Principles and Functions of Management

What management is

Management is the process of getting work done through and with people by planning, organising, staffing, directing and controlling resources so that organisational goals are reached efficiently (doing things right) and effectively (doing the right things).

Levels and skills

The three managerial skills (technical, human, conceptual) are associated with Robert Katz. Human skill matters at every level.

Functions of management

1. Planning - deciding in advance what is to be done, how, when and by whom. It is the primary function.
2. Organising - grouping activities, assigning duties and fixing authority relationships.
3. Staffing - filling and keeping filled the positions in the structure.
4. Directing - guiding people through supervision, motivation, leadership and communication.
5. Controlling - setting standards, measuring actual performance, comparing the two and correcting deviations.

Two classical lists are examined:

• Henri Fayol named five elements: planning, organising, commanding, coordinating and controlling.
• Luther Gulick coined POSDCORB (1937): Planning, Organising, Staffing, Directing, Coordinating, Reporting, Budgeting.

Fayol's 14 principles

Fayol, a French mining engineer, set them out in Administration industrielle et générale (1916), translated into English as General and Industrial Management (1949).

1. Division of work
2. Authority and responsibility
3. Discipline
4. Unity of command - one employee, one boss
5. Unity of direction - one head and one plan for activities with the same objective
6. Subordination of individual interest to general interest
7. Remuneration
8. Centralisation
9. Scalar chain - the line of authority from top to bottom; the gang plank allows direct contact between employees at the same level in an emergency
10. Order - a place for everything and everyone
11. Equity
12. Stability of tenure
13. Initiative
14. Esprit de corps - team spirit

Taylor's scientific management

Frederick W. Taylor, called the father of scientific management, developed his ideas at the Midvale Steel Company and published Shop Management (1903) and The Principles of Scientific Management (1911). His principles are:

• develop a true science for each element of work, replacing rule of thumb;
• select workers scientifically;
• train and develop workers scientifically;
• ensure cooperation between management and workers, with management doing the planning.

His techniques include time study, piece-rate incentive pay and functional foremanship, in which a worker is guided by several specialist foremen. Frank and Lillian Gilbreth added motion study. Fayol looked at the whole organisation from the top; Taylor looked at the shop floor.

Types of plans

• Standing plans are used repeatedly: policies, procedures, rules, methods.
• Single-use plans are made for one occasion: programmes, projects, budgets.
• By level, plans are strategic (top), tactical (middle) and operational (lower).
• Management by objectives (MBO), popularised by Peter Drucker in The Practice of Management (1954), has superiors and subordinates set goals jointly and review results against them.

Decision making

Decision making is choosing one course of action from the alternatives. The usual steps are: identify the problem, develop alternatives, evaluate them, choose the best, implement, and follow up.

• Programmed decisions are routine and repetitive, handled by rules (for example, sanctioning leave).
• Non-programmed decisions are new and unstructured (for example, entering a new market).
• Bounded rationality (Herbert Simon): managers have limited information, time and mental capacity, so they accept a satisfactory solution instead of the optimal one.

Exam pointers

• Fayol: 14 principles, five elements, book of 1916. Taylor: scientific management, book of 1911.
• Unity of command concerns the employee and one boss; unity of direction concerns one plan for one group of activities.
• Gang plank is an exception to the scalar chain.
• Commanding and coordinating are in Fayol's list; staffing, reporting and budgeting come from Gulick's POSDCORB.
• Policies, procedures and rules are standing plans; budgets, programmes and projects are single-use plans.
• Controlling closes the loop by comparing actual performance with the plan.