Principles of Management - Study Notes

Lesson summary

Management is part of daily life, goal oriented, and the art of getting things done with and through others. It helps achieve the organisational mission and is a global and universal concept.

1.01 Concept of management

1. Body of knowledge: a specialised body of theory and philosophy; the best passport to employment.
2. Management tools: accounting, business law, psychology, statistics, econometrics, data processing.
3. Separate discipline: taught in universities; since 1951 specialised schools offer master's degrees in business management and administration.
4. Specialisation: management by experts or professionals in each functional area.
5. Code of conduct: social responsibility to customers, employees and the public; 'seller beware' has replaced 'buyer beware'.
6. Professional association: business management associations spread knowledge and build a public image.

1.02 Definitions

• Henry Fayol: to manage is to forecast, to plan, to organise, to command, to co-ordinate and to control.
• Peter F. Drucker: a multipurpose organ with three jobs: managing a business, managing manager, managing workers and work.
• Louis A. Allen: definition of a professional manager who plans, organises, leads and controls the efforts of others using classified knowledge and a code of ethics.

Art or science

• An inexact science: its principles, tested where men, machines, money and materials (4 Ms) meet, cannot be exactly proved or disproved.
• Not an art in toto: skills vary from person to person; the art shows in decision making. A computer cannot replace a manager in decision making.
• Conclusion: a combination of both.

1.03 Management vs administration

Example: Board of Directors with CEO/MD = administration; managers of production, marketing, finance and other units = management. Administration is above management.

1.04 Management process

• Twin purposes: maximum productivity or profitability; maximum human welfare and satisfaction.
• Five parts: co-ordination of the 4 Ms; a process (planning, organising, staffing, directing, controlling); a purposive process; a social process; a cyclical process (planning-action-control-re-planning).

1.05 Taylor's scientific management

1. Science, not rule of thumb: rule of thumb is decision by personal judgment; even loading iron sheets into box cars can be planned scientifically.
2. Harmony, not discord: workers and management as one family; Japanese black badge example.
3. Mental revolution: complete change in attitude of both towards each other; share profits.
4. Cooperation, not individualism: extension of harmony, not discord; workers consulted in decisions.
5. Development of each person: scientific selection and training for efficiency and prosperity.

1.06 Fayol's 14 principles

Division of work; authority and responsibility; discipline; unity of command; unity of direction; subordination of individual interest to mutual interest; remuneration; degree of centralization; line of authority or scalar chain; order; equity; stability of tenure of personnel; initiative; esprit de corps or team spirit.

1.07 Span of management

• Number of subordinates a superior can manage efficiently.
• Wide span: fewer levels, flat structure, fewer managers, salary saved, subordinates feel free; but supervision becomes complex.
• Narrow span: more levels, tall structure, more managers and salary cost, communication suffers, poor coordination and control.