Principles of Management - Unit 1: Nature of Management
UNIT 1: NATURE OF MANAGEMENT
Lecture Hours: 10
Topics Covered in this Unit:
•
•
•
•
Organization: Concept, types, organizational goals and features
Management: Definition, characteristics, functions, principles
Managerial Hierarchy, Skills and Roles
Evolution of Management Thought: Classical and Modern Theories
1. ORGANIZATION
1.1 Concept of Organization
An organization is simply a group of people who work together to achieve some common
goals. When people come together to do something, an organization is formed. For example,
a family is an organization where members work together, a school is an organization where
teachers and students work together for education, a factory is an organization where workers
produce goods together.
Organizations can be formed for different purposes like doing business, providing services,
religious activities, or social work. What makes an organization is that people join hands to
complete tasks that would be difficult for one person to do alone.
1.2 Definition of Organization
According to Keith Davis: "Organization may be defined as a group of individuals, large or
small, that is operating under the direction of executive leadership in accomplishment of
certain common object."
Key Elements of an Organization:
•
•
•
•
A group of people working together
Some predetermined goals that they want to achieve
Leadership to guide the group
Group members perform different activities to reach goals
1.3 Types of Organization
A. Based on Purpose:
Type
Description
Examples
Business
Organization
Formed to earn profit by
providing products or services
to customers
Surya Nepal, Buddha Airways,
local shops and factories
Government
Organization
Established by government to
provide essential services to
citizens
District Education Office,
Public Health Office, Nepal
Khanepani
Service
Organization
Provide services rather than
physical goods; can be private
or government
Schools, hospitals, barbers,
beauty parlors, film halls
Page 1 of 11
Principles of Management - Unit 1: Nature of Management
Type
Description
Examples
Professional
Organization
Formed by people in same
profession to protect their rights
and interests
Medical Association, Bar
Association, Engineering
Council
International
Organization
Formed by two or more
countries for mutual benefits
WHO, UN, SAARC, EU, FAO
Table 1: Types of Organization Based on Purpose
B. Based on Investment:
•
•
•
Private Organization: Owned by individuals or groups. Examples: sole trading,
partnership, joint stock company, cooperative
Government Organization: Owned and operated by government. Examples:
government offices, public enterprises
Semi-Government Organization: Both government and private investment together
1.4 Organizational Goals
Organizational goals are the targets that an organization wants to achieve. They give direction
to all the employees about what they need to do. Goals tell everyone in the company what
results are expected from them. For example, a company might set a goal to sell 1000
products in a month or to open 5 new branches in a year.
Goals help managers make decisions and guide employees in their daily work. When
everyone knows what the goals are, they can work together more effectively.
Features of Good Organizational Goals (SMART):
Feature
What it Means
Specific
The goal should be clear and exact. Everyone should understand
exactly what needs to be done. For example, "increase sales by
20%" is specific, but "do better" is not.
Measurable
You should be able to measure progress. This could be in terms of
numbers, time, money, or quality. This way you can track if you
are reaching the goal.
Acceptable
Goals should be agreed upon by both managers and employees.
When employees help set the goals, they feel more committed to
achieving them.
Realistic
Goals should be achievable with the available resources. Setting
impossible goals will only frustrate employees and reduce
motivation.
Time-bound
Every goal needs a deadline. Without a time limit, work keeps
getting delayed. A clear time frame creates urgency and helps in
planning.
Table 2: SMART Features of Organizational Goals
2. MANAGEMENT
Page 2 of 11
Principles of Management - Unit 1: Nature of Management
2.1 Concept of Management
We all know that resources are limited but human wants are unlimited. We need to use our
limited resources properly to satisfy as many needs as possible. This is where management
comes in. Management is the process of getting things done through other people. It involves
planning what to do, organizing resources, directing people, and controlling the work to make
sure goals are achieved.
Simply put, management is about making the best use of available resources (people, money,
machines, materials) to achieve organizational goals efficiently and effectively. A successful
manager is someone who can do this well.
2.2 Definitions of Management
Koontz and O'Donnell: "Management is the art of getting things done through and with
people in formally organized groups."
What this means: Management is an art that can be improved with practice. The
manager's job is to get work done through other people, not by doing everything alone.
Ricky W. Griffin: "Management is the set of activities (including planning, decision making,
organizing, leading and controlling) directed at an organization's resources (human, financial,
physical and information) with the aim of achieving organizational goals in an efficient and
effective manner."
What this means: Management involves many activities like planning, organizing, leading
and controlling. All these activities focus on using organizational resources to reach goals
in the best possible way.
2.3 Characteristics of Management
Management has several important characteristics that define what it is:
Characteristic
Explanation
Goal-Oriented
Management always works towards achieving specific goals. All
plans and activities are done to reach these targets. Without goals,
management has no purpose.
Universal
Management is needed everywhere - in schools, hospitals,
businesses, offices, NGOs, and even at home. Wherever people
work together, management is required.
Continuous Process
Management never stops. After one task is completed, another one
begins. Managers must keep planning, checking, and improving all
the time.
Group Activity
Management involves working with people, not alone. It brings
employees together to work as a team. Big tasks cannot be done by
one person.
Dynamic
Management changes according to situations. If technology,
market, or customer needs change, management must also change
its plans and methods.
Page 3 of 11
Principles of Management - Unit 1: Nature of Management
Characteristic
Explanation
Situational
Approach
There is no one best way to manage. The best approach depends on
the specific situation. Different circumstances require different
management methods.
Multi-Disciplinary
Management uses ideas from many subjects like economics,
psychology, sociology, and mathematics. This helps managers
understand people and solve problems better.
Decision-Making
Managers make many decisions every day - what to do, how to do
it, when to do it, and who will do it. Good decisions lead to smooth
operations.
Integrative Force
Management brings together people, money, machines, and
materials so they all work together properly. It connects different
departments toward common goals.
Intangible
Management cannot be seen or touched, but we can see its results.
Good management shows in smooth work and happy employees;
bad management shows in confusion.
Social Process
Management deals with people, so it must understand human
behavior. Managers motivate workers, solve conflicts, and
maintain good relationships.
Table 3: Characteristics of Management
2.4 Functions of Management
Management has five main functions that managers perform:
1. Planning
Planning is the most basic function of management. It means deciding in advance what to do,
how to do it, when to do it, and who will do it. Planning is like making a roadmap before
starting a journey. Without planning, other functions cannot work properly. Planning helps
avoid confusion, waste, and risks.
2. Organizing
Organizing means arranging resources and activities to carry out the plans. It involves
identifying what tasks need to be done, grouping similar tasks together, assigning tasks to
people, and giving them the authority they need to do their jobs. Good organizing ensures
everyone knows their role and responsibility.
3. Staffing
Staffing is about getting the right people for the right jobs. It includes activities like:
determining how many employees are needed, recruiting and selecting candidates, training
them, evaluating their performance, and deciding on promotions and transfers. The goal is to
have capable people in every position.
4. Directing
Directing means guiding and supervising employees to do their work. It includes:
•
•
Supervision: Watching over employees to make sure work is done correctly
Motivation: Encouraging employees to work hard and achieve goals
Page 4 of 11
Principles of Management - Unit 1: Nature of Management
•
•
•
Leadership: Influencing employees to work willingly toward organizational goals
Communication: Sharing information clearly between managers and employees
Coordination: Making sure all departments work together smoothly
5. Controlling
Controlling means checking if actual work matches the planned work. It involves setting
standards, measuring actual performance, comparing the two, and taking corrective action if
there are problems. This ensures that goals are achieved as planned.
2.5 Principles of Management (Henry Fayol's 14 Principles)
Henry Fayol, a French mining engineer, gave 14 principles of management that are still
useful today:
No.
Principle and Explanation
1
Division of Work: Work should be divided into smaller tasks and each task
should be given to a specialist. When people focus on one type of work, they
become more skilled and efficient.
2
Authority and Responsibility: Authority (power to give orders) and
responsibility (accountability for results) must go together. A manager needs
both to be effective.
3
Discipline: Employees must follow the rules and respect authority. Good
discipline comes from good leadership and fair rules for everyone.
4
Unity of Command: Each employee should receive orders from only one
boss. If an employee has two or more bosses, it creates confusion and conflict.
5
Unity of Direction: All employees working on the same goal should have one
plan and one leader. This keeps everyone focused and organized.
6
Subordination of Individual Interest: The organization's interests should
come before individual interests. Everyone should work for the common good,
not just personal benefit.
7
Remuneration: Employees should be paid fairly for their work. Fair wages
keep employees motivated and loyal to the organization.
8
Centralization: Decision-making power should be kept at the top level, but
there should be a balance. Too much centralization slows things down.
9
Scalar Chain: There should be a clear chain of command from top to bottom.
Communication should normally follow this chain, except in emergencies.
10
Order: Everything should be in its proper place - both people and materials.
The right person should be in the right job. This saves time and increases
efficiency.
11
Equity: All employees should be treated fairly and with kindness. Managers
should not discriminate. Fair treatment leads to loyalty and better performance.
12
Stability of Tenure: Employees should not be transferred or fired too often.
Job security helps employees work confidently and productively.
Page 5 of 11
Principles of Management - Unit 1: Nature of Management
No.
Principle and Explanation
13
Initiative: Employees should be allowed to suggest new ideas and take actions
on their own. This makes them feel valued and increases innovation.
14
Esprit de Corps: This means team spirit. Managers should promote unity and
cooperation among employees. A united team is a strong team.
Table 4: Fayol's 14 Principles of Management
Additional Principles:
•
•
Span of Control: One manager should supervise only a limited number of
employees. Too many subordinates make supervision difficult.
Management by Exception: Managers should focus on important and exceptional
issues, not routine matters. Routine work should be handled by subordinates.
3. MANAGERIAL HIERARCHY, SKILLS AND ROLES
3.1 Managerial Hierarchy
In most organizations, managers are arranged in three levels. Each level has different
responsibilities and authority:
Level
Positions
Main Functions
Top Level
Management
Board of Directors, Chairman,
CEO, Managing Director,
General Manager
Set overall goals, make strategic
plans, appoint department
heads, represent company
externally
Middle Level
Management
Department Heads: HR
Manager, Marketing Manager,
Finance Manager, Production
Manager
Implement top-level plans,
coordinate between top and
lower levels, train employees,
report progress
Lower Level
Management
Supervisors, Foremen, Sales
Officers, Team Leaders
Directly supervise workers,
assign daily tasks, maintain
discipline, report to middle
level
Table 5: Three Levels of Management
3.2 Managerial Skills (Robert L. Katz)
Robert Katz identified three types of skills that managers need:
Skill Type
What it Means
Most Important At
Technical Skills
The ability to use specific knowledge,
methods, and tools to perform a particular
job. For example, an accountant needs
knowledge of accounting software and tax
rules.
Lower Level
Human Skills
The ability to work well with other people.
This includes communicating clearly,
All Levels
Page 6 of 11
Principles of Management - Unit 1: Nature of Management
Skill Type
What it Means
Most Important At
motivating others, resolving conflicts, and
building good relationships.
Conceptual Skills
The ability to see the organization as a
whole and understand how different parts
affect each other. This helps in making big
decisions and solving complex problems.
Top Level
Table 6: Three Types of Managerial Skills
3.3 Managerial Roles (Henry Mintzberg)
Henry Mintzberg studied what managers actually do and identified 10 roles divided into 3
categories:
Category
Interpersonal Roles
Informational
Roles
Decisional Roles
Role
What the Manager Does
Figurehead
Performs ceremonial duties like greeting
visitors, attending functions
Leader
Directs, motivates, and guides employees
to achieve goals
Liaison
Maintains contacts with people outside the
organization
Monitor
Gathers information about the organization
and external environment
Disseminator
Shares information with employees within
the organization
Spokesperson
Represents the organization to outsiders,
shares official information
Entrepreneur
Initiates new projects, takes risks for
improvement and innovation
Disturbance Handler
Takes action when problems or crises arise
in the organization
Resource Allocator
Decides how resources (money, people,
time) will be distributed
Negotiator
Bargains with other parties to gain
advantages for the organization
Table 7: Mintzberg's 10 Managerial Roles
4. EVOLUTION OF MANAGEMENT THOUGHT
Management has been practiced for thousands of years, but it became a formal field of study
after the Industrial Revolution. Different theories developed over time to explain how
organizations should be managed. These theories are divided into Classical (older) and
Modern (newer) theories.
Page 7 of 11
Principles of Management - Unit 1: Nature of Management
4.1 Classical Theories
Classical theories focus on efficiency and finding the "one best way" to manage. There are
three main classical theories:
A. Scientific Management Theory (F.W. Taylor)
Frederick Winslow Taylor is called the "Father of Scientific Management." He worked in a
steel company and noticed that workers were not working efficiently. He believed there was a
scientific way to do every job.
Main Idea: Replace the old "rule of thumb" (guesswork) methods with scientific methods
based on study and measurement. The goal was to increase worker productivity.
Contributions:
• Increased production through better planning and tools
• Reduced costs and increased profits
• Improved worker efficiency through training
• Changed attitude of both employers and employees
Limitations:
• Too much focus on technical aspects, ignored human side
• Treated workers like machines
• Workers had to do the same boring task repeatedly
• Ignored social needs of workers
B. Administrative Management Theory (Henry Fayol)
Henry Fayol was a French mining engineer who focused on the management of the entire
organization, not just the workers. He gave 14 principles of management and identified the
main functions of management.
Main Idea: Management is a skill that can be taught. There are universal principles that
apply to all organizations. He focused on what managers should do (planning, organizing,
commanding, coordinating, controlling).
Contributions:
• Gave universal principles applicable to all organizations
• Identified main functions of management
• Made management a separate field of study
Limitations:
• Ignored human and behavioral aspects
• Did not consider different situations
• Based only on personal experience
C. Bureaucratic Management Theory (Max Weber)
Max Weber was a German sociologist who described bureaucracy as an ideal form of
organization. He believed organizations should run on rules, not personal preferences.
Main Idea: Organizations should have clear rules and procedures, a hierarchy of authority,
division of work, and promotion based on merit (ability), not favoritism.
Contributions:
• Promotes efficiency through clear rules and hierarchy
• Provides stability and order
• Ensures fairness through objective criteria
• Increases accountability through documentation
Page 8 of 11
Principles of Management - Unit 1: Nature of Management
Limitations:
• Too rigid - hard to adapt to changes
• Resistant to new ideas
• Too much paperwork (red tape) causes delays
• Reduces creativity and flexibility
4.2 Modern Theories
Modern theories recognize that managing people is more complex than classical theories
thought. They consider human behavior, situations, and the organization as a whole.
A. Human Relations Theory (Elton Mayo)
Elton Mayo conducted the famous Hawthorne Studies at a factory near Chicago. He found
something surprising - workers are more productive when they feel someone cares about
them, not just when working conditions improve.
The Hawthorne Studies: Mayo studied how lighting, breaks, and working hours affected
productivity. He found that social factors and attention from managers were more important
than physical conditions. Workers performed better when they felt valued.
Key Findings:
• Workers are motivated by social factors, not just money
• Informal groups influence worker behavior
• Attention from supervisors improves performance
• Workers need to feel valued and included
Limitations:
• Overemphasized social factors, ignored work itself
• Neglected economic needs of workers
B. Behavioral Science Theory
This is an improved version of Human Relations Theory. It uses scientific methods to study
human behavior in organizations. It draws from psychology (study of individuals), sociology
(study of groups), and anthropology (study of culture).
Key Contributors:
• Abraham Maslow: Gave the Need Hierarchy Theory - humans have five levels of
needs from basic to self-actualization
• Douglas McGregor: Gave Theory X (managers who think workers are lazy) and
Theory Y (managers who think workers are self-motivated)
• Frederick Herzberg: Gave Two-Factor Theory - hygiene factors prevent
dissatisfaction, motivators create satisfaction
Contributions:
• Recognized importance of human element in organizations
• Emphasized good leadership and motivation
• Focused on non-financial rewards
Limitations:
• Neglected economic aspects of work
• Did not consider situational factors
C. System Theory
System theory views an organization as a system made of interrelated parts that work
together. A system receives inputs, processes them, and produces outputs. Changes in one
part affect all other parts.
Page 9 of 11
Principles of Management - Unit 1: Nature of Management
Main Idea: An organization is like a human body - if one part has a problem, the whole body
is affected. Organizations interact with their environment (suppliers, customers, government,
etc.).
Contributions:
• Helps understand how different parts of organization are connected
• Shows importance of environment
• Integrates different management theories
Limitations:
• Too abstract - hard to apply directly
• Does not give specific tools for managers
D. Contingency Theory
Contingency Theory says there is no "one best way" to manage. The best approach depends
on the situation. What works in one organization may not work in another.
Four Key Factors that Affect Management:
• Organization Size: Managing 10 people is different from managing 10,000 people
• Technology: Different technologies need different management styles
• Environment: Stable environments need different approaches than rapidly changing
ones
• Individual Differences: Different employees need different motivation and
leadership styles
Contributions:
• Helps managers adapt to different situations
• Encourages flexible thinking
Limitations:
• Does not give universal principles
• Does not specify exactly what to do in each situation
E. Decision Theory (Herbert Simon)
Herbert Simon won the Nobel Prize for this theory. He believed that managers' main job is
making decisions. Good decisions lead to organizational success.
Main Idea: Managers constantly make decisions - about goals, plans, products, investments,
and daily operations. The quality of these decisions determines organizational effectiveness.
Contributions:
• Provides scientific approach to decision-making
• Uses mathematical tools for better decisions
Limitations:
• Focuses only on decision-making, ignores other aspects
• Limited to economic aspects of decisions
KEY POINTS TO REMEMBER
•
•
•
Organization: A group of people working together to achieve common goals. Types
include business, government, service, professional, and international.
Management: The process of getting things done through others. Five functions:
Planning, Organizing, Staffing, Directing, Controlling.
Fayol's 14 Principles: Division of work, Authority & Responsibility, Discipline,
Unity of Command, Unity of Direction, Subordination of Individual Interest,
Page 10 of 11
Principles of Management - Unit 1: Nature of Management
•
•
•
•
•
Remuneration, Centralization, Scalar Chain, Order, Equity, Stability, Initiative, Esprit
de Corps.
Three Levels of Management: Top Level (strategic decisions), Middle Level
(implementation), Lower Level (operations).
Three Managerial Skills (Katz): Technical (lower level), Human (all levels),
Conceptual (top level).
Ten Managerial Roles (Mintzberg): Interpersonal (Figurehead, Leader, Liaison),
Informational (Monitor, Disseminator, Spokesperson), Decisional (Entrepreneur,
Disturbance Handler, Resource Allocator, Negotiator).
Classical Theories: Scientific (Taylor), Administrative (Fayol), Bureaucratic
(Weber) - focus on efficiency and structure.
Modern Theories: Human Relations (Mayo), Behavioral Science (Maslow,
McGregor, Herzberg), System Theory, Contingency Theory, Decision Theory
(Simon) - focus on human factors and situations.
Page 11 of 11