In this article we will discuss about the importance of management in an organisation.


Importance of Management:

Management plays important role in shaping the culture of an organisation. The performance and survival of business organisation depends on its management.

Peter F. Drucker, in this regard remarks:

“Management is the specific organ of the modern institution. It is the organ on the performance of which the performance and the survival of the institution depends.”

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The modern society is dependent upon organisations for its survival.

Organisations help the society in the following ways:

1. They help in the attainment of individual goals.

2. They preserve knowledge by maintaining records of past achievements and provide knowledge for future generations.

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3. They provide career opportunities to individuals.

A well-managed organisation can effectively utilise its resources (human, physical and financial) and achieve its objectives as well as meet the society’s needs. Effectiveness (doing the right things) along with efficiency (doing things right) is the fundamental key to managerial success. As Drucker puts it, the manager’s need to make the most of opportunities “implies that effectiveness rather than efficiency is essential to business. The pertinent question is not how to do things right, but how to find the right things to do, and to concentrate resources and efforts on them.” It was the effectiveness of management that helped the economies restructures their operations in the post-World War II period.

The interest in management is widely spreading in every country of the world. It is evidenced by the fact that an increasingly large number of management institutes and schools are offering management courses to a large number of students.

The importance of management is as follows:

1. Achievement of Organisational Goals:

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Management helps organisations to effectively design their goals and frame plans and policies to achieve them efficiently.

2. Optimum Utilisation of Organisational Resources:

Management helps the organisation utilise its scarce resources (human, physical and financial resources) efficiently.

Human resources are the people with their talent, skill, knowledge, experience and abilities for effective conversion of inputs into outputs.

Material or physical resources are the raw material or plant and machinery required for producing goods and services.

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Financial resources are the money or funds needed for meeting organisational short- term and long-term requirements of raw material, labour, machinery and other current and fixed assets.

3. Develop Analytical and Conceptual Ability of Managers:

Management helps to analyse the organisational problems, link them with other organisational matters and arrive at solutions geared towards organisational goals.

4. Balance between Multiple Goals:

At a point of time, managers face multiple goals which cannot be simultaneously achieved. Deciding about what is more important so that scarce organisational resources can be optimally allocated to different organisational goals, is facilitated through management.

5. Economic and Social Development:

Drucker asserts that “developing countries are not underdeveloped, they are undermanaged.” If knowledge of management is transferred from developed to developing countries, developing countries will develop their entrepreneurial ability, managerial excellence, rate of savings, capital formation and, thus, economic and social development.

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“Savings and capital investment do not produce management and economic development. On the contrary, management produces economic and social development, and with it savings and capital investment.” — Drucker

6. Coordination between Individual and Organisational Goals:

Effective management coordinates individual goals of people with formal goals of the organisation. It motivates employees to put their best efforts to contribute to organisational goals and through it, achieve their personal goals.

7. Face Competition:

Management helps firms face tough competition in the contemporary business environment. Effectively managed business firms outperform those which are not effectively managed and, thus, capture bigger share of the market. Management promotes innovation as fast changing technology, social processes and organisation structures have become inevitable part of organisational working. It helps the organisations adopt the complex environmental changes and promote their level of competence.

8. Social Upliftment:

Management promotes social development by generating and directing human energies towards the needs of the society such as health care, education, clean environment etc.

9. Reform Government and Society:

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Management teaches respect for individual values, tradition and social culture. The more management of an organisation believes in traditions, customs, values and beliefs of the society, the more that organisation is accepted by the society and the Government.

“Management will increasingly be concerned as much with the expression of basic beliefs and values as with the accomplishment of measurable results.” — Drucker

“It will increasingly stand for the quality of life of a society as much as for its standard of living.”

10. Social Innovation:

The social and economic development is more a result of social innovation than technical innovation. The needs of our society, educate, health care, clean environment, entrepreneurship, productivity etc. are fulfilled through able and skilled managers. The knowledge of management, therefore, plays important role in the social upliftment of society. “Economic and social development are the result of management. Development is a matter of human energies rather than of economic wealth. And the generation and direction of human energies is the task of management. Management is the mover and development is a consequence.”

11. Foundation to Organisation:

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Clearly defined tasks, their distribution to people with authority provides foundation to the organisation. It assigns right task to the right person to avoid duplication and confusion in organisational activities.

12. Environmental Analysis:

Management enables an organisation to analyse its strengths and weaknesses and relate them with environmental threats and opportunities. (This is done with the help of SWOT analysis). It helps managers to minimise risks and maximise environmental opportunities and business gains.


Importance of Management: Top Six Points

According to Drucker, management is the dynamic life-giving element in every organization. It is the activating force that gets things done through people. Without management, an organization is merely a collection of men, machines, money and material. In its absence, the resources of production remain resources and never become production.

The importance of management can be understood from the following points:

i. Optimum Use of Resources:

Management ensures optimum utilization of resources by attempting to avoid wastage of all kinds. It helps in putting the resources to the best advantage within the limitations set by organization and its environment. A right climate is created for workers to put in their best and show superior performance.

ii. Effective Leadership and Motivation:

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In the absence of management, the working of an enterprise will become random and haphazard in nature. Employees feel a sense of security when they find a body of individual’s working day and night for the continued growth of an organization. Proper management makes group effort more effective.

It enables the employees to move cooperatively and achieve goals in a coordinated manner. Management also creates teamwork and motivates employees to work harder and better by providing necessary guidance, counselling and effective leadership.

iii. Sound Industrial Relations:

Management minimizes industrial disputes and contributes to sound industrial relations in an undertaking. Industrial peace is an essential requirement for increasing productivity.

To this end, managers try to strike a happy balance between the demands of employees and orga­nizational requirements. They initiate prompt actions whenever workers express dissatisfaction over organizational rules, methods, procedures and regard systems.

iv. Achievement of Goals:

Management plays an important role in the achieve­ment of objectives of an organization. Objectives can be achieved only when the human and non-human resources are combined in a proper way.

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Management is goal oriented. With a view to realize the pre-determined goals—managers plan carefully, organize the resources properly, hire competent people and provide necessary guidance.

They try to put everything on the right track. Thus unnecessary deviations, overlapping efforts and waste motions are avoided. In the final analysis, all these issues help in realizing goals with maximum efficiency.

v. Change and Growth:

A business concern operates in a constantly changing environment. Factors such as changes in technology, government policy, competition, etc., often threaten the survival of a firm. Failure to take note of customer’s needs regarding fuel efficiency has spelt doom for ‘Ideal Java’ in the two-wheeler market in India.

An enterprise has to take note of these changes and adapt itself quickly. Managers help an organization by antici­pating these changes (careful planning, forecasting combined with efficient use of resources) and taking appropriate steps. Successful managers are the ones who anticipate and adjust to changing circumstances rather than being passively swept along or caught unprepared.

Employers today are hiring managers who can take unfamiliar situations in their stride. At AT&T, people remark, ‘If you are hiring people who do not like surprises, you are probably not hiring the right people’.

vi. Improved Standard of Living:

Management improves the standard of living of people by:

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(i) Using scarce resources efficiently and turning out profits;

(ii) Ensuring the survival of the firm in the face of continued changes;

(iii) Exploiting new ideas for the benefit of society as a whole; and

(iv) Develop­ing employee talents and capabilities while at work and prompting them to display peak performance.

The great economist, Schumpeter, referred to management and entrepreneurs as the engine of growth. Drucker called management ‘the life blood’ of an enter­prise. According to him, management is ‘the crucial factor in economic and social development’.

Admittedly, firms can fail because of inadequate funds, improper marketing, incompetent product design, along with many other reasons. They often fail because the basic management functions are performed poorly or not at all.

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Management is ‘the single most critical social activity in connection with eco­nomic progress. Physical, financial and manpower resources are, by themselves, only passive agents- they must be effectively combined and coordinated through sound and effective management if a country is to experience a substantial level of economic growth and development.’


Importance of Management

Management is a task of getting things done which makes it the most important human activity in an organisation. No business can run on itself and management acts as a continuous impetus for a business to operate smoothly.

The following discussion attempts to explain the importance of management:

Importance # 1. Coordination of Different Factors:

Management is important for enabling coordination between people working across different levels and functions in an organisation. Through coordination, management aims at unifying, integrating, synchronizing efforts of all subordinates/employees to provide unity of action for seeking organisational goals. Management seeks to achieve coordination through its basic functions-planning, organising, staffing, directing and controlling.

Importance # 2. Achievement of Objectives:

Every organisation sets objectives or specific results to be achieved within a particular time frame with certain resources. They serve as the basis for formulating policies, rules, performance standards, etc., which may further lead to minimising expenses, maximising profits, market expansion, customer satisfaction and so on. Management becomes important for achievement of such objectives for directing and unifying the group efforts to achieve them.

Importance # 3. Increasing Productivity:

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Management is important for increasing productivity as it ensures that resources like capital, labour, energy, raw materials, etc. are consumed efficiently at a particular time period to produce as planned by the organisation. The management also ensures that the increase in productivity can be realistically obtained by motivating labour and equitable alignment of supporting resources.

Importance # 4. Facing Competition:

All businesses experience competition with increase in demand of products/services. Businesses thereby compete with each other to seek more sales, more profit and a higher market share by offering the products / services at best prices, quality and service. Human and physical resources accordingly need to be managed suitably with increasing competition thus necessitating the need for manage­ment.

Importance # 5. Inventions:

Modern scientific and technical inventions have made production processes complex that has resulted in demand for sophisticated machines and methods. These inventions have also resulted in less dependence in human resources leading to the need for management that can facilitate efficiency in such innovative resources.

Importance # 6. Positive Influence:

Management aims at getting things done but this can be possible with supporting positive influences which are set in an organisation. Positive influences include positive communication and leadership abilities of the management. For example, during economic difficulties management can motivate and assure workers of job security and provide them necessary guidance to work efficiently.

Importance # 7. Adding to Real Value:

Integration of all efforts efficiently can generate team spirit; create new ideas, imaginations and vision among employers / employees working together and between other stakeholders by a sound management. A good and positive management can develop an improved standard of living, access and availability to leisure, amenities and overall welfare leading to good quality of life.

Importance # 8. Necessary to all Organisations:

Management is important for various types of organisations which are for profit, non-profit, educational, religious and charitable organisations. Management is found also among households, families, clubs and associations that require human activities supported by other physical resources.


Importance of Management: Micro and Macro Level of Importance

The importance of management has been divided under two heads:

1. Micro level of importance; and

2. Macro or National level of importance.

1. Micro Level of Importance:

Micro level of importance has been discussed under the following five heads:

(i) Managing is an essential activity in every aspect of organised life.

The essential activities of management have been studied under the following heads:

(a) It is an accepted fact that everybody is a manager in some phase of his daily life because he has to manage his time and other resources economically and efficiently.

(b) In Simple Words – Management is a process of taking certain decisions and putting them into action. Both these activities i.e. – (i) deciding and (ii) doing are very important to achieve the objectives of any organisation.

(c) In the Present Age – It is of utmost importance to ensure an optimum use of the resources of all kinds – i.e. – (i) human, (ii) material, and (iii) technological. In optimising the use of these resources managers play a catalytic role.

(d) Managers’ Functions – (i) Managers bring about co-ordination and integration of various resources, (ii) They reconcile the objectives of the enterprise and the individuals working in it and guide and co-ordinate their activities in the use of materials, machines, technology etc., for the accomplishment of objectives of the enterprise. Whatever may be the nature of an enterprise it cannot function successfully unless it is managed efficiently.

Thus, it can be safely said that management is an essential part of any group activity.

(ii) Management determines the objectives of the organisation and takes steps to achieve them – It motivates the people in the organisation for the effective and efficient utilisation of various resources.

(iii) Management is the brain of any organisation – Because it takes decisions at every moment of time to accomplish the organisational objectives.

Who are the managers? “Managers are those persons who perform the management functions of any organisation.” Managers keep themselves in contact with the changing business environment and supply foresight to the organisation.

They are also responsible for implementing their decisions. For this purpose, they organize, direct and control the activities of the people working in the organisation.

(iv) The study of management emphasises what to do and when to do – The importance of management can be well realised by imagining a situation in which an enterprise has manpower, capital, machinery and other resources but no management.

In such a case the result will be utter confusion and nobody will know what to do and when to do. Everybody will be managing his own activities and nobody will be responsible to anyone.

There will be waste of human and other resources and no objective will be achieved. Thus, there is a great need of some agency to guide and control the activities of manpower for the utilisation of material resources. Such an agency is called management.

(v) Management directs the members of the organisation towards the achievement of its objectives – This will lead to all round development of the organisation.

2. Macro or National Level of Importance:

The importance of management under macro or national level is as follows:

(i) Management is a critical ingredient in the nation’s economic and social development:

While analysing the critical ingredient of management in the Nation’s economic and social development Drucker has said – “Management is the crucial factor in economic and social development. It is obvious that the economists traditional view of development as a function of savings and capital investment do not produce management and economic development.”

On the contrary, “Management produces economic and social development and with it savings and capital investment. It is apparent that the developing countries are not underdeveloped, they are undermanaged.” Here there is no lack of human and material resources but there was lack of managerial personnel who could exploit the material resources with the help of human resources.

(ii) Country’s development depends upon good management:

The development of a country is virtually dependent upon the quality of management of its resources. No amount of capital investment and import of technical know-how and equipment will succeed in furthering economic development of a nation if such wealth producing resources are not managed properly.

(iii) Efficient management is a key to national growth:

It is only efficient management which enables underdeveloped nations to make better use of material and human resources for the achievement of economic development.

(iv) Management is “the single most critical social activity in connection with economic progress”:

Physical, financial and manpower resources are by themselves but passive agents; they must be effectively combined and co-ordinated through sound and effective management if a country is to experience a substantial level of economic growth and development.

A country can have sizeable natural and manpower resources including plentiful skilled labour and substantial capital but still be relatively poor because very few competent managers are available to put these resources efficiently together in the production and distribution of useful goods and services.

(v) In the end, it can be said that – “Management is the mover and development is a consequence.”


Importance of Management:

At all levels of organisation in any joint enterprise (re­quiring teamwork) managing is an essential input and it is said that anything minus management amounts to nothing. Management is the most critical asset for the success of any enterprise.

Management can deliver rising standards of living to the society. It can offer enriched life to employees, consumers and citizens or members of a community. It assures smooth run­ning of’ an enterprise. It is a powerful innovative force. It is the main determinant of our economic progress. It is the guide for our effective Government. It can strengthen our national defence.

Specialists of economic development have pointed out to the Governments of developing countries that even the most modern technology, best materials, resources and plant facili­ties, liberal and cheap finance may not be able to achieve stated objectives (industrial productivity and quality of work­ing life) without effective and efficient management.

The greatest obstacle and the limiting factor for undeveloped and developing countries is the quality of management. Compe­tent managerial personnel was really responsible for the acce­lerated development and recovery of Germany and Japan after the World War II after 1950.

Good management is the only economic resource which can decide the extent of utilisation of all other resources. It alone is responsible for the optimum utilisation of available scarce resources.

Productivity of resources is the current burning problem in all countries. Problem of inflation and ever-growing consu­mer demand due to growth of population have created unique importance to productivity. Management is called upon to meet the challenge of productivity.

Managers have to manage separately the productivity of all four key resources: capital, crucial physical resources, time and labour (skilled people, knowledge people, managerial and professional people). But what matters in the end is the total, overall productivity of an enterprise, e.g., factory, store, bank, hospital, school, office and so on. Managers must commit themselves to accomplish steady increase in productivities of all resources particularly in turbulent and ever-changing environment.

Good management is necessary in industry, commerce, agriculture, hospital, educational institution, sports, chari­table institution, political bodies, trade unions and Govern­ment.

In the field of co-operation, small and cottage indus­tries, we need good management. Government is the greatest industrialist and greatest employer in India. Hence, mana­gement has gained greatest importance in all Government branches of administration.


Importance of Management

The success of an organization to a great degree depends on its management.

Importance # (i) Achieving Group Goals:

As a first point management ensures organizational success by clearly defining objective / goals of organization so that all the efforts of the group and resources are used in right direction without wastage. Management ensures that the goals are achieved by aligning the factors of production, gathering and organizing the resources, and integrating them effectively.

Business activities are group activities. Management is a directive activity aiming at the effectiveness of collective human effort. A good management inspires them and increases their willingness to work. Management helps in achieving group goals by giving a common direction to the individual effort.

Importance # (ii) Optimum Utilization of Resources:

Management with the help of experts and professionals tries to make best use of all of its physical & human resources. Their knowledge and skills ensures most efficient way thus avoiding underutilization of resources. By finding best possible alternate use of even by-products, management provides maximum utilization of scarce resources.

Importance # (iii) Reduces Costs:

Management is an integrating process in the sense; it incorporates the men, machine and material to carry out the operations of the enterprise in the best possible manner. This integration process is result oriented.

It takes these as inputs & produce output for the consumption of the society in the form of goods & services. Thus, the use of experts, efficient utilization of resources, results in maximum output and minimum wastage which in turn leads to cost reduction.

Importance # (iv) Establishes Sound Organization:

A sound organizational structure is one which is robust and all encompassing, in order to achieve the desired goal. This is done by establishing effective authority & responsibility relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors & who are subordinates.

Next, management fills up positions in this well-defined organization with right persons, having right skills and knowledge, training and qualification. Lastly everyone is communicated their role and desired outcomes so that the ultimate organizational goal is achieved.

Importance # (v) Establishes Equilibrium:

Management needs to continuously achieve an equilibrium between the changing environment and the functioning of the organization. If there are changes in the external environment then it is essential for the organization to change the co-ordination of organization also. Management hence adapts organization to changing needs of market & society which is a must for survival and growth of an organization.

Importance # (vi) Prosperity of Society:

Any business ultimately works for fulfilling the needs of society, efficient manage­ment leads to best utilization of scarce resources and economical production hence serving the masses and in turn the welfare of society. By managing business / organization efficiently, management improves standard of living along with increasing the profit which again directly and indirectly benefits society.


Importance of Management in Business and Industry

Modern society is characterized by people working together to accomplish tasks. We depend on institutions for our personal and social goals to fulfil. The performance of modern society increasingly depends on the perfor­mance of these institutions. And on the other hand, as Drucker says, “If institutions are to function, manage­ment must perform.”

It is an established fact that every human or social organization must be managed. Thus, management is as old as civilization itself. Claude S. George recognized the universal importance of management when he pointed out that “Despite its importance to every man, manage­ment is one of the most nebulous and at the same time most ubiquitous functions in all societies, being found in the homes, churches, governments, and economic under­takings of all peoples.

It is and always has been the strong right hand of all leaders. In fact, all the truly great leaders of history were managers—managing countries, manag­ing explorations, managing wars, managing other men’s efforts. Today, management is the central activity of our age and economy—a powerful and innovative force on which our society depends for material support and national well-being.

Management is at one and the same time the determiner of our economic progress, the em­ployer of our educated, the amasser of our resources, the guide for our effective government, the strength of our national defense, and the molder of our society. It is the central core of our national as well as personal activities, and the way we manage ourselves and our institutions reflects with alarming clarity what we and our society will become.”

The role of management is indeed ever growing in the present world. Certain fundamental changes in society have increased the relative importance of and opportuni­ties in management. In the 1990s the role of managers is becoming more vital and challenging especially due to some factors.

Joseph L. Massie has described them in the following way:

1. Post-industrial society-Service—oriented organizations now are the most dynamic parts of the economy.

2. Growth in the public sector—Welfare and non-profit associations are increasing at a more rapid pace.

3. Women in management—The role of women as man­agers has increased in the 1990s. This has a great impact on management ideology.

4. Emergence of the information society—New Technol­ogy is revolutionizing the working style and flow of information in organizations.

5. Entrepreneurship—Small new businesses are playing leading role in economy.

Few more factors have tremendously increased the importance of management in business and other sectors:

(i) Growing complexities and size of modern business.

(ii) Turbulent and dynamic environment of business.

(iii) Need for harnessing the resources at the optimum level.

(iv) Increasing specialization and use of sophisticated technology in work.

(v) Cut throat competitive forces in the market.

(vi) Growing industrial disputes and labour unrest.

(vii) Increasing regulation of business by the Govern­ment.

(viii) Need for research and investigation.

(ix) Need for integrating the interests of various groups, e.g., owners, workers, customers and the public.

(x) Growing social responsibility and ethical awareness.

(xi) New organization culture and intrapreneuring.

(xii) Emerging international face of management.

Importance of Managing in Business and Industry:

Management is important because every business organization requires effective management to be suc­cessful. Only a few business firms can long be successful that do not utilize the skills of management.

A few points can be mentioned in this regard:

1. Central Core of Business Activities:

Robbinson Edwin says, “Every business needs repeated stimulus.” This stimulus in provided by the management. Managers are the creative force and activating element of business. They determine its success. Stoner states, “Without some manager the business organization is likely to flounder.” William Glueck writes, “Historians and social scientists have yet to find an enterprise that survived very long without developing a hierarchy of management.”

Today, business has become a complex and challenging field. Now it is no longer possible to manage a business by hunches or common sense. Drucker has very rightly stated that the days of the “intuitive” managers are numbered.” He further writes, “A business institution that cannot produce its own managers will die. From an overall point of view the ability of a business to produce managers is more important than its ability to produce efficiently and cheaply. Thus, it can be said that manage­ment is the key difference between the success and failure of a business.

2. Dynamic Resource and Productive Organ:

High quality management is business firm’s single most impor­tant resource. It has the transforming capacity. It embod­ies a major responsibility for creative action. It makes the resources productive. It is only skilled management that enables the human beings to make better use of their capabilities and potentiality. Peter Drucker has very well explained this fact- “Management converts a mob into an organization, and human efforts into performance. It is responsible for directing vision and resources towards greatest results and contributions.”

Richard Reynolds once said- “The difference between a company that is a leader in its industry and one that is a follower is “management”-superior human performance.” Manage­ment, indeed, is the catalyst without which no business organization can survive and prosper. Management is the one and perhaps the only resource of production which generates life and momentum in business.

Importance of Managing in Society:

Management plays a vital role in modern society. It organizes the factories of production for social progress, greater productivity, increased jobs and income, better performance and for the fulfilment of society’s needs. It promotes the development of society and welfare of the public. Management plays a decisive role in the welfare of the society.

“By serving as a pivotal element in the operation of business enterprises and especially by pro­viding a dynamic force in guiding enterprises in useful activities, management makes a significant social contri­bution. Consumer’s needs are met, employees gain jobs that give them an ever-higher standard of living, supplier’s fine markets for their materials, and governments have sources of direct and indirect taxation.”

A dynamic viable society is one that is made up of a number of dynamic, viable institutions, which, while differing in purpose and function operate in concert to achieve the common good of the whole society. John Gardner has correctly pointed out, “A Society is only as healthy as its institutions; if they are growing, it grows; if they are decaying, it decays.”

The social contribution of management can be stated through the following points:

1. Social Function:

Management is not just running factories or building dams or highways, employing skilled workmen or using mechanical devices. It is also sharing with the aspirations, feelings and thoughts of people and getting more work from them through willing effort. Management turns human potentialities into realities.

Peter Drucker has said, “Management is the central social function in our society.” At another place he writes, “Management is not culture-free. It is a social function. It is, therefore, both socially accountable and culturally embedded.” Indeed, management is not a political strat­egy but a social culture caring for a social mission.

2. Social Innovation:

Managers create new values and new aspirations in society. Today, a new breed of entrepreneurial managers is emerging. Drucker says, “Never before has a social leadership group, a new social institution, emerged as rapidly as management.” He treats management as an instrument of social innova­tion. Charles A. Beard has rightly called management as “an essential instrument of human progress” and “key­stone science of modern society.”

3. Preservative of Cultural Diversity:

Management can be considered as an instrument of cultural diversity. It has created a universal system of culture and values. “In a world that is politically increasingly fragmented and obsessed by nationalism, business management is one of the very few institutions capable of transcending national boundaries. The multinational corporation brings togeth­er in a common venture management people from a great many countries with different languages, cultures, tradi­tions, and values, and unites them in a common purpose.

It is one of the few institutions of our world that is not nationalistic in its world view, its values, and its deci­sions; but truly a common organ of a world economy that, so far, lacks a world polity.” Paul Pigors considers man­agement as “the stabilizer of society and guardian of tradition.”

4. Leadership Force:

It is also management to which our society looks for leadership in respect of ‘resource creation’, ‘quality of life’, ‘social values’, and ‘cultural heritage’. Drucker has very aptly said, “Today’s developed society, sans aristocracy, sans large landowners, even sans capitalists and tycoons, depends for leadership on the managers of its major institutions. It depends on their knowledge, on their vision, and on their responsibility.”

5. Promotes Social Upliftment:

Management makes society’s dreams come true. It anticipates social problems and solves them. Modern managers are socially respon­sive. Curing society’s social ills has become a prime responsibility of today’s managers. It is the managers who can play an active role in relieving men and women from the pangs of social evils like poverty, starvation, frustra­tion, class conflicts, self-depression, illiteracy, women injustice, pollution etc.

Thus, managers are expected to take the lead, at least to some extent, in helping to meet some diverse social goals like racial equality, communal harmony, social renewal, guns and butter, inflation, good health, education and welfare.

Managements Role in National Economy:

Krishna Mohan, former Director of the Indian Insti­tute of Management, Calcutta, once pointed out that “the one factor which was neglected in the colossal effort for industrial and technical development was the managerial dimension.” But the modern slogan “Management pro­motes prosperity” is quite clear when we look to the pages of business history of Europe and America.

All over the world, regardless of political patterns, growing impor­tance is being attached to the development of managerial skills. “A technological society needs managers as much as technologists.” In developing countries, management has an ever greater contribution to make. Through man­agerial revolution a country can make progress at a faster rate.

An efficient management is in the best interest of a nation as it can lead to creation of jobs, wealth and full employment. A welfare society cannot be built without developing the competent managers. President Roosevelt once said: “A government without good management is a house built on sand.”

The role of management in a national economy can be stated under the following headings:

1. Critical Ingredient in a Nation’s Growth:

Today, it is being more widely recognized that management plays an important role in a nation’s growth. By bringing together the various factors of production, management enables a nation to experience a substantial level of economic growth.

Franklin Moore pin-pointed that “We look to the managers of our business companies to make most of the changes which are to improve our well-being. We expect management to preserve and add to the nation’s supply of capital, industrial know-how and pro­ductive capacity. We expect management to increase the nation’s supply of goods and services year by year and to maintain widespread employment, good wages, so that all of us will have jobs and more leisure, more conveniences and less drudgery.”

2. Catalyst of Economic Development:

It is being realized by modern economists that accumulation of capital, high rate of investment and technological ad­vancement cannot produce economic development un­less it is matched by managerial input. Farmer and Richman support this point when they state, “We view management as the single most critical social activity in connection with economic progress. Physical, financial, and manpower resources are by themselves but agents; they must be effectively combined and coordinated through sound, active management if a country is to experience a substantial level of economic development.”

It has be­come apparent that traditional economists’ view of devel­opment as a function of savings and capital investment is not adequate. In fact, there should be competent manag­ers to convert these resources into production. Drucker remarked, “The developing countries are not underdevel­oped, they are undermanaged.” P.L. Tondon, the former chairman of Hindustan Liver said that “we have seen, that inputs of labour, capital and raw material do not by themselves ensure growth, they require the catalyst of management to maximise the results.”

3. Development of Human Resources:

Management forms ‘human capital’. Development of human resources should be regarded as the key to economic prosperity. Peter Drucker states, “Wherever rapid economic and social development tool place after World War II, it oc­curred as a result of systematic and purposeful work on developing managers and management.”

He further writes, “Development is a matter of human energies rather than of economic wealth. And the generation of human ener­gies is the task of management. Management is the mover and development is a consequence.” George Terry also states, “Management provides the generation and direc­tion of effective human energies.”

4. Better Utilization of Resources:

Management know- how utilizes the available resources effectively towards the achievement of national objectives. It is only skilled managers who enable underdeveloped countries to make better use of their national resources. It is now widely accepted by scholars that “Capital and people can be effectively used only by building the institutions with the capacity to use them.”

5. Promotes Prosperity:

Management is the key to national prosperity and material welfare. Marshall Dimock writes, “Management is not a matter of pressing a button, pulling a lever, issuing orders, scanning profit and loss statements, promulgating rules and regulations. Rather, it is the power to determine what shall happen to the personalities and happiness of entire people, the power to shape the destiny of a nation and of all the nations, which make up the world.


Importance of Management: According to Experts

In the ancient times business was done on a small scale and management had no special importance. Now business is done on a big scale and consequently, various complexities confront us. The need of management has been felt in view of these complexities and their solution. Now management has established itself as an art and with its help minimum effort can result in maximum prosperity.

In this regard the views of some modern management experts are given below:

According to Drucker, Management is a dynamic and life-giving element of every business. In its absence the means of production remain merely the means and can never be the producers.

According to Terry, No organisation can be successful for a long time without effective management. To a large extent the achievement of social, economic and political objectives depends on able managers.

It is thus clear that not only in the field of business but in other fields also management has come to occupy an important place. In this reference, it is said that anything minus management is nothing.

The following facts clearly highlight the importance of management:

1. Achieving Pre-Determined Objectives:

Each organisation is established with certain aims. Management is the only medium and power which can help in the successful attainment of these aims. A manager with the help of his expertise and cleverness makes an assessment of the future events. He makes plans, creates an organisation, distributes work, grants requisite authority, directs the employees & controls them. By a critical assessment or appraisal he tries to find out deviations and finally by his corrective action makes the impossible look simple.

2. Ensuring Maximum Utilization of Resources of Production:

Management is that power which by establishing an effective coordination between the various resources of production makes an optimum use of these resources. According to Herbert N. Bayson, in every big enterprise a train-load of gold is provided. It can be achieved by making a better use of resources and putting an end to useless or meaningless expenses.

It means that all the available resources of the organisation have been likened with gold but to profit from the available resources requires their proper utilization. It is, therefore, clear that the most efficient use of the limited resources is the key to the successful business. This fact can be converted into reality with the help of management.

3. Overcoming Competition:

These days business is not localised but it has assumed national or even international dimensions. Competition is increasing with the widening of area and larger dimension of business. A modern producer faces competition not only from a local producer or competition at the national level but international competition is also getting sharper.

In such a competitive atmosphere only that organisation can survive which can make available to its customers the best quality of goods at the cheapest rates. Only an efficient and clever manager can make it a reality and save the reputation of an organisation.

4. Ensuring Integration with Changing Environment:

Management is not only limited to various internal functions of an organisation but it has to compromise with the outer atmosphere also. On the one hand technical experts are devising new ways of production and, while on the other hand progressive organisations are applying modern marketing techniques. Even customers do not easily accept the produced goods because they are now wide awake and their standard of living has also improved and their tastes have also undergone a change.

Thus, only an efficient manager can coordinate his work with the fast changing atmosphere. With the help of efficient and effective management coordination between the new and prevalent work system and methods can be established to save the reputation of an organisation.

5. Ensuring Smooth Running of Large Scale Business:

Keeping in view the profits of large scale production, it has started getting preference. In view of the large scale production the means of production (Men, Money, Material, Machine, etc.) will also be required on a large scale. Apart from this, business shall have to face various legal formalities. To perform these functions efficiently and in a controlled manner, the need of an efficient manager is paramount. Therefore, without an efficient manager smooth running of large scale business is not possible.

6. Maintaining a Sound Organisational Structure:

A sound organisational structure is needed for the success of any enterprise. A sound organisational structure means defining a clear relationship between the superiors and their subordinates. It has to be decided what work will be done by various persons and what rights and duties they enjoy.

It will lead to the creation of a team spirit and keep the work atmosphere clean and healthy. All the superiors and subordinates will work without any tension. A sound organisational structure can be created by an efficient manager.

7. Establishing Good Labour-Owner Relationship:

Labour and capital are the two main resources of production. The owners invest capital and determine objectives while the labour tries to transform those objectives into reality. Therefore, existence of a sweet relationship between the two is of paramount importance. There was a time when there were no labour unions and the owners thought it fit to exploit the labour to the maximum possible extent.

Now the labour unions exist and they are sufficiently organised to exert pressure on the owners to get their demands conceded. Industrialists too have realised their importance. It is clear to them that without the efficiency of labour more profits cannot be expected. The efficiency of labour can be increased only when their problems are effectively solved. This can be possible only through management.

An efficient manager, with the help of his knowledge and experience, understands the feelings of labour and tries to remove their grievances. He makes arrangements for their training to increase their efficiency. He offers them an opportunity to be partners in the process of management. He also establishes a system of sharing the profits, establishing their individual identity and making timely efforts to solve their problems.

8. Giving Importance to Research and Investigation:

A recent research has brought out the fact that only those companies or business enterprises which are constantly taking interest in research activities are developing fast. In the context of business, research and investigation mean finding out new products and new markets for the extension of business field, new methods of distribution and adopting the use of new techniques to solve financial problems and using new techniques in the field of communication.

It is thus abundantly clear that research is needed to develop business at a rapid pace and this job can be accomplished by an efficient manager. Efficient managers invariably establish research and investigation department to achieve this important purpose.

9. Fulfilling the Social Responsibility:

A business establishment starts its activities in society, prospers and reaches the climax of development in the same social surroundings. Thus, no organisation can remain aloof from society and yet survive. That is why every enterprise is considered as an integral part of society. When an enterprise is so much indebted to society, it should also realise its responsibilities towards society.

The social responsibilities of a business organisation include ensuring the safety of the capital and sufficient profit, proper remuneration and work conditions for the employees, making available to the consumers goods of good quality at the right time and proper prices, making available the opportunities of employment to the people and making efforts to raise their standard of living.

An enterprise can ensure these expectations only through the medium of management. Thus, management has a special significance in the task of fulfilling the social responsibilities of business.

10. Aiming at Increased Profits:

In order to increase the profits of any organisation it is the basic principle either to increase the sales revenue or reduce costs. Increasing the sales revenue is beyond the control of an organisation to some extent but to affect a reduction in costs is primarily an internal affair of the organisation and it can certainly be accomplished with the help of good quality raw material, modern machinery and trained employees.

By reducing costs the profits of an organisation can be achieved by the management and future development can be expected.