FML Unit 2 Principles and Functions of Management|Fundamentals of management and life skills|Bcom 1st semester Unit 2
Unit 2
Principles and Functions of Management
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What is management
Management is the process of designing and maintaining and designing an environment in which individuals working together in groups efficiently, to achieve selected aims.
Define management
Management is defined as the process of planning organising, actuating and controlling an organisations operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of resources.
Explain Henry Fayol's principles of management
The 14 principles of management given by Henry Fayol are
1.Division of work
According to Fayol, division of work produce more and better work for the same effort. Division of work leads to specialisation. Here the work is divided into small tasks
2.Authority and Responsibility
Authority is the right to give orders and responsibility is the corollary of authority. There should be balance between authority and responsibility.
*corollary meaning -(something that naturally follows)
3.Discipline
It is the obedience to the rules of organisation .Discipline requires good superiors at all levels and requires clear and fair agreements and judicious application of penalties
4.Unity of Command
According to Fayol there should be only one boss for every employee.Every employee in an organisation should receive orders from and be responsible to only one superior
5.Unity of Direction
All the units of an organisation should be moving towards the same objective through coordinated and focused efforts.Each group of activities having the same objectives must have one head and one plan.
6.Remuneration of employees
The overall pay and remuneration must be fair for both the employee and the organisation.The employees must be paid fair wages and at the same time it should be within the paying capacity of the company.
7.Centralisation and decentralisation
The concentration of decision making authority is called as centralisation.whereas its distribution among more than one person is known as de-centralisation.Usually large organisations have more decentralisation than small organisation.
8.Scalar Chain
The flow of authority from highest to lowest rank is known as scalar chain.According to Fayol there should be a chain of authority, and communication from top to bottom and must be followed by managers and subordinates..
9.Order
Order means a for everything and everyone.If there is a fixed place for everything then work can be done smoothly.This increases efficiency and productivity.
10.Equity
Good sense and experience are needed to ensure fairness to all employees..It emphasises kindness and justice in the behaviour of managers towards the employees.
11.Initiative
Workers should be encouraged to develop and carry out their plans.According to Fayol, initiative is the means of taking first step with self-motivation.
12. Espirit De Corps
Management should promote a team spirit of unity and harmony among the employees.A manager should replace 'I" with "We"in his conversation with the workers.This would foster the team spirit of the workers and the belongingness among the team.
Principles of scientific management
The four principles of scientific management are
- Taylor pioneered the introduction of the method of scientific inquiry into the domain of management practice.
- He believed that the best method to maximise efficiency can be developed through study and analysis and must substitute ''Rule of Thumb'
- Scientific method involved investigation of traditional methods through work-study, unifying the best practices and developing a standard method, which would be followed throughout the organisation.
- Taylor called for complete mental revolution on the part of both management and workers.
- It means that management and workers should transform their thinking.
- He emphasised that there should be complete harmony between the management and workers. Both should realise that each one is important and must be part of the family.
- According to Taylor, " prosperity for the employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice versa’.
- There should be complete cooperation between the labour and the management instead of individualism. This is an extension of principle of ‘Harmony not discord’.
- Both should realise that they need each other.
- management should be open to any constructive suggestions made by the employees.
- They should be rewarded for their suggestions which results in substantial reduction in costs.
- They should be part of management and, if any important decisions are taken, workers should be taken into confidence.
- At the same time workers should desist from going on strike and making unreasonable demands on the management.
- Taylor was of the view that the concern for efficiency could be built in right from the process of employee selection.
- Each person should be scientifically selected.
- Then work assigned should suit her/his physical, mental and intellectual capabilities.
- To increase efficiency, they should be given the required training.
- Efficient employees would produce more and earn more.
- This will ensure their greatest efficiency and prosperity for both company and workers.
MBO is an approach to effective management through achievement of goals.In ,MBO goals and standards are fixed after discussion with managers at various levels which secures the integration of organisational goals with individual goals.
The principle behind MBO is to make sure that everybody within the organisation has a clear understanding of the aims and objectives of the organisation as well as awareness of their own roles and responsibilities in achieving those aims.
3 basic parts of MBO strategy
- All individuals within an organisation are assigned a special set of objectives that they try to reach a normal operating period
- Periodic performance reviews to to determine how close individuals are to in obtaining their objectives.
- Rewards are given on the basis of how close they come in reaching their goals.
Need for MBO
- To enhance communication between superiors and subordinates
- To serve as a basis for judgements about salary and promotion
- To increase the motivation of subordinates
- To serve as a device for organisational control
- To set long term and short term objectives
- It develops result oriented philosophy
- Formulation of dearer goals
- Facilitates objective appraisal
- Raises employee morale
- Facilitates effective planning
- Acts as motivational force
- Facilitates effective control
- Basis for organisational change
- It is time consuming
- It is a reward-punishment process
- Creates organisational problems
- It develops conflicting objectives
- Lacks durability
- Problem of co-ordination
- Trained managers are not available
It is a system of identification and communication that signals a manager as to when and where his attention is needed.The main objective of MBE is to enable the manager to identify the problems that are more critical and avoid least critical problems which can be handled by his subordinates.
MBE consists of 4 steps
Setting the objectives and defining what the norm should be
Assessing the performance to see whether performance is on track
Analysing work to see where performance deviates from the objectives
Investigating and solving the exceptions to the norm.
Advantages of MBE
- It saves time effort and money of managers
- complex problems demanding urgent attention will not be overlooked
- Helps managers to work on important aspects
- Subordinates get better chances of using their expertise in their jobs
- It alarms the management about good opportunities as well as difficulties
- Helps in installing effective control system
Limitations of MBE
- This approach promotes personalized opinion of an individual
- Requires establishment of broad standards for middle and lower level which is complex
- Too much paper work and costly and time consuming process
- Sometimes all managers do not like the delegation of authority
- If middle level and lower level fails to report any deviations then it can be a threat.
Comparison of MBO and MBE
MBO | MBE |
Defined as a management model that has a common objective for both management and employees | Defined as a management model that provides objectives for employees and only concentrates on deviations from set objectives |
Employee participation is essential | Employee participation is minimal in setting objective setting and decision making |
clarity of personal responsibility towards organisational goals is better understood by employee | clarity will be lacking as employees will perform responsibility without understanding his role in overall objective achievement |
Dependence on one group or department is less | Dependence on one department is high |
Active involvement in decision making can lead to delays and reduce efficiency | Only a certain group makes important decisions. so more time can be devoted for daily work. Hence better efficiency |
Management Functions
There are basically four primary functions of management
- Planning
- Organising
- Staffing
- Directing
- Controlling
Planning is the function of determining in advance what is to be done and who is to do it. This implies setting goals in advance and developing a way of achieving them efficiently and effectively.It is a systematic way of making decisions today that will affect the future of the company.
Planning provides direction for action and ensures that the goals and objectives are clearly stated so that they can act as a guide for deciding what action to be taken and in which direction.
2.Organising
Organising is the management function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan.
Once a specific plan has been established for the accomplishment of an organisational goal, the organising function examines the activities and resources required to implement the plan.
It determines what activities and resources are required. It decides who will do a particular task, where it will be done, and when it will be done.
3.Staffing
Staffing is finding the right people for the right job. A very important aspect of management is to make sure that the right people with the right qualifications are available at the right places and times to accomplish the goals of the organisation. This is also known as the human resource function and it involves activities such as recruitment, selection, placement and training of personnel.
4.Directing
Directing involves leading, influencing and motivating employees to perform the tasks assigned to them. This requires establishing an atmosphere that encourages employees to do their best. Motivation and leadership are two key components of direction. Directing also involves communicating effectively as well as supervising employees at work.
5.Controlling
Controlling is the management function of monitoring organisational performance towards the attainment of organisational goals. The task of controlling involves establishing standards of performance, measuring current performance, comparing this with established standards and taking corrective action where any deviation is found.
Benefits/Importance of Planning
Planning is certainly important as it tells us where to go, it provides direction and reduces the risk of uncertainty by preparing forecasts. The major benefits of planning are given below:
(i) Planning provides directions:
- Planning provides direction for action by stating in advance how work is to be done
- Planning act as a guide for deciding what action should be taken and in which direction.
- With well defined goals , employees are aware of what the organisation has to do and what they must do to achieve those goals.
- Departments and individuals in the organisation are able to work in coordination.
(ii) Planning reduces the risks of uncertainty:
- Planning enables a manager to look ahead and anticipate changes.
- As the tasks to be performed are decided in advance, planning shows the way to deal with changes and uncertain events.
- Thus it reduces the risk of uncertainty
(iii) Planning reduces overlapping and wasteful activities:
- Planning serves as the basis of coordinating the activities and efforts of different divisions, departments and individuals.
- It helps in avoiding confusion and misunderstanding.
- planning ensures clarity in thought and action so work is carried on smoothly.
- Useless and redundant activities are minimised or eliminated.
(iv) Planning promotes innovative ideas:
- Planning is the first function of management so new ideas can take the shape of concrete plans.
- It guides all future actions leading to growth and prosperity of the business and hence is the most challenging activity for the management
(v) Planning facilitates decision making:
- Planning helps the manager to look into the future and make a choice from various courses of action.
- He has to evaluate each alternative and select the most viable proposition.
- Planning helps in taking rational decisions.
(vi) Planning establishes standards for controlling:
- Planning provides the goals or standards against which actual performance is measured.
- By comparing actual performance with some standard, managers can know whether they have actually been able to attain the goals and any deviation can be corrected.
- So planning is a prerequisite for controlling.
- The nature of corrective action required depends upon the extent of deviations from the standard. Therefore, planning provides the basis of control.
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