General management, basic concepts and fundamentals - partial lecture notes PDF

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Lecture 2 - 11. Management comes from the latin word “ manus ”, meaning “hand”. Therefore, it is about handling situations. Management does not involve just the idea of giving orders to others, but it encompasses a complex process meant for achieving with maximum efficiency an established goal. We c...

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Lecture 2 - 11.10.2018 Management comes from the latin word “manus”, meaning “hand”. Therefore, it is about handling situations. Management does not involve just the idea of giving orders to others, but it encompasses a complex process meant for achieving with maximum efficiency an established goal. We could say that management is about planning (forecasting), organising, coordinating, commanding and controlling your own activity, but most importantly the activity of others, in order to succeed in correctly doing the undertaken actions. Management entered the economic life as a concept being largely accepted by most of the people in 1941, when James Burnham published in New York a book entitled “The Managerial Revolution”, this representing in fact a real revolution in terms of theory and practice related to the management activity. Management can be analysed as a practical activity, but it can be also considered to be an art. Also, management succeeded in turning into a science once people had realised that this is a highly useful tool in carrying out any important activity. Management manifested as a practical activity exists since the beginnings of the human society. People working in groups, in communities or in collectivities needed someone to guide them, to organise them, to coordinate their activity and so on, and this involved the existence of some individuals that today we can assimilate to managers. Thus, from this perspective, we can define management as representing a complex set of actions carried out in order to provide a normal, proper functioning operation of organised human collectivities (be their education institutions, political organisations, economic enterprises and so on) and of any structural component thereof. The main goals when talking about managing things is: A. To use any available resources in the most possible efficient way; B. To carry out undertaken activity under best possible conditions in order to achieve a high level of efficiency. There are three main premises having been at the basis of the management activity: 1. The existence of human collectivities, this involving the need for coordination, for guidance, for order and discipline among many others. 2. The social division of labour and the specialisation of producers that emerged and developed increasingly due to the technological and scientific progress, this involving the cooperation in labour, the interconnection of the actions of individuals as well as the evaluation and control of the activity of the same. !1

3. The establishment of large corporations encompassing a large number of employees and involving a large volume of technical capital which imposed the need for coordination of all activities carried out by different departments.

Lecture 3 - 18.10.2018 Management should be also perceived as an art, in fact this is deemed to be the oldest of all arts that men push towards perfection. It is the art of making people work by persuasion. Convincing people to work is not an easy thing to do, but by adopting an appropriate attitude, one might succeed in doing so in an appropriate manner. Harold Koontz and Cyril O’Donnell considered management as the work of an artist able to provide a highly efficient activity with lowest possible negative consequences. After having emerged as a practical activity and after having manifested in time as an art, management became at the beginning of the 20th century a science. The parents of management as a science were the American engineer Frederick Winslow Taylor and the French geologist Henri Fayol. The name of the two titans of economic management are related to the management principles (for both of them) and to management functions (for the latter). Taylor has published in 1911 the book entitled “The Principles of Management”, which is considered even today as one of the best guidelines for all individuals trying to manage an organisation. Another important book is represented by the work of Fayol, published in 1916 and entitled “General and Industrial Administration”. Management as a science belongs to the category of functional and measurement functions, which is part of the category of social sciences. In fact, the management science started to manifest at micro-level, extending thereafter both horizontally and vertically and turning into a micro social science, a mezzo social science and a macro social science, this meaning that we refer to management as to an activity carried out at the level of an organisation, at the level of a branch of activity as well as at the level of a nation, all of them incorporating also the social component. Considering that management is a science, we should perceive it via its related processes and relationships. Management as science can be defined from such perspective by virtue of its object of study as being focused on the management processes and relationships, the main purpose of it being to identify the laws governing the same as well as to conceive new systems of management and to outline new management methods and techniques. The management process is represented by a series of activities via which a part of the employees (the managers) act upon the !2

other part (the executants - subordinates) as such process is beside the execution one a component of the labour process. The management relationships reflect the interconnections in terms of communication, activities carried out and so on, among the members of an organisation (both managers and subordinates) and among the members of one organisation and the members of other organisations, while accomplishing the forecasting (planning), the organising, the coordinating, the commanding and the evaluating and controlling specific management functions. The management process and most importantly the management relationships are highly influenced by the type of activity of the organisation, the complexity of the same, the level of specialisation of it, the territorial spread, the quantity and quality of the personnel being their managers or subordinates, the legislation and so on. Thus we discuss in terms of a triple determination of such process and relationships, namely:

- The social and economic determination, being related to different management approaches, given the type of ownership encountered in that organisation.

- Technical and material determination, as management is highly dependent on the type and characteristics of the production factors, this having led to the specialisation of management (agricultural management, industrial management, etc…).

- The human determination as management is certainly subject to the personality and potential of both managers and subordinates.

Lecture 4 - 25.10.2018 Three important stages have occurred until reaching the current form of scientific management: 1. The first one, known as empirical management, was that type of management based on the intuition and practical experience of an individual who was usually at the same time owner of that business and manager of the same. 2. The second one, the early scientific management, has emerged based on the papers of Frederick Taylor and Henri Fayol, and was mainly focused on increasing the production level of the organisation in terms of both quantity and quality. This has driven to what we know today as the Classical School of Management, that remained even nowadays a reference point in the management economic thinking. 3. The third one, the effective scientific management, is based on the research of Elton Mayo from Harvard University. It relaunches the idea originating in the above mentioned economic !3

thinking, but focuses this time rather on the importance of human resources in achieving a high level of efficiency at organisational level. In such respect, everything originates in the theory of motivation, which is very important for achieving a high level of production, both in quantitative and qualitative terms. This is the moment when we assist to the emergence of the Post-Classical Management School, the Systemic Management School and the Human Management School (behavioural, psychological, sociological, etc…) The main characteristics of the scientific management (contemporary management) are as follows:

• It is an interdisciplinary science, as it takes over different concepts and ideas from other economic sciences, like economics and finance, but also integrates methods and techniques specific to non-economic sciences, such as statistics, psychology, sociology and so on.

• It is an open system, as it is interrelated with other economic or non-economic systems, however being bordered because, after all, we talk about the existence of a stand-alone management system.

• It is, as underlined by Koontz and O’Donnell, the most inexact of sciences, as it deals with highly complex processes and phenomena, the decisions having sometimes to be made based on the intuition of managers.

• It does not provide managers with an universal pattern, with a best always applicable way to follow, the decisions being recommended to be made based on the specificities of each and every particular case, however considering some general guidelines that might orient the activity of managers. Basis of analyses of the management processes and relationships, the management science synthesises and formulates different laws governing the management activity, laws designated by Taylor as management principles. Such principles are in fact requirements intercorrelated and interconditioned based on the type of organisation, the type of activity carried out, and the specific problems to be solved. Also, they should be observed by both sides, namely by the managing system and by the managed one, in order to achieve the desired level of efficiency for the organisation. These principles can be split into two categories, considering their level of complexity, namely: I.

General management principles, concerning the entire management system;

II. Specific management principles, concerning a component of the management system (for instance the quality management). !4

A first classification of the general management principles, made based on the work of Taylor, contains six elements: 1. Principle of increased efficiency 2. Principle of economic administration 3. Principle of unity, of authority and responsibility 4. Principle of professional competence and motivation of employees 5. Principle of flexibility 6. Principle of participative management

Lecture 5 - 01.11.2018 I.

The principle of increased efficiency is related to the idea of increasing the level of productivity of an organisation by succeeding in creating a larger gap between the effects and the efforts. This effect-effort relationship is translated into a revenue and expenses one, a high level of efficiency being there for construe as an increase or a higher level of profit.

II. The principle of economic administration is directly connected to the previous principle as it is related to the idea of covering the organisation’s expenses and in adding some extra benefits, namely in getting profit. This principle involves exceeding at a given moment of time the break-even point, the company being in the position in continuously increasing from that point on. III. The principle of unity of authority and responsibility is related to the fact that individuals, once appointed in a given managing position, are vested with a certain level of authority, but also have some clearly established responsibilities that they should accomplish. The same principle is related to the fact that the organisational structure should be clearly defined, so as to allow for a manager to give orders only to his/her direct subordinates and to be directly contacted by the same whenever circumstances impose it. The subordinates will accomplish only the orders received from their direct managers and will respond only before him/her for their professional actions. IV. The principle of professional competence and motivation of employees is related on one hand to having the right person into the right place and, on the other hand, to the fact that the performance of each individual should be stimulated either by positive or negative motivation. Such motivation should be selective and progressive, and should be done via financial or non financial means. In the first case we talk about increases of the wage level or about different !5

bonuses, while in the second one we talk about different forms of appreciation, promotion or other facilities. V. The principle of flexibility is related to the capacity of the entire management system to quickly adapt to the changing circumstances, be they internal or external to the organisation (changes related to the micro and macro environment). Normally larger an organisation, lower is the level of flexibility, usually due to the very complex organisational structure. Given the importance of flexibility, the current trend for large organisations consists in flattening such structure, therefore decreasing the number of hierarchical levels, thus allowing for a higher adaptation capacity. VI. The principle of participative management is related to involving the subordinates not only in the accomplishment of the established goals, but also in the effective establishment of the same, the managers being in the position of choosing whether the subordinates will be also effectively involved in the decision making process or not.

Lecture 7 - 15.11.2018 Another classification of the management principles arising based on the ideas expressed by Frederick Taylor is as follows: I.

Science, not rule of thumb: this principle says that any managerial decision should be made based on a serious research and analysis, not just on intuition and experience. By considering also the scientific issues, the organisation managers will be in the position of making decisions by realistically considering any possible consequences.

II. Harmony, not discord, this meaning that the manager should do his/her best in order to provide an environment of trust and understanding for his/her subordinates. III. Principle of mental revolution, this meaning that any individual working in an organisation should understand that he/she belongs to the same and that his/her wellbeing will be achieved, while achieving the wellbeing of the organisation. IV. Cooperation, not individualism: this means that no matter how tempted we may be in acting individually and in standing out before our colleagues in terms of efficiency, cooperating with the same might bring sometimes more advantages both at individual and collective level. V. Development of the personnel up to the highest level of efficiency: this principle means that the manager should take care of his/her subordinates in terms of properly identifying the best job fit for him/her and in terms of properly training the same according to their professional needs. !6

The 14 principles of Henri Fayol are: 1. Division of work, this meaning that any activity should be split into different sub-activities, actions, specific tasks, and to assign each of them to those individuals being in the position of properly accomplishing the same. 2. Principle of authority and responsibility, suggesting that the individual empowered to give orders and to make decisions in an organisation should be also made responsible for the results of such orders and decisions. The manager should be also made responsible partly for the results provided by his/her subordinates based on such orders/decisions, the remainder of such responsibility being on the side of the subordinates implementing such decisions. 3. Discipline, this meaning that all employees in an organisation, be they managers or subordinates, should behave properly with one another. 4. Principle of unity of command, suggesting that each individual working in an organisation (safe for the top manager) has a direct hierarchical chief from whom he/she should receive orders and before whom he/she should respond as for the activities carried out. 5. Principle of unity of direction, meaning that the effort of the subordinates coordinated by a manager should be concentrated into the same direction not only in terms of efficiency, but also in terms of types of activities performed. 6. Principle of subordination of the individual interest to the common interest, meaning that any worker in an organisation should understand that making the best for the organisation will normally result sooner or later into the best for themselves. 7. Principle of remuneration, stating that any individual should receive a proper wage level considering his/her studies and experience, but most important considering the results effectively obtained for that organisation. 8. Principle of level of centralisation or decentralisation of decisions, meaning that any manager should find a balance between the decisional poles existing in an organisation so as to render its activity more efficient. This highly depends on the type of activity carried out in that organisation, on the size of the same, on the personality of managers, on the potential of employees and so on. Usually the public companies are rather characterised by centralised decisions, while the public ones are rather focused on decentralisation. In micro companies (up to 10 employees) or small companies we usually deal with centralised decisions, while in medium and large ones with decentralised ones. For organisations with branches and subsidiaries the level of decentralisation will be always higher than for other companies. !7

9. Principle of scalar chain, states that any organisation should clearly delimit and continuously improve its organisational structure and to make it visible to each and every individual working in that organisation. 10. Principle of order, this standing not just for physical order, but also for social order, therefore creating proper conditions for working in efficient terms. 11. Principle of equity, meaning that all individuals working in an organisation, irrespective of their gender, race, religion, etc… should be equally treated in all respects. 12. Principle of stability of the personnel, stating that a manager should do his/her best in order to keep his/her subordinates in that company, as the cost involved by training the same and by allowing them to accommodate to that business environment are significant for that organisation. 13. Principle of initiative, meaning that the manager should try to involve as much as possible the subordinates in the establishment of the organisational goals and should allow them to express their point of view whenever during the implementation of the decisions made for accomplishing such goals. 14. Esprit De Corps, saying that the manager should be able to create that feeling of loyalty and devotion within the group managed by him/her.

Lecture 8 - 22.11.2018 THE MANAGEMENT PROCESS The management process involves specific instruments, methods and techniques, in fact the labor process is the unity of two sides:

• on one hand the execution side, via which individuals working for that organisation use all other available resources in order to produce goods and offer services necessary for satisfying the customers’ needs and thereby the organisational needs;

• on the other hand the management side, via which individuals specifically empowered by official documents act upon the rest of the employees orienting the same towards a highly efficient achievement of the organisational goals. The management process harmonises all components and sub-components of an organisation, linking the managing system to the managed one. It is the process by which the organisational goals are established, the available necessary resources are identified and the specific activities to be carried out for the achievement of such goals are delimited, so as to lay the premises for performing at high level in that organisation. !8

The management process is characterised by continuity, consistenc...