Principles Of Management

The Indian Manager in a Global Context

The following article is a summary of a talk given by R. Gopalakrishnan, Executive Director, Tata Sons Ltd at the “India Leadership Lecture Series” instituted by SIES College of Management Studies (SIESCOMS).

The world, according to me, was pretty much globalised before the 19th century. People could move about freely without passports and travel papers. They could acquire knowledge from anyone, they could trade with anyone and use any currency, because trade and supply / demand were the determinants of what money could buy. Let me recall some facts from Indian and world history:

  • Merchants from Harappa and Mohenjodaro were trading with Sumeria as early as 2300 B.C.
  • The world’s first university was established in Takshila in 700 B.C. It taught sixty subjects and had 10,500 students from all over the world
  • Jesus’ apostle St. Thomas arrived in Kerala in the first century and moved freely across South India. He died in Madras at San Thome where his cemetery stands today
  • Fa Hien and Hiuen Tsang freely travelled all over India in the seventh century, writing their valuable observations about the country
  • In 1498, when Vasco da Gama sailed into Calicut, it was already a thriving port familiar to Arab and Chinese merchants
  • For eighty years from 1835 to 1915, India had a consistent and handsome trade surplus
  • As late as the 1920s, India was ranked fourth in world trade with a market share of 2.5 percent (against well below 1 percent today)

What changed this globalised order was the concept of ‘the country’ or ‘the nation’ that developed around the 1860s. Nationalistic and inward-looking policies were adopted and implemented by governments in a manner that took no cognisance of its potential deleterious effect on other nations. This was part of the background to the two world wars. In India’s case, the combination of colonialism and socialism over the last 150 years led her to become inward looking and lose her global outlook.

I now, based on my experiences, put forth my understanding on the subject.

It takes an exceptional domestic leader plus something to be a global leader

A manager must first be an exceptional leader in the domestic context before he can be even reckoned for a position of global leadership. Domestic mediocres do not become global leaders.

I recall an outstanding young marketeer, an Englishman sent to Hindustan Lever as the Marketing Director twenty-five years ago. Although he must have had an impeccable CV, unfortunately, he turned out to be very poor in adaptability and soon left Unilever. As against this is David Orr who came to India as early as the 1950s, and went on to become the Chairman of Unilever. If there is a single trait that the domestic leader must demonstrate to be a global leader, it is adaptability. Adaptability to my mind means four distinct and increasingly difficult skills

  • to operate across borders with confidence;
  • to rise above the particularities of regions and cultures;
  • to revel in diversity; and,
  • to operate in spite of high ambiguity and frustration.

Expatriation is expensive, planned expatriation is a terrific tool, but ad hoc expatriation is disastrous

Often people who are sent on overseas assignments are capable but culturally illiterate. One interesting piece of research shows that out of 100 managers sent abroad by US companies, 20 returned early because of job or location dissatisfaction. Of the balance 80 who stayed, another 25 did not perform up to expectations, leaving 55 who completed the assignment satisfactorily. Of these 55, fifteen left the firm, leaving only 40 out of 100 for the firm to use. How to minimise this high level of attrition? My advice is that the firm must select managers with the following five characteristics for expatriation:-

  • A drive to communicate
  • Broad-based sociability
  • Cultural flexibility
  • Cosmopolitan orientation
  • Collaborative negotiation

Globalisation is a way of thinking and a way of doing, and not a strategy or a technique

For each firm, it is important to pin down the specific fruits it seeks, thus defining globalisation as its own unique approach to solve a defined problem or tap an opportunity.

I quite like the generic benefit term called CONELEARN, coined by two European thinkers. They argue that there are three generic benefits from globalisation: COst advantages, NEtwork benefits, LEARNing opportunities.

Globalisation can go hand in hand with a strong national identity

Unilever has always tried to be seen as a local company with an Anglo-Dutch parentage. This yearning is clearly reflected in the names of its subsidiaries: Hindustan Lever, Nippon Lever, Unilever Arabia, Lever Malaysia and so on. More often than not, Unilever appointed local managers at the seniormost levels as early as possible.

The foundation for developing global leadership skills is laid early in life and early in the career path

Aldous Huxley once observed: “Experience is not what happens to a man. It is what a man does with what happens to him.” In general, the development of global leaders requires early and multiple exposures across functions, across geographies and across industry segments.

To conclude, the four Ts of training, transfer, teams and travel are the necessary conditions for success for any company trying to build a global skill base.

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Historical Development of Management

Taylor’s Major Concern

An American engineer who worked his way through evening studies for his qualifications. From being an engineer in a steel company he became one of the first of a new breed of very influential management writers and theorists. He is known for defining the techniques of scientific management which is the study of relationships between people and tasks for the purpose of redesigning the work process to increase efficiency.

He was writing at a time when factories were creating big problems for management who needed new methods for dealing with the management challenges.
Taylor was one of the first to attempt to systematically analyze behaviour at work. His model was the machine therefore his ideas are often characterised as the machine model of organisations. Each task was broken down to its smallest unit to identify the best way to do each job. Then the supervisor, would teach it to the worker and make sure the worker did only those actions essential to the task..

Taylor’s major concern throughout most of his life was to increase efficiency in production, not only to lower cost and raise profits but also to make possible increased pay for workers through their higher productivity. As a young man working in machine shops, he was impressed with the degree of soldiering on the job, of making work, and of producing less rather than more, due primarily to the workers ear that they might work themselves out of a job if they produced more. He saw soldiering as a system. Form his own experience, he knew that much higher productivity was possible without unreasonable effort by the workers.

Taylor decided that the problem of productivity was a matter of ignorance on the part of both management and labor. Part of this ignorance arose from the fact that neither managers nor workers know what constituted a fair day’s work were concerned too much with how they should divide the surplus that arose from productivity-the split in thinking between pay and profits-and not enough with increasing the surplus so that both owners and laborers could get more compensation. In brief, Taylor was productivity as the answer to both higher wages and higher profits. He believed that the application of scientific methods, instead of custom and rule of thumb, could yield productivity without the expenditure of more human energy or effort.

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Henri Fayol

The Father Of Modern Operational Management Theory

Henri Fayol (1841-1925) a French engineer. His key work was Administration Industrielle et Generale, 1916 He belongs to the Classical School of management theory and was writing and exploring administration and work about same time as F W Taylor in USA.

The real father of modern management theory is the French industrialist Henri Fayol. Although there is little evidence that management scholars, either in England or in the United States, paid much heed to Fayol’s work or knew much about it unit the 1920s or even year later, his acute observations on the principles of general management first appeared in 1916 in French. Although the work of Fayol was brought to the attention of American management scholars in 1923 by Sarah Greer’s translation of one of Fayol’s paper.

Industrial Activates.

Fayol found that activates of an industrial undertaking could be divided into six groups, Technical (production), Commercial (Buying, selling, and exchanging), Financial (Search for and optimum use of capital), Security (Protection of property and persons), Accounting (including Statistics)and Managerial (Planning, Organization, Command, Coordination and control).

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Major Contribution to Management

Scientific management

Frederick W. Taylor, Shop Management 1903, Principles of Scientific Management 1911, Testimony before the special House Committee 1912.

Acknowledged as the father of scientific management. His primary concern was to increase productivity through greater efficiency in production and increased pay for workers, through the application of the scientific method. His principles emphasized using science, creating group harmony and cooperation, achieving maximum output, and developing works.

Henry L. Gantt 1990

Called for scientific selection of workers and harmonious cooperation between labor and management. Developed the gantt. Stressed the need for training.

Frank and Lillian Gilbreth 1900.

Frank is known primarily for his time and motion studies. Lillian, and industrial psychologist, focused on the human aspects of work and the understanding of workers personalities and needs.

Modern Operational Management Theory

Herri Fayol, Administration Industrielle et Generale 1916

Referred to as the father of modern management theory Divided industrial activities into six groups : technical, commercial, financial, security, accounting and managerial. Recognized the need for teaching management. Formulated fourteen principles of management, such as authority and responsibility, unity of command, scalar chain, and esprit de corps.

Behavioral Sciences

Hugo Munsterberg 1912

Application of psychology to industry and management.

Walter Dill Scott 1911

Application of psychology to advertising, marketing, and personnel.

Max Weber (Translations 1946, 1947)

Theory of bureaucracy.

Vilfredo Pareto (books 1896-1917)

Referred to as the father of the social systems approach to organization and management.

Elton Mayo and F.J. Roethlisberger 1933

Famous studies at the Hawthorne plant of the western electric company. Influence of social attitudes and relationships of work groups on performance.

Taylor’s Principles

The fundamental principles that Taylor saw underlying the scientific approach to management are summarized in the Perspective below. You will notice that these basic precepts of Taylor’s are not far from the fundamental beliefs of the modern manager. It is true that some of the techniques Taylor and his colleagues and followers developed in order to put his philosophy and principles into practice had certain mechanistic aspects. To determine what a fair day’s work was and to help in finding the one best way of doing any given job, the careful study of time and motion was widely applied. Likewise, various pay plans based on.

Replacing rules of thumb with science (organized knowledge.

Obtaining harmony in group action, rather than discord.

Achieving cooperation of human beings, rather than chaotic individualism.

Working for maximum output, rather than restricted output.

Developing all workers to the fullest extent possible for their own and their company’s highest prosperity.

Output were used in an attempt to increase the surplus to make sure that workers who produced were paid according to their productivity, and to give workers an incentive for performance.

As they often were by many factory owners throughout the world, to increase labor productivity without providing ample reward, adequate training, or managerial help. But this was certainly not what Frederick Taylor had in mind.

Taylor emphasized the importance of careful advance planning by managers and the responsibility of manager to design work systems so that workers would be helped to do their best. But as he spoke of management, he never overlooked the fact that the relations between employers and men form without question the most important part of this art.

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General Principles Of Management

Noting that principles of management are flexible, not absolute, and must be usable regardless of changing and special conditions, Fayol listed fourteen, based on his experience. They are summarized in the perspective.

  1. Division of work. This is the specialization that economists consider necessary for efficiency in the use of labor. Fayol applies the principle to all kinds of work, managerial as well as technical.

  1. Authority & responsibility. Here Fayol finds authority and responsibility to be related, with the latter arising from the former. He sees authority as a combination of official factors, deriving from the manager’ position and personal factors.

  1. Discipline. Seeing discipline as “respect for agreements which are directed at achieving obedience, application, energy, and the outward marks of respect. Fayol declares that discipline requires good superiors at all levels.

  1. Unity of command. This means that employees should receive orders from one superior only.

  1. Unity of direction. According to this principle, each group of actives with the same objective must have one head and one plan.

  2. Subordination of individual to general interest. This is self explanatory when the two are found to differ, management must reconcile them.

  1. Remuneration. Remuneration and methods of payment should be fair and afford the maximum possible satisfaction to employees and employer.

  1. Centralization. Without using the term “Centralization of authority.” Fayol refers to the extent to which authority is concentrated or dispersed. Individual circumstances will determine the degree that will give the best overall yield.

  1. Scalar chain. Fayol thinks of this as a chain of superiors from the highest to the lowest ranks, which, while not to be departed from needlessly, should be short circuited when to follow it scrupulously would be detrimental.

  1. Order. Breaking this into material and social order, Fayol follows the simple adage of a place for everything and everything in its place.

  1. Equity. Loyalty and devotion should be elicited from personnel by a combination of kindliness and justice on the part of managers when dealing with subordinators.

  1. Stability of tenure. Finding unnecessary turnover to be both the cause and the effect of bad management, Fayol points out its dangers and costs.

  1. Initiative. Initiative is conceived of as the thinking out and execution of a plan. Since it is one of the keenest satisfactions for an intelligent man to experience.

  1. Esprit de corps. This is principle that “in union there is strength” as well as an extension of the principle of unity of command, emphasizing the need for teamwork and the importance of communication in obtaining it.

Henri Fayol (1841-1925)

F. W. Taylor

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Key Management Skills

In addition to having a knowledge base, managers need certain skills to carry out the various functions of management. A skill is the ability to engage in a set of behaviors that are functionally related to one another and that lead to a desired performance level in a given are. For managers, three types of skills are necessary :

Technical Skills

Technical skills that reflect both an understanding of and a proficiency in a specialized field. For example, a manager may have technical skills in accounting, finance, engineering, manufacturing, or computer science.

Human Skills

Human skills are skills associated with manager’s ability to work well with others, both as a member of a group and as a leader who gets things done through other.

Conceptual Skills

Conceptual skills related to the ability to visualize the organization as a whole, discern interrelationships among organizational parts, and understand how the organization fits into the wider context of the industry, community, and world. Conceptual skills, coupled with technical skills, human skills and knowledge base, are important ingredients in organizational performance.

Job Types Of Managerial

Although we hae been discussing the nature of managerial work in general, managerial jobs vary somewhat on the basis of two important dimensions. One is a vertical dimension, focusing on different hierarchical levels in the organization. The other is a horizontal dimension, addressing variations in managers responsibility areas. We explore these dimensions and their implications in this section. Because of its importance in fostering innovation, we give special attention to the entrepreneurial role at various hierarchical levels.

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Vertical Dimension : Hierarchical Levels

Along the vertical dimension, managerial jobs in organizations fall into three categories : first-line, middle, and top management. These categories represent vertical differentiation among managers because they involve three different levels of the organization.

First-Line Managers

First-line managers (or first-line supervisors) are managers at the lowest level of the hierarchical who are directly responsible for the work of operating (no managerial) employees. They often have titles that include the work supervisor. First-line managers are extremely important to the success of an organization because they have the responsibility of seeing that day-to-day operations run smoothly in pursuit of organizational goals. Because they operate at the interface between management and the rest of the work force.

Middle Managers

Middle managers located beneath the top levels of the hierarchy who are directly responsible for the work of managers other middle managers or first-line managers. Sometimes middle managers also supervise operating personnel, such as administrative assistants and specialists. Many different titles are used for middle managers, including “manager”, director of chief, department head, and division head.

Top Managers

Top managers are managers at the very top levels of the hierarchy who are ultimately responsible for the entire organization. They are few in number, and their typical titles include “chief executive office” president, “executive vice president” “executive director, senior vice president, and sometimes, vice president. Top level managers are often referred to as executives, although the term executive is also sometimes used to include the upper layers of middle managers as well. They typically oversee the overall planning for the organization, work to some degree with middle managers in implementing that planning, and maintain overall control over the progress of the organization.

In public. Corporations, whose stock is sold to the public, top management ultimately reports to the board of directors, the board is composed of a group of individuals elected by the shareholders for the purpose of guiding corporate affairs and selecting officers. A board typically has from 15 to 25 members, depending on company size. In some companies, boards may essentially rubber-stamp management initiatives, particularly when the majority of the board is made up of top managers and outside individuals with close ties to management. In others, boards include more outsiders, operate more independently and are more proactive factors that often lead to better corporate performance. Typically, the board appoints the CEO, who then selects other top managers, including most vice presidents, subject to board approval. Often the CEO also serves as chair person of the board. A recent study, however, suggests that companies perform better when the CEO does not also hold the position of board chairperson as this arrangement allows the board to more adequately monitor the performance of top management.

Differences among Hierarchical Levels

Although the same basic managerial process applies to all three hierarchical levels of management, there are some differences in emphasis. Major difference stem mainly from the importance of the four functions of management, the skills necessary to perform effectively, the emphasis on managerial roles at each level, and the use of the entrepreneurial role.

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Function of Management

The relative importance of planning, organizing, leading and controlling varies somewhat depending on managerial level. Planning tends to be more important for top managers than for middle or first-line managers. This is primarily because top managers are responsible for determining the overall direction of the organization, a charge that requires extensive planning.

At the same time, organizing is somewhat more important for both top and middle managers than for first-line managers. This stems from the fact that it is the top and middle levels of management that are mainly responsible for allocating and arranging resources, even though this function is also performed to some extent by first-line supervisors.

In contrast, leading substantially more important for first-line supervisors than for managers at higher levels. Since first-line supervisors are charged with the ongoing production of goods or services, they must engage in substantially higher amounts of communicating, motivating, directing, and supporting. All of which are associated with leading.

Finally, the management function that is most similar at all three hierarchical levels is controlling. This similarity reflects a common degree of emphasis at all levels on monitoring activities and taking corrective action as needed.

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Management Skills

The three levels of management also differ in the importance attached to the key skills discussed earlier: technical, human, and conceptual. Generally, conceptual skills are most important at the top management level. Top managers have the greatest need to see the organization as a whole, understand how its various parts relate to one another and associate the organization with the world outside. Whirlpool’s David Whitwam points out that looking at an organization as a whole can be difficult, particularly when a company is doing well and there is not imminent crisis on the horizon. He said that Whirlpool was doing well domestically, but nevertheless, top management faced up to the challenge of looking at the big picture because they could envision their future growing more difficult and complicated. When they took a more holistic view, they realized that they had to globalize to survive and prosper.

In contrast, first-line managers have the greatest need for technical skills, since they directly supervise most of the technical and professional employees who are not manager. Yet middle managers, too often need sufficient technical skills so that they can communicate with subordinates and recognize major problems. Even top managers must have some technical skills, particularly when technology is an important part of the products or services their organizations produce.

Not surprisingly, all three levels of management require strong human skills because they all must get things done through people. Ironically, promotions to first-level management are often based on individuals good technical skills, with little consideration given to the adequacy of their human skills. Managers who lack sufficient human skills usually run into serious difficulties when they attempt to deal with individuals inside and outside their work units.

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Managerial Roles

Although Mintzberg argued that the 10 managerial roles he identified apply to all levels of management he did note that there may be some differences in emphasis at various levels. Subsequent research by others suggests that the figurehead role and several others such as liaison and spokesperson may become more important ass a manager moves up the hierarchy. On the other hand, the leader role appears to be more critical at the lower levels, a finding that supports the idea that the leading function itself has greater importance for lower-level managers than for those higher up.

In a study of the importance of the various roles, managers at all levels gave particularly high ratings to the entrepreneurial role. Several experts on innovation, however, argue that the entrepreneurial role varies in some important way depending on a manager’s level in the hierarchy.

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