means of
achieving economic goals.
29

30. Abraham Maslow’s - Hierarchy of Needs
Theory – substantially satisfied need no
more motivates
Self
Actualization
Esteem Needs
Affiliation or Acceptance
needs
Security or Safety Needs
Physiological Needs
30

31. Douglas McGregor – Theory X and Y
Either appropriate under different situations
Y – POSITIVE
APPROACH Employees
view work as natural
play/rest. Persons accept
responsibility
X – NEGATIVE
APPROACH Employees
dislike work, needs to be
controlled and threatened
31

32. Douglas Mcgregor
Theory X Theory Y
Most People dislike work Work is a natural activity like
play.
Most People must be
coerced and threatened
before they work.
People are capable of self
direction and self control
Most people prefer to be
directed. They avoid
responsibility and have
little ambition.
People become committed to
organizational objectives if
they are rewarded in doing
so.
32

33. Modern Approaches
to Management
• Systems Approach
• Contingency Theory
• Management Science Approach
33

34. System approach
• Organizations can be visualized as systems
• Inputs , transformation process , output and
feedback
34

35. Contingency approach
• Suggests the managers to develop skills to
identify the important situational factors.
35

36. Management Science
 It stresses the use of mathematical models
and statistical methods for decision-making.
 Another name is the Operations Research.
36

37. Emerging Approaches In
Management Thought
 William Ouchi, outlined new theory called Theory
Z.
 It is the blend of positive aspects of both
American and Japanese management styles.
 Quality Management is a management approach
that directs the efforts of management towards
bringing about continuous improvement in
product and service quality to achieve higher
levels of customer satisfaction and build customer
loyalty.
37

38. Functions of Management
38

39. Functions of Management
• Forecasting
• Planning
• Organizing
• Staffing
• Decision making
• Directing
• Controlling
39

40. Forecasting
• Forms the basis of planning the activities
of an organization.
• Defined as an estimate of future events
,that can be obtained by systematically
combining past and present data in a
predetermined way and arrive at future
data.
• Eg : sales forecast , production forecast
40

41. Planning
• Determined course of action for achieving
a specific objective.
• Selecting mission and objectives and
actions to achieve them.
• Consist of goals , policies ,procedures ,
rules , methods , budgets strategies and
programmes
41

42. Types of Plans
• Mission – Basic function or task for which the organization is existing
• Objectives or Goals – Ends towards which an activity is aimed in
specific terms
• Strategies – General programme of actions and deployment of
resources to attain comprehensive objectives
• Policies – General statements or understandings which guide or
channel thinking in decision making
• Procedures – Plans that establish a required method of handling future
activities
• Rules – Spell out specific required action or non action, allowing no
discretion
• Programmes – complex of goals , policies, procedures, rules, task
assignments, steps to be taken etc.
• Budgets – Statement of expected results expressed in numerical terms
42

43. Steps in Planning
• Being aware of opportunities and threats
• Analyze strengths and weakness
• Setting objectives and goals
• Developing premises and alternatives
• Evaluating alternatives
• Choosing alternatives
• Selecting course of action
• Formulating supporting plans
43

44. Organization
• Organizing involves process by which the
structure and allocation of jobs is
determined
• It is the formalized intentional structure of
roles and positions
44

45. Organization definition
• Process of:
– Identifying, classifying and grouping the work
to be performed
– Defining and delegating responsibility and
authority
– Establishing relationships for the purpose of
enabling people to work most effectively
together in accomplishing objectives
45

46. Principles of Organization
• Objectives
• Relationship of components
• Responsibility
• Authority
• Span of control
• Dividing, Grouping and specialization of work
• Effective delegation
• Communication
• Defining line and staff functions
• Balance
• Stability
• Flexibility
46

47. Organization structure
• Systematic arrangement of people working for
the organization in order to achieve pre decided
objectives
• Provides appropriate framework for authority
and responsibility and relationship between
components
• Represented in the form of an organization chart
• Dimensions
– Vertical – hierarchy of managers and subordinates
– Horizontal – basic departmentation
47

48. Organization structure
• Portrays graphically the structural
relationship
• Structure depends on
– Size of organization
– Nature of product/service
– complexity
48

49. Types of organization structures
• Line type organization
• Functional organization
• Line and staff organization
• Matrix type organization
• Teams
49

50. Line Type Organization
• Relative authority and responsibility
• No specialization
• Superior gives instructions and are executed
• Advantages
– Flexible
– Clear division of authority and responsibility
– Clear Communication
• Disadvantages
– No specialization
– Overloading
– Small organization
50

51. Line Type Organisation
Chief
Engineer
Dy. CE
EE
AEE
EE
AEE
AE
Dy. CE
EE
AEE
Dy. CE
51

52. Functional Organization
• Divided according to functions with
functional specialists
• Advantages
– Specialization
– Relieves line executives
– Quality of work improved
• Disadvantages
– Co ordination difficult
– Fixing responsibility difficulty
– All-round people cannot be developed
52

53. Functional Type Organisation
Managing
Director
GM(Materials)
Purchase
Manager
Stores Manager
GM(Marketing) GM(HR) GM(Production)
Production
Manager
Maintenance
Manager
53

54. Functional Organisation
54

55. Line and staff Type
Organization
• Takes advantage of functional specialists
reporting as staff relationships
• Advantages
– Expert advice of specialists
• Disadvantages
– Additional cost of staff executives
55

56. 56

57. Project Type Organization
• A separate division for one time activities
• Adopted for special one time activities
57

58. Matrix Type of Organization
• Combination of functional type and project
type of organization
58

59. 59

60. Span of control
• Number of subordinates that report to an executive
• Optimum 2 to 20
• Small span – oversupervison
• Large span – lack of supervision
• Factors effecting span
– Training and experience of subordinates
– Specialized and repetitive work
– R&D and Maintenance
– Requiring close supervision
– Capacity of executive
– Efficient control systems
60

61. Directing
• Process by which the actual performance of
subordinates is guided towards the common
goals of the enterprise
• Involves
– Giving instructions to subordinates
– Guiding subordinates to do the work
– Supervise subordinates to make certain that work
done by them is as per the plans established
61

62. Directing involves
• Leadership
• Communication
• Motivation
• supervision
62

63. Leadership
• Leadership is the quality of the behavior of the
persons whereby they inspire confidence and
trust in their subordinates , get maximum
cooperation from them, and guide their activities
in organized effort
• Three Types
– Authoritarian – leader makes decisions and
commands
– Democratic – Promotes participation of subordinates
– Free reign or Laissez faire – minimum control
63

64. Communication
• Process by which ideas are transmitted
received and understood by others for
the purpose of achieving desired
results
• Types
– Upward
– Downward
– Horizontal
64

65. Motivation
• Inspiring the subordinates to do a work for
achieving organization objectives
effectively and efficiently
65

66. Factors contributing towards
motivation
• Achievement –
satisfaction of completion of a job
• Advancement –
promotions
• Growth
Learning, new skills advancement
• Recognition –
Acknowledgement of a job done well
• Responsibility and authority –
to one’s job
66

67. Factors which demotivate
• Organization policy and administration
• Job security
• Interpersonal relations
• Salary
• Status
• Supervision
• Personal Life
67

68. Motivation and Theories of
Motivation
• Inspiring the subordinates to do a work for
achieving organizational objectives
effectively and efficiently
• Theories of Motivation
– Abraham Maslow’s - Hierarchy of Needs
Theory
– Frederick Herzberg’s - two factor theory
– David C McClelland - needs theory
– Douglas McGregor – theory X and Y
68

69. Frederick Herzberg’s - two factor theory
Hygiene factors do not motivate an
employee
HYGIENE FACTORS
Absence > Dissatisfaction
Presence > No
Dissatisfaction
MOTIVATORS
Absence > No
Satisfaction
Presence > Satisfaction
69

70. David C McClelland – Three Needs
Theory
Identify the person type and motivate
NEED FOR
POWER
• Great concern
to Exercise
influence and
control
• Forceful,
outspoken,
hard headed
and
demanding
NEED FOR
AFFILIATION
• Derive
pleasure from
being loved
and avoid the
pain of
rejection
• Enjoy sense of
intimacy and
understanding
NEED FOR
ACHIEVEMENT
• Intense desire
for success
and fear of
failure
• Take difficult
goals and take
a realistic
approach to
risk
70

71. Controlling
• Monitoring the activities to make sure
that objectives are being met.
• The initiation of corrective action to
overcome problems
• Controlling process
– Sets standards
– Measures job performance
– Takes corrective actions
71

72. Decision making
72

73. Decision making
• Conclusion of a process by which one
chooses between two or more available
alternative courses of action for the
purpose of attaining goals
• All functions of management involve
decision making
73

74. Steps in Decision making
• Defining problem
• Searching for alternatives
• Evaluating the alternatives
• Selecting the alternative
74

75. Types of decisions
• Programmed and non programmed
• Routine and strategic decisions
• Organizational and personals decisions
• Individual and group decisions
• Decision making process
• decision making.pptx
75

76. Decision Making
• Process by which a course of action is consciously
chosen from available alternatives for purpose of
achieving objectives
• Decision making Classified into
• Single stage – selecting alternatives on the basis
of available information at a point of time
• Multistage – sequence of decisions in which
following each decision a chance event occurs
which in turn influences further decisions
76

77. Single stage decision making steps
• Identification of various possible outcomes
or states of nature or events for which the
decision maker hasn’t got any control
• Identification of all courses of action or
strategies where the decision maker has
got control
• Determination of the payoff function which
describe the consequences
• Choosing from various alternatives
77

78. Single Stage Decision making
situations
• Decision making under certainty –
Decision maker has clear idea about the
outcomes
• Decision making under uncertainty – The
decision maker can no way assess the
probabilities of various states of nature
• Decision making under Risk – The decision
maker chooses to consider several possible
outcomes and the probabilities of occurrence
can be stated
78

79. Example
• An electrical machines dealer wants to take a
decision on how many capacitors are to be kept in
stock to meet the customers demand
• Given
• Selling price of one capacitor = Rs. 100
• Cost price = Rs. 80
• Disposal price of unsold capacitor = Rs. 30
• Demand for a month = between 18 and 20 nos.
• How much should be kept in stock for maximisng
the returns (profit)?
79

80. Analysis
• Three Possible EVENTS
• E1 = 18, E2 = 19, E3 = 20
• Three Possible STRATEGIES
• S1 = 18, S2 = 19, S3 = 20
• To choose from three possible
STRATEGIES with three possible EVENTS
which are mutually exclusive
80

81. Payoff Functions
• Let D = Demand
• Let Q = Quantity decided to purchase
• Two situtaions D >= Q or D<Q
• When D>=Q
• Payoff = 100Q-80Q = 20Q
• When D<Q
• Payoff = [100D+30(Q-D)] – 80Q = 70D-
50Q
81

82. Payoff Matrix
STRATEGIES
A1 = 18 A2 = 19 A3 = 20
EVENTS
E1 = 18 360 310 260
E2 = 19 360 380 330
E3 = 20 360 380 400
82

83. Decision Making Under Certainty
• Decision maker knows the exact demand
• Choose the strategy which gives the
maximum Returns
83

84. Decision Making under Uncertainty
Principle 1 – Laplace Equally likely Principle
• Consider all events as equally probable
• Find out the expected mean value of
payoff for each strategy
• Chose the strategy with highest expected
mean payoff
84

85. Payoff Matrix
STRATEGIES
A1 = 18 A2 = 19 A3 = 20
EVENTS
E1 = 18 360 310 260
E2 = 19 360 380 330
E3 = 20 360 380 400
Mean
expected
payoff
360 356.6 330
85

86. Decision Making under Uncertainty
Principle 2 – MaxiMin or MiniMax Principle
• Adopted by pessimistic decision makers
who are conservative in their approach
• Find the minimum payoff associated with
each strategy
• Choose the maximum payoff from among
these minimum payoff
• Choosing the best profit from the set of
worst profits
86

87. Payoff Matrix
STRATEGIES
A1 = 18 A2 = 19 A3 = 20
EVENTS
E1 = 18 360 310 260
E2 = 19 360 380 330
E3 = 20 360 380 400
87

88. Decision Making under Uncertainty
Principle 3 – MaxiMax or MiniMin Principle
• Adopted by optimistic decision makers
• Find Maximum payoff associated with
each strategy
• Choose the maximum payoff from among
these maximum payoffs.
• Choosing the best profit from among the
best payoffs
88

89. Payoff Matrix
STRATEGIES
A1 = 18 A2 = 19 A3 = 20
EVENTS
E1 = 18 360 310 260
E2 = 19 360 380 330
E3 = 20 360 380 400
89

90. Decision Making under Uncertainty
Principle 4 – Hurwitz Principle
• Decision making between optimism and
pessimism
• Define the index of optimism α which can
take values from 0 (extreme pessimism)
to 1 (extreme optimism)
• Multiply maximum profit by α and minimum
profit by I – α and select the maximum of
HC
• HC = (α) (Max Payoff) + (1-α)(Min Payoff)
90

91. Payoff Matrix – if α = 0.6
STRATEGIES
A1 = 18 A2 = 19 A3 = 20
EVENTS
E1 = 18 360 310 260
E2 = 19 360 380 330
E3 = 20 360 380 400
HC 360 352 344
91

92. Decision Making under Risk
• Decision maker chooses to consider
several possible outcomes and the
probability of their occurrence could be
stated.
• Probabilities determined from past
records.
• Probabilities are mutually exclusive and
collectively exhaustive events
92

93. Payoff Matrix
STRATEGIES
Probabil
ities
A1 = 18 A2 = 19 A3 = 20
0.3
EVENTS
E1 = 18 360 310 260
0.5 E2 = 19 360 380 330
0.2 E3 = 20 360 380 400
93

94. Decision Making under Risk
Principle 1 – Maximum Likelihood Principle
• Consider the event that is most likely to
occur
• Decide the action which has maximum
conditional payoff corresponding to the
above
94

95. Payoff Matrix
STRATEGIES
Probabil
ities
A1 = 18 A2 = 19 A3 = 20
0.3
EVENTS
E1 = 18 360 310 260
0.5 E2 = 19 360 380 330
0.2 E3 = 20 360 380 400
95

96. Decision Making under Risk
Principle 2 – Expectation Principle
• Calculate the expected payoff for each
strategy by multiplying the payoff values
with respective probabilities and then add
it
• The strategy with the highest expected
payoff represents the optimal choice.
96

97. Payoff Matrix
STRATEGIES
Probabil
ities
A1 = 18 A2 = 19 A3 = 20
0.3
EVENTS
E1 = 18 360 310 260
0.5 E2 = 19 360 380 330
0.2 E3 = 20 360 380 400
Mean
Expected
Payoff
360 359 323
97

98. Decision Trees
• Multistage Decision making problems
• Characterized by a sequence of decisions
in which following each decision a chance
event occurs which in turn influences the
next decision
• A decision tree is a graphical
representation of the sequences of action
event combinations available to the
decision maker
98

99. Decision Trees
• Decision making criteria based on
expectation principle, choosing the
alternative that maximizes the expected
profit
99

100. Decision Tree Symbols
• Decision Node
Decision maker to take a decision
• Chance Node
Chances that can occur
100

101. Example
• Mary is a manager of a gadget factory. Her factory has been quite
successful the past three years. She is wondering whether or not it
is a good idea to expand her factory this year. The cost to expand
her factory is $1.5M. If she does nothing and the economy stays
good and people continue to buy lots of gadgets she expects $3M in
revenue; while only $1M if the economy is bad.
• If she expands the factory, she expects to receive $6M if economy is
good and $2M if economy is bad.
• She also assumes that there is a 40% chance of a good economy
and a 60% chance of a bad economy.
• (a) Draw a Decision Tree showing these choices.
101

102. 102