Unit Concept of 1

1.1. INTRODUCTION The knowledge of Management Science is very much essential for an engineer as he is the man who deals with utilization of useful resources of the country to produce useful products for the use of human kind. In the process of conversion he must be very careful in using the available resources, which belongs to the public at large. He must use them optimally to produce goods and services. The knowledge of management science helps him to use his analytical ability to sharpen enough to see that he does his work in such a way; for the best advantage of the country and his fellowmen. Everyone of us are involved in the management processes every day while planning our activities from morning till evening, without the knowledge of management science. The knowledge of management will sharpen our thinking in the direction of optimal utilization of available resources.

1.2. NATURE OF MANAGEMENT To run any business a central directing and controlling agency is a must. This agency is very much similar to our mind, which directs and controls our body, which is an assembly of flesh and bones. Without mind this body has no meaning. Similarly any business house is a collection of men, machines, labour and equipment, which does not serve any purpose, without the proper guiding and controlling agency. For efficient functioning of business, it is necessary that all the above said factors are put to work in co-coordinated and meaningful way. Management does this work. All the resourses available inside and outside of the organization are put to right use in a planned manner by the management. Management is a word used by different people with different meanings. The noun ‘management’ is used as a collective noun to refer all those who manage with in a particular organization including the decision makers (like managers), including those who help or advise them in decision making process (staff personnel). The word management is also used to refer to a particular activity such as or to distinguish a special class of peoples ‘management’ and labor. says that ‘management is a multi-purpose organ that manages a business, managers, workers and work.’ He adds that ‘neither results nor resources exist inside the business. Both exist outside.’ It is the function of a management to use resources for the realization of results in such a way that the business firm is not 2 Management Science only able to pay its way but also able to earn some surplus to meet the needs of growth and expansion. It is the management that provides planning, organization and direction, which are necessary for business operations. Whatever may be the size of the firm it is the function of the management or people responsible for management to chalk out the course of action that the business has to follow to fulfill the objectives for which the business has started. Management is a vital function concerned with all aspects of the working of enterprise. In any enterprise, people will associate together to run it, with specific objectives, may be maximization of profit, or render service to the community. These people plan the work of the organization, direct the people in the organization, pool up resources and direct the men under them to use these resources in a meaningful way to achieve the desired objectives. The process employed by this group is the process of management. Management is the function of guiding, directing, coordinating human effort and activities for the accomplishment of given task. Or, we can say that the task of planning, co-coordinating, motivating and controlling the efforts of others (people working in the organization) towards the specific objectives. Or it is the act of getting things done by the people to achieve the goals. Luther Gullick says that the functions of management as POSDCORB. That is: P = Planning, O = Organization, S = Staffing, D = Directing, CO = Coordinating, R = Reporting, and B = Budgetting.

1.3. ADMINISTRATION, MANAGEMENT, AND ORGANIZATION Although the words ‘administration’ and ‘management’ are often used synonymously, some authors have sought to make a distinction between the two. Sheldon describes administration as the function in industry concerned with the determination of the corporate policy, the coordination of finance, production and distribution, the settlement of the compass of the organization and the ultimate control of the executive. Sheldon says the management as the function in industry concerned with the execution of policy, within the limits set by the administration and employment of the organization to fulfill the objective for which it has been established. With this we can understand that the administration relates to the duties of top management, who are more concerned with determining the corporate policy and ensuring coordination among the functional departments. As against to this, management is more involved in ensuring adequate execution of policy decisions prescribed at the top management level. But in real practice, there is a certain overlap between the two and it is very difficult to demark the two, as many managers are involved in both the activities i.e. thinking and doing aspects. It can be explained that as one of them say thinking aspect, i.e. administration work descends, and the execution work i.e., managerial work increases. This is shown in Fig.1.1. Concept of Management 3

ADMINISTRATION LEVEL OF MANAGERS

TOP

MIDDLE

LOWER

OPERATIONS

Fig. 1.1. Administration and Management

The word organizing or organization planning is generally taken to refer: (a) The logical combining or grouping of activities, (b) The delineating of authority and responsibility, and (c) The establishment of working relationships among the human beings within the organization. Organizing sometimes also refers to combining appropriately materials, machines, equipment and efforts of manpower with a view to accomplish the desired goals and objectives of the company. The word organization is also used to refer to the structure or network showing the relationship between the individual managers in the organization. In this context, the management function is divided into two aspects, namely (i) Administrative management, and (ii) Operative management. Administrative management is concerned with the laying down of policies and the preparing of plans as well as with evaluating the performance against predetermined goals or targets or standards. Operative management, on the other hand is concerned with the actual execution of the plans, through the use of resources. To summarize: Administration is the function in industry concerned with the determination of the corporate policy, the coordination of resources, production and distribution, the settlement of the compass of the organization and the ultimate control of the executive. Management is the function in industry concerned with the execution of policy, within the limits set up by the administration and the employment of the organization for the particular objects set before it. Organization is the process of combining the work, which individuals or groups have to perform with the faculties necessary for its execution that the duties, so formed, provide the best channels for the efficient, systematic, positive and coordinated application of the available effort. 4 Management Science

1.4. DEFINITION OF MANAGEMENT John F. Mee defines management as the art of securing maximum results with a minimum of effort so as to secure maximum prosperity and happiness for both employer and employee and give the public the best possible service. R.C. Davis defines management as tough function of executive leadership anywhere. Mary Cushing Niles defines management as Good Management, or Scientific Management, achieves a social objective with the best use of human, material energy, time and with satisfaction for the participants and the public. E.F.L. Brech says that management is concerned with seeing that the job gets done —its tasks put emphasis on planning and guiding the operations that are going on in the enterprise. Prof. A. Dasgupta defines management as the creation and control of technological and human environment of an organization in which human skill and capacities of individuals and groups find full scope for their effective use in order to accomplish the objective for which an enterprise has been set up. It is involved in the relationships of the individual, group, organization and the environment. Many authors defined management in their own way of learning. Many definitions concentrate on getting things done by the people through coordinating, using the resources of the organization to fulfill the goal for which the organization is set up. Management is also looked upon as a process concerned with planning, executing and controlling the activities of an enterprise.

1.4.1. Different Meanings of Management The word management can be referred as a field of learning, a body of organized knowledge, which is taught in universities and business schools. Another way of thinking is collective sense of the managerial group of an organization; say for example, ‘the management of the college has declared the vacation period’. Management may also be taken as an occupation or a career.

1.5. IS MANAGEMENT AN ART OR SCIENCE? Art refers to know-how or systematic skills for the effective accomplishment of desired results. Every art is practical in that the proof of the practitioner’s competence lies in the tangible results that he can show. Art is used in creating things; hence it is creative in nature. Any manager’s work is to get the things done by the people for getting the desired targets. In this process, many a time he has to use his skills to deal with human beings so that they cooperate with manager and fulfill the mission without any difficulty. Instead of ordering by using his official power, he can as well guide them in a friendly way, so that they may feel a sense of working. A manager must use his skills to motivate the people under him by creating a friendly atmosphere in the organization, so that everybody feel that he is working for his organization and he realizes the benefits when the goal of the organization is reached. Hence, we can say management as an art of getting things done by the people for the accomplishment of desired goals. Concept of Management 5

Science refers to organized theoretical knowledge empirically derived, critically tested and generalized into theories, laws and principles. Many a time manager, who is making a decision, has to deal with the data on his hand and use mathematical techniques. While making decisions, he has to use logical thinking and scientific methods to obtain optimal results. Hence, we can say that management is both art and science. The science of management provides certain general principles, which can guide managers in their professional effort. The art of the management consists in tackling every situation in an effective manner. Hence, we can summarize the nature of management as: 1. It is an art. 2. It is a science or a discipline. 3. It is a process of achieving results. 4. It is a social process involving integration of people for common objectives. 5. It is organized to lead to the achievement of predetermined objectives. 6. It is a profession, which involves specialized training and is governed by an ethical code arising out of its social obligations.

1.6. DEVELOPMENT OF MANAGEMENT THOUGHT Before, we study the evolution of management thought, it is better we understand some of the works of pioneers in management. The most important persons are: (a) Fredric Winslow Taylor (F.W. Taylor):1856–1916: U.S.A. (b) Henry Robinson: 1844–1924: U.S.A. (c) Harrington Emerson: 1853–1931: U.S.A. (d) Fredric Arthur Halsey: 1856–1935: U.S.A. (e) Henry Laurence Gantt (H.L. Gantt): 1861–1919: U.S.A. (f) Mary Parker Follet: 1868–1933: U.S.A. (g) : 1868–1924: U.S.A. (h) George Elton Mayo: 1880–1949: Australia. Let us now briefly discuss the contributions of the above-mentioned persons to the field of industrial management. (a) Fredric Winslow Taylor: F.W. Taylor coined the word scientific management and his work Principles of Scientific Management was published in the year 1911. From that time onwards greater attention has been given to scientific management as a separate discipline worth studying. F.W. Taylor has been accepted as father of scientific management in spite of severe criticism about his works. Taylor received training as a machinist in 1873 and took position in 1878 in Midvale Steel Works at Philadelphia and become chief engineer of the plant in the year 1884, at the age of 31 years. He began to concentrate attention on such basic industrial problems as which is the best way to do a work? What should constitute a day’s work? He deliberately set out to give answers to many of these questions. He extended his studies further and endeavored to establish basic principles of management, which would apply to all fields of industrial activity. He explained his objectives as: 6 Management Science

The development of a science for each element of a man’s work, thereby replacing the old thumb rule method. (i) The selection of the best worker for each particular task and then training, teaching and developing the workman; in place of the former practice of allowing the worker to select his own task and train himself as best as he could. (ii) The development of a spirit of hearty cooperation between management and the men to carry the activities in accordance with the principles of the developed science. (iii) The division of the work into almost equal shares between management and the workers, each department taking over the work for which it is best fitted; instead of the former condition in which almost all of the work and the greater part of the responsibility were thrown on the men. It were these principles, extended and applied, which formed the basis of what has been called ‘Scientific Management’. In the year 1989, Taylor went to Bethlehem Steel Works, where he undertook his famous studies of shoveling. He designed an optimal shovel and by which the productivity increased. He also started planning department in order to determine in advance the amount of work to be done in the yard during the ensuing day. The credit must go to him for naming his technique ‘time study’ for necessity of time studies became the principal feature of his scientific management. (b) Henry Robinson Towen: Towne’s most significant contribution to management was the leading part he played in persuading his fellow engineers to extend the traditional scope of their professional interest to include management subjects. He also elaborated an important management technique when he presented the results of the gain sharing system operating in his own works. Under this system gains were awarded to the departments on the basis of relative efficiency. This was a modified form of profit sharing on a group basis and an attempt for improving the traditional piece rate system. (c) Harrington Emerson: He is well known as efficiency engineer; he popularized scientific management and expounded the concepts of standard time, standard costs, preventable wastes etc. He was the first man to call attention to the lessons tobe learnt from military experienced by business management. (d) Frederic Arthur Halsey: He originated first successful incentive scheme of wage payment in the American industry and improved upon the ordinary piece rate system. His incentive schemes have advantages over piece rate system, day rate system and Twine’s gain sharing system. Halsey’s premium plan of paying labour aimed at eliminating rate cutting. It guaranteed daily or hourly rate for fixed quantity of work as agreed with the worker based on customary performance in the past. The premium payment was provided for any additional work of about one-half to one-third of the sum normally payable for such work. As the employer gets benefit from increased output, he should not indulge in rate cutting. (e) Henry Laurence Gantt: He is very much bothered about human beings in industry. He considered human resource as the most important one in all problems of management. He is also described as ‘The forerunner of modern industrial Concept of Management 7

democracy’. He was famous for one particular chart, which bears his name although he evolved many charts. This chart is known as Gantt chart, which is used for scheduling the work. He also devised incentive schemes to motivate human beings to work. (f) Mary Parker Follett: Her contribution to industrial management is the application of ‘psychological insight and findings of social science’. She was herself a political and social philosopher. She offered a new conception of the nature of management and of human relationships within industrial groups. She showed that conflict can be constructive and could be harnessed to the service of the groups. (g) Frank Bunker Gilbreth: The industrial world owes an incalculable debt to Frank and Lillian Gilbreth, for the development of what they named ‘motion study’, an intensification of the broad pioneering method studies of Robert Owen andmany others. Frank B. Gilbreth was a New England contractor and industrial consultant and another pioneer in the field of scientific management. He was always greatly assisted by his wife, Dr. Lillian Gilbreth, a trained psychologist, who until her death played an active part in the continuation of her husband’s work. Gilbreth started as a bricklayer and become a successful contractor. His wife worked for many years to win her doctorate in psychology; yet she was able at the same time to assist her husband materially in his work to develop the technique motion study, which concentrates on finding the best way of doing the work. (h) George Elton Mayo: Elton Mayo is famous for his contribution to management on the human and the social factors in industrial relationships and the great difficulty in developing true scientific techniques applicable to the study ofsocial behaviour. He is very famous for his investigation at Hawthorne. His experiments at Hawthorne emphasized that the emotional, non-logical attitudes and sentiments are more important even in economic relationships than the logical, economic ones.

1.7. THE EVOLUTION OF MANAGEMENT DISCIPLINE Until Industrial revolution after World War II, adequate thought was not given to the practice of management as separate discipline. Development of management theory on a systematic basis began in twentieth century because of industrial revolution and advent of factory system. Economists, psychologists, sociologists, engineers etc. Made contributions to the theory of management to promote management as separate discipline. Development of management thought in a time perspective can be divided into four stages, as: 1. The Scientific Management Stage, 2. The Organizational Stage, 3. The Management Process Stage, and 4. The General Management Theory Stage.

1.7.1. The Scientific Management Stage During early 20th century, man was very much interested in using human effort effectively. His intention was to reduce the waste and unnecessary operations from human work and to increase the productivity. In this direction, the work was divided as operative work and 8 Management Science planning work. Top level management was responsible for planning the work effectively and the lower level managers or operative management was responsible for executing the plan. Thus the line organization, line and staff organization structures developed during this period. Wage payment plans were aimed at providing incentives for the worker for maximum motivation. Thus a major break-through was affected during this decade of World War I with the greatest contributions being that of Taylor and Fayol. In short it was conceived as mental attitudes towards intelligent use of human effort to increase the productivity by reducing the wastages and at the same time taking care of labour welfare.

1.7.2. The Organizational Stage In the next decade, that is during 1930s more attention was given to organization as a structure for carrying out managerial assignments. Administration was concerned with formulation of polices and the establishment of the organization through which the plan was executed and the organization structure become a management mechanism for carrying out the work assignment. Management’s main concern was to control and ensure proper work performance with the organization structure. Later on certain people divided the work of management as administrative management and operative management where administrative management was responsible for formulation of policies, plans and the operative management was responsible for execution of plans.

1.7.3. The Management Process Stage In the next decade, i.e. during 1940, more emphasis is placed on two management functions planning and control to crystallize the objectives, so that all activities are directed to achieve the desired objectives. Thus achievement of objectives of an enterprise as a whole became the basis of conceptual framework of the management and more stress was placed on the process of managing. In this stage more emphasis is placed on setting of objectives, goals and also on the functions of management such as organizing, staffing, motivating etc. to fulfil the organizational objectives.

1.7.4. The General Management Theory Stage In this stage, the management concepts so far evolved is synthesized into a conceptual framework for a general management theory. The process of managing was influenced by technology. Developments in communication and information technology, advent of computers in database management, use of operations research techniques in decision-making have dramatically changed the process of management. Especially after World War II, one can recognize the changes in management approach and then onwards, due to changes in technology, introduction of computers in decision-making process, a new wave swept the general management theory, due to which new schools of management thought began to evolve.

1.8. SCHOOL OF MANAGEMENT THOUGHT Several schools of management thought have evolved over a period of time depending on the learning and philosophy of the exponents. A study of literature in the field of management is necessary to the modern manager, so as to develop his own way of solving the managerial Concept of Management 9 problems and managing the resources of an enterprise effectively. The mental philosophy of the manager will be automatically conditioned by his own thinking and frame of reference. His leaning will automatically be in favour of certain philosophy or school of thought. Various schools of management thought available are: 1. The Empirical or Management by Custom School 2. The Human Behaviour or Human Relations School 3. The Social System School 4. The Decision Theory or Decisional Management School 5. The Mathematical or Quantitative Measurement School 6. The System’s Approach or Systems Management School 7. The Management Process School 8. Contingency School.

1.8.1. The Empirical or Management by Custom School Those who believe in this thought, is of the opinion that the management is a study of the experiences of managers. If managerial experiences can be studied closely, management knowledge would emerge and grow out of it. Other managers in making their own decisions and solving managerial problems faced by them can use this knowledge. But this school of thought depends heavily on the historical methods of study. The basic assumption of this approach to the study of management is that the study of actual business situation contributes to the development of management skill. Even today we can see that in management courses much importance is given to the case studies to train students to understand and solve the managerial problems. By studying the management situations, which are unique the manager gets on idea about what could be the good managerial decisions and what makes the decisions poor. By studying the cases he can also develop the analytical and problem solving abilities, which are very essential for the successful practice of management in actual life. This school of thought is based on the proverb ‘learn from experience’. Empirical school of thought goes mainly by precedents in so far as it studies the managerial situations handled by the mangers and their own experience. However, the exponents of this school do not fully realize that a manager has to work under dynamic conditions and that history does not exactly repeat by itself. The situations of the past may not be exactly same as that of the present because of the development of technology, information system and changes in the social system. Hence manager may face a problem if he tries to transfer the ideas gained by study of experiences of previous managers straight away. While making decisions, manager must use his knowledge from previous case studies as guidelines, study the present problem, try to combine his experience, knowledge from cases and commonsense to solve the problem. In the words of Harold Koontz “Management unlike law is not a science based on precedents and situations in the future exactly comparable to the past are exceedingly unlikely to occur. There is a positive danger in relying too much of the past experience and on undistilled history of managerial problems solving for the simple reason that the technique of approach found right in the past may not fit the situation of the future”. The 10 Management Science principle tool of study for the empirical school of thought is the case method. The case is considered to be the most convenient way of acquiring skill of decision-making. However, this method is not necessarily the best method in imparting training for decision-making. In decision-making, there are several complex variables, which change under dynamic conditions. It is because of this, case study method has its own limitations. The main contributors of this school of thought are: Harvard Business School, Ernest Dale and the Management Associations in various countries, especially American Management Association. The main features of this school of thought are: (a) Management is the study of experience. (b) The management experience can be passed over to the practitioners and students. (c) The success and the failure of management in the process of decision-making could provide guidance to the manager in the similar situation. (d) Theoretical research has to be based on practical experience.

1.8.2. The Human Behaviour or Human Relation School Management could be rightly thought of as the process of getting things done through or with people. If that is so, any organization could be compared to a structure made up of human beings. The relationship among these people is the cementing force that binds them together in pursuit of common organizational goals. According to this school of thought management is the study of behavior of people at work. This school had its origin in a series of experiments conducted by Professor Elton Mayo and his associates in Harvard School of Business at the Western Electric Company’s Hawthorns works near Chicago. These studies brought out for the first time the importance of relationship between social factors and productivity. Until then the productivity of the employee was considered to be a function only on physical conditions of work and money wages paid to them. For the first time it was realized that productivity depended heavily upon the satisfaction of the employee in work situations. Following the Hawthorne Experiments, a great deal of work has been carried on by behavioral Scientists belonging to variety of disciplines including psychology, sociology, anthropology and philosophy in studying the behavior of people at work in organizations. Those who subscribe to the Human Relations or the Human Behavior School of thought are of the view that the effectiveness of any organization depends upon the quality of relationships among the people working in the organization. Supporters of this school are of the opinion that the management should concern itself with the analysis of or the interaction among the people at work. Apart from the study of formal organization and techniques used by such organizations, this school studies the psychological change, motivation and relationships among the various groups of people constituting organization and the climate of the organizations. In short this school of thought concentrates on people and their behavior, within formal and informal organization. To summarize, the main features of this school are: (a) Since management is getting things done through or with people, a manager must have a basic understanding of human behavior in all its aspects, particularly in the context of work groups and organizations. (b) Management must study inter-personal relations among people.