Nature of Management and its Process

Development of Management Theory

Ever since the dawn of civilization, one of the biggest concerns of organized cooperation has been management. While we can trace organization and management as far back as 530 BC, the systematic study and examination of management is primarily the product of the last four decades of research. Various management theories developed during this time and contributed to the way we currently approach and understand management. In this article, we will explore management theories by different authors and the difference between administration and management.

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Management Theories – Frederick Taylor

The Father of Scientific Management, Frederick Taylor, attempted to use systematic study in order to find the single best way of doing a task. He laid down the following four principles of management for all managers:

  1. Develop a science for each aspect of work. Also, study and analyze it to find the single best way to do the work.
  2. Ensure that the selection of workers is based on a scientific methodology and not on nepotism and favoritism. Also, train, teach and develop the workforce allowing them to reach the optimum potential.
  3. Your employees are not your enemies. Therefore, create an environment of cooperation with them to ensure the implementation of scientific principles.
  4. Divide all work and responsibility equally between the workers and the management.

management theories

                                                                                                                                                 Source: Pixabay

Taylor believed that these principles could help determine a fair day’s work for a fair day’s pay in a manner which was good for both the employees and the management. He also recommended the use of incentives for employee motivation.

The management theories which evolved in the early twentieth century were called the Second Industrial Revolution. Further, there was a lot of criticism and opposition to similar management theories from other contributors.

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Management Theories – Max Weber and Henri Fayol

Max Weber introduced the idea of bureaucratic organizations to the world. Further, this came at a time when politics and heredity or tradition were the basis of promotions to prominent positions. By definition, bureaucracy is the exercise of control based on knowledge, expertise, and/or experience.

He proposed that organizations must adopt policies which are fair as opposed to favoritism-based and recorded in writing. He also recommended that professional managers must supervise the organization rather than company owners. Here are some principles to guide the management of an organization:

  • Qualification-based hiring – Hire employees based on their educational qualification or technical training.
  • Merit-based promotionManagers decide on promotions and base their decisions on experience or achievement.
  • Chain of command – Organizations must have a structure wherein each position reports and is accountable to a higher position. Also, create a complaints process to protect the rights of workers in lower positions.
  • Division of labor – Responsibilities, tasks, and authority is equally divided and clearly defined.
  • Impartiality – Regardless of the position or status of an employee, all rules and regulations must apply to all members of the organization.
  • Recording in writing – Record every single administrative act, decision, rule or procedure in writing.
  • Owners are not managers – The owners of a company should not manage it.

Henri Fayol

The Father of Modern Management Theory, Henri Fayol, proposed a theory of general management which is applicable to all types of fields and administration. He divided all activities of an industrial enterprise in the following six groups:

  1. Technical activities pertaining to production
  2. Commercial activities (buying/selling)
  3. Financial activities pertaining to the optimum utilization of capital
  4. Accounting activities (final accounts, costs, statistics, etc.)
  5. Security-related activities (protecting the premises)
  6. Managerial activities

Of these, Fayol focused his work on describing and explaining managerial activities. He grouped managerial functions around the activities of planning, organizing, commanding, coordinating, and controlling. He suggested the following 14 principles of management:

  1. Division of Work: to ensure optimum performance with minimal effort.
  2. Authority and Responsibility: Every authority comes with certain responsibilities.
  3. Discipline: Employees must respect and obey their superiors.
  4. Unity of Command: Every employee must receive orders from only one senior.
  5. Unity of Direction: If there are a group of tasks with a common objective, then there must be a single head and a single plan.
  6. Subordination: Individual interest is secondary to the general interest.
  7. Remuneration: Wages must afford maximum satisfaction to the employees and the firm.
  8. Centralization: The organization must decide about the amount of authority that the higher levels would retain or dispersed in the organization.
  9. Scalar Chain: The relations between the superiors and subordinates should be short-circuited and not detrimental to the business.
  10. Order: All employees and process must have an appointed place.
  11. Equity: Managers must strive for equity and equality of treatment while dealing with the employees. They must display a combination of kindness and justice.
  12. Stability of Tenure of Personnel: Managers must try to reduce employee turnover.
  13. Initiative: Managers must take initiatives.
  14. Espirit de Corps: There must be an emphasis on teamwork and effective communication for achieving it.

Behavioralists, Sociologists, and Psychologists

Many behavioralists believed that the study of management must concern itself with human behavior in organizations. Further, they felt that the effectiveness of an organization relies on the quality of the relationship among the people working in it. Also, good management relies on the manager’s ability to develop interpersonal competence among its members.

Further, the behavioral approach to management drew attention to a lot of socio-psychological aspects like the dynamics of organizational behavior, groups, organizational conflict, change, and techniques of organizational development.

Systems Approach

The systems approach defines a system as a set of interdependent and inter-related parts arranged meticulously to produce a unified whole. Also, systems are of two types – Open and Closed. An open system recognizes the dynamic interaction with the environment (suppliers, labor unions, customers, etc.). On the other hand, in a closed system, the environment has no influence on it.

management theories

Inputs Processes Outputs
Human Planning Products
Materials Organizing Services
Equipment Leading Profit/Loss
Financial Controlling Human development
Information Technology Information
Facilities

The management must coordinate all parts of the system to meet the organization’s goals. Further, the managers must set up feedback mechanisms for the same.

Difference between Administration and Management

Administration Management
Policy Making Policy Implementation
Legislative and largely determinative functions Executive and governing functions
Usually, administration concerns with planning and organizing functions Usually, management concerns with motivating and controlling functions
Typically, the Board of Directors is concerned with the administration Personnel below the Directors are concerned with the management

management theories

In today’s times, management comprises of both the processes – planning as well as policy-making and execution. Therefore, management includes administrative and operative management.

Solved Question for You

Q1. List Henri Fayol’s 14 principles of management.

Answer:

The 14 principles of management by Henri Fayol are:

  1. Division of work
  2. Authority with responsibilities
  3. Obey and respect the superiors
  4. Single command
  5. One direction
  6. Preference to the general interest
  7. Fair remuneration
  8. Centralization and decentralization of authority
  9. Optimum relations between superiors and subordinates
  10. Everything in its designated place
  11. Equity and equality of treatment
  12. Minimal employee turnover
  13. Taking initiatives
  14. Importance of teamwork
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Weber’s principles seem so progressive, even for modern workplaces!

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