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Management thought & practice is contextual, and has changed & adapted to the needs of the environment The Village Economy

Subsistence level, farm based economy Local RMs, Labour, Markets Technology Tradition bound -passed from father to son Very low productivity Poor infrastructure Political Entity - Feudal Lord Value Creation difficult
The Industrial Revolution

Application of power for manufacturing process Beginning of application of Modern Technology Beginning of Innovation in industry Productivity Management focused on increasing production & productivity Expansion of markets due to increase in Real Wages Capital formation Exploitative use of labour Continued dependence on skilled worker Society divided into Feudal Rich & Peasants no middle
class Mass Production

Manufacturing process broken down into small relatively simple

tasks.

Workers job was to complete given simple task within given time
to given quality standards

Quality & productivity was delivered by the production system Dependence on skilled worker for production broken, skilled
employees required for setting up & monitoring system

Management focused on increasing production & productivity Dramatic increase in productivity

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Markets size

due to increase in Real Wages, focus was on meeting basic needs of society standardised products at low cost through extensive distribution network

Attitude to the customer was paternalistic, focus was on selling Management orientation to the market place
Production Concept Product Concept Selling Concept

Capital formation Some of the benefits of prosperity passed on to labour

Market Fragmentation Differentiated Marketing

Prosperity in the society led to customers preference shifting Management focused on finding out what customers want &
satisfying needs of customers Marketing Concept

from mass marketed standardised products to those products which met their needs more specifically

Management orientation to the market place Dramatic increase in product variety Competition Total markets size due to increase in choice, market size for
specific product due to fragmentation of market. variety & loss of economies of scale Global Markets

Cost pressure on manufacturers due to providing increased

Manufacturers sought foreign markets to offset loss of

economies of scale in home markets

Attempt to create Global Markets to sell a standardised

Portfolio of products across national markets. Evolution of Management Thought Three Eras Pre Scientific o Early 1800s Robert Owen &Charles Babbage Scientific Human Relations

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Three Schools of Management Thought Classical Two Branches o Scientific Management 1890 1930 Fredrick W. Taylor, Henry L. Gantt, Frank & Lillian Gilbreths o Classical Organisation Theory Henri Fayol, Max Webber o Transitional Theories people oriented Mary Parker Follett, Chester Bernard The Behavioural School

o The Human Relations Movement Elton Mayo Hawthorne effect concept of social man o Behaviour Science Approach Maslow, Mac Gregor & Argyris concept of self actualising man The Management Science School o Operations Research OR Integrative Approaches o Systems Approach o Contingencies Approach o Neo Human Relations Movement W. Edward Deming, Tom Peters etc. Pre Scientific Era Robert Owen Manager of several cotton mills in the early 1800s in New Lanark, Scotland Believed that improving the condition of workers would lead to increased production & profits o Built better housing for workers etc. Cut standard working hours to 10 Refused to hire children below the age of 10 Started a daily open rating of employees work o Helps manager identify problem areas o Instils pride in workers o Increases competition Charles Babbage British Professor of mathematics early 1800s Advocated application of scientific principles to work processes o Analysis of operations to isolate skills o Division of labour o Specialisation Management Process
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Scientific Management Theory A management approach that sought to determine scientifically the best method for performing any task & for selecting, training & motivating workers. Fredrick W. Taylor the Father of Scientific Management Consulting management engineer Wrote The Principles of Scientific Management Based management systems on time studies Broke down each job into its components & designed the quickest & best method of performing each component Established standards for performance Trained workers in the best methods laid off/transferred inefficient workers Encouraged employers to pay productive workers higher, based on a incentive scheme he called Differential Rate System Cut standard working hours from 10 to 8 Introduced rest periods Ideas worked well initially Were misused by employers Resisted by unions

Henry L. Gantt Consulting Industrial Engineer Worked with Taylor on various projects Abandoned the differential rate system & developed one where worker + supervisor received bonuses for attaining standards Built upon Owens idea of rating employees publicly Developed a charting system for production scheduling Gantt Chart which is still in use Was the forerunner of PERT Program Evaluation & Review Technique Frank & Lillian Gilbreths Frank Gilberth was a bricklayer who went on to become a building contractor

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Studied the different motions of bricklaying and developed a technique which reduced motions from 18 to 5 & doubled output without increased effort Collaborated with Lillian on fatigue & motion studies Became a consultant on improvement of human productivity Met Taylor in 1907 & combined his ideas with Taylors Lillian did her doctorate in industrial psychology Focused on ways to promote workers welfare

Classical Organisation Theory A management approach based on identifying the principles and skills needed for effective management. Focus the whole organisation Henri Fayol the real Father of Modern Management French industrialist Founder of the classical management school Believed sound management practice falls into certain patterns that can be identified & analysed Built a cohesive doctrine of management which continues to be relevant today Found that activities of an industrial undertaking could be divided into 6 groups 1. Technical/Production 2. Commercial Buying, Selling & exchanging 3. Financial 4. Security 5. Accounting 6. Managerial Believed that the last function was neglected & therefore focused his attention on it Examined in detail management elements/functions 1. Planning 2. Organising 3. Commanding 4. Coordinating & 5. Controlling Believed that management can be taught & Principles of management are universal can be applied to business, politics, religion etc. AJAY NAGRE
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Fayols 14 Principles of Management 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Division of work - specialisation Authority & responsibility are interlinked Discipline respect of rules Unity of command report to only one superior Unity of direction operations having the same objective must have one head & one plan Subordination of individual interest to common good Remuneration should be fair to both employer & employee Centralisation find right balance Scalar Chain/Hierarchy lines of authority running from top to bottom Order a place for everything (one), & everything (one) in its place Equity managers should be friendly & fair to employees Stability of tenure Initiative subordinates should be given to show Esprit de corps promoting team spirit

Fayol emphasised that this is not an exhaustive list These are (guiding) principles & not laws or rules

Theory of Bureaucratic Management Bureaucracy an organisation with a legalised formal & hierarchical structure Developed by Max Webber, a German sociologist Stressed the need for a strictly defined hierarchy governed by clearly defined rules & lines of authority. Members of the organisation are guided by their sense of duty to the organisation & A set of rational rules & regulations Organisation characterised by o Specialisation of tasks o Appointment by merit o Provision of career opportunities for members o Routinization of activities & o Impersonal organisational climate Objective was to make the organisation predictable & efficient

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Management Process Approach also known as The Operational Approach Believes that fundamentals of management are universal Treats management as a science. -Integrates concepts, principles & techniques that underlie the task of managing Distinguishes between managerial & non managerial knowledge Believes that there is a central core of knowledge about managing that is pertinent only to the field of management e.g. line & staff, departmentation etc. Also draws on knowledge from other fields e.g. sociology, psychology, mathematics etc. Success in managing depends on: o Managerial knowledge o Special/Technical knowledge Marketing, Finance, Production Has developed a classification system built around managerial functions

The Functions of a Manager Planning selecting missions & objectives & the actions to achieve them Organizing establishing an intentional structure of roles for people to fill in an organisation Staffing filling & keeping filled the positions in the organisation structure Leading influencing people to contribute to organisation & group goals Controlling measuring & correcting individual & organisational performance to ensure conformity to plans

The Managerial Roles Approach Popularised by Prof. Henry Mintzberg Refers to the usual method of classifying managerial functions planning, organising, staffing, leading & controlling as folklore Studied activities of 5 chief executives in different organisations & concluded that managers actually fill a series of 10 roles

The Ten Managerial Roles Interpersonal Roles

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1. Figurehead organisations representative at ceremonial & social duties 2. Leader 3. Liaison particularly with outsiders Informational Roles 4. Recipient receiving information 5. Disseminator passing information 6. Spokesperson transmitting info. outside the org. Decision Role 7. Entrepreneur 8. Disturbance handler 9. Recourse allocator 10. Negotiator Planning If you dont know where you are going, no road will get you there. Anon
Research at Harvard revealed that 3% of people who had written down goals had become worth more financially than the other 97% put together.

Plan course of future action Planning process of establishing goals & suitable course of action for achieving these goals Steps in Planning Being aware of opportunities Setting Objectives or Goals Planning premises assumptions about the environment Identifying Alternatives Evaluating Alternatives Decision Making/Choosing an alternative Formulating supporting plans Numberizing plans by budgeting AJAY NAGRE
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The Time Dimension o Strategic/Corporate/Long Term o Medium Term o Short Term Strategic Plan is the intended relationship between the organisation & its environment. It answers basic questions like: o o o o o What business are we in? Who are our customers? What is the value to the customer? What will our business be? What should our business be?

Medium Range Plan period between 1 5 years Has two distinct but related parts 1. Projection or forecast of present business activities over the planning period 2. Development & scheduling of new programs & business actions for the future Programming steps for 1. Dividing program into projects or parts 2. Determining the relationships & sequence between each of the parts 3. Fixing responsibilities who? 4. How to accomplish each part & the resources required 5. Estimating the time required to accomplish each part 6. Establishing starting & ending dates for each part Techniques for programming Gantt Charts, PERT/CPM Objectives ends towards which organisational & individual activities are directed Nature of Objectives

Structured in a hierarchy Objectives form a network / Complementary Multiplicity of objectives Mutual reinforcement of organisational & individual
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Superordinate objectives contain subordinate objectives

Superordinate Objectives guiding concepts, values & aspirations that unite an organisation in some common purpose. Means ends chain Objectives (ends) achieved at lower levels are the means by which objectives at a higher level are reached. Hierarchy of Objectives Socio-economic Purpose or Vision I Mission I Goals & Targets o Divisional o Departmental o Individual Vision desired future state of the organisation. Also called Strategic Intent by Hamel To light the globe at night. To entertain everyone, everywhere. Helping to put a man on the moon. To keep our guests as happy as pigs in shit. Our dreams have to be bigger, Our ambitions higher, Our commitment deeper, And our efforts greater. This is my dream for Reliance & for India. - Dhirubhai H. Ambani Thomas Edison Sony Janitor, Kennedy Space Center, 1969 Hotel Owner, 1996

Think big. Think differently. Think fast. Think ahead. Aim for the best. Management Process
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- Corporate Philosophy of Reliance. Mission or Purpose essential purpose of the organisation in line with the values & expectations of major stakeholders o Tangible expression of vision o Broad direction & focus Goals broad, medium term objectives. General statement of aim or purpose. Targets specific, short term objectives. Quantified or more precise statement of goals

G oal ' T o im p r o v e c u s t o m e r c a r e R e d u c e o rd e r to d e s p a t c h t im e b y 2 0 %
Two approaches to targets o Visionary o SMART SMART o S Specific o M Measurable o A Achievable/Agreed o R Realistic/Recorded o T Time Bound MBO Management by Objectives is a formal set of procedures that establishes & reviews progress towards common goals for managers & subordinates

R e d u c e c u s t o m e r c o m p la in t s t o m a x im u m o f 1 a w e e k

R a is e s a t is f a c t io n le v e l fro m 9 0 % to 9 5 %

Proposed by Peter Drucker in 1954, in his book Practice of

Management The Logic

Performance is higher when people had specific objectives Timely feedback leads to better performance Participation in goal setting leads to higher performance

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Process of MBO

Top Management sets preliminary goals Clarifying Organisational Roles & Structure Objectives set for Manager/Superior Superior gives preliminary recommendation of objectives for
subordinate

Subordinate prepares preliminary statement of objectives Superior & subordinate sit together & finalise subordinates
targets Major areas of responsibilities are clearly defined in terms of measurable expected results Recycling superiors targets are reviewed in light of final sub. Targets

Objectives are used by subordinate to plan his activities

Subordinate has autonomy in planning & implementing

Superior monitors progress periodically based on attainment of

objectives

Corrective measures, if any, are discussed Final performance appraisal based on attainment of objectives
Advantages

Improves Planning
Focuses planning on results rather than on activities Helps in integrating & focusing action towards organisational goals & strategy

Clarification of organisation roles & structure Greater employee involvement & commitment More realistic objectives More opportunity for autonomy & self control Improved performance appraisal objective &
predetermined criteria Limitation

Difficulty in setting verifiable goals Danger of inflexibility Emphasis on short term objectives Time consuming process Ends may justify means Subordinates tend to depress targets
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Failure to teach philosophy of MBO

What is How it works Why it is being done Corporate goals Planning premises How their own activities fit

Failure to give guidelines to goal setters

Planning Premise Planning Premise anticipated environment in which plans are expected to operate, & include assumptions or forecasts of the future & of known conditions that will affect the operation of plans. Assumptions that form the basis of a plan.

Known/Existing conditions
o Internal Policies, Rules etc. o External PEST

Unknown/Uncertain/Future conditions
Forecast o Macro Environment & Business conditions PEST/EPISTLE o Forecast about effect of firms actions/Micro Environment - Sales & Revenue Forecast Advantages

Compels managers to look into the future Discloses areas of inadequacy & lack of control Increases participation within the organisation Brings singleness of purpose of plans
Effective Premising

Selection of relevant premises Development of alternative premises for contingency

planning

Verification of consistency of premises

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Communication of the premises

Forecasting is like trying to drive a car blindfolded & following directions given by a person who is looking out of the back window. - Anon Forecasting the process of using past events to make systematic predictions about future outcomes & trends Forecast o Macro Environment & Business conditions PEST/EPISTLE o Forecast about effect of firms actions/Micro Environment - Sales & Revenue Forecast o Derivative Forecasts Results of plans - BEV, Profit Flows, Cash Flows etc Forecasting o Quantitative o Qualitative Quantitative Forecasting based on use of mathematical rules to manipulate existing data to predict the future. o Time Series analysis o Causal/Co-relation Analysis Regression Analysis Qualitative Forecasting a technique that transforms judgements opinions & knowledge into quantitative estimates o Delphi Technique uses group brainstorming of experts to reach a consensus & insight into the future o Multi - Criteria Analysis a technique in which a jury of experts evaluate various alternatives by assigning numerical scores to criteria identified by consensus Sales Forecasting Quantitative o Time Series analysis o Causal/Co-relation Analysis Qualitative o Jury of executive opinion o Sales force composite method o Users/Buyers Expectation method - Industrial buyers o Deductive methods application of judgement

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Level Enterprise Corporate Business Functional Focus Legitimacy Economic Competitive Departmental Objectives Strategy Created by Founder / Top Mgt. Top Mgt. Top & Middle Mgt. Middle & First Line Mgt.

Vision Statement Enterprise Strategy Mission Statement Goals/ Targets Goals/ Targets Corporate Strategy Competitive Strategy Functional Strategy

Types of Plans Plans Strategic Plans incorporate uncertainty & interface with the environment what to achieve Operational Plans Administrative or Tactical how to achieve. Plans Standing Plans Policies Procedures Rules

Single Use Plans for non recurring activities Programs Projects Budgets

Policies General statements that guide decision making. They define the boundaries within which decisions are made, and they direct decisions towards the accomplishment of objectives. Procedures plans that establish a required method of handling future activities. Are required to achieve a high degree of

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regularity in frequently occurring events. They are guides for action not thinking. Rules - are specific statements of what may or may not be done. They allow no room for discretion. Program a single use plan that covers a relatively large set of organisational activities & specific major steps, their order, & timing & the unit responsible for each. e.g. Expansion program. Project a smaller & separate portion of a program. E.g. Building a new plant. Budget formal quantified statements of resources allocated to specific programs or projects for a given period. Managerial Situation o Problem (solving) actual state of affairs differ from a desired state of affairs o Opportunity (finding) circumstances offer a chance to exceed stated goals & objectives Decision Making the process of identifying & selecting a course of action to deal with a specific problem or to take advantage of an opportunity. Deciding to decide o Can it be dealt with? o Will it resolve itself? o Is it my job to decide it? Types of Decisions o Programmed decisions solutions to routine problems made in accordance with written or unwritten policies, procedures, rules or habit. o Non-programmed decisions specific solutions created to deal with non-routine problems Rational Decision Making Process/Steps o Investigate the situation Define the problem Identify the decision objectives Diagnose the causes o Develop / Search Alternatives o Evaluate Alternatives & Select Alternative o Implement & Monitor the decision

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Limitations of Rational Decision Making

Bounded Rationality
Satisficing Constraints of info. time, money Availability (in the memory of the person) Representativeness stereotyping Anchoring & Adjustment Easy Recall (then it must be right) Easy (lazy) Search Stereotyping Insensitivity to sample size Misconception of chance (random events) Insufficient adjustment Overconfidence The confirmation trap

Heuristics rule of thumb

Biases in Decision Making

Hindsight Evaluation of Alternatives

Qualitative Selection of Alternatives

Quantities

Past Experience Experimentation trying out one alternative Research & Analysis Decision Tree SWOT/TOWS analysis

Techniques

Organizing

Organisational Structure the way in which an organisations activities are divided, organised & co-ordinated. Formal Organisation intentional structure of roles in a formally organised enterprise o Well
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Channels of communication Durable & planned Inflexible Membership gained consciously at a specified time Clearly specified jobs for every member Hierarchy of objectives is clearly & explicitly stated Status, prestige, pay & other perks well ordered & controlled

o o o o o o

Informal Organisation a network of personal & social relations not established or required by the formal organisation but arise spontaneously as people associate with one another Loose Flexible Ill-defined Spontaneous Membership gained consciously or unconsciously Exact time when person becomes a member difficult to determine o Membership or involvement may grow through time o Exact nature of relationship amongst members & goals of the organisation may be unspecified o o o o o o Formal Organisations can get converted to an informal one if defined & structured relationships are not enforced & are replaced by new, unspecified & uncontrolled relationships. Steps in Organising o Establish enterprise objectives o Formulate supporting objectives, policies & plans o Identify & classify activities necessary to accomplish these o Divide total work into tasks that can be logically & comfortably performed by individuals or groups - Division of work o Grouping/Combining tasks & employees in a logical & efficient manner (value creating manner) Departmentalisation o Set up mechanism for co-ordination - Integration o Monitor effectiveness & make adjustments Issues in Organising o Job specialisation division of work into standardised, relatively simple Alienation Job enlargement & job enrichment Management Process
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o Span of Management (Control) the number of subordinated reporting directly to a given manager o Levels of Management layers Tall structures Stable environments Flat structures Dynamic environments o Power ability of individuals or groups to induce or influence the beliefs or actions of other people or groups Legitimate power accepted by subordinates/society Expertise power Referent power when people want to be like or identify with the influencer Reward power Coercive power ability to punish o Authority power vested in a position in an organisational setting o Line authority the authority of managers who are directly responsible throughout the organisational chain of command for achieving organisational goals o Staff Authority authority of managers who provide line managers with advice & services o Functional authority the right delegated to an individual or a department to control specified processes, practices, policies or other matters relating to activities undertaken by persons in other departments o Decentralisation the tendency to disperse decision making authority in an organisation structure o Delegation assigning formal authority & responsibility for completion of specific activities to a subordinate Departmentalisation o Numbers o Time - shifts o Functional o Territory or Geography o Customer o Process o Product o Matrix Staffing What is meant by HRM?

The management function that deals with recruitment, placement, training & development of organization members AJAY NAGRE
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Staffing filling and keeping filled positions in an organization structure Process of HRM or Steps in HRM

Enterprise Plan Organizational Plan HR Planning Forecasting Auditing Recruitment External / Internal Selection Orientation/Socialization Training & Development Performance Appraisal Promotion, Transfer, Demotion or Separation

Issues in HRM

Promotion from within Peters Principle Glass Ceiling Affirmative action / Job Reservation Core Team Outsourcing Global HRM

Control - The process of ensuring that actual activities conform to planned activities Examples of Control

ISO 9000 Examinations Financial Audits Inspection Control Process - Steps

Establish standards & methods for measuring performance Measuring performance Comparing performance with standards AJAY NAGRE
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Take corrective action

Control Process

Est. Stds. & Methods

Measure Per.

Per. > Std. Yes Do Nothing

No Corr. Action

Key Result Areas (KRA)

Critical Points or Key Performance Areas Those aspects of an organization that must function effectively if the entire organization or unit is to succeed Physical Standards Capital Standards Revenue Standards Cost Standards Intangible Standards Strategic Plans Types of Control

Pre Action Control Steering Control / Cybernetic Control Yes No or Screening Control Post Action Control

Issues in Control

Future Directed Efficiencies of Control Preventive Control Suitability to specific organization, task or technology AJAY NAGRE
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MBE Management by Exception Flexibility of Control Action Oriented

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