Introduction to Industrial Management: Concept, Nature, Process and Significance

Chapter 1

LEARNING OBJECTIVES
After reading this chapter, a student would be able to: understand the management, its concepts and process understand various functions of management discuss important characteristic features of management know different dimensions of management appreciate the importance of basic management to study organizational structure and systems explain the process of development of various management thoughts differentiate between various management thoughts critically evaluate various management thoughts discuss modern management thoughts

Nature of Management and its Process

Operationally, management may be defined as: A dynamic process, that helps to get the things done, through and with the efforts of people. James L. Lundy opined that Management is principally the task of planning, coordinating, motivating and controlling the efforts of others towards a specific objective. Definition of management has following different dimensions Productivity Orientation Human Relations Orientation Decision-making Orientation Leadership Orientation Process Orientation It can be said that management is optimization of constraining resources to achieve some intended goals.

Management Functions and Process

Planning Planning is deciding in advance what is to be done, how and when it is to be done. It involves projecting the future course of action for the business as a whole and also for different sections within it. Organizing Organizing is the next function of management. It may be conceived as the structuring of functions and duties to be performed by a group of people for the purpose of attaining enterprise. Staffing Organizing as a function of management helps the executive to establish positions and lay down their functional relations to each other. However, it is through staffing function that different positions in the organization structure are kept manned. Staffing process, therefore, provides the organization with adequate, competent and qualified personnel at all levels in the enterprise.

Management Functions and Process

Direction Mere planning, organizing and staffing are not sufficient to set the tasks in motion. Management have well-coordinated plans, properly established duties and authority relations and able personnel, yet it is through the function of direction that the manager is able to get the employees accomplish their tasks by making them integrate their individual efforts to the interest and objectives of the enterprise. Control It is this possibility of actions deviating from plan that calls for constant observation of actual performance so that appropriate steps may be taken to make them conform to plans. Thus, the controlling task of management involves compelling the events to conform to plans. Coordination Coordination deals with harmonizing the work relations and efforts at all levels for some common purpose. It may be described as unifying and achieving harmony of individual efforts for the purpose of accomplishing group goals.

Important Characteristics and Features of Management

Management Is Organized Activities Management Is Aligned with Organizational Objectives Management Optimizes Constraining Resources Management Works with and through People Management Is about Decision Making Management Is a Science as well as an Art Management Is Universal Management Is Intangible Management Is an Interdisciplinary Approach Management Is a Social Process Management Is a System of Authority Management Is Dynamic Management Principles Are Relative and Not Absolute Management Is an Emerging Profession Management Is a Strategic Function

Management-Science or Art
Science is defined as a body of knowledge systematized through application of scientific method in any department of enquiry. Science is systematic in the sense that certain relationships, principles and their limitations have been discovered, tested and established. Management can be described as a science but not in the sense physical sciences are. Management is a theory possessing a number of principles relating to coordination, organization, decision making and so on. The function of art is to effect change or accomplish goals by deliberate efforts. Management principles are important not for the sake of knowledge alone but also for their application in concrete situations. In fact, skill in application of principles to work situations is so important to the job of an executive that some authorities regard management to be essentially an art.

Management as a Profession
Corporate form of organization with separation of ownership from management, growing complexities in managing the activities of organization, development of organized body of systematic knowledge of management are essential factors which are responsible for raising management to the status of a distinct profession. A field is normally characterized as profession when the following special features are present in it: (i) Systematic body of knowledge

(ii) Need for learning and proper organization

(iii) Entry restricted on the basis of examination or education (iv) Dominance of service motive over profit motive

Pre-Classical Approach
The emphasis was more on developing some specific techniques to solve some identified problems.
Contributors Robert Owen (17711858) Charles Babbage (17921871) Andrew Ure (17781857) and Charles Duplin (17841873) Henry Robinson Towne (1844 1924) Pioneering Ideas He is considered as pioneer in Human Resource Management process. He had advocated the necessity for concern for welfare of workers. As an inventor and management scientist, he had built the practical mechanical calculator, which we consider as the basis of modern computer. Further, he had also advocated the idea of specialization of mental work and suggested the necessity of profit sharing. They had emphasized the necessity of management education, which further paved the way to professionalize the management functions. Emphasized the significance of business skills in running a business.

Classical School of Thought

Scientific Management Approach

Administrative Theory
Bureaucratic Theory

Scientific Management Approach

F.W. Taylor, by developing specific principles of scientific management became the father of scientific management. Taylor developed the principles of scientific management, emphasizing mainly on five important issues:

In essence, Taylor emphasized the following points to achieve organizational efficiency: (a) Develop scientific way of performing jobs (b) Train and develop workers to perform the job (c) Establish harmonious relations between management and workers

Drawbacks of Scientific Management School of Thought

Basic scientific management principles revolve around the operational level problems and do not focus on managerial issues essential for managing an organization. That is why it is often said that scientific management approach is more about engineering than management. While framing the principles, assumptions about workers only consider that they are rational and primarily driven for their desire to fulfil material gains. Therefore, economic and physical needs of the people were only emphasized and not their social needs. This theory also ignores the human desire for job satisfaction.

Administrative Theory
It focuses on principles to coordinate the internal activities of the organization. Fayol at the outset, classified business operation of an organization into six activities and then outlined fourteen principles of management.
Fayols fourteen principles Division of Labour

Activities

Authority Discipline Unity of Command

1. 2. 3. 4. 5. 6.

Technical Commercial Financial Security Accounting Managerial

Unity of Direction
Subordination of Individual Interest to the Common Good Remuneration Centralization The Hierarchy Order Equity Stability of Staff

Initiative
Esprit de Corps

Bureaucratic Theory

Neo-Classical Schools of Thought

Behavioural Theories

Follett was the pioneer in behavioural approach to management Elton Mayo, is recognized as the father of the Human Relations Approach

Neo-Classical Schools of Thought

Hawthorne Experiments
Experiments to evaluate the attitudes and psychological reactions of workers in on-the-job situations.
Illumination experiments Researchers concluded that intensity of illumination was not related to productivity of workers.

Relay assembly test room experiments

Workers would perform better if management look after their welfare and supervisors pay special attention to them-Hawthorne Effect Workers personal situations are results of configuration of relationships. Workers assign meaning to their status in organization and give value to the events, objects, their specific feature of environment. Workers derive satisfaction or dissatisfaction from the social status of an organization.Workers social demands are influenced by social experiences in groups, both inside and outside the workplace. Group norms, therefore, are more important to worker than money.

Interview phase

Bank wiring observation room experiment

Criticisms of Hawthorne Experiments

It is believed procedures and analysis of the findings and conclusions drawn thereon have little relevance. In fact, conclusions are not supported by adequate evidence. The relationship between satisfaction and happiness of workers with productivity were established with simplistic assumptions, while in reality, the situation is more complex due to behavioural phenomena.
Further all these studies failed to focus on attitudes of workers, though attitudes play a crucial role in influencing workers performance and productivity.

Modern Approaches
Quantitative School of Thought extensively utilized statistics, optimization models, information models and computer simulations for decision making and economic effectiveness to solve business problems. Systems Theory Approach considers organization as a whole because of the interdependent nature

of activities, requiring organization to interact with the external environmental factors.

Contingency Theory Approach discards the concept of universality in management principles and determines managerial decisions considering situational factors.

Contemporary School of Management Thoughts

Peters and Watermans Excellence model

Theory Z Concepts, McKinseys

7-S Framework

Theory Z Concepts
Combines the Japanese and American approaches to develop modified management practices.

McKinseys 7-S Framework

Strategy to determine allocation of scarce resource and commit organization to specific course of action Structure to determine number of levels (in hierarchy) and authority centers Systems to determine organizational process, procedures, reports and routines Staff to determine key human resource groups in organization and describe them demographically Style to determine the manner in which managers should behave in achieving organizational goals Superordinate goals (shared vision) to determine the guiding concepts that an organization has to instill in its members Skill to determine the abilities of people in an organization

Peters and Watermans Excellence Model

A Bias for Action Excellent firms make things happen Closeness to the Customer These firms know their customers and their needs Autonomy and Entrepreneurship They value these qualities in each employee Productivity They trust employees to achieve this Hands-on, Value-Driven Management They make it mandatory Stick to the knitting They always deal from strength Simple Form of Lean Staff They develop cost effective work teams. Simultaneous Loose-Tight Properties They decentralize many decisions, retaining, however, tight control

Managerial Roles
Mintzbergs Managerial Roles

Managerial Skills
Which relates to specific concepts, methods and tools that are specific to an organization Technical Supervisory Which enables one to effectively supervise others

General Business Lines of business and support infrastructure

Interperson al Which enables people to communicate and interact effectively

Skills Inventories and MultiSkilling

A skills inventory is a device for locating information about individuals and their suitability for different jobs. The purpose of skills inventories is to provide the organization with quick, accurate information on all employees in order that management can choose the best qualified person for promotion or transfer. Multi-skilling is defined as the process to train employees in specific skills that cross the traditional trade-specific or craft-specific skill sets. Multi-skilling facilitates intra-occupational and interoccupational job mobility and thereby reinforces human resource planning (HRP).

Managerial Competencies
Competencies are a set of behaviours, which encompass skills, knowledge, abilities and attributes.
Manpower planning exercise helps us to analyze such gap and develop a competency model. A competency model is a map to display a set of competencies. It is future oriented and helps to describe an ideal workforce.

Management By Objectives(MBO)
Requires management of an organization to focus primarily on objectives and then manage the whole organization with the directions set by the objectives. MBO also acts as a motivating factor for the employees because they can understand their specific objectives and can assess on their own the degree of their achievement. MBO paved the way for participative management, involving people in framing objectives, aligning their individual goals with the organizational goals or viceversa.