Principles of
Management
Introduction to Management
Learning Objectives
 Tell who managers are and where they work.
 Explain why managers are important to
organizations.
 Describe the functions of managers.
 Describe the roles of managers.
 Describe the skills required of managers.
 Be able to differentiate between a successful
manager and an effective manager.
 Explain the value of studying management.
 Rewards and challenges of being a manager
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2–2
Who Are Managers?
Managers
Individuals who achieve goals through other people.
Managerial Activities
• Make decisions
• Allocate resources
• Direct activities of others to
attain goals
What Do Managers Do?
• Managers
The people responsible for supervising the use of
an organization’s resources to meet its goals.
• Resources are organizational assets
People
Skills
Raw materials
Knowledge
Information
Machinery Financial capital
• Management
Coordinating and overseeing the work activities of
others so that their activities are completed
efficiently and effectively.
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Where Do Managers Work
Organization
A consciously coordinated social unit,
composed of two or more people, that
functions on a relatively continuous basis
to achieve a common goal or set of
goals.
Basically, it is where people
work together and coordinate
their actions to achieve specific
goals.
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Organizational Performance
• Organizational Performance
A measure of how efficiently and effectively
managers are using organizational resources to
satisfy customers and achieve goals.
• Efficiency
To do the things right!
A measure of how well or productively resources
are used to achieve a goal.
• Effectiveness
To get the right things done!
A measure of the appropriateness of the goals an
organization is pursuing and the degree to which
they are achieved.
1–6
Management Key Concepts
• Goal/objective
A desired future condition that the organization
seeks to achieve.
• Strategy
A cluster of decisions about what goals to pursue,
what actions to take, and how to use resources to
achieve goals.
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Efficiency, Effectiveness, and Performance in an Organization
Figure 1.1
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Describe the Manager’s
Functions, Roles, And Skills
• Studies conducted (Gallup poll) found out that
most managers admitted they had no earlier
managerial training nor ready to lead others
when they were given the role.
• Training in the Principles of Management will
therefore equip you to become a successful as
well as an effective manager.
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2–9
Managerial Functions
• Henri Fayol
First outlined the four managerial functions in his
book General Industrial Management.
Managers at all levels in all organizations perform
each of the functions of planning, organizing,
leading, and controlling.
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Functions of Management
Figure 1.2
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Planning
• Identifying and selecting appropriate goals and
courses of action for an organization.
The planning function determines how effective and efficient
the organization is and determines the strategy of the
organization.
A process that includes defining goals, establishing strategy,
and developing plans to coordinate activities.
• Three Steps in the Planning Process:
Deciding which goals to pursue.
Deciding what courses of action to adopt.
Deciding how to allocate resources.
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Organizing
• Structuring working relationships in a way that allows
organizational members to work together to achieve
organizational goals.
• Determining what tasks are to be done, who is to do
them, how the tasks are to be grouped, who reports to
whom, and where decisions are to be made
• Organizational Structure
A formal system of task and reporting relationships that
coordinates and motivates organizational members.
Creating organizational structure:
• Grouping employees into departments according to the tasks
performed.
• Laying out lines of authority and responsibility for
organizational members.
1–13
Leading
• Articulating a clear vision to follow, and
energizing and enabling organizational members
so they understand the part they play in attaining
organizational goals.
• A function that includes motivating employees,
directing others, selecting the most effective
communication channels, and resolving conflicts
Leadership involves using power, influence, vision,
persuasion, and communication skills.
The outcome of leadership is highly motivated and
committed organizational members.
1–14
Controlling
• Evaluating how well an organization is achieving its goals and
taking action to maintain or improve performance.
• Controlling
• Monitoring activities to ensure they are being accomplished as
planned and correcting any significant deviations.
 Monitoring individuals, departments, and the organization to determine
if desired performance standards have been reached.
 Taking action to increase performance as required.
 The outcome of control is the ability to measure performance accurately
and to regulate the organization for efficiency and effectiveness.
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Types of Managers
• Levels of Management
 First-line managers
• Responsible for day-to-day operations. Supervise people
performing activities required to make the good or service.
 Middle managers
• Supervise first-line managers. Are responsible to find the
best way to use departmental resources to achieve goals.
 Top managers
• Responsible for the performance of all departments and
have cross-departmental responsibility.
• Establish organizational goals and monitor middle
managers.
• Form top management team along with the CEO and COO.
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Mintzberg’s Managerial Roles
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Mintzberg’s Managerial Roles (cont’d)
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Mintzberg’s Managerial Roles (cont’d)
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Management Skills
Technical skills
The ability to apply specialized
knowledge or expertise.
Human skills
The ability to work with, understand,
and motivate other people, both
individually and in groups.
Conceptual Skills
The mental ability to analyze and
diagnose complex situations.
1–20
Management Skills
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2–21
Effective Versus Successful Managerial
Activities
Luthans and his associates studied more that 450
managers and found that all managers engage in
four managerial activities:
1. Traditional management (decision making, planning and
controlling)
2. Communication (exchanging routine information and processing paper
work)
3. Human resource management (motivating, disciplining,
staffing, training)
4. Networking (socializing, politicking,, interacting with outsiders)
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2–22
Effective Versus Successful Managerial
Activities
• Successful mangers here are defined in terms
of speed of promotion within their
organization.
• Effective managers here are defined in terms
of quantity and quality of their performance
and the satisfaction and commitment of
employees.
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2–23
Effective Versus Successful Managerial
Activities
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2–24
Changes Facing Managers
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2–25
Why Study Management
• Universality of Management
– The reality that management is needed
•
•
•
•
in all types and sizes of organizations
at all organizational levels
in all organizational areas
in all organizations, regardless of location
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2–26
Rewards and Challenges of Managers
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2–27
Summary
• Explain why managers are important to
organizations.
– Organizations need their managerial skills and abilities in
uncertain, complex, and chaotic times.
– Managers are critical to getting things done in organizations.
– Managers contribute to employee productivity and loyalty.
• Tell who managers are and where they work.
– Managers coordinate and oversee the work of other
people so that organizational goals can be
accomplished.
– Managers work in an organization, which is a
deliberate arrangement of people to
accomplish some specific purpose.
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2–28
Summary
• Describe the functions, roles, and skills of
managers.
– Management involves coordinating and overseeing the
efficient and effective completion of others’ work activities.
– The four functions of management include planning,
organizing, leading, and controlling.
– Mintzberg’s managerial roles include: interpersonal,
informational and decisional roles.
• Explain the value of studying management.
– The universality of management – managers are
needed in all types and sizes of organizations
– The reality of work – you will manage or be managed
– Significant rewards and challenges
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2–29
The Evolution of
Management Theory
Outline
• Scientific Management Theory
Job Specialization and the Division of Labor
F. W. Taylor and Scientific Management
The Gilbreths
• Administrative Management Theory
The Theory of Bureaucracy
Fayol’s Principles of Management
• Behavioral Management Theory
The Work of Mary Parker Follett
The Hawthorne Studies and Human Relations
Chapter Outline (cont’d)
• Behavioral Management Theory (cont’d)
Theory X and Theory Y
• Management Science Theory
• Organizational Environment Theory
The Open Systems View
Contingency Theory
The Evolution of Management Theory
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Scientific Management Theory
• Evolution of Modern Management
Began in the industrial revolution in the late 19th
century as:
• Managers of organizations began seeking ways to
better satisfy customer needs.
• Large-scale mechanized manufacturing began
supplanting small-scale craft production in the ways
in which goods were produced.
• Social problems developed in the large groups of
workers employed under the factory system.
• Managers began to focus on increasing the efficiency
of the worker-task mix.
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Job Specialization and
the Division of Labor
• Adam Smith (18th century economist)
Observed that firms manufactured pins in one of
two different ways:
• Craft-style—each worker did all steps.
• Production—each worker specialized in one step.
Realized that job specialization resulted in much
higher efficiency and productivity
• Breaking down the total job allowed for the division of
labor in which workers became very skilled at their
specific tasks.
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F.W. Taylor and Scientific Management
• Scientific Management
The systematic study of the relationships between
people and tasks for the purpose of redesigning the
work process for higher efficiency.
• Defined by Frederick Taylor in the late 1800’s to
replace informal rule of thumb knowledge.
• Taylor sought to reduce the time a worker spent on
each task by optimizing the way the task was done.
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Four Principles of Scientific Management
• Principles to increase 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.
• Workers should benefit from higher output
2–37
Problems with Scientific Management
• Managers frequently implemented only the
increased output side of Taylor’s plan.
Workers did not share in the increased output.
• Specialized jobs became very boring, dull.
Workers ended up distrusting the Scientific
Management method.
• Workers could purposely “under-perform.”
Management responded with increased use of
machines and conveyors belts.
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Frank and Lillian Gilbreth
• Refined Taylor’s work and made many
improvements to the methodologies of time
and motion studies.
Time and motion studies
• Breaking up each job action into its components.
• Finding better ways to perform the action.
• Reorganizing each job action to be more efficient.
• Also studied worker-related fatigue problems
caused by lighting, heating, and the design of
tools and machines.
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Administrative Management Theory
• Administrative Management
The study of how to create an organizational
structure that leads to high efficiency and
effectiveness.
• Max Weber
Developed the concept of bureaucracy as a formal
system of organization and administration designed
to ensure efficiency and effectiveness.
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Weber’s
Principles of
Bureaucracy
Figure 2.2
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Weber’s Five Principles of Bureaucracy
• Authority is the power to hold people
accountable for their actions.
• Positions in the firm should be held based on
performance, not social contacts.
• Position duties are clearly identified so that
people know what is expected of them.
• Lines of authority should be clearly identified
such that workers know who reports to who.
• Rules, standard operating procedures (SOPs),
and norms guide the firm’s operations.
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Fayol’s Principles of Management
• Division of Labor: allows for job specialization.
Fayol noted jobs can have too much specialization
leading to poor quality and worker dissatisfaction.
• Authority and Responsibility
Fayol included both formal and informal authority
resulting from special expertise.
• Unity of Command
Employees should have only one boss.
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Fayol’s Principles of Management (cont’d)
• Line of Authority
A clear chain of command from top to bottom of
the firm.
• Centralization
The degree to which authority rests at the top of
the organization.
• Unity of Direction
A single plan of action to guide the organization.
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Fayol’s Principles of Management (cont’d)
• Equity
The provision of justice and the fair and impartial
treatment of all employees.
• Order
The arrangement of employees where they will be
of the most value to the organization and to
provide career opportunities.
• Initiative
The fostering of creativity and innovation by
encouraging employees to act on their own.
2–45
Fayol’s Principles of Management (cont’d)
• Discipline
Obedient, applied, respectful employees are
necessary for the organization to function.
• Remuneration of Personnel
An equitable uniform payment system that
motivates contributes to organizational success.
• Stability of Tenure of Personnel
Long-term employment is important for the
development of skills that improve the
organization’s performance.
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Fayol’s Principles of Management (cont’d)
• Subordination of Individual Interest to the
Common Interest
The interest of the organization takes precedence
over that of the individual employee.
• Esprit de corps
Comradeship, shared enthusiasm foster devotion to
the common cause (organization).
2–47
Behavioral Management Theory
• Behavioral Management
The study of how managers should behave to
motivate employees and encourage them to
perform at high levels and be committed to the
achievement of organizational goals.
Focuses on the way a manager should personally
manage to motivate employees.
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The Hawthorne Studies
• Study of worker efficiency at the
Hawthorne Works of the Western
Electric Co. during 1924-1932.
 Worker
productivity was measured at
various levels of light illumination.
 Researchers found that regardless of
whether the light levels were raised or
lowered, productivity rose.
• Actually, it appears that the workers
enjoyed the attention they received as
part of the study and were more
productive.
Behavioral Management
• Mary Parker Follett
An influential leader in early managerial theory
Held a horizontal view of power and authority in
organizations
• Suggested workers help in analyzing their jobs for
improvements—the worker knows the best way to
improve the job.
• If workers have relevant knowledge of the task, then
they should control the task.
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Theory X and Theory Y
• Douglas McGregor proposed the two different
sets of assumptions about workers.
Theory X assumes the average worker is lazy,
dislikes work and will do as little as possible.
• Managers must closely supervise and control through
reward and punishment.
Theory Y assumes workers are not lazy, want to do
a good job and the job itself will determine if the
worker likes the work.
• Managers should allow workers greater latitude, and
create an organization to stimulate the workers.
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Theory X versus Theory Y
2–52
Theory Z
• William Ouchi researched the cultural
differences between Japan and USA.
 USA
culture emphasizes the individual, and
managers tend to feel workers follow the Theory X
model.
 Japan culture expects worker committed to the
organization first and thus behave differently than
USA workers.
• Theory Z combines parts of both the USA
and Japan structure.
 Managers
stress long-term employment, workgroup, and organizational focus.
Management Science Theory
• An approach to management that uses
rigorous quantitative techniques to maximize
the use of organizational resources.
Quantitative management—utilizes linear
programming, modeling, simulation systems.
Operations management—techniques to analyze
all aspects of the production system.
Total Quality Management (TQM)—focuses on
improving quality throughout an organization.
Management Information Systems (MIS)—
provides information about the organization.
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Organizational Environment Theory
• Organizational Environment
The set of forces and conditions that operate
beyond an organization’s boundaries but affect a
manager’s ability to acquire and utilize resources.
• . Considers relationships inside and
outside the organization.
 The
environment consists of forces,
conditions, and influences outside the
organization.
2–55
Organizational Environment Theory (cont’d)
•Systems theory considers the
impact of stages:
Input: acquire external resources.
Conversion: inputs are processed
into goods and services.
Output: finished goods are
released into the environment.
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The Open-Systems View
• Open System
A system that takes resources for its external
environment and converts them into goods and
services that are then sent back to that
environment for purchase by customers.
Inputs: the acquisition of external resources.
Conversion: the processing of inputs into goods and
services.
Output: the release of finished goods into the
environment.
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The Organization as an Open System
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Other System Considerations
• Closed system
A system that is self-contained and thus not
affected by changes occurring in its external
environment.
Often undergoes entropy and loses its ability to
control itself, and fails.
• Synergy
Performance that results when individuals and
departments coordinate their actions
• Performance gains of the whole surpass the sum of
the performance of the individual components.
2–59
Management science theory
A contemporary approach to management that
focuses on the use of rigorous quantitative
techniques to help managers make maximum
use of organizational resources to produce
goods and services.
• Quantitative management
• Operations management
• Total quality management
• Management information systems
2–60
Management science theory
1. Quantitative management uses
mathematical techniques such as linear and
nonlinear programming, modeling,
simulation, queuing theory, etc.
2. Operations management gives managers a
set of techniques they can use to analyze
any aspect of an organizations production
system to increase efficiency.
Management science theory
3. Total quality management focuses on
analyzing and organizations input, conversion,
and output activities to increase product quality.
4. Management information systems give
managers information about events for
occurring inside the organization as well as its
external environment which is information for
effective decision-making.
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Contingency Theory
• Contingency Theory
The idea that the organizational structures and
control systems manager choose depend on—are
contingent on—characteristics of the external
environment in which the organization operates.
Assumes there is no one best way to manage.
• The environment impacts the firm and managers
must be flexible to react to environmental changes.
In rapidly changing organizational environments,
managers must find ways to coordinate different
departments to respond quickly and effectively.
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Contingency Theory of Organizational Design
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