Administration

05 September 2010
05:41 PM

• The control of the enterprise is effected through Administration and Management.

• Administration consists of deciding determination of the goals and policies of the enterprise.
• The three main elements of administration are:
i. The formulation of goals
ii. The choice of ways and means
iii. The direction of the people in some group purpose
• The functions of administration are legislative and largely determinative
• Administration does not need technical ability (management does).
• It is not productive in character (management is).
• Administration coordinates finance, production and distribution.
• Administration is the master of industry. It relates to top level management. Person like
owners of the Board of Directors are in charge of it.

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Organisation
05 September 2010
05:44 PM

• Organisation is the frame work of management

• Organisation is the function of putting together the different parts of an enterprise into
working order.
• Organisation is a system, ie.e. it is a group of persons, and it is a structure of relationships
among the individuals workings towards a common goal.
• Organization is concerned with the building, developing and maintaining of a structure of
working relationships in order to accomplish the objectives of the enterprise.
• Organising is the determining, grouping and arranging of the various activities deemed
necessary for the attainment of the objectives,
i. the assigning of people to those activities
ii. The providing of suitable physical factors of environment, and
iii. The indicating of the relative authority delegated to each individual charged with
the execution of each respective activity.

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Management
12 August 2010
22:18

• Management may be labelled as the art of getting work done through people, with
satisfaction for employer, employees and the public.
• For getting work done (of an enterprise) through the efforts of other people, it is necessary to
guide, direct, coordinate and control human efforts towards the fulfillment of the goals of the
enterprise.
• The goals of the enterprise are fulfilled through the use of resources like money, men,
materials and machines (together called the 4Ms).
• Management may be called an Art as well as a Science:
i. Management has scientific basis because management science are susceptible to
measurement and factual determinataion.
ii. Management is an Art because management means coordinating and getting work
done through others.
• The main characteristics of Management is to integrate and apply the knowledge and
analytical approaches developed by numerous other disciplines.
• Management does not frame policies, it only implements/executes the policies laid down by
administration.
• The functions of management are executive and largely governing.
• There are different levels in management, i.e., top level and bottom level management.
• Management requires technical ability
• Management is productive in character.

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Importance of Management
05 September 2010
05:51 PM

1. It is management that guides and controls the activities of man-power for optimum utilisation
of company resources, such as men, materials, money, machines and methods.
2. Management tackles business problems and provides a tool for the best way of doing things.
3. Management coordinates activities of different departments in an enterprise and establishes
team-spirit among the persons.
4. Management provides stability to the enterprise by changing and modifying the resources in
accordance with the changing environment of the society.
5. Management helps personality development thereby raising efficiency and productivity.

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Characteristics of Management
05 September 2010
05:55 PM

1. Management works as a catalyst to produce goods using labour, materials and capital.
2. Management is goal oriented. It achieves goals through the coordination of the efforts of all
the personnel.
3. Management is a distinct process comprising of functions such as planning, organising, staff
directing and controlling.
4. Management represents a system of authority - a hierarchy of command and control
5. Management is a unifying force.
6. Management harmonises the individual's goals with the organisational goals to minimize
conflicts in the organisation.
7. Management is universal in nature as it is easily applied to all walks of life, be it business,
education, government, army, hospitals, etc.

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Managerial Skills
05 September 2010
05:59 PM

1. Technical Skills
2. Conceptual Skills
○ Decision making skills
○ Organisational skills
3. Human relation skills
○ Communication skills
○ Motivational skills
○ Leadership skills

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Technical Skills
05 September 2010
06:00 PM

• It refers to the proficiency in handling methods, processes, and techniques of a particular kind
of business.
• It is essential for a manager to know which technical skill should be employed in a particular
work.

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Conceptual Skills
05 September 2010
06:02 PM

• It is the ability to see the organisation as a whole, to recognise the inter-relationships among
different functions of the business and external forces and to guide effectively the
organisational efforts
• It is critical in to executive positions whereas technical skills is essential for lower-level
management
• It is easier to learn technical skills rather than conceptual skills.

Decision making skills

• It is the ability of a person to take timely and accurate decisions. This requires mental ability
and the presence of mind.

Organisational skills
• It helps select and fix different people at work. This means placing right people for the right
job

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Human Relation Skills
05 September 2010
06:05 PM

• Human relation skills refers to the ability to work effectively with others and build cooperative
work groups to achieve organisational goals.

Communication Skills
• Communication skill is the ability to pass on information to other. Improper, insufficient and
poorly expressed information can create confusion and annoy the subordinates.

Motivation Skills
• It inspires people to do what the manager wants them to do.
• The manager can use positive or negative motivation.
• Positive motivation methods include reward, praise, etc.
• Negative motivation includes punishment, reprimand, threat, etc.

Leadership Skills
• Enables a manager to lead the people working for under him.
• It is the ability to inspire confidence and trust in the subordinates in order to have maximum
cooperation from them for getting the work done.

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Frederick Winslow Taylor
06 September 2010
01:00 AM

• Frederick Winslow Taylor was an American mechanical engineer who sought to improve
industrial efficiency.
• He is regarded as the father of scientific management, and was one of the first management
consultants. Most of his studies revolved around observations made by him at Bethlehem
Steel, a steel-production company he worked for near the turn of the 19th century.
• Taylor believed that the industrial management of his day was amateurish, that management
could be formulated as an academic discipline, and that the best results would come from the
partnership between a trained and qualified management and a cooperative and innovative
workforce. Each side needed the other, and there was no need for trade unions.
• The term ‘scientific management’ was first used by Taylor in the title of his second
monograph, The Principles of Scientific Management.
• Taylor's approach is also often referred to, as Taylor's Principles, or frequently disparagingly,
as Taylorism.
• He went against the then-current practice by suggesting rest breaks for workers to recover
from fatigue. Taylor also stated that, unless everyone managed themselves perfectly,
someone was required to administer the workers. Hence, he advocated the segregation of the
workers and the managers.

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 Four Principles
06 September 2010
01:06 AM

• Taylor's scientific management consisted of four principles:

i. The traditional rule-of-thumb method of making decisions should be replaced by precise
procedures developed after careful study of an individual at work
ii. Scientifically select, train, and develop each employee rather than passively leaving
them to train themselves. Each employee should be taught the ‘one perfect way’ of
doing things.
iii. Provide "Detailed instruction and supervision of each worker in the performance of that
worker's discrete task".
iv. Divide work nearly equally between managers and workers, so that the managers apply
scientific management principles to planning the work and the workers actually perform
the tasks, and choosing the right person for the task.

• Some of the points noted by Taylor in his theory are:

i. Taylor noted that if employees were paid the same amount, they would tend to do the
amount of work the slowest amongst them is doing

ii. Believed workers have a vested interest in their own well-being, seeing no reason to
work above the defined rate of work

iii. Felt if best method of doing work was taught to workers, and incentives offered,
productivity would increase

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 Criticism
06 September 2010
01:08 AM

Although the provision of incentive for doing more work, fewer working hours and rest breaks
should have made his theory popular with the workers, the manner in which it was implemented
meant it was met with great resistance by many people.

• Taylor is highly criticised for looking down upon workers. He believed it is only
through enforced standardization of methods, enforced adoption of the best implements and
working conditions, and enforced cooperation that this faster work can be assured. And the duty of
enforcing the adoption of standards and enforcing this cooperation rests with management alone.

• Workers were supposed to be incapable of understanding what they were doing. According to Taylor
this was true even for rather simple tasks.

'I can say, without the slightest hesitation,' Taylor once told a congressional committee, 'that the
science of handling pig-iron is so great that the man who is physically able to handle pig-iron and is
sufficiently phlegmatic and stupid to choose this for his occupation is rarely able to comprehend the
science of handling pig-iron.'

• The introduction of his system was often resented by workers and provoked numerous strikes. A
strike even led to a congressional investigation in 1912.

• Taylor believed the labourer was worthy of his hire, and pay was linked to productivity. His workers
were able to earn substantially more than those in similar industries and this earned him enemies
among the owners of factories where scientific management was not in use.

• Taylor also used propaganda techniques to promote his theory. He said that with the triumph of
scientific management, unions would have nothing left to do, and they would have been cleansed of
their most evil feature: the restriction of output.

• To underscore this idea, Taylor fashioned the myth that 'there has never been a strike of men
working under scientific management', trying to give it credibility by constant repetition.

• In similar fashion he incessantly linked his proposals to shorter hours of work, without bothering to
produce evidence of "Taylorized" firms that reduced working hours.

• Taylor’s ideological message required the suppression of all evidence of worker's dissent, of
coercion, or of any human motives or aspirations other than those his vision of progress could
encompass.

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Contributions
06 September 2010
01:05 AM

The contributions and criticism of Taylor’s Scientific Management are summed up below.

• Scientific approach to business management and process improvement

• Importance of compensation for performance

• Began the careful study of tasks and jobs

• Importance of selection criteria by management

• Criticism:

• Did not appreciate the social context of work and higher needs of workers

• Did not acknowledge variance among individuals. One method of doing work may suit one
person, but may not be the best for another

• Tended to regard workers as uninformed and ignored their ideas and suggestions

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Henri Fayol
06 September 2010
01:10 AM

Modern Operational Management Theory

• Henri Fayol, a French mining engineer, director of mines and management theorist, released
the book ‘Administration Industrielle et Generale’ in 1916, only a few years after Frederick
Taylor published his Scientific Management theory. In the book he highlighted a ‘General
Theory of Management’ developed independent of Taylor’s Scientific Management Theory

• His theory proposed there are 6 primary functions of Management and 14 principles of
management.
a. 6 general purposes:

i. forecasting

ii. planning

iii. organizing

iv. commanding

v. coordinating

vi. Controlling

b. 14 Principles of Management:
i. Division of work. Specialisation increases output by making employees more
efficient.

ii. Authority. Managers must be able to give orders. Authority gives them this right.
Note that responsibility arises wherever authority is exercised.

iii. Discipline. Employees must obey and respect the rules that govern the
organisation. Good discipline is the result of effective leadership, a clear
understanding between management and workers regarding the organisation's
rules, and the judicious use of penalties for infractions of the rules.

iv. Unity of command. Every employee should receive orders from only one superior.

v. Unity of direction. Each group of organisational activities that have the same
objective should be directed by one manager using one plan.

vi. Subordination of individual interests to the general interest. The interests of any
one employee or group of employees should not take precedence over the
interests of the organisation as a whole.

vii. Remuneration. Workers must be paid a fair wage for their services.

viii. Centralisation. Centralisation refers to the degree to which subordinates are

involved in decision making. Whether decision making is centralised (to
management) or decentralised (to subordinates) is a question of proper
proportion. The task is to find the optimum degree of centralisation for each
situation.

ix. Scalar chain. The line of authority from top management to the lowest ranks
represents the scalar chain. Communications should follow this chain. However, if
following the chain creates delays, cross-communications can be allowed if agreed
to by all parties and superiors are kept informed.

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 to by all parties and superiors are kept informed.

x. Order. People and materials should be in the right place at the right time.

xi. Equity. Managers should be kind and fair to their subordinates.

xii. Stability of tenure of personnel. High employee turnover is inefficient.

Management should provide orderly personnel planning and ensure that
replacements are available to fill vacancies.

xiii. Initiative. Employees who are allowed to originate and carry out plans will exert
high levels of effort.

xiv. ‘Esprit de corps’. Promoting team spirit will build harmony and unity within the
organisation.

• Fayol's work has stood the test of time and has been shown to be relevant and appropriate to
contemporary management.

• Many of today’s management texts are organized around Fayol’s theory, and have reduced
the six functions to four:
i. planning
ii. organizing
iii. leading
iv. controlling

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Taylorism vs Fayolism
06 September 2010
01:13 AM

On the outlook, Taylorism and Fayolism seem similar, especially since both advocate the separation
of workers and the management. But both theories differ substantially when it comes to practice.

Henri Fayol himself best described the major difference between his theory and that of Frederick
Taylor. In the classic General and Industrial Management Fayol wrote that "Taylor's approach
differs from the one we have outlined in that he examines the firm from the "bottom up." He
starts with the most elemental units of activity -- the workers' actions -- then studies the effects of
their actions on productivity, devises new methods for making them more efficient, and applies
what he learns at lower levels to the hierarchy.”

In Taylor’s method, the separation of workers and management was such that there was no direct
link between the two. This meant that the workers had a number of bosses to report to and take
orders from. Fayol believed that this method was inefficient, and supported a direct chain system of
hierarchy where orders or information were passed on to the level immediately below or above. The
only instances when the chain was skipped was when doing so would save time and such an instance
had already been agreed upon in the past.

Also, Taylor looked upon workers as incapable of doing anything else other than the jobs assigned
to them, and gave them no scope to offer their opinions. Fayol disagreed, and wanted workers to
have some creative freedom also and respected their ability to give some valuable insight. Taylor’s
method also was a case of “every man for himself”, whereas Fayol’s method preached team-spirit.

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 George Elton John Mayo
06 September 2010
01:15 AM

Behavioural Sciences

• George Elton John Mayo was a Australian psychologist, sociologist, organization theorist, and
lecturer at a number of American Universities, including the Harvard School of Business.

• Mayo is known as the founder of the Human Relations movement. His book, The Human Problems
of an Industrialized Civilization, contained The Hawthorne Studies for which he is best known. The
research showed the importance of groups in affecting the behavior of individuals at work.
• It was not Mayo who conducted the practical experiments but his employees Roethlisberger and
Dickinson. This enabled him to make certain deductions about how managers should behave
• He carried out a number of investigations to look at ways of improving productivity, for example
changing lighting conditions in the workplace.
• What he found however was that work satisfaction depended to a large extent on the informal
social pattern of the work group. Where norms of cooperation and higher output were established
because of a feeling of importance, physical conditions or financial incentives had little motivational
value. People will form work groups and this can be used by management to benefit the
organization.
• He concluded that people's work performance is dependent on both social issues and job content.
He suggested a tension between workers' 'logic of sentiment' and managers' 'logic of cost and
efficiency' which could lead to conflict within organizations.

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 Relay Assembly Experiments
06 September 2010
01:17 AM

• The relay assembly experiments, conducted under Mayo, are the best examples of his theory.
Experimenters chose two women as test subjects and asked them to choose four other workers to
join the test group. Together the women worked in a separate room over the course of five years
(1927-1932) assembling telephone relays.

• Output was measured mechanically by counting how many finished relays each dropped down a
chute. This measuring began in secret two weeks before moving the women to an experiment room
and continued throughout the study.
• In the experiment room, they had a supervisor who discussed changes with them and at times used
their suggestions. Then the researchers spent five years measuring how different variables impacted
the group's and individuals' productivity. Some of the variables were:
a. changing the pay rules so that the group was paid for overall group production, not
individual production
b. giving two 5-minute breaks (after a discussion with them on the best length of time),
and then changing to two 10-minute breaks (not their preference). Productivity
increased, but when they received six 5-minute rests, they disliked it and reduced
output.
c. providing food during the breaks
d. shortening the day by 30 minutes (output went up); shortening it more (output per hour
went up, but overall output decreased); returning to the first condition (where output
peaked).

• Changing a variable usually increased productivity, even if the variable was just a change back to the
original condition. However it is said that this is the natural process of the human being to adapt to
the environment without knowing the objective of the experiment occurring.
• Researchers concluded that the workers worked harder because they thought that they were being
monitored individually.

• Researchers hypothesized that choosing one's own coworkers, working as a group, being treated as
special (as evidenced by working in a separate room), and having a sympathetic supervisor were the
real reasons for the productivity increase.
• One interpretation, mainly due to Elton Mayo, was that "the six individuals became a team and the
team gave itself wholeheartedly and spontaneously to cooperation in the experiment." (There was a
second relay assembly test room study whose results were not as significant as the first experiment.)

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 Summary of Mayo's Beliefs
06 September 2010
01:20 AM

Summary of Mayo's Beliefs:

• Individual workers cannot be treated in isolation, but must be seen as members of a group.
• Monetary incentives and good working condition are less important to the individual than the need
to belong to a group.
• Informal or unofficial groups formed at work have a strong influence on the behavior of those
workers in a group.
• Managers must be aware of these 'social needs' and cater for them to ensure that employees
collaborate with the official organization rather than work against it.

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