KALYAN CITY LIFE

Maharashtra SSC Examination 2010 Results Of 17 June 2010 Is On http://mahresult.nic.in Website

MBO is a participative and democratic style of management. Here, ample a scope is given to subordinates and is given higher status and positive/participative role. In short, MBO is both a philosophy and approach to management. MBO concept is different from MBC (Management by Control) and is also superior in many respects. According to the classical theory of management, top management is concerned with objectives setting, directing and coordinating the efforts of middle level managers and lower level staff. However, achievement of organizational objectives is possible not by giving orders and instructions but by securing cooperation and participation of all persons. For this, they should be associated with the management process. This is possible in the case of MBO and hence MBO is different from MBC and also superior to MBC.

MBO is an approach (to planning) that helps to overcome these barriers. MBO involves the establishment of goals by managers and their subordinates acting together, specifying responsibilities and assigning authority for achieving the goals and finally constant monitoring of performance. The genesis of MBO is attributed to Peter Drucker who has explained it in his book 'The Practice of Management'.

Definitions Of Management By Objectives MBO :-

1. According to George Odiome, MBO is "a process whereby superior and subordinate managers of an Organisation jointly define its common goals, define each individual's major areas of responsibility in terms Of results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."
2. According to John Humble, MBO is "a dynamic system which seeks to integrate the company's needs to clarify and achieve its profits and growth goals with the manager's need to contribute and develop himself. It is a demanding and rewarding style of managing a business."

Features Of Management By Objectives MBO :-

1. Superior-subordinate participation: MBO requires the superior and the subordinate to recognize that the development of objectives is a joint project/activity. They must be jointly agree and write out their duties and areas of responsibility in their respective jobs.
2. Joint goal-setting: MBO emphasizes joint goal-setting that are tangible, verifiable and measurable. The subordinate in consultation with his superior sets his own short-term goals. However, it is examined both by the superior and the subordinate that goals are realistic and attainable. In brief, the goals are to be decided jointly through the participation of all.
3. Joint decision on methodology: MBO focuses special attention on what must be accomplished (goals) rather than how it is to be accomplished (methods). The superior and the subordinate mutually devise methodology to be followed in the attainment of objectives. They also mutually set standards and establish norms for evaluating performance.
4. Makes way to attain maximum result: MBO is a systematic and rational technique that allows management to attain maximum results from available resources by focussing on attainable goals. It permits lot of freedom to subordinate to make creative decisions on his own. This motivates subordinates and ensures good performance from them.
5. Support from superior: When the subordinate makes efforts to achieve his goals, superior's helping hand is always available. The superior acts as a coach and provides his valuable advice and guidance to the subordinate. This is how MBO facilitates effective communication between superior and subordinates for achieving the objectives/targets set.

Steps In Management By Objectives Planning :-

1. Goal setting: The first phase in the MBO process is to define the organizational objectives. These are determined by the top management and usually in consultation with other managers. Once these goals are established, they should be made known to all the members. In setting objectives, it is necessary to identify "Key-Result Areas' (KRA).
2. Manager-Subordinate involvement: After the organizational goals are defined, the subordinates work with the managers to determine their individual goals. In this way, everyone gets involved in the goal setting.
3. Matching goals and resources: Management must ensure that the subordinates are provided with necessary tools and materials to achieve these goals. Allocation of resources should also be done in consultation with the subordinates.
4. Implementation of plan: After objectives are established and resources are allocated, the subordinates can implement the plan. If any guidance or clarification is required, they can contact their superiors.
5. Review and appraisal of performance: This step involves periodic review of progress between manager and the subordinates. Such reviews would determine if the progress is satisfactory or the subordinate is facing some problems. Performance appraisal at these reviews should be conducted, based on fair and measurable standards.

Advantages of Management By Objectives MBO :-

1. Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor management by crisis. Managers are expected to develop specific individual and group goals, develop appropriate action plans, properly allocate resources and establish control standards. It provides opportunities and motivation to staff to develop and make positive contribution in achieving the goals of an Organisation.
2. Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals that identify desired/expected results. Goals are made verifiable and measurable which encourage high level of performance. They highlight problem areas and are limited in number. The meeting is of minds between the superior and the subordinates. Participation encourages commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic objectives is me benefit of M[BO.
3. Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance since goals are jointly set by superior and subordinates. The individual is given adequate freedom to appraise his own activities. Individuals are trained to exercise discipline and self control. Management by self-control replaces management by domination in the MBO process. Appraisal becomes more objective and impartial.
4. Raises employee morale: Participative decision-making and two-way communication encourage the subordinate to communicate freely and honestly. Participation, clearer goals and improved communication will go a long way in improving morale of employees.
5. Facilitates effective planning: MBO programmes sharpen the planning process in an Organisation. It compels managers to think of planning by results. Developing action plans, providing resources for goal attainment and discussing and removing obstacles demand careful planning. In brief, MBO provides better management and better results.
6. Acts as motivational force: MBO gives an individual or group, opportunity to use imagination and creativity to accomplish the mission. Managers devote time for planning results. Both appraiser and appraise are committed to the same objective. Since MBO aims at providing clear targets and their order of priority, employees are motivated.
7. Facilitates effective control: Continuous monitoring is an essential feature of MBO. This is useful for achieving better results. Actual performance can be measured against the standards laid down for measurement of performance and deviations are corrected in time. A clear set of verifiable goals provides an outstanding guarantee for exercising better control.
8. Facilitates personal leadership: MBO helps individual manager to develop personal leadership and skills useful for efficient management of activities of a business unit. Such a manager enjoys better chances to climb promotional ladder than a non-MBO type.

Limitations of Management By Objectives MBO :-

1. Time-consuming: MBO is time-consuming process. Objectives, at all levels of the Organisation, are set carefully after considering pros and cons which consumes lot of time. The superiors are required to hold frequent meetings in order to acquaint subordinates with the new system. The formal, periodic progress and final review sessions also consume time.
2. Reward-punishment approach: MBO is pressure-oriented programme. It is based on reward-punishment psychology. It tries to indiscriminately force improvement on all employees. At times, it may penalize the people whose performance remains below the goal. This puts mental pressure on staff. Reward is provided only for superior performance.
3. Increases paper-work: MBO programmes introduce ocean of paper-work such as training manuals, newsletters, instruction booklets, questionnaires, performance data and report into the Organisation. Managers need information feedback, in order to know what is exactly going on in the Organisation. The employees are expected to fill in a number of forms thus increasing paper-work. In the words of Howell, "MBO effectiveness is inversely related to the number of MBO forms.
4. Creates organizational problems: MBO is far from a panacea for all organizational problems. Often MBO creates more problems than it can solve. An incident of tug-of-war is not uncommon. The subordinates try to set the lowest possible targets and superior the highest. When objectives cannot be restricted in number, it leads to obscure priorities and creates a sense of fear among subordinates. Added to this, the programme is used as a 'whip' to control employee performance.
5. Develops conflicting objectives: Sometimes, an individual's goal may come in conflict with those of another e.g., marketing manager's goal for high sales turnover may find no support from the production manager's goal for production with least cost. Under such circumstances, individuals follow paths that are best in their own interest but which are detrimental to the company.
6. Problem of co-ordination: Considerable difficulties may be encountered while coordinating objectives of the Organisation with those of the individual and the department. Managers may face problems of measuring objectives when the objectives are not clear and realistic.
7. Lacks durability: The first few go-around of MBO are motivating. Later it tends to become old hat. The marginal benefits often decrease with each cycle. Moreover, the programme is deceptively simple. New opportunities are lost because individuals adhere too rigidly to established goals.
8. Problems related to goal-setting: MBO can function successfully provided measurable objectives are jointly set and it is agreed upon by all. Problems arise when: (a) verifiable goals are difficult to set (b) goals are inflexible and rigid (c) goals tend to take precedence over the people who use it (d) greater emphasis on quantifiable and easily measurable results instead of important results and (e) over-emphasis on short-term goals at the cost of long-term goals.
9. Lack of appreciation: Lack of appreciation of MBO is observed at different levels of the Organisation. This may be due to the failure of the top management to communicate the philosophy of MBO to entire staff and all departments. Similarly, managers may not delegate adequately to their subordinates or managers may not motivate their subordinates properly. This creates new difficulties in the execution of MBO programme.

Essential Conditions for Successful Execution / Implementation of MBO Or...

Q.How To Make MBO Effective?

1. Support from all: In order that MBO succeeds, it should get support and co-operation from the management. MBO must be tailored to the executive's style of managing. No MBO programme can succeed unless it is fully accepted by the managers. The subordinates should also clearly understand that MBO is the policy of the Organisation and they have to offer cooperation to make it successful. It should be a programme of all and not a programme imposed on them.
2. Acceptance of MBO programme by managers: In order to make MBO programme successful, it is fundamentally important that the managers themselves must mentally accept it as a good or promising programme. Such acceptances will bring about deep involvement of managers. If manages are forced to accept NIBO programme, their involvement will remain superfluous at every stage. The employees will be at the receiving-end. They would mostly accept the lines of action initiated by the managers.
3. Training of managers: Before the introduction of MBO programme, the managers should be given adequate training in MBO philosophy. They must be in a position to integrate the technique with the basic philosophy of the company. It is but important to arrange practice sessions where performance objectives are evaluated and deviations are checked. The managers and subordinates are taught to set realistic goals, because they are going to be held responsible for the results.
4. Organizational commitment: MBO should not be used as a decorative piece. It should be based on active support, involvement and commitment of managers. MBO presents a challenging task to managers. They must shift their capabilities from planning for work to planning for accomplishment of specific goals. Koontz rightly observes, "An effective programme of managing by objective must be woven into an entire pattern and style of managing. It cannot work as a separate technique standing alone."
5. Allocation of adequate time and resources: A well-conceived MBO programme requires three to five years of operation before it provides fruitful results. Managers and subordinates should be so oriented that they do not look forward to MBO for instant solutions. Proper time and resources should be allocated and persons are properly trained in the philosophy of MBO.
6. Provision of uninterrupted information feedback: Superiors and subordinates should have regular information available to them as to how well subordinate's goal performance is progressing. Over and above, regular performance appraisal sessions, counseling and encouragement to subordinates should be given. Superiors who compliment and encourage subordinates with pay rise and promotions provide enough motivation for peak performance.

Maharashtra Board's SSC Exam Result of March 2010 is Available On http://mahresult.nic.in Website.

Check SSC Exam Result of 2010 only on this Official Website. Best of Luck!

Maharashtra Board's SSC Exam Result of March 2010 is Available On http://mahresult.nic.in Website.

Check SSC Exam Result of 2011 only on this Official Website. Best of Luck!

According to Peter Drucker, "Whatever a manager does, he does through decision-making". A manager has to take a decision before acting or before preparing a plan for execution. Moreover, his ability is very often judged by the quality of decisions he takes. Thus, management is always a decision-making process. It is a part of every managerial function. This is because action is not possible unless a firm decision is taken about a business problem or situation.

This clearly suggests that decision-making is necessary in planning, organising, directing, controlling and staffing. For example, in planning alternative plans are prepared to meet different possible situations. Out of such alternative plans, the best one (i.e., plan which most appropriate under the available business environment) is to be selected. Here, the planner has to take correct decision. This suggests that decision-making is the core of planning function. In the same way, decisions are required to be taken while performing other functions of management such as organising, directing, staffing, etc. This suggests the importance of decision-making in the whole process of management.

The effectiveness of management depends on the quality of decision-making. In this sense, management is rightly described as decision-making process. According to R. C. Davis, "management is a decision-making process." Decision-making is an intellectual process which involves selection of one course of action out of many alternatives. Decision-making will be followed by second function of management called planning. The other elements which follow planning are many such as organising, directing, coordinating, controlling and motivating.

Decision-making has priority over planning function. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as such operating decisions as training of manpower and so on. Without such decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible. For this, scientific decision-making is essential.

2. Definitions of Decision-making

1. The Oxford Dictionary defines the term decision-making as "the action of carrying out or carrying into effect".
2. According to Trewatha & Newport, "Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem".

3. Characteristics of Decision Making

1. Decision making implies choice: Decision making is choosing from among two or more alternative courses of action. Thus, it is the process of selection of one solution out of many available. For any business problem, alternative solutions are available. Managers have to consider these alternatives and select the best one for actual execution. Here, planners/ decision-makers have to consider the business environment available and select the promising alternative plan to deal with the business problem effectively. It is rightly said that "Decision-making is fundamentally choosing between the alternatives". In decision-making, various alternatives are to be considered critically and the best one is to be selected. Here, the available business environment also needs careful consideration. The alternative selected may be correct or may not be correct. This will be decided in the future, as per the results available from the decision already taken. In short, decision-making is fundamentally a process of choosing between the alternatives (two or more) available. Moreover, in the decision-making process, information is collected; alternative solutions are decided and considered critically in order to find out the best solution among the available. Every problem can be solved by different methods. These are the alternatives and a decision-maker has to select one alternative which he considers as most appropriate. This clearly suggests that decision-making is basically/fundamentally choosing between the alternatives. The alternatives may be two or more. Out of such alternatives, the most suitable is to be selected for actual use. The manager needs capacity to select the best alternative. The benefits of correct decision-making will be available only when the best alternative is selected for actual use.
2. Continuous activity/process: Decision-making is a continuous and dynamic process. It pervades all organizational activity. Managers have to take decisions on various policy and administrative matters. It is a never ending activity in business management.
3. Mental/intellectual activity: Decision-making is a mental as well as intellectual activity/process and requires knowledge, skills, experience and maturity on the part of decision-maker. It is essentially a human activity.
4. Based on reliable information/feedback: Good decisions are always based on reliable information. The quality of decision-making at all levels of the Organisation can be improved with the support of an effective and efficient management information system (MIS).
5. Goal oriented process: Decision-making aims at providing a solution to a given problem/ difficulty before a business enterprise. It is a goal-oriented process and provides solutions to problems faced by a business unit.
6. Means and not the end: Decision-making is a means for solving a problem or for achieving a target/objective and not the end in itself.
7. Relates to specific problem: Decision-making is not identical with problem solving but it has its roots in a problem itself.
8. Time-consuming activity: Decision-making is a time-consuming activity as various aspects need careful consideration before taking final decision. For decision makers, various steps are required to be completed. This makes decision-making a time consuming activity.
9. Needs effective communication: Decision-taken needs to be communicated to all concerned parties for suitable follow-up actions. Decisions taken will remain on paper if they are not communicated to concerned persons. Following actions will not be possible in the absence of effective communication.
10. Pervasive process: Decision-making process is all pervasive. This means managers working at all levels have to take decisions on matters within their jurisdiction.
11. Responsible job: Decision-making is a responsible job as wrong decisions prove to be too costly to the Organisation. Decision-makers should be matured, experienced, knowledgeable and rational in their approach. Decision-making need not be treated as routing and casual activity. It is a delicate and responsible job.

4. Advantages of Decision Making

1. Decision making is the primary function of management: The functions of management starts only when the top-level management takes strategic decisions. Without decisions, actions will not be possible and the resources will not be put to use. Thus decision-making is the primary function of management.
2. Decision-making facilitates the entire management process: Decision-making creates proper background for the first management activity called planning. Planning gives concrete shape to broad decisions about business objectives taken by the top-level management. In addition, decision-making is necessary while conducting other management functions such as organising, staffing, coordinating and communicating.
3. Decision-making is a continuous managerial function: Managers working at all levels will have to take decisions as regards the functions assigned to them. Continuous decision making is a must in the case of all managers/executives. Follow-up actions are not possible unless decisions are taken.
4. Decision-making is essential to face new problems and challenges: Decisions are required to be taken regularly as new problems, difficulties and challenges develop before a business enterprise. This may be due to changes in the external environment. New products may come in the market, new competitors may enter the market and government policies may change. All this leads to change in the environment around the business unit. Such change leads to new problems and new decisions are needed.
5. Decision-making is a delicate and responsible job: Managers have to take quick and correct decisions while discharging their duties. In fact, they are paid for their skill, maturity and capacity of decision-making. Management activities are possible only when suitable decisions are taken. Correct decisions provide opportunities of growth while wrong decisions lead to loss and instability to a business unit.

5. Steps Involved In Decision Making Process

Decision-making involves a number of steps which need to be taken in a logical manner. This is treated as a rational or scientific 'decision-making process' which is lengthy and time consuming. Such lengthy process needs to be followed in order to take rational/scientific/result oriented decisions. Decision-making process prescribes some rules and guidelines as to how a decision should be taken / made. This involves many steps logically arranged. It was Peter Drucker who first strongly advocated the scientific method of decision-making in his world famous book 'The Practice of Management' published in 1955. Drucker recommended the scientific method of decision-making which, according to him, involves the following six steps:

1. Defining / Identifying the managerial problem,
2. Analyzing the problem,
3. Developing alternative solutions,
4. Selecting the best solution out of the available alternatives,
5. Converting the decision into action, and
6. Ensuring feedback for follow-up.

The figure given below suggests the steps in the decision-making process:-

1. Identifying the Problem: Identification of the real problem before a business enterprise is the first step in the process of decision-making. It is rightly said that a problem well-defined is a problem half-solved. Information relevant to the problem should be gathered so that critical analysis of the problem is possible. This is how the problem can be diagnosed. Clear distinction should be made between the problem and the symptoms which may cloud the real issue. In brief, the manager should search the 'critical factor' at work. It is the point at which the choice applies. Similarly, while diagnosing the real problem the manager should consider causes and find out whether they are controllable or uncontrollable.
2. Analyzing the Problem: After defining the problem, the next step in the decision-making process is to analyze the problem in depth. This is necessary to classify the problem in order to know who must take the decision and who must be informed about the decision taken. Here, the following four factors should be kept in mind:
   
   
   1. Futurity of the decision,
   2. The scope of its impact,
   3. Number of qualitative considerations involved, and
   4. Uniqueness of the decision.
3. Collecting Relevant Data: After defining the problem and analyzing its nature, the next step is to obtain the relevant information/ data about it. There is information flood in the business world due to new developments in the field of information technology. All available information should be utilised fully for analysis of the problem. This brings clarity to all aspects of the problem.
4. Developing Alternative Solutions: After the problem has been defined, diagnosed on the basis of relevant information, the manager has to determine available alternative courses of action that could be used to solve the problem at hand. Only realistic alternatives should be considered. It is equally important to take into account time and cost constraints and psychological barriers that will restrict that number of alternatives. If necessary, group participation techniques may be used while developing alternative solutions as depending on one solution is undesirable.
5. Selecting the Best Solution: After preparing alternative solutions, the next step in the decision-making process is to select an alternative that seems to be most rational for solving the problem. The alternative thus selected must be communicated to those who are likely to be affected by it. Acceptance of the decision by group members is always desirable and useful for its effective implementation.
6. Converting Decision into Action: After the selection of the best decision, the next step is to convert the selected decision into an effective action. Without such action, the decision will remain merely a declaration of good intentions. Here, the manager has to convert 'his decision into 'their decision' through his leadership. For this, the subordinates should be taken in confidence and they should be convinced about the correctness of the decision. Thereafter, the manager has to take follow-up steps for the execution of decision taken.
7. Ensuring Feedback: Feedback is the last step in the decision-making process. Here, the manager has to make built-in arrangements to ensure feedback for continuously testing actual developments against the expectations. It is like checking the effectiveness of follow-up measures. Feedback is possible in the form of organised information, reports and personal observations. Feed back is necessary to decide whether the decision already taken should be continued or be modified in the light of changed conditions.

Every step in the decision-making process is important and needs proper consideration by managers. This facilitates accurate decision-making. Even quantitative techniques such as CPM, PERT/OR, linear programming, etc. are useful for accurate decision-making. Decision-making is important as it facilitates entire management process. Management activities are just not possible without decision-making as it is an integral aspect of management process itself. However, the quality of decision-making should be always superior as faulty/irrational decisions are always dangerous.

Various advantages of decision-making (already explained) are easily 'available when the entire decision-making process is followed properly. Decisions are frequently needed in the management process. However, such decisions should be appropriate, timely and rational. Faulty and hasty decisions are wrong and even dangerous. This clearly suggests that various advantages of decision-making are available only when scientific decisions are taken by following the procedure of decision-making in an appropriate manner.

For accurate/rational decision-making attention should be given to the following points:

1. Identification of a wide range of alternative courses of action i.e., decisions. This provides wide choice for the selection of suitable decision for follow-up actions.
2. A careful consideration of the costs and risks of both positive and negative consequences that could follow from each alternation.
3. Efforts should be made to search for new information relevant to further evaluation of the alternatives. This is necessary as the quality of decision depends on the quality of information used in the decision-making process.
4. Re-examination of the positive and negative effects of all known alternatives before making a final selection.
5. Arrangements should be made for implementing the chosen course of action including contingency plans in the event that various known risks were actually to occur.
6. Efforts should be made to introduce creativity and rationality in the final decision taken.

6. Why Rational and Right Decisions Are Not Possible?

Rational decisions are the best decisions under the available circumstances. All decisions should be rational as such decisions facilitate expansion of business and give more profit, goodwill and prosperity to a business unit. Rationality and decision-making are closely related concepts. Rationality principle is applicable to all types of decisions. All decisions (business, economic, social etc.) should be fair and rational. They should serve as examples over a long period. For such decisions, rational/scientific/balanced approach is essential while making decisions. In the absence of such approach, decisions are likely to be faulty and dangerous to the Organisation and also to all concerned parties.

Rationality in decision-making is possible through human brain which has the ability to learn, think, analyze and relate complex facts and variables while arriving at a decision. A manager has to introduce rationality in his decision-making by using his skills, experience, knowledge and mental abilities.

On some occasions, such rational and right decisions are not taken due to variety of possible reasons. It is also possible that the decision taken may be rational when taken but is treated as wrong/irrational/faulty because' the results available from the decision taken are not as expected/positive/encouraging. Rational decisions may not be possible when the approach of the decision-maker is casual and superficial. He may not be alert, careful and cautious while taking the decisions or he might not have followed the decision-making process in a scientific manner. In brief, all business decisions should be rational as far as possible as such rational decisions offer many benefits/advantages. However, rational decisions may not be taken on certain occasions. According to Herbert A. Simon, human beings are not always rational in the decisional process.

7. Reasons Why Rational and Right Decisions May Not Be Possible?

1. Inadequate information, data and knowledge: For rational decision-making accurate, reliable and complete information about various aspects of the problem under investigation is necessary. The possible future trends can be estimated with the help of such information. This facilitates rational decision-making. However, adequate and reliable information may not be available at the time of decision-making. As a result, the decisions become defective or irrational. Such decision may prove to be faulty in the course of time. This is how the decisions become irrational to certain extent.
2. Uncertain environment: Decisions are taken on the basis of information available about various environmental variables. However, the variables are many and complex in nature. They may be related to political, economic, social and other aspects. It is not possible to study all such variables in depth due to inadequate information/data. This leads to inaccuracy in decision making and the decisions taken are not fully rational.
3. Limited capacity of decision-maker. A decision-maker should be expert, knowledgeable, intelligent and matured. He needs vision and capacity to imagine possible future situation. In the absence of such qualities, the decision-maker may not be able to take rational decisions. Similarly, the decision taken may not be rational if the decision-maker fails to follow all necessary steps required for scientific decision-making. A hasty decision or decision taken without full use of all mental faculties may not be fully rational. Thus, decisions are likely to be less rational if the decision maker lacks capacity to take rational decisions.
4. Personal element in decision-making: Decision-making should be always impartial and also favorable to the Organisation. Decision against Organisation but favorable to decision maker or other employees will be unfair. Such decision will not be rational. Similarly, every decision-maker has his own personal background in the form of personal beliefs, attributes, preferences, likes and dislikes and so on. A decision-maker is expected to keep these elements away while taking management decisions. This may not be possible in the case of all decision-makers and on all occasions. However, decisions are not fully rational when such personal element comes in the picture.
5. A decision cannot be fully independent: Managerial decisions are interlinked and interdependent. A manager has to make adjustments or compromises while making decisions. For example, for reducing price, some compromise with the quality may be necessary. A manager gives more importance to one and less to the other. He takes one decision which is rational at the same time makes some compromise in the other decision. As a result, other decision is not likely to be fully rational. In short, business decisions are interlinked. This brings an element of irrationality in some decisions.

The points noted above suggest why it is not possible to take rational and right decisions on all occasions.

8. Relationship Between Planning and Decision-making

There is close relationship between planning and decision-making. Decision-making has priority over planning function. It is the starting point of the whole management process. In fact, decision-making is a particular type of planning. A decision is a type of plan involving commitment to resources for achieving specific objective. According to Peter Drucker, it is the top management which is responsible for all strategic decisions such as the objectives of the business, capital expenditure decisions as well as operating decisions such as training of manpower and so on. Without management decisions, no action can take place and naturally the resources would remain idle and unproductive. The managerial decisions should be correct to the maximum extent possible. For this, scientific decision-making is essential.

In planning, various business problems are studied, decisions are taken regarding the future course of action and business activities are adjusted accordingly. Thus, planning means deciding in advance the objectives to be achieved and preparing plans/programmes for achieving them. In other words, planning is the process of foreseeing desired objectives - anticipating problems and developing solutions. It serves as a core of the whole management process.

Planning bridges the gap from where we are to where we want to go. In the absence of planning, events are left to chance. A plan is to-day's projection for tomorrow's activity.

2. Definitions of Planning

1. According to Koontz and O'Donnell, "Planning is deciding in advance what to do, how to do it, when to do it, and who is to do it. Planning bridges the gap between where we are and where we want to go. It makes it possible for things to occur which would not otherwise happen”.
2. According to George R Terry, "Planning is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualization and formulation of purposed activities believed necessary to achieve desired results".
3. According to Philip Kotler, "Planning is deciding in the present what to do in the future. It is the process whereby companies reconcile their resources with their objectives and opportunities".

3. Need of Planning

The need of planning is universally accepted in the business as well as in other aspects of life. The following points justify the need of business planning/planning in business:

1. Planning is needed for survival and growth of a business unit in an orderly manner.
2. Planning is needed in order to face new problems/difficulties developed due to growth of markets, market competition, changes in consumer expectations and so on.
3. Planning is needed in order to face challenges created by changing environmental factors/forces.
4. Planning is needed as it acts as a pre-requisite to good management. It is needed as it is the core of the whole management process.
5. Planning is needed in order to achieve the objectives decided by the management. It is also needed as it ensures accuracy, economy and operational efficiency in busin6s management.

4. Importance of Planning in Business Management

The importance of planning as an element in the management process is universally accepted. It plays a positive role in the management of a business unit. Planning brings stability and prosperity to a business unit. It brings unity of purpose and diverts all efforts in one direction for the achievement of certain well defined objectives. Planning also improves the performance of a business unit. In fact, in the absence of planning there will be disorder, confusion, inefficiency, wastage of human efforts and material resources. Planning is rightly treated as the pre-requisite to efficient management. The fact that large majority of business units use planning as a tool of management indicates its utility and importance. Planning brings safety to business operations. It is the only way for survival in the competitive business world.

Planning is important as it is more than a mere theoretical exercise or paperwork. It has practical utility and creative value. Planning is also a rational and intelligent activity. It is, now, rightly treated as a highly professionalized aspect of business management.

Planning is important but planning alone is not adequate. It should be supplemented by suitable follow-up actions on the part of managers. Planning may not be able to solve all managerial problems, but it certainly helps the thoughtful managers in overcoming various managerial problems. A plan will remain on paper if suitable follow-up steps are not taken at different levels for its execution. Thus, planning is a means and not the end in itself

5. Advantages of Planning

1. Facilitates quick achievement of objectives: Planning facilitates quick achievement of business objectives. In the planning process, the objectives to be achieved are clearly decided / finalised and plans are prepared and executed for achieving such well defined objectives. Planning ensures achievement of objectives in an orderly and quick manner.
2. Brings unity of purpose and direction: Planning brings unity of purpose and direction before the entire organisation as it is for achieving certain well defined goals. Planning diverts all resources in one direction for achieving well defined objectives.
3. Ensures full utilisation of resources: Planning ensures effective/maximum utilisation of available human and material resources. It eliminates wastages of all kinds (of material resources and human efforts) and this ensures fuller utilisation of available resources.
4. Avoids inconsistency in efforts: Planning avoids inconsistency in efforts and also avoids possible frictions and duplications. It ensures economy in business operations.
5. Raises competitive capacity/strength: Planning raises competitive potentialities of a business unit. It enables a business unit to stand with confidence in a competitive market. It keeps ready solutions for possible problems and enables a business unit to function with confidence.
6. Promotes managerial efficiency: Planning promotes managerial efficiency. It covers all managerial functions and helps management to execute future programmes in a systematic manner. It makes managerial direction and control effective.
7. Avoids hasty decisions and actions: Due to planning, hasty decisions and haphazard actions by managers are avoided. It also encourages systematic thinking by the managers. Planning facilitates effective delegation of authority, removes communication gaps and thereby raises overall efficiency. It even encourages innovative thinking among managers.
8. Ensures effective control on the Organisation: Planning ensures effective control on the whole organisation. It fixes targets in clear terms and draws plans and programmes for achieving them. This facilitates effective control on the functioning of the business unit.
9. Acts as an insurance against future uncertainties: Planning acts as an insurance against future uncertainties. It takes care of all business uncertainties. In fact, in planning, future problems and situations are studied in advance and alternative solutions are kept ready. This enables management to face any type of critical situation with ease and confidence.
10. Facilitates other managerial functions: Planning facilitates other managerial functions. It is the basic managerial function and other managerial functions such as organising, etc. move as per the plans prepared. It acts as a motivating force behind other managerial functions.
11. Improves motivation: Planning facilitates participation of managers and workers in the normal functioning of an enterprise. It develops team spirit and raises morale and motivation of employees. Workers know what is expected from them. This ensures high degree of efficiency from them. Planning also provides training to managers. It serves as a tool for manpower development in an Organisation.
12. 
    
    1. Planning ensures survival, stability and progress of a business unit.
    2. Ensures uniform decision-making.
    3. Acts as a key to solve problems and challenges faced by a business unit.
    4. Sets performance standards for functional departments.
    5. Planning enables a business unit to adjust itself with ever changing business environment.

6. Limitations of Planning

1. Time-consuming and costly: It is argued that planning is a lengthy process as it involves collection of data, forecast, research and analysis. Similarly, planning is essentially the job of highly paid experts. As a result, planning is a time-consuming and costly activity. Only large firms can undertake planning due to heavy cost and lengthy procedure involved in it.
2. Ineffective due to environmental changes: Business environment changes frequently and plans are required to be adjusted as per the changes in the situation through suitable modifications. However, such revision/modification creates a number of problems. Such adjustments in the operational plan are always costly, time-consuming.
3. Dangers of unreliable data: Planning needs accurate data from internal and external sources. The quality of planning depends on such accurate feedback. If the information supplied by various departments is unreliable, the planning process will be adversely affected. Planning based on incomplete information may prove to be even dangerous. In brief, plans based on unreliable data are not useful /effective. Securing reliable information is always difficult and this brings deficiencies in the entire planning process.
4. Encroachment on individual freedom and initiative: Planning is a centralized process. At the lower levels, plans are to be executed as per the directives issued. This affects individual freedom and initiative at the lower levels. Employees at the lower levels act as instruments for the execution of plan prepared by the top level managers. People are asked to become cogs in the machine with little scope for initiative or independent thinking.
5. Delays actions: Planning is a lengthy process. As a result, the actions to be taken for execution are delayed. Planning is not useful when quick decisions and actions are required.
6. Unsuitable to small firms: Small firms prefer to function without long term comprehensive planning as they find planning rather costly and time-consuming. They prefer to face the situations as they come. Similarly, quick decisions and prompt actions are necessary in the case of certain business activities. Here, long term planning is not suitable.
7. Limited practical value: It is argued that planning is too theoretical and has limited practical utility. Planning takes long time for preparation and the situation changes when such plans are ready for execution. Planning for example, is not suitable in the case of speculative business. It is also not useful for taking quick benefits of business opportunities. In brief, planning has limited practical value.
8. No guarantee of expected results: Planning is for achieving certain well defined objectives. However, there is no guarantee that the objectives will be achieved within the specific time limit by using planning as a tool. Actual performance may not be as per the expectation due to various reasons. Thus planning has an element of uncertainty. Planning leads to probable results and not the expected results. It gives benefits but may not be exactly as per the expectation. Thus, there is no guarantee that planning will give 100 per cent positive/expected results.
9. Generates frustration: At the lower levels, plans are imposed on the employees. No consideration is given to their difficulties, views and opinions. The targets may be too ambitious and the employees may not be able to achieve them in spite of best efforts. This leads to frustration among employees at lower levels.
10. Involves huge paper work: Planning involves huge paper work in the preparation of master plan and departmental plans.
11. Danger of overdoing: Sometimes, planners overload the work. Elaborate reports are prepared without practical utility.

The advantages of planning are more important/significant while its limitations are few and also not of serious nature. Moreover, these limitations can be minimized. The practical utility of planning is universally accepted. It is not fair to give up the concept of planning due to certain limitations. The better alternative is to make it more effective, purposeful and result oriented.

7. Steps in Planning Process

Planning is a lengthy process which moves gradually and step by step approach is usually adopted. These steps are like stations in the journey of planning process. Usual steps in the planning process are as briefly explained below:

1. Classifying the problems: The planning process starts with clear understanding and classifying business problems faced by a business unit. Identification of problems or opportunities by managers justifies the need for action. It is like the diagnosis of the health problem of a patient by his doctor. Planners have to understand the problems of the Organisation first and, then, prepare a plan to deal with the problems in the light of the prevailing business environment.
2. Determining the objectives: In this second stage in the planning process, the planners decide the overall objectives to be achieved. Planning is always for achieving certain well defined objectives and naturally objectives must be spelt out precisely. Objectives act as pillars of the entire planning process. Business objectives may be decided in terms of profit, sales, production or market reputation. Objectives may be defined in quantitative or qualitative terms.
3. Collecting complete information and data: The planners have to collect information relating to problems facing the business unit. Such information is necessary and useful for analyzing the problems in depth and also for accuracy in planning. Information can be collected from internal and external sources. Reliable, updated and adequate data make planning process result-oriented.
4. Analyzing and classifying the information: At this stage, the information collected is analyzed and interpreted systematically for drawing specific conclusions. This facilitates purposeful use of information, while preparing alternative plans. Irrelevant information can be discarded through such analysis.
5. Establishing planning premises: Planning premises are various assumptions and predictions about the future business situation. Such premises act as background for planning activities. The planning premises are expected to supply relevant facts, information and data on the basis of which forecasts are prepared and future trends are indicated. Planning premises reduce uncertainties in the planning process. Planning premises are three in number viz., (a) Controllable permises, (b) Semi-controllable permises, and (c) Uncontrollable premises.
6. Determining alternative plans: Here, the planners prepare and keep ready alternative plans suitable for use under different situations. The best among the available alternative plans is used for actual execution. The preparation of alternative plans is essential as one plan is normally not adequate under all types of situations. It is a type of stand-by arrangement useful for meeting any emergency situation.
7. Selecting operating plan and preparing derivative plans: After study of the business environment and the alternative plans available, the planners select the best plan for actual execution. This decision is a delicate one and must be made with proper care. After the selection of operating plan, the planners have to prepare derivative plans. Such plans are related to different departments/activities and constitute sub-sections of the operating plan. The division of overall plan into derivative plans is necessary for effective execution.
8. Arranging timing and sequence of operations: Timing involves fixation of starting and finishing time for each job or piece of work. Sequence of operations ensures proper flow of work. This step in planning process is important as it brings coordination in the activities of different departments. The timings and sequence of operations must be communicated to concerned departments, managers and staff for implementation of the plan.
9. Securing participation of employees: Planning needs willing participation of all employees and departments. For this, information regarding the operative plan should be given to employees well in advance. Here, the internal communication system should be used extensively. For such participation, employees should be associated with the planning process.
10. Follow-up of the proposed plan: The purpose of follow-up is to make periodical review of the execution process. It is useful for understanding actual progress and deficiencies in the process of execution of the plan. This also facilitates adoption of suitable remedial measures as and when required.

Definitions of Management

1. According to George R. Terry, "Management is a distinct process consisting of planning, organising, actuating and controlling, performed to determine and accomplish stated objectives by the use of human beings and other resources".
2. According to Henry Fayol, "To manage is to forecast and to plan, to organise, to command, to coordinate and to control".
3. According to Peter Drucker, "Management is a multi-purpose organ that manages business and manages managers and manages workers and work".
4. According to Harold Koontz, "Management is the art of getting things done through and with people in formally organized groups”.
5. According to Mary Parker Fallett, "Management is the art of getting things done through people".

Characteristics of Management

1. Management is a managerial process: Management is a process and not merely a body of individuals. Those who perform this process are called managers. The managers exercise leadership by assuming authority and direct others to act within the organisation. Management process involves planning, organising, directing and unifying human efforts for the accomplishment of given tasks.
2. Management is a social process- Management takes place through people. The importance of human factor in management cannot be ignored. A manager's job is to get the things done with the support and cooperation of subordinates. It is this human element which gives management its special character.
3. Management is action-based: Management is always for achieving certain objectives in terms of sales, profit, etc. It is a result-oriented concept and not merely an abstract philosophy. It gives importance to concrete performance through suitable actions. It is an action based activity.
4. Management involves achieving results through the efforts of others: Management is the art of getting the things done through others. Managers are expected to guide and motivate subordinates and get the expected performance from them. Management acts as an activating factor.
5. Management is a group activity: Management is not an isolated individual activity but it is a collective activity or an activity of a group. It aims at using group efforts for achieving objectives. Managers manage the groups and coordinate the activities of groups functioning in an organisation.
6. Management is intangible: Management is not directly visible but its presence is noticed in the form of concrete results. Management is intangible. It is like invisible spirit, which guides and motivates people working in a business unit. Management is like government, which functions but is not visible in physical form.
7. Management is aided, not replaced by computers: The computer is an extremely powerful tool of management. It helps a manager to widen his vision. The computer supplies ocean of information for important decision-making. The computer has unbelievable data processing and feedback facilities. This has enabled the manager to conduct quick analysis towards making correct decisions. A computer supports manager in his managerial work. However, it cannot replace managers in business. They were required in the past, at present and also in future. Their existence is absolutely essential in the management process.
8. Management is all pervasive: Management is comprehensive and covers all departments, activities and employees. Managers operate at different levels but their functions are identical. This indicates that management is a universal and all pervasive process.
9. Management is an art, science as well as a profession: Management is an art because certain skills, essential for good management, are unique to individuals. Management is a science because it has an organised body of knowledge. Management is also a profession because it is based on advanced and cultivated knowledge.
10. Management aims at coordination of activities: Coordination is the essence of management. It gives one clear direction to the whole organisation and brings unity and harmony in the whole business unit. For such coordination, effective communication at all levels is essential.
11. Management is innovative: Management techniques are dynamic and innovative. They need to be adjusted as per the requirements of the situations. Another manager need not repeat the decisions of one manager. Similarly, a manager has to change his decisions under different situations.
12. Management has different operational levels: Every Organisation needs managers for managing business activities. The manager's job is basically the same at all levels. The managers at the higher levels have more important duties while managers at the lower levels have to perform routine functions i.e duties.
13. Management is different from ownership: Management is concerned with the management of business activities. Managers are not the owners but they manage the business on behalf of the owners. Separation of ownership and management is a special feature of modem business organisation.
14. Management has vast scope: The scope of management is quite comprehensive. It covers all aspects of business. The principles of management guide managers while managing various business activities.
15. Management is dynamic: Business is influenced by changes in economic, social, political technological and human resource. Management adjusts itself to the changing atmosphere making suitable forecasts and changes in the policies. Hence, management is treated as a dynamic activity.
16. Management aims at achieving predetermined objectives: Management is a meaningful activity. All organisations are essentially groups of individuals formed for achieving common objectives. An Organisation exists for the attainment of specific objectives.

Need of Management

1. Direction, coordination and control of group efforts: In business, many persons work together. They need proper direction and guidance for raising their efficiency. In the absence of guidance, people will work as per their desire and the, orderly working of enterprise will not be possible. Management is needed for planning business activities, for guiding employees in the right direction and finally for coordinating their efforts for achieving best/most favorable results.
2. Orderly achievement of business objectives: Efficient management is needed in order to achieve the objectives of business activity in an orderly and quick manner.
3. Performance of basic managerial functions: Planning, Organising, Co-ordinating and Controlling are the basic functions of management. Management is needed as these functions are performed through the management process.
4. Effective communication at all levels: Management is needed for effective communication within and outside the Organisation.
5. Motivation of employees: Management is needed for motivating employees and also for coordinating their efforts so as to achieve business objectives quickly.
6. Success and stability of business enterprise: Efficient management is needed for success, stability and prosperity of a business enterprise.

Modem business is highly competitive and needs efficient and capable management for survival and growth. Management is needed as it occupies a unique position in the smooth functioning of a business unit. This suggests the need of efficient management of business enterprises. Profitable/successful business may not he possible without efficient management. In this sense, "No management, no business" is true. Survival of a business unit in the present competitive world is possible only through
efficient and competent management.

Meaning of Management Process

The term management is explained in different ways. For example, it is said that management is what management does. Here, management is explained with reference to its basic functions which include planning, organising, coordinating and controlling. Similarly, management is described as a process which involves various elements. Management process is a continuous one and is run by the managers functioning at different levels. Management is now recognised as a distinct process in which managers plan, organise, lead, motivate and control human efforts in order to achieve well defined goals. In fact, process means a series of activities/operations undertaken/conducted for achieving a specific objective. Process is a systematic way of doing things. For example, in a factory there is a production process. Similarly, in the management process, resources and human efforts are used in an orderly manner for achieving specific objectives. The management process suggests functions to be performed by the managers.

Definition of Management Process

1. According to D. E. McFarland, "Management is the distinct process by which the managers create, direct, maintain and operate purposive organisation through systematic, co-coordinated and cooperative human efforts”.
2. According to Gemp R. Terry, "Management is a distinct process consisting of planning, organisisng, actuating, and controlling, performed to determine and accomplish objectives by the use of people and other resources".

Functions of Management

The essential elements/components of Management Process are four.

1. Planning
2. Organising
3. Directing and
4. Controlling.

We may add some more elements in the management process. Such elements are:-

1. Motivating
2. Co-coordinating
3. Staffing and
4. Communicating.

The elements in the management process are actually the basic functions of management these functions constitute the management process in practice. Management process is in fact, management in practice. This process suggests what a manager is supposed to, do or the basic functions that he has to perform while managing the job assigned to him.

Luther Gullic gave a new formula to suggest the elements of Management Process i.e. basic functions of management. According to him, management process may be indicated by the word "PODSCORB”. Here, ‘P' states for 'planning'. "O" for 'organising', "D" for 'directing', "S" for 'Staffing', "CO" for 'Coordinating, "R" for 'Reporting' and "B" for 'Budgeting'. Gullic coined the word "PODSCORB" to suggest seven functions of management.

The following figures show the management process and the elements involved:

Elements of Management Process

1. Planning: Planning is the primary function of management. It involves determination of a course of action to achieve desired results/objectives. Planning is the starting point of management process and all other functions of management are related to and dependent on planning function. Planning is the key to success, stability and prosperity in business. It acts as a tool for solving the problems of a business unit. Planning plays a pivotal role in business management It helps to visualize the future problems and keeps management ready with possible solutions.
2. Organising: Organising is next to planning. It means to bring the resources (men, materials, machines, etc.) together and use them properly for achieving the objectives. Organisation is a process as well as it is a structure. Organising means arranging ways and means for the execution of a business plan. It provides suitable administrative structure and facilitates execution of proposed plan. Organising involves different aspects such as departmentation, span of control delegation of authority, establishment of superior-subordinate relationship and provision of mechanism for co-ordination of various business activities.
3. Staffing: Staffing refers to manpower required for the execution of a business plan. Staffing, as managerial function, involves recruitment, selection, appraisal, remuneration and development of managerial personnel. The need of staffing arises in the initial period and also from time to time for replacement and also along with the expansion and diversification of business activities. Every business unit needs efficient, stable and cooperative staff for the management of business activities. Manpower is the most important asset of a business unit. In many organisations, manpower planning and development activities are entrusted to personnel manager or HRD manager. 'Right man for the right job' is the basic principle in staffing.
4. Directing (Leading): Directing as a managerial function, deals with guiding and instructing people to do the work in the right manner. Directing/leading is the responsibility of managers at all levels. They have to work as leaders of their subordinates. Clear plans and sound organisation set the stage but it requires a manager to direct and lead his men for achieving the objectives. Directing function is quite comprehensive. It involves Directing as well as raising the morale of subordinates. It also involves communicating, leading and motivating. Leadership is essential on the part of managers for achieving organisational objectives.
5. Coordinating: Effective coordination and also integration of activities of different departments are essential for orderly working of an Organisation. This suggests the importance of coordinating as management function. A manager must coordinate the work for which he is accountable. Co-ordination is rightly treated as the essence of management. It may be treated as an independent function or as a part of organisms function. Coordination is essential at all levels of management. It gives one clear-cut direction to the activities of individuals and departments. It also avoids misdirection and wastages and brings unity of action in the Organisation. Co-ordination will not come automatically or on its own Special efforts are necessary on the part of managers for achieving such coordination.
6. Controlling: Controlling is an important function of management. It is necessary in the case of individuals and departments so as to avoid wrong actions and activities. Controlling involves three broad aspects: (a) establishing standards of performance, (b) measuring work in progress and interpreting results achieved, and (c) taking corrective actions, if required. Business plans do not give positive results automatically. Managers have to exercise effective control in order to bring success to a business plan. Control is closely linked with other managerial functions. It is rightly treated as the soul of management process. It is true that without planning there will be nothing to control It is equally true that without control planning will be only an academic exercise Controlling is a continuous activity of a supervisory nature.
7. Motivating: Motivating is one managerial function in which a manager motivates his men to give their best to the Organisation. It means to encourage people to take more interest and initiative in the work assigned. Organisations prosper when the employees are motivated through special efforts including provision of facilities and incentives. Motivation is actually inspiring and encouraging people to work more and contribute more to achieve organisational objectives. It is a psychological process of great significance.
8. Communicating: Communication (written or oral) is necessary for the exchange of facts, opinions, ideas and information between individual’s and departments. In an organisation, communication is useful for giving information, guidance and instructions. Managers should be good communicators. They have to use major portion of their time on communication in order to direct, motivate and co-ordinate activities of their subordinates. People think and act collectively through communication. According to Louis Allen, "Communication involves a systematic and continuing process of telling, listening and understanding".

Importance of Management

1. Optimum utilisation of resources: Management facilitates optimum utilisation of available human and physical resources, which leads to progress and prosperity of a business enterprise. Even wastages of all types are eliminated or minimized.
2. Competitive strength: Management develops competitive strength in an enterprise. This enables an enterprise to develop and expand its assets and profits.
3. Cordial industrial relation: Management develops cordial industrial relations, ensures better life and welfare to employees and raises their morale through suitable incentives.
4. Motivation of employees: It motivates employees to take more interest and initiatives in the work assigned and contribute for raising productivity and profitability of the enterprise.
5. Introduction of new techniques: Management facilitates the introduction of new machines and new methods in the conduct of business activities. It also brings useful technological developments and innovations in the management of business activities.
6. Effective management: Society gets the benefits of efficient management in terms of industrial development, justice to different social groups, consumer satisfaction and welfare and proper discharge of social responsibilities.
7. Expansion of business: Expansion, growth and diversification of a business unit are possible through efficient management.
8. Brings stability and prosperity: Efficient management brings success, stability and prosperity to a business enterprise through cooperation among employees.
9. Develops team spirit: Management develops team spirit and raises overall efficiency of a business enterprise.
10. Ensures effective use of managers: Management ensures effective use of managers so that the benefits of their experience, skills and maturity are available to the enterprise.
11. Ensures smooth functioning: Management ensures smooth, orderly and continues functioning of an enterprise over a long period. It also raises the efficiency, productivity and profitability of an enterprise.
12. Reduces turnover and absenteeism: Efficient management reduces labour turnover and absenteeism and ensures continuity in the business activities and operations.
13. Creates sound organisation: A dynamic and progressive management guarantees development of sound Organisation, which can face any situation - favorable or unfavorable with ease and confidence.

The very survival of an enterprise depends on its management. Ineffective management leads to disastrous consequences. According to George Terry, "Ineffective management cuts at the very roots of economy of an enterprise’s. This suggests the importance of efficient management. In brief, management occupies a unique position in the functioning of business enterprises. Its importance and positive role is accepted in all sector-private, public, joint and co-operative. Management is like a human brain. It is an integral aspect of business itself.

The importance of management is not fully realised in many developing countries. The economic progress of western countries is not merely due to abundant material resources but because they are efficiently managed and utilised. In other countries, resources are not utilised fully and properly due to lack of managerial skills. This suggests that management is a key factor in the working of business enterprises. There is no substitute to efficient management. An inefficiently managed business enterprise has no place in the present complex and competitive business world groups.

Management in the Future

In the next couple of decades, management theory and practice is bound to change in order to meet the complex and ever changing environmental variables. The phenomenal growth in multinational and transnational operations, fast changing technology, increasing complexity of decision making, dynamic social and economic environment, globalisation of business and elastic project organisations and task groups will significantly influence the future managerial world and managerial tasks. There are successful business and management leaders publishing their memories and offering their experience to the world. There is great increase in the number of business schools. Management education is bank ably providing expertise to nonage the business and this trend is likely to continue. Career paths are likely to be based on expertise alone. Managers will be under pressure to develop this expertise and apply it in an ever-widening range of situations rather than their ability to survive the bureaucratic jungle. They will have to combine their personal, professional and operational qualities and capacities to the satisfaction of employers and the society. The future must be considered as an opportunity and not a problem.

The future business environment will he dominated by information technology (IT), globalisation, material and energy shortages, problems of pollution and ecological balance, consumerism, inflation and R & D. The costs of employing expert managers are regarded as an investment for effective business performance. Management is a designated expertise, increasingly professionalized and is likely to progress to a highly organised status. It is assumed that young people will choose management as an occupation and will progress from lower to middle and from middle to top management positions. An ever-greater range of knowledge is available to all aspects of business and management.

Some forces/factors that are likely to have an impact upon management in future are as mentioned below:-

1. Emergence of knowledge society.
2. Development of socially concerned Humanistic society.
3. Widespread application of information technology (IT)
4. Transition from industrial to service economy.
5. Growing use of innovations and R & D.
6. Social accountability of business.
7. Satisfaction of human and social values in man-machine system.
8. Liberalization and Globalisation of the business.

Development of Management Thought

Management thought has a long history. It is as old as human civilization itself. Management in one form or the other has been a significant feature of economic life of mankind throughout ages. Management thought is an evolutionary concept It has develop along with and in line with the growth of social, political, economic and scientific institutions. Management thought has its origin in the ancient times. It developed gradually along with other socioeconomic developments. The contributor’s to management though are many. They include Management philosophers, management practitioners and scholars. Modem management is based on the solid foundations laid down by management thinkers from the early historical period.

Historical Background of Management

The recorded use of organised management dates back to 5000 B.C. when the agricultural revolution had taken place. These agricultural civilizations existed in India, China and Egypt According to Peter Drucker these irrigation civilizations "were not only one of the great ages of technology, but it represented also mankind’s most productive age of social and political innovation". As the villages grew and civilizations evolved, the managers too grew and evolved. They became the priests, the kings, the ministers holding power and wealth in the society. Written documents found in the Sumerian civilization which flourished some 5000 years ago, contains evidence of management control practices.

As early as 4000 B.C., the Egyptians were aware of the importance of planning, organising and controlling. The huge pyramids of Egypt stand a mute testimony to the managerial and organizational abilities of the ancient Egyptian civilization. One pyramid required 1,00,000 men working for 20 years, covering 13 acres, using 2.3 million blocks, each weighing an average of 2.5 tons. To produce such a monument required proper planning, work allocation, organising, directing, controlling and decision making.

In the Grecian civilization we find the origin of the Scientific Method in the famous Socratic discourses. The Romans who built a vast empire extending from Britain in the west to Syria in the east ruled it for many years only because of their superior and advanced managerial abilities.

In ancient India Kautilya wrote his Arthashastra in about 321 B.C. the major theme of which was political, social and economic management of the State. The study of administration of the cities of Mohenjodaro and Harappa of the ancient Aryans in 2000 B. C., Buddha's order and the Sangha in 530 B. C., provide evidence about the use of the principles of management.

During the 13th and 14th centuries AD the large trading houses of Italy needed a means of keeping records of their business transactions. To satisfy their needs Luca Pacioli published a treatise in 1494 describing the Double Entry System of Book-keeping for the first time.

Management thought is an evolutionary concept. New theories and principles were suggested along with new developments in the business field. The new thoughts supplemented the existing thoughts and theories. This is how developments are taking place continuously in regard to management thoughts/theories. Management thinkers and thinkers from other fields such as economics, psychology, sociology and mathematics have also made their contribution in the evolution of management thought.

Evolution of Management Thought

This evolution of management thought can be studied in the following flum broad stages:

1. The Classical Theory of Management (Classical Approach): It includes the following three streams of thought: (i) Bureaucracy, (ii) Scientific Management; and (iii) Administrative Management
2. The Neo-classical theory of Management: It includes the following two streams: (i) Human Relations Approach and (ii) Behavioral Sciences Approach.
3. The Modern Theory of Management: It includes the following three streams of thought: (i) Quantitative Approach to Management (Operations Research); (ii) Systems Approach to Management and (iii) Contingency Approach to Management.

It is rather difficult to state the exact period of each stage in the evolution of management thought. Experts, in general, agree with the following period for each thought/school.

1. Classical School/thought: 1900 to 1930.
2. Neo-classical School/thought: 1930 to 1960.
3. Modern School/thought: 1960 onwards.

Contributors to Management Thought

The development of management thought is the result of contributions made by pioneering management thinkers and experts from other social sciences such as economics and psychology.

Contribution of F. W. Taylor to Management Thought

F.W. Taylor is one of the founders (the other two are Max Weber and Henry Fayol) of classical thought/classical theory of management. He suggested scientific approach to management also called scientific management theory. F. W. Taylor (1856-1915) is rightly treated as the father of scientific management. He suggested the principles of scientific management. His concept of scientific management developed into a movement and dominated the industrial management for several decades after him. His concepts and principles were refined and popularized by several of his followers, notable among them being Henry Gantt, The Gilberths and Emerson.

Principles of Scientific Management

According to Taylor, scientific management in its essence consists of a philosophy which results in a combination of four important underlying principles of management. First, the development of a true science, second, the scientific selection of the workers, third, their scientific education and development, Froth, intimate co-operation between management and their men. The basic principles of Taylor philosophy of scientific management are as noted below. These principles of scientific management are most crucial aspects of scientific management.

1. The development of 'One best way" of doing a job. This suggests the task of finding out the best method for achieving the objectives of a given job. The standards are decided scientifically for Jobs and incentive wages were paid for all production above this standard. Here, job analysis and standardization of tools, equipment, machinery, etc. are required.
2. Scientific selection of workers and their development through proper training.
3. Scientific approach by management. The management has to develop a true science in all fields of work activity through scientific investigation and experiments.
4. Close co-operation of managers and workers (labour management relations) for better results and understandings.
5. Elimination of conflict between methods and men. The workers are likely to resist to new methods. This can be avoided by providing them an opportunity to earn more wages.

Features of Scientific Management

1. Scientific task setting: F. W. Taylor suggested the introduction of standard task which every worker is expected to complete within one day (working hours) the task is to be calculated through careful scientific investigation. For this, work study (i.e. method study and work measurement study) is essential. Taylor suggested time study, motion study, fatigue study and rate-setting for the introduction of scientific task. Time study is the art of observing and recording the time required to do each detailed element in an industrial operation. Motion study refers to the study and analysis of the movements of an operator while performing a job so that attempts can be made to remove useless/unwanted movements from the process. Both the studies together help in determining the best method of performing a job and the standard time allowed for it. This replaces the old rule-of-thumb knowledge of the workers. The workload, the best method of performing the same and the time within which it must be performed are suggested in this feature of scientific management by Taylor.
2. Planning the task: For performing the task by every worker, Taylor suggested the need of planning the production activity accurately. This idea of planning is Taylor's gift to the science of management. Planning of task gives answers to the following questions. What has to be done, how it is to be done, where the work shall be done and when the work shall be done.
3. Scientific selection and training of workers: Taylor suggested the need of scientific selection of workers for the plant/production activities. The procedure of selection must be systematic so as to select the best and the most suitable persons for different types of jobs. Correct placement of workers is equally important He also suggested the need of training of workers so as to raise their ability or efficiency. Training is to be integrated with the promotion policy. He also suggested differential piece wage plan for compensation payment to workers. He also suggested the importance of cordial relations between management and workers.
4. Standardization: Taylor suggested the importance of standardization of tools and equipment, materials, conditions of work and speed of machines. This brings co-ordination in different activities and all workers will be able to perform the task assigned easily. The workers will have satisfactory working conditions for work due to such standardization.
5. Specialization: Taylor suggested specialization in the administrative and organizational setup of the plant He suggested functional foremanship. Taylor recommended eight functional foremen for different activities and functions. The foremen suggested by him are like route clerk, instruction card clerk, speed boss etc. Such specialization is useful for raising efficiency of the whole organisation.
6. Mental revolution: The techniques suggested by F. W. Taylor in his scientific management are different as compared to traditional techniques and methods. Naturally, these techniques can be used only when workers supervisors and managers accept them in theory and also in practice For this, Mental revolution on their part is essential The success of scientific management rests basically on the attitude of management and workers. They must give up their old ideas and methods and must accept new scientific methods. For this, mental revolution on the part of both is essential. Cooperation from workers and management for the introduction of scientific management depends on this mental revolution.

Benefits / Advantages of Scientific Management

1. Application and use of scientific methods.
2. Wide scope for specialization and accurate planning.
3. Minimum wastages of materials, time and money.
4. Cordial relations between workers and management.
5. Benefits to workers (higher wages and less burden of work), management (cost reduction, better quality productions) and consumers (superior goods at lower prices)

Scientific management not only developed a rational approach to solving organisational problems but also contributed a great deal to the professionalisation of management. Time and motion studies, scientific selection of workers, work design and one best way to doing a job are some new ideals suggested by Taylor and are responsible for the introduction of Many positive changes in the field of industrial/ production management.

F. W. Taylor’s Contribution to the Development of Management Thought / Science

The contribution of F. W. Taylor to management thought is as explained below:

1. Emphasis on rational thinking: Taylor suggested rational thinking on the part of management for raising efficiency and productivity. He wanted managements to replace old methods and techniques by Modern methods which will raise productivity and offer benefits to all concerned parties. He was in favour of progressive, scientific and rational thinking on the part of management on all managerial problems. Such progressive outlook is essential for the introduction of new techniques and methods in the Management.
2. Introduction of better methods and techniques of production: F. W. Taylor suggested the importance of improved methods and techniques of production. Work-study techniques are his contribution to management thought. He suggested new methods after systematic study and research. Taylor recommended the use of new methods for raising overall efficiency and productivity.
3. Emphasis on planning and control of production: Taylor suggested the importance of production planning and control for high production, superior quality production and also for low cost production. He introduced the concept of production management in a systematic way.
4. Importance of personnel and personnel department: Taylor suggested the importance of manpower in management. He was in favour of progressive personnel policies for the creation of efficient and satisfied labour force. He suggested the need of personnel department and its importance. He favored incentive wage payment to workers.
5. Industrial fatigue and rest pauses: Taylor noted the nature of industrial fatigue and suggested the introduction of suitable rest pauses for removing such fatigue of workers. He wanted to reduce the burden of work on workers through the use of scientific methods.
6. Time and motion study: Taylor introduced new concepts like time study, motion study and work study in the field of industrial management such concepts are for the introduction of new methods which will be more quick, scientific and less troublesome to workers.

The positive view of scientific management was described by Taylor as "Science, not rule of thumb; Harmony, not discord; Co-operation, not individualism; maximum output in place of restricted output. The development of each man to his greatest efficiency and prosperity".

F.W. Taylor a rightly treated as father of scientific management. In fact, through his concept of scientific management, Taylor actually developed a new science of management which is applicable not only to management of industrial units but also to the management of all other business units. He suggested certain techniques which can be applied purposefully to all aspects of management of business activities. This is treated as Taylor’s unique contribution to management thought.

The fundamental principles suggested by F. W. Taylor in his scientific management can be treated as his contribution to management thought. In fact, Taylor suggested scientific attitude and a new philosophy for discarding old and outdated ideas and techniques. He was instrumental for the introduction of new ideas and techniques in the science of management. These ideas aid techniques are now accepted in theory as well as in practice.

Criticism of Scientific Management or Opposition to Scientific Management

Scientific management has wider economic and social significance. It has succeeded in revolutionalising the very concept of management by offering a novel approach to the managers in managing men, materials and methods. In spite of several benefits, Taylor's scientific management concept has widely been criticized by employers, workers, trade unions and also by theorists. They oppose Taylor's scientific management on different grounds. The points of criticism we as explained below:

Criticism from Employers

1. Huge investment required: Heavy investment is necessary for reorganization of preliminary standardization of tools, machines and equipment and conduct of time and motion studies and other research activities for the introduction of scientific management. Such investment may not be possible in small and medium size enterprises.
2. Sudden change may disturb existing working arrangements: Sudden change due to the introduction of scientific management may paralyze the existing arrangement of work and will bring the entire Organisation in difficulties. There will be loss due to reorganization, if scientific management is to be introduced.
3. Unsuitable to small units: Small manufacturers argue that the concept of scientific management is not suitable to their units due to financial and other difficulties.
4. Benefits after a long period: The benefit of scientific management will be available only after a long period and the business unit may come in financial and other difficulties during the process of introduction of new changes as suggested in the scientific management.
5. Huge overhead expenses required: Introduction of scientific management involves huge overhead expenses which may erode profitability.

Criticism from Workers and Trade Unions. Why did Trade Unions Oppose Scientific Management?

1. Heavy burden on workers: Workers feel that they will have to share more burden of work as a result of introduction of scientific management. They also fear that the benefits will he shared by the employer alone and that they will be at a loss from all sides. Workers and their unions feel that it will lead to their exploitation and they oppose scientific management on this ground.
2. Reduces initiative among workers: Workers and trade unions argue that scientific management will destroy their initiative and they will be converted into machines in the production process with no freedom, initiative and choice. Similarity, over-specialization (excessive specialization) will lead to monotony and mental fatigue. Hence, they oppose Taylor's scientific management.
3. Possibility of unemployment: Workers and their unions also feel that scientific management will lead to unemployment and that workers will be removed due to the use of labour-saving devices. This will lead to loss of employment and income to workers. This is likely to make trade unions weak and hence they oppose scientific management.
4. Exploitation of workers: Workers argue that they will be exploited under scientific management as they will have to share more burden of work without corresponding increase in the wage rate. Trade unions also oppose to scientific management as it is likely to put more burden of work on the workers without corresponding monetary benefit.
5. Possible adverse effects on workers unity: Trade unions also oppose scientific management as they fear that the unity among workers will be adversely affected. Workers will be divided into efficient and inefficient categories. In addition, different piece rate plans will be introduced in place of uniform wage rate. As a result, workers will be divided. Workers getting high salary will not be interested in the union activities and this will make their union week and ineffective. Even more unions and rival unions will be formed. In brief, trade unions strongly criticize scientific management as it breaks solidarity of workers

The criticism of scientific management by employers and workers/trade unions is not based on sound reasoning. Their arguments are not based on realities. It is possible to give counter-arguments to every point of criticism noted by them. For example, employers object scientific management on the ground of huge investment for its introduction. It is true that huge investment will be necessary but it is likely to give greater return in due course. In addition, scientific management will bring down the cost and thereby enhance the profits.

Contribution of Henry Fayol to Management Thought

Henry Fayol (1841-1925) is rightly treated as the father of modern theory of general and industrial management. The credit of suggesting the basic principles of management in an orderly manner goes to Henry Fayol. After obtaining an engineering degree, Henry Fayol, joined as chief executive in a coal mining company. He developed his management principles and general management theory and published them in the form of a book (in French) "General and Industrial Administration" in 1916. It was translated into English in 1930. In due course of time, Henry Fayol came to be recognised as the founder of modern management theory. His analysis of management process acts as the foundation of the whole management theory and the present super-structure of management has been built on it.

Henry Fayol suggested important qualities of managers and stressed the need for raising such qualities. He developed fourteen principles of management out of his practical experience. These principles are universal in character and are applicable to all types of organisations. Each principle suggested by him has specific meaning and significance. According to him, managers in all organisations need to follow these principles/guidelines while managing the affairs of their business units. The management principles suggested by him in 1916 are universally accepted by modern authorities on management and are treated as valid even to this day. This is because these principles are practical in nature and also result-oriented. In fact, these principles are the outcome of his long experience as a practicing manager. These basic principals are useful for effective management of business activities. They are related to the basic components of management process such as planning, organizing, staffing, leading, coordinating and controlling. He incorporated these principles in the management theory suggested by him.The principles of management suggested by him are useful not only in business/industrial enterprises but also in other organisations such as colleges, hospitals, charitable institutions and government departments. Due to his contribution to management theory and principles, Henry Fayol is rightly treated as the Father of Modern Management Thought. Fayol is the first management thinker who provided the conceptual framework of the functions of management in his book “General and Industrial Management. The functions of management according to Fayol are,

1. Planning
2. Organising
3. Staffing
4. Commanding
5. Coordinating
6. Controlling

The fourteen principles of management suggested by him are related these basic functions of management process and are universally accepted. Fayol has given adequate details of every principle suggested by him. He also made them easily acceptable by others. According to Henry Fayol, managers should be flexible in the application of these principles.

The fourteen principles of management suggested by him are related these basic functions of management process and are universally accepted. Fayol has given adequate details of every principle suggested by him. He also made them easily acceptable by others. According to Henry Fayol, managers should be flexible in the application of these principles.

Fayol divided general and industrial management into following six groups:-

1. Technical activities (production, manufacture, adaptation).
2. Commercial activities (buying, selling and exchange).
3. Financial activities (search for and optimum use of capital).
4. Security activities (protection of property and persons).
5. Accounting activities (stock taking, balance sheet, cost, and statistics).
6. Managerial activities (planning, organising, command, coordination and control).

Henry Fayol also suggested 14 principles of management. These principles are:-

1. Division of work,
2. Authority and responsibility,
3. Discipline,
4. Unity of command,
5. Unity of direction,
6. Subordination of personal interest to organizational interests,
7. Remuneration,
8. Centralization,
9. Scalar chain,
10. Order,
11. Equity,
12. Stability of tenure,
13. Span of co-operation and
14. Initiative

Henry Fayol’s contribution to management theory is certainly remarkable. He gave overall concepts of general management and suggested the basic functions of management. He recommended the selection and training of workers and managers. He also advocated the use of organisation charts. He suggested certain qualities of manager’s winch include physical, mental, moral, educational technical and experience. Fayol’s theory of management was the first complete theory of management as we understand today. It incorporated proven principles, elements, procedures and techniques based on his practical experience.

Contribution of Elton Mayo to the Development of Management Thought

Elton Mayo (1880-1949) is recommended as the Father of Human Relations School. He introduced human relations approach to management thought. His contribution to the development of management thought is unique and is also treated as human relations approach to management. It was Mayo who led the team for conducting the study at Western Electric's Hawthorne Plant (1927-1932) to evaluate the attributes and psychological reactions of workers in on-the-job situations. His associates included John Dewery, Kurt Lewin and others. Mayo and his associates came to the following conclusions from their famous Hawthorne experiments:

1. The amount of work to be done by a worker is not determined by his physical capacity but by the social norms.
2. Non-economic rewards play a significant role in influencing the behavior of the workers.
3. Generally the workers de not reacts as individuals, but as members of group.
4. Informal leaders play an important part in setting and enforcing the group norms.

Mayo discussed the factors that cause a change in human behavior. He concluded that the cause of increase in the productivity of the workers is not a single factor like rest pauses or changing working hours but a combination thease and several other factors such as less restrictive supervision, giving autonomy to workers, allowing the formation of small cohesive groups of workers and so on. Today, as a result of the efforts of Mayo and his associates, the managers in different organisations recognize that workers' performance is related to psychological, sociological and physical factors. Thus, Hawthorne Study was an important landmark to study the behavior of worker and his relationship to the job, his fellow workers and the organisation. It proved that informal work groups and the opportunity to be heard and participate in decision-making have an important impact on the productivity of the workers.

Mayo is one leading management thinker and also a leading advocate of neo-classical theory. The concept of participative management style was suggested in the neo-classical theory. The human relations approach suggested by Mayo has special importance in the present period. He rightly suggested the importance of democratic leadership and participative management style for running business activities efficiently. The role of people (workers) is clearly suggested by Mayo. He rightly suggested that management is not a mechanical process but a study of people involved in the production activities. Management will get positive response from its employees when their actions, sentiments and expectations are given due attention.

Mayo is best known for his work on the project commonly referred to as the Hawthorne Studies. They were conducted in the Hawthorne plant of Western Electric Company in the USA between 1927 and 1932. It is said that Mayo applied psychological approach to management for the first time. He used clinical and diagnostic methods. Mayo has drawn various conclusions from these studies. The Hawthorne Studies have had a shattering impact on management thinking. Mayo is regarded as revolutionary thinker because of his contribution to the management thought in the recent period. The credit of humanization of management with a view to achieve common interest of management and workers goes to Elton Mayo.

Some of the major findings of Hawthorne Studies we as noted below:

1. Employee's behavior is influenced by mental attitudes and emotions including prejudices.
2. The workers in a group develop a common psychological bond uniting them as a group in the form of informal organisation.
3. In managing and motivating employee groups, human and social motivation plays greater role then financial incentives.
4. Management must understand that a typical group behavior can dominate or even supersede individual propensities and preferences.
5. When workers are given special attention by management, the productivity is likely to increase irrespective of actual changes in the working conditions.

Hawthorne Studies are primarily responsible for consideration of non financial incentives in improving productivity. Mayo pointed out that the organization is a social system and informal organisation is a reality. The knowledge of human nature can solve many problems of management. He emphasized that successful human relations approach can easily create harmony in an organisation, higher employee satisfaction and great operational efficiency. Central to this approach was an increased understanding of the individual worker with emphasis on motivation, needs, interpersonal relationships and group dynamics Mayo believed that a factory is not only a workplace but also a social environment in which the employees interact with each other. This gave rise to the concept of the 'social man' whose interaction with others would determine the quality and quantity of the work produced.

Mayo developed his Human Relations Theory of Management on his Hawthorne experiments. He introduced human relations approach to management and is rightly considered as one of the pioneers of the Human Relations Theory of Management.

Features of Human Relations Approach

1. A business organisation is not merely a techno-economic system but also a social system and involves human element.
2. An individual employee is motivated not merely by economic incentives but also by non economic incentives, psychological and social interests, needs and aspirations.
3. The informal groups in the organisation are more important than individuals and play an important role in raising productivity.
4. In place of task-centered leadership, the employee-centered, humanistic, democratic and participative style of leadership should be introduced as it is more effective / productive.
5. Employees are not necessarily inefficient or negative in their approach. They are capable of self-direction and control.
6. Employees performance can be raised by meeting their social and psychological needs. Cordial atmosphere at work place is also useful for raising productivity.
7. Management needs social skills along with technical skills in order to create a feeling (among the employees) that they are a part and parcel of the organisation and not outsiders.
8. Employees need respect and positive feeling from the management. For this, employees should be encouraged to participate and communicate freely their views and suggestions in the concerned areas of decision-making.
9. The management has to secure willing cooperation of employees. The objective before the management should be to secure cooperative effort of its employees. For this, employees should be made happy and satisfied.

The features of human relations school (noted above) are important as they were introduced in the management theory for the first time. At present, these features are well recognised but were unique when suggested by 1930.

Human relations approach is a progressive development as compared to classical approach. Here, productivity is not treated merely as an engineering problem. Cooperation of employees, team spirit and their satisfaction are treated as factors useful for raising productivity. The human relations approach has put special stress on social needs and the role of management in meeting such needs.

Limitations of Human Relations Approach

1. Too much importance to employees, and social needs: Human relations approach to management has given too much importance to employees, their needs and satisfaction. It has given undue stress on the social side of management as compared to technical side. It is another extreme as compared to classical theory where employees were neglected considerably. Human relations approach has also neglected many other aspects such as organizational issues, environment at the work place, labour unions, structure of the organisation and so on.
2. Employee-oriented approach to a limited extent: It is argued that human relations approach is apparently employee-oriented but in reality it is organisation-oriented. Many measures are suggested for the happiness and satisfaction of employees. Measures are suggested to satisfy employees in order to achieve organizational objectives and not for meeting the real needs of workers. Their participation in management or upward communication with the management, etc. is outwardly employee-oriented and gives them a false sense of happiness. In brief, the human relations approach is employee-oriented but only to a limited extent.
3. Faulty assumption in the theory: The human relations approach is based on a wrong assumption that satisfied workers are more productive. After 1950s, it was proved that productivity improvement, as a result of better working conditions and the human relations skills of manager’s did not result in productivity improvement as expected. Thus, workers satisfaction is one but not the only factor which raises industrial productivity.
4. Limited importance to economic incentives: The human relations approach has given limited importance to economic incentives in motivating employees. They prefer informal groups and cordial relations among them. However, their interest and loyalty to the organisation largely depends on monetary incentives. Low wages lead to Labour turnover even when the good treatment is given to employees.

The human relations movement is based on the experiments conducted in the Hawthorne Plant in Cicero (USA). The major conclusion (of Hawthorne Experiments) was that the workers respond to their work situation as a whole and their attitudes and social relations constitute an important part of the total situation. In addition, the attitudes of workers and their relations with each other and with the management would play a role in forming their attitudes towards the total work situation. Elton Mayo conducted a series of pioneering studies at the Hawthorne plant they proved to be of much use in associating employees with the management for achieving organizational objectives.

It is rightly pointed out that F. W. Taylor in his contribution to management thought suggested rationalizing work for greater labour productivity while Elton Mayo recommended/ advocated humanism work for enhanced efficiency and personal satisfaction. The basic purposes of both the approaches are identical. However; the approaches of Taylor and Mayo are different. Taylor's approach was purely engineering while may referred to social needs of employees and their satisfaction. Taylor's approach to scientific management lacks human elements in the production process. He treated employee as a cog in the wheel emphasizing on efficiency at all costs as if there is no difference between workers and machines. Mayo applied psychological approach to management. He recommended humanization of management for better results in terms of production and productivity. He rightly suggested that workers are human beings and not machines. They should be treated with dignity and honour while on job.

Both the approaches (of Taylor and Mayo) are supplementary in the present management thought. At present, stress is on scientific management principles as well as on human approach to management. Efforts are being made to create favorable organisation climate for achieving organizational goals. Taylor's approach is comparatively old and was popular in the early decades of 19th century the human relations approach (suggested by Elton Mayo) is comparatively new and got popularity by 1930s.

Systems Approach to Management Thought

Contributions to management thought/theory after 1960s are covered by modem management theories. Modem theories are based on classical and neo-classical theories but consider the management problems as they developed in the recent years. There are three streams under modern management theory. These are:-

1. Quantitative / Mathematical Approach to Management,
2. Systems Approach to Management, and
3. Contingency Approach to Management.

Systems Management School

A system is an organised entity i.e. a company or a business enterprise made up of parts connected and directed to some purpose. Each system has an input, a process and an output. It acts as a self sufficient unit. Every system is interlinked with its subsystems. Any organisation is looked upon as an artificial system, the internal parts of which work together to achieve established goals and the external parts to achieve interplay with the environment including customers, the general public, suppliers and government. The manager integrates available facilities to achieve a goal by means of systems that relate activities required for the end result. The system serves as the media through which the manager operates. An integrated system can be used purposefully for the conduct of production, marketing, distribution and other activities relating to business in an orderly manner. A manager can conduct various activities in an orderly manner with the help of the systems established. A system is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Almost anything can be viewed as a system.

As per systems management school, an organisation is looked upon as an artificial system. Its internal parts work together to achieve established goals and the external parts to achieve interplay with the environment including customers, the general public, suppliers and government. The manager integrates available facilities to achieve a goal by means of systems that relate activities required for the end result. In this way, the systems management school helps in achieving the established goals of the organisation.

It is possible to establish such systems management organisation in a business enterprise. For this authorities, departments, etc. will be created. The work will be properly distributed and various departments (sub-systems) will operate as per the work assigned under the project. The computer can be used extensively for the execution of systems management Data processing work will become easy and quick. Systems management enables a manager to work more efficiently because of easy availability of information in different aspects of business.

Features Of Systems Approach to Management

1. Open or Closed Systems: Systems may be either open or dosed. An open system is one that is dependent on the outside environment for survival e.g., human body as a system is composed of many subsystems. This is an open system and it must depend on outside input and energy for survival. A system is considered closed if it does not interact with the environment. Physical and mechanical Systems are closed system because they are insulted from their external environment. Traditional organisation theorists regarded organisations as closed systems while according to the modern view organizations are open systems, always interacting with the environment.
2. Interdependent parts: A system is a set of interdependent parts which together form a unitary whole that perform some function. An organisation is also a system which consists of four interdependent parts viz., task, structure, people and technology.
3. Consideration of whole system: No part of the system can be precisely analyzed and under-stood apart from the whole system. Conversely, the whole system cannot be exactly evaluated without understanding all its parts. Each part is related to every other part. It means rather than dealing separately with the various parts of one organisation, the systems approach attempts to give the manager a way of looking at the organisation as a whole. For example, in order to understand the operations of the finance or production or marketing departments, he must understand the company as a whole. It is because activity of any one part of the company affects the activity of every other part.
4. Information, energy and material: Generally, there are three basic inputs that enter the processor of the system viz., information (technology), energy (motive power) and materials to be transformed into goods. If the output is service, materials are not included in the inputs. If we have manufacturing company, output is goods or materials. If we have a consultancy firm, output is information or advice. if we have a power generating company, output is energy.
5. Defined boundaries: Each system including an organisation has its own boundaries which separate it from other system in the environment. For open systems the boundaries are penetrable whereas for closed systems, they are not. The boundaries for closed systems are rigid. In a business organisation, it has many boundary contacts or 'interfaces' with many external system like creditors, suppliers, customers, government agencies etc. The system is inside the boundary, the environment is outside the boundary'.
6. Synergy: Output of a system is always more than the combined output of its parts. This is called 'synergy’. In organizational terms, synergy means when separate departments within an organisation cooperate and interact, they become more productive than if they had acted in isolation e.g., it is certainly more efficient for each department to deal with one secretarial department than for each department to have a separate secretarial department of its own.
7. Feedback mechanism: A system can adopt and adjust itself to the changing environment through the feedback mechanism. As operations of the system proceed information in feedback to the appropriate people. This helps to assess the work and if need be, to get it corrected.
8. Multidisciplinary approach: Systems approach integrates and uses with profit ideas emerging from different schools of thought. Management freely draws concepts and techniques from many fields of study such as psychology, sociology, ecology, economics, mathematics, statistics, operations research, systems analysis etc.

Important contributors to systems school of management include Chester Barnard, Ludwig Von Bertalanffy, Russell Ackoff, Kenneth Boulding and William Scott.

From 1960s onwards, the management theorists and practitioners are referring management concepts in a systems phraseology. A system means to bring together or to combine. When viewed from the systems angle, the organisation is seen as operating in an open system constantly interacting with its environment. It receives external inputs in a continuous manner and transforms them into outputs. Suitable adjustments and rectifications are also made as per the feedback available. An organisation which is not adaptive and responsive to its environment will not survive or grow. An organisation will have individuals, groups, formal structures, goals and resources. A manager has to see that all these parts work in co-ordination in order to achieve organizational goals. Absence of co-ordination will hamper the performance of the organisation. The systems approach suggests that the total performance of the organisation will be effective only when the different systems/units/activities are coordinated and integrated in an efficient manner. For example, efficient manufacturing division needs the support of efficient marketing division for achieving organizational objectives. If not, the total performance of the organisation will be jeopardized. The managers, as decision-making entities, have to regulate the sub-systems of the Organisation. They should not work in isolation but operate in co-ordination with others.

This will avoid shortfalls in different components and bring success to the organisation. The emphasis of systems approach is on interrelatedness of the parts of an organisation. The introduction of integrated approach is treated as major contribution of systems theory.

The systems approach developed only after 1950 and is the recent contribution to management thought. It stresses the interrelatedness and interdependence of all activities within an organization. The systems theory considers organisation as an open, adaptive system which has to adjust changes in its environment. It defines organisation as a structured process in which individuals interact for attaining objectives.

Merits Of Systems Approach

Systems approach to management is comparatively new to the management thought. This approach represents a refreshingly new thinking on organisation and management. It stresses that managers should avoid analyzing problems in isolation but should develop the skills for integrated thinking on management problems. The systems approach provides a unified focus to organizational efforts. It provides a strong conceptual framework for meaningful analysis and understanding of organisations. Systems approach provides clues to the complex behavior of organisation.

The systems theory suggests to practicing manager to study/analyze a particular element by taking into consideration its interacting consequences with other elements. A variety of systems concepts and perspectives have been developed for managers.

The systems approach rightly points out the role of 'synergy' in management. Each subsystem derives strength by its association and interaction with other sub-systems. As a result, the overall outcome is more than the sum total of individual contributions. The other contribution of systems theory is its treatment of organisation as an open system. The Organisation exhibits a 'holistic' character.

Limitations Of Systems Approach

1. The systems approach is criticized on the ground that it is too abstract and vague. It is difficult to apply it to practical problems directly and easily.
2. The systems theory/approach fails to provide specific tools and techniques for the practicing executives/managers.
3. The systems approach does not recognize differences in systems. It fails to clearly identify the nature of interactions and interdependencies between an Organisation and its external environment it also fails to offer a unified body of knowledge.

Contingency Management School / Contingency Approach to Management / Situational Approach

A common deficiency of the classical, behavioral and quantitative schools is that they have stress one aspect of the organisation at the cost of others. The classical approach emphasizes on 'task' while behavioral approach emphasizes on 'people’. The stress of quantitative approach is on 'mathematical decision-making’. However, it is difficult to understand precisely which aspect is most useful and appropriate in a given practical situation.This brings the need to develop me broad conceptual framework that can help a manager diagnose a problem and decide which tool or tools will best do the job. The systems approach as well as contingency approach provide one integrated approach to management problems. The contingency/situational approach is the second approach (the first being the systems approach) whichattempts to integrate the various schools of management thought in an orderly manner. The contingency management approach is similar to known leadership theory called situational leadership theory. The contingency approach is applicable to leadership as well as to business management. This situational management approach is relatively a new approach to management and is an extension of systems approach. The basic theme of contingency approach is that organisations have to deal with different situations in different ways. There is no single best way of managing applicable to all situations. In order to be effective, the internal functioning of the organisation must be consistent with the needs and demands of the external environment. In other words internal organisation should have the capacity to face any type of external situation with confidence.

Features of the Contingency / Situational Approach

1. Management is entirely situational. The management has to use the measures/techniques as per the situation from time to time.
2. Management should match its approach as per the requirements of the situation. The policies and practices used should be suitable to environmental changes.
3. The success of management depends on its ability to cope up with its environment. Naturally, it has to make special efforts to anticipate and comprehend the possible environmental changes. Managers should realize that there is no one best way to manage. They have to use management techniques as per the situation which they face.

According to contingency approach, management principles and concepts of different schools have no universal/general applicability under all situations. This means these schools have not suggested one best method of doing things under all situations and at all times. The contingency approach has provided a solution to this situation.

As per the contingency approach, the task of managers is to try to identify which technique or method will be most suitable for achieving the management objectives under the available situation. Managers have to develop a sort of situational sensitivity and practical selectivity in order to deal with their managerial problems as they develop from time to time.

Contingency approach views are applicable in designing organizational structure and in deciding the degree of decentralization in establishing communication and control systems and also in deciding motivational and leadership approaches. In brief, the contingency approach is applicable to different areas of organisation and management it is an attempt to integrate various viewpoints and to synthesize various fragmented approaches to management.

The contingency approach is the outcome of the research studies conducted by Tom Burns and G. W. Stalker, James Thompson and others.

Merits of Contingency Approach

1. Contingency approach is pragmatic and open minded It discounts preconceived notions, and universal validity of principles.
2. Theory relieves managers from dogmas and set principles. It provides freedom/choice to manage to judge the external environment and use the most suitable management techniques. Here, importance is given to the judgment of the situation and not the use of specific principles.
3. The contingency approach has a wide-ranging applicability and practical utility in, organisation and management. It advocates comparative analysis of organisations to bring suitable adjustment between organisation structure and situational peculiarities.
4. The contingency approach focuses attention on situational factors that affect the management strategy. The theory combines the mechanistic and humanistic approaches to fit particular/specific situation. It is superior to systems theory as it not only examines the relationships between sub-systems of an organisation but also the relationship between the organisation and its external environment.

Limitations of Contingency Approach

1. It is argued that the contingency approach lacks a theoretical base.
2. Under contingency approach, a manager is supposed to think through all possible alternatives as he has no dried principles to act upon. This brings the need of more qualities and skills on the part of managers. The responsibility of a manager increases as he has to analyze the situation, examine the validity of different principles and techniques to the situation at hand, make right choice by matching the technique to the situation and finally execute his choice. The areas of operation of a manager are quite extensive under this theory.

Contingency approach/theory is the latest addition to existing management theories. It was observed that different theories developed earlier are not applicable to all real world situations developed since 1970. An open and adaptable systems approach (also called contingency approach) is more convenient to deal with complex management problems. Contingency/ situational approach appears to be better suited to lead management out of the present management theory jungle.

Contingency theories do not give special importance to any specific theory. It suggests that there is no one best way to management. In the Contingency approach, what is best for a particular business unit or organisation or under the available situation is given special attention. Each situation (before the management) is different and calls for a Contingency / situational approach. A manager has to study the complexity under each situation. He has to adjust his policies/decisions as per his awareness. He has to decide what is best under the available total situation and act accordingly. He (manager) has to identify the technique which will be most effective for achieving organisation objectives under particular situation/ circumstances and act accordingly. This is the practical aspect of contingency approach. What constitutes best/effective management varies with the organisations internal and external environment and the make-up of the organizational sub-systems. The best management pattern depends on a number of interrelated internal and external variable factors around the specific organisation/business unit.

The contingency approach falls somewhere in between the classical theory and systems theory. It provides a synthesis that brings together the best of aft segments of what Koontz has termed "management theory jungle". Contingency approach is practical progressive and action oriented. It considers each organisation as unique and gives special attention to situation around it. Finally, it integrates theory with practice in a systems framework. The other theories (classical or systems) are not rejected in the, contingency approach. However, they are viewed as incomplete, vague and unsuitable to all organisations and situations.

Question Bank

1. Discuss the functions and nature of management.
2. Explain the nature of management process. Why management process is called social and consequential process?
3. What are the principles and features of scientific management of Taylor? Why did trade unions oppose scientific management?
4. Discuss contributions of Elton Mayo to the development of management thought?
5. Discuss features of systems approach to management.
6. What is management? Explain the characteristics of management.
7. Explain the importance of management in the present day business world.

Article Source: Study Notes, Semester I, 2009-2010