VHSE First year Management Text Chapter 1

NATURE AND SIGNIFICANCE OF MANAGEMENT

Management is a developing discipline.  It ensures the accomplishment of the objectives of an organisation with a set of constraints in scientific manner.  In this era of technological advancement and at a time when world is moving towards “Global Village “management is very important.  This chapter deals with the basic concepts of management, its process, functions, Nature, importance, various levels and difference between management and administration. 

After studying this chapter, the learner 

Learning Outcomes

• After studying this chapter the learner; 
• explains the concepts of management
• explains the meaning of management
• recognises the objectives of management
• describes the importance of management
• identifies the nature of management 
• explains the functions of management
• identifies the various levels of management
• distinguishes between management and administration

Modern society is made up of organisations and human beings accomplish most of their objectives through organised endeavour. wherever people work together in a group to achieve common objectives, coordination of physical and human resources become necessary. There must be unity of purpose and harmony of efforts between the members of an organised group. In the absence of a central directing and controlling agency, orderly working of the group is not possible. The element which provides leadership and coordination is known as management.  

1.1. Concepts of management  

The term management is used to refer  both the persons who occupy managerial positions as well as to the activities which the managers perform. In fact there can be five different Concepts of Management. 

(1) Management as economic resource 

According to economists efficient management is the most important input in the success of an organisation. Management is the most active factor of production because if assembles and integrates the other factors. The efficient use of land and capital upon labour is in turn governed by management. Management coordinates the other M's  (manpower. materials. money, machinery)  of an organization.

The M’S of organisation (Inputs of organisation)

 

(2) Management as a class or elite 

Sociologists look up on management as a distinct class in the society. Like, doctors, lawyers engineers etc. Management are a group of people, who are responsible for the establishment and accomplishment of objectives through the direction of others.  

(3) Management as a system of authority

Experts in the field of administration consider management as a rule making and rule enforcing body. 

Managers at different levels possess varying degrees of authority. In general, higher level managers have the authority to lay down the goals and policies ofthe enterprise while those at the lower level are authorized to execute the plans and policies to achieve the desired goals. 

(4) Management as a separate discipline 

As a field of study, management is an organised body of Knowledge. It is being taught in universities and institutes of management. Management discipline is a part of social science and humanities. It provides the principles and practices which a person must learn in order to become successful manager. 

(5) Management as a process

A process is a series of inter related activities. 'The process or management coil., of planning, organising, stalling, directing and controlling. 

Assessment activity

In the diagram given, complete the empty circles: 

1.2. Objectives of management

Management seeks to achieve certain objectives. They must be derived from the basic purpose of business. The objectives of management can be classified into organisational objectives, social objectives and personal objectives. 

(i) Organisational objectives or Economic objectives 

The economic objectives of business are survival, profit and growth. In order to survive an organisation must earn to cover cost. Profit is the return given to owner for risk taking. To remain in the industry, the business must exploit fully the growth potential 

(ii) Social objectives 

Organisations exist in the society and society provides inputs for the organisation. Therefore organisations have certain social obligations too. These include environmental friendly methods of production, giving employment opportunities and providing basic amenities, schools and creches to employees' children etc. 

Assessment activity

 Visit a nearby manufacturing  industry and observe the amenities provided by them to society and make a report. 

(iii) Personal objective

Individuals join the organisation to satisfy their personal needs. They vary from financial needs such as competitive salaries and perks, social needs such as peer recognition personal growth and development. Management has to reconcile personal goals with organisational objectives. 

Importance of management 

Management is a universal activity that is integral to any organisation. The importance of management can be understood from the following  points

• (i) Management helps in achieving group goals
• (ii) It increases efficiency –
  Through better planning, organising directing and controlling management reduces cost and increases productivity.
• (iii) Management creates dynamic organisation -
  Modern business world is ever changing and management helps to adapt the changes so that the organisation is able to maintain its competitive edge. 
• (iv) Management helps to achieve personal objectives-
  Manager motivates and leads his team in such a manner that individual members are able to achieve personal goals while contributing to the overall organisational objectives
• (v) Management helps in the development of society-
  Management helps to provide quality products and services, creates employment opportunities and adopts new technology which is friendly to the society. 

1.3. Levels of Management Management

Management is a universal term used for certain functions performed by individuals in an enterprise. They are bound together in a hierarchy of relationships. Every individual in the hierarchy is responsible for successful completion of a particular work. To perform his responsibility he is assigned a certain amount of authority ( right to take decision ). This authority responsibility relationships bounds individuals as superiors and subordinates and give rise to different levels in an organisation.  

In the case of a company, managerial functions are undertaken by three levels of people such as :

• a) Top level 
• b) Middle level 
• c) Lower level 

         

Levels of management 

Functions performed by different levels of management are ; 

Top level management

• (i) To analyse evaluate and deal with external environment
• (ii) To establish over all long term goals, strategy and policy
• (iii) To create an organisational frame wok i.e. authority and responsibility
• (iv) To appoint key executives
• (v) To represent the company to the outside world
• (vi) To coordinate different departments

Middle level management 

They perform the following functions:

• (i) To interpret ad explain the policies framed by top management
• (ii) To participate in operating decisions
• (iii) To cooperate among themselves to integrate various parts
• (iv) To motivate supervisory personnel
• (v) To develop and train operative personnel

Lower level management: 

The main functions of lower level management are : 

• (i) Plan day-to-day activities
• (ii) To assign job to workers
• (iii) To supervise and control workers
• (iv) To arrange materials tools and maintain machinery
• (v) To advise and assist workers
• (vi) To maintain discipline, morale among the workers
• (vii) To report feedback of worker’s problems

Assessment activity 

Classify the following positions in terms of their rank as top, middle and lower. 

Foremen 

Finance Manager 

CEO 

Superviser 

Marketing Manager 

Board of Directors

Managing Director 

1.4. Nature of management 

The study of management has evolved over a period of time along with the modern organisations based both on experience and practice of managers and a set of theoretical relationships. Over a period of time, it has grown into a dynamic subject. Over a period of time, it has grown into a dynamic subject. A  question  is often  raised as to whether management is an art,  a science,  a  profession or all of these. This question has been  discussed here  to  explain the nature of management.

Management as a science

1. There is a systematised body of knowledge in management. Principles are now available in every function of management and these principles helps to improve managerial effectiveness. For example, unity of command, scalar chain, order etc. Similarly there are several techniques in the field of management. Budgeting, cost accounting, critical path method (C.P.M) are some of these techniques which facilitate better management.
2. Principles of n1anagement have been developed through continuous observations and empirical verification.
3. Management principles are capable of universal application.

Management is a social science as it involves the study of human behaviour. It is a young and growing behavioural science. Management cannot be as perfect as natural sciences like physics, chemistry, etc. Human behaviour is ever changing. Therefore we cannot have the same kind of experimentation in management.

Management as an art

1. The process of management involves the use of knowledge and skills.
2. Management seeks to achieve concrete practical results, e.g. profits, service, etc.
3. Like any other art,  management is creative. It brings out new situations and makes resources productive.
4. Like any other art, management is a personalised process. Every manager has his own approach and technique depending upon his perception.
5. As an art, management requires judgement and skills. The art of management can be refined with continuous practice.
6. The art of management is as old as human civilisation.

Management as a profession 

1. There exists a systematic body of knowledge in the form of managerial principles and practices.
2. This body of knowledge can be mastered and practiced. 
3. Formal education and training= becoming important for managers. 
4. Several institutes have been established for imparting specialised knowledge and skills in management. Business houses are giving preference to properly educated and trained managers.
5. Management associations have been set up in India and abroad. e.g., All India Management Association (A1MA). 

Features of Science	Features of Art	Features of Profession
(i) Science is a systematised body of knowledge pertaining knowledge to a particular field of enquiry	(i)Existence of theoretical knowledge	(i) Well defined body of knowledge.
(ii)It contains principles and theories	(ii)Art effects changes and bring results e	(ii) Restricted entry-entrance test.
(iii)Scientific principles are universally applicable	(iii)Art is creative-success of an artist is measured by the result	(iii) Professional association-to regulate entry, conduct examination.
-	(iv)Art is personalised process-every artist has his own style	(iv) Service motive.
-	(v) An can be improved through practice.	(v) Ethical code of conduct.

But management cannot yet be described as a full pledged profession. Entry to management cadre is not restricted to management graduates. No minimum qualifications have been so far laid down for managers and there is no licensing of managers. There are several management association, but no such association enjoys Legal powers to regulate entry. There is no universally acceptable code of ethics and a person cannot be debarred from acting as manager citing violation of code. 

Assessment activity 

Examine the features of Science, Art and Profession to see whether management is an art, a science, a profession or all these three. 

Features of Science

• (i) Science is a systematised body of knowledge pertaining knowledge to a particular field of enquiry 
• (ii)It contains principles and theories 
• (iii)Scientific principles are universally applicable  

Features of Art 

•  (i)Existence of theoretical knowledge
• (ii)Art effects changes and  bring results 
• (iii)Art is creative-success of  an artist is measured by the result 
• (iv)Art is personalised process-every artist has his own style
• (v) An can be improved through practice. 

Features of Profession 

• (i) Well defined body of knowledge. 
• (ii) Restricted entry-entrance test.
• (iii) Professional association-to regulate entry, conduct examination. 
• (iv) Service motive. 
• (v) Ethical code of conduct. 

1.5. Features of management  

• Management is a systematised body of knowledge
• Principles are now available in every function of management
• Principles of management have been developed through continuous observation
• Management principles are capable of universal application with some modification according to changes in the environment
• Management involves the use of knowledge and skill
• Management seeks to achieve concrete result- profit, service
• Management is creative- management moulds welds attitudes and behaviour of people at work for the accomplishment of specific goals in a changing environment
• Management is personalised process-every manager has his own style
• Formal education and training  are becoming important for managers
• Several institutions have been established for imparting specialised knowledge and skill in management. Business houses are giving preference to them
• Management associations have been set up both in India and abroad (AIMA (All India Management Association))
• There is an increasing emphasis on the social responsibilities of managers

1.6. Functions of management 

The functions of management can be broadly classified into

a) managerial functions 

b) operational functions 

a. Managerial functions

The process of management consists of several inter related activities. These activities or elements are known as the functions of management. Different authorities have given different classification of function which a manager has to perform. Ernest dale has identified – planning, organising, staffing, directing and controlling innovation and representation. Luther Gullick has given a catchword “POSDCORB” which stands for initials of planning organising staffing directing coordinating reporting and budgeting. According to Koontz and O’Donnell, the most useful method of classifying managerial functions is to group them planning, organising, staffing, directing and controlling. 

A brief description of different functions of management is given below: 

Planning- planning implies looking ahead and deciding in advance what is to be done, when and where it is to be done , how and by whom it is to be done. It involves anticipating problems and developing their solution.

Organising- According to Henry Fayol “ to organise a business is to provide it with everything useful to its functioning-raw materials , tools, capital and personnel. The process of organising consist of a) identification of objectives b) grouping activities c)assignment of duties d) delegation of authority e) coordination

Staffing – staffing is the process of filling all positions in the organisations with adequate and qualified personnel. It is the executive function where the recruitment, selection , compensating , training , promotion and retirement of subordinate managers.

Directing–directing deals with interpersonal relations- it converts plans into performance. Direction consist of guiding supervising motivating the subordinates towards the achievement of planned goals.

Controlling – controlling is the process of ensuring that the organisation is moving in the desired direction and that progress is being made towards the achievement of goals. It involves a)establishment of standards b) measurement of actual performance c) comparing actual with the standards d) finding variants and taking corrective action.

Coordination – According to E.F.L.Brech “coordination is balancing and keeping together the team by ensuring a suitable allocation of tasks to the various members and seeing that the tasks are performed with due harmony”

      Coordination is not a distinct function but the very essence of management. It is the basic responsibility of every manager. It is the result of conscious action by the management. The three elements of coordination are balancing , timing and integration. 

b. Operational functions

Operational functions are also known as functional areas of management .They differ according to

the nature and size of business. Operational functions includes production, marketing, financing , purchasing, personnel etc. . 

Assessment activity 

Suggest management functions for the statements given below

1. Thinking in advance the future course of action.
2. Harmonious adjustments of various elements to achieve common objective 
3. Bring the actual result closer to the desired result 

1.7. Management v/s Administration 

There are three different viewpoints about whether management or administration is greater. They 

are: 

• i. Management is a generic term which includes administrative management and operative management 
• ii. Administration is a higher level function, which establish strategies and policies of the entire organisation and management executes all these into action. 
• iii. There is no difference between management and administration.
  
  The points observed from the above opinions are sum up as 

Administration	Management
Administration is a higher level function.	Management is a lower level function
It is thinking function	It is doing function
Determines strategies and policies of entire organisation.	It execute every thing in the organization
Administrators are owners of the company and they get dividend.	Managers are employees of the company and they get salary
The term administration is used mainly in govt. and non business organisations	Management is mainly used in business organisation

Administration 

Administration is a higher level function. 

It is thinking function 

Determines strategies and policies of entire organisation. 

Administrators are owners of the company and they get dividend. 

The term administration is used mainly in govt. and non business organisations  

Management 

Management is a lower level function

It is doing function 

It execute every thing in the organization 

Managers are employees of the company and they get salary 

Management is mainly used in business organisation 

TE Questions

Choose the correct answer from the hollowing given in brackets. 

1. Foreman comes under level ormanagemcnt. 

(a) Top (b) Middle (c) Lower (d) All levels 

2. The essence of management is called ................... 

(a) Planning (b) Organising (c) Co-ordination (d) Staffing It. 

Short answer questions 

1. List the important features of management. 

2. Prepare a seminar report on the topic "Management Functions". 

3. "Administration is a higher level function as compared to Management" Do you agree with this statement? State reasons. 

4. Briefly explain the features of management. 

5. Write a short note on the objectives of management. 

6. Explain the levels of management with the help of a diagram. 

7. Briefly explain the different concepts of management. 

8. Expand the acronym PODSCORB' 

9. Complete the series : 

Non-business organisation :  Administration

Business Organisation  :  .....................

10. Complete the diagram

Extended Activity 

Visit a nearby organization in your locality and observe the various positions in the organization and their functions and prepare a report.