Principles of Management

School Year 2014-2015

Chapter 1: Introduction to ManagementManagement: A Definition• According to Terry and Rue define management as “ a process or form of work

that involves the guidance and direction of a group of people toward organizational goals or objectives.

• According to Stoner states that “management is a process of planning, organizing, leading and controlling the efforts of organization members and using all other organizational resources to achieve stated organizational goals.

• According to Koontz, O’Donnell, and Weihrich point out that “management is the establishment of an environment for group effort in such a way that individuals will contribute to group objectives with the least amount of such money, time, effort discomfort and materials.

• According to Johnson and Stinson say that “management is the process of working with and through other people to accomplish organizational goals.

Management: Functions and Processes (An Overview)

1. Planning- the process of setting the objectives to be accomplished by an organization during a future time period and deciding on the methods of reaching them.

2. Organizing- the process of grouping and assigning activities and providing the necessary authority to carry out the activities.

3. Staffing- the process of filling positions in the organizational structure with the most qualified people available.

4. Motivating- the process of getting people contribute their maximum effort toward the attainment of organizational objectives.

5. Controlling- the process of ensuring the achievement of an organization’s objectives.

Two essential processes are involved in all these five managerial functions:

1. Decision- Making. This is the process of choosing from two or more alternatives.

2. Communicating. It is the impossible to perform the managerial functions without communication, which is the process of exchanging facts, ideas, opinions and emotions between two or more persons.

By 1860, or at the beginning of the Industrial Revolution in the United States, it was evident that the energy, transportation and communication fields have advanced to the point that they served as an incentive to the entrepreneur.

Chapter 2: The Evolution of Management Thought

In 1895, Frederick W. Taylor who challenged the previous methods of managing a business came up with Scientific Management. This was a philosophy that dealt with the relationship of people and work.

Then another contribution to the Scientific Management was Henry L. Gantt who devised what is known as the Gantt Chart , this is bar chart comparing schedule with the actual performance widely used in production control and now on computer scheduling operations.

In 1916, Henry Fayol, drew up of blueprint for a cohesive doctrine of management after investigating managerial behavior. He presented a breakdown of the functions of management which is: planning, organizing, commanding, coordinating and controlling.

Fayol’s: 14 Principles of Management1. Division of Labor2. Authority and Responsibility3. Discipline4. Unity of Command5. Unity of Direction6. Subordination of individual interest to the general interest7. Fair remuneration of personnel8. Centralization9. Scalar Chain10. Order11. Equity12. Stability of tenure13. Initiative14. Esprit de corps

In 1927, Elton Mayo’s studies began to determine the relationship between the physical and productivity emphasized the potential impact of the behavioral sciences on management.

In 1930s, The Great depression shook the entire business structure. During this economic crisis, with widespread unemployment with the collapse or near collapse of major economic institutions, many companies disappeared.

From 1960s, many new schools of and approaches to management theory and knowledge surfaced; so many that Harold Koontz coined the term Management Theory Jungle.

In late 1940s to the early 1960s, the management process or functional approach was accepted as the methodological approach to the study of management.

Planning Defined:Planning is the process of setting the objectives to be accomplished by the organization during the future time period and deciding on the methods of reaching them.

Chapter 3: Planning

Kinds of PlanningStrategic Planning is the type of that is generally reserved for the top-level managers since it involves the determination of overall direction- the direction the organization should be going.

Tactical Planning is the type of planning generally reserved for the middle and lower level manager. This type of planning is primarily concerned with how get where the organization wants to go.

The Planning Function

Firstly, the managers must critically appraise the present position of the organization. Must take a complete inventory and attempt to realistically determine just where organization is at the moment.Secondly, the manager must set objectives. Must decide where organization must go. Must set growth, profitability, and social responsibility objectives for this organization.Finally, must develop a set of plans to achieve these objectives.

Objectives: DefinedObjectives are clear-cut and carefully considered statements designed to give the organization and its member direction and purpose. Goals, aims, purposes or missions are commonly used interchangeably for objectives.

Characteristics of Effective Objectives1. Objectives must be specific. They must have precise meaning for the manager.

Goals such as to maximize profits, to minimize expenses, to promote growth.2. Objectives must be practical. They must be within the capacity of the individual

or group to achieve. The best approach is to aim for levels of achievement which are difficult but attainable

3. Objectives must be quantifiable or measurable. An objective like “to develop management’ can be quantified by reporting the number of qualified promotions for a given period.

Setting Objectives

The managerial objectives sets normally fall into one of four general categories:1. Profitability. This can be expressed in terms of profits, return of

investments or earning per share.2. Customer Service. This can be expressed in very explicit terms.

Example: To reduce the number of customer complaints.3. Employee- Management Needs and Well Being. This may be

quantitatively expressed in the terms of number grievances, training and etc.

4. Social Responsibility. This objective may be expressed in types of activities, number of days of services or financial contributions.

Organizing Defined:Organizing is the process of grouping and assigning activities and providing the necessary authority to carry out the activities.

It is differentiated from staffing in that in organizing, the manager decides what jobs will have to be filled and what the people who hold them must do.

Chapter 4: Organizing

Types of Organization

Line Organization. The line organization illustrated is the simplest and the oldest type of organization. It is characterized by direct vertical flow of authority from the top man through the various managers down to the workers.

PRESIDENT

PLANT MANAGER

MANAGER PRODUCT A

MANAGER PRODUCT B

MANAGER PRODUCT C

WORKERS WORKERS WORKERS

Line and Staff Organization. Consists of the addition of staff specialists, In essence the staff component of a line and staff organization is advisory and supportive in nature and added to contribute to the efficiency and maintenance of the organization.

PRESIDENT

PLANT MANAGER

PERSONNEL DIRECTOR

PLANT MANAGER

ACCOUNTING MANAGER

MANAGER PRODUCT A

MANAGER PRODUCT B

MANAGER PRODUCT C

ASSISTANT TO THE PRESIDENT

WORKERS WORKERS WORKERS

Matrix OrganizationAn advantage of the matrix organization is its ability to meet unusual, innovative or complicated projects often shunned by the typical organizational with its functional departments. One potential disadvantage is that matrix organization can cause conflict of authority.

PRESIDENT

PRODUCTION ENGINEERING PERSONNEL FINANCE

PRODUCT GROUP

PRODUCT GROUP

PRODUCT GROUP

ENGINEERING GROUP

PERSONNEL GROUP

PROJECT MANAGER

A

PROJECT MANAGER

B

PROJECT MANAGER C

ENGINEERING GROUP

PRODUCT GROUP

PERSONNEL GROUP

PERSONNEL GROUP

FINANCE GROUP

FINANCE GROUP

PERSONNEL GROUP

Principles of Organization1. Consideration of Objectives. This principle scarcely need

starting if we accept the definition of organization as a facilitating mechanism which enables us to achieve goals.

2. Division of Work or Specialization. The narrowing scope of a person’s job to one or a few major functions to enable to specialize on these few and to increase efficiency.

3. Delegation of Authority. Authority is the right to command or act and expend resources. This is right may come ownership, legal decree or status in the organization.

Principles of Organization4. Parity of Responsibilities and Authority. Responsibility or

accountability is the obligation of a subordinate to a superior to perform assigned activities to the best of activities.

5. Span of Control. Refers to the number of subordinates a manager can effectively control. This question of span of control is one wherein there is little agreement among experts.

6. Unity of Command. This principle states that each member of an organization should be accountable to, and receive directions from only one supervisor, or immediate supervisor.

Principles of Organization7. Short Chain of Command. This principle states that there should be

as few levels of supervision between the highest authority in an organization and the rank and file as possible.

8. Coordination. This principle states that all individuals activities in an organization must be synchronized with the respect to their amount , time and direction to avoid duplication of work that results in wasted effort and to obtain consolidated action toward a common goal.

9. Efficiency. This principle in organizing specifies that “the organization should be planned that the objectives can be attained with the lowest possible cost, which may mean either money cost or human cost.

Principles of Organization10. Separation of Line and Staff Functions. This principles states

that where separation of functions is possible, no individual or department should be given both line and staff functions.

11. Consideration of Policies, Procedures and Rules. This are all guides to action which relate to the goal attainment. Policies are general principles which indicate the intentions of those who guide the organization and declare the attitude its executives must adopt toward major issues.

12. Job Groupings. It is developing the organizational structure, creates operating basic. Basic operations are assigned to different individuals.

Principles of Organization13. Flexibility. The organization is a dynamic not a static entity.

The environment in which it exist and the people who makes it up continue to change. The changes in the environment are bought about by new developments in technology and the economy.

14. Communication. Aside reducing the number of levels of authority to help in the smooth flow of communication.

15. Balance. The organization should be periodically assessed to ensure that a reasonable balance exists in size of its various segments.

Staffing Defined:Staffing refers to the task of filling positions in the organization with the most qualified people available.

First, to emphasize the fact that a body of knowledge and experience has been developed in this area.

Second, to highlight the fact that staffing is a manager’s responsibility and not that of the personnel department which merely provides assistance in this regard.

Chapter 5: Staffing

The Staffing ProcessA. Personnel Acquisition1. Human Resource Forecasting2. Preparation of job descriptions3. Recruitment of applicants for the job4. Selection of the best qualified among the applicants5. Orientation of the new personnelB. Personnel Retention6. Appraisal of Performance7. Transfer and Promotion8. Human Resource Development

Human Resource ForecastingHuman Resource Forecasting is the first step in the staffing process. Management must determine how many people it will need to manage operations.Preparation of Job DescriptionsA job description must include a brief statement of the responsibilities of the job, a listing of the various duties to be performed, and a statement of what constitutes satisfactory and unsatisfactory standards of performance for each duty.Recruitment of Applicants for the JobRecruitment means attracting or bringing in a few applicants for a single position or hundreds for a major expansion.

Selection of the Best QualifiedSeveral aids are available to improve the selection process. These are the examination of biological data, observation of the candidate’s performance in actual tryouts, psychological tests, interviews and physical examination.

Selection ProcessA. Biological Data- showing personal data, educational qualifications and past experience give some kind of a track record on which applicant’s competent can be assessed.B. Tests1. Intelligence Tests- are designed to measure person’s mental capacity, to test the mental and ability to see relationship in problematic problems.

2. Aptitude Tests- are designed to discover interests, existing skills, and the candidates’ potential for acquiring skills.3. Personality Tests- are devised to reveal a candidate’s personal qualities and the way they may affect others.C. Interview- is really the most crucial part of the selection process and often carries the most weight. It is also here where the managers can make the greatest contribution to better staffing.

Orientation of the New PersonnelOrientation refers to the introduction of the new personnel to the organization. This involves giving them an overview of what the company does, what its objectives are, how it is organized, what benefits it offers, what its general policies and practices.

Appraisal of PerformanceAppraisal is a must in every organization. Both the managers and subordinates want to know the qualities of their performance.1. Production Records. These are applicable to work that is repetitive .

Figures the actual production rate are combined with other factors such as punctuality, industry and observation.

2. Graphic Rating Scale. A linear scale, these is a provision for checking the individual’s rating on these traits from maximum to minimum attainment.

3. Performance against verifiable objectives. A relatively recent method which has gained widespread acceptance; this method grades the subordinate’s work, on-the-job activity rather than personal qualities.

Promotion and TransferPromotion may amount of filling a vacancy or may be an appointment to a new position. More specifically , a promotion involves change of duties, more difficult work and an increase in pay.

Transfer involves no change of class but a change in the organizational unit.

Human Resource DevelopmentThe development of personnel is one of the fundamental pillars of good management. Human resource development refers to the updating of the personnel’s knowledge and attitudes with the end in view of improving their skills and performance to organizational objectives.

Motivating Defined:Motivating can be defined as getting people to contribute their maximum effort toward the attainment of organizational objectives.

Approaches to Motivation1. Work Performance Approach. This approach stresses rewards based on the individual’s productivity. Job descriptions are specific, work performance is carefully measured and the wage is explicitly stated.

Chapter 6: Motivating

2. Environmental Approach. This approach assumes that a worker will perform best in a comfortable environment. To motivate , the manager must extend friendliness and personal considerations to the workers.3. Needs- Satisfaction Approach. This approach adopts the standpoint that a satisfied worker is a productive worker and that management, therefore should aim to identify worker’s needs and find ways of satisfying them.

Theories of Motivation1. Classical TheoryFrederick W. Taylor propounded the theory that people will be highly

motivated if their reward is tied directly to performance. His theory assumes that man consciously chooses the course that is most profitable financially and that money is the best motivation.

2. Human Relations TheoryThe human relations approach to motivation is commonly credited to

the studies of Elton Mayo, the theory evolved from these studies states that informal groups exists alongside the formal organization and that those informal groups could exert a greater pull on the worker’s motivation than combined strength of money, discipline and job security.

Theories of Motivation

3. Field TheoryKurt Lewin explained how motivation depends on organizational

environment through his celebrated formula for human behavior : B=(P,E)26

B stands for human behavior, P a person, and E environment. In other words, human behavior is a function of a person and his environment. If we relate this to motivation, it implies that people can have different motivations at different times and what motivates an individual depends on the environment.

Theories of Motivation4. Hierarchy of Needs TheoryAccording to Abraham Maslow,

each of us wanting being; there is always a need to satisfy. He visualized human needs as taking the form of a hierarchy. He put forth the idea that once a low- level is satisfied, it ceases to become a motivator and only a higher- level need could then fulfil the same functions.

Self- Actualization Needs

Esteem Needs

Social Needs

Safety and Security Needs

Physiological Needs

Maslow’s Hierarchy of Needsa. Physiological NeedsAt the base of the hierarchy are physiological needs: those

needs for sustaining human life itself. They include food, water, clothing, shelter, sleep and sexual gratification.

b. Safety and Security NeedsThese needs are those connected with protection from possible

harm. They do not only include protection from physical dangers, but also freedom from fear of loss of job, property, food, clothing or shelter.

Maslow’s Hierarchy of Needsc. Social NeedsWhen physiological safety and security needs are basically

satisfied, social needs become the predominant motivators. People need to belong, to be accepted by the others.

d. Esteem NeedsThese needs refer to the individual’s need for self-respect and

good opinion of others.e. Self- Actualization NeedsWhen the previous needs have been satisfied, self actualization

needs become active. At this level, the individual attempt to maximize his full potential.

Theories of Motivation5. Need Theorya. Need for Power. People who have a high need for power

express great concern for exercising influence and control over others.

b. Need for Affiliation. People with a high need for affiliation seek acceptance by social groups. They are likely to be concerned with maintaining pleasant relationships and avoiding rejection by social groups.

c. Need for Achievement. People having a high need for achievement have a intense desire for success and an equally intense dread of failure.

Theories of Motivation5. Need Theorya. Need for Power. People who have a high need for power

express great concern for exercising influence and control over others.

b. Need for Affiliation. People with a high need for affiliation seek acceptance by social groups. They are likely to be concerned with maintaining pleasant relationships and avoiding rejection by social groups.

c. Need for Achievement. People having a high need for achievement have a intense desire for success and an equally intense dread of failure.

Theories of Motivation6. Theory X and Theory YAccording to Douglas Mcgregor, there are two types of employees the Theory X

and Theory Y assumptions.Theory X Workers: Theory Y Workers:

1. Dislikes work and will avoid it 1. Work is natural as playpossible. or rest.

2. Lack of responsibility, has little 2. People are not inherently lazy.ambition and seeks securityabove all.

3. Must be coerced, controlled and 3. Self direction and Self- controlthreatened with punishment toget them to work.

-With these the managerial role is to -With these assumptions the managerialcoerced and control employees. role is to develop the potential in employees.

Controlling Defined:Controlling may be defined as the managerial activity for ensuring the achievement of an organization’s objectives.

The Control Process1. Establishing standards against which performance can be measured. These standards are closely tied up with the objectives which the manager formulates during the planning stage. These standards which are often expressed in terms of money, time, quotas and etc.

Chapter 7: Controlling

2. Comparing actual performance against standards. This step, which necessitates the collection of accurate data relating to actual performance, helps the manager see how things really are.3. Correcting deviations or straightening up what is crooked. After the causes of the deviations have been identified, appropriate corrective action should be taken so that performance takes place according to plans.

Types of Control1. Preliminary Control. This a type of control which identifies

major problems before they occur. It is pre-emptive and focuses on the preventions of deviations in planning, organizing, staffing and motivating by assuring that every possible malfunction has been taken care of.

2. Concurrent Control. This form of control endeavours to monitor the operation in progress, work may not proceed to the next step unless it passes a screening test.

3. Post-Action Control. This type is carried out after the event. It exist only for the improvement of the next attempt.

Control TechniquesManagers in the field use various control techniques. These may be classified in three: traditional, specialized and over-all performance techniques.Traditional Control Techniques1. Budgetary Control. A budget is a financial statement

prepared and approved prior to a defined period of time of the policy to be pursued during that period for the purpose of achieving a predetermined objective.

2. Break- Even Point Analysis. This is the point when income is equal to the total cost, that is, the level of activity when neither profit or loss is made by the organization.

Specialized Control Techniques1. Gantt Chart Technique. This is a way of presenting control information to management developed by Henry L. Gantt. Data relating to costs, sales or production and plotted by time period as a series of bars, the length of bars depends upon the value of the data represented.2. Network Analysis. This is a technique for controlling a complex project which requires analyses into its various activities and events.3. Milestone Scheduling. This is a schedule and control procedure developed by the National Aeronautics and Space Administration (NASA). Like the Gantt chart, it uses bar chart to monitor progress.

Controlling Overall Performance1. Income Statement. This is a statement compiled at the conclusion of an accounting period for the purpose of calculating the net profit or loss from the business operations. This is done by deducting administration expenses, financial, selling, and deducting overheads from the gross profit, derived from the trading account, financial charges such as bank interests.2. Return in Investment (ROI). Every business organization must control its operations to achieve on optimum rate of return, that is, a rate of return on investments which is adequate to satisfy the shareholders, and which satisfactory for the type of business.

3. Key Area Control. This is a control technique by which an organization rates its performance in a number of critical areas. Key areas control may include quantity, quality of time and cost with profit as the criterion of success.4. Audits.a. Internal Audits. This type of audit is conducted by internal

auditors who are employees of the organization and are responsible for performing impartial monitoring activities.

b. External Audits. This type of audit is conducted by external auditors who are not employees of the company.

c. Management Audit. Essentially, a management audit is a periodic assessment of managerial performance conducted by internal and external auditors.

Decision- Making Defined:Decision-making is the conscious act of choosing from among a number of option or courses of action. A decision always has several components: a desire for a better state of affairs, a manager who wishes to change the present state of affairs, and a manager who has the needed abilities and resources to effect the change.

Chapter 8: Decision- Making

Types of Decision1. Policy Decision. These are decision which will affect the prospects of the organization for a very long time. These decisions are made by the top management, who are charged with responsibility of the survival and prosperity of the organizations. Such decisions include major capital investments, product and market choice of key executives, volume of production output and similar long- term problems.2. Administrative Decision. These decision are less far-reaching, involving such problems as minor capital investment, market planning, and those decisions that are needed to keep the organization on course with top level objectives.

Types of Decision3. Executive Decisions. These that have immediate results and such are made by supervisors at the lower levels of management. Examples are, replenishment of stocks, routes for deliveries and so on.

Communicating Defined:Communicating is the exchange (sending and receiving) of intelligence, information or emotions by two or more persons by writing, verbal and non- verbal means.

Approaches to Communicating1. Developmental Communicating. The manager assumes that two heads is better than one. He does not think that he is always right. He encourages the contribution in the form of suggestion and ideas from people he works with.

Chapter 9: Communicating

2. Controlling Communication. A manager who subscribes to this approach believes that there are no alternatives to his ideas so he find no need to consult others. He believes that his own ideas or solutions are best.3. Relinquishing Communication. In this approach, the manager relinquishing his role as manager, makes few contributions of his own ideas and tries to shift the burden to this employees.4. Withdrawing Communication. The manager completely withdraws. He avoids interaction with the people he works with and is simply interested in maintaining the status.

Personal Factors Affecting the Quality of Communication1. Self- Concept. A person with a poor opinion or a negative self- image of himself usually experiences difficulty in communicating with others. A positive self- image is needed for a healthy exchange of ideas and feelings.2. Coping with angry feelings. Communication breakdown is usually the result of angry exchange. Angry feeling should be expressed constructively rather destructively.3. Self- disclosure. People find it difficult to talk honestly about themselves for fear of being branded too forward or rude, to communicate, people should learn to talk truthfully about their ideas and feelings.

Reference:Lorenzana, Carlos C. , M.A; Management, Theory and Practice Revised Edition; 2003; REX Bookstore Inc.