Why principles of management
Role of Management - Management principles makes the role of managers concrete. Therefore these principles act as ready reference to the managers to check whether their decisions are appropriate. Besides these principles define managerial activities in practical terms. They tell what a manager is expected to do in specific situation. Guide to Research in Management - The body of management principles indicate lines along which research should be undertaken to make management practical and more effective.
This encourages a team spirit and collective mentality of all for one and one for all. Remuneration — In order to motivate and be fair to employees, they should be paid a reasonable rate for the work they carry out. An organization that underpays will struggle to attract quality workers who are motivated.
Centralization — This principle relates to whether decisions should be made centrally, as in from the top down, or in a more democratic way, from the bottom up.
Different decision making processes are appropriate for different types of decisions. Scalar chain — This relates to the principle of a clear chain of communication existing between employees and superiors. The chain should be respected, unless speedy communication is vital, in which case the chain may be bypassed if all parties consent.
Order — This relates to the proper use of resources and their effective deployment in a structured fashion. Equity — Managers should behave ethically towards those they manage. Almost every organization in the modern world will have a written set of policies and procedures which will outline exactly what is expected from staff at all levels.
Stability of tenure of personnel — It is seen as desirable within an organization to have a low staff turnover rate. This is due to the benefits that come with having experienced staff and the time and expense needed to train new ones. There should be a clear and efficient method of filling any staff vacancies that arise. A general manager is someone who is responsible for managing a clearly identifiable revenue-producing unit, such as a store, business unit, or product line.
General managers typically must make decisions across different functions and have rewards tied to the performance of the entire unit i.
General managers take direction from their top executives. Then they set specific goals for their own departments to fit in with the plan. The general manager of production, for example, might have to increase certain product lines and phase out others. General managers must describe their goals clearly to their support staff.
The supervisory managers see that the goals are met. Figure 1. Both sets of processes utilize human, financial, and material resources. Of course, some managers are better than others at accomplishing this!
There have been a number of studies on what managers actually do, the most famous of those conducted by Professor Henry Mintzberg in the early s. After following managers around for several weeks, Mintzberg concluded that, to meet the many demands of performing their functions, managers assume multiple roles. A role is an organized set of behaviors, and Mintzberg identified ten roles common to the work of all managers.
As summarized in the following figure, the ten roles are divided into three groups: interpersonal, informational, and decisional. The informational roles link all managerial work together. The interpersonal roles ensure that information is provided. The decisional roles make significant use of the information. The performance of managerial roles and the requirements of these roles can be played at different times by the same manager and to different degrees, depending on the level and function of management.
The ten roles are described individually, but they form an integrated whole. The three interpersonal roles are primarily concerned with interpersonal relationships. In the figurehead role, the manager represents the organization in all matters of formality. The top-level manager represents the company legally and socially to those outside of the organization. The supervisor represents the work group to higher management and higher management to the work group.
In the liaison role, the manager interacts with peers and people outside the organization. The top-level manager uses the liaison role to gain favors and information, while the supervisor uses it to maintain the routine flow of work. The leader role defines the relationships between the manager and employees. The direct relationships with people in the interpersonal roles place the manager in a unique position to get information. Thus, the three informational roles are primarily concerned with the information aspects of managerial work.
In the monitor role, the manager receives and collects information. In the role of disseminator, the manager transmits special information into the organization.
The top-level manager receives and transmits more information from people outside the organization than the supervisor.
Thus, the top-level manager is seen as an industry expert, while the supervisor is seen as a unit or departmental expert. The unique access to information places the manager at the center of organizational decision making. There are four decisional roles managers play. In the entrepreneur role, the manager initiates change. In the disturbance handler role, the manager deals with threats to the organization. In the resource allocator role, the manager chooses where the organization will expend its efforts.
In the negotiator role, the manager negotiates on behalf of the organization. The top-level manager makes the decisions about the organization as a whole, while the supervisor makes decisions about his or her particular work unit. The supervisor performs these managerial roles but with different emphasis than higher managers. Supervisory management is more focused and short-term in outlook. Thus, the figurehead role becomes less significant and the disturbance handler and negotiator roles increase in importance for the supervisor.
Since leadership permeates all activities, the leader role is among the most important of all roles at all levels of management. On the one hand, managerial work is the lifeblood of most organizations because it serves to choreograph and motivate individuals to do amazing things.
Managerial work is exciting, and it is hard to imagine that there will ever be a shortage of demand for capable, energetic managers. On the other hand, managerial work is necessarily fast-paced and fragmented, where managers at all levels express the opinion that they must process much more information and make more decisions than they could have ever possibly imagined.
So, just as the most successful organizations seem to have well-formed and well-executed strategies, there is also a strong need for managers to have good strategies about the way they will approach their work. This is exactly what you will learn through principles of management. Managers are responsible for getting work done through others. We typically describe the key managerial functions as planning, organizing, leading, and controlling.
The definitions for each of these have evolved over time, just as the nature of managing in general has evolved over time. This evolution is best seen in the gradual transition from the traditional hierarchical relationship between managers and employees, to a climate characterized better as an upside-down pyramid, where top executives support middle managers and they, in turn, support the employees who innovate and fulfill the needs of customers and clients.
Through all four managerial functions, the work of managers ranges across ten roles, from figurehead to negotiator. While actual managerial work can seem challenging, the skills you gain through principles of management—consisting of the functions of planning, organizing, leading, and controlling—will help you to meet these challenges.
The principles of management are drawn from a number of academic fields, principally, the fields of leadership, entrepreneurship, and strategy. If management is defined as getting things done through others, then leadership The act of influencing others toward a goal. It means mobilizing others to want to struggle toward a common goal. Leadership also includes an understanding of when, where, and how to use more formal sources of authority and power, such as position or ownership. Increasingly, we live in a world where good management requires good leaders and leadership.
Internally, there has been a change from managers being outspoken and needing to direct their staff, to being individuals who electrify and inspire those around them. Ranking of Most Admired Firms for , , Both firms emphasize leadership in terms of being exceptional at developing people. In the same way Google puts users first when it comes to online service, Google espouses that it puts employees first when it comes to daily life in all of its offices. Ideas are traded, tested, and put into practice with a swiftness that can be dizzying.
Observers and employees note that meetings that would take hours elsewhere are frequently little more than a conversation in line for lunch and few walls separate those who write the code from those who write the checks.
This highly communicative environment fosters a productivity and camaraderie fueled by the realization that millions of people rely on Google results. Leadership at Google amounts to a deep belief that if you give the proper tools to a group of people who like to make a difference, they will.
You cannot manage men into battle. You manage things; you lead people. Chester Bernard — , former executive and author of Functions of the Executive. The first job of a leader is to define a vision for the organization…Leadership is the capacity to translate vision into reality. A manager takes people where they want to go. Entrepreneurship The recognition of opportunities needs, wants, problems, and challenges and the use or creation of resources to implement innovative ideas for new, thoughtfully planned ventures.
Perhaps this is obvious, but an entrepreneur A person who engages in the process of entrepreneurship. We describe entrepreneurship as a process because it often involves more than simply coming up with a good idea—someone also has to convert that idea into action.
Entrepreneurs and entrepreneurship are the catalysts for value creation. They identify and create new markets, as well as foster change in existing ones. However, such value creation first requires an opportunity.
Indeed, the opportunity-driven nature of entrepreneurship is critical. Opportunities are typically characterized as problems in search of solutions, and the best opportunities are big problems in search of big solutions. In other words, bigger problems will often mean there will be a bigger market for the product or service that the entrepreneur creates. We hope you can see why the problem-solving, opportunity-seeking nature of entrepreneurship is a fundamental building block for effective principles of management.
When an organization has a long-term purpose, articulated in clear goals and objectives, and these goals and objectives can be rolled up into a coherent plan of action, then we would say that the organization has a strategy. It has a good or even great strategy when this plan also takes advantage of unique resources and capabilities to exploit a big and growing external opportunity.
Strategy The central, integrated, externally-oriented concept of how an organization will achieve its objectives. Hambrick and J. Strategic management What an organization does to achieve its mission and vision. Strategic management is important to all organizations because, when correctly formulated and communicated, strategy provides leaders and employees with a clear set of guidelines for their daily actions.
This is why strategy is so critical to the principles of management you are learning about. Simply put, strategy is about making choices: What do I do today? What should my organization be doing? What should it stop doing? You know that leadership, entrepreneurship, and strategy are the inspiration for important, valuable, and useful principles of management.
Now you will want to understand how they might relate to one another. Finally, strategic management aims to make sure that the right choices are made—specifically, that a good strategy is in place—to exploit those big opportunities. One way to see how leadership, entrepreneurship, and strategy come together for an organization—and for you—is through a recent disguised job posting from Craigslist.
The posting identifies a number of areas of functional expertise for the target candidate. You can imagine that this new position is pretty critical for the success of the business. For that reason, we hope you are not surprised to see that, beyond functional expertise, this business seeks someone with leadership, entrepreneurial, and strategic orientation and skills.
Now you have a better idea of what those key principles of management involve. You will touch everything at the company, from finance to sales, marketing to operations, recruiting to human resources, accounting to investor relations.
You will report directly to the CEO. The principles of management are drawn from three specific areas—leadership, entrepreneurship, and strategic management. You learned that leadership helps you understand who helps lead the organization forward and what the critical characteristics of good leadership might be. While drawing from a variety of academic disciplines, and to help managers respond to the challenge of creative problem solving, principles of management have long been categorized into the four major functions of planning, organizing, leading, and controlling the P-O-L-C framework.
The four functions, summarized in the P-O-L-C figure, are actually highly integrated when carried out in the day-to-day realities of running an organization. Therefore, you should not get caught up in trying to analyze and understand a complete, clear rationale for categorizing skills and practices that compose the whole of the P-O-L-C framework.
It is important to note that this framework is not without criticism. Specifically, these criticisms stem from the observation that the P-O-L-C functions might be ideal but that they do not accurately depict the day-to-day actions of actual managers. The typical day in the life of a manager at any level can be fragmented and hectic, with the constant threat of having priorities dictated by the law of the trivial many and important few i.
However, the general conclusion seems to be that the P-O-L-C functions of management still provide a very useful way of classifying the activities managers engage in as they attempt to achieve organizational goals.
Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives. Planning requires that managers be aware of environmental conditions facing their organization and forecast future conditions. It also requires that managers be good decision makers. Planning is a process consisting of several steps. The process begins with environmental scanning The act of analyzing the critical external contingencies facing an organization in terms of economic conditions, competitors, and customers.
Planners must then attempt to forecast future conditions. These forecasts form the basis for planning. Planners must establish objectives, which are statements of what needs to be achieved and when. Planners must then identify alternative courses of action for achieving objectives.
After evaluating the various alternatives, planners must make decisions about the best courses of action for achieving objectives. They must then formulate necessary steps and ensure effective implementation of plans. Finally, planners must constantly evaluate the success of their plans and take corrective action when necessary.
There are many different types of plans and planning. Strategic planning The process of analyzing competitive opportunities and threats, as well as the strengths and weaknesses of the organization, and then determining how to position the organization to compete effectively in its environment. Strategic planning has a long time frame, often three years or more. Strategic planning generally includes the entire organization and includes formulation of objectives.
Tactical planning Intermediate-range planning that is designed to develop relatively concrete and specific means to implement the strategic plan. Middle-level managers often engage in tactical planning. Operational planning Assumes the existence of goals and objectives and specifies ways to achieve them.
Operational planning is short-range less than a year planning that is designed to develop specific action steps that support the strategic and tactical plans. Organizing is the function of management that involves developing an organizational structure and allocating human resources to ensure the accomplishment of objectives. The structure of the organization is the framework within which effort is coordinated.
The structure is usually represented by an organization chart, which provides a graphic representation of the chain of command within an organization. Organizing also involves the design of individual jobs within the organization. Decisions must be made about the duties and responsibilities of individual jobs, as well as the manner in which the duties should be carried out.
Organizing at the level of the organization involves deciding how best to departmentalize, or cluster, jobs into departments to coordinate effort effectively. There are many different ways to departmentalize, including organizing by function, product, geography, or customer. Many larger organizations use multiple methods of departmentalization.
Organizing at the level of a particular job involves how best to design individual jobs to most effectively use human resources. Traditionally, job design The process of putting together various elements to form a job, bearing in mind organizational and individual worker requirements.
However, experience has shown that it is possible for jobs to become too narrow and specialized. For example, how would you like to screw lids on jars one day after another, as you might have done many decades ago if you worked in company that made and sold jellies and jams? When this happens, negative outcomes result, including decreased job satisfaction and organizational commitment, increased absenteeism, and turnover.
Recently, many organizations have attempted to strike a balance between the need for worker specialization and the need for workers to have jobs that entail variety and autonomy. Many jobs are now designed based on such principles as empowerment, job enrichment A job redesign technique that allows workers more control over how they perform their own tasks. From company-wide meetings to team huddles, HUI employees know and understand their customers and how HUI might service them best.
Leading involves the social and informal sources of influence that you use to inspire action taken by others. If managers are effective leaders, their subordinates will be enthusiastic about exerting effort to attain organizational objectives.
The behavioral sciences have made many contributions to understanding this function of management. Personality research and studies of job attitudes provide important information as to how managers can most effectively lead subordinates. Studies of motivation and motivation theory provide important information about the ways in which workers can be energized to put forth productive effort.
Studies of communication provide direction as to how managers can effectively and persuasively communicate. Controlling involves ensuring that performance does not deviate from standards. Controlling consists of three steps, which include 1 establishing performance standards, 2 comparing actual performance against standards, and 3 taking corrective action when necessary.
Performance standards are often stated in monetary terms such as revenue, costs, or profits but may also be stated in other terms, such as units produced, number of defective products, or levels of quality or customer service.
The measurement of performance can be done in several ways, depending on the performance standards, including financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals. Managers at all levels engage in the managerial function of controlling to some degree.
The managerial function of controlling should not be confused with control in the behavioral or manipulative sense. This function does not imply that managers should attempt to control or to manipulate the personalities, values, attitudes, or emotions of their subordinates. Effective controlling requires the existence of plans, since planning provides the necessary performance standards or objectives.
Controlling also requires a clear understanding of where responsibility for deviations from standards lies.
Two traditional control techniques are budget and performance audits. An audit involves an examination and verification of records and supporting documents. A budget audit provides information about where the organization is with respect to what was planned or budgeted for, whereas a performance audit might try to determine whether the figures reported are a reflection of actual performance.
Although controlling is often thought of in terms of financial criteria, managers must also control production and operations processes, procedures for delivery of services, compliance with company policies, and many other activities within the organization. Although there have been tremendous changes in the environment faced by managers and the tools used by managers to perform their roles, managers still perform these essential functions. The principles of management can be distilled down to four critical functions.
These functions are planning, organizing, leading, and controlling. This P-O-L-C framework provides useful guidance into what the ideal job of a manager should look like.
Increasingly though, it seems clear that noneconomic accomplishments, such as reducing waste and pollution, for example, are key indicators of performance as well. Indeed, this is why the notion of the triple bottom line The measurement of business performance along social, environmental, and economic dimensions. Essentially, the triple bottom line refers to The measurement of business performance along social, environmental, and economic dimensions.
We introduce you to economic, social, and environmental performance and conclude the section with a brief discussion of the interdependence of economic performance with other forms of performance.
In a traditional sense, the economic performance of a firm is a function of its success in producing benefits for its owners in particular, through product innovation and the efficient use of resources.
When you talk about this type of economic performance in a business context, people typically understand you to be speaking about some form of profit. The definition of economic profit is the difference between revenue and the opportunity cost of all resources used to produce the items sold.
This definition includes implicit returns as costs. In other words, your organization makes a profit when its revenues are more than its costs in a given period of time, such as three months, six months, or a year. Before moving on to social and environmental performance, it is important to note that customers play a big role in economic profits.
If customers are only willing to make purchases based on price, then a firm, at least in the face of competition, will only be able to generate profit if it keeps its costs under control. You have learned a bit about economic performance and its determinants. For most organizations, you saw that economic performance is associated with profits, and profits depend a great deal on how much customers are willing to pay for a good or service.
With regard to social and environmental performance, it is similarly useful to think of them as forms of profit—social and environmental profit to be exact.
Increasingly, the topics of social and environmental performance have garnered their own courses in school curricula; in the business world, they are collectively referred to as corporate social responsibility CSR When organizations consider the interests of society by taking responsibility for the effect of their activities on customers, suppliers, employees, shareholders, communities, and the environment in all aspects of their operations.
CSR is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities, and the environment in all aspects of their operations. This obligation is seen to extend beyond the statutory obligation to comply with legislation and sees organizations voluntarily taking further steps to improve the quality of life for employees and their families, as well as for the local community and society at large.
Their statements about why they do this, summarized in Table 1. Table 1. By raising the profile of social and environmental matters inside the Company and recording the impact of our work on the community, this report aids us in our search for business decisions that support all three parts of our Company Mission Statement: Economic, Product, and Social.
In addition, the report is an important source of information about the Company for students, journalists, prospective employees, and other interested observers. In this way, it helps us in our quest to keep our values, our actions, and public perceptions in alignment. Johnson we are committed to being a good neighbor and contributing to the well-being of the countries and the communities where we conduct business.
We have a wide variety of efforts to drive global development and growth that benefit the people around us and the planet we all share.
Environmentally Neutral Design END designs shoes with the goal of eliminating the surplus material needed to make a shoe such that it costs less to make and is lighter than other performance shoes on the market.
Is there really a way to achieve a triple bottom line in a way that actually builds up all three facets of performance—economic, social, and environmental? Advocates of CSR understandably argue that this is possible and should be the way all firms are evaluated. Critics argue that CSR detracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window dressing; still, others argue that it is an attempt to preempt the role of governments as a watchdog over powerful multinational corporations.
While there is no systematic evidence supporting such a claim, a recent review of nearly research studies on the relationship between CSR and firm performance reported that there appeared to be no negative shareholder effects of such practices.
In fact, this report showed that there was a small positive relationship between CSR and shareholder returns. Margolis and Hillary H. The financial benefits of social or environmental CSR initiatives vary by context. For example, environment-friendly strategies are much more complicated in the consumer products and services market. For example, cosmetics retailer The Body Shop and StarKist Seafood Company, a strategic business unit of Heinz Food, both undertook environmental strategies but only the former succeeded.
The Body Shop goes to great lengths to ensure that its business is ecologically sustainable. It actively campaigns against human rights abuses and for animal and environmental protection and is one of the most respected firms in the world, despite its small size.
Consumers pay premium prices for Body Shop products, ostensibly because they believe that it simply costs more to provide goods and services that are environmentally friendly. The Body Shop has been wildly successful. StarKist, too, adopted a CSR approach, when, in , it decided to purchase and sell exclusively dolphin-safe tuna. At the time, biologists thought that the dolphin population decline was a result of the thousands killed in the course of tuna harvests.
Moreover, since tuna were bought from commercial fishermen, this particular practice afforded the firm no protection from imitation by competitors. However, individuals are willing to pay more for organic produce, so why not dolphin-safe tuna? One difference is that while the environment is a public good, organic produce produces both public and private benefits.
For example, organic farming is better for the environment and pesticide-free produce is believed to be better for the health of the consumer. Dolphin-free tuna only has the public environmental benefits i.
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