Fill your details for notification of Free resources

Chapter 1

1.1 Evolution of Management
1.2 Definition and Importance of Management
1.3 Management as a science & an art
1.4 Henri Fayol’s 14 Principles of Management
1.5 Levels of Management & their functions
1.6 Managerial Skills
1.7 Functions of Management
1.8 Process of Communication
1.9 Business Communication


The 21st century has brought with it a new workplace, one in which everyone must adapt to a rapidly changing society with constantly shifting demands and opportunities. The economy has become global and is driven by innovations and technology and organizations have to transform themselves to serve new customer expectations. Today’s economy presents challenging opportunities as well as dramatic uncertainty.

The new economy has become knowledge based and is performance driven. The themes in the present context area ‘respect’, participation, empowerment, teamwork and self management. In the light of the above challenges a new kind of leader is needed to guide business through turbulence. Managers in organizations do this task.

A manager is someone who coordinates and oversees the work of other people so that organizational goals can be accomplished. It is not about personal achievement but helping others do their job. Managers may also have additional work duties not related to coordinating the work of others.


Mary Parker Follet defines management as, “The art of getting things done through people”

Importance of Management: 1. It helps in Achieving Group Goals –

It arranges the factors of production, assembles and organizes the resources, integrates the resources in effective manner to achieve goals. It directs group efforts towards achievement of pre-determined goals. By defining objective of organization clearly there would be no wastage of time, money and effort. Management converts disorganized resources of men, machines, money etc. into useful enterprise. These resources are coordinated, directed and controlled in such a manner that enterprise work towards attainment of goals.

2. Optimum Utilization of Resources –

Management utilizes all the physical & human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. It makes use of experts, professional and these services leads to use of their skills, knowledge, and proper utilization and avoids wastage. If employees and machines are producing its maximum there is no under employment of any resources.

3. Reduces Costs –

It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction.

4. Establishes Sound Organization –

No overlapping of efforts (smooth and coordinated functions). To establish sound organizational structure is one of the objective of management which is in tune with objective of organization and for fulfilment of this, it establishes effective authority & responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who are subordinates. Management fills up various positions with right persons, having right skills, training and qualification. All jobs should be cleared to everyone.

5. Establishes Equilibrium –

It enables the organization to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organization must be changed. So it adapts organization to changing demand of market / changing needs of societies. It is responsible for growth and survival of organization.

6. Essentials for Prosperity of Society –

Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which is beneficial to business and society will get maximum output at minimum cost by creating employment opportunities which generate income in hands. Organization comes with new products and researches beneficial for society.

Management as a Science

Science is a systematic body of knowledge relating to a specific field of study that contains general facts which explains a phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles governing their relationship. These principles are developed through scientific method of observation and verification through testing.

Science is characterized by following main features

1. Universally accepted principles –
Scientific principles represent basic truth about a particular field of enquiry. These principles may be applied in all situations, at all time & at all places. E.g. – law of gravitation which can be applied in all countries irrespective of the time.
Management also contains some fundamental principles which can be applied universally like the Principle of Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization – business or non business.

2. Experimentation & Observation –

Scientific principles are derived through scientific investigation & researching i.e. they are based on logic.
E.g. the principle that earth goes round the sun has been scientifically proved. Management principles are also based on scientific enquiry & observation and not only on the opinion of Henry Fayol. They have been developed through experiments & practical experiences of large no. of managers.
E.g. it is observed that fair remuneration to personal helps in creating a satisfied work force.

3. Cause & Effect Relationship –
Principles of science lay down cause and effect relationship between various variables.
E.g. when metals are heated, they are expanded. The cause is heating & result is expansion.
The same is true for management; therefore it also establishes cause and effect relationship.
E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be ascertained easily i.e. ineffectiveness. Similarly if workers are given bonuses, fair wages they will work hard but when not treated in fair and just manner, reduces productivity of organization.

4. Test of Validity & Predictability –
Validity of scientific principles can be tested at any time or any number of times i.e. they stand the time of test. Each time these tests will give same result. Moreover future events can be predicted with reasonable accuracy by using scientific principles.
E.g. H2 & O2 will always give H2O.
Principles of management can also be tested for validity.
E.g. principle of unity of command can be tested by comparing two persons – one having single boss and one having 2 bosses. The performance of 1st person will be better than 2nd.
It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of other physical sciences like biology, physics, and chemistry etc. The main reason for the inexactness of science of management is that it deals with human beings and it is very difficult to predict their behaviour accurately. Since it is a social process, therefore it falls in the area of social sciences. It is a flexible science & that is why its theories and principles may produce different results at different times and therefore it is a behaviour science.

Management as an Art

Art means application of knowledge & skill to get the desired results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters –

1. Practical Knowledge:
Every art requires practical knowledge therefore learning of theory is not sufficient. It is very important to know practical application of theoretical principles.
E.g. to become a good painter, the person not only should know about the different colour and brushes but different designs, dimensions, situations etc to use them appropriately. A manager can never be successful just by obtaining degree or diploma in management; he must have also known how to apply various principles in real situations, by functioning as a manager.

2. Personal Skill:
Although theoretical base may be same for every artist, but each one has his own style and approach towards his job. That is why the level of success and quality of performance differs from one person to another.
E.g. there are several qualified painters but M.F. Hussain is recognized for his style. Similarly management as an art is also personalized. Every manager has his own way of managing things based on his knowledge, experience and personality, that is why some managers are known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad.

3. Creativity:
Every artist has an element of creativity in line. That is why he aims at producing something that has never existed before which requires combination of intelligence & imagination. Management is also creative in nature like any other art. It combines human and non-human resources in an useful way so as to achieve desired results. It tries to produce sweet music by combining chords in an efficient manner.

4. Perfection through practice:
Practice makes a man perfect. Every artist becomes more and more proficient through constant practice. Similarly managers learn through an art of trial and error initially but application of management principles over the years makes them perfect in the job of managing.

5. Goal-Oriented:
Every art is result oriented as it seeks to achieve concrete results. In the same manner, management is also directed towards accomplishment of pre-determined goals. Managers use various resources like men, money, material, machinery & methods to help in the growth of an organization.
Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of highest order because it deals with shaping the attitude and behaviour of people at work towards the desired goals.

Management as both Science and Art
Management is both an art and a science. The above mentioned points clearly reveal that management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore management is a well-judged combination of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.). To conclude, we can say that science is the root and art is the fruit.

1.4 Henri Fayol’s 14 Principles of Management

Henri Fayol and Max Weber were the two most prominent proponents of the general administrative approach. Fayol focused on activities common to all managers. He described the practice of management as distinct from other typical business functions.

Henri Fayol’s 14 Principles of Management
1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to group interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability
13. Initiative
14. Espirit de corps

Management Principles developed by Henri Fayol:

1. Division of Work:
Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization.

2. Authority:
The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable, and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility.

3. Discipline:
A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.

4. Unity of Command:
Workers should receive orders from only one manager.

5. Unity of Direction:
The entire organization should be moving towards a common objective in a common direction.

6. Subordination of Individual Interests to the General Interests:
The interests of one person should not take priority over the interests of the organization as a whole.

7. Remuneration:
Many variables, such as cost of living, supply of qualified personnel, general business conditions, and success of the business, should be considered in determining a worker’s rate of pay.

8. Centralization:

Fayol defined centralization as lowering the importance of the subordinate role. Decentralization is increasing the importance. The degree to which centralization or decentralization should be adopted depends on the specific organization in which the manager is working.

9. Scalar Chain:
Managers in hierarchies are part of a chain like authority scale. Each manager, from the first line supervisor to the president, possess certain amounts of authority. The President possesses the most authority; the first line supervisor the least. Lower level managers should always keep upper level managers informed of their work activities. The existence of a scalar chain and adherence to it are necessary if the organization is to be successful.

10. Order:
For the sake of efficiency and coordination, all materials and people related to a specific kind of work should be treated as equally as possible.

11. Equity:
All employees should be treated as equally as possible.

12. Stability of Tenure of Personnel:
Retaining productive employees should always be a high priority of management. Recruitment and Selection Costs, as well as increased product-reject rates are usually associated with hiring new workers.

13. Initiative:
Management should take steps to encourage worker initiative, which is defined as new or additional work activity undertaken through self direction.

14. Espirit De Corps:
Management should encourage harmony and general good feelings among employees.

Management Functions

According to the functions approach managers perform certain activities to efficiently and effectively coordinate the work of others. They can be classified as

1) Planning
Planning involves defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities.

2) Organizing
Organizing involves arranging and structuring work to accomplish the organization’s goals.

3) Leading
Leading involves working with and through people to accomplish organizational goals.

4) Controlling
Controlling involves monitoring, comparing, and correcting work performance. Since these four management functions are integrated into the activities of managers throughout the workday, they should be viewed as an ongoing process and they need not the done in the above sequence.

5) Staffing
Staffing is the managerial function which involves manning the organisational structure through effective and proper selection, appraisal, and development of personnel to fill the roles designed into the structure.


Top Level of Management

The Top Level Management consists of the Board of Directors (BOD) and the Chief Executive Officer (CEO). The Chief Executive Officer is also called General Manager (GM) or Managing Director (MD) or President.

The Board of Directors are the representatives of the Shareholders, i.e. they are selected by the Shareholders of the company. Similarly, the Chief Executive Officer is selected by the Board of Directors of an organisation.

The main role of the top level management is summarized as follows:-

1. The top level management determines the objectives, policies and plans of the organisation.
2. They mobilises (assemble and bring together) available resources.
3. The top level management does mostly the work of thinking, planning and deciding. Therefore, they are also called as the Administrators and the Brain of the organisation.
4. They spend more time in planning and organising.
5. They prepare long-term plans of the organisation which are generally made for 5 to 20 years.
6. The top level management has maximum authority and responsibility. They are the top or final authority in the organisation.
7. They are directly responsible to the Shareholders, Government and the General Public. The success or failure of the organisation largely depends on their efficiency and decision making.
8. They require more conceptual skills and less technical Skills.

Middle Level of Management

The Middle Level Management consists of the Departmental Heads (HOD), Branch Managers, and the Junior Executives. The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch Managers are the head of a branch or local unit. The Junior Executives are Assistant Finance Managers, Assistant Purchase Managers, etc. The Middle level Management is selected by the Top Level Management.

The middle level management emphasize more on following tasks :-

1. Middle level management gives recommendations (advice) to the top level management.
2. It executes (implements) the policies and plans which are made by the top level management.
3. It co-ordinate the activities of all the departments. They also have to communicate with the top level Management and the lower level management.
4. They spend more time in co-ordinating and communicating.
5. They prepare short-term plans of their departments which are generally made for 1 to 5 years.
6. The middle Level Management has limited authority and responsibility. They are intermediary between top and lower management. They are directly responsible to the chief executive officer and board of directors.
7. Require more managerial and technical skills and less conceptual skills.

Lower Level of Management

The lower level management consists of the Foremen and the Supervisors. They are selected by the middle level management. It is also called Operative / Supervisory level or First Line of Management.

The lower level management performs following activities:-

1. Lower level management directs the workers / employees.
2. They develop morale in the workers.
3. It maintains a link between workers and the middle level management.
4. The lower level management informs the workers about the decisions which are taken by the management.
5. They also inform the management about the performance, difficulties, feelings, demands, etc., of the workers.
6. They spend more time in directing and controlling.
7. The lower level managers make daily, weekly and monthly plans.


Management is a challenging job. It requires certain skills to accomplish such a challenge. Thus, essential skills which every manager needs for doing a better management are called as Managerial Skills.

According to Professor Robert Katz, there are three managerial skills, viz.,

• Conceptual Skills,
• Human Relations Skills, and
• Technical Skills.

According to Prof. Robert Katz, all managers require above three managerial skills. However, the degree (amount) of these skills required varies (changes) from levels of management and from an organisation to organisation.

1. Conceptual Skills
Conceptual skill is the ability to visualise (see) the organisation as a whole. It includes Analytical, Creative and Initiative skills. It helps the manager to identify the causes of the problems and not the symptoms. It helps him to solve the problems for the benefit of the entire organisation. It helps the manager to fix goals for the whole organisation and to plan for every situation. According to Prof. Robert Katz, conceptual skills are mostly required by the top-level management because they spend more time in planning, organising and problem solving.

2. Human Relations Skills
Human relations skills are also called Interpersonal skills. It is an ability to work with people. It helps the managers to understand, communicate and work with others. It also helps the managers to lead, motivate and develop team spirit. Human relations skills are required by all managers at all levels of management. This is so, since all managers have to interact and work with people.

3. Technical Skills
A technical skill is the ability to perform the given job. Technical skills help the managers to use different machines and tools. It also helps them to use various procedures and techniques. The low-level managers require more technical skills. This is because they are in charge of the actual operations.

They have limited authority but important responsibility of getting the work done from the workers. They regularly report and are directly responsible to the middle level management.


1. Planning:-

It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of pre-determined goals.

According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing:-
It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and non-human resources to the organizational structure.

Organizing as a process involves:
• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.

3. Staffing:-
It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behaviour etc. The main purpose of staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal & development of personnel to fill the roles designed in the structure”. Staffing involves:

• Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).
• Recruitment, Selection & Placement.
• Training & Development.
• Remuneration.
• Performance Appraisal.
• Promotions & Transfer.

4. Directing:-
It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:

• Supervision
• Motivation
• Leadership
• Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing work & workers. Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding.

5. Controlling:-
It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”.

According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:

a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.


“Communication is the process of conveying information between two or more people.” The communication process is the steps we take in order to achieve a successful communication
Organizations stress upon the importance of good communication management. It's empirical for an organization to have a proper communication management.
Once this is achieved, the organization is one step closer to achieving its overall business objectives. Communication management refers to a systematic plan, which implements and monitors the channels and content of communication.
To become a good manager, one must have a clear approach at hand when it comes to communicating with employees.
An effective communication management is considered to be a lifeline for many projects that an organization undertakes as well as any department of the organization.


Communication is a process of exchanging information, ideas, thoughts, feelings and emotions through speech, signals, writing, or behaviour. In communication process, a sender (encoder) encodes a message and then using a medium/channel sends it to the receiver (decoder) who decodes the message and after processing information, sends back appropriate feedback/reply using a medium/channel.

Types of Communication
People communicate with each other in a number of ways that depend upon the message and its context in which it is being sent. Choice of communication channel and your style of communicating also affect communication. So, there is variety of types of communication.

Types of communication based on the communication channels used are:
1. Verbal Communication
2. Nonverbal Communication

Verbal Communication:-

Verbal communication refers to the form of communication in which message is transmitted verbally; communication is done by word of mouth and a piece of writing. Objective of every communication is to have people understand what we are trying to convey.

When we talk to others, we assume that others understand what we are saying because we know what we are saying. But this is not the case. usually people bring their own attitude, perception, emotions and thoughts about the topic and hence creates barrier in delivering the right meaning.

So in order to deliver the right message, you must put yourself on the other side of the table and think from your receiver’s point of view. Would he understand the message? How it would sound on the other side of the table?

Verbal Communication is further divided into:
1. Oral Communication
2. Written Communication

Oral Communication

In oral communication, Spoken words are used. It includes face-to-face conversations, speech, telephonic conversation, video, radio, television, voice over internet. In oral communication, communication is influence by pitch, volume, speed and clarity of speaking.

Advantages of Oral communication are:
1. It brings quick feedback.
2. In a face-to-face conversation, by reading facial expression and body language one can guess whether he/she should trust what’s being said or not.

Disadvantage of oral communication
In face-to-face discussion, user is unable to deeply think about what he is delivering, so this can be counted as a Written Communication
In written communication, written signs or symbols are used to communicate. A written message may be printed or hand written. In written communication message can be transmitted via email, letter, report, memo etc. Message, in written communication, is influenced by the vocabulary & grammar used, writing style, precision and clarity of the language used.
Written Communication is most common form of communication being used in business. So, it is considered core among business skills.
Memos, reports, bulletins, job descriptions, employee manuals, and electronic mail are the types of written communication used for internal communication. For communicating with external environment in writing, electronic mail, Internet Web sites, letters, proposals, telegrams, faxes, postcards, contracts, advertisements, brochures, and news releases are used.

Advantages of written communication include:
1. Messages can be edited and revised many time before it is actually sent.
2. Written communication provides record for every message sent and can be saved for later study.
3. A written message enables receiver to fully understand it and send appropriate feedback.

Disadvantages of written communication include:
1. Unlike oral communication, written communication doesn’t bring instant feedback.
2. It takes more time in composing a written message as compared to word-of-mouth and number of people struggles for writing ability. Nonverbal Communication
Nonverbal communication is the sending or receiving of wordless messages. We can say that communication other than oral and written, such as gesture, body language, posture, tone of voice or facial expressions, is called nonverbal communication. Nonverbal communication is all about the body language of speaker.
Nonverbal communication helps receiver in interpreting the message received. Often, nonverbal signals reflect the situation more accurately than verbal messages. Sometimes nonverbal response contradicts verbal communication and hence affects the effectiveness of message.

Nonverbal communication has the following three elements:

1. Appearance
Speaker: clothing, hairstyle, neatness, use of cosmetics
Surrounding: room size, lighting, decorations, furnishings

2. Body Language
facial expressions, gestures, postures

3. Sounds
Voice Tone, Volume, Speech rate

Types of Communication Based on Purpose and Style
Based on style and purpose, there are two main categories of communication and they both bears their own characteristics. Communication types based on style and purpose are:
1. Formal Communication
2. Informal Communication

Formal Communication

In formal communication, certain rules, conventions and principles are followed while communicating message. Formal communication occurs in formal and official style. Usually professional settings, corporate meetings, conferences undergoes in formal pattern.

In formal communication, use of slang and foul language is avoided and correct pronunciation is required. Authority lines are needed to be followed in formal communication.

Informal Communication

Informal communication is done using channels that are in contrast with formal communication channels. It’s just a casual talk. It is established for societal affiliations of members in an organization and face-to-face discussions. It happens among friends and family. In informal communication use of slang words, foul language is not restricted. Usually. informal communication is done orally and using gestures.

Informal communication, Unlike formal communication, doesn’t follow authority lines. In an organization, it helps in finding out staff grievances as people express more when talking informally. Informal communication helps in building relationships.