Organization and Management: Management

BANKING DIPLOMA EXAMINATION

Banking Diploma Courses under The Institute of Bankers, Bangladesh (IBB)

Organization and Management-JAIBB

Management

Q.1 Discuss the nature of Management.

Ans.: The nature of management can be discussed as follows :-

(1) Multidisciplinary : Management draws knowledge and concepts from various disciplines. It draws freely ideas and concepts from such disciplines as psychology, sociology, anthropology, economics, ecology, statistics, operation research, history etc. Management integrates the idea and present newer concepts which can be put into practice for managing the organisations.

(2) Dynamic Nature of Principles : Based on integration and supported by practical evidences. Management has framed certain principles. These principles are flexible in nature and change with the change in the environment in which an organisation exist.

(3) Relative, not Absolute Principles : A particular management principle has different strengths in different condition. Therefore principles of management should be applied in the light of prevailing conditions. Allowance must be made for different changing environment.

(4) Management - Science or Art : Management is both a science and an art. The process of scientific theory construction and confirmation is used in the process of management. And has to do with applying of knowledge.This is especially important in management because in many instances, much creativity and adroitness in applying the managerial efforts are necessary to achieve the desired results.

(5) Management as Projection : Management satisfies the requirement of a profession in the form of existence of knowledge. The concept of management is still evolving and continuously new principles are being developed.

(6) Universality of Management : Management is a universal phenomenon. Management principles are not universally applicable but are to be modified according to the needs of the situation.

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Q.2 What do you mean by principles of Management? Discuss the important principles of Management.

Ans.: Management principles are those fundamental truths or statements of facts which serve as guide to managers in thinking and doing their job of managing. Management principles may be derived in any of the following ways :-

(i) By observation and analysis of managerial practices.

(ii) By conducting studies through system enjury, collection and analysis and testing of facts.

Some Important Principles of Management : 

F. W. Taylor, Henry Fayol, Mary Parkeer Follett, Urwick, Koontz O’ Donnel, George R. Terry etc. are the leading thinkers who have listed and described certain management principles :-

(1) Fayol’s Principles of Management : Henri Fayol, who is recognized as the father of modern theory of management formulated a set of 14 principles.

(i) Division of Work : Division of work states that the total work should be subdivided into small components / parts and each part of the work should be allocated to the worker who specializes in that part of the work.

(ii) Authority and Responsibility : Authority creates responsibility whenever a person exercises authority, responsibility arises. Responsibility is the essential counter part of authority.

(iii) Discipline : According to Fayol, discipline is absolutely essential for the smooth running of business. Without it no business can prosper.

(iv) Unity of Command : The principle of unity of command states that each subordinate should receive orders from only one boss or superior.

(v) Unity of Direction : The principle of unity of direction states that there should be “one head and one plan” for a group of similar activities having the same objective. In other words, the activities that have same objective should be directed by only one manager under one plan.

(vi) Subordination of Individual Interest to General Interest : Interest of organisation as a whole must prevail over the individual interest wherever individual interest and the common interest differ, efforts must be made to reconcile them.

(vii) Remuneration : Fayol stressed that the remuneration or compensation for work done should be fair to both employers and the firm. It should neither be low nor high.

(viii) Centralization : Decreasing the role of subordinates in decision making is centralization of authority and increasing their role in it is decentralization of authority. Fayol believed that managers should retain final responsibility but should at the same time give their subordinates enough authority to do their job properly.

(ix) Scalar Chain or Hierarchy of Authority : Scalar chain or hierarchy of authority refers to the unbroken chain or line of authority running from the top management to the lowest levels of the organisation.

(x) Order : The principle of order states that there should be a place for every think and for every person. Material and people should be in the right place at the right time. People should be assigned the jobs that are best suited to them.

(xi) Equity : According to this principle, the manager must install equity in the organisation. To ensure this, manager should be friendly, fair and kind in dealing with their subordinates.

(xii) Stability of Personnel : This principle states that there should be reasonable stability of the tenure of personnel in the firm. No employee must be removed from his position within a short period of time.

(xiii) Initiative : This principle states that subordinates should be given the freedom to develop and carry out their plans. But managers should do so within the limits of authority and discipline.

(xiv) Esprit de Corps : This principle states that managers should promote esprit crops or team spirit and a sense of unity among the employees.

Other Important Principles :

(xv) Principle of Objective : Koontz and O’Donnel suggest that “The organisation as a whole and every part of it must contribute to the attainment of enterprise objectives.

(xvi) Principle of Planning : The principle of planning states that good planning is a prerequisite for good management. Therefore managers should accurately plan the activities of their organisation keeping in view the environmental factors.

(xvii) Principle of Span of Control : Span of control means the number of subordinates under the direct supervision of the superior. According to this principle, a superior should supervise only that number of subordinates which be can properly supervise directly under his control.

(xviii) Principle of Balance : This principle states that different parts or units of an organisation should be in balance. This is essential in order to ensure proper development of business and its efficiency.

(xix) Principle of Coordination : This principle states that human efforts and other resources should be co-ordinated in order to achieve organisational goals effectively.

(xx) Principle of exception : The principle of exception states that every superior should set the objectives and plan for their subordinates and delegate them appropriate amount of authority to take all decisions to carry out the plans.

(xxi) Principle of Participation : This principle states that managers must encourage participation of their subordinates in taking decisions on matters directly affecting them.

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Q.3 Discuss the major functional area of Management.

Ans.: An acceptable and practical classification includes four broad functional areas :-

(i) Production : This area is normally kept under the control of a production manager who is responsible for the performance of entire related activities.

This area may further be classified into major sub-activities :-

· Purchasing

· Material Management

· Research and Development

(ii) Marketing : This area involves the distribution of organisation’s product to the buyers. This can be divided into following subareas :-

· Advertising

· Marketing Research

· Sales Management

(iii) Finance and Accounting : This area deals with the record keeping of various transactions and management of financial resources :-

· Financial Accounting

· Management Accounting

· Costing

· Investment Management

· Taxation

(iv) Personnel : This aspect deals with the management of human beings in the organisation. It includes following areas :-

· Recruitment and Selection

· Training and Development

· Wage and Salary Administration

· Industrial Relations

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Q.4 Discuss the major functions of management.

Ans.: A function is a group of similar activities. However what functions are undertaken by managers in organisations, there is a divergence of views. But the major management functions suggested by most of the authors are as follows :-

(i) Planning : Planning is the conscious determination of future course of action. This involves why an action, what action, how to taken action, and when to take action. Thus planning includes determination at specific objectives, determining projects and programmes, setting policies and strategies, setting rules and procedures and preparing budgets.

(ii) Organising : Organising is a process of dividing work into convenient task or duties, grouping of such duties in the form of positions, grouping of various positions into department and sections, assigning duties to individual positions and delegating authority to each position so that the work is carried out as planned.

(iii) Staffing : Staffing involves manning the various positions created by the organizing process. It includes preparing inventory of personnel available and identifying the gap between manpower required and available, identifying the sources from where people will be selected, selecting people, training and development fixing financial compensation, appraising them periodically etc.

(iv) Directing : Directing includes communicating, motivating and leading. When people are working in an organisation, they must know what they are expected to do in the organisation. Superior managers fulfill this requirement by communicating to subordinates about their expected behaviour. The superiors have a continuous responsibility of guiding and leading them for better work performance and motivating them to work with zeal and enthusiasm.

(v) Controlling : Controlling involves identification of actual results. Comparison of actual results with expected results as set by planning process, identification of deviation between the two, if any and taking of corrective action so that actual result match with expected results.

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Q.5 Classify the various approaches of the Management thought along with the origination period and the major contributors.

Ans.: The various approaches to management can be divided into the following major schools :-

(A) The Classical Approach :

(i) Scientific Management : Time Period (1900 – 1930), Introduced by (F. W. Taylor).

(ii) Administrative or Functional Approach : Henry Fayol (1916 – 1940).

(iii) Organisational Theory Approach : Max Wabor, C. I. Bernard, H.

A. Simon.

(B) Neo Classical Approach :

(i) Human Relation Approach : George Elton Mayo (1924 -1932).

(ii) Behavioural Science Approach : Herzberg, Fred Fiedler, Mclellend, Likert etc. (1950 -1970)

(C) Modern Approach :

(i) Quantitative or Management Science Approach : (1950 -1960).

(ii) System Approach : Ludwig Von Bertalanffy (1960 onwards).

(iii) Contingency Approach : Tosi and Hammer (1970 onwards).

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Q.6 Assess the contribution of Scientific Management to the development of

Management thought.

Ans.: Scientific management approach is also known as the productivity or efficiency approach. The credit for pioneering and developing scientific management approach is primarily given to F. W. Taylor. He is recognised as the father of scientific management. The other individuals who contributed to this school of management thought are Frank Gilkreth, Lillian Gillreth, Henry Gantt and Harrington Emerson. Scientific management school concentrates on the process of finding one best way of doing a thing in order to achieve maximum production and efficiency.

Philosophy and Principles of Taylor :

· Develop a science to replace rule of thumb

· Labour – Management Cooperation

· Maximization of output or production

· Equal division of responsibility

· Job specialization

· Scientific selection, training and development of workers.

· Planning and scheduling of work

· Standardisation

· Wage incentives

· Mental Revolution

Mechanism of Scientific Management : In order to blend philosophy and principles of scientific management into practice, Taylor developed the following

techniques or mechanism :-

(1) Scientific Task Setting : The task of every worker for everyday should be

determined through scientific investigation.

(2) Experimentation or Work Study : Work Study means organised systematic and objective analysis and assessment of the operational efficiency of all the elements connected with the work. The main areas of work study are as follows :-

(i) Method Study : Survey of production process.

(ii) Motion Study : The study of movement of a worker or a machine in doing a job.

(iii) Time Study : Find out a standard time for doing the job.

(iv) Fatigue Study : Fatigue study is the study of the reduction of human energy in doing his job.

(3) Planning : Planning function should be separated from the doing function.

(4) Scientific Selection and Training of Worker.

(5) Specialization : Allocate the task according to their specialization.

(6) Standardisation : Taylor advocated for standardisation of material, tools equipment, method etc..

(7) Efficient Costing System : To control cost of production and pricing.

(8) Incentive Wage Plan : Worker is to receive a bonus in addition to his wages if he completed his jobs before the standard fixed time.

(9) Congenial Atmosphere of Work : The environment must also be cheerful

and psychologically satisfactory

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Q.7 Explain the various tasks conducted in the Hawthorne studies. Also discuss the contribution of Hawthorne Experiments in the development of Managerial thinking.

Ans.: Harvard University research team conducted a series of studies. George Elton Mayo, F. I. Roethlisberger, W. J. Dicton and others were the members of the team. The studies were conducted at Hawthorne plant of the western electric company, Chicago (USA) between 1924 and 1932.

Four studies were conducted at the Hawthorne Plant :-

(1) Illumination or Test Room Study : The illumination study was conducted to determine the relationship between light intensity and productivity of efficiency of workers. For this purpose, three different experiments were conducted in which researchers changed light intensity. They concluded that lighting was a minor factor affecting the productivity of workers.

(2) The Relay Assembly Test Room Study : The relay assembly test room study was conducted to ascertain the factors other than the light intensity affecting the productivity. During the test researcher change working condition and they concluded that most likely cause of higher productivity was the change in social situation in the work group.

(3) Mass Interviewing Study : The third study was the mass interviewing programme. Under this programme over 21,000 employees were interviewed. They have asked some direct question and ……… on some indirect questions. And finally the researchers reached in the conclusion that work performance and the individual status in the organisation are determined not by the person himself but by the group members, peers and their personal problems also effect the feeling about his job.

(4) Bank Wiring Observation Room Study : In order to observe informal group behaviour more accurately, band wiring observation room study was undertaken. The following conclusions were drawn :-

(i) The group was restricting output by enforcing the norms or standards set by the group.

(ii) There existed internal cliques or groups which are not formed on the basis of occupation.

Conclusions / Contribution of Hawthorne Studies :

(i) Work is a group activity.

(ii) Workers form internal informal group.

(iii) Social groups influence the productivity.

(iv) Social groups determines informal norms.

(v) Group cooperation is planned.

(vi) Worker is not only rational economic being.

(vii) Supervisor behaviour affect the behaviour of worker.

(viii) Free flows of communication affects the attitude of workers towards work.

(ix) Complaints may not be statement of facts.

(x) Birth of human relation movements.

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