Unit-II Evolution of Management Thought

Management and Administration, Classical Perspective-Scientific Management, Bureaucratic Organizations, Administrative Principles-Humanistic Perspective, Quantitative Perspective, Systems Thinking, Contingency View, Total Quality Management, Contemporary Management Tools. Mckinseys 7-S approach, Contributions of Peter F. Drucker.
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Management and Administration At the initial level of development of management thought, no distinction has been made between management and administration and both the terms were used interchangeably. In 1923, the terminological conflict between the two was raised by Oliver Sheldon when he emphasized administration as decision-making function and management as execution function. After that there have been lot of controversies between these terms. These controversies have resulted into three different approaches a) Administration is above management b) Administration is a part of management and c) Administration and management are the same. Administration is above management: Administration relates to policy formulation and management relates to policy execution and these two activities are not the same. Administration is that phase of a business enterprise that concerns itself with the overall determination of institutional objectives and the policies necessary to be followed in achieving the objectives. Management, on the other hand, is an executive function which is primarily concerned with carrying out broad policies laid down by the administration. Administration determines the basic framework of the organization within which managerial functions are taken.

Administration is a part of management: According to this approach management is a comprehensive term and administration is its part. Management is a social process entailing responsibility for the effective and economical planning and the regulation of the operation of an enterprise, in the fulfillment of a given purpose or task. On the other hand administration is that part of management which is concerned with the installation and carrying out of the procedures by which it is laid down and communicated the process of activities regulated and checked against plans.

Administration and management are the same: The difference between administration and management lies mostly in their use in different fields of human activities. The origin of the word administration found in the bureaucratic structure of government or in regulation of some laws. The government often uses the word administrator, instead of manager, to handle and manage its affairs. In law also administrators are appointed to look after the estate of deceased person. While handling the government affairs, administrators are to execute the broad policies laid down by the government, though they may also participate in policy formulation. The basic point of controversy between management and administration lies in terms of coverage of activities. In organizations the content of policy formulation is higher at higher levels; it is lower at lower levels while execution is otherwise. For example Board of Directors, Chief Executive and General Manager are concerned with administration while managers and supervisors are concerned with execution. It is suggested that two sets of people may not be required to perform two sets of management functions. Everyone performs all managerial functions, only relative importance of these function varies.

Mckinseys 7-S approach: The 7-S framework for management analysis was developed by the consulting firm of Mckinsey & Company. The seven Ss are Strategy, Structure, Systems, Style, Staff, Shared values and Skills. Strategy: Systematic action and allocation of resources to achieve company objectives. Structure: Organization structure and authority/responsibility relationships. Systems: Procedures and processes such as information systems, manufacturing processes, budgeting and control processes. Style: The way management behaves and collectively spends its time to achieve organizational goals. Staff: The people in the enterprise and their socialization into the organizational culture. Shared values (super ordinate goals): The values shared by the members of an organization that shape its destiny. Skills: Distinctive capabilities of an enterprise.

The Hard Ss: Strategy: Actions a company plans in response to or anticipation of changes in its external environment. Structure: Basis for specialization and coordination influenced primarily by strategy and by organization size and diversity. Systems: Formal and informal procedures that support the strategy and structure. The Soft Ss Style/Culture:

The culture of the organization consisting of the two components: 1. Organizational culture: The dominant values, beliefs and norms, which develop overtime and become relatively enduring features of organizational life. 2. Management Style: More a matter of what managers do than what they say; Staff: The people/human resource management-processes used to develop managers, socialization processes, ways of shaping basic values of management, ways of introducing young recruits to the company, ways of helping to manage the careers of employees. Skills: The distinctive competencies-what the company does best, ways of expanding or shifting competencies. Shared values/Superordinate goals: Guiding concepts, fundamental ideas around which a business is built-must be simple, usually stated as abstract level, have great meaning inside the organization even though outsiders may not see or understand them. Effective organizations achieve a fit between these seven elements. If one element changes, then this will affect all the others. For example, a change in HR systems like internal career plans and management training will have an impact on organizational culture (management style) and this will affect structures, processes and finally characteristic competencies of the organization.

Contributions of Peter F. Drucker: Peter F. Drucker is a management consultant and Professor of Management in the New York University. He outshines all other contemporary management thinkers. He is considered as the father of modern management thought. He has written many books on managerial topics. The more important books are: The Practice of

Management, Managing by Results, The effective executive, The Age of Discontinuity and Management: Tasks, Responsibilities and Practices . The main contributions are: He is against bureaucratic management and has emphasized management with creative and innovative characteristics. The basic objective of management is to lead towards innovation. The concept of innovation include development of new ideas, combining of old and new ideas, adaptation of ideas from other fields or even to act as a catalyst and encouraging others to carry out innovation. He emphasized that managers should not only have skills and techniques but should have right perspective putting the things into practice. They should be good practitioners so that they can understand the social and cultural requirements of various organizations and countries. According to Drucker manager has three basic functions which he must perform to enable the institution to make its contributions for (i) the specific purpose and mission of the institution, (ii) making work productive and the worker achieving, (iii) managing social impacts and social responsibilities. A manager has to perform several functions; setting of objectives, decision-making, organizing and motivating. He has attached great importance to the objective setting function and has specified eight areas where clear objective setting is required. These are; market standing, innovation, productivity, physical and financial resources, profitability, managerial performance and development of worker performance and attitude, and public responsibility. He advocated the replacement of bureaucratic structure because it has many dysfunctional effects. He emphasized three basic characteristics of an effective organization structure. These are: (i) enterprise should be organized for performance; (ii) it should contain the least possible number of managerial levels; and (iii) it must make possible the training and testing of tomorrows top managers-giving responsibility to a manager while still he is young. He identified three basic aspects in organizing: activity analysis, decision analysis, and relation analysis. An activity analysis shows what work has to be performed, what kind of work should be put together, and what emphasis is to be given to each activity in the organization structure. Decision analysis takes into account the four aspects of

decision; the degree of futurity in the decision, the impact of a decision over other functions, number of qualitative factors that enter into it, and whether the decision is periodically recurrent or rare. Such an analysis will determine the levels at which the decision can be made. Relation analysis helps in defining the structure and also to give guidance in manning the structure. He advocated federalism which refers to centralized control in decentralized structure. Federalism sets the top management free to devote itself to its proper functions. It defines the functions and responsibilities of the operating people, it creates yardstick to measure their success and effectiveness in operating jobs, and it helps to resolve the problem of continuity through giving the managers of various units education in top management problems and functions while in an operating position. He also advocates the concept of Management by Objectives (MBO). The MBO includes method of planning, setting standards, performance appraisal and motivation. According to Drucker, MBO is not only a technique of management but it is a philosophy of managing. It transforms the basic assumptions of managing from exercising control to self-control. Drucker has visualized rapid changes in the society because of rapid technological development. Since rapid changes are occurring in the society, human beings should develop philosophy to face the changes and take them as challenges for making the society better. This can be done by developing dynamic organizations which are able to absorb changes much faster than static ones.

Systems Thinking: Systems thinking is the ability to see both the distinct elemnts of a system or situation and the complex and changing interaction among those elements. A system is a set of interrelated parts that function as a whole to achieve a common purpose. Subsystems are parts of a system, such as an organization, that depend on one another. The systems approach to management is more a perspective for viewing problems than a school of thought. It is based on the concept that an organization is a system,

or an entity of interrelated parts. If you adjust one part of the system, other parts will be affected automatically. For example, suppose you offer low compensation to job candidates. According to the systems approach, your action will influence product quality. The low-quality employees who are willing to accept low wages will produce low-quality goods. The process of management reflected a systems viewpoint. Another aspect of systems theory is to regard the organization as an open system, one that interacts with the environment. The organization transforms inputs into outputs and supplies them to the outside world. If these outputs are perceived as valuable, the organization will survive and prosper. The feedback loop indicates that acceptance of the outputs by society gives the organization new inputs for revitalization and expansion. Managers can benefit from by recognizing that whatever work they undertake should contribute something of value to external people (such as customers and clients). Two other important concepts for managers from systems theory are entropy and synergy. Entropy is the tendency of a system to run down and die if it does not receive fresh inputs from its environment. The organization must continually receive input from the outside world to make sure it stays in tune with, or ahead of, the environment. Synergy means that the whole is greater than the sum of the parts. When the various parts of an organization work together, they can produce much more than working independently. For example, a few years ago, product developers at Cadillac thought about building a luxury sports utility vehicle called the Escalade. The developers consulted immediately with manufacturing, engineering, purchasing, and dealers to discuss the feasibility of their idea. Working together, the units of the organization produced a successful product launch in a tightly competitive market. Contingency Approach: Contingency view states that what works in one setting might not work in another. It means that one thing depends on other things and a managers response to a situation depends on identifying key contingencies in an organizational situation. For example, the organizational structure that is effective for an internet company such as Google would not be successful for a large auto manufacturer such as Ford. A business organization is now regarded as an open and adaptive system. Open and adaptable systems approach which is called contingency or situational approach can be adjusted to the demands of changing environmental situations. Situational approach recognizes that all the sub-systems of an organization and the supra-system of environment are interconnected and interrelated, and by analyzing their interrelationships, it helps the management in finding solutions to specific

situations. Different situations or circumstances demand different solutions. There cannot be universal principles of organization and management appropriate to all situations. In other words, there is no one best way to manage. Democratic or participative managerial styles may work under certain situations and we may have to adopt an autocratic managerial style under specific circumstances. Financial incentives may be effective in one situation while non-financial incentives can work wonders under certain other situations. If the condition is X, action A may be effective and if the condition is Y, action B may be needed. Contingency theory states that the pattern of management is influenced by a number of interrelated internal and external factors, and there is no one best theory of management or organization. The situation decides the pattern of organization and management. Total Quality Management: TQM focuses on managing the total organization to deliver better quality to customers. The approach infuses high-quality values throughout every activity within a company, with front-line workers intimately involved in the process. Four significant elements of quality management are employee involvement, focus on the customer, benchmarking, and continuous improvement, often referred to as kaizen. Employee involvement means that achieving better quality requires companywide participation in quality control. All employees are focused on the customer; companies find out what customers want and try to meet their needs and expectations. Benchmarking refers to a process whereby companies find out how others do something better than they do and then try to imitate or improve on it. Continuous improvement is the implementation of small, incremental improvements in all areas of the organization on an ongoing basis. TQM is not a quick fix, but companies such as General Electric, Texas Instruments, Procter & Gamble, and DuPont achieved astonishing results in efficiency, quality, and customer satisfaction through total quality management.

Contemporary Management Tool There is a continuous demand on the part of managers to look for new techniques and approaches that more adequately respond to customer needs and the demands of the environment. Customer Relationship Management: CRM systems use the latest information technology to keep in close touch with customers and to collect and manage large amounts of customer data. These data can help employees and managers act on customer insights, make better decisions, and provide superior customer service. 63 percent of surveyed managers reported their companies used CRM in 2008 as against 35% companies used CRM in 2000. Meeting customer needs and desires is a primary goal for organizations, and using CRM to give customers what they really want provides a tremendous boost to customer service and satisfaction. Outsourcing : Information technology has also contributed to the rapid growth of outsourcing, which means contracting out selected functions or activities to other organizations that can do the work more cost efficiently. Outsourcing requires that managers not only be technologically savvy but that they learn to manage a complex web of relationships. These relationships might reach far beyond the boundaries of the physical organization; they are built through flexible e-links between a company and its employees, suppliers , partners, and customers. Supply Chain Management: Refers to managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers. A supply-chain is a network of multiple businesses and individuals that are connected through the flow of products or services. Today, many organizations manage the supply chain with sophisticated electronic technology. In India, for example, Walmart managers have invested in an efficient supply chain that electronically links farmers and small manufacturers directly to the stores, maximizing value for both ends.

Quantitative Perspective: The quantitative perspective on management became popular based on its successful application in solving military problems during World War II. The quantitative perspective uses mathematics, statistical techniques, and computer technology to facilitate management decision making, particularly for complex problems. The subsets of the quantitative approach are operations research, operations management, and information technology. Operations research consists of mathematical model building and other applications of quantitative techniques to managerial problems. Operations management refers to the field of management that specializes in the physical production of goods or services. Operations management specialists use quantitative techniques to solve manufacturing problems. Some commonly used methods are forecasting, inventory modeling, linear and nonlinear programming, queuing theory, scheduling, simulation and break-even analysis. Information technology is the most recent subfield of the quantitative perspective, which is often reflected in management information systems designed to provide relevant information to managers in a timely and cost-efficient manner. Information technology include various software programs that help managers estimate costs, plan and track production, manage projects, allocate resources, or schedule employees.

Classical Perspective The study of modern management began in the late nineteenth century with the classical perspective, which took a rational, scientific approach to management and sought to make organizations efficient operating machines. Classical perspective contains three subfields, each with a slightly different emphasis: scientific management, bureaucractic organizations, and administrative principles.

Scientific Management: SM is a subfield of the classical perspective that emphasizes scientifically determined changes in management practices as the solution to improving labor productivity. Frederick Winslow Taylor is known as the father of Scientific management. It is one of the most significant innovations influencing modern management. Some supermarket chains are using computerized systems based on scienfitic management principles to schedulre employees for maximum efficiency. Frederick Taylor and Scientific Management: Frederick Winslow Taylor and other contributors notable Frank Gilbreth, Lillian Gilbreth, and Henry Gantt, investigated the effective use of human beings in industrial organizations, particularly at shop floor levels. Taylor has defined the basic problem of managing as the art of knowing exactly what you want men to do and then see in that they do it in the best and cheapest way. Since Taylor has put the problem of managing on a scientific way, he is often called as the father of scientific management and his contributions as the principles of scientific management. Taylor joined Midvale Steel Company in U.S.A as a worker and later on became supervisor. During this period, he continued his studies and eventually completed his M.E. (Master of Engineering). Subsequently, he joined Bethlehem Steel Company. At both these places, he carried experiments about how to increase the efficiency of people. Even after his retirement, he continued to develop scientific management. On the basis of his experiments, he published many papers and books and all his contributions were compiled in his book Scientific Management. Taylors contributions can be described in two parts: main features of scientific management and principles of scientific management. Main Features of Scientific Management: Taylor conducted various experiments at his work places to find out how human beings could be made more efficient by standardizing the work and better method of doing the work. These experiments have provided the following features of scientific management.

1. Separation of Planning and Doing: Taylor emphasized the separation of planning aspect from actual doing the work. Before Taylors scientific management, a worker used to plan about how he had to work and what instruments were necessary for that. The worker was put under the supervision of a supervisor commonly known as gang boss. Thus supervisors job was merely to see how the workers were performing. This was creating lot of problems, and Taylor emphasized that planning should be left to supervisor and worker should emphasize only operational work. 2. Functional Foremanship: Separation of planning from doing resulted into development of supervision system which could take planning work adequately besides keeping supervision on workers. For this purpose, Taylor evolved the concept of functional foremanship based on specialization of functions. In this system, eight persons are involved to direct the activities of workers. Out of these, four persons are concerned with planning; (i) route clerk, (ii) instruction card clerk, (iii) time and cost clerk, (iv) disciplinarian. The remaining four persons are concerned with doing aspect of the work. These are: (i) speed boss (ii) inspector, (iii) maintenance foreman, and (iv) gang boss. All of them give directions to workers on different aspects of work. This is against unity of command principle. 3. Job Analysis: JA is undertaken to find out the one best way of doing the thing. The best way of doing a job is one which requires the least movements, consequently less time and cost. The best way of doing the thing can be determined by taking up time-motion-fatigue studies. Time study involves the determination of time a movement takes to complete. The movement which takes minimum time is the best one. This helps in fixing the fair work for a period. Motion study involves the study of movements in parts which are involved in doing a job and thereby eliminating the wasteful movements and performing only necessary movements. Elimination of unnecessary movements in doing a work reduces time taken in performing a work and also the fatigue of workers.

Fatigue study shows the amount and frequency of rest required in completing the work. After certain period of time, workers feel fatigue and cannot work with full capacity. Therefore, they require rest in between. When the rest is allowed, they start working with full capacity. Thus job analysis, as given by Taylor, suggested the fair amount of a days work requiring certain movements and rest periods to complete it. 4. Standardization: As far as possible, standardization should be maintained in respect of instruments and tools, period work, amount of work, working conditions, cost of production, etc. These things should be fixed in advance on the basis of job analysis and various elements of costs that go in performing a work. 5. Scientific Selection and training of Workers: Taylor has suggested that workers should be selected on scientific basis taking into account their education, work experience, aptitude, physical strength, etc. A worker should be given work for which he is physically and technically most suitable. Apart from selection, proper emphasis should be given on the training of workers which makes them more efficient and effective. 6. Financial Incentives: Financial incentives can motivate workers to put in their maximum efforts. If provisions exist to earn higher wages by putting extra effort, workers will be motivated to earn more. Taylor himself applied the concept of differential piece rate system which was highly motivating. According to this scheme, a worker who completes the normal work gets wages at higher per piece and one who does not complete gets at lower rate. Thus, there is considerable difference in wages between those who complete the work and those who do not complete. To make the differential piece rate system work, Taylor has suggested that wages should be based on individual performance and not on the position which he occupies. Further, the wage rate should be fixed on accurate knowledge and not on estimates. 7. Economy: While applying scientific management, not only scientific and technical aspects should be considered but adequate consideration should be given to economy and profit. For this purpose, techniques of cost estimates

and control should be adopted. The economy and profit can be achieved by making the resources more productive as well as by eliminating the wastages. 8. Mental Revolution: SM depends on the mutual co-operation between management and workers. For this co-operation, there should be mental change in both parties from conflict to cooperation. Bureaucratic Organizations Approach: Max Weber introduced most of the concepts on bureaucratic organizations, which emphasizes management on an impersonal, rational basis through elements such as clearly defined authority and responsibility, formal record-keeping, and separation of management and ownership. It focuses on the total organization rather than the individual worker and delineates the management functions of planning, organizing, commanding, coordinating, and controlling. The organization relies on rules and written records for continuity. In addition, rules and procedures are impersonal and applied uniformly to all employees. A clear division of labor arises from distinct definitions of authority and responsibility, legitimized as official duties. Positions are orgnized in a hierarchy, with each position under the authority of a higher one. The manager depends not on his or her personality for successfully giving orders but on the legal power invested in the managerial position. Characteristics of Bureaucracy: Division of Labor, with clear definitions of authority and responsibility. Positions orgnized in a hierarchy of authority. Managers subject to rules and procedures that will ensure reliable, predictable behaviour. Management separte from the ownership of the organization. Administrative acts and decisions recorded in writing Personnel selected and promoted based on technical qualifications.

Humanistic Perspective The Humanistic perspective on management emphasized the importance of understanding human behaviors, needs, and attitudes in the workplace as well as social interactions and group processes. There are three primary subfields based on the humanistic perspective: the human relations movement, the human resource perspective, and the behavioural sciences approach. The advocates of humanistic approach were Mary Parker Follett and Chester Barnard. Folletts ideas served as a contrast to scientific management and are re emerging as applicable for modern managers dealing with rapid changes in todays global environment. Follett addressed issues such as ethics, power, and how to lead in a way that encourages employees to give their best. The concepts of empowerment, facilitating rather than controlling employees, and allowing employees to act depending on the authority of the situation. Chester I, Barnard contribution was the concept of the informal organization. The informal organization occurs in all formal organizations. Informal relationships are powerful forces that can help the organization if properly managed. Another significant contribution was the acceptance theory of authority, which states that people have free will and can choose whether to follow management orders. People typically follow orders because they perceive positive benefits to themselves, but they do have a choice. Managers should treat employees properly because their acceptance of authority may be critical to organization success in important situations. Human Relations Movement The human relations movement was based on the idea that truly effective control comes from within the individual worker rather than from strict, authoritarian control. Elton Mayo, F.J. Roethlisberger and others have done the famous experiments at the Hawthorne plant of the Western Electric Company between 1927 and 1932. They found that changing levels of illumination for the test group, modifying rest periods, shortening workdays and varying incentive pay systems did not seem to explain changes in productivity. They arrived at a conclusion that other factors

were responsible. They found, in general, that the improvement in productivity was due to such social factors as morale, satisfactory interrelationships between members of a work group ( a sense of belonging), and effective management -a kind of managing that would understand human behavior, especially group behavior, and serve it through such interpersonal skills as motivating, counseling, leading and communicating. The contributions of this movement are: 1. A business organization is not merely a techno-economic system but is also a social system. Hence, the management has to provide social satisfaction to the workers to make them to improve their productivity. 2. There is no correlation between improved working conditions and productivity. 3. Production norms for workers are set by their group and not by the time, motion and fatigue studies. 4. The workers who deviate from the production norms set by the group are isolated, harassed and penalized by their co-workers. 5. A worker does not work for money only. Non-financial factors such as affection and respect of his co-workers play a significant role in influencing his behavior. 6. Employee centered, democratic and participative style of supervisory leadership is more effective than task-centered leadership. 7. As informal groups play an important role in influencing workers behavior, the informal group and not the individual is the dominant unit of analysis in the organization. Human Resources Perspective The human relations movement initially espoused a dairy farm view of management-contented cows give more milk, so satisfied workers will give more work. The human resources perspective maintained an interest in worker participation and considerate leadership but shifted the emphasis to consider the daily tasks which that people perform. The human resources perspective combines prescriptions for design of job tasks with theories of motivation. In the human resources view, jobs should be designed so that tasks are not perceived as

dehumanizing or demeaning but instead allow workers to use their full potential. Two of the best-known contributors to the human resources perspective were Abraham Maslow and Douglas McGregor. Abraham Maslow (1908-1970) , a practicing psychologist, observed that his patients problems usually stemmed from an inability to satisfy their needs. He suggested a hierarchy of needs. Maslows hierarchy started with physiological needs and progressed to safety, belongingness, esteem, and, finally, selfactualization needs. Douglas McGregor (1906-1964) formulated Theory X and Theory Y. He believed that the classical perspective was based on Theory X assumptions about workers. He proposed Theory Y as a more realistic view of workers for guiding management thinking. The point of Theory Y is that organizations can take advantage of the imagination and intellect of all their employees. Employees will exercise self-control and will contribute to organizational goals when given the opportunity. Assumptions of Theory X The average human being has an inherent dislike of work and will avoid if if possible. Because of the human characteristic of dislike for work, most people must be coerced, controlled, directed, or threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives. The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and want security above all. Assumptions of TheoryY The expenditure of physical and mental effort in work is as natural as play or rest. The average human being does not inherently dislike work. External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. A person will exercise self-direction and self-control in the service of objectives to which he or she is committed.

 The average humanbeing learns, under proper conditions, not only to accept but to seek responsibility. The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems.

Behavioral Sciences Approach The behavioral sciences approach uses scientific methods and draw from sociology, psychology, anthropology, economics, and other disciplines to develop theories about human behavior and interaction in an organizational setting. One specific set of management techniques based in the behavioral sciences approach is organization development. In the 1970s, organization development evolved as a separate field that applied the behavioral sciences to improve the organizations health and effectiveness through its ability to cope with change, improve internal relationships, and increase problem-solving capabilities. The techniques and concepts of OD have been expanded to address the increasing complexity of organizations and the environment.

Administrative Principles: Henry Fayol is a French Industrialist known as the real father of modern management. His contributions are generally termed as operational management or administrative management. His contributions were first published in the book titled as Administration Industrielle et Generale. He looked at the problems of managing an organization from top management point of view. He has used the term administration instead of management. He emphasized that principles of management are flexible and not absolute and are usable regardless of changing and special conditions. He classified the activities of an industrial organization into six groups: Technical (relating to production) Commercial (buying, selling and exchange) Financial (Search for capital and its optimum use) Security (protection of property and person) Accounting (including statistics); and Managerial (planning, organization, command, coordination and control)

Fayol has classified his approach of studying management into three parts: 1. Managerial qualities and Training

2. General principles of management, and 3. Elements of management

Managerial qualities and Training: According to Fayol, there are six types of qualities that a manager requires. These are: (i) (ii) (iii) (iv) (v) (vi) Physical (health, vigor, and address) Mental (ability to understand and learn, judgment, mental vigor and adaptability) Moral (energy, firmness, initiative, loyalty, tact, and dignity); Educational (general acquaintance with matters not belonging exclusively to the function performed); Technical (peculiar to the function being performed); and Experience (arising from the work)

He observed that the most important ability for a worker is technical; the relative importance of managerial ability increases as one goes up the scalar chain, with insight becoming the most important ability for top level executives.

General principles of management: Fayol has given fourteen principles of management. He made a distinction between management principles and management elements. While management principle is a fundamental truth and establishes cause-effect relationship, management element denotes the function performed by manager. While giving the management principles, Fayol has emphasized two things: (i) The list of management principles is not exhaustive but suggestive. (ii) Principles of management are not rigid but flexible and capable of adapting to every need. 1. Division of Work: He advocated division of work to take the advantages of specialization and applies the principle to all kinds of work, managerial as well as technical.

2. Authority and Responsibility: The authority and responsibility are related, with the latter the corollary of the former and arising from it. Authority is a combination of official factors, deriving from the managers position and personal factors such as intelligence, experience, moral worth, past services, etc. Responsibility arises out of assignment of activity. 3. Discipline: Discipline is obedience, application, energy, behavior and outward mark of respect shown by employees. Discipline may be of two types; self-imposed discipline and command discipline. Self-imposed discipline springs from within the individual and is in the nature of spontaneous response to a skilful leader. Command discipline stems from a recognized authority and utilizes deterrents to secure compliance with a desired action, which is expressed by established customs, rules and regulations. 4. Unity of Command: This means that employees should receive orders from one superior only. 5. Unity of Direction: According to this principle, each group of activities with the same objective must have one head and one plan. It is concerned with functioning of the organization in respect of its grouping of activities or planning while unity of command is concerned with personnel at all levels in the organization in terms of reporting relationship. Unity of direction provides better coordination among various activities to be undertaken by an organization. 6. Subordination of individual to general interest: Individual interest must be subordinate to general interest of the organization when there is a conflict between the two. 7. Remuneration: Remuneration and methods of payment should be fair and afford the maximum possible satisfaction to employees and employer. 8. Centralization: Refers to the extent to which authority is concentrated or disbursed. Individual circumstances will determine the degree that will give the best overall yield. 9. Scalar chain: There should be a scalar chain of authority and of communication ranging from highest to the lowest. It suggests that each communication going up or coming down must flow through each position in the line of authority. It can be short-circuited only in special circumstances when it when its rigid following would be detrimental to the

organization. For this purpose he suggested gang plank which is used to prevent the scalar chain from bogging down action. 10.Order: This is a principle relating to the arrangement of things and people. There should be a place for everything and everything should be in its place. Similarly, in social order, there should be right man in the right place. 11.Equity: Loyalty and devotion should be elicited from personnel by a combination of kindness and justice on the part of managers when dealing with subordinates. 12.Stability of tenure: No employee should be removed within short time. There should be reasonable security of jobs. Stability of tenure is essential to get an employee accustomed to new work and succeeding in doing it well. Finding unnecessary turnover to be both the cause and the effect of bad management. 13.Initiative: Within the limits of authority and discipline, managers should encourage their employees for taking initiative. Initiative is concerned with thinking out and execution of a plan. Initiative increases zeal and energy on the part of human beings. 14.Esprit de corps: This is the principle of union is strength as well as an extension of the principle of unity of command for establishing team work. The manager should encourage esprit de corps among his employees. Elements of Management: According to Fayol management is a process consisting of five elements. He has regarded these elements as functions of management. These are planning, organization, commanding, coordination and controlling. Planning is the most important managerial function and failure to plan properly leads to hesitation, false steps, and untimely changes in directions which cause weakness in the organization. Creation of organization structure and commanding is necessary to execute plans. Coordination is necessary to make sure that everyone is working together, and control looks whether everything is proceeding according to plan. According to him these functions are required at all levels of management and in all types of organizations.