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MG 6851PRINCIPLES OF MANAGEMENT

UNIT 1: INTRODUCTION TO MANAGEMENT & ORGANISATIONS

UNIT 2 : PLANNINGUNIT 3 : ORGANISINGUNIT 4 : DIRECTINGUNIT 5 : CONTROLLING

S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAMARAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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COURSE OBJECTIVE

• To enable the students to study the evolution of Management, • to study the functions and principles

of management and • to learn the application of the

principles in an organization.


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POM- Course outcomes1. Define types of managers, list managerial roles and skills

and distinguish between different types of business organization

2. Define types of planning, importance of setting objectives & factors of objectives and describe & steps of decision making.

3. Explain the basics of organization structure, various departmentation concepts and staffing activities of an organization

4. Discuss the various leadership styles, theories and techniques of motivation and process of communication

5. Emphasize the various aspects of controlling namely productivity, cost, quality, maintenance etc.


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MEASURING TOOL FOR COURSE OUTCOME EVALUATION

UNIT Slip Test Internal Test Assignment Seminar/Discussion/Quiz/

OthersI 20% 40% 20% 20% (CASE STUDY/

SEMINAR)II 20% 30% 20% 30%

(QUIZ/SEMINAR)III 20% 40% 20% 20% (CASE

STUDY/SEMINAR)IV 20% 40% 20% 20%

(QUIZ/SEMINAR)V 20% 40% 10% 30%

(QUIZ/MOODLE TEST)


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LEADING … DIRECTING


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LEADING ….MANAGING

S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAAMRAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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MANAGING


Organising people in various levels

Multi tasking …

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MANAGING


Base, middle takes load of TOP

Handling one ball at a time, but handling more than two balls. Balls refers to activities

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• Management is the process of designing and maintaining an environment in which individuals working together in groups, efficiently accomplish selected item

• Management is the process of getting things done, through & with people in organization

• Management is accomplishment of objectives utilising Men, Machineries and Money

• (Management is getting objectives using 3 Ms) • Management is accomplishment of Objectives utilising Men,

Materials, Machineries, Money, Methods, Motivation and Minutes.

• (Management is getting objectives using 7 Ms)

Management – Definition:


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Management functions (or) Process of Management:

There are five types of functions in management.Planning-Defines the goal & establishing strategy. Organizing-Includes determining what task has to be

done, who is to do them and how it is to be doneStaffing-Includes recruitment of people and training

them to do tasks and positioning in jobs.Leading-Includes the motivating the employees and

directing the activities to reach objectives.Controlling-It is the process of monitoring the

performance.All functions aimed at reaching Objectives


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Managerial Skills

Three types of Managerial skills Conceptual Skills-These skills are required by the

employee MOSTLY who are in top level management. Requirement is more at top level, less in Middle level and very less in low level

Technical skills- These skills are required by the employee MOSTLY who are in middle level Management. Requirement is more at low level, less in Middle level and very less in top level

Human Relations Skills-These skills are required by the employee MOSTLY in the supervisory level. Requirement is high at top level, more in Middle level and less in low level. Required at all levels.


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Different Managerial Levels

Top Management

Middle Management

Low Level Management

Supervisory Level

Human Relations Skills

Conceptual Skills

Technical Skills

Human Relation Skills

Technical Skills


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Order of Management

Operatives (or)

Executive

First-Line Managers

Middle Managers

Top Management


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Managerial Role approach• Managerial Roles:• Interpersonal Roles : Figure head role, leader role and Liaison Role• Informational Roles:Recipient Role, Disseminator Role, Spoke

person Role• Decision Roles :Entrepreneurial Role, Disturbance Role,

Resource allocator Role, Negotiator RoleS.PALANIVEL ASSOCIATE PROF./MECH ENGG

KAMARAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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• Effectiveness: Adequate to accomplish a purpose producing the intended or expected result.

• Efficiency: Performing or functioning in the best possible manner with the least waste of time and effort.

(Or)• Efficiency is doing something with the least

possible expenditure of resources (such as time, energy, etc.)

Efficiency & Effectiveness


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Productivity• The output – input ratio within a time period with

due consideration for quality• Productivity = Output/Input (within a time &quality)• Productivity can be improved byIncreasing the Output with same inputDecreasing inputs with same outputIncreasing Output and decreasing inputDecreasing the rejects of productionInputs include labour, materials and capital cost


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Management – 4 Aspects• Firstly – Organisation’s Objective Main purpose of organisation• Secondly – Systems required to achieve Objective Systems include machineries, No. of Tiers and inter

relation/controls among systems• Thirdly – Operating Principles to operate Systems Scientific operating principles based on fail safe,

effective, cost less etc., to operate systems • Fourthly – Positioning people to carryout activities Recruiting, training and positioning right people


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Managing an organisation• Check all the four aspects• If Objective is achievable and beneficial, we have to

check whether the Systems defined are scientifically and evidently made, if that is also in order

• Then we have to check operating principles, whether limiting parameters are defined and principles are expressed clearly without any ambiguity and operable efficiently and in a cost effective way

• If all the three aspects are found to be in order, we have to change positioning of personnel or training the personnel to meet the gap evidently found as a hurdle in achieving objective.


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Managing - Science (or) Art Managing as a practice is an art. It is know how,

doing things in light of the realities of a situation Yet Managers can work better by using organised

knowledge about management. It is this knowledge is science.

Systems and operating principles have to be made on scientific management but positioning people and controlling have to be done as per situation on accepted principles ie like an art, here achieving the targets is the prime activity.


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Owner, Entrepreneur & Manager

• Owner : Person who is holding the all the shares/ capital of a company or organisation

• Entrepreneur : Person who starts a business on his own and identifies products/services and continue its operation

• Manager : Person authorised or appointed by company to head a unit or a division, who is expected to carryout the functions of the unit/divison using the resources provided


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Emergence of Management Thought• Scientific Management : Fredick W. TaylorTo raise productivity through greater efficiency in production and increased pay for workers by applying scientific method.Using science creating group harmony and cooperation achieving maximum output and developing workers.Henry L. Gantt : Called for scientific selection of workers and harmonious cooperation between labor and management. Developed Gantt Chart. Stressed need for training.

S.PAANIVEL ASSOCIATE PROF./MECH ENGG KAMARAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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Emergence of Management Thought

Modern Operational Management Theory• Henry Fayol the father of modern

management theory.• Divided industrial activities into six groups-

technical, commercial, financial, security, accounting and managerial.

• Recognised need for teaching management• Formulated 14 principles of management


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Emergence of Management Thought• Behavioral science : Application of psychology

to Industry and management. Theory of Bureaucracy. Influence of social attitudes and relationships of work groups on performance.

• Systems Theory : Task of Mangers is to maintain a system of cooperative effort in a formal organisation

• Modern Management thought : Introduced Quality control in Japan, Japanese managerial practices


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14 Principles of Management • Division of work: This is the specialization that economists

consider necessary for efficiency in the use of labor. Fayol’s applies the principle to all kinds of work, managerial as well as technical.

• Authority & responsibility: Authority and responsibility to be related, with the later arising from the former. He sees authority as a combination of official factors, deriving from the manager’ position and personal factors.

• Discipline: Seeing discipline as “respect for agreements which are directed at achieving obedience, application, energy, and the outward marks of respect. Fayol declares that discipline requires good superiors at all levels.

• Unity of command: This means that employees should receive orders from one superior only.

• Unity of direction: According to this principle, each group of actives with the same objective must have one head and one plan.


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• Subordination of individual to general interest: This is self explanatory when the two are found to differ, management must reconcile them.

• Remuneration and methods: of payment should be fair and afford the maximum possible satisfaction to employees and employer.

• Centralization: Without using the term “Centralization of authority.”Fayol's refers to the extent to which authority is concentrated or dispersed. Individual circumstances will determine the degree that will give the best overall yield.

• Scalar chain: Fayol thinks of this as a chain of superiors from the highest to the lowest ranks, which, while not to be departed from needlessly, should be short circuited when to follow it scrupulously would be detrimental.

• Order: Breaking this into material and social order, Fayol's follows the simple adage of a place for everything and everything in its place.


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• Equity: Loyalty and devotion should be elicited from personnel by a combination of kindliness and justice on the part of managers when dealing with subordinators.

• Stability of tenure: Finding unnecessary turnover to be both the cause and the effect Of bad management, Fayol points out its dangers and costs.

• Initiative: Initiative is conceived of as the thinking out and execution of a plan. Since it is one of the keenest satisfactions for an intelligent man to experience.

• Esprit de corps: This is principle that “in union there is strength” as well as an extension of the principle of unity of command, emphasizing the need for teamwork and the importance of communication in obtaining it.


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Evolution of management• Empirical / case approach• Managerial Role approach• Contingency/ Situational

approach• Mathematical /

management Science approach

• Decision theory approach• Reengineering approach• Systems approach• Socio-technical

approach

• Cooperative social systems approach

• Group behaviour approach• Interpersonal behaviour

approach• McKinsey’s 7 – S frame

work approach• Total quality management

approach• Management process or

operational approach


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Management as an Essential for any Organization

Managers are charged with the responsibility of taking actions that will enable individuals to make their best contributions to group objectives. Management thus applies to small and large organizations, to profit and not-for profit enterprises, to manufacturing as well as service industries.


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• Time Study• Timing how long it takes good workers

to complete each part of their jobs.

• Motion Study• Breaking each task into its separate

motions and then eliminating those that are unnecessary or repetitive.

Time & Motion Studies: Frank & Lillian Gilbreth


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Managerial

Challenges: Ethics

MANAGER

E-Business

Globalization

Diversity

Customers

Innovation

KnowledgeManagement


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History: Schools of

Management Thought (start)

Traditional Viewpoint

Behavioral Viewpoint

Systems Viewpoint

Contingency Viewpoint

Quality Viewpoint

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAAMRAJ COLLEGE

OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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Traditional

Viewpoint

Goals:Efficiency

Consistency

Administrative Management

Bureaucratic Management

ScientificManagement


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Characteristics of

Bureaucratic Management

Rules—formal guidelines for the behavior of employees on the job

Impersonality—employees are evaluated according to rules and objective data

Division of Labor—splitting work into specialized positions


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What is Scientific

Management?


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Business organisation

Purpose of Business organisation is to create profit or surplus thro their business operation.Activities of organisation may be production of items or providing services.


S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAAMRAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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TYPES OF ORGANISATIONComposition of Company : Capital invested in a company included as equity shares of predetermined value. Normally face value of equities will range from Rs.1, 2, 5, 10, 100 or 1000.Proprietary Company: Company owned wholly by a single person or in other words, all the shares of the company owned by Owner.Partnership company : Equities of Company are held by more than one person and holding persons are called as partners. Holding pattern or ratio may differ or same , of course as per the terms and conditions specified in partnership deed.

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TYPES OF ORGANISATIONPrivate Limited : Privately held small entity. No. of share holders are limited to a max. of 50. The shares held by members are not permitted to trade the shares in a open marketPublic Limited: Company equities are held by public, promoters, Financiers of the company. No. of shares will vary and trading of shares are permitted.


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TYPES OF ORGANISATIONPUBLIC SECTOR UNDERTAKING (PSU)AFTER FREEDOM OF COUNTRY PSUs FORMED TO INVOLVE IN MAJOR CORE INDUSTRIES.GOVERNEMENT WAS HOLDING ALL SHARES WITH IT. BOARD APPOINTED BY GOVT. RUNNING THE PSUsINTIALLY BOARD COMPRISES OF DIRECTORS (APPOINTED) AND REPRESENTATIVES FROM GOVT. OF INDIA AND REPRESENTATIVES FROM FEDRAL GOVT. APPOINTED DIRECTORS CALLED AS FUNCTIONAL DIRECTORS. CHAIRMAN CUM MANAGING DIRECTOR AUTHORISED TO HEAD THE PSU AND CHAIR BOARD MEETINGS.


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PSUs CONTD.• IN ORDER TO ENHANCE PERFORMANCE AND TO REDUCE BURDEN

ON GOVT. A PORTION OF SHARES SOLD TO VARIOUS AGNECIES• SHARES OFFERED AT DISCOUNT RATES TO EMPLOYEES TO INCREASE

THEIR PARTICIPATION.• CONTROL OF PSUs MAINTAINED BY KEEPING SHARES MORE THAN 51

%• INDEPENDENT DIRECTORS (NON FUNCTIONAL) INCLUDED IN THE

BOARD.• GOVT. OFFLOADED ALL ITS SHARES TO PUBLIC/AGNECIES• ALL PSUs LISTED IN SEBI. GOVERNED BY COMPANY ACTS• PSUs GRADED AS PER STANDARD PERFORMANCE AS MAHA RATNA,

NAV RATNA, MINI RATNA , PSUs.• DELGATED POWERS OF PSUs VARYING DEPENDING ON STATUS• NO BUDGETARY SUPPORT TO PSUs SINCE 1992. IT MADE PSUs TO

WORKJ EFFICIENTLY , EARN PROFITS AND EXPAND ON THEIR OWN.S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAMARAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

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EXTERNAL ENVIRONMENT• All Managers have to take into account the elements

and forces of their external environment.• Though Managers could do a little or no control over

these forces, they have no alternative but to respond to them.

• Managers must identify, evaluate and react to the forces outside the enterprises that may affect its operation.

• Organisation may have to take care of changes in Technological, Social, Economic. Ethical, Ecological and Political& legal.

• Influences of external factors are more crucial in international management.


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Operating in Pluralistic Society• Pluralistic Society – A society where many orgainsed

groups represent various interests.• Working within a pluralistic society has several

implications. Keep business power in balance Business interests can be expressed by joining groups Participate with other groups on common objectives There can be conflict as well as agreements among

groups.• In pluralistic society one group is quite aware of what

other groups are doing.S.PALANIVEL ASSOCIATE PROF./MECH ENGG


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Technological environment• One of the most influential factors in the

environment is the Technology.• It is Science that provides knowledge and it is the

technology that uses it.• Technology refers the sum total of knowledge we

have of ways to do things First wave economy based on land and farm labor. Second wave centred on machines and large

Industries Third wave economy is the knowledge age


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Ecological Environment• Mangers must take into account the ecological factors

in their decision making.• Ecology means the relationship of people & other

living things with their environment such as soil, water, air , land. Water and air pollution is of great concern to all people.

• Land may be polluted by dumping of industrial waste• Water pollution may be caused by mixing harzrdous

waste and sewage in river & water bodies.• Air pollution may be caused by emitting Carbon

mono oxide and harmful gases , vehicle fumesS.PALANIVEL ASSOCIATE PROF./MECH ENGG


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Ecological Environment contd..

• Variety of legislation has been passed dealing with solid waste, water and air pollution.

• Restrictions are there in emitting Nox, SOx and carbon emissions.

• Penalties are there for firms violating norms.• Managers must be aware of these laws and

regulations and must incorporate the ecological concerns into their decision making.


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Ecological Environment contd….

• BHOPAL PLANT disaster :• In Dec 1984, leaking of Mythial Cyanide- 2000

people died, over 40000 people injured badly• In order to protect environment ISO 14001

standards developed.• This standard aims in identifying Risks in Industrial

operations and aiming to reduce and eliminate.• This standard aims to improve safety standards and

needed compliance of certain safety norms


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Protection of Environment• To protect environment, European countries devised the ISO

14001 standard to assure that company policies address a variety of public concerns , including pollution prevention and compliance of relevant laws and regulations.

• The standard was valuable to Ford for reducing water consumption, disposed paint sludge and disposable packing materials.

• Disposal of Industrial wastes is considered important factor. Disposal of e – waste has to be done according to norms.

• Dumping of wastes in river , sea are prohibited. It has to be treated before disposal.

• Nuclear wastes, Mercury wastes are to be disposed as per accepted safety procedures.


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Social Responsibility • In early 1900s the mission of Business was exclusively

economic ie. generating profit.• Due to interdependencies of the many groups in our

society, the social involvement of business has increased.• Stake holders expect Manages to discharge their social

responsibilities• CSR – Corporate Social Responsibility- serious

consideration of the impact of the company’s actions on Society.

• Social Responsiveness : Ability of a Corporation to relate its operations and policies to the social environment in ways that are mutually beneficial to the company and society.


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Business Involvement in Social actionsArguments for Business involvement:• Business received its charter from society and

consequently Business organisations has to respond to the needs of society.

• Creation of a better social environment benefits both society and business. Society gains through better neighbourhoods and employment opportunities; business benefits from a better community, since the community is the source of its workforce and consumer of its products and services.

• Problems can become profits. Wastes can be used profitably


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Arguments for Business involvement - Contd.• Social involvement discourages Govt. intervention

with new regulation. The result is greater freedom and more flexibility in decision making for business.

• Business has a great power, hence it should be accompanied by equal amount of responsibility.

• Modern society is an interdependent system and the internal activities of the enterprise have an impact on the external environment.

• Social involvement may be in the interests of stock holders (share holders).

• Social involvement creates a favorable image, Firm may attract customers, employees and investors.


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Arguments for Business involvement - Contd.• Business should try to solve problems that other

institutions have not been able to solve. Business has a history of coming with novel ideas.

• Business has resources. Specifically business should use their talents of managers & staffs and resources to solve the problem of society.

• It is better to prevent social problems through business involvement than to cure them. It may be easier to help hard core unemployed than to cope with social unrest.


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Arguments against for Business involvement• Primary task of business to maximize profit by focusing strictly

on economic activities. Social involvement could reduce economic efficiency.

• Society must pay for social involvement of business through high costs. Social involvement would create excessive costs for business.

• Social involvement can create a weakened international business balance of payment situation. Cost of social programs would have to be added to he production costs. Socially involved companies selling in international markets would be at a disadvantage when competing with companies from other countries that do not have these social costs to bear.

• Business has enough power and additional social involvement would further increase its power and influence.


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Arguments against for Business involvement

• Business people lack the social skills to deal with problems of society . Their training and experience are with economic matters may not be pertinent to social problems.

• There is a lack of accountability of business to society. Unless accountability can be established business should not be involved.

• There is not full support for involvement in social actions. Consequently disagreements among groups with different view points will cause friction.


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CSR in India

• Corporate Social Responsibility is made as mandatory requirement of Corporates in India

• Every PSU has to spend 2 to 5 % of Profit to the developmental activities of their surroundings.

• Under these CSR programme, projects are being carried out by PSUs since

• PSUs are also taking part in National Building.


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Reaction or proaction PROACTION is essential• Managers need not react in the face of stress due to change

in environment.• No enterprise can be expected to react quickly to unforeseen

developments, an enterprise must practice ways of anticipating developments through forecasts.

• An alert company does not wait until its product is obsolete and sales have fallen off before coming out with anew or improved product.

• Any company should not wait until govt’s regualtions are obsolete and discredited before looking for another way to achieve its objectives.

• No enterprise should wait for problems to develop before preparing to face them


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Ethics in Managing• Ethics is defined as “ the discipline dealing with what

is good and bad and with moral duty and obligation.• Business ethics is concerned with truth & justice and

has a variety of aspects both in home country and in abroad

Expectations of society Fair competition Advertising Public relations Social responsibility Consumer autonomy Corporate Behaviour


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Bad Ethics in Indian Corporates• Satyam Computers – falsely inflated profits to

show the networth of company hingh wrongly and to use it in unholy way. Company was forced to face actions and finally company owners had to face Jail and company also sold.

• King Fishers – UB involved in Beverages production and sales entered Airline Business. Its operational costs were high, company faced huge loss. Company frdaulently sold aircrafts and transferred its assets to another company and failed to repay loans. Now owner facing litigation.


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Ethical Theories• Three basic types of moral theories in the field of

normative ethics have been developed• Utilitarian theory – Plans and actions should be

evaluated by their consequences. The idea is that plans and actions should produce the greatest good number of people.

• Theory based on Rights – All people have bsic rights like rights to freedom and conscience, free speech and due process.

• Theory of Justice – Decision makers be guided by fairness and equity as well as impartiality.


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Institutionalising Ethics•Managers especially Top Managers have to create an organizational environment that fosters ethical decision making by institutionalising ethics. This can be doneBy establishing an appropriate company policy or code of ethicsBy using a formally appointed ethics committeeBy teaching ethics in management development programs.•Managers must set themselves as a good example thro ethical behavior and practices.•A Code is a statement of policies , principles or rules that guide behavior. Codes of ethics do not apply to business enterprises, they should guide the behavior of persons in all organisations and in every day life. S.PALANIVEL ASSOCIATE PROF./MECH ENGG


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Ethics committee Appointment of ethics committee consisting of internal

and external directors is considered essential for institutionalising ethical behavior. Functions of such committee include

Holding regular meetings to discuss ethical issues Dealing with “grey areas” Communicating the codes to all in the organisation Checking possible violations of the code Enforcing the code Rewarding compliance and punishing violations Reviewing and updating the code Reporting activities of committee to the Board of

Directors.S.PALANIVEL ASSOCIATE PROF./MECH ENGG


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Factors that raise Ethical standards• Two factors that raise ethical standardsPublic disclosure and publicityIncreased concern of a well informed public• For ethical codes to be effectiveProvisions must be made for their enforcementUnethical managers should be held responsible for

their actions, privileges and benefits should be withdrawn and sanctions should be applied.

Effective code enforcement requires demonstration of consistent ethical behavior and support from top management.


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Leadership & Management