Chapter-1 Nature and Significance of Management

MEANING OF MANAGEMENT:

Management is an activity which is necessary wherever there is a group of people working in an organisation.
People in an organisation are performing diverse task, but they are all working towards the same goal.
Management aims at guiding their efforts towards achievement of common goal.

Thus a management has to see that, task are completed and goals are achieved ( i.e. effectiveness) with the
least amount of resources at a minimum cost (i.e. efficiency).

Definition:

According to Harold Koontz, “Management is an art of getting things done through and with the people in
formally organized groups. It is an art of creating an environment in which people can perform and individuals
and can co-operate towards attainment of group goals”.

According to F.W. Taylor, “Management is an art of knowing what to do, when to do and see that it is done
in the best and cheapest way”.

Henri Fayol: Defined management as a process involving forecasting, planning, organizing, commanding,
coordinating, and controlling.

Characteristics of Management:

1) Management is a goal-oriented process: An organization has a set of basic goals which are the basic reason
for its existence. These should be simple and clearly stated. Different organizations have different goals.
For example, the goal of a retail store may be to increase sales, but the goal of The Spastics Society of India
is to impart education to children with special needs.
Management unites the efforts of different individuals in the organisation towards achieving these goals.
2) Management is all pervasive: The activities involved in managing an enterprise are common to all . All
organizations, business, political, cultural, or social are involved in management because it is the
management that helps and directs the various efforts towards a definite purpose.
3) Management is multidimensional: Management is a complex activity that has three main dimensions.
These are:
(a) Management of work: All organisations exist for the performance of some work. In a factory, a product is
manufactured, in a garment store a customer’s need is satisfied and in a hospital, a patient is treated.
Management translates this work in terms of goals to be achieved and assigns the means to achieve it. This
is done in terms of problems to be solved, decisions to be made, plans to be established, budgets to be
prepared, responsibilities to be assigned and authority to be delegated
(b) Management of people: Human resources or people are an organisation’s greatest asset. Despite all
developments in technology “getting work done through people” is still a major task for the manager.
Managing people has two dimensions (i) it implies dealing with employees as individuals with diverse needs
and behavior; (ii) it also means dealing with individuals as a group of people. The task of management is to
make people work towards achieving the organisation’s goals, by making their strengths effective and their
weaknesses irrelevant
(c) Management of operations: No matter what the organisation, it has some basic product or service to provide
in order to survive. This requires a production process which entail the flow of input material and the
technology for transforming this input into the desired output for consumption. This is interlinked with both
the management of work and the management of people
4) Management is a continuous process: The process of management is a series of continuous, composite,
but separate functions (planning, organising, directing, staffing and controlling). These functions are
simultaneously performed by all managers all the time.
5) Management is a group activity: An organisation is a collection of diverse individuals with different needs.
Every member of the group has a different purpose for joining the organisation but as members of the
organisation they work towards fulfilling the common organisational goal. This requires team work and
coordination of individual effort in a common direction. At the same time management should enable all
its members to grow and develop as needs and opportunities change
6) Management is a dynamic function: Management is a dynamic function and has to adapt itself to the
changing environment. An organisation interacts with its external environment which consists of various
social, economic and political factors. In order to be successful, an organisation must change itself and its
goals according to the needs of the environment.
7) Management is an intangible force: Management is an intangible force that cannot be seen but its
presence can be felt in the way the organisation functions. The effect of management is noticeable in an
organisation where targets are met according to plans, employees are happy and satisfied, and there is
orderliness instead of chaos.

Objectives of Management
1) Organisational Objectives: Management is responsible for setting and achieving objectives for the
organisation. It has to achieve a variety of objectives in all areas considering the interest of all stakeholders
including, shareholders, employees, customers and the government. The main objective of any
organisation should be to utilise human and material resources to the maximum possible advantage, i.e.,
to fulfill the economic objectives of a business. These are survival, profit and growth.
2) Social objectives: It involves the creation of benefit for society. As a part of society, every organisation
whether it is business or non-business, has a social obligation to fulfill. This refers to consistently creating
economic value for various constituents of society. This includes using environmentally friendly methods
of production, giving employment opportunities to the underprivileged sections of society, and providing
basic amenities like schools and healthcare, etc., for the community.
3) Personnel objectives: 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. These vary from financial needs such as competitive salaries and perks, social needs such as peer
recognition and higher-level needs such as personal growth and development. Management has to
reconcile personal goals with organisational objectives for harmony in the organisation.

Importance of Management
(i) Management helps in achieving group goals. Management creates teams and coordinates with individuals
to achieve individual goals along with organizational goals
(ii) Management increases efficiency. Management increases efficiency by using resources in the best possible
manner to reduce cost and increase productivity.
(iii) Management creates a dynamic organisation. Management helps the employees overcome their
resistance to change and adapt as per changing situation to ensure its survival, growth and its competitive
edge.
(iv) Management helps in achieving personal objectives. Through motivation and leadership management
helps individuals in achieving increases personal goals while working towards organizational objective.
(v) Management helps in the development of society. Management helps in the development of society by
producing good quality products, creating employment opportunities and adopting new technologies.

Effectiveness VS Efficiency

Meaning of Effectiveness: Effectiveness is about doing the right task, completing the assigned job on time,
no matter whatever the cost.

Meaning of Efficiency: Efficiency is about doing the job in cost-effective manner i.e. getting maximum
output with minimum input.

Basis Effectiveness Efficiency

Meaning It refers to the completion of work on It refers to the completion of work with
time and doing right thing on time. minimum cost and maximum profit
means maximum production on minimum
input.
Objective To achieve end results on time Performing task with least wastage of
time and effort (cost)
Main Focus Is on time Is on cost

Nature of Management

1. Management as an Art: Art refers to skillful and personal application of existing knowledge acquired
through study, observation and experience. The features of art are as follows:
a) Existence of theoretical knowledge: In every art, Systematic and organized study material is available
to acquire theoretical knowledge and experts in the respective fields apply these principles to their
respective art forms.
b) Personalized application: The use of basic knowledge differs from person to person and thus, art is a
very personalized concept.
c) Based on practice and creativity: Art involves creativity and practice of the experts. For e.g. the music
created by musicians are different though the musical notes used are the same. Every manager has his
own unique style of managing things and people. He/she uses his creativity in applying management
techniques and his skills improve with regular application. Since all the features of art are present in
management. So it can called an art.
Management as a Science:

Science is a systematized body of knowledge that is based on general truths, which can be tested anywhere,
anytime. The features of Science are as follows:

Systematized body of knowledge: Science has a systematized body of knowledge based on cause and effect
relationships.

Principles based on experiments and observation: Scientific principles are developed through experiments
and observation.

Universal validity: Scientific principles have universal validity and application

➢ Management has systematic body of knowledge and its principles are developed over a period of time
based on repeated experiments & observations which are universally applicable but they have to be
modified according to given situation. As the principles of management are not as exact as the
principles of pure science, so it may be called-an inexact science. The prominence of human factor in
the management makes it a Social Science.

Management as Profession

Profession means an occupation for which specialized knowledge and skills are required and entry is restricted.
The main features of profession are as follows:

Specialized body of Knowledge: is complete set of principles, concepts, terms and activities that make up a
professional domain.

Restricted Entry: The entry in every profession is restricted through examination or through educational
degree.

Professional Associations: All professions are affiliated to a professional association, which regulates entry
and frames code of conduct relating to the profession. Eg. IMA, ICAI

Ethical Code of Conduct: All professions are bound by a code of conduct, which guides the behavior of its
members.

Service Motive: The main aim of a profession is to serve its clients. Management does not fulfill all the features
of a profession and thus it is not a full-fledged profession like doctor, lawyer, etc.

Level of Management

Top Management: Designations and Functions Comprises of CEO, Board of Directors, MD, GM, VP. Main task
is conceptualizing of organizational goal, policy and strategy formulation and organising, controlling and
monitoring activities and resources. Controlling the work performance of individuals and approving Budgets.

Middle Management: Designations and Functions Comprises of Departmental, Sub‐Departmental and

Divisional heads. Their main task is execution of plans, policies framed by the top level management and
preparing organisational set up & appointing employees, issuing instructions and motivating employees. They
are responsible for inter departmental cooperation as well.
Supervisory and operational Level: Designations and Functions Consists of Foremen and supervisor etc. Main
task is to ensure actual implementation of the policies as per directions of top and middle level managers and
also to Bring workers’ grievances before the management & maintain discipline among the workers.

Functions of Management

Planning: What is to be done in future and determine it in present is called planning. It includes setting of
objectives, targets and formulating an action plan. It bridges the gap between where we are and where we
want to reach.

Organising: Involves assigning duties, grouping tasks, establishing authority and responsibility relationships
and allocating the resources required to perform a specific plan.

Staffing: Finding and placing the right person for the right job at the right time. It involves recruitment,
selection, placement, induction and development of employees.

Directing: Refers to leading, influencing, motivating the staff to perform the assigned task efficiently and
effectively.

Controlling: Refers to monitoring organizational activities towards the attainment of organizational goals. It
involves setting standards measuring current performance, comparing with the standards, and taking
corrective action for any deviations. It is the process of ensuring that all activities are going according to the
plan.

Coordination

Coordination is the force which synchronizes all the functions of management and activities of different
departments. Lack of coordination results in overlapping, duplication, and delay in actions.

It is concerned with all the three levels of management as if all the levels of management are looked together,
they become a group and as in the case of every group, they also require coordination among themselves.
Coordination is implicit and inherent in all functions of an organisation.

Features of Coordination

1. Coordination Integrates Group Effort: It is an orderly arrangement of group effort to ensure that
performance is at par with the plans and schedules.

2. Coordination Ensures unity of action: It is a binding force between various departments and ensures that
all efforts are focused towards achieving the organizational goal.

3. Coordination is a Continuous Process: It is a never-ending process as its needs are felt at all levels and in all
activities in the organisations. It begins at the planning stage and continues until controlling.

4. Coordination is the responsibility of all managers: Coordination is equally important at all levels of
management. It is the responsibility of all the individuals in an organisation to carry out their work in a
responsible manner and coordinate with each other to achieve organizational goals.
5. Coordination is a deliberate function: A manager has to coordinate the efforts of different people in a
conscious and deliberate manner. In other words, coordination is never established by itself rather it is a
conscious effort on the part of every manager.

6. Coordination is all pervasive function: It is needed in all departments and at all levels. Lack of coordination
can lead to overlapping of activities.

Importance of Coordination

The reasons that bring out the importance or the necessity for coordination are

Growth in the Size: An organisations growth results in the increase in the number of people employed with
varied individual aspirations and culture. So it is important to harmonize individual goal with the organizational
goals through coordination.

Functional Differentiation: All the departments and divisions may have their own, objective, policies and their
own style of working. However all departments and individuals are interdependent and cannot work in
isolation. Thus, coordination is necessary for linking the activities of various departments.

Specialization: Mostly specialists have a feeling of superiority and prioritize their zone of activities.
Coordination seeks to sequence and integrate all the specialists’ activities into a wholesome effort.