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Principles of Management

Instructor: Navaid M. Khan

A program of
Institute of Business Management

FALL 2016

All students must carry to the class the course text book

All those who do not have the text book in the class, their marks will be deducted

Some Basic Definitions
• Management is the process of attaining organizational goals by effectively and efficiently Planning, Organizing, Leading/Motivating and Controlling
the Organization’s Human, Physical, Financial, and Information Resources

• Efficiency is
• Getting work done with a minimum of effort, expense, or waste
• Doings things right—most output for least input

• Effectiveness is
• Accomplishing tasks that help fulfill organizational objectives
• Doing the right things

Manager is:
Someone who participates in the management process by planning, organizing, leading, or controlling the organizations resources.

Entrepreneur is:
An individual who conceives an idea of what product or service to offer and launches and runs his business.

Organization is:
A group of two or more people who work together in a consciously structured setting to achieve group goals.

Customers are:
Individuals and organizations that buy the goods and services produced by an organization

Performance is:
The degree to which individuals and organizations achieve organizations goal with effectiveness and efficiency

Four Management Functions

• Determining organizational goals and a means for achieving them Organizing
• Deciding where decisions will be made
• Who will do what jobs and tasks
• Who will work for whom

Inspiring – Motivating

• Monitoring progress toward goal achievement and taking corrective action when needed

KATZ'S 3 Levels of Management

• Top Managers
• Middle Managers
• First-Line Managers/ Supervisors

Top Managers

 Responsible for providing the overall direction of an organization
 Develop goals and strategies for entire organization
 Spend most of their time planning and leading
 Communicate with key stakeholders—stockholders, unions, governmental agencies, etc., company policies
 Use of multicultural and strategic action competencies to lead firm is crucial

Responsibilities of top Managers Middle Managers
 Responsible for setting objectives that are consistent with top management’s goals and translating them into specific goals and plans for first-line managers to implement
 Responsible for coordinating activities of first-line managers
 Establish target dates for products/services to be delivered
 Need to coordinate with others for resources
 Ability to develop others is important
 Rely on communication, teamwork, and planning and administration competencies to achieve goals

• First-line Managers
 Directly responsible for production of goods or services
 Employees who report to first-line managers do the organization’s work
 Spend little time with top managers in large organizations
 Technical expertise is important
 Rely on planning and administration, self-management, teamwork, and communication competencies to get work done

Mintzberg's Ten Managerial Roles
• Figurehead: All social, inspiration, legal and ceremonial obligations. In this light, the manager is seen as a symbol of status and authority.
• Leader: Duties are at the heart of the manager-subordinate relationship and include structuring and motivating subordinates, overseeing their progress, promoting and encouraging their development, and balancing effectiveness.
• Liaison: Describes the information and communication obligations of a manager. One must network and engage in information exchange to gain access to knowledge bases.
• Monitor: Duties include assessing internal operations, a department's success and the problems and opportunities which may arise. All the information gained in this capacity must be stored and maintained.
• Disseminator: Highlights factual or value based external views into the organization and to subordinates. This requires both filtering and delegation skills. • Spokesman: Serves in a PR capacity by informing and lobbying others to keep key stakeholders updated about the operations of the organization.
• Entrepreneur: Roles encourage managers to create improvement projects and work to delegate, empower and supervise teams in the development process.
• Disturbance handler: A generalist role that takes charge when an organization is unexpectedly upset or transformed and requires calming and support.
• Resource Allocator: Describes the responsibility of allocating and overseeing financial, material and personnel resources.
• Negotiator: Is a specific task which is integral for the spokesman, figurehead and resource allocator roles.

Managerial Skills

Management is a challenging job. It requires certain skills to accomplish such a challenge. Thus, essential skills which every manager needs for doing a better management are called as Managerial Skills.

According to Professor Katz, there are three managerial skills, viz.,
1. Conceptual Skills,
2. Human Relations Skills, and
3. Technical Skills.

According to Prof. Katz, all managers require above three managerial skills. However, the degree (amount) of these skills required varies (changes) fromlevels of management and from an organisation to the organisation.

The diagram I showed in class has the managerial skills which are required by managers working at different levels of management. The top-level managers require more conceptual skills and less technical skills. The lower-level managers require more technical skills and fewer conceptual skills. Human relations skills are required equally by all three levels of management.

1. Conceptual Skills
Conceptual skill is the ability to visualise (see) the organisation as a whole. It includes Analytical, Creative and Initiative skills. It helps the manager to identify the causes of the problems and not the symptoms. It helps him tosolve the problems for the benefit of the entire organisation. It helps the manager to fix goals for the whole organisation and to plan for every situation. According to Prof. Katz, conceptual skills are mostly required by the top-levelmanagement because they spend more time in planning, organising andproblem solving.

2. Human Relations Skills
Human relations skills are also called Interpersonal skills. It is an ability to work with people. It helps the managers to understand, communicate and work with others. It also helps the managers to lead, motivate and develop team spirit. Human relations skills are required by all managers at all levels of management. This is so, since all managers have to interact and work with people.

3. Technical Skills
A technical skill is the ability to perform the given job. Technical skills help the managers to use different machines and tools. It also helps them to use various procedures and techniques. The low-level managers require moretechnical skills. This is because they are incharge of the actual operations. Apart from Prof. Katz's three managerial skills, a manager also needs (requires) following additional managerial skills.

4. Communication Skills
Communication skills are required equally at all three levels of management. A manager must be able to communicate the plans and policies to the workers. Similarly, he must listen and solve the problems of the workers. He must encourage a free-flow of communication in the organisation.

5. Administrative Skills
Administrative skills are required at the top-level management. The top-level managers should know how to make plans and policies. They should also know how to get the work done. They should be able to co-ordinate different activities of the organisation. They should also be able to control the full organisation.

6. Leadership Skills
Leadership skill is the ability to influence human behaviour. A manager requires leadership skills to motivate the workers. These skills help the Manager to get the work done through the workers.

7. Problem Solving Skills
Problem solving skills are also called as Design skills. A manager should know how to identify a problem. He should also possess an ability to find a best solution for solving any specific problem. This requires intelligence, experience and up-to-date knowledge of the latest developments.

8. Decision Making Skills
Decision-making skills are required at all levels of management. However, it is required more at the top-level of management. A manager must be able to take quick and correct decisions. He must also be able to implement his decision wisely. The success or failure of a manager depends upon the correctness of his decisions.


Twenty first century is different from the last century in every way.

1. It is a century of look a like products and services. This has resulted on account of technological development worldwide. To top it all we have WTO in operation for last decade. Here we have to work at product/service differentiation and creating our competitive advantages. We need to do everything better and faster.

2. It is a century where CHANGE dominates our businesses. Change has always been there ever since Adam and Eve came down on this earth but what makes twenty first century unique is the speed and quantum of Change which has multiplied a hundred times. Twenty first century is not about managing Change, it is about staying ahead of Change. Today we have to learn to do things differently or do different things.

3. There will be five key words in the twenty first century for all businesses. These will be:


All those who are winners in these areas will be the Success stories - others history or statistics.

Twenty first century will see two kinds of Managers. The Quick Manager and the Dead Manager - Tom Peters

Another Success Formula

I learned that the only way you are going to get anywhere in life is to work hard at it.
If you do, you'll win. If you don't you won't.

We need to have our blue print for success. It is our roadmap. We need to decide what we have to do, how much we have to do and what not to do. Time is a limited resource and we should trace where our time is going. Before going to bed, we can ask the following questions:

- Am I clear on what I want in my life?

- Do I have a strategy to reach what I want?

- Do I have a focus on my goal?

- Am I putting in adequate hours of work in a day?

- Is there anything else I can do to increase the quality of my work?

- Should I work even harder?

- Do I suffer from laziness and lack of enthusiasm?

- What sacrifice I have to make to make my dream come true?

Chapter 2
Different perspectives of Management

1. The Classical Management Perspective
2. The Behavioral Management Perspective
3. Contemporary Management Perspectives

The Classical Management Perspective
A set of management theories that focus on increasing the efficiency of the organization as a whole

Focus on one best way to do it. Focuses on rational, scientific study of work situations to improve employee efficiency.

Frederick Taylor
The Father of Scientific Management

The Evolution of Management Theory
• The travel of a straight line is an absolute model of efficiency at its purest.
• The fastest way from point A to point B is a straight line.
• Scientifically, it is a proven fact.
• Mathematically, it is the shortest distance, therefore takes the less time.

• Four Principles of Scientific Management and increased efficiency

1. Study the ways jobs are performed now and determine new ways to do them.
• Gather detailed time and motion information.
• Try different methods to see which is best.
2. Codify the new methods into rules.
• Teach to all workers the new method.
3. Select workers whose skills match the rules.
4. Establish fair levels of performance and pay a premium for higher performance.

14 principles of Henry Fayol
• 1. Division of work: Division of work and specialization produces more and better work with the same effort.
2. Authority and responsibility: Authority is the right to give orders and the power to exact obedience. A manager has official authority because of her position, as well as personal authority based on individual personality, intelligence, and experience. Authority creates responsibility.
3. Discipline: Obedience and respect within an organization are absolutely essential. Good discipline requires managers to apply sanctions whenever violations become apparent.
• 4. Unity of command: An employee should receive orders from only one superior.
5. Unity of direction: Organizational activities must have one central authority and one plan of action.
6. Subordination of individual interest to general interest: The interests of one employee or group of employees are subordinate to the interests and goals of the organization. This is necessary to maintain unity and to avoid friction among the employees
• 7. Remuneration of personnel: Salaries - the price of services rendered by employees - should be fair and provide satisfaction both to the employee and employer.
8. Centralization: The objective of centralization is the best utilization of personnel. The degree of centralization varies according to the dynamics of each organization.
9. Scalar chain: A chain of authority exists from the highest organizational authority to the lowest ranks.
• 10. Order: Organizational order for materials and personnel is essential. The right materials and the right employees are necessary for each organizational function and activity.
11. Equity: In organizations, equity is a combination of kindliness and justice. Both equity and equality of treatment should be considered when dealing with employees.
12. Stability of tenure of personnel: To attain the maximum productivity of personnel, a stable work force is needed.
• 13. Initiative: Thinking out a plan and ensuring its success is an extremely strong motivator. Zeal, energy, and initiative are desired at all levels of the organizational ladder.
14. Esprit de corps: Teamwork is fundamentally important to an organization. Work teams and extensive face-to-face verbal com


External Environment
‘Major forces outside the organisation with potential to influence significantly the likely success of an organization

• Nature of organisational culture:
• ‘A system of shared values, assumptions, beliefs and norms uniting organisational members’
• ‘The way we do things around here.’
• The ‘glue’ binding the disparate parts (or the oil that keeps them moving).
• The interpretive part of organisational behaviour: it explains, gives direction, sustains energy, commitment, and cohesion.

• External environment is made up of:

• The mega-environment • The broad conditions and trends in societies in which an organisation operates.

• The task environment • Specific outside elements with which an organisation interfaces in the course of conducting its business.

• Five major elements:
• Technological element
• Current state of knowledge regarding production of products & services

• Economic element
• Systems of producing, distributing & consuming wealth

• Legal-political element
• Legal & governmental systems within which an organisation must function

• Sociocultural element
• Attitudes, values, norms, beliefs, behaviours & associated demographic trends characteristic of a given geographic area

• International element
• Developments in countries outside of an organisation’s home country with potential to influence the organisation


Five elements:
• Customers and clients
Individuals and organisations purchasing products/services
• Competitors
Other organisations offering (or with a high potential to offer) rival products/services
• Suppliers
Organisations and individuals supplying resources an organisation needs to conduct its operations
• Labour supply
Individuals potentially employable by an organisation
• Government agencies
Agencies providing services and monitoring compliance with laws and regulations at local, state or regional and national levels

• Commercial databases
• Specialty trade publications
• Local newspaper clippings
• Advertised vacancies
• Published market research
• Trade shows & product literature
• Personal contacts

Perspectives on environment:
• Population ecology model
Argues that environmental factors cause organisations to survive or fail

• Resource dependence model
Highlights the dependence of organisations on environment but attempts to manipulate the environment to reduce this dependence

Managers find both models useful:
• The population ecology model
shows that organisations have little control over environmental factors and that success may be based on luck.

• The resource dependence model shows that managers can influence environmental aspects, therefore they must monitor, understand and influence. They must realise that major organisational impacts can come from unexpected elements.

Environment characteristics:
• Uncertainty
Condition in which future environmental circumstances affecting an organisation cannot be accurately assessed and predicted
• Complexity
Number of elements in an organisation’s environment and their degree of similarity
• Dynamism
Rate and predictability of change in the elements of an organisation’s environment
• Bounty
Extent to which the environment can support sustained growth and stability


Three approaches to managing the environment:
• Adaptation
Involves changing internal operations & activities to make the organisation and its environment more compatible
• Favourability influence Involves trying to alter environmental elements to make them more compatible with the organisation’s needs
• Domain shifting
Changing product/service mix to create favourable interface
• Buffering
Stockpiling either inputs into, or outputs from, a production or service process to cope with environmental fluctuations
• Smoothing
Taking actions aimed at reducing the impact of fluctuations, given the market
• Forecasting
Predicting changing conditions & future events that significantly affect an organisation’s business
• Rationing
Providing limited access to a product or service in high demand
• Advertising & public relations
• Boundary spanning
• Recruiting
• Negotiating contracts
• Co-opting
• Strategic alliances
• Trade associations
• Political activity
• Move out of a current product, service or geographic area into a more favourable domain
• Expand current domains through diversification or expansion of products/services offered
Nature of organisational culture:
• ‘A system of shared values, assumptions, beliefs and norms uniting organisational members’
• ‘The way we do things around here.’
• The ‘glue’ binding the disparate parts (or the oil that keeps them moving).
• The interpretive part of organisational behaviour: it explains, gives direction, sustains energy, commitment, and cohesion.

Objects, acts, events or qualities serving as a vehicle for conveying meaning
• Stories
Narratives based on true events, which may be embellished to highlight intended value • Rites
Relatively elaborate, dramatic, planned sets of activities intended to convey cultural values to participants and, usually, an audience
• Ceremonials
Systems of rites performed in conjunction with a single occasion or event
• Strategic
Focused on identifying opportunities
• Committed to seizing opportunities
Willing to make major, fast changes
• Commitment of resources
Many stages with risk assessed for each stage
• Control of resources
Rental or outsourcing of resources for flexibility • Management structure
Few levels, with informal communication

Because they involve fairly stable values, beliefs and assumptions, organisations can be difficult to change.
An approach to changing culture:
• Surfacing actual norms
• Articulating new directions
• Establishing new norms
• Identifying culture gaps
• Closing culture gaps

• Crisis identification
• Communication of a new vision
• Motivation of key staff
to lead cultural change by implementing the new vision and its corresponding strategy


Decision: The choice made from available alternatives that is expected to lead to favorable solution to problem

Decision Making: The process of recognizing a problem, generating and weighing alternatives, coming to a decision, taking action and assessing the results.


- The Decision Makers
- Goals to be served
- Relevant Alternatives
- Order of the Alternatives
- Choice of alternative

Types of Problems:
- Crisis problem
- Non crisis problem
- Opportunity problem

Types of Decisions:
- Programmed Decisions
- Non programmed decisions

Conditions of Decision Making:
- Certainty
- Risk
- Uncertainty
- Ambiguity

Group Decision Making
Advantages and Disadvantages

Processes of making group decisions
• Brainstorming
• Nominal Group technique
• Delphi Group technique
Rational Decision Making Process

Step 1: Identify the problem
- Recognize the problem
- Defining the problem
- Diagnosis of problem

Step 2: Generate alternatives

Step 3: Evaluate Alternatives

Step 4: Make the Decision

Step 5: Implement the Decision

Step 6: Evaluate the results and provide feedback

Barriers to decision making: - Imperfect or incomplete information
- In accurate identification of problem or alternatives
- Biases