CH-1

LEARNING OBJECTIVES

After studying this chapter you will be able to:

• state the concept, objectives and importance of management;

• elaborate the concept of management as on activity, process, disciplineand group;

• appreciate the nature of management as a science, an art andprofession;

• reconcile different views on management and administration;

• explain the various management functions;

• appreciate the nature and importance of coordination.

Nature and Significance of Management1CHAPTER

Success brought its own management problems to Microsoft. Shrewd business dealsand sheer luck had propelled the pioneering Software Company into a leading role atthe center of the volatile, hotly competitive computer industry. But spectacular50 per cent annual growth left Microsoft unwieldy and disorganised as softwarecompanies such as Lotus and Ashton-Tate were taking aim its revenues. Computertechnology continued to evolve at a rapid pace, consumers grew more demanding, andrival programmers worked around the clock to create new and better applications. Forfounder and chief executive officer Bill Gates, managing Microsoft required heroic effort.

Gate’s visionary leadership was largely the reason for Microsoft’s wild success.When Gates dropped out of Harvard to form the company in 1975, personal computerswere toys for the “hardcore tech-noid”, as he once described himself. But Gates envisioneda nation with a computer in every home and in every office, and a piece of Microsoftsoftware in every computer. An early alliance with computer giant IBM put Microsoft’sbasic operating programme into 80 per cent of the nation’s 50 million personal computers.Gates boldly lead Microsoft into Europe and Asia too. Motivated by his charisma andtechnical knowledge, Microsoft employees investigated new data storage technologiesand broadened software offerings for home and office. In the future, Gates foresawhandwriting, recognition programmes, word processing with animation and stereosound, modular software that lets anyone combine programme features, and more.

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Microsoft’s Bill Gates would be the firstto admit that management isuniversally necessary in organisations.It is the force that holds everything in abusiness enterprise together and thatsets everything in motion. Managementis the mobilisation of an organisation’sresources (land, labour and capital) tomeet a goal. Management is virtually,applied to every type of organisation,whatever its size or purpose. An autoplant, a city government, a cricket team,a typing service, all requiremanagement. Whenever people worktogether to achieve a goal, someonemust make decisions about who will dowhat, when they will do it, and whatresources they will use. In thebeginning of this chapter we will explainthe concept, process, functions andimportance of management. In the laterparagraphs, we will elucidate the natureand importance of coordination.

CONCEPT

Management is a set of functionsdirected at the efficient and effectiveutilisation of resources in the pursuitof organisational goals. To be morespecific, to manage is to forecast and toplan, to organise, to command, tocoordinate and to control. To foreseemeans examining the future anddrawing up the plan of action. Toorganise means building up the dualstructure, material and human of theundertaking. To command meansmaintaining activity among thepersonnel. To coordinate meansbinding together, unifying andharnessing all activity and effort. Tocontrol means seeing that everythingoccurs in conformity with theestablished rules and expressedcommand. For example, an auto firmdecides to manufacture 1,000 scooters(plan) in the next year. To manufacture

But good ideas were not enough anymore. Gates found he was so swamped by newbusiness that he could hardly handle day-to-day operational details, much less developthe vision he needed to beat the competition in the twenty-first century. Organisation waslacking, and planning became an afterthought. Time after time his company targeted anew market only to introduce a mediocre product the first time out. Gates put himself incharge of five important product lines but then could not find time to adequately tailorthem to client needs. Projects died. Customers got angry.

Gates was also worried about something that threatened his leadership: he fearedlosing touch with his employees, the people who put his vision into action. In the relaxedatmosphere of Microsoft, talking shop with the CEO was an important morale boosterand method of indoctrination. Gates still relished personal contact with employees, buttheir number had grown past 1,000 and they were spread around the world.

Gates had always made the big decisions at Microsoft, but more decisions wereneeded and he was already working 65 or more hours a week. How could he both planfor the long haul and effectively manage daily affairs? What could he do to reach thestaff and spread his vision? What could he do about control problems? How could heensure Microsoft’s success through the twenty-first century?

5NATURE AND SIGNIFICANCE OF MANAGEMENT

them, the firm may need people withvaried knowledge and skills(organising). Once it is determined, suchpeople are to be recruited (staffing). Theywill be given instruction to perform(directing). And finally, theirperformance (individually) as well asorganisation’s performance (as a group)will be evaluated to see that the firm isworking as per the norms set(controlling) at the beginning of the year.

By efficient utilisation of resourcesmeans using resources wisely and in acost-effective manner. By effectivenesswe mean making the right decisionsand successfully implementing them.Efficiency and effectiveness areinterrelated. For instance, it is easier tobe effective if one ignores efficiency.Timex could produce more accurateand attractive watches if it disregardedlabour and material input costs. Some

central government agencies have beencriticised regularly on the grounds thatthey are reasonably effective butextremely inefficient; that is, they gettheir jobs done but at a very high cost.Management is concerned, then, notonly with getting activities completed(effectiveness), but also with doing soas efficiently as possible. In general,successful organisations are bothefficient and effective.

Managers (those who perform thejob of management) can have the mostnotable effects on organisations. IBMfloundered through much of the 1980sand early 1990s, losing market share,seeing costs rise, and watching its stockprice dwindle from almost $180 pershare to barely $50. Within three years,its new chairman Louis Gerstnerrevamped the company’s product line,dramatically lowered costs, changed

Contemporary Definitions of Management

1. “Management is the process by which a cooperative group directs actions of otherstowards common goals.”

— Massie and Douglas

2. “Management is the process of working with and through others to effectivelyachieve organisational objectives by efficiently using limited resources in thechanging environment.”

— Kreitner

3. “Management is the coordination of all resources through the process of planning,organising, directing and controlling in order to attain stated objectives.”

— Sisk

4 “Management is establishing an effective environment for people operating in formalorganisational groups.”

— Koontz and O'Donnel

5. “Management entails activities undertaken by one or more persons in order tocoordinate the activities of others in the pursuit of ends that cannot be achievedby any one person.”

— Donnelly, Gibson and Ivancevich

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CHARACTERISTICS

Management is the process of workingwith and through others to achieveorganisational objectives in a changingenvironment. Central to this process is

the company’s culture, and oversaw arise in the firm’s stock price from $50back to almost $180 again. Managereffects like these don’t happen justat giant corporations. Managers atthousands and thousands of smallbusinesses — grocery shops,drycleaners, motels — are running theirbusinesses well with courteous,prompt, and first-class service, highmorale employees, and a minimum ofcustomer problems.

The effect of good management isnothing short of remarkable. Take anunder-performing — even chaotic —organisation and install a skilledmanager, and he soon can have theenterprise humming like a well-tunedmachine. Take a successful enterprisethat has been managed well for yearsby its proprietor — say, aneighbourhood stationary store — andwatch as a new, less competent managertakes over. Shelves are suddenly indisarray, products are out of stock, andbills go unpaid as the new owner triesin vain to run the little store and itshandful of employees. Studies haveshown that 90 per cent of the businessesfail generally, due to “poor management”

However, management has been vieweddifferently by different authors. To signifydiversity of opinions about management alist of definitions by different authors hasbeen given on the previous page.

the effective and efficient use of limitedresources. A closer examination of keycharacteristics of management is givenbelow:

(i) Achieving organisationalobjectives: Management deals withachieving something specific, expressedas an objective. Commonly, managerialsuccess is measured by the extent towhich the objectives are achieved.Management exists because it is aneffective means of accomplishingrequired jobs. For example, a firmdecides to sell 10,000 TV sets in aparticular year. The manager will plana course of action and organise therequired activities to achieve that target.In this process he will instruct andmotivate his subordinates and monitortheir performance regularly. Thisprocess will help him in getting thedesired results.

(ii) Distinct activity: Managementis an activity which consists ofplanning, organising, communicating,decision making, staffing, leading andcontrolling. People who perform suchactivities are designated as managers,members of management team, orexecutive leaders. In addition,management is a distinct activity. It canbe studied, experimented andpractised. For example, the financemanager is expected to procure fundsfor various requirements of thebusiness and deploy these fundswhenever and wherever required. To dothis, he is equipped with necessaryskills and knowledge.

(iii) Group efforts: Managementas a group is the common viewpoint. The


group emphasis stems from the factthat all enterprises — Reliance, IndianAirlines, Novelty Stores, and the NovexDrycleaners — are organisations. Allorganisations consist of people withformally assigned roles who must worktogether to achieve stated goals. Forexample, a firm wants to launch a newproduct. To make this event effective,the marketing manager will consult itssales people, finance people, operationdepartment and other concernedpeople to arrive at a decision. This is sobecause each decision is not workedout in isolation and thus, involvementof concerned persons are considered.The result of this event is going to affectall concerned and thus, managementis a group rather than an individualactivity. However, management isequally applicable to an individual'sefforts. For example, a person canmanage his personal financeseffectively.

(iv) Intangible: Intangibles arecalled the unseen force. Managementcannot be seen. However, its presencecan be felt through orderliness,enthusiastic employees, buoyant spirit,and adequate work output. Quiteoften, the identity of management isbrought in focus by its absence or bythe presence of its direct opposite,mismanagement. The results ofmismanagement are quickly noticed;and thus, the identity of managementis brought into clear focus. Forexample, in a firm, inventory isincreasing beyond a certain prescribedlimit. To bring down the inventory tothe prescribed limit concerned person

will take some steps to put inventory inorder. Increasing inventory is a sign ofpoor management and keepinginventory at the prescribed limit is anindication of efficient management.Thus, management reflects the effortsof people.

(v) Influences behaviour:Management influences behaviour in thesense that it affects the way people viewtheir work and how they actually performthe work. Managers rather thanperforming the actual work, influence thebehaviour of people to work towards acommon goal. This they can do byimproving the work environment tostimulate people to do things better andto make productive decisions. A managercan achieve progress, can bring hope,and can help group members inachieving better things in life. This canbe achieved by establishing two-way —communication, inspiring leadership andcreating strong motivational environmentin the organisation.

(vi) Composite process: Themanagement process is not a series ofseparate functions (planning,organising, directing and controlling)which can be performed independently.It is a composite process made up ofthese individual ingredients. No singlefunction can be performed withoutinvolving the others. For example, a carmanufacturer enters into two wheelerbusiness. For this, he has to set a target(say 10,000 scooters a year) ofmanufacturing scooters. To manu-facture that, he also has to determinethe amount of work required and groupthem as per specialisation (marketing,

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finance, production, personnel, etc.). Thiswill provide the positions (managers,supervisors, workers, etc.) that are to becreated in the firm. He will also think interms of responsibility-authorityrelationship (superior-subordinatestatus) among these positions. He willrecruit the people as per positionscreated in the organisation structureand finally instructions will be issued tothem to start work.. He will also makeprovision for monitoring the performanceof such employees. The whole processwill work simultaneously to achievedesired results.

(vii) Coordination force: Asignificant part of management's job iscoordination of the efforts of employees.Each employee has his own values andaspirations in a company programme.They are also performing variedactivities. Managers try to strike ahappy balance between enterpriseobjectives and individual goals. Forexample, ABC Ltd, a car manufacturerwants to produce a new product. Todo that, the chief executive must closelycoordinate each department’s activities.If the sales manager projects sales of50,000 units next year, then the

How Managers Get the Job Done

• They work intensely with their subordinates when needed.

• They ally themselves with subordinates in getting a job done without invadingtheir territory or depriving them of recognition for their accomplishments.

• They focus the dialogue on the work rather than on the person doing the work.They do not play psychiatrist, which is an inappropriate role in a work situation.

• They accept a certain amount of hostility and resentment from their subordinates,which is an inevitable aspect of all human relationships, especially those with aninequality of power.

• They control the human tendency to use a position of power to express hostilityor anger.

• They divert their subordinate’s hostility and aggression away from themselves andonto the project, the challenges of the job, and the competition.

• They pass on experience and knowledge and try to control their fear that asubordinate will displace them. Weak people tend to surround themselves withweak subordinates. Good managers also recognise that their experience andknowledge may be obsolete and that their subordinates are often more knowledgeableabout many aspects of a task.

• They help subordinates assess their strengths and weaknesses.

• They help subordinates recognise and accept certain distressing but universalcharacteristics of work groups. They spend a great deal of time balancing theconflict between collaboration and competition among subordinates, and theyhelp them understand that conflict is inherent to social life.

• They explain, when necessary, any problems subordinates cause by their behaviour.


OBJECTIVES

Objectives are goals established toguide the efforts of the company andeach of its components. They are theends towards which the activities of anorganisation are directed and thestandards against which theperformance is assessed. For example,a company may set organisationalobjectives in terms of return oninvestment (say 10 per cent), bonus toemployees (say 15 per cent) and installa pollution control plant in the factory.Objectives can be classified into threemajor categories: Organisational;Social; and Individual. A briefdescription about each objective isgiven below.

(i) Organisational objectives:Drucker indicates that the very survivalof management may be endangered ifmanagers emphasise only a profitobjective. This single objectiveemphasis encourages managers to takeaction that will make money today withlittle regard for how a profit will be madetomorrow. In practice, managersshould strive to develop and attain

production manager must take stepsto produce that many cars, and thefinance manager must be sure that thefunds are available to produce and sellthat many cars. Therefore, the chiefexecutive closely coordinates theworking of each of these functionaldepartments.

(viii) Working with and throughothers: It is essential for managementto resist the usual tendency to performall things by oneself and get tasksaccomplished by, with and through theefforts of non-managerial employees.Since, it not possible for managers toperform all the work themselves, theyhave to take the help of others.

(ix) Balancing effectiveness andefficiency: Managers focus theirattention and efforts in producingresults successfully. They know whereto start, what to do to keep thingsmoving and how to follow through. Allsuch accomplishments must beperformed effectively and efficiently.Successful managers have an urge notonly for accomplishment butaccomplishment of tasks differently interms of efficiency and effectiveness. Forexample, a manager has assigned hissubordinate a target to produce 100radiator caps in a day. Manager will helpto achieve this target because hissuccess or failure depends on themanufacturing of 100 units in a day.He will see to it that this target beachieved not only on time but also at acompetitive cost.

(x) Dynamic discipline:Management is a creator rather than acreation of the economy. It is a dynamic

and growth-oriented function.Management is not just passive butadaptive behaviour. It means takingaction to make the desired results tocome to pass. Principles, techniques,methods and skills of management arechanging over a period of time.Management is a very live and progressivediscipline and its success and failuredepends on how management isequipped with latest techniques andprinciples.

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variety of objectives in allmanagement areas where activity iscritical to the operation and successof the system. Management should bebasically concerned with utilisinghuman and material resources availableto an enterprise for deriving bestresults. This leads to reduction in costs

Organisational Objectives : Drucker

1. Market standing: Management should set objectives indicating where it wouldlike to be in relation to its competitors. For example, GE, the well-knownmulti-national firm with interests in many businesses, has evolved a policythat if it cannot hold either No. 1 or No. 2 position in a given business, it wouldquit the business.

2. Innovation: Management should set objectives outlining its commitment tothe development of new methods of operation. For example, in case of Du Pont,leadership in chemical technology and continuous new product developmentare major objectives.

3. Productivity: Management should set objectives outlining the target levels ofproductive efficiency. For example, Hindustan Motors aims at 56 persons percar per day (2005) from 86 persons per car per day (2000).

4. Physical and financial resources: Management set objectives with regard tothe use, acquisition and maintenance of capital and monetary resources. Forexample, Eicher Tractors is to mobilise Rs 170 crore for increasing the productioncapacity by 50 per cent between 2000-2005.

5. Profitability: Management should set objectives that specify the return oninvestment the company would like to generate. For example, during the fiveyears 1995-2000, Federal Express aimed at a 50 per cent growth in itsturnover globally, and a market share growth of 10 per cent from 45 per cent to55 per cent in the US with 6 per cent return on investment.

6. Management performance and development: Management should setobjectives that specify rates and levels of managerial productivity and growth.ITC provides a good example of a company attempting flexibility in its businessportfolio. The optimum portfolio become the standards of managementperformance in the company.

7. Worker performance and attitude: Management should set objectives thatspecify rates of worker productivity as well as the attitude workers possess. Forexample, Infosys set corporate objectives in human resources, corporate imageand social responsibility.

8. Public responsibility: Management should set objectives that indicate thecompany's responsibilities to its customers and society and the extent to whichthe company intends to live up to those responsibilities. For instance, Tatasparticipate in the rehabilitation of handicapped children.

and maximum prosperity for theorganisation by generating high profits.Organisational objectives must takecare of the interests of all thestakeholders in a fair and justmanner. Drucker advises managersto set management objectives in eightareas as listed below.


IMPORTANCE

Management in one form or the otheris absolutely essential if human effortshave to be made effective to meet allround development of the societythrough productive activity, occupationor profession. It is essential in allorganisations and at all levels oforganisation in an enterprise. Withoutthe enlightened guidance andleadership made available bymanagement “the productive resourceswill remain resources and shall neverbecome production.” Management is adynamic element, which gives life to abusiness enterprise. The productiveresources such as materials, men, andmoney are entrusted to theadministrative ability, enterprisinginitiative and managerial skills ofmanagement. In effect management isimportant for the following reasons:

(i) Provides effectiveness tohuman efforts: Management focus onefficiency and effectiveness in itsactivities and thus, stress on betterequipment, plants, offices, products,services, and human relations. Thesedrives help management in achievingeffectiveness and efficiency in theirefforts. To secure efficiency of operationsmanagement has to reduce costs ofproduction and increase output. Itkeeps abreast of changing conditions,and it supplies foresight and

(ii) Social objectives: Socialobjectives deal with the commitment ofan organisation toward society. Suchobjectives may be pertaining to health,safety, labour practices, and priceregulation. Further, they includeactivities intended to further social andphysical improvement of thecommunity and to contribute todesirable civic activities. It should benoted that most business houses inachieving their primary goals alsocontribute to their respectivecommunities by creating neededeconomic wealth, employment andfinancial support to the community.For example, Asian Paints funded alarge-scale community developmentproject to enable farmers to use localresources effectively. Steel Authority ofIndia contributes regularly foragriculture, industry, education, healthcare, dairy, poultry, fisheries anddrinking water supply the people livingnearby to their steel plants.

(iii) Individual objectives:Individual objectives are pertinent tothe employees of the organisation.Each employee join an organisation tosatisfy his needs by working in thefirm. These objectives might includecompetitive salary, personal growthand development, peer recognition,and societal recognition. In the absenceof satisfaction of personal objectives,employees may lose interest in thework and the performance of theorganisational objectives may suffer.Therefore, integration of personalobjectives with corporate objectives isa better option for the organisations.While formulating corporate

objectives, management shouldconsider individual aspirations andexpectations, which they would like tosatisfy through the work they performin the organisation.

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imagination. Improvement andprogress are its constant watchwords.For example, BPL group set upmanufacturing process in Indiaidentical to that of their collaborators(Sanyo, Japan). They adhere strictly tothe specifications of the materials andthe components, the manufacturingprocess, and the quality assuranceprogramme of the collaborators. Theseinitiatives provide edge to BPL over itscompetitors in its electronic products.

(ii) Brings order to endeavours:In an organisation, people come fromdifferent background and educationalqualifications. They may have differentvalue systems. Because of diversityamong employees of the organisation,their style of functioning andmanagement may also vary. Due tothis, there is a possibility of chaos. Toovercome such situation, managementis required to put the energy of all inone direction and for commonobjectives.

(iii) Critical ingredient innation's growth: Economic growth ofa nation does not necessarily dependon availability of resources. Countriesare developed and underdeveloped onthe basis of how they use their scarceresources effectively and efficiently.Efficient management of resources is thecritical factor in the economicdevelopment of the country. Managementknow-how utilises the availableresources effectively towards achievementof basic needs. Business organisationsare the key contributors to the economicgrowth of the nation. The use ofmanagement techniques in running the

organisations on scientific basis is theneed of the hour. Ef ficiency ofmanagement leads to greater and moreeconomical production for the society.

(iv) Provides judgement andvision: To determine worthwhile goals,carefully select and utilise resourcesefficiently require a high degree ofjudgement and vision. From time totime, gadgets and aids are offered toreplace management, but actually atbest they assist and do not representmanagements. Serious consideration ofsuch devices usually points out theneed for more management judgementand skills to be used. Nothing takes theplace of management. Management hasto think before doing anything. Thisnecessitates thinking in advance, thatis, before happening of any event. Since,there are many influences that factorsthe event and hence, management hasto take decisions that involvejudgement. Sound management willenable an enterprise to adjust to thecomplex and dynamic externalenvironment thus maintainingequilibrium.

(v) Helps in achieving groupgoals: The goal of the organisationrepresents the aspiration of all thosewho are working in the firm. Since,every one joins the organisation witha set of expectations, there arechances of conflict in attaining them.Here, lies the role of management tosatisfy all employees of the businessto the maximum extent possible.Thus, management ensures effective-ness to the efforts of a group of personsorganised to achieve given objectives.


DIMENSIONS

The term management can beunderstood in different ways. Forinstance, it can refer simply to theprocess that managers follow toaccomplish organisational goals. It canalso be understood to refer to a body ofknowledge. Management is also usedto pinpoint the individuals who guideand direct organisations or to designatea career devoted to the task of guidingand directing organisations. Adiscussion on each of these dimensionsfollows:

Activity

Management is the human activityundertaken to plan, organise, directand control the efforts of all thoseinvolved in the working activities of anenterprise. It has to be done mostdiscretely so that efforts of individualsand groups are used in the bestinterests of the organisation and thesociety. While doing so the materialresources and human efforts areintegrated in such a way that there isminimum wastage of materials, timeand energy. It has been rightly pointedout that management is the manner inwhich resources are used to accomplishprescribed objectives.

Process

According to the process approach,management consists of a series ofsteps including planning, organising,staffing, directing and controlling theactivities of an organisation. The central

idea behind the study of managementis the concern for objectives and theirattainment. This is what leads manyauthors of management to say that it is“a process of organising and employingresources to accomplish predeterminedobjectives.” The very success ofmanagement is the effectiveness of theenterprise managed by it. It is wellknown that the working of anyenterprise or organisation begins withthe establishment of its objectives andends with the achievement of theseobjectives. This process begins withthose at the top of the organisation andcontinues in more or less degree atevery level of the organisation. In effecteven the individuals at the lowest levelhave to go through this process.

Discipline

Over decades management hasdeveloped as a discipline. Disciplinecan be defined as a subject, the studyof which can be organised and taught.It should form a logical area forinquiry and research. It should meetthe basic requirements of (i) gainingacceptability; (ii ) capable ofdiscovering completely verifiedknowledge; (iii) able to organise andpass on to others the knowledge sodiscovered; and (iv) the knowledge sodisseminated should be such whichcan be successfully applied. From thecareful study of the literature onmanagement, it can be fairly statedthat management is a relatively newacademic discipline. Before World WarII, all the books on management filled

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application of knowledge and skill as perthe needs of a given situation. On theother hand, there are authors whoregard management as a sciencebecause management represents a bodyof well-tested principles, which can beuniversally applied. However, beforeresolving this question, let us first seewhat are the important features of anart and a science.

Management as a Science

Science is a systematically organisedbody of knowledge. It is based onlogically observed findings, facts andevents. It comprises exact principles.The principles of science are capable ofverification. It is a reservoir offundamental truths and its findingsapply safely in all the situations. Sciencetries to establish cause and effectrelationship with regard to variousphenomena and events.

Consequently, replication ispossible; two researchers undertakingthe same investigation, workingindependently, and treating the samedata under the same conditions, shouldobtain identical results. So far, relativelyfew management principles have beenderived by the method of science.Recent additions to the store ofmanagement knowledge have beengained largely by means of techniquesother than scientific. Only in a limitedway, in specialised areas such asresearch, testing and new productdevelopment, has management madeuse of the scientific method. Whether ascience of management will ever evolveis highly uncertain. In referring to the

only a modest shelf. Today,management texts are read not onlyby students who want to climb thecorporate ladder, they are on the bestseller lists as well. Before World WarII, very few colleges taughtmanagement. Today, hundreds ofcolleges and universities offer degreesin the field of management.

Group

The term management has also beenused as “the group of people havingmanagerial responsibility for anenterprise.” For example, usuallyreference is made to the managementof a school, a college, an undertaking,or a university. Reference to the labour-management relations is a commonmatter in the working of any organisation.Here, the term is used distinctly to pointout the group of persons charged withthe responsibility of effective working ofan enterprise or any organisation asdifferent from the rank and file ofemployees deployed to carry out the day-to-day routine work of that organisation.This approach focuses more on a teamrather than individuals. They believe thatmanagement as a team can contributemore effectively and efficiently than anindividual.

NATURE

Are there any set principles to managean organisation effectively? Literature onmanagement often gives very conflictingviews on this issue. Some authorsdescribe management as an art becausemanagement relates to practical


hope or dream that a true science ofmanagement may someday be achieved,Professor Mee states, “This hopeprobably will be realised in anotherchapter in another book in anothercentury.” Perhaps the best that can besaid is that a science of management isjust beginning to emerge.

It has often been stated that evenwhen management attempts to use themethod of science (from whichmanagement principles are alsoderived), management is neither asprecise nor as comprehensive as thenatural and pure sciences. There areseveral reasons why this is so:(i) The rational approach and the

application of the method of scienceare relatively new in business andindustry. As a result, managing hasnot developed thecomprehensiveness found in otherdisciplines that have used thescientific approach for a muchlonger time. In fact, one of the moresignificant developments in the lastseventy-five years in the field ofmanagement has been the tendencytowards using the rationalapproach in solving managementproblems.

(ii) Relatively few managers are trainedor experienced in using the methodof science. Those who are trainedmay find it too time-consuming and,because of this as well as otherlimiting factors, seek other ways toreach decisions and to solveproblems.

(iii) In science, precision measuringinstruments and tools are available.

A manager is forced to use relativemeasurement where absolutemeasurement is not possible orfeasible. To evaluate the perfor-mance of a group of supervisors, forexample, he may have to use arelative measuring device such as acarefully prepared rating scale. Forhis purposes, however, the relativemeasuring technique is just asuseful and effective.

(iv) In the physical sciences, theresearcher works with a singlevariable, holding all other factorsconstant. Managers can seldom dothis. They almost always deal withpeople, the human element, with allits weaknesses. The human elementcan never be treated as a constant;hence, precision is less than in thephysical sciences. Businessmen arealways dealing with theunpredictable: people, governmentsand nature. They change very fastand constantly and therefore, anyprediction about them is mostunreliable.

(v) Managerial decision making stressesresult-oriented action rather thantruth. A manager’s decisions musthave practical application. Managersstrive for reasonable results underuncertain conditions rather than forperfection. A method, technique, ordevice has to be good to get the jobdone.

Management as an Art

After doing MBBS, a person becomes adoctor. In this process she learns thebasic principles of medicine and

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surgery. However, to become an expertand specialist in a particular field ofmedicine or surgery, she has to go infor practice. This period of practicesharpens her knowledge and she is ableto use her knowledge with moredexterity. First part of her acquiringknowledge is a science and the secondpart is an art since, she is applying theknowledge which she has acquired asa discipline. Art refers to the skill to putinto action a systematised body ofknowledge for the achievement of agiven task. To get mastery in any skillit is necessary to have thoroughknowledge of the principles of doing theparticular task. At the same time it isnecessary to possess the tact, the careto be taken, the discretion and properjudgement in applying the principlesinvolved. Presence of mind, promptnessto react to the given situation and correctresponse demanded by the prevailingcondition are all essential to performskilfully the task undertaken.Experiences and judgement add to thisskill.

Management is also an art as manymanagers in organisations areworking on managerial positionsthough they have never acquired anyspecialised knowledge ofmanagement. Over a period of timethey have learnt some skills to performsuch jobs. Though they are not sureabout what they are doing nor theyfollow the same technique again forsimilar situations.

Sometimes it is said that a goodmanager is born and not made. But ithas been now established and accepted

that it is through learning and trainingprocess that skilled managers aredeveloped. Thus, art and science are notexclusive terms but complementaryones. Management as an art has thefollowing features:

(i) Situational: Managementdeals with human beings. They behavedifferently in different situations andtherefore, no set pattern can bedeveloped for the given situation.

(ii) Personal skill: Human beingsapart, there are other factors which varyin their effect and role in theachievement of the managerial tasks.Managers have to apply their skills todeal with them.

(iii) Personal judgement: Nodoubt there are useful principles ofmanagement, but it needs individualjudgement to apply them properly andat appropriate time. It means art isnecessary.

(iv) Continuous practice: The artof management is much older than thescience of management, which as anorganised body of knowledge is hardlyabout few centuries old.

(v) Practical knowledge: Businessenterprises involve risks. Only thosewho have experiences can dealeffectively with such risks.

Management: Both Science and Art

Management is a combination of anorganised body of knowledge andskilful application of this knowledge.Much of this knowledge is to befound in various academicdisciplines. Effective performance ofvarious management functions


necessarily needs an adequate basisof knowledge and a scientif icapproach. Thus, management is botha science and an art. It is a sciencebecause it uses certain principles. Itis an art because it requirescontinuous practice and personalskills. Thus, science and art inmanagement are not mutuallyexclusive. Both of them exist togetherin every function of management.

Management as a Profession

Profession is a well-defined body ofknowledge, which is learnedintellectually and organisationally. Ina profession, examination or educationrestricts entry. It is primarily concernedwith service to others. One enters intoit to work without any expectation of adirect share in the profits earned out ofsuch activities. Professionals normally,work on professional charges in theform of fee.

Features

A profession is an occupation backedby specialised knowledge and training.The professional’s behaviour isgoverned by a code of conduct that isregulated by a professional body andis duly recognised by the society. Thebasic requirements of a profession areas follows:(i) Existence of techniques, skills and

specialised body of knowledge;(ii) Availability of formal methods of

training and experience;(iii) Existence of a representative

organisation with professional-isation as its goal;

(iv) The formal ethical code of conductfor the guidance for its members;

(v) The charging of fees based on thenature of service extended.In the light of the above, let us

examine whether management is aprofession. The arguments in favour ofthis statement are listed below:

(i) Body of knowledge: All over theworld there is marked growth of anorganised systematic body ofknowledge about management as adiscipline. Scholars are studyingvarious business situations and aretrying to find out principles. There area large number of books onmanagement. A number of journalsspecialise in various aspects ofmanagement problems.

(ii) Formal methods of training:The establishment of professionalschools of management in whichmanagement as a body of knowledgecan be taught is seen everywhere. Indiais no exception to it as is clear from theestablishment of Indian Institutes ofManagement at Ahmedabad, Calcutta,Bangalore, Lucknow, Indore, Kozik-hode; Post-Graduate Departments ofManagement; Management Institutesand Colleges of Management in differentparts of the country.

(iii) Fee as remuneration: Mostmanagers are salaried people. However,the number of management consultantsis increasing. Even a large number ofwell-reputed firms are establishingtheir consultancy agencies. Theycharge fee as remuneration. Manybusiness and non-business firms aretaking the services of management

18BUSINESS STUDIES

consultants in restructuring theirorganisations.

(iv) Existence of ethical code:There is growing emphasis on theethical basis of management behaviour.All India Management Association hasdevised a Code of Conduct for Indianmanagers. But there is no statutorybacking for this code. Membership ofthis body is not compulsory.

(v) Establishment ofrepresentative organisations:

Both at the national and internationallevels, Management Associations havebeen formed with their membershiprules, codes of conduct, etc. All IndiaManagement Association, New Delhi,National Institute of PersonnelManagement, Calcutta, Institute ofMarketing and Management, Instituteof Chartered Accountants of India,New Delhi, Institute of Costs andWorks Accountants of India, Calcutta,are the well established associations

Enlightened Professionalism at Hindustan Lever

Multinationals in the third world have had a mixed record. They have been accusedof economically exploiting backward countries and making them worse off, andthey have also been praised for bringing Western capital, technology, and managementknow how to developing countries, thus spurring their growth. Hindustan Lever, anIndian subsidiary of Unilever, UK, may be a shining example of a company that hascontributed positively to India’s growth. In the eighties, it made substantialinvestments in backward industrial locations in half-a-dozen Indian states. It tookover the management of several sick units and revived them. A producer of cosmeticsand toiletries, its R&D. was aimed at finding indigenous substitutes for importedinputs. The company also was a major exporter, exporting 10 per cent to 15 per centof its production. The company’s long term financial performance, too, wasoutstanding. It declared a dividend ranging from 20 per cent to 34 per cent in theten years ending in 1986. In polls of corporate excellence it was consistently one ofthe toppers.

In the late eighties, Hindustan Lever was known to be one of the mostprofessionally managed companies in India, with exceptionally strong systems offinancial control, marketing and human resource management. Nepotism was taboo.Training was a way of life. Hindustan Lever had an internal board. That is, a boardconsisting mostly of its own senior executives. But a feature of the company wasthat executives in their early forties were invited to join the board. The company’schief executives had rendered distinguished services to the nation: Prakash Tandonlater became the chief executive of a nationalised bank and still later of the NationalCouncil of Applied Economic Research; Rajadhyaksha later became a member ofIndia’s Planning Commission.

Hindustan Lever was trying to practice a compassionate sort of professionalism.All its fresh managerial recruits were required to spend a few months in a rural site inthe state of Uttar Pradesh, where the company ran a model dairy, so that they got afeel of rural India. In Bombay, the company adopted an orphanage where managersand their family members could go in their spare time for rendering help to orphans.

Source: Business Today


in India. And many moreorganisations in the specialised fieldsor branches of management are beingformed.

Management as Profession: a Trend

Questions are sometimes asked: Ismanagement a profession? Is itbecoming a profession? As it is wellknown, a large number of businessunits India in operate as sole tradingand single entrepreneurshipenterprises. By definition and inpractice proprietor-managers managethem. So is the case with partnershipfirms and Joint Hindu Family Business.But Company form of businessenterprises in India and corporateorganisations in USA and othercountries are, even by definition,enterprises in which ownership isdivorced from management.

As things stand, under law it is theshareholders who elect the Board ofDirectors from amongst themselves.Thus, the top most men at the top levelmanagement of a company or corporatebody are not professional managers.But all the big companies operating onlarge scale appoint executives andmanagers on salary-cum-perks basis.They are professional managers. Inlarge companies the Vice-Presidents ofMarketing. Finance, etc. who are on theBoard of Directors are also professionalmanagers. So are all those working atthe middle levels and lower level ofmanagement. Many Indian companieshave taken initiatives to replace familymembers by professional managers.For example Ranbaxy Laboratoies and

Eicher Tractors are managed byprofessional managers rather thanfamily members of the owners. Thistrend is picking up due to increasingmarket competition. Now, days ofprotecting industry are over. Survivalof industry depends upon thecompetitiveness of the business ratherthan protection and that demandsprofesionalisation of management.

In case of public undertakingsmanagement is in effect by professionalmanagers. Exception is that of thedepartmental undertakings such asRailways, Posts and Telegraphs etc.which are controlled by the variousdepartments of the government. Butthere also, other than the Minister-in-charge all those looking after themanagement are professionals.

A new trend is becoming more andmore marked. Proprietary managersare becoming more interested inacquiring the latest knowledge andtechnique of management. They aresending their sons, daughters and otherclose relatives abroad to acquireDegrees and Diplomas in Management.Others are joining short term coursesin Management run by organisationslike Administrative Staff CollegeHyderabad, All India ManagementAssociation, etc. Such persons are nowoccupying positions at the top mostlayers of the managerial hierarchy. Arethese persons to be regarded asproprietary managers or professionalmanagers? No doubt all the features ofprofession are not applicable to them.But they do possess other features.

In conclusion, it may be said thatmanagers at the top level do not satisfy

20BUSINESS STUDIES

all the requirements of profession. Butmanagement is, by and large, becominga profession.

It is more so in the developednations. But even in India a largenumber of managerial cadres areprofessionals. This is applicable to boththe public and private sectors. Even inthe case of smaller enterprises, whichare run by proprietary managers,assistance of professionals such asChartered Accountants, CostAccountants and Lawyers are beingutilised to a great extent.

MANAGEMENT AND ADMINISTRATION

There is often a terminological conflictbetween management andadministration. Some authors suggestthat there is no fundamental differencebetween management andadministration; whatever the differencebetween the two exists, it exists only interms of usage in different walks of life.Other authors suggest that there isdifference between these two termsbecause both of them representdifferent activities. Therefore, it is

Experts’ Views on Management and Administration

Oliver Sheldon: Administration is the function in industry concerned with thedetermination of corporate policy, the coordination of finance, production anddistribution, the settlement of the compass structure of the organisation), andultimate control of the executive. Management on the other hand, is the functionin industry concerned with the execution of policy within the limits set up byadministration, and the employment of the organisation for the particular objectiveset before it.

E.F.L. Brech: Management is the generic term for the total process of executivecontrol involving responsibility for effective planning and guidance of the operationsof an enterprise. Administration is the part of management, which is concernedwith the installation, and carrying out of the procedures by which the programmeis laid down and communicated and the progress of activities is regulated andchecked against plans.

William H. Newman: Management or administration is the guidance, leadershipand control of the efforts of a group of individuals towards some common goals.

G.E. Milward: Administration is primarily the process and agency used to establishthe objective or purpose which an undertaking and its staff are to achieve; secondly,administration has to plan and to stabilise the broadlines or principles which willgovern action. These broadlines are usually called policies. Management is theprocess and agency through which execution of policy is planned and supervised.

William R. Spriegel: Administration is that phase of a business enterprise thatconcerns itself with the overall determination of institutional objectives and thepolicies necessary to be followed in achieving those objectives. Management, on theother hand, is an executive function, which is primarily concerned with carrying outbroad policies laid down by the administration.

Kimball and Kimball: It is a myth to make difference between management andadministration. Actually these are synonymous to each other.


desirable to resolve terminologicalconflict between management andadministration.

Administration is part ofManagement: According to thisview, management means the entireprocess of planning, policy-making,and coordination of efforts, controllingthe operations and maintaining thediscipline for the efficient and smoothfunctioning of a business enterprise. Itsignifies a total process of executivecontrol in industry or commerce. Itimplies undertaking of responsibilityfor effective planning, policy-making,fixation of targets and operativefunctioning of providing men, moneyand materials to carry out the policiesand run the day-to-day activities of theenterprise smoothly and systematicallyfor producing tangible results in theprocess of work. According to this

opinion management involves the (i)responsibility for policy formation; (ii)responsibility for planning, organising,directing and controlling; and (iii)responsibility for supervision. Thus, itis found that management begins withthe administrative function at the top.As one moves down the layers of theorganisation managerial functionsbecome more and more important.

Management and Adminis-tration mean the same thing: Thereare views according to that the terms“Management” and “Administration” tomean the same. For example, accordingto one view administration isfundamentally the direction of affairs.It is purposeful action and, to anincreasing degree, it is informed rationaland deliberate action. It is over-whelmingly concerned with the choiceof ends, ways and means for the

Board of Directors

Chief Executive

General Manager

Superintendent

Supervisor

A D M I N I S T R A T I O N

M A N A G E M E N T

Fig. 1.1: Administration and Management

22BUSINESS STUDIES

Administration and Management

Efficiency has always been important. But the new age is more demanding. It insistson maximum efficiency. Administration was the backbone of colonialism.Management is the hallmark of the age of independence. There is a qualitativedifference between the two approaches. Administration preserves the status quo.Management seeks to change. Administration commands. Management motivates.Administration overpowers. Management empowers. The transition from anadministrator to a manager is a revolution in attitude, and attitudes are important,because attitudes produce behaviour and behaviour determines results. In theultimate analysis, sound management is synonymous with sound leadership.

Source: Indian Management

attainment of desired results. The threemain elements of administration are theformulation of goals, the choice of waysand means and the direction of thepeople in some group purpose.According to another view adminis-tration is the total of planning,coordinating, motivating, controllingand operating work. It refers“Administration” as comprising all thefunctions that a manager of anenterprise is expected to perform inrealising the chosen objectives.

Administration comes firstManagement follows it: According tothis view, the term is used to control thespecific functions of planning, guiding,controlling and executing the workconnected with a business enterprise.Administration is that phase of abusiness enterprise, which concernsitself with the overall determination ofthe major policies and objectives.Administration predetermines the specificgoals and lays down the broad areaswithin which the goals are to be achieved.Administration is a determining function,management is the executive function

that concerns itself with carrying out ofthe administrative policies laid down byadministration. This view brings out thedifference between the termsadministration and management in thefollowing words: administration is thedetermination of policy andcoordination. Proper management is theexecution of policy. Administration isthe force, which lays down the objectivefor which an organisation and itsmanagement are to strive and the broadpolicy under which they are to operate.Management is the force, which leads,guides, and directs an organisation inthe accompli-shment of apredetermined object.

Administrative and managerialfunctions permeate throughout theorganisational setup of the enterprise.Functionally, speaking every managerhas to fulfil the dual role ofadministration and management invarying degrees. But in highlysophisticated modern enterprises, thefunctions of planning, policy-making,formulation of basic objectives are vestedin the top level of management


Board of Directors, Chief Executives,Chairman, Managing Directors, GeneralManager

Functional Managers, Departmental Heads,and Other Executive Officers

Supervisors, Foremen, Inspectors, etc.

MiddleManagement

Supervisory or OperationalManagement

TopManagement

Hierarchy of Management

consisting of directors, chief executivesand expert advisers. The remainingmanagerial personnel are expected tocarry out policies and programmes sofinalised. The administrative function isconfined to a compact group, which spellout broad policy. The subordinateexecutives in the organisational setupdo the details of operation.

LEVELS

In company or corporate form oforganisation a large number ofpersons are employed and placed atdifferent places and positions to workon various jobs. To carry out theseresponsibilities they are givennecessary authority (right to decision-making). Authority given to each ofthese managers more or less dependson the responsibility (duty) assignedto them. In other words, the wholerelationship between these managersand subordinates working in acompany form of organisation arearranged in a series of levels.

At each level a group of managersare entrusted with particular type andnature of duties to be performed. Forattending to these duties they receiveinstructions from the managers placedin the higher positions (known as theirsuperiors). At the same time they aregranted the right (authority) to issueinstructions to the managers workingat the next layer of the organisation.They are their subordinates. Thiscreates a chain of authority-subordinate relationships. This chainis known in management literature ashierarchy or levels of management.

Authors do not agree on the lengthof this chain or the number of levelsof management. However, in generalwe accept three levels of management— top level, middle level andsupervisory or operational level ofmanagement. The whole arrangementof the chain is such that if onearranges the number of peopleworking from top to the supervisorylevels, it looks like a pyramid — few

24BUSINESS STUDIES

(operational level), a few (middle level),and very few at the top level.

Top Management

Top management consists of Chairmanof the board, Directors, ManagingDirector, General Manager and otherresponsible persons for systematicconduct of the enterprise along the rightlines reaching out towards therealisation of business objectives. Topmanagement cannot be viewed as aunitary position occupied by anindividual with paramount authority.Rather it should be looked upon as agroup of crucial people essential forpiloting the operations of theundertaking towards profit andprosperity. The functions of the topmanagement may be outlined asfollows: (i) determining the objectives ofthe enterprise; (ii) framing of policies;(iii) organising activities to beperformed; (iv) assembling the requiredresources; and (v) controlling andmonitoring the planned performance.

Middle Management

This level of management is concernedwith the task of implementing thepolicies and plans chalked out by thetop management. Middle managementcomprises departmental heads andother executive officers attached todifferent departments. Thesedepartmental managers and officers areexpected to take concrete steps foractual realisation of the objectives andoperational results visualised in theplans finalised by the top management.

“This group is responsible for theexecution and interpretation of policiesthroughout the organisation and for thesuccessful operation of assigneddivisions or departments.” In otherwords, the middle management officersexercise the usual functions ofmanagement in respect of their owndepartments. They have to plan theoperations, issue instructions to theirassistants, collect the resourcesrequired and control the work of thepeople under them and evaluate theresults achieved by their departments.If the top management is endowed withthe authority of policy-making, middlemanagement is entrusted with theprogramming of efforts essential forimplementing the basic predeterminedpolicies. Functions of middlemanagement are: (i) interpretation ofpolicies framed by top management; (ii)preparing the organisational setup intheir departments for fulfilling theobjectives implied in various businesspolicies; (iii) finding out the suitableoperative and supervisory personneland assigning duties andresponsibilities to them for theexecution of the plans of the concerneddepartments; (iv) compiling detailedinstructions regarding operations andissuing them to the assistants andoperatives to focus and guide theirefforts accordingly; (v) motivating thepersonnel for higher productivity andrewarding them for their merit,capacity or calibre; (vi) cooperating withother departments so as to ensuresmooth functioning of the organisation;(vii) collecting reports, statistical


information and other records aboutthe work turned out in respectivedepartments and forwarding the samewith their observations to the topmanagement; and (viii) recommendingto the top management new or revisedpolicies for their departments to securebetter performance.

Supervisory or OperationalManagement

It refers to the bottom level in themanagerial hierarchy of theorganisation. Foreman, supervisorsand sub-departmental executivesassisted by a number of workers, clerksetc., carry out the actual operations asper schedule. Their authority andresponsibility is limited and they havethe lines drawn by the higher levels ofmanagement. Though classified at thelower level, the importance of functionsof personnel employed at theoperational level cannot be overlooked.The plans and the policies of the top

Managing Levels

Look at how ICICI Bank, Infosys and the Murugappa group have gone about solvingthe problem. The ICICI Bank top management is increasingly involving middlemanagement employees in board proceedings. It is not uncommon for managerseven at the DGM level to make presentations to the board.

The Murugappa group has evolved a process for this. It has identified a team of100 young managers and has given every director in the group the job of mentoringat least 2-3 of them. Besides the obvious HR benefits (managers learn from beingexposed to the board), a process and channel for independent directors to seek outinformation also gets established.

However, if such a process is to work, the management, too, needs to have anopen culture that encourages middle managers to interact with independent directorsirrespective of hierarchy based protocols.

Source: Business World

management will fail if the foremen andoperatives do not fully realise the spiritof sustained work. The quality ofworkmanship and quantity of outputwill depend on the hard labour,discipline and loyalty of the operatingpersonnel. The foremen andsupervisors are responsible forexecuting the work order allotted totheir respective departments orsections. They pass on the instructionsof middle management to the workforce, procure the materials, tools etc.,required for the jobs, assign specificduties to individual workmen andguide them in acting upon theinstructions and handling the job onhand with ability and accuracy. Theyseek to maintain precise standards ofquality, prevent wastage of materials bynegligent workmen, look to the safetyof machines and equipment and ensuresteady flow of output as per plans andprogrammes prescribed by the top andmiddle management. They are alsoresponsible for maintaining discipline

26BUSINESS STUDIES

consumers? What resources (labour,materials, and machines) will berequired? When should theseresources be obtained? These andmany other questions have to beanswered before management canintelligently move ahead.

Organising

Once the plans are in place, it is time toproceed with other phases of theproject. The next step would be toestablish an organisation structure.Should it be a corporation? If 60 peopleare to be hired, what sub-units shouldthere be? How many work groups?Should these be organised around thefunctions performed, the products to beproduced, or steps involved in theprocessing? How many supervisorsshould there be, and what authorityshould they have? Should any specialsupport units like personnel orpurchasing be established? How canpeople be informed of the scope of theirjobs? Once these decisions are made,the organisation assumes a particularstructural form.

Staffing

Following the establishment of theplans and the development of theorganisation structure, the managerthen seeks people to staff theorganisation. Staffing is the selectionof employees who have the training andskill to meet the demands of eachposition. It also includes thedevelopment, promotion, andperformance evaluation of subordinates

FUNCTIONS

Regardless of the type of organisation,all managers have certain basicfunctions: planning, organising,staffing, directing, and controlling. Thescope and nature of these functionsdiffer from manager to manager andfrom firm to firm.

Planning

Planning is always the first function.Before you can accomplish anything ofa long term nature you must determinein advance what is to be done. If anentrepreneur such as Bill Gates in thechapter opening case established acompany to manufacture computersoftware, he would first have to decidewhat the goals and objectives were tobe. What products will be produced?How will they be produced? Where willthe funds be obtained? Who will be the

among the respective batches ofworkers, preserving and boosting theirmorale and fostering the team spirit inthem. Functions of lower managementare: (i) representing the workers’grievances before the management; (ii)ensuring adequate lighting, ventilation,orderliness in the working area andproviding other amenities to workers;(iii) looking after safety of workers byproper fencing and safe guards at allcritical points and avoiding accidents;(iv) helping the management inselection, training, placement andpromotion of workers; and (v)welcoming suggestions from workersfor better working practices andproduction-techniques.


and the other important “people”considerations in the organisation.

Directing

After the plans are made, theorganisation established, and thepeople hired, it is time to move aheadwith the project. If the new venture isto be a success, leadership is essential.This execution phase of planning turnsinto the day-to-day time consumingprocess of providing direction forongoing activities. The manageractivates and energises theorganisation. He is expected to makethe decisions and provide the leadershipto keep the organisation movingtowards the established goals. Thisinvolves many activities and skills, sinceit includes guiding, motivating, andsupervising subordinates.

Controlling

As the project progresses, it is themanager’s responsibility to see that itmoves ahead as anticipated. Will thegoals be reached? Are the operationsbeing preformed in relation toestablished standards? Is the productor service being produced on time,within cost limitations, and in thequality and quantity desired?Control encompasses all of theperformance measurements andfollow-up actions that keepperformance on track.

COORDINATION

Linking of activities of diverse nature torealise the homogeneous objects is oneof the vital — responsibilities of

management. Integration of theseactivities is what we mean bycoordination. Coordination is regardedas culmination of all the managerialprocesses. Planning execution,howsoever accurate and skilful, cannotbe fruitful unless managementestablishes harmonious blending ofactivities through organisationarrangements and administrativeaction. This is done throughcoordination. Coordination meanssynchronisation of efforts from thestandpoint of time and the sequence ofexecution. It involves the developmentof unity of purpose and the harmoniousimplementation of plans for theachievement of the desired ends.Coordination is the force binding all theother functions of management. It aimsat canalisation of group efforts in thedirection of reaching the chosen goals ofthe company. Similarly, activitiesconcerning production, purchases, sales,finance etc. are to be unified to ensurecontinuity in the working of the company.

The primary reason forcoordination is that departments andwork groups are interdependent —they depend on each other forinformation and resources to performtheir respective activities. For example,in a Hotel, the reservations department,front-desk check-in, and housekeeping are all reciprocallyinterdependent. Reservation has toprovide front-desk employees withinformation about how many gueststo expect each day, and house-keepingneeds to know which rooms requirepriority cleaning. If any of the three

28BUSINESS STUDIES

units does not do its job properly, theothers will all be affected.

ELEMENTS

The greater the interdependencebetween departments, the morecoordination the organisation requiresif departments are to be able to performeffectively. The key elements ofcoordination are explained below:

(i) Integration: It refers to theunification of all the unrelated ordiverse interests, which must bebrought together if purposeful work isto be accomplished effectively. Itimplies the reconciliation of all diverseforces into a common focus of the workto be performed as planned andscheduled. Integration of activitiesresult in better performance of theorganisation.

(ii) Balancing: It meanssupplementing the activities, efforts andjobs of one department with those ofanother. It means providing support byone activity to another so that optimumresults could be achieved. For exampleat Hindustan Motors, one plantassembles engines and then ships themto a final assembly site at another plantwhere the cars are completed. Theplants are interdependent in that thefinal assembly plant must have theengines from engine assembly before itcan perform its primary function ofproducing finished automobiles.

(iii) Timing: It involves schedulingof operations in suitable order. Itrequires that different activitiesproceeding under their own schedulesbe brought into focus so that all

advance in such a manner so as toreinforce each other.

NATURE

Coordination is the process ofachieving unity of action amongindependent activities. This would bebetter achieved if the nature ofcoordination is understood clearly asdiscussed below:

(i) Essence of management:Coordination is an activity that isrequired at every level and every timein the organisation. Sinceorganisations are performingdiversified activities to achieve commongoals, therefore, the integration ofefforts at all levels is equally important.In the absence of harmonised groupactivities, achievement of group goalsbecomes difficult.

(ii) Continuous process: A notionof coordination as a fixed entity, whicheither exists or does not exist, isunrealistic. Coordination is present invarying degrees. Executives mustwork continuously to achievecoordination . Maintainingcoordination among various activitiesof business is the essential task ofmanagers. This should happencontinuously.

(iii) Group effort: Coordination isa concept that applies to group, notindividual, effort. When a number ofindividuals seek to work together,orderliness becomes significant. Theextent to which coordination producesorderliness in group effort is animportant element of efficiency inrunning a business. Undue confusion


Rath Travels Finds Out What Farmers Know About Organising

Rath Travels is a fast growing 1,000-office global travel agency, but the way it isorganised is based on what CEO Ramesh Chauhan learned on a cow farm. Standingon a cowpat-spotted field in rural Sonapur several years ago, Chauhan made adiscovery: “The family farm is the most efficient type of unit I have ever run across,because everybody on the farm has to be fully functional and multifaceted.” Hedecided to look for an organisational design that would embody that approach togetting everyone’s full involvement in helping to run the company. He knew doingso would help his managers better manage change.

His company now is a good example of how smart managers blend severalorganisational styles to build fast moving and successful firms. The first thingChauhan did was to break his company into more than 100 business units, eachfunctioning like a “farm” serving specific regions and clients. Corporate headquartersbecame more like what Chauhan calls “farm towns,” where “stores” like humanresources and accounting remain centralised so all the “farms” can use them. Itscomputerised Global Distribution Network links every one of its travel agents tothe company’s minicomputers in Patna, where centralised data on all the company’sclients help ensure that the work of all the offices is coordinated to serve the needsof Chauhan’s clients.

Source: Business Today

is a symptom of poor coordination.Since, organisation means two or morethan two persons working together,these two persons may be of differentbackground in terms of education andexperience and thus, their style ofmanaging an organisation may bedifferent. To achieve organisationalgoals, these two or more than twopersons should work in cohesion.

(iv) Unity of effort: It meansprimarily that the leader has to soarrange the timing of the efforts thatindividual contributions are blendedinto a harmonious stream of productiveaction. When all the employees worktogether in the same direction and ontime, organisation may achieve itstarget with more surety. Conflictingefforts may cause more damage to theorganisational objectives. It is the duty

of the managers to direct the efforts ofall persons to a common goal

(v) Common purpose: The degreeto which the business achieves itsintended purposes is at least a partialindex of the extent to which the chiefexecutive has been able to coordinateit. Unity of effort requires anunderstanding by all participatingindividuals of the goals towards whichthey are working as a group. Forexample, in companies, which havegrown consistently over the years,including Ranbaxy, INDAL, Infosys,Arvind Mills, L & T, Titan, SundaramFasteners, a substantial part of seniormanagement time is spent oncommunicating the organisationalvision and objectives in a clear, coherentmanner to all levels. Organisationalvision and mission are the techniques

30BUSINESS STUDIES

of achieving common purpose of theorganisation.

IMPORTANCE

Performance of various managerialfunctions in an integrated mannerinvolves fair degree of coordinationamong individuals and departments.Coordination derives it’s importancefrom the fact that it is needed to integratethe efforts of individuals, departmentsand specialists which may work at crosspurposes. In large organisations, suchcomplexities require special efforts for

coordination due to individualdifferences and number of personsinvolved.

(i) Size of the organisation: Inlarge organisations, multiplicity ofpersons often creates difficulty inintegrating their activities. Eachindividual is unique, acting to sensehis own needs as well as those of theorganisation. Each has his own habitsof work, his own background,approaches to situations, andrelationships with others. Moreover, theindividual does not always act

Mercedes-Benz Improves Coordination to Improve Product Quality

Improving coordination can improve the effectiveness and efficiency of the workforcein any organisation. Mercedes-Benz executives focus on improving coordination toimprove product quality. Although they acknowledge that new competitors such asLexus and Infinity have made an impact in the upscale automobile market, Mercedes-Benz executives are neither discouraged nor digressing from decades oldorganisational objectives. The company remains dedicated to the needs and wantsof the upscale but unpretentious buyer who is looking for a vehicle that balancesstyle and performance with form and function. As in the past, the company willcompete by remaining firmly committed to improve the overall quality of its products.Klaus-Dieter Vohringer, a member of the Mercedes-Benz top management team,says, the company will demonstrate this commitment to product quality through aplan that focuses on improving coordination among three different manufacturingand assembly plants. This major restructuring of the manufacturing process atMercedes-Benz is expected to result not only in better product quality but also inmore productive uses of existing facilities, quicker responses to changing customers’needs and competitive products, and lowered product costs. According to Vohringer,Mercedes-Benz has developed a sophisticated understanding of its customers overthe years. In order to maintain a high level of customer satisfaction, managementknows that it must constantly be on the alert for new methods of improving productquality, and is convinced that better coordination in the manufacturing processwill help Mercedes-Benz achieve its quality goals.

Source: Business World


rationally. His behaviour is not alwayscompletely predictable. Therefore, it isimperative for organisational efficiencyto integrate individual and group goalsthrough coordination.

(ii) Functional differentiation:Functions of an organisation arefrequently divided into departments,divisions, sections, and the like.Coordination problems arise becausedomains become solidified, withbarriers between them becoming rigid.Each unit tries to perform its missionin isolation from the others. Sometimesthis happens because functions aregrouped illogically or managers takethe experience rather than the logicalroute. In such cases, coordination isessential to work effectively in theorganisations.

(iii) Specialisation: There is a highdegree of specialisation in modernorganisations. Specialisation arises outof the complexities of modern

technology as well as from the diversityof tasks needed to be performed.Organisations employ a number ofspecialists. The specialists think thatthey only are qualified to evaluate, judgeand decide according to theirprofessional criteria and others are notcompetent and qualified for doing these.If the specialists are allowed to workwithout coordination, it may lead toconflicts. Therefore, some mechanismis required to coordinate the efforts ofvarious specialists among themselvesas also between the specialists andothers in the organisation.

Coordination is the essence ofmanagement. It is not something,which could be ordered by a manager.Instead, it is something which themanager attempts to achieve whileperforming his functions of planning,organising, staffing, directing andcontrolling. Thus, every managerialfunction is an exercise in coordination.

Coordination : the Essence of Management

Hyderabad Allwyn would be remembered for many “firsts”. Established in 1942, itwas the first in the country to produce a double-decker bus, refrigerators, andquartz watches. It had technical collaborations with companies like Mitsubishi,Hitachi, Seiko and Nissan for its diverse range of products — buses, watches,refrigerators, sewing machines, LPG cylinders, compressors, office furniture, etc.With an emphasis on growth, the company kept on expanding and diversifying. Bythe end of the 1980’s, the problems of consolidation and coordination becameapparent. The diversification had spread the company too thin, making it difficultfor it to compete in the market either by volumes or niche; lack of synergy amonginterrelated production divisions had lead to high inventories of finished goods,work force had swelled; plants were working at low capacities. By 1993, the companyhad an accumulated loss of Rs 168 crore, and its various divisions were up forsales. Company failed to balance its various product portfolios.

32BUSINESS STUDIES

Concept

Management is a process of planning, organising, motivating and controlling theenterprise resources for the purpose of achieving the goals of the organisation.

Characteristics

The key features of management are: Achieving organisational objectives; Distinctactivity; Group efforts; Intangible; Influences behaviour; Composite process;Coordinating force; Working with and through others; Balancing effectiveness andefficiency; and Dynamic discipline.

Importance

Management is important because it provides: Effectiveness to human efforts; Bringsorder to endeavours; Critical ingredient in nation’s growth; Provides judgement andvision; and Helps in achieving group goals.

Dimensions

Management is a human activity undertaken to organise direct and control theefforts of persons involved in the work of an enterprise. It is a process of organising,and employing resources to accomplish predetermined objectives. This is a subjectof study, which can be organised and taught. It is the group of people havingmanagerial responsibility for an enterprise.

Nature

Management is a combination of an organised body of knowledge (science) andskilful application (art) of this knowledge. Although it does not satisfy all therequirements of a profession but, by and large, becoming professionalism.Management serves — organisation, individuals, and society as its objectives.

MANAGEMENT AND ADMINISTRATION

The administrative function is confined to a compact group which spell out broadpolicy. Managerial executives in the organisational setup do the details.

Levels

Management is considered as a three-tier activity. The top management centresaround the determination of objectives and policies, the middle management isconcerned with implementation of policies through the assistance of lower levelmanagers of the organisation.

Functions

Regardless of the type of firm, all managers have certain basic functions: Planning;Organising; Staffing; Directing; and Controlling.

COORDINATION

Coordination is the process of achieving unity of action among interdependentactivities.

SUMMARY


Elements

The key elements of coordination are : Integration; Balancing; and Timing.

Nature

Coordination is an essence of management since, it helps in achieving harmony ofindividual efforts towards the accomplishment of group goals. It is a continuousprocess applies to group effort, unity of efforts and has a common propose.

Importance

Need for coordination arises because of the size of the organisation, functionaldifferentiation and specialisation.

Short Answer Type Questions

1. Define the term ‘management’.

2. Explain the term ‘management’ as an Art.

3. What do you mean by ‘levels of management’?

4. Explain briefly the important features of management as a profession.

5. “Management is a learned discipline”. Comment.

6. Define the term ‘coordination’.

7. Discuss the need for coordination in management.

Long Answer Type Questions

1. Bring out the objectives and importance of management.

2. Is management a ‘science’? Explain.

3. Explain critically if management is a profession.

4. Distinguish between the terms ‘management’ and ‘administration’.

5. Discuss briefly the functions of top level of management.

6. Explain the place of middle level management pointing out their functions inbrief.

7. Briefly explain the planning and organising functions of management?

8. Discuss the meaning and nature of coordination.

9. Examine the element of coordination from the point of effective management.

10. Define balancing and timing and indicate their significance in coordination.

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