Unit 1 Fundamental of Management & Planning

Management

Management guru, Peter Drucker, According to him, "Management is a multipurpose organ that manages a business and manages managers, and manages workers and work."

Traditional Definition

According to Mary Parker Follet, "Management is defined as an art of getting things done through others."
The person who directs the efforts of others is known as the Manager.

Modern Definition

According to Harold Koontz and Weirich, "Management is the creation and maintenance of an internal environment in an enterprise where individuals, working in groups, can perform efficiently and effectively towards the achievement of groups goals."

• Effectiveness: refers to the completion of a task on time.
• Efficiency: means optimum resource utilisation, i.e., using fewer resources and getting maximum output.

Function of Management

According to Koontz & O'Donnell: Five Managerial Functions

1. Planning: Deciding what needs to be done and how to do it. It involves setting goals and figuring out the steps to achieve them. It includes (Determination of objectives, Forecasting, Budgeting, Formulation of policies and programs). Planning helps create a clear direction and framework for behaviour.
2. Organising: Arranging resources and tasks in a structured way to achieve the goals set during planning. It includes assigning roles and responsibilities. It includes (Identification & Grouping of Activities, Assigning duties, and Development of authority responsibility relationship). Organizing sets up the structure that influences how people interact and work together.
3. Staffing: Hiring and managing the right people for the job. This involves recruiting, training, and developing employees to ensure they can perform their tasks effectively. It includes (HR Planning, Recruitment, Selection, Training & Development). Staffing ensures the right people are in place, affecting team dynamics and productivity.
4. Directing: Guiding and motivating employees to do their work and achieve the organization’s goals. It involves leadership, communication, and supervision. It includes (Leadership, Communication, Motivation, Super Vision). Directing involves motivating and guiding employees, impacting their job satisfaction and performance.
5. Controlling: Monitoring and evaluating the progress towards goals. It involves measuring performance, identifying any deviations from the plan, and making necessary adjustments. It includes (Setting Standards, Measuring Performance, Comparing with Standards, and Taking Corrective Action). Controlling involves monitoring behaviours and making adjustments to improve overall effectiveness. 

According to Luther Gullick & Lyndall Urwick: 7 Managerial Function  - "POSDCORB"

1. Planning: Deciding what needs to be done and how to do it. It involves setting goals and figuring out the steps to achieve them. It includes determining objectives, Forecasting, Budgeting, and formulating policies and programs). Planning helps create a clear direction and framework for behaviour.
2. Organising: Arranging resources and tasks in a structured way to achieve the goals set during planning. It includes assigning roles and responsibilities. It includes (Identification & Grouping of Activities, Assigning duties, and Development of authority-responsibility relationship). Organizing sets up the structure that influences how people interact and work together.
3. Staffing: Hiring and managing the right people for the job. This involves recruiting, training, and developing employees to ensure they can perform their tasks effectively. It includes (HR Planning, Recruitment, Selection, Training & Development). Staffing ensures the right people are in place, affecting team dynamics and productivity.
4. Directing: Guiding and motivating employees to do their work and achieve the organization’s goals. It involves leadership, communication, and supervision. It includes (Leadership, Communication, Motivation, Super Vision). Directing consists in motivating and guiding employees, impacting their job satisfaction and performance.
5. Controlling: Monitoring and evaluating the progress towards goals. It involves measuring performance, identifying any deviations from the plan, and making necessary adjustments. It includes (Setting Standards, Measuring Performance, Comparing with Standards, and Taking Corrective Action). Controlling involves monitoring behaviours and making adjustments to improve overall effectiveness.
6. Reporting: This involves regularly providing detailed updates on various aspects of the organization’s performance. It includes financial reports, progress reports, and performance metrics. Reporting helps managers make informed decisions by providing a clear picture of how well the organization is doing compared to its goals.
7. Budgeting: This is the process of creating a financial plan for the organization. It involves forecasting revenue and expenses, setting financial goals, and allocating resources accordingly. Budgeting helps in controlling costs, managing cash flow, and ensuring that financial resources are used efficiently to achieve organizational objectives.

Objectives of Management

The main objectives of management are:

1. Achieving Organizational Goals: Ensuring that the organization meets its objectives effectively and efficiently.

2. Optimizing Resources: Using resources (such as time, money, and personnel) in the best possible way to maximize productivity and minimize waste.

3. Increasing Efficiency: Streamlining processes and operations to improve performance and reduce costs.

4. Ensuring Growth and Development: Facilitating the organization's growth by innovating, expanding, and adapting to changes in the market.

5. Maintaining Employee Satisfaction: Creating a positive work environment, motivating employees, and addressing their needs to enhance job satisfaction and performance.

6. Enhancing Profitability: Maximizing financial returns and maintaining financial health through effective cost management and revenue generation.

7. Fostering Innovation: Encouraging creativity and new ideas to improve products, services, and processes.

8. Ensuring Customer Satisfaction: Meeting or exceeding customer expectations to build loyalty and maintain a competitive edge.

9. Maintaining Compliance: Adhering to legal regulations, industry standards, and ethical practices to avoid legal issues and build a positive reputation.

10. Building a Strong Organizational Culture: Establishing and nurturing a culture that supports the organization’s values, mission, and goals.

11. Managing Risk: Identifying potential risks and implementing strategies to mitigate them, ensuring the organization’s stability and continuity.

12. Facilitating Communication: Ensuring effective communication channels within the organization to promote collaboration and information flow.

13. Developing Leadership: Cultivating strong leadership at various levels to guide the organization towards its objectives and foster professional growth.

Level of Management

a) Top Level Management

b) Middle-Level Management

c) Lower-level management

1. Top-Level Management: This is the highest level, including executives like CEOs and presidents. They set the overall direction and goals for the organization and make major decisions.

2. Middle-Level Management: These managers implement the strategies set by top management. They oversee departments or divisions, coordinate activities, and manage middle managers and team leaders.

3. Lower-Level Management: Also known as first-line or operational managers, they handle day-to-day operations and supervise the employees who directly work on the tasks. They ensure that work is done efficiently and address immediate issues.

Management Skills

To perform the functions of management and to assume multiple roles, managers must be skilled. Robert Katz identified three managerial skills that are essential to successful management:

1. Technical Skill

2. Human Skill

3. Conceptual Skill

1. Technical skills: These are the abilities needed to perform specific tasks or use certain tools and technologies. For example, knowing how to operate machinery or use software.

2. Human skills: These involve interacting effectively with people. It includes communication, empathy, and teamwork—essential for working well with others.

3. Conceptual skill: It involves the formulation of ideas. Managers understand abstract relationships, develop ideas, and solve problems creatively. These are the abilities to understand and manage complex ideas and situations. It involves seeing the big picture, solving problems, and making strategic decisions.

Thus, Technical skills deal with things, focusing on specific tasks and tools.

Human skills concern people, Building on technical skills, and focusing on interacting with people.

Conceptual skill has to do with ideas, At the top, dealing with complex ideas and strategic thinking, relying on both technical and human skills.

Role of Manager

A manager is a person who performs the function of POSDC (Planning, Organizing, Staffing, Directing, & Controlling) for the accomplishment of the objectives of an undertaking.

According to H. Mintzberg, the following are the important role of a Manager:

1. Interpersonal Role

2. Informational Role

3. Decisional Role

1. Interpersonal Role: This involves how managers interact with people. It includes acting as a figurehead, leading and motivating the team, and building relationships with others inside and outside the organization.

2. Informational Role: This involves handling and sharing information. Managers collect, process, and distribute information, and ensure that everyone in the organization is informed about relevant details.

3. Decisional Role: This involves making decisions and solving problems. Managers use information to make choices, solve issues, and take actions that affect the organization’s direction and performance.

Characteristics of Management

Here are some key characteristics of management: 

1. Goal-oriented: Management focuses on achieving specific objectives and goals for the organization.
2. Organized: It involves arranging resources, tasks, and people systematically to reach goals.
3. Continuous Process: Management is an ongoing activity that involves planning, organizing, leading, and controlling.
4. Dynamic: Management adapts to changes in the environment, technology, and market conditions.
5. People-centric: It involves working with and managing people to get the best results.
6. Decision-Making: Management requires making choices and solving problems to guide the organization effectively.
7. Coordinated Effort: It involves integrating various activities and resources to ensure everything works together smoothly.
8. Universal Application: Management principles apply to all types of organizations, whether for-profit, non-profit, or governmental.
9. Integrative: It combines different functions and activities to achieve overall objectives, ensuring that various departments and teams work together.
10. Efficiency and Effectiveness: Management aims to use resources wisely (efficiency) and achieve desired outcomes (effectiveness).
11. Hierarchical: It involves different levels of authority and responsibility, from top executives to front-line supervisors.
12. Strategic and Tactical: Management includes both long-term planning (strategic) and day-to-day operations (tactical).
13. Resource Management: It involves managing financial, human, and physical resources to support organizational goals.
14. Control Mechanism: Management includes monitoring and evaluating performance to ensure that goals are being met and making adjustments as needed.
15. Motivational: It involves encouraging and inspiring employees to perform their best and achieve the organization’s goals.

Evolution of Management ( management practices from past to present) 

The Different Approaches are:

1. Classical Approach: The Classical Approach in management focuses on improving organizational efficiency through established principles and practices. It includes: 

a) Scientific Management Approach (F. W. Taylor)

b) Administrative Management Approach (Henry Fayol)

c) Bureaucratic Management Approach (Max Weber)

2. Behavioural Approach (Neo-Classical Approach) (Human Relation Approach): It emphasizes the human and social aspects of work and focuses on improving organizational effectiveness through understanding employee behaviour and needs

a) Human Relation Approach (Elton Mayo)

b) Social System Approach (Vilfredo Pareto)

3. Modern Approach: The Modern Approach in management involves using updated methods and ideas to effectively handle today’s business challenges.

a) Quantitative/Mathematical Approach

b) System Approach

c) Contingency Approach

1. a) Scientific Management Approach: Applying scientific methods to work processes to improve productivity. It involves analyzing tasks, standardizing procedures, and optimizing worker performance through systematic study.

F. W. Taylor (Frederick Winslow Taylor) is called as the Father of Scientific Management. His book "The Principles of Scientific Management" was published in 1911. He suggests that the management should follow a scientific approach in their work.

F.W. Taylor specified Six principles for Scientific Management

1. Science, Not Rule of Thumb
2. Harmony, Not Discord
3. Cooperation, Not individualism
4. Maximum Output in place of restricted output.
5. Equitable division of work and responsibility between management and labour.
6. Planning not adhocism.

The main elements of Scientific Management are:

1. Determination of workload based on method study, motion study, time study, fatigue study etc.
2. Planning of industrial operations- i.e.; what work shall be done? How the work be done? where and when the work be done?
3. Proper selection, placement and training of workers by a centralised personnel department
4. Improvement in the method of work ie; Standardisation of tools and equipment, and Improvement of the work environment.
5. Mental revolution i.e.; a change in the mental outlook of the employees and the employers.

1. b) Functional/Administrative Approach: Focuses on the overall administration and management of organizations. Fayol identified key principles of management, such as planning, organizing, leading, and controlling, and emphasized the importance of management functions and organizational structure

Henri Fayol is said to be the father of the Functional/Administrative Approach. According to Henri Fayol, all activities of industrial undertakings could be divided into Six groups:

1. Technical (Production, Manufacturing, Adaptation
2. Commercial (Buying. Selling & Exchange)
3. Financial (Search for & Optimum use of Capital Resources)
4. Security (Protection of Property & Persons)
5. Accounting (Balance sheets, Cost & Statistics)
6. Managerial (Planning, Organising, Commanding, Coordinating, Controlling)

14 Principles of Management (Given by Henri Fayol) are: 

1. Division of Work
   
2. Authority & Responsibility
   
3. Discipline
   
4. Unity of Command: (Command from one boss Only)
5. Unity of Direction: (The same instructions should be given to the same group of subordinates)
6. Subordination of Individual Interest to General Interest:
   
7. Remuneration of Personnel: (Payment should be fair and provide maximum satisfaction)
8. Centralisation
   
9. Scalar Chain & Hierarchy
   
10. Order: There should be a place for everything, and everything should be in its place
11. Equity: Employees should be treated equitably
12. Stability: of Tenure of Personnel
13. Initiative: Subordinates should be encouraged to conceive and carry ideas

1. c) Bureaucratic Management Approach (Max Weber): Emphasizes a formal organizational structure with clear rules, roles, and hierarchy. It aims to create a rational and efficient system with well-defined procedures and authority.

Max Weber contributed the theory of bureaucracy to management thought. Focus on dividing the organisation into hierarchies establishing strong lines of authority and control.

Characteristics of Bureaucracy

• a) Division of work
• b) Hierarchy in position.
• c) Rules and regulations
• d) Impersonal Conduct
• e) Staffing
• f) Technical Competence
• g) Official Records

2. a) Human Relation Approach (Elton Mayo)

Conducted by Elton Mayo, F. J. Roethlisberger and the team at the Hawthorne plant of the Western Electric Company between 1927 and 1932. Conducted Four Experiments ( Hawthorne Experiment) :

1. Illumination Experiment:

• To check the illumination effect on employee output.
• Two Groups of employees were selected, one placed in a room where lighting remained constant, and the other in a room where lighting varied periodically.
• Output of both groups increased
• It was calculated that lighting was a minor factor.

2. Relay Assembly Test Room Experiment:

• A group of Six female workers were formed
• Frequent changes were made in their working conditions such as shorter working hours, rest periods, hot lunch, friendly and informal supervisors, free interaction among members of the group etc.
• The productivity of the group increased, even when the improvement in working conditions were withdrawn
• It was concluded that socio-psychological factors, exercise a greater influence on productivity than working conditions.

3. Bank Wiring Observation Room Study:

• A group of 14 workers was put under close observation
• Payment was made dependent on the performance of the group as a whole
• It was found that the group had developed its own norms of performance and various forms of social pressure were exerted to enforce these norms.
• As a result, output could not increase despite the group incentive scheme

4. Mass Interview Programme:

• A large number of workers were interviewed to understand their opinions on the factors influencing productivity.
• It was found that the opportunity to talk freely about things that are important to workers has a positive effect on their morale and productivity.

The major Findings were:

• An organisation is a psycho-social system.
• The human factor is the most important element in the social system. • The behaviour of an individual is determined by the informal group of which he/she is a member.
• Workers are not merely motivated by money. They are
• Sociopsychological beings respond to the total work situation.

2. b) Social System Approach (Vilfredo Approach)

• According to this theory, an organisation is essentially a cultural system composed of people who work in cooperation.
• This concept has been attributed to the theory of cooperation whereby an individual tries to satisfy his biological, physical and social needs through cooperation with others.

Features:

• Organisation is a social system, a system of cultural relationships.
• Relationships exist among the external as well as internal environment of the organisation.
• Cooperation among group members is necessary for the achievement of organisational goals.

3. a) Quantitative & Mathematical Approach

• Quantitative Approach:  Focuses on using numerical data and statistical analysis to understand and manage business operations. Examples: Forecasting sales, analyzing market trends, and optimizing inventory levels using data.
• Mathematical Approach: Applies mathematical models and techniques to solve complex management problems and improve decision-making.Examples: Using linear programming for resource allocation, applying queuing theory to improve service efficiency, and utilizing optimization techniques to enhance production processes.

3. b) System Approach: 

Views organizations as complex systems with interrelated parts. Emphasizes the importance of understanding how different parts of the organization interact and affect each other. Focus on mproving efficiency by optimizing the whole system, not just individual component

3. c) Contingency Approach: 

Suggests that there is no one-size-fits-all solution in management. The best approach depends on the specific circumstances and variables of each situation. Focus on Adapting management practices to fit the unique needs of different situations and environments.

Planning

According to Killen, Planning is the process of deciding in advance what is to be done? who is to do it? How is it to be done? and when it is to be done?

Planning is the process of thinking before doing. It involves the determination of goals as well as activities required to undertake to achieve goals.

The objective of Planning:

• Direction: Provides a clear roadmap for where the organization is heading.
• Coordination: Ensures all parts of the organization work towards the same goals.
• Efficiency: Helps use resources in the most effective way possible.
• Control: Allows for monitoring progress and making adjustments as needed.
• Set Goals: Determine what you want to achieve.
• Create Strategies: Develop ways to reach these goals.
• Organize Resources: Allocate time, money, and personnel efficiently.
• Prepare for Challenges: Identify potential problems and plan solutions.

Planning Process:

1. Define Objectives: - Set specific, measurable, achievable, relevant, and time-bound (SMART) goals.
2. Assess Current Situation: - Conduct a SWOT analysis to understand strengths, weaknesses, opportunities, and threats.
3. Identify Alternatives:- Brainstorm various ways to achieve the objectives.
4. Evaluate Alternatives:- Use criteria such as cost, benefits, feasibility, and risk to assess each option.
5. Choose the Best Option:- Select the alternative that offers the best balance of benefits and feasibility.
6. Implement the Plan:- Develop detailed action plans, assign tasks, and allocate resources.
7. Monitor and Review:- Track progress through performance metrics and adjust plans as needed.

Types of Planning:

1. Strategic Planning: Long-term planning focuses on the overall vision and goals of the organization. Involves top management and looks at where the organization wants to be in the future.
2. Tactical Planning: Shorter-term planning focused on implementing parts of the strategic plan. Typically handled by middle management and covers specific areas or departments.
3. Operational Planning: Daily or weekly planning for routine tasks and processes. Ensures that everyday activities align with tactical and strategic goals.
4. Contingency Planning: Planning for unexpected events such as emergencies or crises. Involves developing backup plans and response strategies.

Types of Plans:

1. Formal Plans:  Detailed documents outlining strategies, objectives, and procedures. Often used for strategic, tactical, and operational planning.
2. Informal Plans: Less structured, often verbal or written informally. Used for day-to-day decisions or minor adjustments.
3. Long-Term Plans: Cover extended periods, usually more than a year. Focus on major goals and strategic direction.
4. Short-Term Plans: Cover shorter time frames, typically less than a year. Focus on immediate objectives and operational activities.

Management by Objective (MBO)

• Objective means something that you are trying to achieve; an aim/goal
• Management means to manage or to control or organise 

In this approach, in any organisation, the employees are managed by the objective/task given to them

Management by Objective (MBO)

1. It refers to the process of setting goals for the employees so that they know what they supposed to do at the workplace. It is also called as Goal Setting Approach Or Work Planning and Review/management by planning
2. The term "management by objectives (MBO)" was first used by Peter F. Drucker in his 1954 book titled The Practice of Management.
3. MBO defines roles and responsibilities for the employees and helps them chalk out their future course of action in the organization.
4. MBO guides the employees to deliver their level best and achieve the targets within the stipulated time frame

Management Objectives

1. Achieve Goals: Align organizational activities and resources to meet strategic objectives.
2. Optimize Resources: Ensure effective use of financial, human, and material resources to maximize efficiency.
3. Increase Efficiency: Streamline processes to improve productivity and reduce operational costs.
4. Enhance Growth: Support the organization’s expansion and development through innovation and strategic initiatives.
5. Improve Customer Satisfaction: Focus on delivering value to customers to enhance loyalty and market position.
6. Foster Employee Development: Invest in training and development to build a skilled and motivated workforce.
7. Decision-making is the process of selecting a course of action from several alternatives to accomplish the desired results.

Types of Decision-Making:

a)Programmed Decisions: -  Routine, repetitive decisions made using established procedures.

Examples: Reordering inventory, and scheduling regular maintenance.

b) Non-Programmed Decisions: Unique, complex decisions that require creative problem-solving and judgment.

Examples: Entering a new market, launching a new product.

Decision-Making Process:

1. Identify the Problem: Recognize and define the issue that needs to be addressed.
2. Gather Information: Collect relevant data, facts, and insights from various sources.
3. Develop Alternatives: Create a list of possible solutions or options.
4. Evaluate Alternatives: Analyze each alternative’s advantages, disadvantages, and potential impact.
5. Make the Decision: Select the best alternative based on the evaluation.
6. Implement the Decision: Execute the chosen solution, develop an action plan, and assign responsibilities.
7. Review and Evaluate: Assess the outcomes of the decision, measure success, and make necessary adjustments.

Techniques for Decision-Making:

• Cost-Benefit Analysis: - Compare the expected costs and benefits of each alternative to determine the most advantageous option.
• SWOT Analysis:  Assess strengths, weaknesses, opportunities, and threats to understand the context and make informed decisions.
• Decision Trees:  Use a graphical representation to evaluate different decision paths and their potential outcomes.
• Brainstorming: Generate a wide range of ideas and solutions through group discussion to explore creative options.
• Pareto Analysis: Focus on the most significant issues (often the 20% of problems causing 80% of the effects) to prioritize actions and resources.