MG6851 PRINCIPLES OF MANAGEMENT

UNIT I INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS

Management
It is the process of getting the works done by other to achieve the organizational objectives
effectively and efficiently.
Management is the process of designing and maintaining of an environment in which individuals
working together in groups efficiently accomplish the objectives.
Functions of Management

Planning
It is a basic function of management. It is a systematic thinking of future activities in advance
to achieve the organizational objectives.
Planning is deciding in advance –
What to do,
When to do
& how to do.
It bridges the gap from where we are & where we want to go.
Advantages of planning
 Planning is necessary to ensure proper utilization of human & nonhuman resources
• It helps to minimize risk
• It improve efficiency
• It avoid confusions
 • It encourage innovation and creativity
• It serves as the basis of control.
Organizing
It is the process of bringing together physical, financial and human resources (Man,
Machine, Materials) and developing productive relationship amongst them for achievement of
organizational goals.
Organizing as a process involves:
• Identification of activities.
• Grouping of activities.
• Assignment of duties.
• Delegation of authority and responsibility.
• Coordinating authority and responsibility.
Staffing
It is the function of manning the organization to keep the organization live. The main purpose of
staffing is to put right man on right job.
It involves,
 Manpower Planning
 Recruitment, selection & placement.
 Training & development.
 Remuneration.
 Performance appraisal.
 Career development
 Promotions and transfers
Directing/Leading
It deals with influencing, guiding, supervising, motivating sub-ordinate for the achievement of
organizational goals.
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching &
directing work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates to work. Positive, negative,
monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the subordinates in
desired direction.
Communications- is the process of passing information, experience, opinion etc from one person to
another.
Controlling
It implies measurement of accomplishment against the standards (plans) and correction of
deviation if any, to ensure achievement of organizational goals. The purpose of controlling is to ensure
that everything occurs in conformities with the standards
(i) Establishment of standards performance
(ii) Measurement of actual performance.
(iii) Comparison of actual performance with the standards and finding out deviation if any.
(iv) Corrective action.

Levels of management
The three levels of management

CEO, MD, Board of Directors,

Chairman, Vice President etc

Department Heads

Section Heads

Floor level workers

The Top Management

 It consists of board of directors, chief executive or managing director. The top management is the
ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on
planning and coordinating functions.
The role of the top management can be summarized as follows;
 Top management lays down the objectives and broad policies of the business.
 It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
 It prepares strategic plans & policies for the enterprise.
 It appoints the executive for middle level i.e. departmental managers.
 It controls & coordinates the activities of all the departments.
 It is also responsible for maintaining a contact with the outside world.
 It provides guidance and direction.

Middle Level Management

The branch managers and departmental managers constitute middle level. They are responsible
for the functioning of their department. They devote more time to organizational and directional
functions. In small organization, there is only one layer of middle level of management but in big
enterprises, there may be senior and junior middle level management.
Their role can be emphasized as:
 They execute the plans of the organization in accordance with the policies and directives of the
top management.
 They make plans for their departments/branches.
 They participate in employment & training of lower level management.
 They interpret and explain policies from top level management to lower level.
 They are responsible for coordinating the activities within the division or department.
 It also sends important reports and other important data to top level management.
 They evaluate performance of junior managers.
Lower Level Management
Lower level is also known as supervisory / operative level of management. It consists of
supervisors, foreman, section officers, superintendent etc. They concerned with direction and
controlling function of management. Their activities include,
 Assigning of jobs and tasks to various workers.
 They guide and instruct workers for day to day activities.
 They are responsible for the quality as well as quantity of production.
  They communicate workers problems, suggestions, and recommendatory appeals etc to the higher
level
 They help to solve the grievances of the workers.
 They supervise & guide the sub-ordinates.
 They are responsible for providing training to the workers.
 They arrange necessary materials, machines, tools etc for getting the things done.
 They prepare periodical reports about the performance of the workers.
 They ensure discipline in the enterprise.
 They motivate workers.
 They are the image builders of the enterprise because they are in direct contact with the workers.

Skills of manager
There are three levels of managers namely first-line managers, middle level managers and top
level managers. These managers must have different level of skill set to be efficient in their roles and
functions. There are three skills required by the managers (conceptual skill, Human skill and technical
skill).
Conceptual skill:
Conceptual skills are the ability to analyze complex information. It enables managers to
process information about the internal/external environment of the organization and determines its
implications. Top level managers need to have strong conceptual skills if they are to effectively
accomplish goals.

Human skills
Human skills are the ability to work effectively with people. It involves motivating and
disciplining employees, monitoring performance, providing feedback, improving communication and
instructing employees. Human skills are most important for middle managers as these managers must
coordinate efforts of the members in his group as well as other work groups within the organization.

Technical skills
Technical skills are the knowledge and the ability to use tools, techniques and procedures that
are specific to their particular field. Technical skills tend to be most important for first line managers as
they must have the knowledge and the "know-how" to ensure that the products and services of their
organization are delivered to customer.

Roles of Manager
Henry Mintzberg identified ten different roles, separated into three categories.
Interpersonal role

The managerial roles in this category involve providing information and ideas.
1. Figurehead – As a manager, you have social, ceremonial and legal responsibilities. You're expected
to be a symbol of the organization. People look up to you as a person with authority, and as a
figurehead.
2. Leader – As a manager he motivates and encourage the people;
3. Liaison – Managers must communicate with internal and external contacts. You need to be able to
network effectively on behalf of your organization.
Informational role
The managerial roles in this category involve processing information.
4. Monitor – In this role, you regularly seek out information related to your organization and industry,
looking for relevant changes in the environment. You also monitor your team, in terms of both their
productivity, and their well-being.
5. Disseminator – This is where you communicate potentially useful information to your colleagues and
your team.
6. Spokesperson – Managers represent and speak for their organization. In this role you're responsible
for transmitting information about your organization and its goals to the people outside it.
Decisional role
The managerial roles in this category involve using information.
7. Entrepreneur – As a manager, you create and control change within the organization. This means
solving problems, generating new ideas, and implementing them.
8. Disturbance Handler – When an organization or team hits an unexpected roadblock (strike, accident,
shortage etc), it's the manager who must take charge. You also need to help mediate disputes within it.
9. Resource Allocator – You'll also need to determine where organizational resources are best applied.
This involves allocating funding, as well as assigning staff and other organizational resources.
10. Negotiator – You may be needed to take part in, and direct, important negotiations within your team,
department, or organization.

EVOLUTIONOF MANAGEMENT
The practice of management is as old as human civilization. The ancient civilizations of
Egypt (the great pyramids), Greece (leadership and war tactics of Alexander the great) and Rome
displayed the marvelous results of good management practices. The origin of management as a
discipline was developed in the late 19th century. Over time, management thinkers have sought
ways to organize and classify the voluminous information about management that has been
collected and disseminated in five different approaches.
1. Classical approach
2. Behavioral approach
3. Quantitative approach
4. Systems approach
5. Contingency approach
Classical Approach:
The classical approach is the oldest formal approach of management thought. Its roots
pre-date the twentieth century. The classical approach of thought generally concerns ways to
manage work and organizations more efficiently. Three areas of study that can be grouped
under the classical approach are i) scientific management, ii) administrative management,
and iii) bureaucratic management.
i) Scientific management
Frederick W. Taylor is known as the father of scientific management. Scientific
management (also called Taylorism or the Taylor system) is a theory of management that
analyzes and synthesizes workflows, with the objective of improving labor productivity. In
other words, Traditional rules of thumb are replaced by precise procedures developed after
careful study of an individual at work.
This scientific management is based on the concept called ‘Division of labour’
introduced by the great economist Adam Smith in his book ‘Wealth of the nation’.
Taylor defined the one best way of doing the job after the decades of continues research
among the employees. This approach resulted in tremendous improvement in labour
productivity.
In the same way Frank and Lillion Gillberth introduced the concepts of Time and
Motion study. They have done their research in brick laying industry and standardized the
number of movements (17 movements) an employee has to make to lay the brick. Through
which they eliminated the wasteful body and hand movements which resulted in higher
productivity.
ii) Administrative Management:
This approach focused on whole organization especially on top manager’s role in the
organization. Hendry Fayol was the major contributor in the approach by giving 14 principles
of management.
iii) Bureaucratic management:
Bureaucratic management focuses on the ideal form (structure) of organization. Max
Weber was the major contributor to bureaucratic management. Based on observation, Weber
concluded that many early organizations were inefficiently managed, with decisions based on
personal relationships and loyalty. He proposed that a form of organization, called a
bureaucracy, characterized by division of labor, hierarchy, formalized rules, impersonality,
and the selection and promotion of employees based on ability, would lead to more efficient
management.
Behavioral approach:
The behavioral approach of management thought developed, because of perceived
weaknesses in the classical approach. The classical approach emphasized efficiency, process, and
principles. Thus, the behavioral approach focused on trying to understand the factors that affect
human behavior at work.
i) Human Relation management
The Hawthorne Experiments began in 1924 and continued through the early 1930s. A
variety of researchers participated in the studies, including Elton Mayo. One of the major
conclusions of the Hawthorne studies was that workers' attitudes are associated with
productivity. Social and psychological factors would influence the productivity. Another was
that the workplace is a social system and informal group influence could exert a powerful
effect on individual behavior. A third was that the style of supervision is an important factor in
increasing workers' job satisfaction.
ii) Behavioural science:
Based on the previous researches in human resource approach the new paradigm of
management was born in 1960s. It mainly focuses on personality, attitude, values, motivation,
group behavior, conflict management etc.
Quantitative approach:
The quantitative approach focuses on improving decision making via the application of
quantitative techniques.
i)Management Science (Operations Research)
Management science (also called operations research) uses mathematical and statistical
approaches to solve management problems. It developed during World War II as strategists
tried to apply scientific knowledge and methods to the complex problems of war. Industry began
to apply management science after the war. The advent of the computer made many management
science tools and concepts more practical for industry. Optimization models, simulation, linear
programming, Work scheduling and Economic order Quantity (EOQ) was the basic
techniques used for resource allocation decision making.
ii) Production and operation management
This approach focuses on the operation and control of the production process that
transforms resources into finished goods and services. Operations management emphasizes
productivity and quality of both manufacturing and service organizations. W. Edwards
Deming exerted a tremendous influence in shaping modern ideas about improving productivity
and quality. Major areas of study within operations management include capacity planning,
facilities location, facilities layout, materials requirement planning, scheduling, purchasing
and inventory control, quality control, computer integrated manufacturing, just-in-time
inventory systems, and flexible manufacturing systems.
System Approach:
A system is a set of interrelated but separate parts working towards a common
purpose. The arrangement must be orderly and there must be proper communication facilitating
interaction between the elements and finally this interaction should lead to achieve a common
goal.

CONTINGENCY APPROACH:
The contingency approach focuses on applying management principles and processes as
dictated by the unique characteristics of each situation. It emphasizes that there is no one best
way to manage and that it depends on various situational factors, such as the external
environment, technology, organizational characteristics, characteristics of the manager,
and characteristics of the subordinates. Contingency theorists often implicitly or explicitly
criticize the classical approach for its emphasis on the universality of management principles;
however, most classical writers recognized the need to consider aspects of the situation when
applying management principles.

Henry Fayol's 14 Principles of Management:

1. Division of work: It’s dividing the work into different tasks and assigns the task to experts
who can do the work perfectly. Division of work or specialization produces maximum
productivity and efficiency.
2. Authority and Responsibility: The right to give order is called authority. The obligation to
accomplish is called responsibility. Authority and Responsibility are the two sides of the
management coin. They exist together. They are complementary and mutually interdependent.
3. Discipline: The objectives, rules and regulations, the policies and procedures must be
honoured by each member of an organization. There must be clear and fair agreement on the
rules and objectives, on the policies and procedures. There must be penalties (punishment) for
non-obedience or indiscipline. No organization can work smoothly without discipline - referably
Voluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict, each member of
an organization must received orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organization must work together to accomplish
common objectives.
6. Emphasis on Subordination of Personal Interest to General or Common Interest: This is
also called principle of co-operation. Each shall work for all and all for each. General or common
interest must be supreme in any joint enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the best incentive or motivator
for good performance. Exploitation of employees in any manner must be eliminated. Sound
scheme of remuneration includes adequate financial and nonfinancial incentives.
8. Centralization: There must be a good balance between centralization and decentralization of
authority and power. Extreme centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of command linking
all members of the organization from the top to the bottom. Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything. Order or system alone can create
a sound organization and efficient management. (Each and every resources must be put in order
for effective function of the organization)
11. Equity: An organization consists of a group of people involved in joint effort. Hence, equity
(i.e., justice) must be there. Without equity, we cannot have sustained and adequate joint
collaboration. (no discrimination between employees)
12. Stability of Tenure: A person needs time to adjust himself with the new work and
demonstrate efficiency in due course. Hence, employees and managers must have job security.
Security of income and employment is a pre-requisite of sound organization and management.
13. Esprit of Co-operation (team work): Esprit de corps is the foundation of a sound
organization. Union is strength. But unity demands co-operation. Pride, loyalty and sense of
belonging are responsible for good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial
planning and execution of predetermined plans.
TYPES OF BUSINESS/ FORMS OF BUSINESS ORGANIZATIONS
An organization is a group of people intentionally organized to accomplish a common or
set of goals.
Types of Business Organizations
When organizing a new business, one of the most important decisions to be made is choosing the
structure of a business.
1. sole proprietorship
2. Partnership
3. Joint stock company
4. Cooperatives
Sole Proprietorships
The vast majority of small business starts out as sole proprietorships. These firms are
owned by one person, usually the individual who has day-to-day responsibility for running the
business. Sole proprietors own all the assets of the business and the profits generated by it. They
also assume "complete personal" responsibility for all activities. In the eyes of the law, you are
one in the same with the business.
Grocery store, vegetable store, sweets shop, stationery store, the STD/ISD telephone
booths etc.
Merits:
• Easiest and least expensive form of ownership to organize.
• Sole proprietors are in complete control, within the law, to make all decisions.
• Sole proprietors receive all income generated by the business to keep or reinvest.
• Profits from the business flow-through directly to the owner's personal tax return.
• The business is easy to dissolve, if desired.
Demerits:
• Unlimited liability and are legally responsible for all debts (loans) against the business.
• Their business and personal assets are 100% at risk.
• Ability raise the funds is limited (because of single person).
• Have a hard time attracting high-caliber employees, or those that are motivated by the
Opportunity to own a part of the business.
• Employee benefits such as owner's medical insurance premiums are not directly deductible
from business income (partially deductible as an adjustment to income).
Partnerships
In a Partnership, two or more people share ownership of a single business. Like
proprietorships, the law does not distinguish between the business and its owners. The Partners
should have a legal agreement (Partnership agreement/ deed) that sets forth how decisions will
be made, profits will be shared, disputes will be resolved, how future partners will be admitted to
the partnership, how partners can be bought out, or what steps will be taken to dissolve the
partnership when needed. These firms are governed by the Indian Partnership Act, 1932.
Number of partners limit is 10 in case of banking business and 20 in case of all other types
of business
(Ex)Retail and wholesale trade, Professional services, Medium sized mercantile houses
and Small manufacturing units.

Types of Partners
General partners- they took part in all activities of business
Limited Partners- Their contribution is limited in terms of money, time, activities as per
agreement
Active Partners- they involve in designing organizational policies, goals and strategies.
Sleeping Partners- the invest the money and won’t involve in any of the business
activities
Nominal Partners- They invests their image or personality into the business not the
money
Minor Partners – partners below age group of 18.
Merits:
• Partnerships are relatively easy to establish; however time should be invested in developing the
partnership agreement.
• With more than one owner, the ability to raise funds may be increased.
• The profits from the business flow directly through to the partners' personal taxes.
• Prospective employees may be attracted to the business if given the incentive to become a
partner.

Demerits:
• Partners are jointly and individually liable for the actions of the other partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements can occur.
• Some employee benefits are not deductible from business income on tax returns.
• The partnerships have a limited life; it may end upon a partner withdrawal or death.

Joint stock company/Corporate

A voluntary association of persons to carry on business. Members of a joint stock
company are known as shareholders and the capital of the company is known as share capital.
The companies are governed by the Indian Companies Act, 1956. A joint stock company is
suitable where the volume of business is quite large, the area of operation is widespread
(Ex)Tata Iron & Steel Co. Limited, Hindustan Lever Limited, Reliance Industries Limited, Steel
Authority of India Limited, Ponds India Limited etc.
Private limited company- Minimum membership of two persons and maximum 200. In this
transfer of shares is limited to members only. The government also does not interfere in the
working of the company
Public limited company-the minimum is seven and the maximum membership is unlimited.
These public limited companies are subjected to greater control & supervision by government.
The shares are open to the public.
Merits
1. Limited Liability.
2. Continuity of existence.
3. Benefits of large scale operation.
4. Professional Management.
5. Social Benefit.
Demerits:
1. Formation is not easy.
2. Control by a Group.
3. Excessive government control.
4. Delay in Policy Decisions
Cooperative society
Any ten persons can form a co-operative society. It functions under the Cooperative
Societies Act, 1912. The main objectives of co-operative society are:
(a) Rendering service rather than earning profit,
(b) Mutual help instead of competition, and
(c) Self help in place of dependence
On the basis of objectives, various types of co-operatives are formed:
a. Consumer co-operatives
b. Producers co-operatives.
c. Marketing co-operatives.
d. Housing Co-operatives
 UNIT II- PLANNING

NATURE AND PURPOSE OF PLANNING

Nature of Planning
1. Planning is goal-oriented: Every plan must contribute in some positive way towards the
accomplishment of group objectives.
2. Primacy of Planning: Planning is the first of the managerial functions. It precedes all other
management functions.
3. Pervasiveness of Planning: Planning is found at all levels of management. Top management
looks after strategic planning. Middle management is in charge of administrative planning.
Lower management has to concentrate on operational planning.
4. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the
objectives as economically as possible. Planning also focuses on accurate forecasts.
5. Co-ordination: Planning co-ordinates the what, who, how, where and why of planning.
Without co-ordination of all activities, we cannot have united efforts.
6. Limiting Factors: A planner must recognize the limiting factors (money, manpower etc) and
formulate plans in the light of these critical factors.
7. Flexibility: The process of planning should be adaptable to changing environmental
conditions.
8. Planning is an intellectual process: The quality of planning will vary according to the quality
of the mind of the manager.
Purpose of Planning
As a managerial function planning is important due to the following reasons:-
1. To manage by objectives: All the activities of an organization are designed to achieve certain
specified objectives. However, planning makes the objectives more concrete by focusing
attention on them.
2. To offset uncertainty and change: Future is always full of uncertainties and changes.
Planning foresees the future and makes the necessary provisions for it.
3. To secure economy in operation: Planning involves, the selection of most profitable course
of action that would lead to the best result at the minimum costs.
4. To help in co-ordination: Co-ordination is, indeed, the essence of management, the planning
is the base of it. Without planning it is not possible to co-ordinate the different activities of an
organization.
5. To make control effective: The controlling function of management relates to the comparison
of the planned performance with the actual performance. In the absence of plans, a management
will have no standards for controlling other's performance.
6. To increase organizational effectiveness: Mere efficiency in the organization is not
important; it should also lead to productivity and effectiveness. Planning enables the manager to
measure the organizational effectiveness in the context of the stated objectives and take further
actions in this direction.
Features of Planning
• It is primary function of management.
• It is an intellectual process
• Focuses on determining the objectives
• Involves choice and decision making
• It is a continuous process
• It is a pervasive function

PLANNING PROCESS
Perception of Opportunities
Although preceding actual planning and therefore not strictly a part of the planning process,
awareness of an opportunity is the real starting point for planning. It includes a preliminary look
at possible future opportunities and the ability to see them clearly and completely, knowledge of
where we stand in the light of our strengths and weaknesses.
Ex. Next IPL season is coming- Opportunity
Establishing Objectives:
The first step in planning itself is to establish objectives for the entire enterprise and then for
each subordinate unit. Objectives specifying the results expected indicate the end points of what
is to be done, where the primary emphasis is to be placed, and what is to be accomplished by the
network of strategies, policies, procedures, rules, budgets and programs.
Ex. Increase the sales by 15 percent (bat, ball, T-shirts, accessories)
Considering the Planning Premises
Write about Business environment (Micro and macro environment)
Identifying the alternatives
Once the organizational objectives have been clearly stated and the planning premises
have been developed, the manager should list as many available alternatives as possible for
reaching those objectives. The focus of this step is to search for and examine alternative courses
of action
Alternatives: Increase the number of outlets
Discount offer
Release new products,
Brand ambassador
Evaluation of alternatives
Having sought out alternative courses and examined their strong and weak points, the
following step is to evaluate them by weighing the various factors in the light of premises and
goals.
Choice of alternative plans
Based on the evaluation the manager should select most profitable alternative to achieve
the objectives.
Formulating of Supporting Plans
After decisions are made and plans are set, the final step to give them meaning is to
rubberize them by converting them to budgets. The overall budgets of an enterprise represent the
sum total of income and expenses with resultant profit or surplus and budgets of major balance–
sheet items such as cash and capital expenditures.

Plans can be broadly classified as

a) Strategic plans
b) Tactical plans
c) Operational plans
d) Contingency plan
Operational plans lead to the achievement of tactical plans, which in turn lead to the
attainment of strategic plans. In addition to these three types of plans, managers should also
develop a contingency plan in case their original plans fail.
a) Strategic plans:
A strategic plan is long term goals of the entire organization.
i) Mission:
. The mission is a statement that reflects the basic purpose and focus of the organization which
normally remain unchanged. The mission of the company is the answer of the question : why
does the organization exists?
Mission of Ford: ―we are a global, diverse family with a proud inheritance, providing
exceptional products and services‖.
ii) Objectives or goals:
Both goal and objective can be defined as statements that reflect the end towards which the
organization is aiming to achieve.
iii) Strategies:
Strategy is the determination of the basic long term objectives of an organization and the
adoption of action and collection of action and allocation of resources necessary to achieve these
goals.
Strategic planning begins with an organization's mission. Strategic plans look ahead over
the next two, three, five, or even more years to move the organization from where it currently is
to where it wants to be. Requiring multilevel involvement, these plans demand harmony among
all levels of management within the organization. Top-level management develops the
directional objectives for the entire organization, while lower levels of management develop
compatible objectives and plans to achieve them. Top management's strategic plan for the entire
organization becomes the framework and sets dimensions for the lower level planning.
b) Tactical plans:
Tactical plans are concerned with shorter time frames and narrower scopes than are
strategic plans. These plans usually span one year or less because they are considered short-term
goals.
Normally, it is the middle manager's responsibility to take the broad strategic plan and identify
specific tactical actions.
c) Operational plans
The specific results expected from departments, work groups, and individuals are the operational
goals. These goals are precise and measurable. ―Process 150 sales applications each week‖ or
―Publish 20 books this quarter‖ are examples of operational goals.
An operational plan is one that a manager uses to accomplish his or her job responsibilities.
Supervisors, team leaders, and facilitators develop operational plans to support tactical plans (see
the next section). Operational plans can be a single-use plan or a standing plan.
i) Single-use plans apply to activities that do not recur or repeat. A one-time occurrence, such as
a special sales program, is a single-use plan because it deals with the who, what, where, how, and
how much of an activity.
Ø Programme: Programme consists of an ordered list of events to be followed to execute a
project.
Ø Budget: A budget predicts sources and amounts of income and how much they are used for a
specific project.
ii) Standing plans are usually made once and retain their value over a period of years while
undergoing periodic revisions and updates. The following are examples of ongoing
plans:
Ø Policy: A policy provides a broad guideline for managers to follow when dealing with
important areas of decision making. Policies are general statements that explain how a manager
should attempt to handle routine management responsibilities. Typical human resources policies,
for example, address such matters as employee hiring, terminations, performance appraisals, pay
increases, and discipline. Ex. Leave policy, Anti ragging policy, vocational policy
Ø Procedure: A procedure is a set of step-by-step directions that explains how activities or tasks
are to be carried out. Most organizations have procedures for purchasing supplies and equipment,
for example. This procedure usually begins with a supervisor completing a purchasing
requisition. The requisition is then sent to the next level of management for approval. The
approved requisition is forwarded to the purchasing department. Depending on the amount of the
request, the purchasing department may place an order, or they may need to secure quotations
and/or bids for several vendors before placing the order. By defining the steps to be taken and the
order in which they are to be done, procedures provide a standardized way of responding to a
repetitive problem. Ex. Leave application procedure
Ø Rule: A rule is an explicit statement that tells an employee what he or she can and cannot do.
Rules are ―do‖ and ―don't‖ statements put into place to promote the safety of employees and
the uniform treatment and behavior of employees. Ex. No smoking
Contingency plan
Contingency planning involves identifying alternative courses of action that can be
implemented if and when the original plan proves inadequate because of changing
circumstances. Unexpected problems and events frequently occur. When they do, managers
may need to change their plans. Anticipating change during the planning process is best in case
things don't go as expected. Management can then develop alternatives to the existing plan and
ready them for use when and if circumstances make these alternatives appropriate.

OBJECTIVES
Objectives may be defined as the goals which an organization tries to achieve. Objectives
are described as the end- points of planning. Objectives are, therefore, the ends towards which
the activities of the enterprise are aimed.
Features of Objectives (SMART)
• The objectives must be predetermined.
• A clearly defined objective provides the clear direction for managerial effort.
• Objectives must be realistic.
• Objectives must be measurable.
• All objectives are interconnected and mutually supportive.
• Objectives may be short-range, medium-range and long-range.
• Objectives may be constructed into a hierarchy.
Advantages of Objectives
• Clear definition of objectives encourages unified planning.
• Objectives provide motivation to people in the organization.
• When the work is goal-oriented, unproductive tasks can be avoided.
• Objectives act as a sound basis for developing administrative controls.
• Objectives contribute to the management process: they influence the purpose of the
organization, policies, personnel, leadership as well as managerial control.
Process of setting objectives / MANAGEMENT BY OBJECTIVES (MBO)
MBO was first popularized by Peter Drucker in 1954 in his book 'The practice of
Management‘. MBO is a process whereby the superior and the mangers of an organization
jointly identify its common goals and responsibilities to achieve the organizational objectives.
MBO is focused on self control and self evaluation.
Features of MBO
1. MBO is concerned with goal setting and planning for individual managers and their units.
2. The essence of MBO is a process of joint goal setting between a supervisor and a
subordinate.
3. MBO facilitates control through the periodic development and subsequent evaluation of
individual goals and plans.

Setting objectives:
For Management by Objectives (MBO) to be effective, individual managers must
understand the specific objectives of their job and how those objectives fit in with the overall
company objectives.
The managers of the various units or sub-units, or sections of an organization should
know not only the objectives of their unit but should also actively participate in setting these
objectives and make responsibility for them.
Developing action plans
Actions plans specify the actions needed to address to reach each of the associated goals,
who will complete each action and according to what timeline.
Reviewing Progress:
Periodical review of activities to be done to ensure the right path of operation.
Performance appraisal:
Performance appraisals communicate to employees how they are performing their jobs,
and they establish a plan for improvement. Performance appraisals are extremely important to
both employee and employer, as they are often used to provide predictive information related
to possible promotion. Appraisals can also provide input for determining both individual and
organizational training and development needs. Feedback on behavior, attitude, skill or
knowledge clarifies for employees the job expectations their managers hold for them.
Strategy
It is the plan of action to achieve long term objectives of the organization.
Strategic planning process
Input to the Organization: Various Inputs (People, Capital, Management and Technical skills,
others) including goals input of claimants (Employees, Consumers, Suppliers, Stockholders,
Government, Community and others)need to be elaborated.
Industry Analysis: Formulation of strategy requires the evaluation of the attractiveness of an
industry by analyzing the external environment. The focus should be on the kind of competition
within an industry, the possibility of new firms entering the market, the availability of substitute
products or services, the bargaining positions of the suppliers, and buyers or customers.
Enterprise Profile: Enterprise profile is usually the starting point for determining where the
company is and where it should go. Top managers determine the basic purpose of the enterprise
and clarify the firm‘s geographic orientation.
Values, and Vision of Executives: The enterprise profile is shaped by people, especially
executives, and their orientation and values are important for formulation the strategy. They set
the organizational climate, and they determine the direction of the firm though their vision.
Consequently, their values, their preferences, and their attitudes toward risk have to be carefully
examined because they have an impact on the strategy.
External Environment: The present and future external environment must be assessed in terms
of threats and opportunities.
Internal Environment: Internal Environment should be audited and evaluated with respect to its
resources and its weaknesses, and strengths in research and development, production,
operation, procurement, marketing and products and services.
Development of Alternative Strategies: Strategic alternatives are developed on the basis of an
analysis of the external and internal environment. Strategies may be specialize or concentrate.
Alternatively, a firm may diversify, extending the operation into new and profitable markets.
Other examples of possible strategies are joint ventures, and strategic alliances which may be an
appropriate strategy for some firms.
Evaluation and Choice of Strategies- Analyze the positives and negatives of each strategy
Medium/Short Range Planning: Develop medium and short range planning to achieve the long
term goal
Contingency plan: have a plan B as a backup
TYPES OF STRATEGIES
According to Michel Porter, the strategies can be classified into three types. They are
a) Cost leadership strategy
b) Differentiation strategy
c) Focus strategy

Cost Leadership Strategy

This generic strategy calls for being the low cost producer in an industry for a given
level of quality. The firm sells its products below the average industry prices to gain market
share. In the event of a price war, the firm can maintain some profitability while the competition
suffers losses. The cost leadership strategy usually targets a broad market.
Some of the ways that firms acquire cost advantages are by improving process efficiencies,
gaining unique access to a large source of lower cost materials, making optimal outsourcing
and vertical integration decisions, or avoiding some costs altogether. If competing firms are
unable to lower their costs by a similar amount, the firm may be able to sustain a competitive
advantage based on cost leadership.
Ex. Basic Nokia models- 1100, Micromax, Lava etc.
Differentiation Strategy
A differentiation strategy calls for the development of a product or service that offers
unique attributes that are valued by customers and that customers perceive to be better than or
different from the products of the competition. The value added by the uniqueness of the product
may allow the firm to charge a premium price for it. The firm hopes that the higher price will
more than cover the extra costs incurred in offering the unique product.
Firms that succeed in a differentiation strategy often have the following internal strengths:
• Access to leading scientific research.
• Highly skilled and creative product development team.
• Strong sales team with the ability to successfully communicate the perceived strengths of the
product.
• Corporate reputation for quality and innovation.
Ex. Samsung, Apple, Motorolla.
Focus strategy
The focus strategy concentrates on a narrow segment and within that segment attempts to
achieve either a cost advantage or differentiation.
Ex. Logitech- focuses only in Computer accessories, BMW, Audi focuses on premium
segment customers.
Decision Making
"Decision-making is the selection based on some criteria from two or more possible
alternatives".
Characteristics of Decision Making
• Decision making implies that there are various alternatives and the most desirable alternative is
chosen to solve the problem.
• The decision-maker has freedom to choose an alternative.
• Decision-making may not be completely rational but may be judgemental and emotional.
• Decision-making is goal-oriented.
• Decision-making is a mental or intellectual process because the final decision is made by the
decision-maker.
• A decision may be expressed in words or may be implied from behaviour.
• Decision making is rational. It is taken only after a thorough analysis and reasoning and
weighing the consequences of the various alternatives.
TYPES OF DECISIONS
a) Programmed and Non-Programmed Decisions:
i) Programmed decisions: Programmed decisions are routine and repetitive and are made
within the framework of organizational policies and rules. These policies and rules are
established well in advance to solve recurring problems in the organization.
Programmed decisions have short-run impact. They are, generally, taken at the lower level of
management.
Ex. Granting vocation to employee, raw material ordering, etc.
ii) Non-Programmed Decisions: Non-programmed decisions are decisions taken to meet non-
repetitive problems. Non-programmed decisions are relevant for solving unique/ unusual
problems in which various alternatives cannot be decided in advance. Since these decisions are
of high importance and have long-term consequences, they are made by top level management.
Ex. New product introduction, dealing with employee strike
b) Strategic and Tactical Decisions:
i) Strategic Decisions: Basic decisions or strategic decisions are decisions which are of crucial
importance. Strategic decisions a major choice of actions concerning allocation of resources and
contribution to the achievement of organizational objectives. Decisions like plant location,
product diversification, entering into new markets, selection of channels of distribution,
capital expenditure etc are examples of basic or strategic decisions.
ii) Tactical Decisions: Routine decisions or tactical decisions are decisions which are routine
and repetitive. They are derived out of strategic decisions. The various features of a tactical
decision are as follows:
• Tactical decision relates to day-to-day operation of the organization and has to be taken very
frequently.
• Tactical decision is mostly a programmed one.
• The outcome of tactical decision is of short-term nature and affects a narrow part of the
organization.
DECISION MAKING PROCESS

Specific Objective: The need for decision making arises in order to achieve certain specific
objectives.
Problem Identification
Identify the problem by asking questions like these
Who would make decision?
What information would be needed?
From where the information is available?
Why have to take a decision?
What is the root cause of the problem?
Search for Alternatives: A problem can be solved in several ways; however, all the ways
cannot be equally satisfying. Therefore, the decision maker must try to find out the various
alternatives available in order to get the most satisfactory result of a decision. A decision
maker can use several sources for identifying alternatives:
• His own past experiences
• Practices followed by others and
• Using creative techniques.
Evaluation of Alternatives: After the various alternatives are identified, the next step is to
evaluate them and select the one that will meet the choice criteria. Having narrowed down the
alternatives which require serious consideration, the decision maker will go for evaluating how
each alternative may contribute towards the objective supposed to be achieved by implementing
the decision.
Choice of Alternative: The evaluation of various alternatives presents a clear picture as to how
each one of them contribute to the objectives under question. A comparison is made among the
likely outcomes of various alternatives and the best one is chosen.
Action: Once the alternative is selected, it is put into action. The actual process of decision
making ends with the choice of an alternative through which the objectives can be achieved.
Results: When the decision is put into action, it brings certain results. These results must
correspond with objectives, the starting point of decision process, if good decision has been
made and implemented properly. Thus, results provide indication whether decision making and
its implementation is proper.
DECISION MAKING UNDER VARIOUS CONDITIONS
The conditions for making decisions can be divided into three types. Namely a) Certainty, b)
Uncertainty and c) Risk
a) Certainty:
In a situation involving certainty, people are reasonably sure about what will happen when they
make a decision. The information is available and is considered to be reliable, and the cause and
effect relationships are known.
b) Uncertainty
In a situation of uncertainty, on the other hand, people have only a meager database, they do
not know whether or not the data are reliable, and they are very unsure about whether or not
the situation may change.
For example, a corporation that decides to expand its Operation to an unfamiliar country may
know little about the country, culture, laws, economic environment, and politics. The political
situation may be volatile that even experts cannot predict a possible change in government.
c) Risk
In a situation with risks, factual information may exist, but it may be incomplete. 1o improve
decision making One may estimate the objective probability of an outcome by using, for
example, mathematical models On the other hand, subjective probability, based on judgment
and experience may be used
 UNIT III- ORGANIZING
NATURE OR CHARACTERISTICS OF ORGANIZING
(1) Division of Work: Division of work is the basis of an organization. In other words, there can
be no organization without division of work. Under division of work the entire work of business
is divided into many departments .The work of every department is further sub-divided into sub
works.
(2) Coordination: Under organizing different persons are assigned different works but the aim
of all these persons happens to be the some - the attainment of the objectives of the enterprise.
Organization ensures that the work of all the persons depends on each other‘s work even though
it happens to be different. The work of one person starts from where the work of another person
ends. The non-completion of the work of one person affects the work of everybody.
Therefore, everybody completes his work in time and does not hinder the work of others. It is
thus, clear that it is in the nature of an organization to establish coordination among different
works, departments and posts in the enterprise.
(3) Plurality of Persons: Organization is a group of many persons who assemble to fulfill a
common purpose. A single individual cannot create an organization.
(4) Common Objectives: There are various parts of an organization with different functions to
perform but all move in the direction of achieving a general objective.
(5) Well-defined Authority and Responsibility: Under organization a chain is established
between different posts right from the top to the bottom. It is clearly specified as to what will be
the authority and responsibility of every post.
(6) Organization is a Structure of Relationship: Relationship between persons working on
different posts in the organization is decided. In other words, it is decided as to who will be the
superior and who will be the subordinate. Leaving the top level post and the lowest level post
everybody is somebody's superior and somebody's subordinate. The person working on the top
level post has no superior and the person working on the lowest level post has no subordinate.
(7) Organization is a Universal Process: Organization is needed both in business and non
business organizations. Not only this, organization will be needed where two or mom than two
people work jointly. Therefore, organization has the quality of universality.
(8) Organization is a Dynamic Process:
ORGANIZING PROCESS
Organization is the process of establishing relationship among the members of the
enterprise. The relationships are created in terms of authority and responsibility. To organize is
to harmonize, coordinate or arrange in a logical and orderly manner. Each member in the
organization is assigned a specific responsibility or duty to perform and is granted the
corresponding authority to perform his duty.

a) Determination of Objectives:
It is the first step in building up an organization. Organization is always related to certain
objectives. Therefore, it is essential for the management to identify the objectives before starting
any activity.
b) Enumeration of Objectives:
If the members of the group are to pool their efforts effectively, there must be proper division of
the major activities. For example, the work of an industrial concern may be divided into the
following major functions – production, financing, personnel, sales, purchase, etc.
c) Classification of Activities:
The next step will be to classify activities according to similarities and common purposes and
functions. Then, closely related and similar activities are grouped into divisions and departments
and the departmental activities are further divided into sections.
d) Assignment of Duties:
Each individual should be given a specific job to do according to his ability and made
responsible for that. He should also be given the adequate authority to do the job assigned to
him.
e) Delegation of Authority:
Since so many individuals work in the same organization, it is the responsibility of management
to lay down structure of relationship in the organization. Authority without responsibility is a
dangerous thing and similarly responsibility without authority is an empty vessel. Everybody
should clearly know to whom he is accountable; corresponding to the responsibility authority is
delegated to the subordinates for enabling them to show work performance.
ORGANIZATION STRUCTURE
An organization structure is a framework that allots a particular space for a particular
department or an individual and shows its relationship to the other. An organization structure
shows the authority and responsibility relationships between the various positions in the
organization by showing who reports to whom. It is an established pattern of relationship among
the components of the organization.
PRINCIPLES OF ORGANIZATION STRUCTURE
a) Line and Staff Relationships:
Line employees are responsible for achieving the basic or strategic objectives of the
organization, while staff plays a supporting role to line employees and provides services. The
relationship between line and staff is crucial in organizational structure, design and efficiency.
b) Departmentalization:
Departmentalization is a process of horizontal clustering of different types of functions and
activities on any one level of the hierarchy. Departmentalization is conventionally based on
purpose, product, process, function, personal things and place.
c) Span of Control:
This refers to the number of specialized activities or individuals supervised by one person.
Deciding the span of control is important for coordinating different types of activities effectively.
d) De-centralization and Centralization:
De-centralization refers to decision making at lower levels in the hierarchy of authority. In
contrast, decision making in a centralized type of organizational structure is at higher levels. The
degree of centralization and de-centralization depends on the number of levels of hierarchy,
degree of coordination, specialization and span of control.
FORMAL AND INFORMAL ORGANIZATION
Informal organization, which does not have any structure, rules and regulation.
FORMAL ORGANIZATION
The formal organization refers to the structure of jobs and positions with clearly defined
functions and relationships as prescribed by the top management. This type of organization is
bound by rules, systems and procedures. Everybody is assigned a certain responsibility for the
performance of the given task and given the required amount of authority for carrying it out.
Advantages of formal organization
• The formal organization structure concentrates on the jobs to be performed. It, therefore, makes
everybody responsible for a given task.
• A formal organization is bound by rules, regulations and procedures. It thus ensures law and
order in the organization.
• The organization structure enables the people of the organization to work together for
accomplishing the common objectives of the enterprise
Disadvantages or criticisms of formal organization
• The formal organization does not take into consideration the sentiments of organizational
members.
• The formal organization does not consider the goals of the individuals. It is designed to achieve
the goals of the organization only.
• The formal organization is bound by rigid rules, regulations and procedures. This makes the
achievement of goals difficult.
INFORMAL ORGANIZATION
Informal organization refers to the relationship between people in the organization based
on personal attitudes, emotions, prejudices, likes, dislikes etc. an informal organization is an
organization which is not established by any formal authority, but arises from the personal and
social relations of the people. These relations are not developed according to procedures and
regulations laid down in the formal organization structure; generally large formal groups give
rise to small informal or social groups. These groups may be based on same taste, language,
culture or some other factor.
Characteristics features of informal organization
• Informal organization is not established by any formal authority. It is unplanned and arises
spontaneously.
• Informal organizations reflect human relationships. It arises from the personal and social
relations amongst the people working in the organization.
• Formation of informal organizations is a natural process. It is not based on rules, regulations
and procedures.
• The inter-relations amongst the people in an informal organization cannot be shown in an
organization chart.
• In the case of informal organization, the people cut across formal channels of communications
and communicate amongst themselves.
• The membership of informal organizations is voluntary. It arises spontaneously and not by
deliberate or conscious efforts.
• Membership of informal groups can be overlapping as a person may be member of a number of
informal groups.
• Informal organizations are based on common taste, problem, language, religion, culture, etc. it
is influenced by the personal attitudes, emotions, whims, likes and dislikes etc. of the people in
the organization.
Benefits of Informal organization
• It blends with the formal organization to make it more effective.
• Many things which cannot be achieved through formal organization can be achieved through
informal organization.
• The presence of informal organization in an enterprise makes the managers plan and act more
carefully.
• Informal organization acts as a means by which the workers achieve a sense of security and
belonging. It provides social satisfaction to group members.
• An informal organization has a powerful influence on productivity and job satisfaction.
• The informal leader lightens the burden of the formal manager and tries to fill in the gaps in the
manager's ability.
• Informal organization helps the group members to attain specific personal objectives.
• Informal organization is the best means of employee communication. It is very fast.
Informal organization gives psychological satisfaction to the members. It acts as a safety valve
for the emotional problems and frustrations of the workers of the organization because
they get a platform to express their feelings.
• It serves as an agency for social control of human behavior.
LINE AND STAFF AUTHORITY
In an organization, the line authority flows from top to bottom and the staff authority is
exercised by the specialists over the line managers who advise them on important matters. These
specialists stand ready with their specialty to serve line mangers as and when their services are
called for, to collect information and to give help which will enable the line officials to carry out
their activities better. The staff officers do not have any power of command in the organization
as they are employed to provide expert advice to the line officers. The 'line' maintains discipline
and stability; the 'staff' provides expert information. The line gets out the production, the staffs
carries on the research, planning, scheduling, establishing of standards and recording of
performance.
Types of Staff
1. Personal Staff: Here the staff official is attached as a personal assistant or adviser to the line
manager. For example, Assistant to managing director.
2. Specialized Staff: Such staff acts as the fountainhead of expertise in specialized areas like R
& D, personnel, accounting etc.
3. General Staff: This category of staff consists of a set of experts in different areas who are
meant to advise and assist the top management on matters called for expertise. For example,
Financial advisor, technical advisor etc.
Features of line and staff organization
• Under this system, there are line officers who have authority and command over the
subordinates and are accountable for the tasks entrusted to them. The staff officers are specialists
who offer expert advice to the line officers to perform their tasks efficiently.
• Under this system, the staff officers prepare the plans and give advice to the line officers and
the line officers execute the plan with the help of workers.
• The line and staff organization is based on the principle of specialization.
Advantages
• It brings expert knowledge to bear upon management and operating problems. Thus, the line
managers get the benefit of specialized knowledge of staff specialists at various levels.
• The expert advice and guidance given by the staff officers to the line officers benefit the entire
organization.
• As the staff officers look after the detailed analysis of each important managerial activity, it
relieves the line managers of the botheration of concentrating on specialized functions. • Staff
specialists help the line managers in taking better decisions by providing expert advice.
Therefore, there will be sound managerial decisions under this system.
• It makes possible the principle of undivided responsibility and authority, and at the same time
permits staff specialization. Thus, the organization takes advantage of functional organization
while maintaining the unity of command.
• It is based upon planned specialization.
• Line and staff organization has greater flexibility, in the sense that new specialized activities
can be added to the line activities without disturbing the line procedure.
Disadvantages
• Unless the duties and responsibilities of the staff members are clearly indicated by charts and
manuals, there may be considerable confusion throughout the organization as to the functions
and positions of staff members with relation to the line supervisors.
• There is generally a conflict between the line and staff executives. The line managers feel that
staff specialists do not always give right type of advice, and staff officials generally complain
that their advice is not properly attended to.
• Line managers sometimes may resent the activities of staff members, feeling that prestige and
influence of line managers suffer from the presence of the specialists.
• The staff experts may be ineffective because they do not get the authority to implement their
recommendations.
• This type of organization requires the appointment of large number of staff officers or experts
in addition to the line officers. As a result, this system becomes quite expensive.
• Although expert information and advice are available, they reach the workers through the
officers and thus run the risk of misunderstanding and misinterpretation.
• Since staff managers are not accountable for the results, they may not be performing their
duties well.
• Line mangers deal with problems in a more practical manner. But staff officials who are
specialists in their fields tend to be more theoretical. This may hamper coordination in the
organization.
DEPARTMENTATION BY DIFFERENT STRATEGIES
DEPARTMENTATION refers to the process of grouping activities into departments.
Departmentation is the process of grouping of work activities into departments, divisions, and
other homogenous units.
Key Factors in Departmentation
• It should facilitate control.
• It should ensure proper coordination.
• It should take into consideration the benefits of specialization.
• It should not result in excess cost.
• It should give due consideration to Human Aspects.
Departmentation takes place in various patterns like departmentation by functions, products,
Customers, geographic location, process, and its combinations.
Functional Departmentation

Functional departmentation is the process of grouping activities by functions performed.

Activities can be grouped according to function (work being done) by placing employees with
shared skills and knowledge into departments for example human resources, finance, production,
and marketing. Functional departmentation can be used in all types of organizations.
Advantages:
• Advantage of specialization
• Easy control over functions
• Pinpointing training needs of manager
• It is very simple process of grouping activities.
Disadvantages:
• Lack of responsibility for the end result
• Overspecialization or lack of general management
• It leads to increase conflicts and coordination problems among departments.
Product Departmentation

Product departmentation is the process of grouping activities by product line. Tasks can
also be grouped according to a specific product or service, thus placing all activities related to
the product or the service under one manager. Each major product area in the corporation is
under the authority of a senior manager who is specialist in, and is responsible for, everything
related to the product line. Dabur India Limited (ITC, HUL) is the India‘s largest Ayurvedic
medicine manufacturer is an example of company that uses product departmentation. Its
structure is based on its varied product lines which include Home care, Health care, Personal
care and Foods.
Advantages
• It ensures better customer service
• Unprofitable products may be easily determined
• It assists in development of all around managerial talent
• Makes control effective
• It is flexible and new product line can be added easily.
Disadvantages
• It is expensive as duplication of service functions occurs in various product divisions
• Customers and dealers have to deal with different persons for complaint and information of
different products.
c) CUSTOMER DEPARTMENTATION

Customer departmentation is the process of grouping activities on the basis of common

customers or types of customers. Jobs may be grouped according to the type of customer served
by the organization. The assumption is that customers in each department have a common set of
problems and needs that can best be met by specialists. UCO is the one of the largest commercial
banks of India is an example of company that uses customer departmentation. Its structure is
based on various services which includes Home loans, Business loans, Vehicle loans and
Educational loans.
Advantages
• It focused on customers who are ultimate suppliers of money
• Better service to customer having different needs and tastes
• Development in general managerial skills
Disadvantages
• Sales being the exclusive field of its application, co-ordination may appear difficult between
sales function and other enterprise functions.
• Specialized sales staff may become idle with the downward movement of sales to any specified
group of customers.
d) GEOGRAPHIC DEPARTMENTATION
Geographic departmentation is the process of grouping activities on the basis of territory. If an
organization's customers are geographically dispersed, it can group jobs based on geography. For
example, the organization structure of Coca-Cola Ltd has reflected the company‘s operation in
various geographic areas such as Central North American group, Western North American
group, Eastern North American group and European group.
Advantages
• Help to cater to the needs of local people more satisfactorily.
• It facilitates effective control
• Assists in development of all-round managerial skills
Disadvantages
• Communication problem between head office and regional office due to lack of means of
communication at some location
• Coordination between various divisions may become difficult.
• Distance between policy framers and executors
• It leads to duplication of activities which may cost higher
Process Departmentation

Because each process requires different skills, process departmentation allows

homogenous activities to be categorized. Ex. Textile industries. Fabrication, cutting, Stitching,
Ironing and packing.
Departmentation by process: -
Advantages
• Oriented towards end result.
• Professional identification is maintained.
• Pinpoints product-profit responsibility.
Disadvantage
• Conflict in organization authority exists.
• Possibility of disunity of command.
• Requires managers effective in human relation
f) MARTIX DEPARTMENTATION

In actual practice, no single pattern of grouping activities is applied in the organization

structure with all its levels. Different bases are used in different segments of the enterprise.
Composite or hybrid method forms the common basis for classifying activities rather than one
particular method,. One of the mixed forms of organization is referred to as matrix or grid
organization‘s According to the situations, the patterns of Organizing varies from case to case.
Advantages
• Efficiently manage large, complex tasks
• Effectively carry out large, complex tasks
Disadvantages
• Requires high levels of coordination
• Conflict between bosses
• Requires high levels of management skills
CENTRALIZATION AND DECENTRALIZATION
CENTRALIZATION:
It is the process of transferring and assigning decision-making authority to higher levels
of an organizational hierarchy.
Characteristics
• Philosophy / emphasis on: top-down control, leadership, vision, strategy.
• Decision-making: strong, authoritarian, visionary, charismatic.
• Organizational change: shaped by top, vision of leader.
• Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes.
Advantages of Centralization
• Provide Power and prestige for manager
• Promote uniformity of policies, practices and decisions
• Minimal extensive controlling procedures and practices
• Minimize duplication of function
Disadvantages of Centralization
• Neglected functions for mid. Level, and less motivated beside personnel.
• Nursing supervisor functions as a link officer between nursing director and first-line
management.
DECENTRALIZATION:
It is the process of transferring and assigning decision-making authority to lower levels of
an organizational hierarchy.
Characteristics
• Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
• Decision-making: democratic, participative, detailed.
• Organizational change: emerging from interactions, organizational dynamics.
• Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.
Three Forms of decentralization
• De-concentration. The weakest form of decentralization. Decision making authority is
redistributed to lower or regional levels of the same central organization.
• Delegation. A more extensive form of decentralization. Through delegation the responsibility
for decision-making are transferred to semi-autonomous organizations not wholly controlled
by the central organization, but ultimately accountable to it.
• Devolution. A third type of decentralization is devolution. The authority for decision making is
transferred completely to autonomous organizational units.
Advantages of Decentralization
• Raise morale and promote interpersonal relationships
• Relieve from the daily administration
• Bring decision-making close to action
• Develop Second-line managers
• Promote employee‘s enthusiasm and coordination
• Facilitate actions by lower-level managers
Disadvantages of Decentralization
• Top-level administration may feel it would decrease their status
• Managers may not permit full and maximum utilization of highly qualified personnel
• Increased costs. It requires more managers and large staff
• It may lead to overlapping and duplication of effort
Centralization and Decentralization are two opposite ways to transfer decision-making
power and to change the organizational structure of organizations accordingly. There must be a
good balance between centralization and decentralization of authority and power. Extreme
centralization and decentralization must be avoided.
DELEGATIONOF AUTHORITY
A manager alone cannot perform all the tasks assigned to him. In order to meet the
targets, the manager should delegate authority. Delegation of Authority means division of
authority and powers downwards to the subordinate.
Elements of Delegation
1. Authority - in context of a business organization, authority can be defined as the power and
right of a person to use and allocate the resources efficiently, to take decisions and to give orders
so as to achieve the organizational objectives.
2. Responsibility - is the duty of the person to complete the task assigned to him. A person who
is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the
tasks for which he was held responsible are not completed, then he should not give explanations
or excuses.
3. Accountability - means giving explanations for any variance in the actual performance from
the expectations set. Accountability cannot be delegated. For example, if ‘A‘ is given a task with
sufficient authority, and ‘A‘ delegates this task to B and asks him to ensure that task is done well,
responsibility rest with ‘B‘, but accountability still rest with ‘A‘. The top level management is
most accountable. Being accountable means being innovative as the person will think beyond his
scope of job. Accountability, in short, means being answerable for the end result. Accountability
can‘t be escaped. It arises from responsibility.
DELEGATION PROCESS

STAFFING
Staffing involves filling the positions needed in the organization structure by appointing
competent and qualified persons for the job. The staffing process encompasses man power
planning, recruitment, selection, and training.

Manpower planning:
Manpower Planning which is also called as Human Resource Planning consists of putting right
number of people, right kind of people at the right place, right time, doing the right things for
which they are suited for the achievement of goals of the organization
Recruitment:
Recruitment is the process of finding and attempting to attract job candidates who are capable of
effectively filling job vacancies.
Training and Development:
Training and Development is a planned effort to facilitate employee learning of job related
behaviors in order to improve employee performance.
RECRUITMENT PROCESS
Recruitment is the process of finding and attempting to attract job candidates who are capable of
effectively filling job vacancies.
The recruitment process consists of the following steps
• Identification of vacancy
• Preparation of job description and job specification
• Selection of sources
• Advertising the vacancy
• Managing the response
a) Identification of vacancy:
The recruitment process begins with the human resource department receiving requisitions for
recruitment from any department of the company. These contain:
• Posts to be filled
• Number of persons
• Duties to be performed
• Qualifications required
b) Preparation of job description and job specification: (JOB ANALYSIS)
A job description is a list of the general tasks, or functions, and responsibilities of a position. It
may often include to whom the position reports, specifications such as the qualifications or skills
needed by the person in the job, or a salary range.
A job specification describes the knowledge, skills, education, experience, and abilities you
believe are essential to performing a particular job.
c) Selection of sources:
Every organization has the option of choosing the candidates for its recruitment processes from
two kinds of sources: internal and external sources. The sources within the organization itself
(like transfer of employees from one department to other, promotions) to fill a position are
known as the internal sources of recruitment. Recruitment candidates from all the other sources
(like outsourcing agencies etc.) are known as the external sources of the recruitment.
d) Advertising the vacancy:
After choosing the appropriate sources, the vacancy is communicated to the candidates by means
of a suitable media such as television, radio, newspaper, internet, direct mail etc.
e) Managing the response:
After receiving an adequate number of responses from job seekers, the sieving process of the
resumes begins. This is a very essential step of the recruitment selection process, because
selecting the correct resumes that match the job profile, is very important. Naturally, it has to be
done rather competently by a person who understands all the responsibilities associated with the
designation in its entirety. Candidates with the given skill set are then chosen and further called
for interview. Also, the applications of candidates that do not match the present nature of the
position but may be considered for future requirements are filed separately and preserved.
The recruitment process is immediately followed by the selection process.
SELECTION:

Initial Screening
Initial Screening eliminates unqualified applicants and helps save time. Applications received
from various sources are scrutinized and irrelevant ones are discarded.
Preliminary Interview
It is used to eliminate those candidates who do not meet the minimum eligibility criteria laid
down by the organization. The skills, academic and family background, competencies and
interests of the candidate are examined during preliminary interview. The candidates are given a
brief up about the company and the job profile; and it is also examined how much the candidate
knows about the company. Preliminary interviews are also called screening interviews.
Filling Application Form
An candidate who passes the preliminary interview and is found to be eligible for the job is
asked to fill in a formal application form. Such a form is designed in a way that it records the
personal as well professional details of the candidates such as age, qualifications, reason for
leaving previous job, experience, etc.
Personal Interview
Most employers believe that the personal interview is very important. It helps them in obtaining
more information about the prospective employee. It also helps them in interacting with the
candidate and judging his communication abilities, his ease of handling pressure etc.
References check
Most application forms include a section that requires prospective candidates to put down names
of a few references. References can be classified into - former employer, former customers,
business references, reputable persons. Such references are contacted to get a feedback on the
person in question including his behaviour, skills, conduct etc.
Background Verification
A background check is a review of a person's commercial, criminal and (occasionally) financial
records. Employers often perform background checks on employers or candidates for
employment to confirm information given in a job application, verify a person's identity, or
ensure that the individual does not have a history of criminal activity, etc., that could be an issue
upon employment.
Final Interview
Final interview is a process in which a potential employee is evaluated by an employer for
prospective employment in their organization. During this process, the employer hopes to
determine whether or not the applicant is suitable for the job. Different types of tests are
conducted to evaluate the capabilities of an applicant, his behaviour, special qualities etc.
Separate tests are conducted for various types of jobs.
Physical Examination
If all goes well, then at this stage, a physical examination is conducted to make sure that the
candidate has sound health and does not suffer from any serious ailment.
Job Offer
A candidate who clears all the steps is finally considered right for a particular job and is
presented with the job offer.
Employee Induction / Orientation
Orientation or induction is the process of introducing new employees to an organization, to
their specific jobs & departments, and in some instances, to their community.
Purposes of Orientation
1. To Reduce Startup-Costs:
Proper orientation can help the employee get "up to speed" much more quickly, thereby reducing
the costs associated with learning the job.
2. To Reduce Anxiety:
Any employee, when put into a new, strange situation, will experience anxiety that can impede
his or her ability to learn to do the job. Proper orientation helps to reduce anxiety that results
from entering into an unknown situation, and helps provide guidelines for behaviour and
conduct, so the employee doesn't have to experience the stress of guessing.
3. To Reduce Employee Turnover:
4. To Save Time for Supervisor & Co-Workers:
Simply put, the better the initial orientation, the less likely supervisors and co-workers will have
to spend time teaching the employee.
5. To Develop Realistic Job Expectations, Positive Attitudes and Job Satisfaction:
An orientation program principally conveys 3 types of information, namely:
a) General information about the daily work routine to be followed
b) A review of the organization‘s history, founders, objectives, operations & products or
services, as well as how the employee‘s job contributes to the organization‘s needs.
c) A detailed presentation of the organization‘s policies, work rules & employee benefits.
Two Kinds of Orientation
There are two related kinds of orientation. The first we will call Overview Orientation, and deals
with the basic information an employee will need to understand the broader system he or she
works in.
Overview Orientation includes helping employees understand:
• Management in general
• Department and the branch
• Important policies
• General procedures (non-job specific)
• Information about compensation
• Accident prevention measures
• Employee and union issues (rights, responsibilities)
• Physical facilities
The second kind of orientation is called Job-Specific Orientation, and is the process that is used
to help employees understand:
• Function of the organization,
• Responsibilities,
• Expectations,
• Duties
• Policies, procedures, rules and regulations
• Layout of workplace
• Introduction to co-workers and other people in the broader organization.

TRAINING
Training is a process of learning a sequence of programmed behaviour. It improves the
employee's performance on the current job and prepares them for an intended job.
Purpose of Training:
1) To improve Productivity: Training leads to increased operational productivity and increased
company profit.
2) To improve Quality: Better trained workers are less likely to make operational mistakes.
3) To improve Organizational Climate: Training leads to improved production and product
quality which enhances financial incentives. This in turn increases the overall morale of the
organization.
4) To increase Health and Safety: Proper training prevents industrial accidents.
5) Personal Growth: Training gives employees a wider awareness, an enlarged skill base and that
leads to enhanced personal growth.
Training Process:

1) Identifying Training needs: A training program is to improve performance of a trainee.

• Man Analysis: Knowledge, attitude and skill one must possess for attainment of organizational
objectives
2) Getting ready for the job: The trainer has to be prepared for the job. And also who needs to
be trained - the newcomer or the existing employee or the supervisory staff.
3) Presentation of Operation and Knowledge: The trainer should clearly tell, show, illustrate
and question in order to convey the new knowledge and operations. The trainee should be
encouraged to ask questions in order to indicate that he really knows and understands the job.
4) Performance Try out: The trainee is asked to go through the job several times. This
gradually builds up his skill, speed and confidence.
5) Follow-up: This evaluates the effectiveness of the entire training effort
TRAINING METHODS
Training methods can be broadly classified as on-the-job training and off-the-job tainting
a) On-the-job training
On the job training occurs when workers pick up skills whilst working alongside experienced
workers at their place of work. For example this could be the actual assembly line or offices
where the employee works. New workers may simply observe fellow employees to begin with
and are often given instruction manuals or interactive training programmes to work through.
b) Off-the-job training
This occurs when workers are taken away from their place of work to be trained. This may
take place at training agency or Local College, although many larger firms also have their own
training centres. Training can take the form of lectures or self-study and can be used to develop
more general skills and knowledge that can be used in a variety of situations.
The various types of off-the-job training are
(i) Instructor presentation: The trainer orally presents new information to the trainees, usually
through lecture. Instructor presentation may include classroom lecture, seminar, workshop, and
the like.
(ii) Group discussion: The trainer leads the group of trainees in discussing a topic.
(iii) Demonstration: The trainer shows the correct steps for completing a task, or shows an
example of a correctly completed task.
(iv) Assigned reading: The trainer gives the trainees reading assignments that provide new
information.
(v) Exercise: The trainer assigns problems to be solved either on paper or in real situations
related to the topic of the training activity.
(vi) Case study: The trainer gives the trainees information about a situation and directs them to
come to a decision or solve a problem concerning the situation.
(vii) Role play: Trainees act out a real-life situation in an instructional setting.
(viii) Field visit and study tour: Trainees are given the opportunity to observe and interact with
the problem being solved or skill being learned.
PERFORMANCE APPRAISAL
Performance appraisal is the process of obtaining, analyzing and recording information
about the relative worth of an employee. The focus of the performance appraisal is measuring
and improving the actual performance of the employee and also the future potential of the
employee. Its aim is to measure what an employee does.
Objectives of Performance appraisal:
• To review the performance of the employees over a given period of time.
• To judge the gap between the actual and the desired performance.
• To help the management in exercising organizational control.
• Helps to strengthen the relationship and communication between superior – subordinates and
management – employees.
• To diagnose the strengths and weaknesses of the individuals so as to identify the training and
development needs of the future.
• To provide feedback to the employees regarding their past performance.
• Provide information to assist in the other personal decisions in the organization.
• Provide clarity of the expectations and responsibilities of the functions to be performed by the
employees.
• To judge the effectiveness of the other human resource functions of the organization such as
recruitment, selection, training and development.
• To reduce the grievances of the employees.
Process of performance appraisal:
a) Establishing performance standards:
The first step in the process of performance appraisal is the setting up of the standards (profit,
sales, number of complaints handles, number customers handles etc)which will be used to as the
base to compare the actual performance of the employees.
b) Communicating the standards:
After establishing the standards, it is the responsibility of the management to communicate the
standards to all the employees of the organization. The employees should be informed and the
standards should be clearly explained to them.
c) Measuring the actual performance:
The most difficult part of the Performance appraisal process is measuring the actual performance
of the employees that is the work done by the employees during the specified period of time. It is
a continuous process which involves monitoring the performance throughout the year. This stage
requires the careful selection of the appropriate techniques of measurement, taking care that
personal bias does not affect the outcome of the process and providing assistance rather than
interfering in an employees work.
d) Comparing the actual with the desired performance:
The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set.
The result can show the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a negative deviation in
the organizational performance
e) Discussing results:
The result of the appraisal is communicated and discussed with the employees on one-
to-one basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and reaching
consensus. The feedback should be given with a positive attitude as this can have an effect on the
employees‘ future performance. The purpose of the meeting should be to solve the problems
faced and motivate the employees to perform better.
f) Decision making:
The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR decisions
like rewards, promotions, demotions, transfers etc.

UNIT IV DIRECTING
MOTIVATION
Motivation may be defined as those forces that cause people to behave in certain ways.
Motivation encompasses all those pressures and influences that trigger, channel, and sustain
human behavior
NATURE AND CHARACTERISTICS OF MOTIVATION
Motivation is an Internal Feeling
Motivation is a psychological phenomenon which generates in the mind of an individual the
feeling that he lacks certain things and needs those things. Motivation is a force within an
individual that drives him to behave in a certain way.
Motivation is Related to Needs
In order to motivate a person, we have to understand his needs that call for satisfaction.
Motivation Produces Goal-Directed Behaviour
Goals are anything which will alleviate a need and reduce a drive. An individual's behavior is
directed towards a goal.
Motivation can be either Positive or Negative
Positive or incentive motivation is generally based on reward. According to Flippo - "positive
motivation is a process of attempting to influence others to do your will through the possibility of
gain or reward".
Negative or fear motivation is based on force and fear. Fear causes persons to act in a certain
way because they are afraid of the consequences if they don't.

TYPES OF MOTIVATION TECHNIQUES

a) Positive Motivation:
"Positive motivation is a process of attempting to influence others to do your will through the
possibility of gain or reward". Incentive motivation is the "pull" mechanism. The receipt of
awards, due recognition and praise for work-well done definitely lead to good team spirit, co-
operation and a feeling of happiness.
Positive motivation include:-
• Praise and credit for work done
• Wages and Salaries
• Appreciation
• A sincere interest in subordinates as individuals
• Delegation of authority and responsibility
b) Negative Motivation:
This type of motivation is based on force and fear. Fear causes persons to act in a certain way
because they fear the consequences. Negative motivation involves the possibility of decreased
motive satisfaction. It is a "push" mechanism.
MOTIVATIONTHEORIES
a) McGregor’s Theory X and Theory Y:
McGregor states that people inside the organization can be managed in two ways. The first is
basically negative, which falls under the category X and the other is basically positive, which
falls under the category Y.
Under the assumptions of theory X:
• Employees inherently do not like work and whenever possible, will attempt to avoid it.
• Because employees dislike work, they have to be forced, coerced or threatened with
punishment to achieve goals.
• Employees avoid responsibilities and do not work fill formal directions are issued.
• Most workers place a greater importance on security over all other factors and display little
ambition.
In contrast under the assumptions of theory Y:
• Physical and mental effort at work is as natural as rest or play.
• People do exercise self-control and self-direction and if they are committed to those goals.
• Average human beings are willing to take responsibility and exercise imagination, ingenuity
and creativity in solving the problems of the organization.
• That the way the things are organized, the average human being‘s brainpower is only partly
used.
b) Abraham Maslow’s “Need Hierarchy Theory”:

One of the most widely mentioned theories of motivation is the hierarchy of needs theory
put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a
hierarchy, ascending from the lowest to the highest, and he concluded that when one set of needs
is satisfied, this kind of need ceases to be a motivator.
As per his theory these needs are:
(i) Physiological needs:
These are important needs for sustaining the human life. Food, water, warmth, shelter, sleep,
medicine and education are the basic physiological needs which fall in the primary list of need
satisfaction. Maslow was of an opinion that until these needs were satisfied to a degree to
maintain life, no other motivating factors can work.
(ii) Security or Safety needs:
These are the needs to be free of physical danger and of the fear of losing a job, property, food or
shelter. It also includes protection against any emotional harm.
(iii) Social needs:
Since people are social beings, they need to belong and be accepted by others. People try to
satisfy their need for affection, acceptance and friendship.
(iv) Esteem needs:
This kind of need produces such satisfaction as power, prestige status and self-confidence. It
includes both internal esteem factors like self respect, autonomy and achievements and external
esteem factors such as states, recognition and attention.
(v) Need for self-actualization:
It is the drive to become what one is capable of becoming; it includes growth, achieving one‘s
potential and self-fulfillment. It is to maximize one‘s potential and to accomplish something.
c) Frederick Herzberg’s motivation-hygiene theory:
Frederick has tried to modify Maslow‘s need Hierarchy theory. His theory is also known as two-
factor theory or Hygiene theory. He stated that there are certain satisfiers and dissatisfiers for
employees at work. Intrinsic factors are related to job satisfaction, while extrinsic factors are
associated with dissatisfaction.
Examples of Hygiene factors are:
Security, status, relationship with subordinates, personal life, salary, work conditions,
relationship with supervisor and company policy and administration.
Examples of Motivational factors are:
Growth prospectus job advancement, responsibility, challenges, recognition and achievements.
d) Victor Vroom’s Expectancy theory:
The theory argues that the strength of a tendency to act in a specific way depends on the
strength of an expectation that the act will be followed by a given outcome and on the
attractiveness of that outcome to the individual to make this simple, expectancy theory says that
an employee can be motivated to perform better when there is a belief that the better
performance will lead to good performance appraisal and that this shall result into realization of
personal goal in form of some reward.
e) Clayton Alderfer’s ERG Theory:

Alderfer has tried to rebuild the hierarchy of needs of Maslow into another model named
ERG i.e. Existence – Relatedness – Growth. According to him there are 3 groups of core needs
as mentioned above. The existence group is concerned mainly with providing basic material
existence. The second group is the individuals need to maintain interpersonal relationship with
other members in the group. The final group is the intrinsic desire to grow and develop
personally.
f) McClelland’s Theory of Needs:
David McClelland has developed a theory on three types of motivating needs :
(i) Need for Power
(ii) Need for Affiliation
(iii) Need for Achievement
Basically people for high need for power are inclined towards influence and control. They like to
be at the center and are good orators.
In the second category are the people who are social in nature. They try to affiliate themselves
with individuals and groups. They are driven by love and faith. They like to build a friendly
environment around themselves. Social recognition and affiliation with others provides them
motivation.
People in the third area are driven by the challenge of success and the fear of failure. Their need
for achievement is moderate and they set for themselves moderately difficult tasks. They are
analytical in nature and take calculated risks. Such people are motivated to perform when they
see at least some chances of success.
g) Equity Theory:
People are motivated by their beliefs about the reward structure as being fair or unfair,
relative to the inputs.

LEADERSHIP
Definition
Leadership is defined as influence, the art or process of influencing people so that they will strive
willingly and enthusiastically toward the achievement of group goals.
LEADERSHIP STYLES
The leadership style we will discuss here are:
a) Autocratic style
b) Democratic Style
c) Laissez Faire Style
a) Autocratic style
Manager retains as much power and decision-making authority as possible. The manager does
not consult employees, nor are they allowed to give any input. Employees are expected to obey
orders without receiving any explanations. The motivation environment is produced by creating
a structured set of rewards and punishments.
.b) Democratic Style
Democratic Leadership is the leadership style that promotes the sharing of responsibility, the
exercise of delegation and continual consultation.
The style has the following characteristics:
• Manager seeks consultation on all major issues and decisions.
• Manager effectively delegate tasks to subordinates and give them full control and responsibility
for those tasks.
• Manager welcomes feedback on the results of intiatives and the work environment.
• Manager encourages others to become leaders and be involved in leadership development.
c) Laissez-Faire Style
Leader who leaves his/her colleagues to get on with their work.
The manager doesn‘t understand his or her responsibilities and is hoping the employees can
cover for him or her.
LEADERSHIP THEORIES
The various leadership theories are
a) Great Man Theory:
• Leaders are born and not made.
• Great leaders will arise when there is a great need.
Ex. Jesus, Moses, Mohammed and the Buddah.
b) Trait Theory:
• People are born with inherited traits.
• Some traits are particularly suited to leadership.
• People who make good leaders have the right (or sufficient) combination of traits.
Emotional stability and composure: Calm, confident and predictable, particularly when under
stress.
Admitting error: Owning up to mistakes, rather than putting energy into covering up.
Good interpersonal skills: able to communicate and persuade others without resort to negative
or coercive tactics.
Intellectual breadth: Able to understand a wide range of areas, rather than having a narrow (and
narrow-minded) area of expertise.
c) Behavioral Theory:
• Leaders can be made, rather than are born.
• Successful leadership is based in definable, learnable behavior.
d) Participative Leadership:
• Involvement in decision-making improves the understanding of the issues involved by those
who must carry out the decisions.
• People are more committed to actions where they have involved in the relevant decision
making.
• People are less competitive and more collaborative when they are working on joint goals.
• When people make decisions together, the social commitment to one another is greater and thus
increases their commitment to the decision.
• Several people deciding together make better decisions than one person alone.
e) Situational Leadership:
• The best action of the leader depends on a range of situational factors.
f) Contingency Theory:
Contingency theories are a class of behavioral theory that contends that there is no one
best way of leading and that a leadership style that is effective in some situations may not be
successful in others.
g) Transactional Leadership:
• People are motivated by reward and punishment.
• Social systems work best with a clear chain of command.
• When people have agreed to do a job, a part of the deal is that they cede all authority to
their manager.
• The prime purpose of a subordinate is to do what their manager tells them to do.
Description
The transactional leader works through creating clear structures whereby it is clear what is
required of their subordinates, and the rewards that they get for following orders. Punishments
are not always mentioned, but they are also well-understood and formal systems of discipline
are usually in place.
h)Transformational Leadership:
• People will follow a person who inspires them.
• A person with vision and passion can achieve great things.
• The way to get things done is by injecting enthusiasm and energy.

SATISFACTION
Employee satisfaction (Job satisfaction) is the terminology used to describe whether
employees are happy and contented and fulfilling their desires and needs at work. Factors
contributing to employee satisfaction include treating employees with respect, providing regular
employee recognition, empowering employees, offering above industry-average benefits and
compensation, providing employee perks and company activities, and positive management
within a success framework of goals, measurements, and expectations. Employee satisfaction is
often measured by anonymous employee satisfaction surveys administered periodically that
gauge employee satisfaction in areas such as:
• Management,
• Understanding of mission and vision,
• Empowerment,
• Teamwork,
• Communication, and
• Coworker interaction.
The facets of employee satisfaction measured vary from company to company. A second method
used to measure employee satisfaction is meeting with small groups of employees and asking the
same questions verbally. Depending on the culture of the company, either method can contribute
knowledge about employee satisfaction to managers and employees.
JOB DESIGN
It is the process of Work arrangement (or rearrangement) aimed at reducing or overcoming job
dissatisfaction and employee alienation arising from repetitive and mechanistic tasks. Through
job design, organizations try to raise productivity levels by offering non-monetary rewards such
as greater satisfaction from a sense of personal achievement in meeting the increased challenge
and responsibility of one's work.
Approaches to job design include :
Job Enlargement: Job enlargement changes the jobs to include more different tasks. Its add
interest to the job but it may or may not give employees more responsibility.
Job Rotation: Moves employees from one task to another task. It
Job Enrichment : Employees assume more responsibility, accountability, and independence.
COMMUNICATION
Communication is the exchange of messages between people for the purpose of achieving
common meanings.
DEFINITION
According to Koontz and O'Donnell, "Communication, is an intercourse by words, letters
symbols or messages, and is a way that the organization members shares meaning and
understanding with another".
THE COMMUNICATION PROCESS
Communication is important in building and sustaining human relationships at work.
Communication can be thought of as a process or flow. Before communication can take place, a
purpose, expressed as a message to be conveyed is needed. It passes between the sender and the
receiver. The result is transference of meaning from one person to another. The figure below
depicts the communication process. This model is made up of seven parts:

(1) Source, (2) Encoding, (3) Message, (4) Channel, (5) Decoding, (6) Receiver, and (7)
Feedback.
a) Source:
The source initiates a message. This is the origin of the communication and can be an individual,
group or inanimate object. The effectiveness of a communication depends to a considerable
degree on the characteristics of the source. The person who initiates the communication process
is known as sender, source or communicator. In an organization, the sender will be a person who
has a need or desire to send a message to others. The sender has some information which he
wants to communicate to some other person to achieve some purpose. By initiating the message,
the sender attempts to achieve understanding and change in the behaviour of the receiver.
b) Encoding:
Once the source has decided what message to communicate, the content of the message must be
put in a form the receiver can understand. As the background for encoding information, the
sender uses his or her own frame of reference. It includes the individual's view of the
organization or situation as a function of personal education, interpersonal relationships,
attitudes, knowledge and experience. Three conditions are necessary for successful encoding the
message.
c) The Message:
The message is the actual physical product from the source encoding. The message contains the
thoughts and feelings that the communicator intends to evoke in the receiver. The message has
two primary components:-
d) The Channel:
The actual means by which the message is transmitted to the receiver (Visual, auditory, written
or some combination of these three) is called the channel. The channel is the medium through
which the message travels. The channel is the observable carrier of the message. Communication
in which the sender's voice is used as the channel is called oral communication. When the
channel involves written language, the sender is using written communication. The sender's
choice of a channel conveys additional information beyond that contained in the message itself.
For example, documenting an employee's poor performance in writing conveys that the manager
has taken the problem seriously.

f) Decoding:
 Decoding means interpreting what the message means. The extent to which the decoding
by the receiver depends heavily on the individual characteristics of the sender and receiver. The
greater the similarity in the background or status factors of the communicators, the greater the
probability that a message will be perceived accurately. Most messages can be decoded in more
than one way. Receiving and decoding a message are a type of perception. The decoding process
is therefore subject to the perception biases.
g) The Receiver:
The receiver is the object to whom the message is directed. Receiving the message means one or
more of the receiver's senses register the message - for example, hearing the sound of a supplier's
voice over the telephone or seeing the boss give a thumbs-up signal. Like the sender, the receiver
is subject to many influences that can affect the understanding of the message. Most important,
the receiver will perceive a communication in a manner that is consistent with previous
experiences. Communications that are not consistent with expectations is likely to be
rejected.
h) Feedback:
The final link in the communication process is a feedback loop. Feedback, in effect, is
communication travelling in the opposite direction. If the sender pays attention to the feedback
and interprets it accurately, the feedback can help the sender learn whether the original
communication was decoded accurately. Without feedback, one-way communication occurs
between managers and their employees. Faced with differences in their power, lack of time, and
a desire to save face by not passing on negative information, employees may be discouraged
from providing the necessary feedback to their managers.
Guidelines for effective Communication
(i) Senders of message must clarify in their minds what they want to communicate. Purpose of
the message and making a plan to achieve the intended end must be clarified.
(ii) Encoding and decoding be done with symbols that are familiar to the sender and the receiver
of the message.
(iii) For the planning of the communication, other people should be consulted and encouraged to
participate.
(iv) It is important to consider the needs of the receivers of the information. Whenever
appropriate, one should communicate something that is of value to them, in the short run as well
as in the more distant future.
(v) In communication, tone of voice, the choice of language and the congruency between what is
said and how it is said influence the reactions of the receiver of the message.
(vi) Communication is complete only when the message is understood by the receiver. And one
never knows whether communication is understood unless the sender gets a feedback.
(vii)The function of communication is more than transmitting the information. It also deals with
emotions that are very important in interpersonal relationships between superiors, subordinates
and colleagues in an organization.
(viii) Effective communicating is the responsibility not only of the sender but also of the receiver
of the information.
BARRIERS TO EFFECTIVE COMMUNICATION
a) Filtering:
Filtering refers to a sender manipulating information so it will be seen more favourably by the
receiver. The major determinant of filtering is the number of levels in an organization's structure.
The more vertical levels in the organization's hierarchy, the more opportunities for filtering.
Sometimes the information is filtered by the sender himself. If the sender is hiding some
meaning and disclosing in such a fashion as appealing to the receiver, then he is "filtering" the
message deliberately. A manager in the process of altering communication in his favour is
attempting to filter the information.
b) Selective Perception:
Selective perception means seeing what one wants to see. The receiver, in the communication
process, generally resorts to selective perception i.e., he selectively perceives the message based
on the organizational requirements, the needs and characteristics, background of the employees
etc. Perceptual distortion is one of the distressing barriers to the effective communication.
c) Emotions:
How the receiver feels at the time of receipt of information influences effectively how he
interprets the information. For example, if the receiver feels that the communicator is in a jovial
mood, he interprets that the information being sent by the communicator to be good and
interesting. Extreme emotions and jubilation or depression are quite likely to hinder the
effectiveness of communication.
d) Language:
Communicated message must be understandable to the receiver. Words mean different things to
different people. Language reflects not only the personality of the individual but also the culture
of society in which the individual is living. In organizations, people from different regions,
different backgrounds, and speak different languages. People will have different academic
backgrounds, different intellectual facilities, and hence the jargon they use varies. Often,
communication gap arises because the language the sender is using may be incomprehensible,
vague and indigestible. Language is a central element in communication.
e) Stereotyping:
Stereotyping is the application of selective perception. When we have preconceived ideas about
other people and refuse to discriminate between individual behaviours, we are applying selective
perception to our relationship with other people. Stereotyping is a barrier to communications
because those who stereotype others use selective perception in their communication and tend to
hear only those things that confirm their stereotyped images.
f) Status Difference:
The organizational hierarchy poses another barrier to communication within organization,
especially when the communication is between employee and manager. This is so because the
employee is dependent on the manager as the primary link to the organization and hence more
likely to distort upward communication than either horizontal or downward communication.
Effective supervisory skills make the supervisor more approachable and help reduce the risk of
problems related to status differences. In addition, when employees feel secure, they are more
likely to be straightforward in upward communication.
g) Use of Conflicting Signals:
A sender is using conflicting signals when he or she sends inconsistent messages. A vertical
message might conflict with a nonverbal one. For example, if a manager says to his employees,
"If you have a problem, just come to me. My door is always open", but he looks annoyed
whenever an employee knocks on his door". Then we say the manager is sending conflicting
messages. When signals conflict, the receivers of the message have to decide which, if any, to
believe.
h) Reluctance to Communicate:
For a variety of reasons, managers are sometimes reluctant to transmit messages. The reasons
could be:-
• They may doubt their ability to do so.
• They may dislike or be weary of writing or talking to others.
• They may hesitate to deliver bad news because they do not want to face a negative reaction.
When someone gives in to these feelings, they become a barrier to effective communications.
i) Projection:
Projection has two meanings.
(a) Projecting one's own motives into others behavior. For example, managers who are motivated
by money may assume their subordinates are also motivated by it. If the subordinate's prime
motive is something other than money, serious problems may arise.
(b) The use of defense mechanism to avoid placing blame on oneself. As a defense mechanism,
the projection phenomenon operates to protect the ego from unpleasant communications.
Frequently, individuals who have a particular fault will see the same fault in others, making their
own fault seem not so serious.
j) The "Halo Effect":
The term "halo effect" refers to the process of forming opinions based on one element from a
group of elements and generalizing that perception to all other elements. For example, in an
organization, a good attendance record may cause positive judgments about productivity,
attitude, or quality of work. In performance evaluation system, the halo effect refers to the
practice of singling out one trait of an employee (either good or bad) and using this as a basis for
judgments of the total employee.
CHANNELS OF COMMUNICATION
a) Formal Communication
Formal communication follows the route formally laid down in the organization structure. There
are three directions in which communications flow: downward, upward and laterally
(horizontal).
i) Downward Communication
Downward communication involves a message travelling to one or more receivers at the lower
level in the hierarchy. The message frequently involves directions or performance feedback. ii)
Upward Communication
In upward communication, the message is directed toward a higher level in the hierarchy. It is
often takes the form of progress reports or information about successes and failures of the
individuals or work groups reporting to the receiver of the message. Sometimes employees also
send suggestions or complaints upward through the organization's hierarchy. The upward flow of
communication involves two distinct manager-subordinate activities in addition to feedback:
iii) Horizontal Communication
When takes place among members of the same work group, among members of work groups at
the same level, among managers at the same level or among any horizontally equivalent. The
messages might concern advice, problem solving, or coordination of activities.
b) Informal Communication or Grapevine
Informal communication, generally associated with interpersonal communication, was
primarily seen as a potential hindrance to effective organizational performance. This is no longer
the case. Informal communication has become more important to ensuring the effective conduct
of work in modern organizations.
Probably the most common term used for the informal communication in the workplace is
―grapevine‖ and this communication that is sent through the organizational grapevine is often
considered gossip or rumor. While grapevine communication can spread information quickly and
can easily cross established organizational boundaries, the information it carries can be changed
through the deletion or exaggeration crucial details thus causing the information inaccurate –
even if it‘s based on truth.The use of the organizational grapevine as an informal communication
channel often results when employees feel threatened, vulnerable, or when the organization is
experiencing change and when communication from management is restricted and not
forthcoming.
 UNIT V
CONTROL PROCESS
The basic control process involves mainly these steps as shown in Figure

a) The Establishment of Standards:

Plans can be considered as the criterion or the standards against which we compare the actual
performance in order to figure out the deviations.
Examples for the standards
• Profitability standards: In general, these standards indicate how much the company would like
to make as profit over a given time period- that is, its return on investment.
• Market position standards: These standards indicate the share of total sales in a particular
market that the company would like to have relative to its competitors.
• Productivity standards: How much that various segments of the organization should produce is
the focus of these standards.
• Product leadership standards: These indicate what must be done to attain such a position.
• Employee attitude standards: These standards indicate what types of attitudes the company
managers should strive to indicate in the company‘s employees.
• Social responsibility standards: Such as making contribution to the society.
• Standards reflecting the relative balance between short and long range goals.
b) Measurement of Performance:
The measurement of performance against standards should be on a forward looking basis so that
deviations may be detected in advance by appropriate actions. The degree of difficulty in
measuring various types of organizational performance, of course, is determined primarily by the
activity being measured. For example, it is far more difficult to measure the performance of
highway maintenance worker than to measure the performance of a student enrolled in a college
level management course.
c) Comparing Measured Performance to Stated Standards:
When managers have taken a measure of organizational performance, their next step in
controlling is to compare this measure against some standard. A standard is the level of activity
established to serve as a model for evaluating organizational performance. The performance
evaluated can be for the organization as a whole or for some individuals working within the
organization. In essence, standards are the yardsticks that determine whether organizational
performance is adequate or inadequate.
d) Taking Corrective Actions:
After actual performance has been measured compared with established performance standards,
the next step in the controlling process is to take corrective action, if necessary. Corrective action
is managerial activity aimed at bringing organizational performance up to the level of
performance standards. In other words, corrective action focuses on correcting organizational
mistakes that hinder organizational performance.

TYPES OF CONTROL SYSTEMS

a) Feed forward controls: They are preventive controls that try to anticipate problems and take
corrective action before they occur. Example – a team leader checks the quality, completeness
and reliability of their tools prior to going to the site.
b) Concurrent controls: They (sometimes called screening controls) occur while an activity is
taking place. Example – the team leader checks the quality or performance of his members while
performing.
c) Feedback controls: They measure activities that have already been completed. Thus
corrections can take place after performance is over. Example – feedback from facilities
engineers regarding the completed job.
BUDGETARY CONTROL
Definition: Budgetary Control is defined as "the establishment of budgets, relating the
responsibilities of executives to the requirements of a policy, and the continuous comparison of
actual with budgeted results either to secure by individual action the objective of that policy or to
provide a base for its revision.
CLASSIFICATION OF BUDGETS
Budgets may be classified on the following bases –
a) BASED ON TIME PERIOD:
(i) Long Term Budget
Budgets which are prepared for periods longer than a year are called Long Term Budgets. Such
Budgets are helpful in business forecasting and forward planning.
Eg: Capital Expenditure Budget and R&D Budget.
(ii) Short Term Budget
Budgets which are prepared for periods less than a year are known as Short Term Budgets. Such
Budgets are prepared in cases where a specific action has to be immediately taken to bring any
variation under control.
Eg: Cash Budget.
b) BASED ON CONDITION:
(i) Basic Budget
A Budget, which remains unaltered over a long period of time, is called Basic Budget.
(ii) Current Budget
A Budget, which is established for use over a short period of time and is related to the current
conditions, is called Current Budget.
c) BASED ON CAPACITY:
(i) Fixed Budget
It is a Budget designed to remain unchanged irrespective of the level of activity actually attained.
It operates on one level of activity and less than one set of conditions. It assumes that there will
be no change in the prevailing conditions, which is unrealistic.
(ii) Flexible Budget
It is a Budget, which by recognizing the difference between fixed, semi variable and variable
costs is designed to change in relation to level of activity attained. It consists of various budgets
for different levels of activity
d) BASED ON COVERAGE:
(i) Functional Budget
Budgets, which relate to the individual functions in an organization, are known as Functional
Budgets, e.g. purchase Budget, Sales Budget, Production Budget, plant Utilization Budget and
Cash Budget.
(ii) Master Budget
It is a consolidated summary of the various functional budgets. It serves as the basis upon which
budgeted Profit & Loss Account and forecasted Balance Sheet are built up.
NON-BUDGETARY CONTROL TECHNIQUES
There are, of course, many traditional control devices not connected with budgets, although some
may be related to, and used with, budgetary controls. Among the most important of these are:
statistical data, special reports and analysis, analysis of break- even points, the operational audit,
and the personal observation.
i) Statistical data:
Statistical analyses of innumerable aspects of a business operation and the clear presentation of
statistical data, whether of a historical or forecast nature are, of course, important to control.
Some managers can readily interpret tabular statistical data, but most managers prefer
presentation of the data on charts.
ii) Break- even point analysis:
An interesting control device is the break even chart. This chart depicts the relationship of sales
and expenses in such a way as to show at what volume revenues exactly cover expenses.
iii) Operational audit:
Another effective tool of managerial control is the internal audit or, as it is now coming to be
called, the operational audit. Operational auditing, in its broadest sense, is the regular and
independent appraisal, by a staff of internal auditors, of the accounting, financial, and other
operations of a business.
iv) Personal observation:
In any preoccupation with the devices of managerial control, one should never overlook the
importance of control through personal observation.
v) PERT:
The Program (or Project) Evaluation and Review Technique, commonly abbreviated PERT, is a
is a method to analyze the involved tasks in completing a given project, especially the time
needed to complete each task, and identifying the minimum time needed to complete the total
project.
vi) GANTT CHART:
A Gantt chart is a type of bar chart that illustrates a project schedule. Gantt charts illustrate the
start and finish dates of the terminal elements and summary elements of a project. Terminal
elements and summary elements comprise the work breakdown structure of the project. Some
Gantt charts also show the dependency (i.e., precedence network) relationships between
activities.

PRODUCTIVITY
Productivity refers to the ratio between the output from production processes to its input.
Typical Productivity Calculations
Measures of size and resources may be combined in many different ways. The three common
approaches to defining productivity based on the model of Figure 2 are referred to as physical,
functional, and economic productivity. Regardless of the approach selected, adjustments may be
needed for the factors of diseconomy of scale, reuse, requirements churn, and quality at delivery.
a) Physical Productivity
This is a ratio of the amount of product to the resources consumed (usually effort). Product may
be measured in lines of code, classes, screens, or any other unit of product. Typically, effort is
measured in terms of staff hours, days, or months. The physical size also may be used to estimate
software performance factors (e.g., memory utilization as a function of lines of code).
b) Functional Productivity
This is a ratio of the amount of the functionality delivered to the resources consumed (usually
effort). Functionality may be measured in terms of use cases, requirements, features, or function
points (as appropriate to the nature of the software and the development method). Typically,
effort is measured in terms of staff hours, days, or months. Traditional measures of Function
Points work best with information processing systems. The effort involved in embedded and
scientific software is likely to be underestimated with these measures, although several variations
of Function Points have been developed that attempt to deal with this issue.
c) Economic Productivity
This is a ratio of the value of the product produced to the cost of the resources used to produce it.
Economic productivity helps to evaluate the economic efficiency of an organization. Economic
productivity usually is not used to predict project cost because the outcome can be affected by
many factors outside the control of the project, such as sales volume, inflation, interest rates, and
substitutions in resources or materials, as well as all the other factors that affect physical and
functional measures of productivity. However, understanding economic productivity is essential
to making good decisions about outsourcing and subcontracting. The basic calculation of
economic productivity is as follows:
Economic Productivity = Value/Cost
PROBLEMS IN MEASUREMENT OF PRODUCTIVITY OF KNOWLEDGE
WORKERS
Productivity implies measurement, which in turn, is an essential step in the control process.
Although there is a general agreement about the need for improving productivity, there is little
consensus about the fundamental causes of the problem and what to do about them. The blame
has been assigned to various factors. Some people place it on the greater proportion of less
skilled workers with respect to the total labor force, but others disagree. There are those who see
cutback in research and the emphasis on immediate results as the main culprit. Another reason
given for the productivity dilemma is the growing affluence of people, which makes them less
ambitious. Still others cite the breakdown in family structure, the workers‘attitudes, and
government policies and regulations. Another problem is that the measurement of skills work is
relatively easy, but it becomes more difficult for knowledge work. The difference between the
two kinds is the relative use of knowledge and skills.
COST CONTROL
Cost control is the measure taken by management to assure that the cost objectives set down in
the planning stage are attained and to assure that all segments of the organization function in a
manner consistent with its policies.
Steps involved in designing process of cost control system:
• Establishing norms: To exercise cost control it is essential to establish norms, targets or
parameters which may serve as yardsticks to achieve the ultimate objective. These standards,
norms or targets may be set on the basis of research, study or past actual.
• Appraisal: The actual results are compared with the set norms to ascertain the degree of
utilization of men, machines and materials. The deviations are analyzed so as to arrive at the
causes which are controllable and uncontrollable.
• Corrective measures: The variances are reviewed and remedial measures or revision of
targets, norms, standards etc., as required are taken.
Advantages of cost control
• Better utilization of resources
• To prepare for meeting a future competitive position.
• Reasonable price for the customers
• Firm standing in domestic and export markets.
• Improved methods of production and use of latest manufacturing techniques which have the
effect of rising productivity and minimizing cost.
• By a continuous search for improvement creates proper climate for the increase efficiency.
• Improves the image of company for long-term benefits.
• Improve the rate of return on investment.

PURCHASE CONTROL
Purchase control is an element of material control. Material procurement is known as the
purchase function. The functional responsibility of purchasing is that of the purchase manager or
the purchaser. Purchasing is an important function of materials management because in purchase
of materials, a substantial portion of the company's finance is committed which affects cash flow
position of the company. Success of a business is to a large extent influenced by the efficiency of
its purchase organization. The advantages derived from a good and adequate system of the
purchase control are as follows:
a) Continuous availability of materials: It ensures the continuous flow of materials. So
production work may not be held up for want of materials. A manufacturer can complete
schedule of production in time.
b) Purchasing of right quantity: Purchase of right quantity of materials avoids locking up of
working capital. It minimizes risk of surplus and obsolete stores. It means there should not be
possibility of overstocking and under stocking.
c) Purchasing of right quality: Purchase of materials of proper quality and specification avoids
waste of materials and loss in production. Effective purchase control prevents wastes and losses
of materials right from the purchase till their consumptions. It enables the management to reduce
cost of production.
d) Economy in purchasing: The purchasing of materials is a highly specialized function. By
purchasing materials at reasonable prices, the efficient purchaser is able to make a valuable
contribution to the success of a business.
e) Works as information centre: It serves as a function centre on the materials knowledge
relating to prices, sources of supply, specifications, mode of delivery, etc. By providing
continuous information to the management it is possible to prepare planning for production.
f) Development of business relationship: Purchasing of materials from the best market and
from reliable suppliers develops business relationships. The result is that there may be smooth
supply of materials in time and so it avoids disputes and financial losses.
g) Finding of alternative source of supply: If a particular supplier fails to supply the materials
in time, it is possible to develop alternate sources of supply. the effect of this is that the
production work is not disturbed.
h) Fixing responsibilities: Effective purchase control fix the responsibilities of operating units
and individuals connected with the purchase, storage and handling of materials. In short, the
basic objective of the effective purchase control is to ensure continuity of supply of requisite
quantity of material, to avoid held up of production and loss in production and at the same time
reduces the ultimate cost of the finished products.
MAINTENANCE CONTROL
Maintenance department has to excercise effective cost control, to carry out the maintenance
functions in a pre-specified budget, which is possible only through the following measures:
First line supervisors must be apprised of the cost information of the various materials so that the
objective of the management can be met without extra expenditure on maintenance functions. A
monthly review of the budget provisions and expenditures actually incurred in respect of each
center/shop will provide guidelines to the departmental head to exercise better cost control. The
total expenditure to be incurred can be uniformly spread over the year for better budgetary
control. However, the same may not be true in all cases particularly where overhauling of
equipment has to be carried out due to unforseen breakdowns. some budgetary provisions must
be set aside, to meet out unforeseen exigencies.
The controllable elements of cost such as manpower cost and material cost can be discussed with
the concerned personnel, which may help in reducing the total cost of maintenance. Emphasis
should be given to reduce the overhead expenditures, as other expenditures cannot be
compromised.
It is observed through studies that the manpower cost is normally fixed, but the same way
increase due to overtime cost. however, the material cost, which is the prime factor in
maintenance cost, can be reduced by timely inspections designed, to detect failures. If the
inspection is carried out as per schedule, the total failure of parts may be avoided, which
otherwise would increase the maintenance cost. the proper handling of the equipment by the
operators also reduces the frequency of repair and material requirements. Operators, who check
their equipment regularly and use it within the operating limits, can help avoid many unwanted
repairs. In the same way a good record of equipment failures/ maintenance would indicate the
nature of failures, which can then be corrected even permanently.
QUALITY CONTROL
Quality control refers to the technical process that gathers, examines, analyze & report the
progress of the project & conformance with the performance requirements
The steps involved in quality control process are
1) Determine what parameter is to be controlled.
2) Establish its criticality and whether you need to control before, during or after results are
produced.
3) Establish a specification for the parameter to be controlled which provides limits of
acceptability and units of measure.
4) Produce plans for control which specify the means by which the characteristics will be
achieved and variation detected and removed.
5) Organize resources to implement the plans for quality control.
6) Install a sensor at an appropriate point in the process to sense variance from specification.
7) Collect and transmit data to a place for analysis.
8) Verify the results and diagnose the cause of variance.
9) Propose remedies and decide on the action needed to restore the status quo.
10) Take the agreed action and check that the variance has been corrected.
Advantages and disadvantages
Ø Advantages include better products and services ultimately establishing a good reputation for a
company and higher revenue from having more satisfied customers.
Ø Disadvantages include needing more man power/operations to maintain quality control and
adding more time to the initial process.