Principles of Management

Dr. Sanchayan Mukherjee

B.M.E. (1st Class Hons.), M.E.(Distinction), M.I. E., F.A.E., Ph.D. (Engineering)
Member of Faculty
Department of Mechanical Engineering
Kalyani Government Engineering College
Kalyani 741235, Nadia, West Bengal, India

Management is an Art or
Science ?
Management is an art and science both.
According to the American Society of
Mechanical Engineers. Management is the
art and science of preparing, organizing and
directing human efforts to control the forces
and utilize the material of nature for the
benefit of men. "Thus, it has now been
accepted that management is an art as well
as science. It has the elements of both arts
and science. In the words of Dean Stanley,
"Management is a mixture of an art and
science - the present ratio is about 80% art
and 20% science."

Change of Management Emphasis

through Time

Frederick Winslow Taylor

Frederick Winslow Taylor (March 20, 1856 March 21, 1915) was an
American mechanical engineer who sought to improve industrial efficiency. He
is regarded as the father of scientific management and was one of the first
management consultants. Taylor was one of the intellectual leaders of the
Efficiency Movement and his ideas, broadly conceived, were highly influential
in the Progressive Era.
Future US Supreme Court justice Louis Brandeis coined the term scientific management in
the
course
of
his
argument
for
the
Eastern Rate Case
before
the
Interstate Commerce Commission in 1910. Brandeis debated that railroads, when
governed according to the principles of Taylor, did not need to raise rates to increase
wages.
Taylor
used
Brandeis's
term
in
the
title
of
his
monograph
The Principles of Scientific Management , published in 1911. The Eastern Rate Case
propelled Taylor's ideas to the forefront of the management agenda. Taylor wrote to
Brandeis "I have rarely seen a new movement started with such great momentum as you
have given this one." Taylor's approach is also often referred to as Taylor's Principles, or
frequently disparagingly, as Taylorism. Taylor's scientific management consisted of four
principles:
Replace rule-of-thumb work methods with methods based on a scientific study of the
tasks.
Scientifically select, train, and develop each employee rather than passively leaving
them to train themselves.
Provide "Detailed instruction and supervision of each worker in the performance of that
worker's discrete task" (Montgomery 1997: 250).
Divide work nearly equally between managers and workers, so that the managers apply
scientific management principles to planning the work and the workers actually perform
the tasks.

Taylor on Managers and Workers

Taylor had very precise ideas about how to introduce his system:
It is only through enforced standardization of methods, enforced
adoption of the best implements and working conditions, and enforced
cooperation that this faster work can be assured. And the duty of
enforcing the adoption of standards and enforcing this cooperation rests
with management alone.
Workers were supposed to be incapable of understanding what they
were doing. According to Taylor this was true even for rather simple
tasks.
'I can say, without the slightest hesitation,' Taylor told a congressional
committee, 'that the science of handling pig-iron is so great that the man
who is ... physically able to handle pig-iron and is sufficiently phlegmatic
and stupid to choose this for his occupation is rarely able to comprehend
the science of handling pig-iron.
Taylor believed in transferring control from workers to management. He
set out to increase the distinction between mental (planning work) and
manual labor (executing work). Detailed plans specifying the job, and
how it was to be done, were to be formulated by management and
communicated to the workers.
The introduction of his system was often resented by workers and
provoked numerous strikes. The strike at Watertown Arsenal led to the
congressional investigation in 1912. Taylor believed the laborer was
worthy of his hire, and pay was linked to productivity. His workers were
able to earn substantially more than those under conventional
management, and this earned him enemies among the owners of
factories where scientific management was not in use.

Henry Fayol's Principles of

Management
Henry Fayol, a frech industrialist, offered fourteen principles of
management for the first time in 1916. During the period of
1920-40 in the U.S. many authors did hard work in developing
and testing various principles of management. Today, there is a
very lengthly list of management principles and it is not
possible to give an exhaustive lot of these management
principles. Here, we are giving some important principles of
management.
Fayol developed theory of management. According to him
managerial excellence is a technical ability and can be
acquired. He developed theories and principles of management
which are universally accepted and make him universalistic. He
was pioneer of the formal education in management. Fayol's
principles of management meet the requirements of modern
management.

Henry Fayol's Principles of

Management

Division of Work
According to Henry Fayol under division of work, "The worker
always on the same post, the manager always concerned with the
same matters, acquire an ability, sureness and accuracy which
increases their output. In other words, division of work means
specialization. According to this principle, a person is not capable
of doing all types of work. Each job and work should be assigned
to the specialist of his job. Division of work promotes efficiency
because it permits an organizational member to work in a limited
area reducing the scope of his responsibility. Fayol wanted the
division of work not only at factory but at management levels
also.

Authority and Responsibility

Authority and responsibility go together or co-existing. Both
authority and responsibily are the two sides of a coin. In this way,
if anybody is made responsible for any job, he should also have
the concerned authority. Fayol's principle of management in this
regard is that an efficient manager makes best possible use of his
authority and does not escape from the responsibility.

Henry Fayol's Principles of Management

(contd.)

Discipline
According to Henry Fayol discipline means sincerity about the work and
enterprise, carrying out orders and instructions of superiors and to
have faith in the policies and programmes of the business enterprise, in
other sense, discipline in terms of obedience, application, energy and
respect to superior. However, Fayol does not advocate warning, fines,
suspension and dismissals of worker for maintaining discipline. These
punishments are rarely awarded. A well disciplined working force is
essential for improving the quality and quantity of the production.

Unity of Command
A subordinate should take order from only one boss and he should be
responsible and accountable to him. Further he claimed that if the unity
of command is violated, authority is undermined, discipline is in
danger, order is disturbed and stability is threatened. The violation of
this principle will face some serious consequences. In this way, the
principle of unity of command provides the enterprise disciplined,
stable and orderly existence. It creates harmonious relationship
between officers and subordinates, congenial atmosphere of work. It is
one of the Fayol's important essential principle of management.

Henry Fayol's Principles of Management

(contd.)
Unity of direction
Fayol advocates "One head and one plan" which means that
group efforts on a particular plan be led and directed by a single
person. This enables effective co-ordination of individual efforts
and energy. This fulfils the principles of unity of command and
brings uniformity in the work of same nature. In this way the
principle of direction creates dedication to purpose and loyalty.
It emphasizes the attainment of common goal under one head.
Subordination of individual interests to general interests
The interest of the business enterprise ought to come before the
interests of the praise individual workers. In other words,
principle of management state that employees should surrender
their personnel interest before the general interest of the
enterprise. Sometimes the employees due to this ignorance,
selfishness, laziness, carelessness and emotional pleasure
overlook the interest of the organisation. This attitude proves to
be quite harmful to the enterprise.

Henry Fayol's Principles of Management

(contd.)

Fair Remuneration to employees

According to Fayol wage-rates and method of their payment should be
fair, proper and satisfactory. Both employees and employers should
agree to it. Logical and appropriate wage-rate and methods of their
payment reduces tension and differences between workers and
management, create harmonious relationship and a pleasing atmosphere
of work. Further Fayol recommends that residential facilities be provided
including arrangement of electricity, water and facilities.

Centralization and Decentralization

There should be one central point in the organisation which exercises
overall direction and control of all the parts. But the degree of
centralization of authority should vary according to the needs of
situation. According to Fayol there should be centralization in small units
and proper decentralization in big organisation. Further, Fayol does not
favour centralization or decentralization of authorities but suggests that
these should be proper and effective adjustment between centralization
and decentralization in order to achieve maximum objectives of the
business. The choice between centralization and decentralization be
made after taking into consideration the nature of work and the
efficiency, experience and decision-making capacity of the executives.

Henry Fayol's Principles of Management

(contd.)

Scalar chain
The scalar chain is a chain of supervisors from the highest to the lowest rank. It
should be short-circuited. An employee should feel the necessity to contact his
superior through the scalar chain. The authority and responsibility is
communicated through this scalar chain. Fayol defines scalar chain as "the
chain of superiors ranging from the ultimate authority to the lowest rank." The
flow of information between management and workers is a must. So we must
make direct contact with the concerned employee. Business problems need
immediate solution, so we cannot always depend on the established scalar
chain. It requires that direct contact should be established.

Order:
According to Fayol there should be proper, systematic and orderly arrangement
of physical and social factors, such as land, raw materials, tools and equipment
and employees respectively. As per view, there should be safe, appropriate and
specific place for every article and every place is to be used effectively for a
particular activity and commodity. In other words, every piece of land and every
article should be used properly, economically and in the best possible way.
Selection and appointment of the most suitable person to every job is a
prerequisite. There should be specific place for every one and every one should
have specific place. This principle also stresses scientific selection and
appointment of employees on every job.

Henry Fayol's Principles of Management

(contd.)

Equity
The principle of equality should be followed and applicable at every
level of management. There should not be any discrimination as
regards caste, sex and religion. An effective management always
accords sympathetic and human treatment. The management should
be kind, honest and impartial with the employees. In other words,
kindness and justice should be exercised by management in dealing
with their subordinates. This will create loyalty and devotion among
the employees. Thus, workers should be treated at par at every level.

Stability of use of personnel

Principle of stability is linked with long tenure of personnel in the
organisation. This means production being a team work, an efficient
management always builds a team of good workers. If the members
of the team go on changing the entire process of production will be
disturbed. It is always in the interest of the enterprise that its trusted,
experienced and trained employees do not leave the organisation.
Stability of job creates a sense of belongingness among workers who
with this feeling are encouraged to improve the quality and quantity
of work.

Henry Fayol's Principles of Management

(contd.)

Initiative
Under this principle, the successful management provides an
opportunity to its employees to suggest their new ideas, experiences
and more convenient methods of work. The employees, who has been
working on the specific job since long, discover now better alternative
approach and technique of work. It will be more useful, if initiative to do
so is provided to employees. In simple, to ensure success, plans should
be well formulated before they are implemented.

Spirit of Co-operation (Spirit de crops)

In order to achieve the best possible results, individual and group effort
are to be effectively integrated and coordinated. Production is a team
work for which the whole-hearted support and co-operation of the
members at all levels is required. Everyone should sacrifice his personal
interest and contribute his best energies to achieve the best results. it
refers to the spirit of loyalty, faithfulness on the part of the members of
the group which can be achieved by strong motivating recognition and
importance of the members for their valuable contribution, effective
coordination, informal mutual social relationship between members of
the group and positive and constructive approach of the management
towards workers' welfare.

Hawthorne Experiments
The term gets its name from a factory called the Hawthorne
Works. The Hawthorne experiments were groundbreaking
studies in human relations that were conducted between
1924 and 1932 at Western Electric Company's Hawthorne
Works in Chicago. Originally designed as illumination studies
to determine the relationship between lighting and
productivity, the initial tests were sponsored by the National
Research Council (NRC) of the National Academy of
Sciences. In 1927 a research team from the Harvard
Business School was invited to join the studies after the
illumination tests drew unanticipated results. Two additional
series of tests, the relay-assembly tests and the bank-wiring
tests, followed the illumination tests. The studies assumed
the label Hawthorne experiments or studies from the
location of the Western Electric plant. Concluded by 1932,
the Hawthorne studies, with emphasis on a new
interpretation of group behaviour, were the basis for the
school of human relations.

Hawthorne Experiments (contd.)

Part I - Illumination Experiments (1924-27)
These experiments were performed to find out the effect of
different levels of illumination (lighting) on productivity of
labour. The brightness of the light was increased and
decreased to find out the effect on the productivity of the
test group. Surprisingly, the productivity increased even
when the level of illumination was decreased. It was
concluded that factors other than light were also important.

Part II - Relay Assembly Test Room Study (1927-1929)

Under these test two small groups of six female telephone
relay assemblers were selected. Each group was kept in
separate rooms. From time to time, changes were made in
working hours, rest periods, lunch breaks, etc. They were
allowed to choose their own rest periods and to give
suggestions. Output increased in both the control rooms. It
was concluded that social relationship among workers,
participation in decision-making, etc. had a greater effect on
productivity than working conditions.

Hawthorne Experiments (contd.)

Part III - Mass Interviewing Programme (1928-1930)
21,000 employees were interviewed over a period of three
years to find out reasons for increased productivity. It was
concluded that productivity can be increased if workers are
allowed to talk freely about matters that are important to
them.
Part IV - Bank Wiring Observation Room Experiment
(1932)
A group of 14 male workers in the bank wiring room were
placed under observation for six months. A worker's pay
depended on the performance of the group as a whole. The
researchers thought that the efficient workers would put
pressure on the less efficient workers to complete the work.
However, it was found that the group established its own
standards of output, and social pressure was used to
achieve the standards of output.

Conclusions of Hawthorne
Experiments

The social and psychological factors are responsible for workers'

productivity and job satisfaction. Only good physical working
conditions are not enough to increase productivity.
The informal relations among workers influence the workers'
behaviour and performance more than the formal relations in the
organisation.
Employees will perform better if they are allowed to participate in
decision-making affecting their interests.
Employees will also work more efficiently, when they believe that the
management is interested in their welfare.
When employees are treated with respect and dignity, their
performance will improve.
Financial incentives alone cannot increase the performance. Social
and Psychological needs must also be satisfied in order to increase
productivity.
Good communication between the superiors and subordinates can
improve the relations and the productivity of the subordinates.
Special attention and freedom to express their views will improve the
performance of the workers.

Criticism of Hawthorne
Experiments

Lacks Validity : The Hawthorne experiments were conducted

under controlled situations. These findings will not work in real
setting. The workers under observation knew about the
experiments. Therefore, they may have improved their
performance only for the experiments.
More Importance to Human Aspects : The Hawthorne
experiments gives too much importance to human aspects.
Human aspects alone cannot improve production. Production also
depends on technological and other factors.
More Emphasis on Group Decision-making : The Hawthorne
experiments placed too much emphasis on group decisionmaking. In real situation, individual decision-making cannot be
totally neglected especially when quick decisions are required and
there is no time to consult others.
Over Importance to Freedom of Workers : The Hawthorne
experiments gives a lot of importance to freedom of the workers.
It does not give importance to the constructive role of the
supervisors. In reality too much of freedom to the workers can
lower down their performance or productivity.

George Elton Mayo

George Elton Mayo (December 26, 1880 - September 7, 1949) was an Australian psychologist,
sociologist and organization theorist.
He lectured at the University of Queensland from 1919 to 1923 before moving to the University
of Pennsylvania, but spent most of his career at Harvard Business School (1926 - 1947), where
he was professor of industrial research.
Elton Mayo is known as the founder of the Human Relations Movement, and is known for his
research including the Hawthorne Experiments, and his book The Social Problems of an
Industrialised Civilization (1933). The research he conducted under the Hawthorne Studies of
the 1930s showed the importance of groups in affecting the behaviour of individuals at work.
However it was not Mayo who conducted the practical experiments but his employees
Roethlisberger and Dickinson. This enabled him to make certain deductions about how
managers should behave. He carried out a number of investigations to look at ways of
improving productivity, for example changing lighting conditions in the workplace. What he
found however was that work satisfaction depended to a large extent on the informal social
pattern of the workgroup. Where norms of cooperation and higher output were established
because of a feeling of importance. Physical conditions or financial incentives had little
motivational value. People will form workgroups and this can be used by management to benefit
the organisation. He concluded that people's work performance is dependent on both social
issues and job content. He suggested a tension between workers' 'logic of sentiment' and
managers' 'logic of cost and efficiency' which could lead to conflict within organisations.
Criticism regarding his employees' procedure while conducting the studies:
* The members of the groups whose behaviour has been studied were allowed to choose
themselves.
* Two women have been replaced since they were chatting during their work. They were later
identified as members of a leftist movement.
* One Italian member was working above average since she had to care for her family alone.
Thus she affected the group's performance in an above average way.

Elton Mayo's Beliefs

Individual workers cannot be treated in isolation, but must be seen as

members of a group.
Monetary incentives and good working condition are less important to the
individual than the need to belong to a group.
Informal or unofficial groups formed at work have a strong influence on the
behaviour of those workers in a group.
Managers must be aware of these 'social needs' and cater for them to
ensure that employees collaborate with the official organisation rather than
work against it.
The role that Mayo had in the development of management is usually
associated with his discovery of social man and the need for this in the work
place. Mayo found that workers acted according to sentiments and emotion.
He felt that if you treated the worker with respect and tried to meet their
needs than they would be a better worker for you and both management and
the employee would benefit. This is pointed out in his books that he wrote.
Mayo was also able to provide concrete evidence to support Follet's theory that
the lack of attention to human relationships was a major flaw in other
management theories. He was able to prove that employees did react better
when they had good relationships with the management that they worked
with. If management would treat the employees with respect and give them
the attention at the work place that they needed, then the workers would be
more willing to work harder for the employer. The was not totally what the
Hawthorn study was looking at for they were focusing on working conditions
such as lighting that the workers worked in and other factors that could
easily be changed with out management having to do much. The real
solution was to have management get more involved with the workers.

Functions of Managers

Planning: This step involves mapping out exactly how to achieve a

particular goal. Say, for example, that the organization's goal is to
improve company sales. The manager first needs to decide which
steps are necessary to accomplish that goal. These steps may include
increasing advertising, inventory, and sales staff. These necessary
steps are developed into a plan. When the plan is in place, the
manager can follow it to accomplish the goal of improving company
sales.
Organizing: After a plan is in place, a manager needs to organize her
team and materials according to her plan. Assigning work and
granting authority are two important elements of organizing.
Staffing: After a manager discerns his area's needs, he may decide
to beef up his staffing by recruiting, selecting, training, and
developing employees. A manager in a large organization often works
with the company's human resources department to accomplish this
goal.
Leading: A manager needs to do more than just plan, organize, and
staff her team to achieve a goal. She must also lead. Leading involves
motivating, communicating, guiding, and encouraging. It requires the
manager to coach, assist, and problem solve with employees.
Controlling: After the other elements are in place, a manager's job is
not finished. He needs to continuously check results against goals and
take any corrective actions necessary to make sure that his area's
plans remain on track.

Roles Performed by Managers

A manager wears many hats. Not only is a manager a
team leader, but he or she is also a planner,
organizer, cheerleader, coach, problem solver, and
decision maker all rolled into one. And these are
just a few of a manager's roles.
In addition, managers' schedules are usually jampacked. Whether they're busy with employee
meetings, unexpected problems, or strategy
sessions, managers often find little spare time on
their calendars. (And that doesn't even include
responding to e-mail!)
In his classic book, The Nature of Managerial Work,
Henry Mintzberg describes a set of ten roles that a
manager fills. These roles fall into three categories:
Interpersonal: This role involves human interaction.
Informational: This role involves the sharing and
analyzing of information.
Decisional: This role involves decision making.

Mintzberg's Set of Ten Roles

Category
Informational

Interpersonal

Decisional

Role
Monitor

Activity
Seek and receive information; scan
periodicals and reports; maintain personal
contact with stakeholders.

Disseminator

Forward information to organization

members via memos, reports, and phone
calls.

Spokesperson

Transmit information to outsiders via reports,

memos, and speeches.

Figurehead

Perform ceremonial and symbolic duties,

such as greeting visitors and signing legal
documents.

Leader

Direct and motivate subordinates; counsel

and communicate with subordinates.

Liaison

Maintain information links both inside and

outside organization via mail, phone calls,
and meetings.

Entrepreneur

Initiate improvement projects; identify new

ideas and delegate idea responsibility to
others.

Disturbance handler

Take corrective action during disputes or

crises; resolve conflicts among subordinates;
adapt to environments.

Resource allocator

Decide who gets resources; prepare

budgets; set schedules and determine
priorities.

Negotiator

Represent department during negotiations of

union contracts, sales, purchases, and
budgets.

Skills Needed by Managers

Not everyone can be a manager. Certain skills, or abilities to translate knowledge

into action that results in desired performance, are required to help other employees
become more productive. These skills fall under the following categories:
Technical: This skill requires the ability to use a special proficiency or expertise to
perform particular tasks. Accountants, engineers, market researchers, and computer
scientists, as examples, possess technical skills. Managers acquire these skills
initially through formal education and then further develop them through training
and job experience. Technical skills are most important at lower levels of
management.
Human: This skill demonstrates the ability to work well in cooperation with others.
Human skills emerge in the workplace as a spirit of trust, enthusiasm, and genuine
involvement in interpersonal relationships. A manager with good human skills has a
high degree of self-awareness and a capacity to understand or empathize with the
feelings of others. Some managers are naturally born with great human skills, while
others improve their skills through classes or experience. No matter how human
skills are acquired, they're critical for all managers because of the highly
interpersonal nature of managerial work.
Conceptual: This skill calls for the ability to think analytically. Analytical skills
enable managers to break down problems into smaller parts, to see the relations
among the parts, and to recognize the implications of any one problem for others.
As managers assume ever-higher responsibilities in organizations, they must deal
with more ambiguous problems that have long-term consequences. Again,
managers may acquire these skills initially through formal education and then
further develop them by training and job experience. The higher the management
level, the more important conceptual skills become.

Skills Needed by Managers

American Assembly of Collegiate Schools of Business

(AACSB) is urging business schools to help their students
develop.
Leadership ability to influence others to perform tasks
Self-objectivity ability to evaluate yourself realistically
Analytic thinking ability to interpret and explain
patterns in information
Behavioural flexibility ability to modify personal
behaviour to react objectively rather than subjectively to
accomplish organizational goals
Oral communication ability to express ideas clearly in
words
Written communication ability to express ideas clearly
in writing
Personal impact ability to create a good impression and
instil confidence

Managerial Ethics

Definition
Ethics are the moral codes that govern behaviour of a person or group of
people regarding what is right and wrong. These moral codes revolve around
established values and principles and may not be the same from culture to
culture. Ethics point the way to a particular course of action defining acceptable
behaviours and choices. Managerial ethics are a set of standards that dictate
the conduct of a manager operating within a workplace.
Boundaries
There are no legal rules or laws that are directed specifically at managers.
Instead, an ethics code is assembled by a company to guide its managers. Such
a code of conduct typically references shared values, principles and company
policies about basic conduct and outlines the duties a manager has to his
employees, the company and the company's stakeholders. Although not
enforceable by law, managers who consistently ignore certain company ethics
may be asked to step down, be moved into another position or fired.
Examples
Managerial ethics usually address two separate areas: principles and policies.
Principle-based ethics outline what is considered fair and ethical in the scope of
the workplace and might include information about departmental boundaries or
use of company equipment. Policy-based managerial ethics refer to conflicts of
interest, the right response to gifts from vendors or business partners, or the
handling of proprietary information.

Managerial Ethics
(contd.)

Violations
The need to reference managerial ethics arises when a conflict of
values is presented. Enron is a perfect example of a violation of
managerial ethics. Although it was not illegal for Enron's executive
managers to encourage employees to purchase shares of company
stock the managers knew would drop in value once Enron's financial
trouble was revealed, it was clearly a violation of ethical standards
the managers where bound to regarding the treatment and protection
of employees. Acting in their own interests, the executives violated
basic managerial ethics.
Establishing
Managerial ethics help to guide decision making and regulate
internal and external behaviour. Ethical dilemmas typically arise from
a conflict between an individual or group and the company, division or
department as a whole. Companies establishing a set of values and
norms that are acknowledged by managers and consistently
referenced during the work day have created an ethical platform by
which managers can operate and make decisions. Training managers
on the specifics of managerial ethics by role play, case study and
group discussion may set the stage for ethical behaviour.

Social Responsibility of Managers

Social responsibility is defined as the obligation and commitment of managers to take

steps for protecting and improving societys welfare along with protecting their own
interest. The managers must have social responsibility because of the following reasons:
1.Organizational Resources - An organization has a diverse pool of resources in form
of men, money, competencies and functional expertise. When an organization has these
resources in hand, it is in better position to work for societal goals.
2.Precautionary measure - if an organization lingers on dealing with the social issues
now, it would land up putting out social fires so that no time is left for realizing its goal of
producing goods and services. Practically, it is more cost-efficient to deal with the social
issues before they turn into disaster consuming a large part if managements time.
3.Moral Obligation - The acceptance of managers social responsibility has been
identified as a morally appropriate position. It is the moral responsibility of the
organization to assist solving or removing the social problems.
4.Efficient and Effective Employees - Recruiting employees becomes easier for
socially responsible organization. Employees are attracted to contribute for more socially
responsible organizations. For instance - Tobacco companies have difficulty recruiting
employees with best skills and competencies.
5.Better Organizational Environment - The organization that is most responsive to
the betterment of social quality of life will consequently have a better society in which it
can perform its business operations. Employee hiring would be easier and employee
would of a superior quality. There would be low rate of employee turnover and
absenteeism. Because of all the social improvements, there will be low crime rate
consequently less money would be spent in form of taxes and for protection of land.
Thus, an improved society will create a better business environment.

Criticisms regarding social

responsibility
Managers social responsibility is not free from some criticisms, such as
High Social Overhead Cost - The cost on social responsibility is a
social cost which will not instantly benefit the organization. The cost
of social responsibility can lower the organizational efficiency and
effect to compete in the corporate world.
Cost to Society - The costs of social responsibility are transferred
on to the society and the society must bear with them.
Lack of Social Skills and Competencies - The managers are best
at managing business matters but they may not have required skills
for solving social issues.
Profit Maximization - The main objective of many organizations is
profit maximization. In such a scenario the managers decisions are
controlled by their desire to maximize profits for the organizations
shareholders while reasonably following the law and social custom.
Social responsibility can promote the development of groups and
expand supporting industries.