Nature and Significance of Management

Class 12 Business Studies

Management is the process of planning, organising, staffing, directing and controlling the enterprise resources efficiently and effectively for achieving the goals of the organisation.

Process in the definition means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. In other words, it is concerned with the end result. Efficiency means doing the task correctly and with minimum cost.

Characteristics of Management

The key features of management are: 

1. goal oriented process
2. all pervasive
3. multidimensional
4. continuous process
5. group activity
6. dynamic function
7. tangible force

(i) Management is a goal-oriented process

An organisation has a set of basic goals which are the basic reason for its existence. These should be simple and clearly stated. Different organ­isations have different goals.

(ii) Management is all pervasive

The activities involved in managing an enterprise are common to all organisations whether economic, social or political.

(iii) Management is multidimensional

Management is a complex activity that has three main dimensions - Management of work, Management of people, Management of operations.

(iv) Management is a continuous process

The process of management is a series of continuous, composite, but separate functions (planning, organising, directing, staffing and controlling). These functions are simultaneously performed by all managers all the time.

(v) Management is a group activity

An organisation is a collection of diverse individuals with different needs. Every member of the group has a different purpose for joining the organisation but as members of the organisation they work towards fulfilling the common organisational goal. This requires team work and coordination of individual effort in a common direction.

(vi) Management is a dynamic function

Management is a dynamic function and has to adapt itself to the changing environment. An organisation interacts with its external envi- ronment which consists of various social, economic and political factors. In order to be successful, an organisation must change itself and its goals according to the needs of the environment.

(vii) Management is an intangible force

Management is an intangi­ ble force that cannot be seen but its presence can be felt in the way the organisation functions. The effect of management is noticeable in an organisation where targets are met according to plans, employees are happy and satisfied, and there is orderliness instead of chaos.

Objectives of Management

Management fulfils three basic objectives: organisational, social and personal.

(i) Organisational Objectives

Management is responsible for setting and achieving objectives for the organisation. It has to achieve a variety of objectives in all areas considering the interest of all stakeholders including, shareholders, employees, cust­omers and the government. The main objective of any organisation should be to utilise human and material resources to the maximum possible advantage, i.e., to fulfill the economic objectives of a business. These are survival, profit and growth.

(ii) Social objectives

It involves the creation of benefit for society. As a part of society, every organisation whether it is business or non-business, has a social obligation to fulfill. This refers to consistently creating economic value for various constituents of society. This includes using environmental friendly methods of production, giving employment opportunities to the underpreviledged sections of society and providing basic amenities like schools and healthcare, etc., for community.

(iii) Personnel objectives

Organisations are made up of people who have different personalities, backgrounds, experiences and objectives. They all become part of the organisation to satisfy their diverse needs. These vary from financial needs such as competitive salaries and perks, social needs such as peer recognition and higher level needs such as personal growth and development. Management has to reconcile personal goals with organisational objectives for harmony in the organisation.

Importance of Management

Management is important because it helps in achieving group goals, increases efficiency, creates a dynamic organisation, helps achieve personal objectives and contributes to the development of society.

(i) Management helps in achieving group goals

Management is required not for itself but for achieving the goals of the organisation. The task of a manager is to give a common direction to the individual effort in achieving the overall goal of the organisation.

(ii) Management increases effici­ency

The aim of a manager is to reduce costs and increase through better productivity planning, organising, directing, staffing and controlling the activities of the organisation.

(iii) Management creates a dynamic organisation

All organisations have to function in an environment which is constantly changing. It is generally seen that individuals in an organisation resist change as it often means moving from a familiar, secure environment into a newer and more challenging one. Management helps people adapt to these changes so that the organisation is able to maintain its competitive edge.

(iv) Management helps in achieving personal objectives

A manager motivates and leads his team in such a manner that individual members are able to achieve personal goals while contributing to the overall organisational objective. Through motivation and leadership the management helps individuals to develop team spirit, cooperation and commitment to group success.

(v) Management helps in the development of society

An organisation has multiple objectives to serve the purpose of the different groups that constitute it. In the process of fulfilling all these, management helps in the development of the organisation and through that it helps in the development of society. It helps to provide good quality products and services, creates employment opportu­nities, adopts new techno-logy for the greater good of the people and leads the path towards growth and development.

Nature of Management

Management is as old as civilisation. Although modern organisations are of recent origin, organised activity has existed since the time of the ancient civilisations.

Management is a combination of an organised body of knowledge (science) and its skillful application (art). Although it does not satisfy all the requirements of a profession, it is to a large extent professional in character.

The term ‘management’ today has several different connotations that highlight the different aspects of its nature. The study of management has evolved over a period of time along with the modern organisations; based both on the experience and practice of managers and a set of theoretical relationships. Over a period of time, it has grown into a dynamic subject with its own special characteristics.

Levels of Management

Management is considered a three-tier activity. The top management focuses on determination of objectives and policies, middle management attempts to achieve these objectives through the effort of other managers and supervisory or operational management directly oversees the efforts of the workforce.

Functions of Management

All managers perform the following interrelated functions: Planning, Organising, Staffing, Directing and Controlling.

Planning is the function of determining in advance what is to be done and who is to do it. This implies setting goals in advance and developing a way of achieving them efficiently and effectively.

Organising is the management function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan. Once a specific plan has been established for the accomplishment of an organisational goal, the organising function examines the activities and resources required to implement the plan.

Staffing is finding the right people for the right job. A very important aspect of management is to make sure that the right people with the right qualifications are available at the right places and times to accomplish the goals of the organisation. This is also known as the human resource function and it involves activities such as recruitment, selection, placement and training of personnel.

Directing involves leading, influ­encing and motivating employees to perform the tasks assigned to them. This requires establishing an atmosphere that encourages employees to do their best.

Controlling is the management function of monitoring organisational performance towards the attainment of organisational goals. The task of controlling involves establishing standards of performance, measuring current performance, comparing this with established standards and taking corrective action where any deviation is found.

Coordination

Coordination is the essence of management. It is the process of achieving unity of action among interdependent activities and departments of an organisation.