Unit 1 Nature and Significance of Management

 

                        Nirmal Singh Rana (PGT Commerce) 

Unit: 1   Nature and Significance of Management

Concept of Management

Successful organisations do not achieve their goals by chance but by following a deliberate process called ‘management’.

According to Koontz and O’Donnell, “Management is creating an internal environment of an enterprise where individuals working together in groups perform efficiently and effectively towards achievement of group

goals.”

        Management is defined as a process of getting things done with the aim of achieving goals effectively and efficiently.

The concepts of Management includes following three terms:

• Process in the definition means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling.

• ‘Effectiveness’ in management is concerned with doing the right task, completing activities and achieving goals. Thus, being effective basically means finishing the given task.

• Efficiency means doing the task correctly and with minimum cost. Efficiency in increased if by using less resources (i.e., the inputs) more benefits are derived (i.e., the outputs). For management, it is important to be both effective and efficient, i.e. to achieve goals (effectiveness) with minimum resources (efficiency).

              

Effectiveness and efficiency are two sides of the same coin. But these two aspects need to be balanced in every organisation.

                    Difference between Effectiveness and Efficiency

Basis	Effectiveness	Efficiency
Meaning	It refers to completing the task on time no matter whatever the cost.	It refers to completing the task with minimum cost optimum utilisation of resources and in cost effective manner.
Objective	To achieve end result.	To conduct cost benefit analysis.
Main consideration	End result.	Cost.

Characteristics/Features of Management

1. Management is a goal oriented process which unites the efforts of different individuals in the organization towards achieving these goals.

2. Management is all pervasive as the activities involved in managing an enterprise are common to all organisations whether economic, social or political.

3. Management is a continuous process consisting of continuous, composite, but separate functions (planning, organising, staffing, directing and controlling). 

4. Management is a dynamic function and has to adapt itself to the changing environment.

5. Management is an intangible force that cannot be seen but its presence can be felt in the way the organisation functions – When targets are achieved and there is orderliness instead of chaos.

6. Management is multidimensional/multifaceted concept as it is a complex activity that has three dimensions: Management of work, Management of people, Management of operations.

7. Management is a group activity which ensures team work and coordination of individual effort in a common direction.

Objectives of Management

1. Organisational or Economic Objectives

• Survival–An organisation must earn enough revenues for survival.

• Profit–Profit is essential to cover costs and risks of the business.

• Growth–Management must exploit fully the growth potential of the organisation. Indicators of growth are increase in sales turnover, capital investment and number of products and employees.

2. Social Objectives: Social objectives of management involve the creation of benefits for the society. This includes: 

  • using environmental friendly methods of production, 

• providing basic amenities like schools and crèches to employees, giving employment opportunities to the disadvantaged sections of the society, etc.

Social objectives is to provide some benefits to society like applying environmental friendly practices in the production process and giving employment to disadvantaged sections of society, etc. Example: TISCO, ITC, and Asian Paints.

3. Personal Objectives: Personal objectives which aim to satisfy the needs of the employees working in the organisation such as 

• financial needs by giving them competitive salary and perks, 

• social needs such as peer recognition, and 

• Higher level needs such as personal growth and development.

Importance of Management

1. Management increases efficiency by reducing costs and increasing productivity through better planning, organising, directing and controlling the activities of the organisation.

2. Management helps in the development of the society by providing good quality products, creating employment opportunities and adopting new technology, etc.

3. Management helps in achieving group goals by giving a common direction to individual effort.

4. Management creates a dynamic organisation by making the organisation adapt itself to the changing environment.

5. Management helps in achieving personal objectives by motivating and leading in such a way that both personal goals and organisational objectives are accomplished.

Levels of Management

1. Top Level Management consists of Chief Operating Officer, Chief Executive Officer (CEO), Chief Finance Officer, Director, Chairman, President, Vice-President, etc. Their functions are:

1. To coordinate the activities of different departments according to the overall objectives of the organisation.

2. To be responsible for welfare and survival of the organisation.

3.  To analysis the business environment and its implications for the survival of the firm.

4. To formulate overall organisational goals and strategies for their achievement.

5. To be responsible for all the activities of the business and for its impact on the society.

2. Middle Level Management consists of divisional/ departmental heads, such as Production Manager, Marketing Manager, Operations Manager, Plant Superintendent, etc. Their functions are:

1. To interpret the policies framed by the top management.

2. To ensure that their department has the necessary personnel.

3. To assign necessary duties and responsibilities to the employees of their respective departments for implementation of the plan.

4. To motivate employees of their respective departments to achieve the desired objectives.

5. To cooperate with other departments for smooth functioning of the organisation.

3. Operational or Supervisory Management consists of Supervisors and Foremen. Their functions are:

1. To oversee the efforts of the workforce.

2. To interact with the actual workforce and pass on the instructions of the middle management to the workers.

3. To ensure that the quality of output is maintained and wastage of material is minimized.

4. To ensure safety standards are maintained.

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Nature of Management as Science, Art and Profession

Management as a Science

Management is a science but not an exact science because of the following reasons:

1. Systematised body of knowledge: Like science, management is a systematic body of knowledge with its own theories and principles that have developed over a period of time. So, this feature of science is present in management.

2. Principles based on observation and experimentation: Like science, management principles are derived through observation and repeated experimentation. However, since management deals with human beings the outcome of these experiments are not capable of being accurately predicted. So, this feature of science is not fully present in management.

3. Universal validity: Principles of management like principles of pure science provide managers with certain standardised techniques that can be used in different situations. However, since the principles of management have to be modified according to a given situation, their application and use is not universal. So, this feature of science is not fully present in management.

Management as an Art

Management is an art. Three features that establish it as an art are:

1. Existence of theoretical knowledge: As in art, in management too, there is a lot of literature available in various areas of management which the manager has to specialise in.

2. Personalised application: Like in any art, in management too, a manager applies his acquired knowledge in a personalised and unique manner. This gives rise to different styles of management.

3. Based on practice and creativity: Management satisfies this criteria as manager gains experience through regular practice and becomes more effective.

Management as a Profession SWEEP

Management is a profession but not a full-fledged profession like legal, accounting or medical professions because it does not meet the exact criteria of a profession.

1. Well-defined body of knowledge: All professions are based on a well-defined body of knowledge that can be acquired through instruction. Management too is based on a systematic body of knowledge comprising well-defined principles. This feature of profession is present in management.

2. Restricted entry: The entry to the above stated profession is restricted through a prescribed qualification. But there is no restriction on anyone being appointed as a manager in any business enterprise. So, presently this feature of profession is not present in management

3. Professional association: Legal and medical professions are affiliated to a professional association like bar council and medical council which regulates entry, grants certificate of practice and formulates and enforces a code of conduct. There are several associations of practicing managers in India, like the AIMA that has laid down a code of conduct to regulate the activities of their members. There is, however, no compulsion for managers to be members of such an association. So, presently this feature of profession is not present in management.

4. Ethical code of conduct: Legal and medical professions are bound by a code of conduct which guides the behaviour of its members. AIMA has devised a code of conduct for Indian managers but there is no statutory backing for this code. So, presently this feature of profession is not present in management.

5. Service motive: The motive of legal and medical profession is to serve their client’s interests by rendering dedicated and committed service. The basic purpose of management to help the organisation achieve its goals by providing

good quality products at reasonable prices, thereby serving the society is being increasingly recognised. So, presently this feature of profession is not fully present in management.

Coordination: Concept and Importance

Coordination is the process by which a manager synchronises the activities of different departments towards the achievement of a common goal.

Nature/Characteristics/ Features of Coordination 

1. Coordination integrates group efforts by unifying diverse interests thereby giving them a common focus to ensure that the performance is according to the 

plan. 

2. It ensures unity of action by acting as a binding force between departments and ensuring that all action is aimed at achieving the goals of the organisation.

3. It is a continuous process as it starts at the planning stage and continues till controlling.

4. It is a pervasive function as it is required at all levels of management and in all departments.

5. It is the responsibility of all managers at the top, middle and lower level.

6. It is a deliberate function as every manager has to coordinate the efforts of different people in a conscious and deliberate manner.

Need and Importance of Coordination

1. Growth in size: As organisations grow in size, number of people in the organisation also increases. Coordination is needed to integrate their efforts and activities.

2. Functional differentiation: In an organisation, there are different departments for production, marketing, finance, etc. All departments have their own objectives, policies, strategies, etc. There may arise conflict among them. Coordination is needed to ensure unity of action among them and to avoid inter-departmental conflicts.

3. Specialisation: In modern organisations, there is high degree of specialisation. Organisations, therefore, employ a number of specialists. They do not take advice or suggestions from others. Coordination is needed to reconcile the differences in approach, interest or opinion of the specialists.

Functions of Management

1. Planning: Thinking in advance what to do, when to do, and who is going to do it. It bridges the gap between where we are and where we want to reach.

2. Organising: organization means deciding the framework of working how many units and sub-units are needed, how many posts are needed, how to distribute the authority and responsibilities.

3. Staffing: It refers to recruitment, selection, training, development and appointment of the employees. 

4. Directing: It refers to guiding, instructing, inspiring and motivating the employees.

5. Controlling are the main functions of management. Controlling is monitoring the organizational performance towards the attainment of the organisational goals.

Objective Types / Multiple Choice Questions (MCQs)

1. Which is not a function of management of the following?

                (a) Planning                        (b) Staffing 

  (c) Co-operating (d) Controlling

2. Management is:

(a) An art (b) A science

(c) Both art and science (d) Neither

3. The following is not an objective of management:

(a) Earning profits (b) Growth of the organisation

(c) Providing employment (d) Policy making

4. Policy formulation is the function of:

(a) Top level managers (b) Middle level managers

(c) Operational management (d) All of these

5. Co-ordination is:

(a) Function of management (b) The essence of management

(c) An objective of management (d) None of these

6. Management is creating an ......................... of an enterprise where individuals working together in groups perform efficiently and effectively towards achievement of group goals.

(a) Internal environment (b) External environment

(c) Economic environment (d) Ecological environment

7. Management is ......................... as it can’t be seen but its effects can be felt in the form of results like whether the objectives are met and whether people are motivated or not and there is orderliness and co-ordination in the work environment.

(a) Intangible force (b) Tangible force

(c) Internal force (d) External force

8. Your grandfather has retired as the Vice President of a manufacturing company. At which level of management was he working:

(a) Top level management (b) Middle level management

(c) Lower level management (d) None of these

9. Rajiv explains the policies of superiors to the employees and ensures a touch of

co-operation among all the departments. At which level of management was he working:

(a) Top level management (b) Middle level management

(c) Lower level management (d) None of these

10. At times, a business may concentrate more on producing goods with fewer resources i.e., cutting down cost but not achieving the target production. Consequently, the goods do not reach the market and hence the demand for them declines and competitors enter the market. Which aspect of management was ignored in this situation?

(a) Efficiency (b) Effectiveness 

(c) Productivity (d) Co-ordination

11. Dishaa at Frameworks Ltd., performs several different tasks in a single day. Some days she may spend more time in planning a future exhibition and on another day she may spend time in sorting out an employee’s problem. The task of a manager consists of an ongoing series of functions. Which aspect of management is highlighted here?

  (a) Management is a continuous process.  

(b) Management is multi-dimensional.

  (c) Management is a pervasive process.   

(d) Management is an intangible process.

12. McDonalds, the fast food giant made major changes in its menu to be able to survive in the Indian market. Which feature of management is highlighted here:

(a) Management is a continuous process.

(b) Management is multi-dimensional.

(c) Management is a pervasive process.

(d) Management is a dynamic function.

13. Organisations are made up of people who have different personalities, backgrounds, experiences and objectives. They all become part of the organisation to satisfy their diverse needs. Which objective of management is highlighted in aforesaid statement?

(a) Organisational objective (b) Social objective

(c) Personnel objective (d) None of these

14. A business needs to add to its prospects in the long run, for this it is important for the business to grow. Which objective of management is highlighted in aforesaid statement:

(a) Organisational objective (b) Social objective

(c) Personnel objective (d) None of these

15. Every organisation whether it is business or non-business, has an obligation to fulfill. This refers to consistently creating economic value for various constituents of society. Which objective of management is highlighted in aforesaid statement:

(a) Organisational objective (b) Social objective

(c) Personnel objective (d) None of these

16. The subject of management is taught at different institutions. Some of these have been set up with the specific purpose of providing management education such as the Indian Institutes of Management (IIMs) in India. Entry to different institutes is usually through an examination. Which aspect of management is highlighted in aforesaid statement?

(a) Management as a science (b) Management as an art

(c) Management as a science and an art (d) Management as a profession

17. The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human beings and human behaviour, the outcomes of these experiments are not capable of being accurately predicted or replicated. Which aspect of management is highlighted in aforesaid statement?

(a) Management as a science (b) Management as an art

(c) Management as a science and an art (d) Management as a profession

18. At times, a business may concentrate more on producing goods with fewer resources i.e., cutting down cost but not achieving the target production. In this case the manager is:

(a) Efficient (b) Effective

(c) Efficient as well as effective (d) Neither efficient nor effective

19. Through ...... management helps individuals to develop term spirit, co-operation, Commitment to group success.

(a) Co-ordination (b) Supervision 

(c) Communication (d) Motivation

20. Which of the following is not a characteristics of a profession?

(a) Service motive (b) Restricted entry

(c) Based on creativity (d) Well-defined body of knowledge

21. Through their efforts quality of output is maintained, wastage of materials is minimised and safety standards are maintained. Which level of management is highlighted in aforesaid statement?

(a) Top level of management (b) Middle level of management

(c) Operational management (d) None of these

22. Which managerial function is concerned with assigning duties, grouping tasks and establishing reporting relationships?

(a) Planning (b) Organising 

(c) Staffing (d) Directing

23. Which managerial function ensures that the right people with the right qualifications are available at the right place and time to accomplish the goals of the organisation:

(a) Planning (b) Organising 

(c) Staffing (d) Directing

24. Which of the following statement is correct in respect of management as an art?

1. A good manager works through a combination of practice, creativity, imagination, initiative and innovation.

2. There is a lot of literature available in various areas of management like marketing, finance and human resources which the manager has to specialise in.

3. The basic purpose of manager is to help the organisation achieve its stated goal.

4. A manager applies this acquired knowledge in a personalised and skillful manner in the light of the realities of a given situation.

25. Following are the managerial functions against their respective aspects. 

1. Planning	(i) Deviations
2. Staffing	(ii) Objectives
3. Direction	(iii) Abilities
4. Controlling	(iv) Leadership

      Select the most appropriate combination:

 

   (a) 1. (iv); 2. (iii), 3. (ii), 4. (i) 

(b) 1. (iv); 2. (i), 3. (iii), 4. (ii)

(c) 1. (ii); 2. (iii), 3. (iv), 4. (i)

 (d) 1. (iii); 2. (i), 3. (ii), 4. (iv)

ANSWERS

1.    (c)	2.    (c)	3.    (d)	4.     (a)	5.     (b)
6.    (a)	7.    (a)	8.    (a)	9.     (b)	10.   (b)
11.  (a)	12.   (d)	13.   (c)	14.   (a)	15.   (b)
16.  (d)	17.   (a)	18.   (d)	19.   (a)	20.   (c)
21.  (c)	22.   (b)	23.   (c)	24.   (c)	25.   (c)