Commerce · Ch 6 — Nature and Significance of Management
Introduction
Introduction
The Foundation of Management
Management is the force that turns a group of people into a purposeful organisation. Whether it is a century-old global conglomerate with operations across continents, or a small candle-making venture started by a first-generation entrepreneur in a rural district of Sikkim, every organisation needs management to succeed. Such organisations do not rise to the top by chance — they achieve their goals through a deliberate, ongoing process called management. A closer look at any successful organisation shows that whoever runs it is constantly performing a series of interrelated and continuous functions: planning ahead, organising resources and people, and communicating regularly with everyone the organisation depends on, from suppliers to customers.
This holds true regardless of the kind of organisation. Schools, hospitals, shops, and large corporations all have diverse goals, but they all have one thing in common — management and managers. What a person running a small venture does day to day, and what the head of a large enterprise does, is fundamentally the same set of interconnected functions aimed at achieving the organisation's goals. Successful organisations do not achieve their goals by chance but by following this deliberate process called 'management'.
Formal Definitions of Management
Several management thinkers have defined the term. Here are three key definitions:
- Harold Koontz and Heinz Weihrich: "Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims."
- Robert L. Trewelly and M. Gene Newport: "Management is defined as the process of planning, organising, actuating and controlling an organisation’s operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives."
- Kreitner: "Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment."
The Universal Need for Management
Management is essential for all types of organisations, regardless of their size, nature, or objective:
- Size: Big or small
- Objective: Profit or non-profit
- Nature: Services or manufacturing
Management is necessary so that individuals can make their best contribution towards group objectives. It consists of a series of interrelated functions performed by all managers, though the time spent on each function varies by level. Top-level managers spend more time on planning and organising, while lower-level managers spend more time on directing and controlling.
The Tata Group, founded in 1868 by Jamsetji Nusserwanji Tata, is a global conglomerate operating in over 100 countries across five continents. Jamsetji set himself four goals — an iron and steel company, a world-class learning institution, a unique hotel and a hydro-electric plant — and of these only the hotel, the Taj Mahal Hotel at the Colaba waterfront in Mumbai, opened in his lifetime (inaugurated on 3 December 1903; it was the only hotel in India then to have electricity). He paid his workers gratuity and provident fund well before these were made mandatory, and his planning is visible in the whole city of Jamshedpur built around the steel works. Today the group has 29 publicly-listed enterprises — including Tata Steel, Tata Motors, Tata Consultancy Services, Tata Power, Tata Chemicals and Indian Hotels — and deliberately balances economic prosperity with environmental responsibility and social benefit, its conduct governed by the Tata Code of Conduct.
Why it matters: Building enterprises on this scale — and sustaining and running them profitably — is possible only through effective and efficient management and coordination at every level. That is exactly what this chapter is about.
Different writers capture management in different words:
"Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims."
— Harold Koontz and Heinz Weihrich
"Management is defined as the process of planning, organising, actuating and controlling an organisation's operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives."
— Robert L. Trewelly and M. Gene Newport
"Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment."
— Kreitner
Across all three, the common threads are the same: management is a process, carried out with and through people, that achieves the organisation's goals both effectively (the right tasks done) and efficiently (at minimum cost).