Nature and Significance of Management
Introduction
The provided document is sourced from www.tatasteel.com and was accessed in June 2018.
The document emphasizes the importance of management in organizations, highlighting that successful organizations, like top companies in India, owe their success to the quality of their management.
Management is essential for all types of organizations, including manufacturing, trading, service provision, and even non-business entities.
Case Study: Smita Rai and Namchi Designer Candles
Smita Rai's Background: Smita Rai, a 38-year-old entrepreneur from Namchi, South Sikkim, possessed artistic skills, particularly in wax molds and candle making.
Initial Situation: Smita was concerned about the conditions of women in her district, many of whom were poor and jobless.
Idea Formation: Smita wanted to provide livelihood skills to these women but lacked a concrete plan.
Collaboration with NEDFI: In August 2012, Smita met Abishek Lama from NEDFI (North Eastern Development Finance Corporation Ltd), a financial corporation supporting local skills development.
Venture Establishment: Inspired, Smita decided to convert her candle-making hobby into a venture, leading to the establishment of Namchi Designer Candles with NEDFI's support.
Employee Base: Namchi Designer Candles employs 100% women.
Product Customization: The company produces varieties of customized candles, including Diwali-themed candles that have become increasingly popular in Sikkim.
Awards and Recognition: Namchi Designer Candles has received awards such as North East Women Entrepreneur of the year 2015-2016 for Sikkim and recognition from Sreemanta Shankar Mission of Guwahati in 2018.
Smita's Typical Day: Management in Action
Planning: Smita plans special festive collections, like for Diwali, which involves organizing funds and recruiting workers.
Communication: She regularly communicates with suppliers to meet deadlines for goods delivery.
Customer Interaction: Smita meets customers for feedback and suggestions.
Overall Management: Smita manages Namchi Designer Candles, similar to how a principal manages a school, showcasing that diverse organizations share the common element of management.
The Essence of Management
Organizational Goals: Organizations like schools, hospitals, and corporations have diverse goals, but they all aim to achieve something.
Management Functions: Smita's work involves interconnected and interdependent functions aimed at achieving organizational goals.
Deliberate Process: Successful organizations achieve goals through a deliberate process called 'management.'
Definitions of Management
Koontz and Weihrich: Management is the process of designing and maintaining an environment in which individuals work together in groups to efficiently accomplish selected aims.
Trewelly and Newport: Management is the process of planning, organizing, actuating, and controlling an organization's operations to achieve coordination of human and material resources effectively and efficiently.
Kreitner: Management is the process of working with and through others to effectively achieve organizational objectives by efficiently using limited resources in a changing environment.
Concept of Management
Popular Term: Management is a widely used term for various activities, especially taking charge of activities in an enterprise.
Group Activity: Management is necessary when a group of people is working in an organization, guiding their efforts towards a common objective.
Effectiveness and Efficiency: Management ensures tasks are completed and goals are achieved effectively (achieving goals) and efficiently (using minimal resources at minimal cost).
Nature of Management
Process: Management involves primary functions or activities like planning, organizing, staffing, directing, and controlling.
Effectiveness: Being effective means finishing the given task, doing the right task, completing activities, and achieving goals; it focuses on the end result.
Efficiency: Efficiency means doing the task correctly and with minimum cost, involving a cost-benefit analysis and the relationship between inputs and outputs.
Effectiveness vs. Efficiency
Interrelation: Effectiveness and efficiency are different but interrelated; management needs to balance both.
Compromise: Management sometimes has to compromise with efficiency to be effective, such as completing a task at a high cost.
Example: A company producing 5000 units by operating on double shifts due to power failure is effective but not efficient because of higher production costs.
Balance: Management should aim to achieve goals effectively with minimum resources efficiently, balancing effectiveness and efficiency.
Characteristics of Management
(i) Goal-Oriented Process:
Organizations have basic goals that justify their existence. These goals should be simple and clear.
Different organizations have different goals (e.g., retail store increasing sales, Spastics Society of India educating children with special needs).
Management unites individual efforts in the organization to achieve these goals.
(ii) All-Pervasive:
Management is common to all organizations, whether economic, social, or political.
The activities involved in managing an enterprise are universal, regardless of location (India, USA, Germany, Japan).
Differences in management practices arise due to variations in culture, tradition, and history.
(iii) Multidimensional:
Management is a complex activity with three main dimensions:
(a) Management of Work: Organizations exist to perform work. Management translates work into achievable goals and assigns means to achieve them (solving problems, making decisions, establishing plans, preparing budgets, assigning responsibilities, delegating authority).
(b) Management of People: Human resources are an organization's greatest asset. It involves:
Dealing with employees as individuals with diverse needs and behaviors.
Dealing with individuals as a group.
Making people work towards organizational goals by leveraging their strengths and minimizing weaknesses.
(c) Management of Operations: All organizations provide a basic product or service, requiring a production process involving the flow of input material and technology to transform inputs into desired outputs. It is interlinked with the management of work and people.
(iv) Continuous Process:
Management is a series of continuous, composite, but separate functions (planning, organizing, directing, staffing, and controlling).
Managers perform these functions simultaneously and continuously.
(v) Group Activity:
An organization is a collection of diverse individuals with different needs working towards a common organizational goal.
Requires teamwork and coordination of individual efforts in a common direction.
Management should enable all members to grow and develop as needs and opportunities change.
(vi) Dynamic Function:
Management must adapt to the changing environment, interacting with external social, economic, and political factors.
Organizations must change themselves and their goals according to environmental needs (e.g., McDonald's adapting its menu for the Indian market).
(vii) Intangible Force:
Management is an intangible force felt by how the organization functions.
noticeable by whether targets are met as planned, employees are happy and satisfied, and there is orderliness rather than chaos.
Objectives of Management
Management seeks to achieve specific objectives that are derived from the basic purpose of the business.
Objectives are classified into organizational, social, and personal/individual objectives.
(i) Organizational Objectives:
Management is responsible for setting and achieving objectives for the organization, considering the interests of stakeholders (shareholders, employees, customers, government).
The main objective is to utilize human and material resources to the maximum advantage to fulfill economic objectives: survival, profit, and growth.
Survival: Ensuring enough revenues to cover costs.
Profit: Providing a vital incentive for continued successful operation and covering costs and risks.
Growth: Adding to prospects in the long run, measured by sales volume, number of employees, number of products, or capital investment.
(ii) Social Objectives:
Involves creating benefits for society, as every organization has a social obligation to fulfill.
Includes using environment-friendly methods of production, providing employment opportunities, and offering basic amenities like schools and healthcare.
(iii) Personnel Objectives:
Organizations are made up of people with diverse personalities, backgrounds, experiences, and objectives.
Vary from financial needs (competitive salaries and perks) to social needs (peer recognition) and higher-level needs (personal growth and development).
Management has to reconcile personal goals with organizational objectives for harmony.
Importance of Management
Management is a universal activity integral to any organization.
(i) Achieving Group Goals: Management is required to give a common direction to individual efforts in achieving the overall goal of the organization.
(ii) Increasing Efficiency: Managers aim to reduce costs and increase productivity through planning, organizing, directing, staffing, and controlling.
(iii) Creating a Dynamic Organization: Management helps people adapt to changes in a constantly changing environment, maintaining the organization's competitive edge.
(iv) Achieving Personal Objectives: Motivation and leadership help individual members achieve personal goals while contributing to the overall organizational objective.
(v) Development of Society: Organizations fulfill multiple objectives, contributing to the development of the organization and society by providing good-quality products and services, creating employment opportunities, and adopting new technology.
Nature of Management
Management is as old as civilization, evolving from rules and regulations based on governmental and commercial activities.
Management is a dynamic subject with its own characteristics, based on managers' experience and practice, and theoretical underpinnings.
Whether management is a science, an art, or both is examined by comparing its features to science and art.
Management as an Art
Art is the skillful and personal application of existing knowledge to achieve desired results, acquired through study, observation, and experience.
(i) Existence of Theoretical Knowledge: Art presupposes theoretical knowledge, with experts deriving basic principles applicable to a form of art.
(ii) Personalized Application: Use of basic knowledge varies from individual to individual, making art a personalized concept.
(iii) Practice and Creativity: Art involves creative practice of existing theoretical knowledge.
Management can be said to be an art:
A successful manager practices management daily, based on study, experience, observation, and combination of practice, creativity, imagination, innovation, and initiative.
Acquired knowledge is applied skillfully and personally in light of given situations, with managers formulating their own theories for use.
Best managers are highly trained and educated, with personal qualities like ambition, self-motivation, creativity, and a desire for self and organizational development.
Management as a Science
Science is a systematized body of knowledge explaining general truths or the operation of general laws.
(i) Systematized Body of Knowledge: Science is a systematic body of knowledge based on cause and effect relationships.
(ii) Principles Based on Experimentation: Scientific principles are developed through observation and tested through repeated experimentation under controlled conditions.
(iii) Universal Validity: Scientific principles have universal validity and application.
Management has characteristics of science:
Management has a systematized body of knowledge with its own theory and principles, drawing on other disciplines like Economics, Sociology, Psychology, and Mathematics.
Principles have evolved over time based on experimentation and observation, though outcomes dealing with human behavior cannot be accurately predicted or replicated.
Application and use are not universal, requiring modification based on the situation, providing standardized techniques for training and development.
Management as a Profession
Organized activities need to be managed, and organizations seek qualified individuals to manage them.
Whether management is a profession is examined by comparing its features to those of a profession.
A profession has the following characteristics:
(i) Well-defined Body of Knowledge: Based on knowledge acquired through instruction.
(ii) Restricted Entry: Restricted through examination or acquiring an educational degree.
(iii) Professional Association: Affiliated with a professional association regulating entry, granting certificates, and enforcing a code of conduct.
(iv) Ethical Code of Conduct: Bound by a code guiding behavior of members.
(v) Service Motive: Basic motive is to serve client's interests through dedicated service.
Management does not meet the exact criteria of a profession but has features of one:
There is a marked growth in management as a discipline with a systematic body of knowledge.
No restriction on being designated a manager, but professional knowledge and training are desirable qualifications.
Several practicing managers' associations, like AIMA (All India Management Association), have a code of conduct but no compulsion for membership or statutory backing.
The basic purpose is to help the organization meet its stated goal, serving society through good quality products at reasonable prices.
Levels of Management
Management involves functions performed by individuals in a hierarchy of relationships, each responsible for completing a task and assigned the authority to make decisions.
There are three levels in the hierarchy:
(i) Top Management: Senior-most executives, such as chairman, CEO, COO, president, and vice-president. They integrate diverse elements, coordinate activities, analyze the business environment, formulate organizational goals and strategies, and are responsible for the business's impact on society.
(ii) Middle Management: Links top and lower-level managers, including division heads and production managers. They implement and control plans and strategies, carry out plans formulated by top managers, interpret policies, ensure necessary personnel, assign duties, motivate employees, and cooperate with other departments.
(iii) Supervisory or Operational Management: Foremen and supervisors oversee the workforce, interacting with them and passing on instructions from middle management in an organization, maintaining quality, minimizing wastage, and upholding safety standards.
Functions of Management
Management involves planning, organizing, directing, and controlling organizational members' efforts and resources to achieve specific goals.
Planning: Determining in advance what is to be done and who is to do it, setting goals, and developing ways of achieving them efficiently and effectively.
Organizing: Assigning duties, grouping tasks, establishing authority, and allocating resources required to carry out a specific plan.
Staffing: Finding the right people for the right job, ensuring that individuals with the right qualifications are available at the right places and times.
Directing: Leading, influencing, and motivating employees to perform assigned tasks, establishing an encouraging atmosphere, and effectively communicating and supervising.
Controlling: Monitoring organizational performance toward the attainment of organizational goals, establishing standards, measuring performance, comparing with standards, and taking corrective action.
Coordination – The Essence of Management
Coordination is essential to synchronize all five interrelated functions: planning, organizing, staffing, directing, and controlling organizational subgroups in order to achieve the common goal.
A manager synchronizes activities amongst various departments, each contributing individually to coordination.
The process of coordination requires synchronization of different actions and efforts of different units, which in turns provides the requisite amount, quality, timing, and sequencing that minimizes conflict.
Effective and efficient coordination is essential for organizations to achieve their objectives, resembling a thread in a garland.
Characteristics of Coordination
(i) Integrates Group Efforts: Coordination unifies unrelated or diverse interests into purposeful work activity, giving a common focus to group effort.
(ii) Ensures Unity of Action: Coordination ensures unity of action, acting as a binding force between departments.
(iii) Continuous Process: Coordination is not a one-time function but a continuous process from planning to controlling.
(iv) All-Pervasive Function: Coordination is required at all levels of management due to the interdependence of activities.
(v) Responsibility of All Managers: Coordination is the function of every manager in the organization.
(vi) Deliberate Function: A manager coordinates the efforts of different people in a conscious and deliberate manner.
Importance of Coordination
Coordination is important as it integrates the efforts of individuals, departments, and specialists due to interdependence and for harmonizing individual and organizational goals.
(i) Growth in Size: As organizations grow, it becomes difficult to integrate their efforts and activities.
(ii) Functional Differentiation: Coordination helps in linking activities of various departments, as functions are divided into different departments.
(iii) Specialization: Specialist think that they are qualified to evaluate, judge, and decide due to the complexities of modern technology and the diversity of tasks to be performed, where independent coordinations help with reconciling the differences.
Definitions of Coordination
E.F.L. Brech: Coordination is balancing and keeping together the team by ensuring suitable allocation of tasks to the various members, performed with harmony.
McFarland: Coordination is the process by which an executive develops an orderly pattern of group efforts among subordinates and secures unity of action in the pursuit of common purpose.
Theo Haimann: Coordination is the orderly synchronizing of subordinates' efforts to provide timing and quality of execution, for common enterprise purposes.