NATURE AND CONCEPT OF

MANAGEMENT

Department of Agricultural
Economics and Agribusiness
Management
 INTRODUCTION
Management Defined
 The process of planning,
organizing,
staffing, leading, and controlling the
work of organization members and of using
all available resources to reach stated goals
 An art of knowing what to do, when to do and
see that it is done in the best and cheapest
way (F.W. Taylor)
Organization
 Group of people working together
 To achieve specific goal or set of goals.

Goal
 The purpose that an organization strives to
achieve.
• Good management includes both being
effective (doing the right thing) and
efficient (doing things right).
Other Definitions of Management

Management as a Process
 A series of inter - related functions
 A distinct process consisting of:
planning,
organizing,
actuating and
controlling,
performed to accomplish objective by the
use of resources (George R. Terry).
Three aspects:

1. Management is a social process

 Human factor is most important among the
other factors
2. Management is an integrating process
 Bringing together human, physical and
financial resources
3. Management is a continuous process
Management as an Activity
 Management is what a manager does
(Koontz).
1. Informational activities
2. Decisional activities
3. Inter-personal activities
 Managers have to interact with superiors as
well as the subordinates.
 Management as a Discipline
 Involved study of principles and practices of
basic administration.
 Specifies certain code of conduct to be
followed by the manager and also various
methods for managing resources efficiently.
Management as a Group

 Refers to all those persons who perform the

task of managing an enterprise.
 Include all managers from chief executive to
the first-line managers.
Management as a Science
 Involves seeking new knowledge thru the use
of systematic and rigorous methods of
collecting data, classifying and measuring
them, setting up hypothesis and testing the
results.
 Characterized by following main
features:
1. Universally accepted principles
 Principle of Unity of Command i.e. one man,
one boss.
2. Experimentation and Observation
 E.g. fair remuneration to personnel helps in
creating a satisfied work force.
 3. Cause and Effect Relationship
 E.g. bonus and fair wages –
satisfied/productive work force
4. Test of Validity and Predictability
 E.g. principle of unity of command can be
tested by comparing two persons - one
having single boss and one having 2 bosses.
The performance of first person will be better
than second.
 Management as an Art
 The application of skills and knowledge and
accomplishing an end through deliberate
efforts.
 Management is the art of getting things done
through people.
 Art has the following characteristic:
1. Practical Knowledge
 Ability to know how to apply various
principles in real situations by functioning in
capacity of manager.
2. Personal Skill
 Management as an art is personalized.
 Every manager has his own way of managing
things based on his knowledge, experience
and personality.
3. Creativity
4. Perfection through practice
 An art of trial and error
5. Goal-Oriented
 Management is directed towards
accomplishment of goals
 Management as a Profession
 A profession may be defined as an
occupation that requires specialized
knowledge and intensive academic
preparations to which entry is regulated by a
representative body.
 The essentials of a profession
are:
1. Specialized Knowledge
2. Formal Education and Training
3. Social Obligations
4. Code of Conduct
5. Representative Association
Importance of Management

1. Helps in Achieving Group Goals

 Arranges the factors of production (men,
machines, money etc.), assembles and
organizes the resources, integrates the
resources in effective manner to achieve
goals.
2. Optimum Utilization of Resources
 Management utilizes all the physical and
human resources productively.
 If employees and machines are producing its
maximum there is no under employment of
any resources.
3. Reduces Costs
 Management uses physical, human and
financial resources in such a manner which
results in best combination.
 Helps in cost reduction.
4. Establishes Sound Organization
 Establishing of effective authority and
responsibility relationship.
5. Establishes Equilibrium
 Enables the organization to survive in
changing environment.
 Adapts organization to changing demand of
market / changing needs of societies.
6. Essentials for Prosperity of Society
 Efficient management leads to better
economical production which helps in turn to
increase the welfare of people.
Levels of Management

 Refers to a line of demarcation between

various managerial positions in an
organization.
 The number of levels in management
increases when the size of the business and
work force increases and vice versa.
Figure 1. Levels of management
 Levels of Management
1. Top Level of Management
 Consists of board of directors, chief executive
officer,managing director.
 The ultimate source of authority and it
manages goals and policies for an enterprise.
 Devotes more time on planning and
coordinating functions.
 Controls and coordinates the activities of all
the departments.
2. Middle Level of Management
 Includes the branch managers and
departmental managers.
 Responsible to the top management for the
functioning of their department.
 Execute the plans in accordance with the
policies and directives of the top management.
 Responsible for inspiring lower level managers
3. Lower Level of Management
 aka supervisory / operative level of
management.
 Consists of supervisors, foreman, section
officers, superintendent etc.
 Assigning of jobs and tasks to various
workers.
 Prepare periodical reports
 Motivate workers.
Evolution of Management Theories

a. The Classical Approach

 The oldest formal approach of management
thought.
 Generally concerns ways to manage work
and organizations more efficiently.
 Three areas of study.
1. Scientific Management (1880s)
 Frederick Winslow Taylor - the "father of
scientific management."
 aka Taylorism or the Taylor system

 Analyzes and synthesizes workflows, with the

objective of improving labor productivity.

 Traditional rules of thumb are replaced by

precise procedures developed after careful
study of an individual at work.
2. Administrative Management (1940s)
 Focuses on the management process and
principles of management.
 Provides a more general theory of
management.
 Henri Fayol - the major contributor.
3. Bureaucratic Management (1920s)
 Focuses on the ideal form of organization.
 Max Weber - the major contributor.
 Based on observation, he concluded that
many early organizations were inefficiently
managed, with decisions based on personal
relationships and loyalty.
 Proposed that a form of organization, called a
bureaucracy, characterized by division of
labor, hierarchy, formalized rules,
impersonality, and the selection and
promotion of employees based on ability,
would lead to more efficient management.
 Authority is based on the position held by
managers in the organizational hierarchy.
Evolution of Management Theories

b. The Behavioral Approach

 Focused on trying to understand the factors
that affect human behavior at work.

1. Human Relations (1930s)

 The Hawthorne Experiments (1924 - 1930s)
 Major conclusions of the study:
1. Workers' attitudes are associated with
productivity
2. Workplace is a social system and informal
group influence could exert a powerful effect
on individual behaviour.
3. Style of supervision is an important factor in
increasing workers' job satisfaction.
2. Behavioral Science (1950s)
 Progression of the human relations
movement.
 Contributed to the study of management
through its focus on personality, attitudes,
values, motivation, group behavior,
leadership, communication, and conflict,
among other issues.
c. The Quantitative Approach
 Focuses on improving decision making via
the application of quantitative techniques.
 Its roots can be traced back to scientific
management.

1. Management Science (Operations

Research) (1940s)
 Uses mathematical and statistical
approaches to solve management problems.
 Developed during World War II as strategists
tried to apply scientific knowledge and
methods to the complex problems of war.

2. Production and Operations Management

(1940s)
 Focuses on the operation and control of the
production process that transforms resources
into finished goods and services.
 OM emphasizes productivity and quality of both
manufacturing and service organizations.
 W. Edwards Deming - the major contributor.
 Major areas of study:
capacity planning,
facilities location,
facilities layout,
scheduling,
purchasing and inventory control,
quality control,
d. Systems Approach (1950s)
 Focuses on understanding the organization
as an open system that transforms inputs into
outputs.
 Focuses on the organization as a whole, its
interaction with the environment, and its need
to achieve equilibrium.
Figure 2. Diagram of the systems approach
e. Contingency Approach (1960s)
 Emphasizes that there is no one best way to
manage and that it depends on various
situational factors, such as the external
environment, technology, organizational
characteristics, characteristics of the
manager, and characteristics of the
subordinates.
THE MANAGER AND
HIS VALUES
Manager Defined
 A person who has responsibility
for the activities of other people
in an organization (Rodriguez, 2001).
 People responsible for directing the efforts
aimed at helping organizations achieve
their goals.
SKILLS VS. ROLES
Skills of a Manager
a. Technical skill
The knowledge of and proficiency in
activities involving methods, procedures,
and processes.
b. Human/Interpersonal skill
The ability to work with people; it is
cooperative effort.
  People are the most important assets of
an organization.
 Therefore, they should be treated with
dignity.
c. Conceptual skill
The ability to see the over-all picture, to
identify important elements in a situation
and to understand the relationship among
the elements.
d. Design skill
The ability to solve problems in different
ways that will benefit the organization.
 A manager who can prevent problems
from taking place is much better than
the one who can solve problems.
Roles of a Manager
 According to Henry Mintzberg.
a. Interpersonal Roles
 Involve dealing with people and other
ceremonial duties.
1. Figurehead role
 Role assumed by managers when they
represent their respective units in the
outside world in ceremonial and civic
activities.
2. Leadership role
Role played by managers when they
initiate and coordinate activities in their
units.
3. Liaison role
Needed by unit heads when they interact
with persons in other units within and
outside the organization.
b. Informational Roles
 Related to collecting, receiving, and
disseminating information.
1. Monitor role
 Personally seek and receive information,
to be able to understand the organization.
2. Disseminator role
Since information flowing from various
sources converges in managerial
positions, managers tend to have a key
role in transmitting and disseminating such
information to other parts of the
organization.
3. Spokesperson role
The managers’ leadership positions in the
organization require them to represent and
speak for their units’ vis-à-vis other units of
the organization and outsiders.
c. Decisional Roles
 Roles that revolve around making
choices.
1. Entrepreneurial role
 Managers play a key role in the
identification of new opportunities and the
 development of these into new products,
services, methods or activities within their
organizations.
2. Problem solver
Managers are called upon to identify
solutions and to take action to overcome
the continuous stream of problems which
crop in the day to day operation of the
institution.
3. Resource allocator
Involves distribution of funds, personnel,
materials and other organizational
resources among competing uses in the
organization.
4. Negotiator
Since managers are often dependent on
other persons, both within and outside the
organization, over whom they exercise no
authority (e.g. suppliers, customers,
unions, government, etc.), managers are
frequently involved in negotiation activities
which have a key impact on the
performance of their units.
Management Principles
Henri Fayol
The “father of the modern management
theory.”
1. Division of labor
 Specialization in the use of labor result to
efficiency and productivity.
 Applicable to all work including technical
applications.
2. Parity of authority and responsibility
Right to give order – authority
Obligation to accomplish – responsibility
 Authority without responsibility leads to
irresponsible behavior whereas
responsibility without authority makes
the person ineffective.
 Authority creates responsibility.
3. Discipline
Members of an organization need to
respect and obey the rules and regulations
that govern the organization.
 Good discipline requires managers to
apply sanctions whenever violations
become apparent.
4. Unity of command
Subordinates should receive orders from
one superior only to avoid any possible
confusion and conflict.
 Fayol believed that if an employee is
responsible to more than one boss,
conflicting instructions and confusion
would result.
5. Unity of direction
All members of an organization must work
together to accomplish common
objectives.
6. Subordination of individual interest to
the common good
The interest of employees should not take
precedence over the interest of the
organization as a whole.
 Also called principle of co-operation.
 Each shall work for all and all for each.
General or common interest must be
supreme in any joint enterprise.
7. Remuneration
Method of payment should be fair.
It should afford the maximum satisfaction
to employees and employer.
 Fair pay with non-financial rewards can
act as the best incentive or motivator for
good performance.
 Exploitation of employees in any
manner must be eliminated.
 Sound scheme of remuneration
includes adequate financial and
nonfinancial incentives.
8. Centralization and decentralization
The extent to which authority is
concentrated.
Centralization means concentration of
authority at the top level.
Decentralization means disposal of
decision making authority to all the levels
of the organization
  He believed that managers should
retain final responsibility but that they
also need to give their subordinates
enough authority to their jobs properly.
9. Scalar chain
The “chain of superiors” from the highest
to the lowest ranks.
10. Order
Concerned with proper & systematic
arrangement of things and people.
 Arrangement of things is called ‘material
order’ and placement of people is called
‘social order.’
Material order
There should be safe, appropriate and
specific place for every article and every
place to be effectively used for specific
activity and commodity.
Social order
Selection and appointment of most
suitable person on the suitable job.
 There should be a specific place for
everyone and everyone should have a
specific place so that they can easily be
contacted whenever need arises.
11. Equity
Loyalty and commitment should be elicited
from personnel by a combination of
kindness and justice on the part of the
managers when dealing with subordinates.
 Equity does not mean total absence of
harshness.
 Fayol pointed out that, “at times force
and harshness might become
necessary for the sake of equity.”
12. Stability of tenure
Fayol pointed out the unnecessary
turnover to be both the cause of poor
management and stressed its dangers and
costs.
In order to attain the maximum productivity
of personnel, it is essential to maintain a
stable work force.
According to Fayol, “Time is required for
an employee to get used to a new work
and succeed to doing it well but if he is
removed before that he will not be able to
render worthwhile services.”
13. Initiative
The eagerness to initiate actions without
being asked to do so.
 Fayol advised that management should
provide opportunity to its employees to
suggest ideas, experiences and new
method of work.
  Fayol exhorts managers to sacrifice
“personal vanity” in order to permit
subordinates to exercise it.
14. Esprit de corps
The principle that “in union, there is
strength.”
 This is in effect of unity of command
which emphasizes the need for
teamwork (i.e. harmony in the work
groups and mutual understanding
among the members) and the
importance of communication
(extensive face-to-face verbal
communication) in obtaining it.
End of this Chapter!!!
End of this Chapter!!!