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CHAPTER 1

NATURE AND SIGNIFICANCE OF MANAGEMENT

According to modern concept “Management is a process of getting things done with the
aim of achieving goals effectively and efficiently.”

Efficiency and Effectiveness:

Efficiency refers to doing the task in right ways, i.e., with minimum cost and optimum
utilization of resources. It refers to the relationship between inputs and outputs. If we
produce more from the given inputs, our efficiency is increased. Or if we produce the same
from less input, again our efficiency is increased. And it is possible when the manager
avoids the wastage of resources. Management is concerned with efficient use of resources
because reduction in cost leads to higher profit.

In short, Efficiency means:

 Doing things right

 Not wasting resources
 Making use of resources in a cost effective manner.

Effectiveness refers to doing the right task, completing activities and achieving goal. When
a manager attains goals, we can say he/she is effective. It means effectiveness is adjudged
merely on the basis of the attainment of goals irrespective of the fact how much cost is
incurred in their fulfillment.

Effectiveness means doing right things.

Relation between efficiency and effectiveness

 Effectiveness and efficiency are the two sides of a same coin; one without other is of
no significance. It is easier to be effective if we ignore efficiency.
 Effectiveness and efficiency together lead to higher profit and prosperity of an
organization. And failure of an organization is due to inefficiency and ineffectiveness.

Difference between effectiveness and efficiency

Basis of difference Effectiveness Efficiency

1. Meaning It refers to completing the It refers to completing the task with

task on time, no matter
whatever the cost.
2. Objective To achieve end result on
time.
3. Main Doing the right task
consideration
minimum cost, optimum utilization of
resources, and in cost effective manner.
To conduct cost benefit analysis.
Doing the task right

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Definition of management:

 “Management is the art of knowing what you want to do and then seeing that they do
it in the best and the cheapest way.”
F.W.Taylor
 “Management is the art of getting things done through others and with formally
organized groups.”
Harold Koontz

CHARACTERISTICS OF MANAGEMENT:

Goal
oriented
process

Intangible Pervasive

Characteristics of
management
Dynamic Multi-
function dimensional

Group
Continous
activity

1. Management is goal-oriented process: Management always aims at achieving the

organizational objectives. An organization has a set of basic goals which are the basic
reason for its existence. These should be simple and clearly stated. Management unites
the efforts of different individuals in the organization towards achieving common goals.

2. Management is pervasive: Management activities are performed in all types of

organizations, in all departments and at all levels. Management is required in all
organization whether big or small, manufacturing or service organization, profit or non-
profit making organization. Concept of management is used in whole world. What
managers do in India, USA, Germany or Japan is same, how they do it may be quite
different.

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3. Management is multi-dimensional: Management doesnot mean one single activity but

it includes three main activities:
i) Management of work
ii) Management of people
iii) Management of operations
i. Management of work: all organizations are set up to perform some task or
goal. Management activities aim at achieving goals or tasks to be accomplished.
The task or nature of work depends upon the nature of business for example;
work to be accomplished in a school is providing education, in hospital is to
treat patient, in industry to manufacture some product.

ii. Management of people: people refer to human resources and human

resources are the most important assets of an organization. Management has
to get task accomplished through people by making their strength effective and
their weakness irrelevant. Managing people has two dimensions:
 Taking care of employees individual needs.
 Taking care of group of people.

iii. Management of operations: operations refer to activities of production cycle

such as buying inputs, converting them into semi-finished goods, finished
goods. Management of operations concentrates on mixing management of work
with management of people, i.e., deciding what work has to be done, how it has
to be done and who will do it.

MANAGEMENT

MANAGEMENT MANAGEMENT MANAGEMENT

OF OF OF
WORK PEOPLE OPERATIONS

4. Management is a continuous process: Management is a continuous or never ending

process. All the functions of management are performed continuously, for example,
planning, organizing, staffing, directing and controlling are performed by all the
managers at all the times.
PLANNING

CONTROLLING ORGANISING

DIRECTING STAFFING

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5. Management is a group activity: Management is a group activity since it involves

managing and coordinating activities of different people as a team to attain the desired
objectives.

6. Management is a dynamic activity: Management is a dynamic function since it has to

adapt according to need, time and situation of the changing environment. For example,
McDonalds made major changes in its “menu” to survive in the Indian market.

7. Intangible force: management is such a force which cannot be seen, only its presence
can be felt. When the goals of an organization are being realized in accordance with its
plans, we can say that the management of the organization is good.

OBJECTIVES OF MANAGEMENT:

OBEJCTIVES OF MANAGEMENT

Organisational Personal
Social objectives
objectives obejctives

Quality
Survival Adequate salary
products

Resonable Good working

Profit
price conditions

Employment
Growth Peer recognition
opportunity

Economic Training and

growth development

Education, health and

Social
vocational training
recognition
programmes

Eco-friendly
methods of
production

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i. Organizational objectives: management is responsible for setting and achieving

objectives of the organization. The main objective of any organization should be to utilize
human and material resources to the maximum possible advantage, i.e., to fulfill the
economic objectives of the business. These are survival, growth, and profit.
(a) Survival: the basic purpose of every organization is to survive and exist in
the competitive market for a long period of time and it is possible only when
it is able to cover its cost.
(b) Profit: the most important objective of any organization is earning adequate
amount of profit. Profit is essential for survival, growth and expansion of
business. Profit is the reward given to businessman for bearing risk.
(c) Growth: business organization must grow and expand their activities. The
success of any organization is measured by the growth rate and growth is
measured in terms of sales, number of branches, number of products,
number of employees, etc.

ii. Social objectives: it involves the creation of benefit for society. Business organizations
are the part of the society. They earn by using the resources of society so they must do
something for society also. This includes:
 Supply of quality products at reasonable prices.
 Contribution towards desirable civic activities.
 Generation of economic wealth.
 Generation of employment opportunities.
 Financial support to community.
 Organizing educational, health and vocational training programmes.
 Participating actively in social service projects of government and NGOs.
 Using environmental friendly methods of productions.
 Providing employment opportunities to weaker section of society.

iii. Personal objectives/ Human objectives/ Individual objectives: personal objectives

are related to the employees of the organization. As employees are most important
resources of every company and satisfied and motivated employees contribute maximum
for the organizations. Workers may loose interest in work if their objectives are
neglected. Management must try to integrate the personal objectives with the
organizational objectives. These includes:
 Competitive salary to fulfill financial needs of employees.
 Promotion, training, personal growth and development of employees to fulfill
esteem and other higher level needs of employees.
 Peer recognition, self respect, respect for colleague to fulfill social need.
 Good and healthy working conditions for safety of employees.

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IMPORTANCE OF MANAGEMENT:

Helps in
achieving group
goals
Helps in
development of Increases
society efficiency

Importance of
management

Helps in achieving Creates a

personal objectives dynamic
organisation

1) Management helps in achieving group goals: management creates team work and
coordination in the group. Managers give common direction to individual efforts in
achieving the overall goals of the organization.

2) Management increases efficiency: management increases efficiency by using

resources in the best possible manner to reduce cost and increase productivity.

3) Management creates dynamic organization: management helps the employees

overcome their resistance to change and adapt as per changing situation to ensure
its survival and growth.

4) Management helps in achieving personal objectives: management helps the

individuals achieve their personal goals while working towards organizational
objectives.

5) Management helps in the development of society: management helps in the

development of society by producing good quality products, creating employment
opportunities and adopting new technology.

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NATURE OF MANAGEMENT:

 Management as an art
 Management as a science
 Management as a profession

1) MANAGEMENT AS AN ART: Art refers to the skillful and personal application of

existing knowledge to achieve desired results. It is a systematic body of knowledge
which requires skill, creativity and practice to get perfection.

The main features of art are:

i) Existence of theoretical knowledge: In every art there is systematic and
organized study material available to acquire theoretical knowledge of the art. For
example, various books on different ragas are available in music.
In management also there is systematic and organized body of knowledge
available which can help in acquiring managerial studies. So this feature of art
is present in management also.

ii) Personalized application: In the field of art only theoretical knowledge is not
enough. Every artist must have personal skill and creativity to apply that
knowledge. For example, all musicians learn same ragas but they apply these
ragas according to their personal skill and creativity which makes them different.
in management also all managers learn same management theories and
principles. But their efficiency depends on how well they use these principles
under different situations by applying personal skills and creativity. So this
feature of art is also present in management.

iii) Based on practice and creativity: the artist requires regular practice of art to
become more fine and perfect. Without practice artists lose their perfection. Art
requires creative practice, i.e., artist must add his creativity to the theoretical
knowledge he has learned.
Same way with experience managers also improves their managerial skills and
efficiency. So this feature of art is also present in management.

Since all the features of art are present in management so it can be called as an
Art.

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2) MANAGEMENT AS A SCIENCE: Science is a systematic and organized body of

knowledge based on logically observed findings, facts and events. It comprises of
exact principles which can be verified and it can establish cause and effect relations.

The main features of science are:

i. Systematized body of knowledge: In science organized and systematic study

material is available which is used to acquire the knowledge of science.
In management also there is availability of systematic and organized study
material. So this feature of science is present in management.

ii. Principles are based on experimentation: Scientific principles are developed

through observations and then tested through repeated experiments.
The management principles are also developed through observation and
experiments but since management deal with human being and human
behavior cannot be accurately predicted. So management can be called as
inexact science. This feature of science is partially present.

iii. Universal validity: scientific principles have universal application and validity.
Management principles are not exact like scientific principles so their
application and use is not universal. They have to be modified according to the
given situation. So this feature of science is not present in management.

Since one feature of science is present in management and two are partly
present. So management cannot be considered pure or exact science. It is
called inexact or social science.

3) MANAGEMENT AS A PROFESSION: Profession means an occupation for which

specialized knowledge and skills are required and entry is restricted.

The main features of profession are:

I. Well defined body of knowledge: in every profession there is practice of
systematic body of knowledge which helps the professionals to gain specialized
knowledge of that profession.
In management also there is availability of systematic body of knowledge. Scholars
are studying various business situations and are trying to develop new principles
to tackle these situations. So presently this feature of profession is present in
management also.

II. Restricted entry: the entry to a profession is restricted through an examination

or degree. For example, a person can practice as doctor only when he is having
MBBS degree.
Whereas there is no legal restriction on appointment of a manager, anyone can
become a manager irrespective of the educational qualification. But now many

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companies prefer to appoint managers only with MBA degree. So presently this
feature of profession is not present in the management but very soon it will
be included with statutory backing.

III. Presence of professional associations: For all the professions, special

associations are established and every professional has to get himself registered
with his association before practicing that profession. For example, doctors have
to get themselves registered with Medical Council of India, etc.
In management various management associations are set up national and
international levels which have some membership rules and set of ethical codes,
for example, AIMA in New Delhi, National institute of Personal Management at
Kolkata, etc., but legally it is not compulsory for managers to become a part of
these organizations by registration. So presently this feature of profession is
not present in management but very soon it will be included and get
statutory backing also.

IV. Existence of ethical codes: For every profession there is set of ethical codes fixed
by professional organizations and are binding on all the professionals of that
profession.
In management there is growing emphasis on ethical behavior of managers. AIMA
has devised a code of conduct for Indian managers but legally it is not compulsory
for all the managers to get registered with AIMA.
So presently this feature of profession is not present in management but
very soon it will be included.

V. Service motive: the basic motive of every profession is to serve the clients with
dedication.
The basic purpose of management is achievement of profit maximization. But
nowadays only profit maximization cannot be the sole goal of an enterprise. A
businessman must give due importance to social objectives along with economic
objectives.
So presently this feature of profession is not present but very soon it will be
included.

Today management is not recognized as full-fledged profession but very soon

it will be recognized as a full-fledged profession.

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LEVELS OF MANAGEMENT:

BOARD OF
DIRECTORS,CHAIRMAN,
GENERAL MANAGER,
PRESIDENT,CHIEF
EXECUTIVE OFFICER
TOP LEVEL
DEPARTMENTAL MANAGER,
FUNCTIONAL MANAGER,
EXECUTIVE OFFICER, DIVISIONAL
HEADS, PLANT
SUPERINTENDENT
MIDDLE LEVEL
SUPERVISOR, SUPERINTENDENT, FOREMAN,
SECTION OFFICER, CLERK, SUB-DEPARTMENT
EXECUTIVE, ETC.
LOWER/ SUPERVISORY LEVEL

i. TOP LEVEL MANAGEMENT: They consist of the senior-most executives of the

organization. They consists of chairman, board of directors, managing director, general
manager, president, vice president, chief executive officer, chief financial officer, etc..
The job of top level managers is complex and stressful, demanding long hours and
commitment to the organization.

Functions of top level management:

a) Determining the objectives of the enterprise: The top level managers form long
term as well as short term objectives.
b) Framing of plans and policies: The top level managers frame the plans and policies
to achieve the set objectives.
c) Organizing activities to be performed by persons working at middle level: The
top level management assigns jobs to different individuals working at middle level.
d) Assembling all the resources: The top level management arranges all the finance
required to carry on day to day activities. They buy fixed assets also.
e) Responsible for welfare and survival of the organization: Top level management is
responsible for all the activities of the business and for its impact on the society.
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ii. MIDDLE LEVEL MANAGEMENT: They act as linking pin between top and lower level
management. They consists of departmental heads such as purchase manager, sales
manager, etc. People of this group are responsible for executing the plans and policies
made by top level. They are responsible for all the activities of first line managers.

Functions of middle level management:

a) Interpretation of policies framed by top management to lower level: they
explain the main plans and policies framed by top level management to lower level.
b) Organizing the activities of their department: they organize the resources and
activities of their department.
c) Selecting and appointing the required personnel: they ensure that their
department has the necessary personnel. They also selects and appoints employees
of their department.
d) Motivating the persons: they offer various incentives to employees so that they get
motivated and perform to their best ability.
e) Cooperate with other departments: they cooperate with other departments for
smooth functioning.

iii. SUPERVISORY LEVEL MANAGEMENT: they consists of supervisors, superintendents,

foremen, sub-department executives, clerk, etc. They perform the activities according to
the plans of top and middle level management. They are responsible for maintain
discipline among the workers. Their authority and responsibility is limited.
Functions of lower level management:

a) Representing the problems/grievances of workers: They are directly linked with

subordinates so they are the right persons to understand the problems of
subordinates.
b) Maintain good working conditions: they provide good working conditions and
create supportive work environment which improve relations between supervisors
and subordinates.
c) Looking to safety of workers: they provide safe and secure work environment to
workers.
d) Try to maintain precise standard of quality: they ensure steady flow of output and
make sure that quality standards are maintained by the workers.
e) Responsible for boosting morale of workers: they motivate the employees and
boost their morale.
f) Minimize the wastage of materials
g) Maintain safety of standards
h) Responsible for quality, quantity of output and loyalty of workers.

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FUNCTIONS OF MANAGEMENT:

i) PLANNING: It is always the first function performed by every manager. Planning

refers to “deciding in advance what to do, how to do, when to do, and who is going
to do it.
Planning bridges the gap between where we stand today and where we want to
reach. Planning is the base of all other functions of management.

ii) ORGANISING: After setting up the plans next function is to organize the activities
and establishing an organization structure to execute the plan. Organizing is
assigning duties, grouping tasks, establishing authority, and allocating resources
required to carry out a specific plan. It examines the activities and resources
required to implement the plan. It determines what activities and resources are
required. It decides who will do a particular task, where it will be done, and when
it will be done.

iii) STAFFING: It id finding the right people for the right job. It refers to recruiting,
selecting, appointing the employees, assigning them duties, maintaining cordial
relations and taking care of grievances of employees. It also includes training and
development of employees.

iv) DIRECTING: It involves leading, influencing and motivating employees to perform

the tasks assigned to them. It refers to giving instructions to employees by
motivating them, supervising the activities of employees, communicating with
them. It includes supervising, motivating, communication and leadership.

v) CONTROLLING: this is the last function of management. in this function

managers try to match the actual performance with the planned performance and
if there is no match between both then managers try to find out the reasons of
deviation and suggest corrective measures to come on the path of plan.

PLANNING

CONTROLLING ORGANISING

DIRECTING STAFFING

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COORDINATION:

The process by which manager synchronizes the activities of different departments is

known as coordination. Coordination is the force that binds all the other functions of
management. it is the base or primary function of every manager because various
departments of an organization are working independently and there is need to relate and
integrate their activities.

COORDINATION: THE ESSENCE OF MANAGEMENT:

Co-ordination brings unity of action and integrates various activities of organization. It is

considered as the essence of management because of the following reasons:

1) Coordination is needed to perform all the functions of management:

 The process of coordination begins at planning stage when top management plans
for whole organization.
 Based on plans then organization structure is developed.
 Staff is required, selected and trained as per organization structure and plan.
 To ensure right execution of plan directions are given.
 Controlling ensure no discrepancy between plan and actual performance.

2) Coordination is required at all levels:

 Top level requires coordination to integrate all the activities of organization.
 Coordination id required at middle level to balance between the activities of
different departments.
 Lower level requires coordination to integrate the activities of workers.

3) Coordination is the most important function of an organization: Any company

which fails to coordinate its activities cannot survive and run successfully for a long
period of time. Coordination involves synchronization of different actions of various units
or departments.

Characteristics of coordination:

a) Coordination integrates group efforts: it unifies unrelated or diverse interests into

purposeful work activity. There is no need for coordination when only single
individual is working. It gives common focus to group effort to ensure that
performance is as it was planned and scheduled.

b) Coordination ensures unity of action: the main aim of every manager is to

coordinate the activities and functions of all individuals to common goal. It ensures
all departments work hand in hand and create balance in all the departments.

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c) Coordination is a continuous process: it is a non-ending function. It begins with

the planning stage and continues till controlling.

d) Coordination is an all pervasive function: it is a universal function; it is required

at all the levels, in all the departments and to perform all the functions due to
interdependence of various activities on each other.

e) Coordination is the responsibility of all managers: It is not the task of only top
level managers but managers working at different levels try to coordinate the
activities of organization.

f) Coordination is a deliberate function: every manager tries to coordinate the

activities of organization to avoid confusion and chaos. Without coordination efforts
of individuals cannot be united and integrated.

IMPORTANCE OF COORDINATION:
i) Growth in size: the need of organization increases with the increase in size of
organization because in large organization there are more number of persons
working, each individual has his own needs and objectives, so there is more need
to bring together or synchronizes the efforts of these employees towards common
goal.

ii) Functional differentiation: the functions of an organization are divided into

different departments, sections or divisions and each department works in
isolation by giving more importance to its objective. There is more need to relate
and bring together the activities of different sections as they are part of one
organization only. The coordination is needed to minimize the differences among
departments.

iii) Specialization: in large and modern organization there is high degree of

specialization and the specialists or experts feel that they are the only qualified
people and they always take right decision in right direction. There is a need to
coordinate the activities of all the specialists in a common direction and get
maximum benefit of these specialists.

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