SAHRD FORCES BEHIND MANAGEMENT THOUGHT Political forces The

SAHRD FORCES BEHIND MANAGEMENT THOUGHT • Political forces The political forces manifested through the administration of political institutions and government agencies have shaped management thought. The political forces that influence management thought include basic premises that form the foundation of the political system. Of special importance is the political assumption with respect to property rights, contractual rights concepts of justice, judicial processes, and attitudes towards governmental control versus laissez-faire. Political pressures also tends to define the interrelated rights of customers, suppliers, labor, creditors, owners, and many segments of the general public. Legal processes which emanate from political pressures, such as the Union Carbide disaster in Bhopal, have a tremendous impact on management thinking and practice. 1 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD • Social forces are those that evolve from the values and beliefs of a particular culture of people. Relations among people are dedicated by the needs, education, religion, and norms of human behavior. These forces formulate a people’s social contract, which is that unwritten but understood set of rules that govern the behavior of people in their day-today interrelationships. The social contract gives the society a sense of order and trust in which human affairs can be conducted in relative security and confidence. In the same manner, social contracts emerge between corporations and their many constituents-such as labor, investors, creditors, suppliers, and consumers. These social contracts defined relationships, responsibilities, and liabilities that influence the development of management thought. 2 HUMAN RESOURCE ASSOCIATION OF GUJARAT

• Economic forces SAHRD The economic forces that determine the scarcity, transformation, and distribution of goods and services in a society also influence management thought. Every social institution competes for a limited amount of resources-human, financial, physical, and information resources. This competition over scarce resources allocates them to their most “profitable” use and is the motivator of technological innovation by which resource availability may be maximized. Robert Heilbroner identifies three social mechanisms for the allocation of scarce economic resources: (1) the traditional method; (2) the command method; and (3) the market method. The traditional method allocates resources in the traditional way of the past. The command method allocates resources through a central agency that imposes its economic decisions on other. The market method decentralizes 3 economic decisions to the people and institutions in the market place. HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD HISTORICAL BUILDING BLOCKS TIME PERIOD 3000 -2400 B. C. 3000 -1000 B. C. GROUP Sumerians Egyptians 2700 -500 B. C. Babylonians 1000 -200 B. C. Greeks 800 B. C. – 500 A. D. Romans 1500 B. C. – 1300 A. D. Chinese 450 -1500 A. D. Venetians MANAGEMENT PRACTICE Developed written records. Developed first national government and extensive civilization; built massive buildings and monuments. The code of Hammurabi, the oldest set of laws. Developed strong form of local government, the polls, or city-state; later introduced constitutional democracy. The Senate advised consuls and the Emperor. Developed capable governments and a civilization rich in science and art. Center of commercial sea power; developed laws of commerce. Guidelines for the use of personal power. Division of labor. 4 Parts interchangeability. 1500 A. D. Machiavelli 1776 A. D. Adam Smith 1800 A. D. Eli Whitney HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD Ancient Management • Around 5000 B. C. , on the lower regions of the Euphrates River, the Sumerians utilized written records to administer their governmental and commercial activities. They perfected a complex system of commercial processes, with a system of weights and measures and a postal system. • The early Egyptians established the first national government around 3000 B. C. , and the construction of the great pyramids is evidence that they had highly-developed techniques for planning, organizing, and controlling complex work activities. • The Babylonians developed the Code of Hammurabi which established standards for wages, contract obligations, and contract penalties. 5 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD (Contd…) • Around 1000 B. C. , the Greeks established strong local governments or city-states that they called the polls. Later, they introduced a form of constitutional democracy that set the pattern for the government of such nations as the United States. • The Romans introduced the senate to advice the consuls. In 400 B. C. , Socrates developed a design of management practices and, in 350 B. C. , Plato propounded a system of job specialization. Similarly, the building of the Taj Mahal by Shahjahan required an excessive degree of planning, organizing, and controlling. • The Chinese developed outstanding governing institutions and established the system of conducting qualifying examinations for those aspiring to governmental positions. The Venetians established an elaborate legal framework to facilitate their vast network of 6 commercial activities. HUMAN RESOURCE ASSOCIATION OF GUJARAT

INDUSTRIAL REVOLUTION SAHRD With the advent of the industrial revolution, commerce was conducted on a limited scale and organizations were relatively small. However, with the development of the economic discipline and the technologies of manufacturing and distribution, both commerce and organizations grew rapidly, which in turn facilitated the development of better management practices. Machiavelli’s The Prince developed thesis that man is bad much be managed by deceitful and manipulative management practices (Machiavelli, 1952). In Wealth of Nations, Adam Smith formulated specific management principles in regarding the division and specialization of labor. Smith’s concepts of job specialization along with the work of Eli Whitney, who developed the concept of using interchangeable parts, led to the development of modern-day mass production (Wren, 1987). 7 HUMAN RESOURCE ASSOCIATION OF GUJARAT

Henry Fayol SAHRD (1841 -1925) Functions and Principles of Management Henri Fayol, a French industrialist and director of mines, propounded his general theory of administration. Fayol, in his long service career, not only rose to the position of the MD of a big French combine in the field of mining but also improved the financial position of a nearly bankrupt company. Fayol emphasized on the improvement of the management of the enterprise from top to bottom. He converted his practical experience into generalisations and developed a new theory of administration. In 1915, he published a book on ‘General and Industrial Administration’ to include all theoretical principles of administration. 8 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD Classification of Business Functions l l l Technical (production) Commercial (buying and selling) Financial (obtaining capital and its maximum use) Security (protection of men and resources) Accounting (statistics and financial position) Managerial (planning, organizing, coordination, and control, etc. ) 9 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD Managerial Qualities and Training l l l Physical to include health and vigour Mental to include ability to understand, analyze and adapt Moral to include energy, fitness, willingness to shoulder responsibility, tact and loyalty, etc. Educational to include general acquaintance with common matters. Technical to include knowledge about the business and functions at the shop level Experience arising from proper work. 10 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD Elements of Functions l l l Forecasting and Planning Organising Coordination Command Control 11 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD Fayol’s 14 Principles of Management l Division of work/labour l Authority and Responsibility l Discipline l Unity of command l Unity of direction l Subordination of individual interest to the general interest l Remuneration HUMAN RESOURCE ASSOCIATION OF GUJARAT 12

SAHRD Continued… l Centralisation l Scalar chain/line of authority l Order l Equity l Stability of tenure l Initiative l Esprit de corps 13 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD 1) Division of work Division of labour leads to specialisation and upto a certain extent it results in greater and better work with the same effort. Handling of work by experts in their respective fields applies to all kinds of work, technical or managerial and leads maximum efficiency. 2) Authority and Responsibility Right to get the work done by others is called authority. Authority and responsibility must go hand-inhand. One who exercises authority must accept responsibility for his work. There should be parity between authority and responsibility. 14 HUMAN RESOURCE ASSOCIATION OF GUJARAT

3) Discipline SAHRD Obedience and respect to the authority is absolutely essential for the smooth running of business. Clarity of rules, good supervision and built-in system of penalties will ensure discipline in an enterprise. 4) Unity of command It is one of the most important concepts which an organisation structure must uphold. The concept of unity of command implies that one subordinate should have only one superior from whom he shall receive orders and to whom he shall be accountable. No employee should be made to receive orders from two superiors for the simple reason that nobody can serve two masters at the same time. The subordinate will not be able to judge as to whose order he should follow and whose order he should not follow. Dual or multiple command creates havoc in the organisation. 15 HUMAN RESOURCE ASSOCIATION OF GUJARAT

5) Unity of Direction SAHRD There should be one head and one plan for activities having similar objectives. No organisation can succeed unless there is unity of direction. Unity of command relates to the functioning of the personnel, but the unity of direction relates to the functioning of the whole body corporate. Unity of direction alone can ensure cooperation and produce a sense of loyalty and devotion amongst the subordinates. 6) Subordination of individual interest to general interest Enterprise is superior to individuals or groups. Superiors must set good examples and be firm and reasonable in their decisions. They should serve common interest and not the individual or personal interests. Constant supervision must be undertaken to prevent any individual from promoting his own interest at the cost of the firm. 16 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD 7) Remuneration payable to workers must be fair, reasonable and satisfactory both to the employees as well as to the employers. It must motivate higher productivity. 8) Centralisation Policies which lead to the decrease in the importance of the subordinate’s role amounts to centralisation. According to Fayol, every thing that increases the importance of subordinates role is decentralisation. Management has to decide the extent of authority to be concentrated at the top level and its dispersion among subordinates. Absolute centralisation or decentralisation is not feasible. The degree of centralisation or decentralisation may differ from case-to-case. 17 HUMAN RESOURCE ASSOCIATION OF GUJARAT

9) Scalar chain SAHRD ‘Chain of superiors’ from top to bottom ranging from ultimate authority to lower ranks is called the scalar chain. The line of authority so laid down must always be followed. To facilitate quick communication between one link of the chain and the other, either the chain should not be very long or gang plank(direct contact) may be provided in between to correspond directly. Gang planks help to minimise delays and difficulties in communication. 10) Order is essentially a principle of organisation relating to the management of things and people. There should be a place for everything and everything should be in proper place. Management of right man for the right job or right type of material for the right work would ensure effective organisation of resources and manpower employed in the undertaking. Order requires good organisation and 18 good selection of both men and materials. HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD 11) Equity The chief executive of the business must adopt the attitude of justice and kindness towards his employees. He should treat all the employees equal. This would generate loyalty and dedication. Nothing is more injurious to business than nepotism or favoritism. 12) Stability of tenure Enough time must be given to each worker to acquire the competence of doing his work satisfactorily. Loyalties of a worker and a sense of attachment can be obtained only by providing security of service to him. Unnecessary turnover of the employees will involve greater costs and cause damage to the reputation of the organisation. 19 HUMAN RESOURCE ASSOCIATION OF GUJARAT

SAHRD 13) Initiative Workers, at all levels, must be encouraged to think about and execute the organised tasks in a better way. The initiative of the workers must be inspired and maintained even at the cost of sacrifice of some personal vanity. Workers must be encouraged to make new suggestions or make improvements in the original plans. 14) Espirit de Corps ‘Union is strength’. Strength of a business lies in the cooperation and harmony of its workers. Policy of divide and rule should be replaced by unity of command. Differences of opinion must be settled then and there. Employees must work as a team. 20 HUMAN RESOURCE ASSOCIATION OF GUJARAT