UNIT- I

Concept of Management

A precise definition of management is not so simple because the term management is used in
a variety of ways. Being a new discipline, it has drawn concepts and principles from a number
of disciplines such as economics, sociology, psychology, anthropology, and so on. The result is
that each group of contributors has treated management differently. For example, economists
have treated management as a factor of production: sociologists have treated it as a class or
group of persons: practitioners have treated it as a process comprising different activities.
Naturally, all these divergent groups view the nature and scope of management from their
own points of view. Thus, taking all these points of view together. It becomes difficult to
define management in a comprehensive way. In the present context, the term management is
used in three alternative ways:

1. Management as a discipline.

2. Management as a group of people.

3. Management as a process.

Management as a Discipline

Discipline refers to a field of study having well-defined concepts and principles. When we refer
to management as a discipline, we include in it the various relevant concepts and principles,
the knowledge of which aids in managing. From this point of view, management can be
treated either as an art or science, the two basic and broad disciplines. However, since
management prescribes various principles and how these principles can be applied in
managing an organization, it has the orientation of both, science and art, a phenomenon
which will be discussed later in this chapter.

Management as a Group of People

Sometimes, we refer to management as a group of people in which we include all those

personnel who perform managerial functions in organizations. For example, when we talk
about relationship between management and labour in an organization, we refer to two
distinct classes or groups of personnel in the organization. In the first category, we include all
those persons who are responsible for managerial functions and in the second category, we
include non-managerial personnel. This approach of using management is quite popular:
however, it does not serve our purpose of defining the term management.

Management as a Process

In studying management discipline, we generally refer to management as a process. A process

can simply be defined as systematic method of handling activities. However, the management
process is complex, dynamic, continuous, and flexible. Thus, management as a process
includes various activities. However, what these activities are must be defined precisely to
understand the exact nature and scope of management.

For identifying managerial activities, the total activities of an organization can be divided into
two groups: operational and managerial. Those activities which are of operative nature
through which actual work is accomplished such as handling a machine by workers, putting the
materials into godown, etc. are called operational activities. As against this, some activities are
performed to get things done like a supervisor instructing a worker to do a particular job, or
marketing manager instructing his salesmen to contact the customers to sell the product, etc.
Such activities are different from the first group and are known as managerial activities. Thus,
management can be defined as the process of getting things done by others.

Meaning of Management

 Management is a term derived from the Italian word “Managgiare”, which literal
meaning is “to handle”

 and the Latin word “Manus” which literally means “Hand”

 and in the french word “Mesnagement” is a term that simply means modern-day
management.
Definition of Management

Mary Parker Follett :- “Management is the art of getting things done through people”

According to F. W. Taylor:- “Management is the art of knowing what you want to do and then
seeing that it is done in the best and cheapest way”

“Management is a process and the art of getting things done through people using available
resources with the aim of achieving goals effectively and efficiently.”

Management And Administration: A Terminological Conflicts

Before we proceed further to analyze the nature of management, it is desirable to resolve the
terminological conflict between management and administration as there is often a
terminological conflict between the two. Some authors suggest that there is no fundamental
difference between management and administration, whatever difference between the two
exists, it exists only in terms of their usage in different walks of life. Other authors suggest that
these two terms are different and involve different sets of activities. Therefore, resolution of
this conflict is necessary.

At the initial level of development of management thought, no distinction was made between
management and administration and both the terms were used interchangeably. In 1923, the
terminological conflict between the two terms was raised by Oliver Sheldon in his book “The
Philosophy of Management’ when he emphasized administration as decision-making function
and management as execution function. After that, this distinction between the two terms
was emphasized by many and the terminological conflict proceeded further. Various views
expressed in this regard have led to the emergence of three approaches:

1. Administration is above management;

2. Administration is a part of management; and

3. Management and administration are same.

 1. Administration is above management

According to many classical thinkers, administration is above management so far as different

functions in the organization are concerned. They perceive that both administration and
management activities are different though both of them may be performed by a single
individual in the organization. The general view is that administration relates to policy
formulation and management relates to policy execution and these two activities are not the
same.

Difference between administration and management

Basic Of Difference Administration Management

01. Level in organisation Top level Middle and junior level

02. Major focus Policy formulation and Policy execution for

objective determination objective achievement

03. Nature of function Determination Executives

04. Scope of function Broad and conceptual Narrow and operational

05. Factors affecting Mostly external Most internal
decisions

06. Employer-employee Entrepreneurs and owners Employees

relation

07. Qualities required Administrative Technical

2. Administration Is a Part of Management

“Management is a generic name for the total process of executive control in industry or
commerce. It is a social process entailing responsibility for the effective and economical
planning and regulation of the operation of an enterprise, in the fulfillment of a given purpose
or task. 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, and the process
of activities regulated and checked against plans”.

If this view is accepted, administration becomes a subordinate function to overall

management functions. From this point of view, administration is concerned with day-to-day
function and is a part of management. According to this approach, the previous analysis, that
is, administration is above management, stands completely reversed.

3. Management and administration are same

According to the third approach which is the most popular and practical one, management
and administration are same. Both involve the same functions, principles and objectives. For
example, while speaking at the Second International Congress of Administrative Science, Fayol,
one of the most important early thinkers on management thought, has said, “all undertakings
require planning, organisation, command, coordination and control, and in order to function
properly, all must observe the same general principles.

We are no longer confronted with several administrative sciences but with one which can be
applied equally well to public and private affairs.” Thus there is no difference in A terminology
between management and administration. For example, McFarland, who made distinction
between management and administration in an earlier edition of his book, revised his stand
and viewed that it is difficult to make distinction between management and administration;
both are similar to each other.

The basic point of controversy or A terminology between management and administration

lies in terms of coverage of activities. The controversy arises because people call the various
level management functions differently. For example, the contents of management functions
in terms of policy formulation and execution can be presented as follows. Some call the
formulation function as administration, others call it management however both are
management functions, as shown in Figure below.
Nature of Management

1) Multi-Disciplinary.

Management is basically multi-disciplined. This implies that management has developed from
different disciplines like physiology, sociology, etc. Management integrates Knowledge, idea &
concepts from the above discipline & presents a newer concept that can be put into practice
for managing the operation. According to sociology human element plays a very important
role in the organization. So by using, this concept one can motivate & lead the human element
in the organization to achieve goals according to psychology make –up of humans plays
important role in productivity thus by understanding workers’ attitudes one can increase
productivity in the organization.

2) Dynamic Nature of Principle.

Management has certain principles that are based on Practical evidence however these
principles are flexible in nature & change according to the changes in the environment. With
the continuous development of the speed there in fields, older principles are to be changed by
a new principle.

3) Relative not absolute principle.

Management principle is relative but not outdated means these are applied according to the
need of an organization. Each organization may be different from others in a variety of aspects
like the age of the organization, place, society, and cultural factors.
4) Management Science & art.

Still, there are controversies about whether management is science or art, however,
management is both science & art.

5) Management as a Profession.

Management has been regarded as a profession while many have suggested that it has not
achieved the status of the profession.

6) The Universality of Management.

Management is a universal phenomenon. However, the management principle is not

universally applicable but is to be modified according to the needs of the situation.
Management: Art or Science

Management as an Art

Art is defined as the use of skills to bring a desired result. Skills refer to one's proficiency to do
a specific work. Thus, art has the following features:

1. Practical Knowledge. Knowledge refers to possession of facts and techniques of a particular

field. Knowledge can be acquired through study and/or practical experience, Generally, in art,
more emphasis is given on acquiring knowledge through practical experience. In management,
knowledge is acquired both through study and experience. Thus, Management as an Art.

2. Personalized Application of Knowledge. In art, there is personalized application of

knowledge to the desired results. This is possible because the same set of results can be
achieved through a number of alternative ways. This is done in management too; each
manager has his own way of achieving results. Thus, management is an art.

3. Improvement through Continuous Practice. In art, improvement is made through

continuous practice. This practice eliminates those activities which are not relevant for
achieving the desired results and improving those activities that are relevant. Through this
way, the person engaged in any art tends to move towards perfection. This is exactly done in
management.

4. Situational Application. Art has situational application. This implies an art which is
appreciated in one situation may not be appreciated in another situation. This is true for
management too. Thus, a particular management practice which is quite effective in an
organization may not be effective in another organization because of change in situational
context. Further, in the same organization, management practices may change over the period
of time because of change in contextual variables.

5. Emphasis on Creativity. Art puts emphasis on creativity through which new things or ways
of working are created. This is done in management too; managers create new products, new
ways of working, new means of financing, new ways of marketing and so on.

The above discussion shows that management is an art.

Management as a Science

Science is a body of systematized knowledge generated through logical consistency, critical

evaluation and experimental study. Thus, science has the following features:

1. Systematized Body of Knowledge. Science is a systematized of knowledge. Its principles are

on cause-effect relationship, that is, a particular factor has been caused by what factor can be
explained in a definite way. For example, if you throw a ball up, after going upward the ball
will ultimately come back on the ground because of earth's gravitational force. In
management, there is lack of such a cause-effect relationship; cause effect relationship is
defined in flexible way, not in definite way. Thus, management is not a true science.

2. Principles Based on Experimentation. In science, principles are evolved on the basis of

experiments conducted in laboratories. Such principles are tested again and again for final
approval. In management, this is not done in all cases: in many cases, management principles
are based on personal observations and experiences. Though experiments are conducted
under controlled conditions, their findings are not tested like science. From this point of view,
management is not a true science.

3. Verifiable Principles. Scientific principles can be verified by any one. Such verifications will
give the same results again and again. Management principles are not verifiable in many cases.
In fact, in many cases, it is difficult to appreciate the bases on which management principles
have been evolved. Thus, management is not a true science.

4. Universal Application. Principles of science have universal application, that is, they remain
true irrespective of the conditions in which these are applied. As against this, management
principles are situation bound. It implies that a management principle which works well in one
country may not work equally well in another country. This is because of situational
differences between the two countries. Further, a management principle which works
effectively in one organization may not work effectively in another organization of the same
country. Thus, management cannot be called 'true science'.

The above discussion shows that management is not a true science. Therefore, management is
called an 'inexact science' or 'pseudo-science".
Management Function
1. Planning: Planning is the conscious determination of future course of action. This involves
why in action, what action, how to take action, and when to take action. Thus, planning
includes determination of specific objectives, determining projects and programmes. setting
policies and strategies, setting rules and procedures, and preparing budgets.

2. Organizing: Organizing is the process of dividing work into convenient tasks or duties,
grouping of such duties in the form of positions, grouping of various positions into
departments and sections, assigning duties to individual positions, and delegating authority to
each position so that the work is carried out as planned. Organizing function can be viewed as
a bridge connecting the conceptual idea developed in planning to the specific means for
accomplishing these ideas. Organizing function contributes to the efficiency of the
organization by ensuring that all necessary activities are performed and objectives are
achieved.

3. Staffing: Staffing involves manning the various positions created by the organizing process.
It includes preparing inventory of personnel available and identifying the gap between
manpower required and available, identifying the sources from where people will be selected,
selecting people, training and developing them, fixing financial compensation, appraising them
periodically, etc. There is a controversy whether staffing function is to be performed by all
managers in the organization or it is to be handled by human resource (HR) department which
looks after the matters enumerated above. The controversy can be settled because staffing
function is too complicated and time-consuming. To make it convenient, some processes of
staffing are completed by HR department. In doing so, it facilitates the performance of staffing
function by managers in the organization. For example. managers are required to appraise the
performance of subordinates. HR department can facilitate this function by prescribing and
supplying the proforma for this appraisal so that there is uniformity in appraisal system
throughout the organization. Similar support can be provided by HR department in other
aspects of staffing.

4. Directing: When people are available in the organization, they must know what they are
expected to do in the organization. Superior managers fulfill this requirement by
communicating to subordinates about their expected behaviour. Once subordinates are
oriented, the superiors have continuous responsibility of guiding and leading them for better
work performance and motivating them to work with zeal and enthusiasm. Thus, directing
includes communicating, motivating, and leading
5. Controlling: Controlling involves identification of actual results, comparison of actual results
with expected results as set planning process, identification of deviation between the two, if
any, and taking of corrective action so that actual results match with expected results. It brings
to light all bottlenecks in work performance and operates as straight pointer to the needs of
the situation.

POSDCORB is an acronym which means Planning, Organizing, Staffing, Directing, Coordinating,

Reporting and Budgeting which was first coined in a paper on administrative management that
was written for the Brownlow Committee by Luther Gulick and Lyndall Urwick. POSDCORB
can be used as a systematic framework for efficiently executing business processes in a
company or by an individual.

Scientific Management
Principles of Scientific Management by F W Taylor

Taylor has given certain basic principles of scientific management. The fundamental principles
that Taylor saw underlying the scientific management have been given below:

1. Replacing Rule of Thumb with Science. Taylor has emphasized that in scientific
management, organized knowledge should be applied which will replace rule of thumb. While
the use of scientific method denotes precision in determining any aspect of work, rule of
thumb emphasizes estimation. Since exactness of various aspects of work like day's fair work,
standardization in work, differential piece rate for payment, etc. is the basic core of scientific
management, it is essential that all these are measured precisely and should not be based on
mere estimates. This approach can be adopted in all aspects of managing.

2. Harmony in Group Action. Taylor has emphasized that attempts should be made to obtain
harmony in group action rather than discord. Group harmony suggests that there should be
mutual give and take situation and proper understanding so that group as a whole contributes
to the maximum.

3. Cooperation. Scientific management involves achieving cooperation rather than chaotic

individualism. Scientific management is based on mutual confidence, cooperation, and
goodwill. Cooperation between management and workers can be developed through mutual
understanding and change in thinking. Taylor has suggested substitution of war for peace,
hearty and brotherly cooperation for contentment and strife, replacement of suspicious
watchfulness with mutual confidence, of becoming friends instead of enemies.

4. Maximum Output. Scientific management involves continuous increase in production and

productivity instead of restricted production either by management or by workers. Taylor
hated inefficiency and deliberate curtailment of production. His concern was with the large
size of the cake. In his opinion, there is hardly any worse crime to my mind than that of
deliberately restricting output. He decried quarrel over production but welcomed quarrel over
distribution, provided the product to be distributed had outgrown the size

5. Development of Workers. In scientific management, all workers should be developed to the

fullest extent possible for their own and for the company's highest prosperity. Development of
workers requires their scientific selection and providing them training at the workplace.
Training should be provided to workers to keep them fully fit according to the requirement of
new methods of working which may be different from the non-scientific methods.
 Henry Fayol 14 Principles of Management
Henry Fayol, also known as the ‘father of modern management theory’ gave a new perception
of the concept of management. He introduced a general theory that can be applied to all
levels of management and every department.

Father of the general principle of management, Henry Fayol was a French industrialist. He
joined a French mining company in 1860 as an engineer and rose to the position of its
managing director in 1888. At that time, his company was at the stage of bank insolvency.
With broad administrative experience, ‘Fayol’ contributed a lot to his company. When he
retired in the year 1918, the company was in excellent condition. Henri Fayol recognized the
need for principles of management. He identified 14 principles of management. These
principles are:

1. Division of work: Fayol recommended that work of all kinds must be divided and
allocated as per competence, qualification, and experience of individuals. According to Fayol,
“Division of work intends to produce more and better work for the same effort.
Specialization is the most efficient way to use human effort.”
For example, a bank has several operations, like collection and payment of cash, issue of
cheque books, etc. All those activities are divided and allocated to a different person in the
bank. This method of doing work also improves their efficiency and makes them experts in
their field.

2. Authority and Responsibility:

According to this principle, there should be a proper balance between authority and
responsibility. Authority is the duty, which a subordinate is expected to perform. Authority
and responsibility go hand in hand. Authority without responsibility leads to irresponsible
behavior, while responsibility without authority will make a person ineffective. According to
Fayol, “Authority is the right to give orders and obtain obedience, and responsibility is the
corollary of authority. The two types of authority are official authority, which is the authority
to command, and personal authority, which is the authority of the individual manager.”

For example, if a foreman is given the responsibility to produce 50 units per day, then he
must be given the required authority to achieve this target. If he is not given authority to
draw raw material from the stores, then he cannot be blamed.

3. Discipline:
Discipline refers to the obedience to the rules and regulations of the organization. Discipline
requires good supervision at all levels of management. According to Fayol, good supervision
at all levels, clear and fair rules, and a built-in system of penalties will help to maintain
discipline. It is a must for all levels of management.

For example, employees must be disciplined to work effectively and efficiently to meet their
promises of bonuses, increments, and promotions. Its smoothness systemizes the
functioning of an organization by providing better relations between management and
employees.

4. Unity of Command:
According to this principle, each subordinate should receive orders and be accountable to only
the superior. No person can serve several masters at the same time. If an employee gets orders
from two superiors at the same time, then the principle of unity of command is violated, and
he will find it very difficult to decide who he has to obey first. So, to avoid confusion,
employees should receive an order from one superior.

For example, there is a salesperson who is asked to clinch a deal with a buyer and he is
allowed to give a 12% discount
by the marketing manager. But the finance department tells him not to offer more than a 6%
discount. In this case, there is no unity of command, which will lead to confusion and delay.

5. Unity of Direction:
It implies that there should be one head and one person for proof of activities having the same
objectives. According to this principle, all the activities should be carried under the direction
of one head, and there should be effective coordination in all the activities. This principle
ensures unity of action and avoids unnecessary duplication of work.

For example, if an organization has four departments for different activities, then each
department must be directed by one superior, and its employees should give their whole
efforts to achieving the plan of the organization. Each division should
have its in charge, plans, and execution resources. There should not be an unnecessary
duplication of efforts and a waste of resources.
6. Subordination of Individual Interests to General Interests:
According to this principle, the interest of the organization as a whole must prevail over the
interest of the individual. It must be the interest of the organization that should be placed
above the interest of employees. It is the duty of the manager to reconcile them. If
reconciliation is impossible, then general interest must supersede individual interest. A
manager must sacrifice his interest. Manager can achieve their objectives when the
organization recovers from financial crises.

For example, there is a company that wants maximum output from its employees by providing
less salaries. There are employees on the other hand who want to get the maximum salary
while working the least. In both situations, the interests of the company will supersede the
interest of any one individual. As the interests of the workers and stakeholders are more
important than the interests of any one person

7. Remuneration of Employees:
According to this principle, remuneration should be fair and satisfactory to both employees
and the organization. This principle leads to harmonious relations in the organization. Fair
remuneration should be determined based on government rules related to wages, financial
position of the organization, nature of work, and cost of living. Employees should be paid
reasonable wages for their service, which should provide them with a moderate standard of
living.

For example, if an organisation earns higher profits, then it should share some of its part with
the employees in the form of bonus
8. Centralization and Decentralization:
Centralization refers to the concentration of authority at the top level, and decentralization
means distribution at all levels of management. According to this principle, there should be a
proper balance between centralization and decentralization. The degree of centralization and
decentralization depends on various factors, such as experience of the employees, ability of
subordinates, size of the organization, etc. Too much centralization lead to loss of control of
top management. Therefore an optimum balance should be maintained according to the need
of the organization.

For example, Authority to take vital decisions must be given to the top management, whereas
authority related to operational activities must be given to the middle and lower level.

9. Scalar chain:
According to this principle, there is a scalar chain of authority and communication that moves
in a straight line from the superior to the lowest subordinate. Henri Fayol permitted a shortcut
of chain in case of urgency known as gang plank. Gang plank allows direct communication
between two employees of the same level.
For example, E wants to communicate with I for some important work. The message should
orderly move from E to D, then to C, B, A, and then down from A to F then to G, H and finally
to I. This will take lots of time so to avoid this delay in work, Fayol suggested this concept of
Gang Plank. In this concept ‘E’ can communicate directly with ‘I’ on an urgent matter, the
gang plank allows two employees of the same level to communicate directly with each but
each must enforce to its superior.
10. Order:
According to this principle, there should be a proper place for everything and everyone. Henri
Fayol emphasized on two types of order: material order and social order. In material order,
there must be a plan for everything. It ensures fix a place for various material tools. Whereas
in social order, there must be an appointed place for every employee, which ensures a proper
and fixed place/cabin for each employee.
For example, there should be specific place for foremen in a factory so that the work can be
done easily.

11. Equity:
According to this principle, there should not be any discrimination amongst the employees
based on religion, caste, language, or nationality. Equity ensures coordinated relations
between superior and subordinate. It leads to the smooth and successful working of the
enterprise. It improves satisfaction and motivation of the employee, creating relation between
manager and employees.

For example, workers doing similar jobs in the same organization should be paid same wages
irrespective of their sex, caste, religion and language.
12. Stability of personnel:
According to this principle, there should be proper effort to achieve stability and continuity of
employment. Fayol said that employees should be kept in their position for a reasonable time
to show result stability creates a sense of belonging, and workers are encouraged to improve
their quality of work. This will increase the efficiency of employees, and it will also increase
the reputation of the organization. Unnecessary labor turnover creates an atmosphere of
disbelief. Continuous changes in employees disturb the working environment.

For example, new employees must be given ample time to adapt to new culture and
environment of the workplace.

13. Initiative:
According to this principle, workers should encourage and should be given an opportunity to
take initiative in making and executing the plan. Henri Fayol suggested that employees at all
levels should be encouraged to take initiative in work. It motivates employees to work better
and to take more interest in the organization. The initiative is a powerful motivator of human
behavior and a source of strength for the organization. This increase the mental growth and
feeling of belongingness in employees. It increases the commitment of employees toward the
organization. Lack of initiatives may create an atmosphere of non-cooperation.

For example, organizations must have an employee suggestion system so that they have
feeling of belongingness.
14. Esprit De Corps:
According to this principle, management should take reasonable steps to develop a sense of
belongingness and a feeling of team spirit amongst employees. In order to achieve the best
possible result, individual and group efforts need to be integrated. Production is a teamwork
and it requires the full support of all members. For this purpose, a manager should replace ‘I’
with ‘We’ in his conversations to bring a team spirit among the employees. This will develop
an atmosphere of mutual trust. It will help in achieving group goals, leading to cordial
relations between management and workers.

For example, authority and responsibility meant empowering managers, but now it means
empowerment of employees because of flat organizational structures that are gaining ground.
Bureaucratic Management Approach

One of the most important thinkers in modern organizational theory, Max Weber (1864-
1920), is the 'father of the bureaucratic management theory.' Weber was a German
sociologist and political economist that viewed bureaucracy in a positive light, believing it to
be more rational and efficient than its historical predecessors.
Max Weber, a German scientist, defines bureaucracy as a highly structured, formalized, and
also an impersonal organization.
He also instituted the belief that an organization must have a defined hierarchical structure and
clear rules, regulations, and lines of authority which govern it. Max Weber bureaucracy
ideally has the following characteristics:
1. Administrative Class. Bureaucratic organizations generally have administrative class
responsible for maintaining coordinative activities of the members. Main features of this
class are as follows: (1) People are paid and are whole time employees. (2) They receive
salary and other perquisites normally based on their positions. (3) Their tenure in the
organization is determined by the rules and regulations of the organization. (4) They do not
have any proprietary interest in the organization. (5) They are selected for the purpose of
employment based on their competence.

2. Hierarchy. The basic feature of bureaucratic organization is that there is a hierarchy of

positions in the organization. Hierarchy is a system of ranking various positions in descending
scale from top to bottom of the organization. In a bureaucratic organization. offices also
follow the principle of hierarchy, that is, each lower office is subject to control and
supervision by a higher office.
3. Division of Work. Work of the organization is divided on the basis of specialization to take
the advantages of division of labour. Each office in the bureaucratic organization has specific
sphere of competence. Thus, division of labour tries to ensure that office has a clearly-
defined area of competence within the organization and each official knows the areas in
which he operates and the areas in which he must abstain from action so that he does not
overstep the boundary between his role and those of others. Further, division of labour also
tries to ensure that no work is left uncovered.
4. Official Rules. A basic and most emphasized feature of bureaucratic organization is that
administrative process is continuous and governed by official rules. A rational approach to
organization calls for a system of maintaining rules to ensure twin requirements of
uniformity and coordination of efforts by individual members in the organization. These rules
are more or less stable and more or less exhaustive. When there is no rule on any aspect of
organizational operation, the matter is referred upward for decision which subsequently
becomes precedent for future decision on the similar matter. Rules provide the benefits of
stability, continuity, and predictability and each official knows precisely the outcome of his
behaviour in a particular matter.
5. Impersonal Relationships. A notable feature of bureaucracy is that relationships among
individuals are governed through the system of official authority and rules. Official positions
are free from personal involvement, emotions, and sentiments. Thus, decisions are governed
by rational factors rather than personal factors. This impersonality concept is used in dealing
with organizational relations as well as relations between the organization and outsiders.
6. Official Record. Bureaucratic organization is characterized by maintenance of proper
official records. The decisions and activities of the organization are formally recorded and
preserved for future reference. This is made possible by extensive use of filing system in the
organization. An official record is almost regarded as encyclopedia of various activities
performed by the people in the organization.
 HAWTHORNE EXPERIMENT AND HUMAN RELATIONS
WHAT IS HAWTHORNE
"The Hawthorne plant of famous Western Electric Company, Chicago (USA) was engaged in
the production of bells and other electrical equipments for telephone industry."

WHY HAWTHORNE EXPERIMENTS CONDUCTED?

In early, 1920s, the management of Hawthorne plant adopted certain incentives plan, as
propounded by traditional theorist of its time, to increase productivity of the employees.
However, to their surprise, the managers did not get the desired improvement in
productivity. They initially took up their own enquiry to find out the problem but failed to
resolve the issue.
Thus, in November 1924, a group of professors from Harvard Business School, U.S.A., led by
Prof. George Elton Mayo (a professor of psychology at Harvard University) and William
Dickson (Company representative) took up the challenge to solve the said puzzle.
They did extensive experiments and conducted interviews between 1924 to 1932.

HAWTHORNE EXPERIMENTS - BASICS

This studies discovered that the real cause of human behavior is somewhat more than
physiological variables. These findings helped to focus attention on human beings in
organisation.
Thus, Human Relation Approach brought out the importance of informal organization and its
influence on the formal structure.
This experiment reveals the importance of informal group in a organization.
INFORMAL GROUP
Informal groups are formed by two or more members with the purpose of satisfying their
personal and psychological needs.
Elton Mayo and his associates did extensive experiments and conducted interviews between
1924 to 1932 as described below -

1) Illumination experiments (1924-27)

2) Relay Assembly Test Room Experiments (1927-28)
3) Mass interviewing programme (1928-30)
4) Bank wiring observation room experiments (1930-32)
1. ILLUMINATION EXPERIMENTS
The initial illumination studies were meant to find out the effect of lighting conditions on the
productivity of workers.
In this experiment, the workers were divided into two groups -
Workers Group
1. Controlled Group
2. Experiment Group
It was found that when lighting was improved, the productivity also improved. But when
lighting was brought down to moonlight intensity where the workers could barely see each
other, even then productivity improved.
It led Elton Mayo and his associates to believe that there were some other variables besides
illumination which were influencing productivity.
CONCLUSION
The study revealed that there is no significant correlation between productivity and light
levels.
It was later concluded that productivity is not dependent upon physical conditions alone but
human's psychological conditions also.

2. RELAY ASSEMBLY TEST ROOM EXPERIMENTS

After illumination experiments, another experiment was conducted in the relay room where
female operators assembled switches.
• The experiment was undertaken to find the effect of working conditions (rest pauses) on
productivity.
• Under this test, two group of 6 females relay assemblers were selected. Each group was
kept in separate rooms and from time to time changes were made in working hours.
REST PAUSES
1) Group incentive (financial) were applied instead of individual financial incentive. This
results in increase in productivity of group.
2) 5 min. rest pauses introduced in morning & afternoon productivity increased. Rest pauses
lengthened to 10 min. - productivity remains the same
3) Six 5 min. pauses were introduced and the girls complained that their work rhythm was
broken by the frequent pauses productivity fell down
4) Two rest pauses were reintroduced, the first with coffee & the second one with evening
snack - productivity goes up.
CONCLUSION
However, when these extra privileges were withdrawn even then the productivity improved.
It was once again concluded that something else than these privileges was the root cause
affecting productivity.
Workers output increased as a response to attention, feeling of being important and non-
directive supervision.
3. MASS INTERVIEWING PROGRAMME
The researchers interviewed a large number of workers for more than a year to find out their
attitudes and sentiments towards work, working conditions, supervision, company and intra-
group relationships etc.
In the early part of interviews, the researchers adopted direct technique and asked relevant
questions from the workers. Later on, the indirect technique of interviewing was adopted
and this time the researchers simply noted what the workers wished to share with them.
On the basis of such responses, it was concluded that the social factors played important
role in influencing productivity at the work places.
4. BANK WIRING OBSERVATION ROOM EXPERIMENTS
In the above mentioned two experiments, the workers were separated and the studies were
conducted in test-room conditions.
But this time, the experiments were conducted in almost normal working conditions to avoid
the impact of test-room conditions on the workers.
▪ The researchers identified a group of 14 experienced workers (with varying efficiency
levels) and recorded their output for 18 months prior to the study without the knowledge of
the workers.
When these workers were brought in a room to do their routine work, productivity did not
improve and the output was almost same before and after the experiments.
However, it was observed that the workers restricted their output.
▪ The efficient workers did not increase their productivity willingly and sacrificed their claim
for higher incentives and other privileges which were to be paid to those who made more
than standard output.
The researchers noticed that during experiments, the group members developed intimacy
with each other and through their own generated communication channels set their code of
conduct. They determined their level of output under the guidance of their informal group
leader and accordingly did the production.
CONCLUSION
To sum up, the Hawthorne experiments brought the following interesting facts to light -
a) The organisation is a social system consisting of a number of interacting parts. The
workers form their own groups of choice (i.e., informal groups) and these groups affect each
other through frequent and consistent interaction amongst themselves.
b) The informal groups have their own informal leaders who significantly influence the
performance of their respective group members. Some times, these informal leaders are
more powerful than the formal leaders.
c) The output level of a worker is generally not determined by his 'physiological capacity' but
the 'social norms' set by the informal group to which he belongs.
d) Non-monetary rewards and sanctions significantly affect the performance of workers and
restrict the impact of monetary rewards and sanctions to a large extent.
e) A worker does not behave as an individual at the work place but as a member of his work
group. Thus, a group plays an important role in determining the behaviour of workers at
work places.
f) The workers develop their own informal channels of communication on which the
management has no control. These communication channels influence the behaviour and
performance of workers in the organisation.
g) The goals of the informal groups may not be in line with the organisational goals. Thus, in
order to minimize this conflict between the goals, efforts on the part of management, have
to be made for smooth running of an organisation.

QUESTIONS I. Hawthorne experiments were conducted between -

a) 1920-1934
b) 1922-1935
c) 1924-1932
d) 1921-1935
QUESTIONS 2. Hawthorne experiments were conducted in the leadership of Elton Mayo
who was a -
a) Political Sociologist
b) Psychologist
c) Family Sociologist
d) Industrial Sociologist
QUESTIONS 3. Which of the following experiments was not conducted in Hawthorne
studies -
a) Insurance wiring observation room experiments
b) Relay assembly test room experiments
c) Mass Interviewing Programme
d) Illumination experiments
QUESTIONS 4. Which approach has emerged in management as a result of Hawthorne
experiments?
a) Human Behaviour
b) Systems
c) Human Relations
d) Decision Theory
QUESTIONS 5. Who is considered as "Father of Human Relation Approach"
a) Henry Fayol
b) George Elton Mayo
c) Peter F. Drucker
d) Taylor
QUESTIONS 6. Elton Mayo conducted Hawthorne experiments in which illumination
experiment was one of them, what was the conclusion of the illumination experiment -
a) Productivity is significant affected by lighting levels.
b) Productivity has no correlation with lighting levels.
c) There is a psychological relationship between lighting level and employee's psychology.
d) all the above.
QUESTIONS 7. Study the following statements carefully and choose the right option from
amongst the options given thereafter -
i. In Hawthorne experiments, the illumination experiments were conducted in test room
conditions
ii. In Hawthorne experiments, the relay assembly test room experiments were conducted
in almost normal working conditions
iii. In Hawthorne experiments, during mass interviewing programme, only the direct
technique of interviewing was adopted.
iv. In Hawthorne experiments, it was found that the output level of a worker is generally
determined by his physiological capacity.
Options -
a)(i) statement is false but (ii) statement is true.
b) (i) and (iii) statements are true.
c) (i) and (iv) statements are true.
d) (i) statement is true but (ii) statement is false.

Social Responsibility of Managers

Meaning • The term social responsibilities may be defined as the obligation of management
towards , the society and others concerned with the activities of the organisation.
Social responsibilities of management towards each of the interested groups
 Responsibility towards owners
 Responsibility towards employees
 Responsibility towards consumers
 Responsibility towards the governments
 Responsibility towards the community and society

1. Responsibility towards owners

The primary responsibility of management is to assure a fair and reasonable rate of return on
capital and fair dividend to the shareholders as investors and risk bearers.
With the growth of business the shareholders can also expect appreciation in the value of
their capital.

2. Responsibility towards employees

Management responsibility towards employees relate to the fair wages and salaries,
satisfactory work environment, labour management relations, and employee welfare.
The provision of welfare amenities like safety and security of working conditions, medical
facilities, housing, canteen, leave and retirement benefits.
3. Responsibility towards consumers
o Consumers are often victims of unfair trade practices and unethical conduct of
business
o Management should satisfy consumer needs and protect consumer interests.
o Goods must be of appropriate standard and quality and be available in
adequate, quantities at reasonable prices.
4. Responsibility towards the governments

 As a part of their social responsibility. management must conduct business affair in

lawful manner, honestly pay all the taxes and dues, and should not corrupt public
officials for selfish ends.

 Business activities must also confirm to the economic and social policies of the
government.
5. Responsibility towards the community and society
Provisions for the employment of handicapped persons, and weaker sections of the
community, environmental protection, pollution control, setting up industries in backwa rd
areas, and providing relief to the victims of natural calamities.