DBA 102: PRINCIPLES OF MANAGEMENT

SESSION 1: INTORODUCTION TO MANAGEMENT

Definition:
Management is the process of achieving organization goals through co-coordinated
performance of five specific functions: planning, organization, staffing, directing and
controlling.

The fundamental features of management are: -

(i) Management is universal – principals of management can be applied universally.
(ii) Management applies to all levels of organization
(iii) Management is purposeful – it aims to achieve a specific objective
(iv) Management is concerned with productivity – this implies effectiveness and
efficiency
(v) Management is an integrative process; the essence of management lies in the co-
ordination of individual effort into a team.
(vi) As managers, people carry out the managerial process of planning, organizing,
staffing, directing and controlling
(vii) Management involves the allocation and control of resources, human, money and
other physical resources.
(viii) Management is a social process – management is done by people, through people and
for people
(ix) Management is multi-disciplinary – it depends upon wide knowledge derived from
several disciplines
(x) Management is a continuous process – it is dynamic and an ongoing process.
Management is an art as well as a science.

Objectives of management
 Organizational objectives include:

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 1. Reasonable profits so as to give a fair return on the capital invested in the
business.
2. Survival and solvency of the business; continuity
3. Growth and expansion of the enterprise.
4. Improving the goodwill or reputation of the business.
 Personal objectives: an organization consists of several persons who have their own
objectives. These objectives are as follows:
1. Fair remuneration for work performed.
2. Reasonable working conditions
3. Opportunities for training and development
4. Participation in management and prosperity of the enterprise
5. Reasonable security of service.
 Social objectives: management is also expected to be responsible to various groups
outside the organization. It is expected to fulfil the objectives of society which include:
1. Quality of goods and services at fair prices to consumers
2. Honest and prompt payment of taxes to the government
3. Conservation of the environment and natural resources
4. Fair dealings with suppliers, dealers and competitors.
5. Preservation of ethical values of the society.

Importance of management
 Achievement of group goals.
 Optimum utilization of resources.
 Minimization of costs.
 Survival and growth.
 Generation of employment.
 Development of the nation.

Management a science or an art

As an art
Management is essentially an art because: -

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  The process of management involves the use of know how – knowledge and skill
 Management seeks to achieve concrete practical results – profit and growth
 Management involves creativity. It involves moulding and welding the attitudes and
behaviour of people at work
 Management as any other art is a personalized process – each manager has his own style
 Good management is efficient and the success of a manager is measured by the effective
realization of organizational goals.

As a science
Management is a science because:
 There is a systematized body of knowledge in management. Principles are available
which help guide management
 The principles of management have been developed through continuous observation and
empirical verification
 The principles of management are capable of universal application.
 Management theory helps to examine and evaluate alternative courses of action to resolve
a given problem.

Overview of the management process

Planning this the process by which the organization determines what is to be done. It involves
the following processes:
 Forecasting-analyzing known information within and external to the organization in order
to predict future conditions;
 Goal setting-determining, in light of forecasts and other imperatives, of what the
organization wishes to achieve in the relevant time span;
 Decision making-making choices between different goals and courses of action,
including the identification and resolution of problems, conflicts and priorities

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One of the key to this process is an understanding of where the organization is coming from and
what the future may be like.
Organizing is the management process which arranges for work to be done.
 It is concerned with the allocation of resources-both staff and others-and their
arrangements into working units and relationships, such that the agreed plans may be
carried out and achieved.
 It involves both the division of work into logical tasks and its allocation to staff and the
structural arrangement of staff into groups and organizational relationships.
Staffing is concerned with the acquisition, development, and maintenance of an efficient and
satisfied workforce in the organization. It involves

 recruitment,
 training,
 development and appraisal of the workforce
Directing arises out of organizing, being about ensuring that employees are appropriately
engaged in working on activities to meet goals and plans. This involves motivating and
supervising staff towards the concerted efforts needed for effective performance.
Controlling is the process of monitoring and regulating performance to ensure that it conforms to
plans and goals of the organization. Controls starts from the time plans are put into actions. It
involves continues monitoring and review of the way in which goals are being met through
performance of the designated activities.
Control also involves the taking of appropriate corrective action to ensure that what is actually
happening is in accordance with the expectations of the planning process.

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 THE HISTORY OF MANAGEMENT

Ancient origins of management

The art of management is as old as human civilization. Instances of the application of

management principles are found in ancient civilizations like Athenian commonwealth of

Greece, the Roman Empire, the states of Egypt and China e.t.c. the pyramids of Egypt, the

architectures, the iron pillars of ancient Greece, the greatwall of China are all

manifestations of the administrative skill of those times. The bible contains references to

effective public administration. In the holy bible, Moses of Israel is advised by the father

in-law to follow the principles of span of control. Socrates’ definition of management as a

skill se

parate from technical knowledge and experience is remarkably close to current

understanding of management.

In antiquity, management developed largely in the Roman Catholic Church, government and

military organizations. The hierarchy of authority, functional specialization, staff

specialists and so on, were employed successfully in the Roman Catholic Church. Many

management principles including scalar principles, unity of command, effective

communication had their origin in the administration of armies. A group of Austrian and

German public administrators known as Cameralists advocated the principles of functional

specialization, careful selection and training of administrators, simplifications of

administrative procedures etc. for effective administration of the state.

The techniques of management, like the art of administration and the science of

organization, has ancient roots and medieval branches

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Management theories
The systematic development of management thinking is viewed as dating from the end of

the 19th century with the emergence of large industrial organizations, and the ensuing

problems associated with their structure and management. A central part of the study of

management is the development of the management thinking and what might be termed as

management theory. The application of theory brings about change in actual behaviour.

The following are the main approaches to organization, structure and management

 Early classical Approaches - emphasis is on the purpose, formal structure,

hierarchy of management, technical requirements and common principles of

organization, represented by scientific management, administrative management,

and bureaucracy.

 Neo –classical approaches represented by human relations movement and

behavioural approach. Attention is given to social factors at work, groups,

leadership, the informal organization and the behaviour of people.

 Modern approaches, represented by quantitative approach, systems approach and

contingency approach.

The study of management theory is important for the following reasons:

 They form an important part of the accumulated body of management knowledge;

 Management insight requires that you combine a conceptual framework of ideas

with an understanding of behaviour in organisations and its application in practice;

 Early ideas form the foundations of current understanding, out of which current

thinking has evolved;

 Management is the process of realising organisational goals through the efforts of

people and through planning, organising, directing and controlling such efforts. To

be effective in practice, this requires the manager to have an appreciation of early

ideas and why they were either displaced or evolved;

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  It ensures that the manager does not have to re-invent the wheel;

 Practical management of people and their behaviour is founded on ideas of what will

work in practice;

 Management thought has evolved to cope with changes in the manager's

environment.

In order to help identify main trends in the development of organizational behaviour and

management theory, it is used to categories the work of writers and various approaches,

based on their views of organizations, structure and management

Implies capacity to apply accurately the knowledge to solve the problems

The following analysis will revolve around a framework based on three main approaches.

EARLY CLASSICAL APPROACHES

Scientific management
Fredrick w. Taylor (1856-1915) is considered the father of scientific management. He

exerted a great influence on the development of management thought through his

experiments and writings. Taylor made several important contributions which are

classified under scientific management

What to do to improve productivity?

1. Scientifically study each part of a task and develop the best method for

performing the task.

2. Select competent people to perform the defined task.

3. Train them to perform the task by using the scientifically developed method

4. Stimulate good behaviour with motivation-related strategies (mostly financial)

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 5. Cooperate fully with workers to ensure task execution

6. Divide work and responsibility so that management will be responsible for planning

work methods and workers are responsible for executing the work accordingly.

Contributions of Scientific Management

 Work units with clear purpose and direction

 Work organization and scheduling

 Higher competency

 Financial reward system to motivate workers

 Work coordination

Limitations of scientific management

 It offered a one-dimensional approach to motivation which ignored job satisfaction;

 It tended to generate fears of mass redundancies, strikes and long-lasting

resentment;

 It promoted resistance to change;

 Worker suspicions of work measurement and time and motion studies arose due to

one-sided applications – working harder for the same money!

 Power was concentrated in the hands of the production controllers and decision

power was removed from workers, thereby losing their potential contribution;

 Rationalisation, division of labour and specialisation led to de-skilling;

 Specialisation led to boredom and monotony and ignored individuality and the desire

for variety.

Bureaucracy

Max Weber, a Germany sociologist, made a study of different types of business and

government organizations and distinguished 3 basic types of administration in them:

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  Leader oriented administration is one which there is no delegation of management

functions. All employees serve as loyal subjects of a leader.

 In tradition-oriented administration managerial positions are handed down from

generation to generation. Who you are rather than what you can do, becomes the

primary criterion for work assignment

 In bureaucratic administration delegation of management responsibility is based on

a person’s demonstrated ability to hold the position. People earn positions because

they are presumed to be the best capable of filling them. Weber considered this

to be the most ideal type of administration.

Establish a bureaucratic management: why?

Need for the organization to operate in a rational manner rather than relying on the

arbitrary whims and sectional interests of the owners and managers

Features of Bureaucracy
 Specialisation of labour: jobs are broken down into routine, well defined tasks so

that members know what is expected of them and can become extremely competent

at what they do.

 Formal rules and procedures: written rules and procedures specify the behaviours

desired from members, facilitate coordination and ensure uniformity.

 Impersonality: rules, procedures, and sanctions are applied uniformly regardless of

individual personalities and personal considerations.

 Well defined hierarchy: multiple levels of positions with carefully determined

reporting relationships among levels provide supervision of lower offices by higher

ones, a means of handling exceptions and the ability to establish accountability of

actions.

 Career advancement based on merit: selection and promotion are based on the

qualification and performance of members.

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Contributions of Bureaucracy
 The definition of responsibilities and duties of each position within the hierarchy

derives from the overall objectives of the organisation and there is no room for

subversion of those objectives.

 Work is highly regulated in that every eventuality is covered by the laid-down rules

and procedures

 All tasks are covered by the hierarchy of supervision which ensures the desired

level of performance.

 The existence of tight job descriptions and person specifications means that staff

has specific skills and abilities related directly to the tasks to be performed.

 The bureaucratic form strongly supports the application of rules and regulations

which create a feeling of certainty that provides a stress free workplace.

 Security of employment and the impersonality of the work practices and

procedures encourage faithful performance of duties, confidence in the system and

opportunities within a regularized promotion system which removes office

competition.

Limitation of Bureaucracy
a) Impersonality can ensure a common level of treatment and lack of responsiveness to

individual incidents.

b) Relationships are inhibited, meaning that social and ego needs are unsatisfied.

c) Individual circumstances vary infinitely and trying to apply rigid rules can mean

inefficiency, even injustice, in the non-standard case.

d) Initiative may be stifled as rules become ends in themselves.

e) Bureaucratic rules/procedures can cause a lack of flexibility or adaptation to

changing circumstances.

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 f) There can be a lack of attention to the informal organisation and the development

of groups and their goals.

g) Handling problems in a standard fashion instead of using their own initiative does

not satisfy most workers' needs.

h) Environments are becoming more dynamic and prone to change there is therefore

need for a dynamic organisation and relationships in a changing environment.

Administrative School (Management)

Henry Fayol was an early 20th century mining engineer who developed an interest in

management principles. He realised the importance of structure and argued that every

organization needs to be planned, organized and controlled. Fayols notion of the ideal

structure for all organizations rested on the following principle:

1. Divisions of Labour:

2. Authority and responsibility: The holder of an office should have enough authority

to carry out his mandate.

3. Discipline: People in companies must respect the rules and regulations that govern

the company.

4. Unity of command: Each subordinate should report to one superior

5. Subordination of individuals to a common goals Interest of individuals should not be

placed before the goals of the overall company.

6. Remuneration (Compensation). Compensation should be fair to the employees

7. Centralization: Power and authority should be concentrated at upper levels of the

company as much as possible

8. Scalar Chain: A chain of authority should extend from top to the bottom of the

company and should be followed at all times

9. Order: Resources should be well co-coordinated such that they are at the at the

required place at the required time

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 10. Equity: Managers should be kind and fair when dealing with subordinates. Equal

treatment for all.

11. Stability of tenure of personnel high turnover of employees should be avoided or

limited

12. Initiative: subordinates should have the freedom to make their own decisions

13. Unity of direction: similar activities in a company should be grouped under one

manager i.e. all activities should have the same objective

14. Team work: Esprit de corps: Team spirit and sign of unity and togetherness should

be maintained at all times

Fayol also developed a functional view of the management process. He singled out five (5)

basic functions that a manager needs to perform.

 Planning

 Organization

 Commanding Employers

 Coordinating

 controlling responses

Contributions of Administrative Management

 There is a strong element of common sense in the ideas put forward, and many are

recognized by practising managers.

 There is emphasis on the importance of objectives in the overall performance of

the organization.

 Focus was put on how the structure of the organization and how it affects its

performance.

 Management education was recognized as being important in the running of an

organization.

 There was recognition that organizations were open systems and therefore were

affected by the environment around them.

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Limitations of the Administration Management

 The approaches are now seen as being too mechanistic and rigid, as there is demand

for a more flexible approach to management and organisation.

 This approach ignores the existence of the informal organization.

 All important decisions rest with management, with very little consultation with the

staff.

 His principle of specialisation produces the following dysfunctional consequences;

a) It leads to the formation of small work groups with norms and goals at odds

with those of management.

b) It results in the dissatisfaction of workers because it does not provide them

the opportunity to use all their abilities.

c) It results in an increase in the overhead costs because the more the

specialisation develops at one level, the greater becomes the need for

coordination at a high level.

Neo-classical approaches
These approaches are called neo-classic because they do not reject the classical concepts

but only try to refine and improve them.

Human Relations Theory of Management

A series of experiments in the 1920s and early 1930s pointed the way to new approaches

to the problems of productivity. These studies were conducted at the Hawthorne plant of

western electrical company in Chicago by Elton Mayo who was an associate professor at

the Harvard graduate school of business management.

 The background was that the researchers were trying to find the optimum level of

lighting in the plant to maximize productivity.

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  The surprising finding was that the productivity increased among the group of

workers being studied both when levels of illumination was increased and when it

was decreased.

 Subsequent studies by Mayo led to the conclusion that what was affecting

performance was the special attention being paid to the group of workers rather

than any external physical factors. Their working lives had suddenly become more

interesting because of the experiments which were taking place, they felt

important and valued, and the result was increased enthusiasm for their jobs and a

higher output. This phenomenon has become to known as the “Hawthorne effect”

Having established from this that performance was related to psychological and

sociological factors as well as purely physical ones and the organizational structure, Mayo

went on to investigate what other forces were at play in the work place.

In summary, his findings were as follows:

 Workers are strongly motivated by social needs (for social interaction, self esteem

and recognition, a sense of belonging and security) and seek satisfaction of those

needs over and above any others, including the need for money once a certain level

of remuneration has been achieved.

 Individual workers belong to groups at the workplace which lay down their own

codes of behaviour, leaders and means of enforcement of the group norms

constituting a whole “informal” organization within the formal one.

Contributions of Human Relations Movement

 It recognized the importance of human factors like feelings and needs

 It brought out the importance of group dynamics in communication, motivation,

participation and leadership.

 The importance of organizational members as active resources rather than passive

tools was recognized.

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  A business organization is not merely a techno-economic system but is also a social

system.

 There is no correlation between improved working conditions and high production.

 A worker’s production norm is set and enforced by his group and not by the time

and motion study done by any industrial engineer.

 A worker does not work for money only. Non-financial rewards such as affection

and respect of his co-workers also significantly affect his behaviour.

 Employee-centred, democratic and participative style of supervisory leadership is

more effective than the task-centred leadership.

 The informal group and not the individual is the dominant unit of analysis in

organizations.

Limitations
 The human relations writers saw only the human variables as critical and ignored

other variables.

 The implicit belief of this approach that an organization can be turned into one big

happy family where it is always possible to find a solution which satisfies everybody

is not correct.

 This approach over-emphasises the importance of symbolic rewards and underplays

the role of material rewards.

 This approach provides an unrealistic picture about informal groups by describing

them as a major source of satisfaction for industrial workers.

 This approach is in fact production-oriented and not employee-oriented as it claims

to be.

 The leisurely approach of decision-making of this approach cannot work during an

emergency.

 The approach makes an unrealistic assumption that the superior does not want

power.

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  This approach is based on a wrong assumption that satisfied workers are more

productive workers.

Behavioural approach
The major contributors to this approach to management include:

Abraham Maslow

Under this approach productivity is a function of competency and motivation. Action is

triggered by the level of satisfaction to human to human needs. In his theory of

motivation, he argues that human beings have needs that are never completely satisfied.

Human action is aimed at fulfilling some needs that are unsatisfied at a give point in time.

Needs fit into somewhat predictable hierachy from lower level basic needs to higher level

needs.

Not everybody has the same needs. One should survey the workforce and determine the

needs for each catergory of personnel. Senior level personnel tend to display highest level

needs(belonging, esteem, and self actualization) more than lower level personnel

(physiological and safety needs generally satisfied through monetary means). Once a need

is sastified it stops being a motivator.

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Frederick Herzberg developed his two-factor theory of motivation by looking at various

job factors and how they relate to needs. From this research, Herzberg divided the

factors at the workplace into two categories:

(a) Motivators

These are factors which, when present to a marked degree, increase satisfaction from

work and provide motivation towards superior effort and performance. These are:

 recognition (for work done)

 responsibility

 achievement

 advancement

 the work itself

These factors reflect the higher level needs identified by Maslow, and their satisfaction

leads directly to contentment. However, when absent, these factors do not lead to

dissatisfaction. Note that they are all directly related to the job.

(b) Hygiene factors

These are factors which, to the degree that they are absent, increase worker

dissatisfaction with jobs. When present, they serve to prevent job dissatisfaction, but do

not result in positive satisfaction and motivation. These factors are:

 type of supervision

 interpersonal relations

 salary/wages

 working conditions

 Company policies, rules, etc.

From the list you can see that these factors relate to more basic needs. If not satisfied,

they can lead to unhappiness. However, their satisfaction does not, in itself, result in

contentment. Note that all the factors are related to the context of the job (for example,

its environment) rather than the job itself.

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Contributions

 Herzberg's most important contribution his assertion that work itself is a potential

motivator. He showed that the elements which give most job satisfaction have little

to do with money or status, and far more to do with achievement and responsibility

within the job.

 The importance of this in a work environment is that managers should ensure that

both hygiene factors (pay, working conditions, etc) and motivating factors (need

for personal fulfilment) are satisfied if employees are to be both contented and

motivated.

Limitations

 In criticism it must be pointed out that the theory does not apply as well to

unskilled or semiskilled workers with boring and repetitive jobs. For many of these,

even though the work is often very well paid, it is instrumental and a means to an

end – to satisfy outside interests. Where there is minimal satisfaction in the work

and little scope for advancement or personal growth, it makes sense to focus on the

pay.

McGregor argued that the style of management adopted is a function of the manager’s

activities towards human nature and behaviour at work. He put forward two suppositions

called theory X and Theory Y.

Theory X represents the carrot and stick assumptions on which traditional organization

are based. It assumptions are that.

1. The average person is lazy and has an inherent dislike of work

2. Most people must be forced, controlled, directed and threatened with punishment

if the organization is to achieve its objectives.

3. The average person avoids responsibility, prefers to be directed, lacks ambition and

values security most of all.

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4. Motivation occurs only at the physiological and security levels. The central principal

of theory X is direction and control through a centralized system of organization

and exercise of authority.

Theory Y represents the assumptions that:

1. For most people work is as natural as play or rest.

2. People will exercise self direction and self control in the service of objectives to

which they are committed.

3. Commitment to objectives is a foundation of rewards associated with their

achievement.

4. Given the right conditions the average worker can learn to accept and to seek

responsibility.

5. The capacity for creativity in solving organizational problems is distributed widely

in the population.

6. The intellectual potential of the average person is only partially utilized.

7. Motivation occurs at the affiliation, esteem and self actualization levels as well as

the psychological and security levels.

The central principal of Theory Y is the integration of individual and organizational

goals.

The Neo-human relations approach has generated a lot of writing and research which

has led to continuing attention being given to such matters as organization structuring,

group dynamics, job satisfaction, communication and participation, leadership styles

and motivation.

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 Modern approaches to management

Quantitative approach to management

This approach is sometimes referred to as management science approach. It is based on

the approach of scientific management. The characteristic of this approach are:

 Management is essentially decision-making and an organization is a decision making

unit.

 Organizational efficiency depends upon the quality of managerial decisions

 A problem is expressed in the form of a quantitative or mathematical model

containing mathematical symbols and relationships

 The different variables in management can be quantified and expressed in the

form of an equation.

Contributions

 This approach has provided sharp tools for rational decision making.

 The mathematical formulation enables practising managers to discover significant

relationships that could aid control.

 It provides a rational basis for making decisions with precision and perfection. It is

widely used in planning and control.

 It has contributed to computer based information systems

Limitation

 It cannot deal with human problems and therefore it is not used in organizing,

staffing, leadership.

 It does not take total view of management.

The Systems Approach

A system is a set of interrelated parts that operate as whole in pursuit of common goals.

The ability to achieve goals is a function of the ability of each component of the various

systems to effectively operate. Inefficiencies and ineffectiveness in one part of the

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system will affect its overall performance. This approach calls for more interaction,

interdependence and coordination in organizational life.

The system, at its most simple level, takes inputs from its environment and transforms

them through various processes into outputs. The object of this transformation must at

the very least be the survival of the system, but it may be possible to attain further goals.

The organisation is essentially the transformation process. It takes inputs of varying kinds

and transforms them through a series of processes into outputs. This basic concept can

be illustrated diagrammatically as follows.

Figure 1.1: Basic Elements of a System

Plans Inputs Process Output

Objectives Information, Conversion Information,
Policies Energy of inputs Energy,
Methods Materials into outputs Materials

The feedback loop is included to show that outputs commonly have an effect upon the

system, often by returning as an input.

Nature of systems

A system is composed of several components. These include:

(a) Sub-systems

Within each system, there are likely to be a number of "sub-systems", each a separate

entity but forming an integral part of the whole. The outputs from one subsystem are

likely to form, at least in part, the inputs for another sub-system. The whole can, then, be

seen as a system of interdependent parts, constantly in action and reaction, both internally

in relation to each other and externally in relation to the environment of the system.

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Management must, therefore, understand and consider the inter-relationships and

interdependence of the various parts which make up the organisation.

(b) Boundaries and the environment

Each system or sub-system has a boundary existing around it and separating it from all the

others.

 There are certain types of system which function entirely within their boundaries

and are totally unaffected by anything outside. These are known as "closed"

systems.

 However, far more common are "open" systems where flows occur across the

boundary and factors outside the system affect it significantly.

 Anything outside the boundary of a system with the potential to affect its

operation constitutes the "environment".

These are important concepts since managerial problems often arise at the boundaries of a

system or sub-system, and events in the environment are often outside of the control of

those responsible for the system itself. Environmental monitoring is a key activity for

management as it enables managers to be aware of change which may affect the

functioning of the organisation.

(c) Objectives and goals

All systems must have a purpose; at the very least, this should be to survive, but, in terms

of the types of organisation we are concerned with, it should be some form of mission

expressed as aims, objectives or goals.

This applies to sub-systems as well as the whole system. The outputs of the

transformation process are designed to meet these objectives.

The Organisation as a System

The systems approach concentrates attention on the dynamics of the organisation. It

allows us to consider not just how the organisation functions in formal or informal terms,

but what it reacts to and how change may affect it.

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  If there is no change in the environment and inputs can remain constant, the

organisation will remain static and we can concentrate on the formal structures of

the transformation system.

 However, the people who work in the organisation are themselves dynamic and there

are very likely to be variations in the attitudes, motivations, etc. of staff as an

input. The environment within which most organisations operate is constantly

changing, both in the nature of the outputs required and the inputs available.

 To view the organisation as a system, or as a complex of inter-related sub-systems,

is to study the extent to which it is able to achieve a balance in its internal and

external relationships, and how far it can develop and progress in relation to the

changes in those relationships.

 As inputs and outputs change, the organisation must be capable of changing to

accommodate the new requirements and maintaining equilibrium – that essential

balance in a constantly shifting environment.

Elements of the Organisational System

The main sub-systems can be identified:

The technical sub-system Any organisation employs technology in its broadest sense to

assist it in carrying out its tasks. The technology used is an important determinant of the

organisation. Thus, examining the technical sub-system, and the way in which it changes,

can explain a great deal about organisation and management.

The psycho-social sub-system The goals, values, aspirations and modes of behaviour of

the members of the organisation will also be important determinants of the way work is

done and the relationships between people in the organisation. This gives recognition to

the nature of the informal organisation and culture, and its impact on organisational form

and management.

The structural sub-system The structural subsystem is concerned with the division of

tasks, their grouping into operation units, their co-ordination and control.

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The goals and values sub-system The goals and values sub-system emphasises the formal

goals and values of the organisation itself – the purpose of the undertaking and the

supporting sub-goals and value systems required to give expression to that purpose

throughout the organisation.

The managerial sub-system This includes the form of management within the

organisation and the techniques employed to ensure that the work is carried out

effectively and efficiently, such as budgeting, management by objectives, work study and

quality control.

The Organisation as a system

The systems approach highlights the multidimensional and multi disciplinary nature of

management.

This concept is useful in several ways:

a) It helps a system in determining where it ends and the other system begins.

b) It divides those elements that are a part of a system from those that are a

part its environment

c) It enables a system to protect its transformation process from the vagaries of

its environment.

Implications of system theory of management on modern management

 Organization is an open system. The internal functioning of the organization must

be consistent with the demands of the environment.

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  Organization is a dynamic system in which equilibrium is always changing.

Management has to function in a probabilistic environment wherein absolute

predictability of variables is not possible.

 According to the system approach, no part of the system can be accurately

analyzed and understood apart from other parts and form the whole system. A

manager should look at the organization as a whole instead of dealing with its parts

separately.

 Organization is multi-dimensional, multi-level and multivariate in character. There is

no simple cause and effect relationship due t which management must continuously

adapt to the changing environment. Effective management of systems requires a

multivariational and multi-disciplinary approach

 Attention should be paid towards the overall effectiveness of the system rather

than to the effectiveness of the subsystem. The overall objectives and

performance of the organization should be given prominence over the objectives

and performance of its parts.

 The output of a system is always more than the combined output of its parts. This

is called synergy. The parts of a system become more productive when they

interact than when they act in isolation

Contributions of the systems approach

 In the system approach a problem is studied both at the level of the subsystem and

the total the total system. This results in the requirement that executives, in

addition to having skills in their own functional areas, should have enough knowledge

of other areas also.

 It recognizes the importance of environment and feedback to organizational

success

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Limitations

 Systems are said to be abstract and vague.

 Too many subsystems and interdependence among them make the task of a manager

very difficult.

 The subsystem approach neither offers any tool and technique for analysis and

fusion nor recognizes the differences which exist between them.

Contingency approach Management

It is a systematic attempt to determine a package of management techniques, approaches

and practices which are appropriate in specific situation. It put more emphasis on the

situational variables and application of managerial tools and techniques contingent upon a

specific situation.

The main features and principles of this approach are:

 Contingency approach is situation oriented urging upon the managers to study,

analyse and diagnose the situation. It is done in terms of component variables of

the situation and the external factors affecting the situation.

 Managers are expected to prepare inventories of management theory, principles,

techniques and concepts to apply to the situation. Different situations require

different managerial response.

 The environment of an organization is ever changing and the organization

continuously interacts with the dynamic environment. Management style and

practice should match the requirements of the situation.

 Success in management depends upon the ability to cope with environmental

demands. Therefore managers should sharpen their diagnostic skills to anticipate

and comprehend the environmental changes.

Contributions

 No one best way to manage an organization

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  Identify the circumstances and contingencies that influence which particular

approach or principle will be effective in a given situation.

Limitations

 It lacks sound theoretical base.

 It all depends upon the situation.

 A manager has to think through all possible alternatives as he has no cut-out or

tried principles to act upon.

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 THE CONTEXT OF MANAGEMENT
The levels of management
The number of levels of management in an organization will depend on its size, technology
and diversity in its range of production
In order to ensure greater efficiency and productivity, the levels of management should
be kept to the minimum. The different levels maybe classified into three categories
Levels of management or Management hierarchy
Top Management
 Includes:
1. Board of directors
2. Managing director
3. General managers
 Functions:
1. Determining of goals or objectives
2. Policy framing
3. Formulation of strategic plans
4. Mobilization of resources
5. Motivating personnel
6. Co-coordinating and communicating
7. Controlling of operations

Middle Management
Includes:
1. Department managers
2. Section officers
Functions
1. Runs detailed activities of the organization.
2. Co-operate for smooth functioning of the organization.
3. Co-coordinating between different parts
4. Build up efficient staff
5. Build company spirit

Lower Management
Functions:
1. Planning the day-to-day work
2. Issue instructions to workers and supervise
3. Provide on the job training
4. Solve worker’s problems
5. Maintain discipline among workers

Essential skills of a manager

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Skills are the various talents managers need to perform their roles effectively. These
skills are grouped into 4 categories.

Technical skills – the ability to use methods, equipment and techniques involved in
performing specific tasks within the organization. Technical skills are critical for low-level
or operational managers.

Conceptual Skills – the ability to see the whole organization as a single unit of operation,
to visualize the interrelations between different components of the organization and how
they should collaborate for achieving its global mission; to deeply understand the external
environment of the organization as well as the new possibilities, threats and challenges it
presents for the organization.
These skills are more important for the top level management.

Diagnostic Skills – These are skills used to define and understand situations. They are
most important at the top, moderately important in the middle and least important at the
bottom of the managerial hierarchy.
Human Skills– the ability to work effectively with others in a personalised manner. This
requires a sense of feeling for others an appreciation of their rights, which can be
demonstrated by the way the mangers interact with their subordinates, equals and
superiors. Human skills also refer to the ability to succeed, to cooperate with others for a
common goal, to delegate tasks and authority in ways to empower others, to deal with
conflict situations and generate consensus, and to build an enjoyable work environment.
These skills are necessary for all levels of management

Management Roles
One of the classic studies into the work of managers was conducted by Mintzberg in 1980.
Mintzberg identified three general roles:
a) interpersonal – dealing with the maintenance of relationships with others within
and outside the organisation;
b) informational – dealing with the gathering and provision of information, again
within and outside the organisation;
c) Decisional–dealing with organisational and operational problems and difficulties.
Within these three categories, ten more specific roles were set out, as summarized below.
a) Interpersonal roles
1. Figurehead – Formal, representational and symbolic duties
2. Leader – Relationship with subordinates – motivating, communicating, coaching,
etc.
3. Liaison – Contacts with others outside work unit, for assistance, information,
etc.
b) Informational roles
4. Monitor – Ensuring acquisition of information necessary for work

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 5. Disseminator – Distributing information throughout organization and outside
6. Spokesperson – Formal provision of information on behalf of organization
c) Decisional roles
7. Entrepreneur – Initiating, developing and facilitating change and innovation
8. Disturbance handler-Troubleshooting problems as and when they arise
9. Resource allocator – Distributing and arranging use of resources (staff, finance,
materials, time)
10. Negotiator – Representing organization in negotiations within area of
responsibility
Whilst this categorization of roles is different from the functional definitions it does not
clash with them. Rather, Mintzberg's roles provide an alternative perspective, emphasizing
three key elements which spread across the spectrum of management processes – planning,
organizing and controlling.

Managerial responsibilities
1. Achieve business and organization goals, visions and objectives.
2. Responsible for the growth and increase in the organizations' finances and earnings.
3. Analyzing, reporting, giving recommendations and developing strategies on how to
improve quality and quantity.
4. Involved in employee selection, career development, succession planning and
periodic training.
5. Supervise and manage the overall performance of staff in his department.
6. Working out compensations and rewards.
7. Identifying problems, creating choices and providing alternatives courses of
actions.

Why Organizations Need Managers

1. To ensure the organization serves its basic purpose- efficient production of goods
and services.
2. To design and maintain the stability of the operations of the organization
3. To take charge of strategy making and adopt the organization in a controlled way to
changes in its environment.
4. To ensure the organization serves the ends of those people who control it.
5. To serve as the key informational link between the organization and the
environment, and
6. As formal authority to operate the organizations status system.

Characteristics of successful manager

Will to manage. A good manager must be willing to accept responsibility and have the
confidence to be accountable for the work of others. Some people have low desire to
manage for the following reasons;
 They lack confidence

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  Are afraid of making decisions
 Fear responsibility /accountability
 Are happy with their current positions
Knowledge of management process A manager should have an understanding of the
management process and management functions through formal training and education in
management.
Intellectually capable He should posses the necessary level of intelligence and ability to
make logical decisions.
Ability to command respect A manager must be able to earn respect from his
subordinates so that they are able to obey him, he must therefore be able to understand
employees, be honest, fair and have a positive attitude.
Have good communication skills He must be able to make himself understood either orally
or through writing. Ineffective communication leads to misunderstanding which results in
mistakes.
Integrity Managers act on behalf of the organization. They must have a high sense of
what is right and what is wrong and practice it. They must conduct business and trade in a
straight, ethical and acceptable manner.
Loyalty They must show loyalty to the organization. They must always try to give good
image of the organization both within and without.
Good personality A good manager should be one ready to work with others and one who
does not always insist on doing things his own way. He should have a stable character- with
few personal problems which might be a liability to the firm for example alcoholism, drug
addiction or domestic problems.

Effects of External and Internal Environment on Business

Internal Environment
To be competitive a company must evaluate itself in order to identify its strengths and
weakness.
The top management must evaluate the company’s distinctive activities and assets. A
company’s assets can be divided into three categories i.e.
1. Tangible assets. The tangible assets refers to the various physical assets
possessed by the company i.e. production equipment, raw materials, financial
resources, building etc
2. Intangible assets. The intangible assets include: the company image (cooperate
image), brand royalty, the company name, patent rights and trademarks, technical
knowhow though these assets are not tangible they help a company in creating a
competitive advantage.
3. Organizational capabilities refers to the ability of combining assets, people and
processes that a company uses to transform input into out puts. A company can gain
a competitive advantage by capitalizing on such capabilities

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In determining the value of its resources, a company can use a resource based view of the
firm.
i) Competitive superiority. Does the resource fulfil customers needs better than those
other competitors
ii) Resource scarcity. Is the resource in short supplier? When it is, it’s more valuable
iii) Immitigability. Can the resource be easily copied or imitated by competitors. Resource
that is not imitetable has the following characteristics.
 Physically unique resource i.e. unique shape, colour, test etc.
 A resource that is path-dependant i.e. the resource can only be used following a
particular unique procedure /process especially if the process is very expensive.
 Resource ambiguity i.e. it is difficult for competitors to understand how the
resource is created e.g. an organization capability.
iv) Appropriability. Is the resource appropriate for the activities that we engage in and
who we benefits from the resources. If the resource is appropriate and the company
solely benefits from it then it creates a core compete
nce.
v) Durability. How rapidly does the resource depreciate? The lower the depreciation rate
the higher the value of the resource i.e. tangible assets.
vi) Substitutability. The availability of the resource, if there are many substitutes the
resource becomes less valuable.

External Environment
Management must keep track of any changes in the business environment since such
changes can determine the success /failure of the business.
Managers must adopt a pro-active approach in dealing with these changes. No specific
company or industry can control the external environ forces. The businesses therefore
must adapt to the environment if they are to survive.
(I) Political forces
This involves analyzing the laws, policies and government systems in general to determine
their trends and the possible effect to business. Companies should particularly be
concerned with the legislations that can directly affect their operations.
A political analysis may also involve analyzing the political powers and the manifestos of
political parties likely to come to power. For multinational companies it’s important to
evaluate the relationship between the home country and the host country politically.
Other areas that managers must evaluate include:
a) Lobby groups i.e. consumers’ movements, environmental advocates
b) Civil society
c) Religious groups
d) They should also be able to monitor the government economic management policies,
government involvement in business.
e) The political systems and leadership. Expropriation: - Given some time to leave and
compensation

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(ii) Economic forces
The economic forces involves analyzing the economic trends e.g. the income levels, the
distribution of income, employment rate (it affects the peoples purchasing power)
economic stage/performance of a country

Prosperit
y Recovery
Recession

Depression

 Demand and supply is also important in an economic situation

 Interest rates, inflation rates
 The economic policies by the government especially by central bank
 The currency and its performance
 Population trend
 Aggregate consumption of specific products within specific time.
(iii) Social-cultural forces
This involves understanding, the cultural and demographic trends and forecast how they
are likely to affect your operations. It is important to evaluate the following:
a. The changes in population i.e. mortality rate, population growth rate, intensity
b. Family structures: reduction in family sizes, increase of single parents
c. Cultures and sub cultures especially the cultural beliefs
d. Consumer rights movements
e. Environmental concerns
f. Religion and its impacts to your strategies
g. Faith and beliefs of people
h. Material life: what people do in a day to day basis
i. Aesthetics: beauty –what people value to be attractive
(iv) Technological forces
Technology influences success of a business to a large extent. Managers therefore need to
evaluate the trends in the technological environment to avoid obsolesce. Technology
changes are unpredictable and very fast. Technology also may sometimes give a company a
competitive edge.
 New Processes New ways of doing things are constantly coming our way, e.g.
satellite broadcasting involves consumers purchasing satellite dishes; EFTPOS –
Electronic Funds Transfer at the Point of Sale – has been developed for retailers.

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  New Materials These are gradually coming on stream. Optical fibres and carbon
fibres are examples. The laser compact disc will soon completely replace the old
long-playing vinyl record.
 The Internet In 2007 consumers spent approximately Kshs.372bn on the internet,
a 54% increase and organisations are spending more on internet marketing than
radio, press advertising and direct mail together. E commerce activities, e.g. selling
on-line, on-line banking and using the internet to research and gather information
are a normal part of life in the developed world and the availability of the internet
is now possible via mobile telephones and wireless networks.

Ecological Environment
Concern about the environment has led to measures to reduce global warming.
 Differential taxation of leaded and unleaded petrol, and of diesel, goes along with
the compulsory fitting of catalysts to reduce the harmful effects of car exhausts.
 Local authorities provide for glass, metal and paper collections, and most large
supermarkets also provide collections points. Many firms now collect and recycle
large amounts of materials which were simply scrapped at one time.
 Increasingly, firms are recognising that failure to consider the ecological effects
of their activities can lead to consumer boycotts, and that an ethical approach to
the environment can be good for business.

Competition
A competitor through his actions places restrictions on what an organization can do.
Pricing decisions in many firms of often reflect the pricing decision of a leading
competitor.
Labour Unions
Through contracts negotiated with management trade unions restrict what management
may want to do about wages, vacations, retirement plans, working conditions, and
employment policies.
Suppliers
They affect the ultimate product that a firm produces depending on the quality of raw
materials available in the market.
Media
The highlight the good and bad deeds of the organization and so affect the operations of
the organizations.
Stakeholder
As interested parties they will influence decisions

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 PLANNING
Definition: Planning can be defined as deciding in advance what to do, how to do it, when to do it
and who is to it. Or planning is the management function of anticipating the future and the
conscious determination of a future course of action to achieve the desired results.
Importance of planning
1. Focuses attention on objectives and results – it concentrates attentions on the dominant
goals on the organization
2. Reduces uncertainty and risk. Planning seeks to reduce risk while taking advantage of
opportunities
3. Provides sense of direction. Planning saves an organization from drifting and avoids aimless
activities.
4. Encourages innovation and creativity. Innovation and creativity are requisites to continuous
growth and steady prosperity of a business.
5. Helps in coordination – planning interrelates all the activities and resources of an
organization. It helps to relates internal conditions and process to external events and
forces
6. Guides decision – making. Planning helps in taking future–oriented decision and prevents
hasty judgment and unplanned action.
7. Provides a basic for decentralization of authority to lower levels of management since it
serves as guides to subordinates.
8. Provides efficiency in operations by facilitating optimum utilization of available resources
9. Facilitates control. Plans serve as standards for evaluation of performance.

Forecasting is a process aimed at predicting changing conditions and future events that may
significantly affect the business of an organization.
Importance of forecasting
 Forecasting plays a vital role in an organization. Many organization fail because of lack of or
faulty forecasting because planning is based on accurate forecasting.
 The development of a business is based on accurate forecasting. Certain objectives can only
be attained upon carrying out accurate forecasting.
 Forecasting provides the vital information for effective planning. It helps management
anticipate future trends and decide appropriate course of action to take advantage of those
trends.
 People of different levels participate in the process of forecasting, because of this
interaction corporation is facilitated between the various members of the organization.
 It provides relevant information for exercising control.
 Forecasting requires executives to look ahead, think through the future and improve their
mental faculties. Mangers develop the habit of collecting, analysing and interpreting data
instead of depending on guise work.

Step in forecasting
 Developing the basis through systematic investigation of the economy, productivity and
industry.
 Estimating future business operations.

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  Regulate forecasts. Management has to constantly compare actual operations with the
forecasts order to find out the reasons for any deviations from the forecasts. This helps in
making more realistic forecasts for the future.
 Review of the forecasting process. Having determined the actual performance it becomes
necessary to examine the procedures adapted for purpose of improving the methods of
forecasting.

Limitation of forecasting
 Forecasting is based on assumptions which may not always be true.
 Forecasts merely indicate future events and trends and cannot guarantee that a particular
event will occur in the future.
 A lot of time and money is involved in the collection, analysis and interpretation of data for
forecasting purposes and it only becomes useful if the benefits exceed the costs.

Forecasting techniques
 Jury of executive opinion. Under this type of forecasting technique a group of executive
hold a meeting and estimate, as a group a forecast of a particular item, for example, sales.
 Time series analysis. Under this method historical data is used to develop forecasts of the
future. For example, past sales trends may be studied and based on this information a
forecast can be made of future sales.
 Regression analysis. This method assumes that the variable to forecast can be predicted
on the basis of the value or more independent variables. For example if the company sales
were the variable to be forecast, they might depend on time, the economy or sales of major
customers.
 Sales force composite. This approach to forecasting involves obtaining the views of the
sales persons, sales management or both on the outlook for individual products and/total
sales. This generally a bottom up approach.
 Index numbers are used to provide a basis for anticipating short term fluctuations caused
by seasonal or cyclical patterns. For example index numbers are used to determine how a
company’s sales might be distributed by the month of the year. Such can be determined by
looking at the ratio of sales for a given month to annual sales for each of the past several
years. Common is the unemployment index or the economic growth index.
 Customer expectations this method seeks to use the customers’ expectations of their
needs and requirements as the basis for forecasting. This is done through surveys
administered by a corporate staff group or it may be done by the sales force gathering
information from selected customers.

Elements of the planning process

1. Planning is goal Oriented – plans emanate from objectives.
2. Planning is a primary function –it is the basic of the management process.
3. Planning is a pervasive –it is the function of each and every of manager irrespective of the
level and area of his / her operation.
4. Planning is an intellectual process – it is a mental process involving imagination / foresight
and sound judgment.
5. Planning is a continuous process – as assumptions and events on which plans are based
change, old plans have to be revised or new ones have to be prepared

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 6. Planning is forward looking – planning involves looking ahead and preparing for the future.
7. Planning involves choice – It presupposes the existence of alternatives.
8. Planning is an integrated process – different plans are interdependent and interrelated.
9. Planning is directed towards efficiency – planning facilitates the achievement of objectives
economically and efficiently.

Steps in planning
1. Being aware f opportunities in the external environment as well as within the organization is
the starting point for planning.
2. Establishing objectives –Objectives specify expected results and indicate what is to be
done and where the emphasis is to be placed.
3. Developing premises – these are the assumption in which the plans are to be carried out.
Forecasting is important in premising.
4. Determining alternative courses. Search for and examine the alternative courses of action.
The examiner must make a preliminary examination to discover the most fruitful
possibilities
5. Evaluating alternatives. Evaluate alternatives by weighing them in light of premises and
goals.
6. Selecting a course. Occasionally an analysis and evaluation of alternatives, wills disclose that
more alternatives are advisable, and the manager may decide to follow several courses
rather than one.
7. Formulating derivative plans. Derivative plans are required to support the basic plans. This
will be done mostly at departmental levels.
8. Number plans by budgeting. The final step in giving plans meaning is to number them by
converting them into budgets.

Principles of planning
These principles relates to the nature, purpose, process and structure of planning.
1. Principle of contribution to objectives. Every plan should contribute towards the
accomplishment of organizations objectives.
2. Principle of efficiency of plans. The efficiency of the plans is measured by the amount it
contributes to objective minus cost and other undesirable consequence involved in the
formulation and operation of the plan.
3. Principle of primary planning. Planning is the primary requisite of other management
functions because these functions are designed to support the accomplishment of
enterprise objectives
4. Principle of planning premises. All managers in the organization should agree and utilize
consistent planning premises
5. Principle of policy framework A consistent and effective framework of enterprise plans can
be developed if the basic policies that guide thinking in decisions are expressed clearly and
understood by Managers who prepare the plans.
6. Principle of timing. Plans should be structured and timed to provide appropriate networks
and supporting programmes so that they can contribute effectively and efficiently towards
the attainment of enterprise objectives.
7. Principles of alternatives In choosing from among alternatives, the best alternative will be
that which contributes most efficiently to the accomplishment of a desired goal.

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 8. Principle of unity factor. While choosing from among the alternatives the planer should
focus on those factors, which are critical to the attainment of the desired goal.
9. Principle of commitment. Logical planning should cover a time period necessary to forecast
the fulfilment of commitments involved in a decision.
10. Principle of flexibility. The risk of loss due to unexpected events can be reduced by building
flexibility into the plans. However the cost of flexibility should be weighed against the
dangers of future commitments made.
11. Principle of navigational change. The manager should periodically check on events and
expectations and redraw plans to maintain a course towards the desired goals.
12. Principle of competitive strategies. While formulating plans, a manager should take into
account the plans of rivals or competitors.
Barriers to planning
1. Planning is based on forecasts which are never 100% accurate
2. Planning is a time consuming and expensive process
3. Planning may result in internal inflexibilities and procedural rigidities, which curb initiatives
and individual freedom.
4. Planning often requires some changes in the existing.
5. Planning may create a false sense of security in the organization.
6. Powerful people and other vested interest may exert pressure to ensure that plans serve
their own interests.
7. The effectiveness of planning may be affected by external forces, which are beyond the
control of those responsible for preparing plans.
8. Some managers may have a negative mental attitude towards planning.

Overcoming barriers
1. Planning should not be left to chance – a climate conducive to planning should be created.
2. Planning must start at the top initiative and support of top management is essential for
effective planning.
3. Planning must be organized to allow for a winder participation and execution of plans
4. Goals, premises and policies must be properly communicated
5. Long range planning must be integrated with short range planning
6. Planning sho
7. uld be definite –time specific and focused.
8. Planning must include awareness and acceptance of change as a necessary aspect.
9. An open systems approach involving continuous monitoring of the environment should be
adopted.
10. Plans should be flexible – allow for change so as to adapt to the changing environment
11. Managers need to be educated and trained on the art of planning and the need for planning
emphasized.
12. Planning should be reviewed regularly to ensure that premises still hold and to allow for
changes as appropriate.

Characteristics/essentials of a good plan

1. It should be based on clearly defined objective
2. it must be simple and easily understandable
3. it must be flexible and adaptable to changing conditions

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 4. it must be balanced in all aspects and reasonably comprehensive
5. it should provide standards for evaluation of performance and actions
6. it should be economical allowing for optimum utilization of resources
7. it should be practicable and unambiguous
8. it should be prepared with consultations of all concerned parties
9. Different plans should be properly integrated and harmonized with one another to ensure
unity or consistency in plans.
10. It should provide for proper analysis and classification of actions.

Types of plans
There are three main types of plans in pursuit of organization goals and there is a relationship (of
these plans) to one another in order to achieve the organizational goals.

1. Strategic Plans – These are designed with the entire organization in mind and begin with an
organization mission. They are designed by CEO’S/Presidents and other top level managers. Desired
future picture is painted. They are designed to achieve long-term results e.g. competitive
advantage, increase profitability, boosting return to investment etc.

2. Tactical Plans – Tactical plans are concerned with the responsibility and functionality of lower-
level departments to fulfil their parts of the strategic plans. They translate the strategic plans by
translating them into specific plans relevant to a distinct area of the organization. What tactics to
use to ensure strategic plans are realised.

3. Operational Plans – These plans sit at the bottom level. They are made by low – level managers
and are focused on the specific procedures and processes that occur within the lowest levels of
organization. Managers must plan the routine tasks of the department using a high level of detail.
Can be single-use plans or ongoing plans.

Note: Operational plans are necessary to attain Tactical plans and Tactical plans
lead to achieve Strategic plans.
Then there are back up plans to backup plans that fail. These are known as
Contingency plans.

Organization Objectives
Definition of objective
Objectives are goals, targets or purposes that the organization wishes to achieve over varying
periods of time.
Objectives are important because they:
1. Provide specific direction to the individual efforts and activities of an organization.
2. They provide integration and coordination of employee action by causing their efforts to be
accomplished for common reasons.
3. The provide mechanism for control

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 4. They provide motivation for those who are assigned the task of accomplishing them.
5. They help to relieve boredom and monotony as they are revised from time to time.
6. Achievement of objectives when combined with feedback can increase job satisfaction.
7. Well-defined objectives are helpful for effective delegation of authority thereby allowing
for decentralization.
Features of objectives
 Objectives are basic plans. They provide justification for the establishment and operation
of an organization.
 Objectives are multiple in natures. The objectives of the business are multiple in order to
satisfy the goals of the various stakeholders who include investors, customers, employees
and the state.
 Objectives should be arranged in a hierarchy. Objectives of an organization differ in the
degree of importance and are arranged in a hierarchy based on their relative importance.
 Objectives vary in the time span in which they have to be achieved. They may be short
term as well as long term.

Characteristics of objectives (SMART)

 Objectives must be clear and specific. They should be written in clear language for
everybody to understand.
 Objectives must be appraised and measured. They must be verifiable and measurable to
provide motivation to individuals because their performance can be measured accurately.
 Results and target oriented. They should focus on targets and results but not on the work
system.
 Must be balanced. They should maintain a balance in variety of needs and goals.
 Must be realizable. They should be designed to attain the improvement in the business
performance in the various levels.
 Must be flexible. They should be constantly reviewed and revised as changes in the
environment take place if they are to be achieved.
 They must be acceptable. All individuals in the organization should be involved in setting up
of objectives of the organization this increases the acceptability of the objectives.

1. Strategy
Is a set of activities or processes that an organization intends to use in order to achieve its
goals & aims.
a) Formulating the company's vision and mission- To be able to formulate a strategy
b) Conducting an analysis that reflects the Company's internal conditions and capabilities-
Employees believes, asset, etc
c) Assessing the Company's external environment in order to adapt to it- Assess economic
status.
d) Assessing the Company's options by matching its resources and the external environment
more effectively and efficiently. Limited resources
e) Identifying the most beneficial options in light of the Company's resources. - Put into
proper direction; choose the best strategy out of the many.
f) Selecting the long-term objectives and strategies that will lead to the most desirable
results

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 g) Developing annual and short term strategies that are compatible with the Company's long
term objectives and strategies- Into small parts
h) Implementing various strategies based on the company’s resources as well as the structures,
technologies and people. Actualize the strategy, workers, telecommunication, etc.
i) Evaluating the success of the strategic process as an input for future decisions.

Characteristics of strategy
 Strategy is a comprehensive and integrated action plan drawn for achieving objectives in a
changed situation which is specific and new in nature.
 Strategies are formulated not only on the basis of objectives to be pursued but on the basis
of careful situational analysis of the organization and its environment.
 Strategy aims at deploying, mobilising and utilising limited resources for maximising the
chance of achieving objectives in the event of difficulties.
 Strategies are formulated to handle changes arising out of environment. It ensures
allocation of resources so as to exploit new opportunities profitably.
 Strategy is flexible and dynamic in nature because it is formulated to cope with the
changing business environment and maintain survival, profitability, growth and development
of the organization.
 Strategies are usually drawn for a long period of time but they have short term implications
also.
 Strategies to a large extent are imposed by the government, trade unions, economic
conditions, technological changes, competition and so many other external factors.
 Strategy is regarded as ‘interpretative planning’ because it is formulated for the purpose of
interpreting the meaning of other policies.

Essentials for effective strategy formulation

 The strategy should be consistent with objectives, policies and elements of planning and
organization.
 It should be workable in order to meet the particular needs of the situation. It must also
contribute to the progress of the organization.
 The strategy should be convenient to the environment of the business. It should not be
inconsistent with the environment which can put the organization in difficulties.
 The risk connected with strategy must be reasonable in view of expected payoffs. A high
risky strategy may threaten the survival of the business.
 The strategy must be designed with the available resources of business in mind. The
strategic decision must have commitment of the right amount of resources to the
opportunity and the reservation of resources for unanticipated demands.
 The strategy should be based on time span coupled with goals. The time should be long
enough to allow the organization to make adjustments and maintain certain consistency of
strategy.
Importance/advantages of strategy
 It helps to ensure efficient consistency in the allocation and utility of resources.
 Strategy helps to achieve the objectives of the business.
 It is an essential requirement of efficient management of business.
 The strategy of a business is vital for the long term survival and growth of the business.

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  It helps the enterprise take advantage of environmental opportunities and manage
environmental pressures.
 It helps to provide useful framework for planning, guiding, thinking and implementation in
the form of action.
Types of strategy
 Master strategy. This is the entire pattern of organizational goals, policies, and resource
deployment of business. It provides unified direction to the entire organization.
 Programmed strategy. It indicates to the specific deployment of resources. It is well
designed to support the master strategy for the implementation and achievement of
organizational objectives.
 Minor strategy or specific strategy. It is more specific and detailed one to execute a
programmed strategy. It specifies the specific action that will be taken. For example under
sales promotion, employing a particular advertising agency is an example of a minor strategy.

2. Policies
A policy is a pre-determined guide established to provide discretion in decision-making. Policies
encourage discretion and initiative but within limits.

Characteristics of policies
 A policy is formulated in the context of objectives and seeks to contribute to the
attainment of organization objectives.
 The policies of the organization should be communicated to all managers of the business.
 A policy is a broad guideline to thinking and action of all members of the organization.
 It is an expression of top management guidance to facilitate managerial decision-making.
 Policies are restrictive and permissive in nature. Restrictive denotes certain constraints for
ensuring consistent action and behaviour on the part of the subordinates. Permissive nature
indicates that the subordinates are given freedom to operate within specified constraints.

Importance of policies
 Speed up decision making. Policies provide a base for quick decision making at lower levels
by providing a framework within which decision can be made.
 Delegation and decentralization are made better. They provide guidelines to action so that
subordinates need not consult their superior frequently which helps for better
decentralization process in the organization.
 Coordination. Policies create unity of efforts and uniformity of action and focuses
attention on organizational objectives.
 Simplifies control. They help to prevent unwarranted deviations from planned course of
action and form the basis for judging the actions and behaviour of subordinates.
 Accomplishment of objectives. They help to accomplish desired objectives by elaborating
the way in which the goals are to be achieved.

Types of policies
 Organizational policies are the basic policies which are used uniformly throughout the
organization.

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  Functional or departmental policies represent the functions and departments of business
such as production policy, personnel policy and finance policy.
 Originated policies. These are policies formulated by top management on their own initiative
in order to guide the actions of their subordinates. They are written and embodied in the
form of policy manuals.
 Appealed policies. These are policies designed based on the appeal or request from the
subordinates.
 Imposed policies. These emerge from the influence of outside forces like the government,
trade unions and chamber of commerce.
 General policies. These state broader terms to give freedom to units of the organization.
 Specific policies. These restrict freedom wherein they specify a particular aspect and
restrict the freedom of action.
 Implied policies. These are inferred from the behaviour or conduct of the top executives of
the organization and they are not clearly stated.
 Written policies. These are declared and in the form of writing.

Essential requirement of a policy

For a policy to be sound it should contain the following:
 A policy should be designed or based on objectives and should contribute towards the
attainment of objectives.
 A policy should be properly planned, coordinated, consistent and balanced.
 A policy should be clear, specific, precise and definite as well as understandable.
 A policy should be designed, based on careful consideration of the resources and
environment of the organization.
 Policies must be flexible and adjustable with the planning premises.
 Policies should be updated with the help of reviews and appraisals.
 Policies should be communicated to all so that objectives are understood by all in order to
carry out proper implementation.
 Policies should coincide and be consistent with the operations of the business.
 Policies should be designed with business ethics in order maintain sound ethical standards of
business.
Policies formulation process
1. Analysis of the environment. Management carries out an analysis of both the internal and
external environment of the organization. The internal relates to physical resources, human
resources, organizational structure, union/management relations, skills availability, values
and norms. External environment relates to social, political, economic, technological, risk and
opportunities. The two are interrelated and interdependent so that a change in one factor
flows to the other factors until all are altered in some respect.
2. Policy alternatives. While doing this the relationship between goals and policies should be
constantly kept in view. These leads to generation of a number of alternatives.
3. Examination of alternatives. Each alternative should be examined in light of its contribution
to organizational goals.
4. Each alternative will be examined to see its consequences on the attainment of
organizational goals.
5. Selection of a particular policy. After knowing the effect of alternatives and the
consequences selection of the appropriate alternative is done.

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Factors determining policy making
1. Values and beliefs of owners and top managers
2. Finance availability
3. Technology prevalence
4. Skills and reactions of employees
5. Competitor policies
6. Rules and regulations of government and control
7. Prices levels and market forces
8. General business environment
9. Objectives and mission of business
10. Public attitudes and behaviour.

3. Procedures
A procedure is a series of steps for the accomplishment of some specific task. It is a chronological
sequence of steps to be under taken to attain an objective.
Procedures are a guide to action rather than thinking and detail the exact manner in which certain
activities must be accomplished. They do not allow for discretion.
4. Rules
This spell out the specific required actions or non-actions, allowing no discretion, they are the
simplest type of plan. Rules serve as a guide but provide no discretion in their application.
5. Programmes
A Program is a complex of goals, procedures, rules, tasks, assignments, steps to be taken, resources
to be employed and other elements necessary to carry out a given course of action. They are
ordinary supported by budgets.
A primary programme may call for many supporting programmes. These and other programmes must
be devised and implemented before the primary programme and this calls for coordination since
delay in one area may affect all the other programmes.
6. Budgets
A budget is a statement of expected results expressed in numerical terms for a definite period of
time in the future. It expresses a plan in precise terms.
 Budget serves as a means coordination and control
 They provide clarity, direction and purpose in the activities of an organization by
laying down verifiable and measurable goals for a specified period of time
 Budgets serve as standards of measuring actual performance
 Budgets may be prepared in terms of time – (labour hours) units of products, or
machine hours or in any either numerical terms
 Budgeting compels planning
 A budget communicates the policies and targets to every manager in the
organization responsible for carrying out part of that plan.
7. Schedules
A schedule specifies time limits within which activities are to be completed. Scheduling is the
process of establishing a time sequence for the work to be done. Schedules are essential for
avoiding delays and for ensuring continuity of operation. A schedule lays down a timetable fixing
starting and finishing dates for different activities
8. Project

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Any undertaking that has definite, final objectives representing specified values to be used in the
satisfaction of some need or desire.
Project management knowledge areas
• Scope Management
• Time Management
• Cost Management
• Quality Management
• Human Resources Management
• Communication Management
• Risk Management
• Procurement Management
• Integration Management

DECISION MAKING
Definition: Decision-making is selection from among alternate courses of action.
Characteristics of decision making
1. Decision-making is a process of selection or choice among alternative courses of action.
2. The aim of decision is to find out the best possible course of action.
3. Decision-making is intellectual or rational process. It is an end process proceeded by
reasoning and judgment.
4. Decision-making involves certain amount of commitment.
5. Decision- making is a pervasive function of management. It is performed by managers at all
levels and is a continuous process.
6. Decision-making is a human and social process. It involves the use not simply of intellectual
activities but also of intuition subjective values and judgment.
7. The choice in decision-making implies freedom to choose from among the alternatives
courses of action without coercion
Stages in decision making
Decision-making is a systematic and planned process consisting of several interrelated phases.
These various stages are:
1. Defining the problem.
2. Analyzing the problem.
a) Analyze performance, what should the results be against what they actually are
b) Problems are merely deviations from performance standards
c) Problem must be precisely identified and described
d) Problems are caused by some change from a distinctive feature
e) Something can always be used to distinguish between what has and hasn't been effected by
a cause
f) Causes to problems can be deducted from relevant changes found in analyzing the problem
g) Most likely cause to a problem is the one that exactly explains all the facts
3. Developing alternative solutions It is essential to search for and identify possible alternatives.
4. Evaluating alternatives. Evaluation involves measurements of merits and demerits of various
alternatives. The following can be used to evaluate the probable consequence of difficult
alternatives
 Risk. The manager should check the risk involved in each course of action against the
expected gains.

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  Economy of effort – what effort is needed in terms of time and money in solving the
problem with the least disturbance in the organization?
 Timing– this involves determining the time available to make the decision
 Limitation of resources. This will involve determine whether there are adequate
facilities and resources in implementing the decision. Effective implementation of
the decision may require competence and skills, which are not available in the
organization. Finance, materials and power may be other limiting resources.
5. Selecting the best alternative. Selection is the point of ultimate decision-making. While
choosing the best alternative the following approaches may be used.
 Experience. In making a final decision, past experience in dealing with problems of a
similar nature can be helpful.
 Experimentation. Under this approach, the tentative decision is put into practice and
the results observed. Various alternatives are tried and the alternative giving the
best results is selected.
 Research and analysis. This approach focuses its attention on different parts of the
problem. However every problem may not lend itself to the use of this approach due
to the cost and delays involved.
6. Implementing the decision. Implementation or execution of the decision involves:
 Communication of the decision,
 Gaining of acceptance,
 Development of detailed plans,
 Getting support and cooperation of those concerned for converting the decision into
effective action and developing controls to ensure that the decision is being carried
out properly.
7. Evaluation of the decision process. The actual results of the decision should be compared with
the expected results and the deviations, if any analyzed. The feedback obtained through the follow
up of the decision will become the basis for necessary improvements in the decision-making
processes.

Types of decisions
 Organizational decision. Decisions taken by an executive in his official capacity or on behalf of
the organization are known as the organizational decisions.
 Personal decisions are decisions taken by an individual for himself in his personal capacity and
not on behalf of the firm.
 Routine decisions relate to the day-to-day operations. They are taken respectively in
accordance with the established policies, practices and procedures. Routine decisions are
normally taken at lower levels of management. Such decisions involve few alternatives and
relates to the economic use of resources.
 Top management normally takes strategic decisions . They are concerned with policy matters and
exercise fundamental influence on the objectives, facilities and structure of the organization.
Such decisions involve long-term commitments and therefore require careful analysis and
considerate deliberations.
 Policy and operational decisions . Policy and operating decision are of vital importance and affect
the entire organization. Top management undertakes them. Such decision set forth the basic
policies and general direction of the enterprise. Policy decisions are sometimes published in the
form of a policy Manuel for the guidance of lower level executives .

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 Operating or administrative decisions are generally taken at lower level of management. They
translate policies into specific actions that are the manner of executing the established
policies. Policy decisions serve as basis of taking operating decisions.
 Programmed decisions. Programmed decisions are routine and repetitive by nature and they are
dealt with according to specific procedures. Systematic procedures are established for such
decision so that the problem needs not to be treated as a unique case each time e.g. application
of leave.
 Non-programmed decisions are required to solve unstructured problems. They are non-
repetitive and new in nature. There exist no standard procedures for handling such problems
and every decision is a unique case. Considerable judgment, intuition and creativity are involved
in such decisions.
 Individual decisions Decision may be taken by an individual. A decision taken by an individual or
single person is known as individual decision. Individual decisions are taken in small organization
or those organizations that operate under autocratic style of management. Individual decisions
are taken in case of routine problems involving simple analysis of variables factors and in
situations where definite procedures to deal with the problem already exist.
 Group decisions refer to a decision taken by a group e.g. board of directors, executive
committee. A group generally takes important and strategic decisions.
Group decision tends to be more balanced acceptable and practicable but they involve greater
expenditure of the money and effort. It is difficult to fix responsibility for such decisions
Merits
1. Group judgment
2. Improved motivation
3. Effective coordination
4. Involvement of diverse interest groups
5. Management development

Demerits
1. Expensive
2. Time Consuming
3. Compromise decision
4. Tyranny of the minority
5. Lack of accountability

ORGANIZING
Definition: Organizing is the process of determining who will perform the tasks needed to achieve
organizational objectives, the resources to be used and the way the tasks will be managed and
coordinated.
The following are the important characteristics of organization.
a) It is fundamentally concerned with the allocation of the tasks to specific people or groups
of people.
b) It is concerned with the coordination of the efforts of several people needed to complete
large tasks.
c) It is concerns resources and other people. It may involve budgets, territories, production
facilities or intellectual abilities.

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 d) Continues process. An organization is a group of people with defined relationship to each
other that allows them to work together achieve the goals of the organization. These
relationships do not come to end after completing a task. Organization is a never ending
process.

Purpose of organization
a) Helps to achieve organizational goal Organization is employed to achieve the overall
objectives of business firms. Organization focuses attention of individual’s objectives
towards overall objectives.
b) Optimum use of resources To make optimum use of resources such as men, material, money,
machine and method, it is necessary to design an organization properly. Work should be
divided and right people should be given right jobs to reduce the wastage of resources in an
organization.
c) To perform managerial function Planning, Organizing, Staffing, Directing and Controlling
cannot be implemented without proper organization.
d) Facilitates growth and diversification A good organization structure is essential for
expanding business activity. Organization structure determines the input resources needed
for expansion of a business activity similarly organization is essential for product
diversification such as establishing a new product line.
e) Human treatment of employees Organization has to operate for the betterment of
employees and must not encourage monotony of work due to higher degree of specialization.
Now, organization has adapted the modern concept of systems approach based on human
relations and it discards the traditional productivity and specialization approach.
f) It is used for monitoring the activities of the organization and for assigning accountability
for areas of work undertaken by groups and individual members of the organization;
g) It allows for flexibility in order to respond to and adapt to changing environmental
influences.

Application of organizing
1. Structure
The framework in which the organization defines how tasks are divided, resources are deployed,
and departments are coordinated.
a) A set of formal tasks assigned to individuals and departments.
b) Formal reporting relationships, including lines of authority, decision responsibility, number
of hierarchical levels and span of managers control.
c) The design of systems to ensure effective coordination of employees across departments.

2. Work specialization-Work specialization (also called division of labour) is the degree to

which organizational tasks are sub-divided into individual jobs. With too much specialization,
employees are isolated and do only a single, tiny, boring job. Many organizations enlarge jobs
or rotate assigned tasks to provide greater challenges.

3. Chain of command-The chain of command is the unbroken line of authority that links all
individuals in an organization, and specifies who reports to whom.
a) Unity of Command - one employee is held accountable to only one supervisor

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 b) Scalar principle - clearly defined line of authority in the organization that includes all
employees

4. Authority, responsibility, and accountability

a) Authority is a manager's formal and legitimate right to make decisions, issue orders,
and allocate resources to achieve organizationally desired outcomes.
b) Responsibility means an employee's duty to perform assigned task or activities.
c) Accountability means that those with authority and responsibility must report and
justify task outcomes to those above them in the chain of command.

Types of authority (and responsibility)

a) Line authority managers have the formal power to direct and control immediate
subordinates. The superior issues orders and is responsible for the result—the
subordinate obeys and is responsible only for executing the order according to
instructions.
b) Functional authority is where managers have formal power over a specific subset of
activities. For instance, the Production Manager may have the line authority to decide
whether and when a new machine is needed but the Controller demands that a Capital
Expenditure Proposal is submitted first, showing that the investment will have a yield
of at least x%; or, a legal department may have functional authority to interfere in
any activity that could have legal consequences. This authority would not be functional
but it would rather be staff authority if such interference is "advice" rather than
"order".
c) Staff authority is granted to staff specialists in their areas of expertise. It is not a
real authority in the sense that a staff manager does not order or instruct but simply
advises, recommends, and counsels in the staff specialists' area of expertise and is
responsible only for the quality of the advice (to be in line with the respective
professional standards etc) It is a communication relationship with management. It
has an influence that derives indirectly from line authority at a higher level.

5. Delegation-Delegation is the process managers use to transfer authority and responsibility

to positions below them. Organizations today tend to encourage delegation from highest to
lowest possible levels. Delegation can improve flexibility to meet customers’ needs and
adaptation to competitive environments. Managers often find delegation difficult

Steps in the organizing

The following are the steps to be followed:
1. Determination of objectives. The objectives to be achieved are identified.
2. Determination, identification and enumeration of activities.
3. Grouping and assigning of activities. All similar activities are grouped together and assigned
on the basis of divisions or departments. These groupings might be done on the basis of

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 such primary functions such as production, marketing, and so on, or these may be done on a
derivative basis such as types of customers, geographical area and so on
4. Delegation of authority. People assigned particular activities and responsibilities are
assigned the necessary authority for performing these duties. Responsibility and authority
are tied together.

Determinants of organizational structure and design

1. Size-This refers to capacity, number of personnel, outputs (customers, sales), and
resources (wealth). Differentiation in the number of levels, departments, job titles,
managerial practices, such as flexibility in personnel assignments, extent of delegation of
authority increases with size.
2. Technology/Task-A lot of organizational structures are determined by the kind of
technology that the organization uses and the task that the organization is assigned to
carry out.
3. Environment adaptation-Organizations actively adapt to their environments. For example,
organizations facing complex, highly uncertain environments typically differentiate so that
each organizational unit is smaller, more certain to face problems in its areas of operations.
4. Natural Selection-Organizations whose structures are not fitted to the environment
(which includes other organizations, communities, customers, governments, etc.) will not
perform well and will fail.
5. Dependence-Every company is dependent on both their suppliers and their customers for
resources and money. To the extent that a company needs it's suppliers less than they need
it, the company has power.
6. Institutionalization-Under conditions of uncertainty, organizations imitate others that
appear to be successful. This can cause whole industries to adopt similar structural
features. .
7. Age/Life-cycle-Organizations progress through a four stage organizational life cycle.
 The first stage is the stage of “birth” when a company is formed.
 The second stage “youth” is characterized by growth and expansion of all organizational
resources.
 The third stage “midlife” is a period of gradual growth evolving eventually into stability.
 The finale and fourth stage of “maturity” is a period of stability after which sometimes
a company evolves into a decline.
As the organization goes through these stages, the organization structure changes with
each stage of the organization. Older organizations will have different structures form
young ones.

Changes to organizational structure

These are caused by:
1. Desire to make more profits
2. Desire to grow
3. New technology
4. Need to keep customers
5. Competition

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Benefits of a good organizational structure
 A good structure facilitates attainment of objectives through proper coordination of all
activities.
 Conflicts between individuals over jurisdiction are kept to a minimum.
 It eliminates overlapping and duplication of work
 It facilitates promotions of personnel by pinpointing the positions of individuals relative to
one another.
 It aids in wage and salary administration by allowing a fair and equitable wage and salary
based upon the premise that the jobs with similar requirements should have similar
benefits.
 Communication is easier at all levels of organizational hierarchy since the line of
communication and flows of authority are clearly identified on the organization chart, and it
eliminates ambiguity.
 It provides a sound basis for effective planning since the goals are clearly established and
resources clearly identified.

Guidelines of Designing an Organisation Structure

1. Structure and design support the unit’s strategy and purpose
 the structure and design as vehicle to support or change culture
 the structure support flexibility so that resources can be deployed according to shifting
priorities
 the structure financially sustainable
2. Client service needs and expectations are met
 the organisational structure helps to efficiently deliver quality products and services to
clients
 the structure support quality client service that caters for different client needs
 clients and others navigate the structure to get to what they need easily
3. Work flows are simple and standardised
 work flows easily between each step in a given process and the overall process clear
 each person in a given process can navigate the work flow
4. Service areas cooperate
 the organisation structure facilitate cooperation with other areas of the organization
 dependencies and interdependencies are clear and manageable
5. Knowledge management and communication are effective
 the organisational structure supports information sharing and feedback loops so that
services improve, processes become more efficient and successes are celebrated
 the structure enable clear and well-informed decision making and communication
6. Structure incorporates opportunities for career progression
 The structure supports career progression for staff. Strong organisational structure should
enable staff to develop their capabilities and move from position to position. Clear
relationships between positions means that staff can broaden their capabilities and
experience, act in vacant higher positions, or take on partial higher duties.
 The structure sets clear relationships between positions, with no anomalies, such as staff
supervising others at the same level.
7. Staff composition is manageable

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  Workgroups are of a size and composition that allows supervisors to provide meaningful
support and feedback to support staff performance. Workgroups can consist of 6 to12
direct reports depending upon the nature of the work, the people in the roles, and the
established processes.
8. Structures comply with governance and legislative responsibilities
 the structure enable compliance with governance and legislative requirements (industrial
awards and agreements, health and safety legislation, relevant University policies), including
reporting requirements
 the structure and design suit the style of management and governance
 Accountabilities and reporting lines are clear. Staff has multiple reporting lines which are
clear and manageable.
 each level of supervision add value and there aren’t too many layers.
9. Position design is satisfying and motivating
 structures encourage satisfying and motivating position design with:
a) a variety of tasks
b) clear responsibility for the job and understanding of how it fits with other positions
and the work of the unit
c) autonomy; that is, scope for decision making, regulating, controlling and improving
own work
d) whole tasks (where possible), ensuring people see the end results of their work
e) meaningful feedback from the staff member’s supervisor and colleagues
f) participation in decisions
g) Recognition and support.
10. Position titles are simple and clear
 Position titles are clear (simple, jargon-free, descriptive, non-discriminatory) so that people
can easily identify who to contact about what.

11. Regular reviews are conducted

 structures and design are reviewed regularly against these principles
 the structure and design be reviewed and supervisors and incumbents are involved in
reviewing structure and design.
 Reviews can be conducted in line with annual business and workforce planning processes or in
response to key events (such as changes in client needs, funding, technology, processes, and
priorities).
 Reviews can be informed by consultation with staff and management, internal/external
clients, and other stakeholders; benchmarking against structures of comparable functions in
other organisations; and the manager’s assessment of the work unit’s performance.
 Supervisors and incumbents should be invited to provide input into the design of
organisation structure and/or positions prior to changes being made.

Guidelines for effective organization

1. The line of authority should be clearly established so that each person in the in this chain of
command knows his authority and its boundaries.
2. Each person in the organization should report to only one boss.

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 3. The responsibility and authority of each supervisor should be established clearly and in
writing.
4. The higher managers are responsible for the acts of their subordinates.
5. The authority and responsibility should be delegated as far down the hierarchical line as
objectively as possible. (decentralization of power)
6. The number of the level of authority should be as few as possible. This makes the
communication easier and clear and decision making faster.
7. The principle of specialization should be applied as far as possible to facilitate specialization
which leads to efficiency and quality
8. The line function and the staff function should be kept separate. The overlapping of these
functions will result in ambiguity.
9. The span of control should be reasonable and well established. It will be narrow where there
fewer individuals who report to the same manager and wider where there are many individuals
under the same manger.
10. The organization structure should be simple and flexible. It should be simple because it is
easier to manage and it should be flexible because it can quickly adapt to changing conditions.

Mechanistic versus Organic structure

Mechanistic structure
The mechanistic organizational is similar to Max Weber’s bureaucratic organization. The basic
characteristic of an organization, based on mechanistic structure are:
1. Division of labour by specialisation. A maximum possible division of labour makes it possible
to utilize, in all links of the organization, experts who are fully responsible for the effective
fulfilment of their duties.
2. A well-defined hierarchy of authority. Every subordinate is accountable to his superior for
his own decisions and in turn, the actions of his subordinates.
3. A system of rules covering the duties and rights of all employees.
4. A system of procedures for dealing with work situations. These procedures must be time
tested and equally applicable under similar situations at work.
5. Impersonal relations among people. Rewards are based upon efficiency rather than nepotism
or personal preferences. The functioning of the organization is based upon rational and
objective standards and excludes the intervention of personal considerations, emotions and
prejudices.
6. Selection and promotion of personnel based upon technical competences and excellence.
Employees are selected on the basis of a match between the job requirements and employee
capabilities. The system of promotions corresponds to seniority or merit or both. Because
of the rules and policies governing the organization, employees are protected against
arbitrary dismissal or demotion.

Organic structures
Organic structures are sufficiently flexible in order to cope with rapidly changing environments.
They are more effective if the environment is dynamic, requiring frequent changes within the
organization in order to adjust to the new changed environment. These organization structures are
characterised by the following:

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 1. Tasks and roles are less rigidly defined. There is little emphasis on formal job descriptions
and specialisations. The ability of solving problems is given to those who can solve them
irrespective of their position or status.
2. Decision making is more decentralised. The decisions are made at the scene of operations so
that there is no assumption that people in higher positions are more know legible than people
in lower positions.
3. The atmosphere is friendlier. The employees are friendlier and respectful to each other so
that there is more information and suggestions rather than instructions; directions and
decisions from higher up passed down and vice versa.
4. Departmental boundaries are flexible. The flexibility results in cordial horizontal
relationships across departments which are equally important as compared to vertical or
chain of command relationships.

Principles of organizing
 Unity of objectives. An organization structure is effective if it enables individuals to
contribute to enterprise objectives.
 Efficiency. An organization is efficient if it is structured to aid the accomplishment of
enterprise objectives with minimum of negative consequences or costs.
 Division of work. The activities of the organization should be divided in such a way that
there is efficient breakdown of tasks.
 Span of control. No executive should be required to supervise more subordinates than he
can effectively manage.
 Scalar principle. There must be a clear chain of command.
 Delegation. Authority delegated to an individual manager should be adequate to enable him
to accomplish results expected of him.
 Functional definition. The duties and authority-relationships of different individuals must
be clearly defined so that there is no confusion or overlapping.
 Absoluteness of responsibility. No superior can escape the responsibility of his
subordinates.
 Correspondence. The responsibility exacted from a position should be commensurate with
the authority delegated to that position and vice versa.
 Unity of command. Each person should receive orders from one superior and be accountable
to him.
 Unity of direction. There must be one head and one plan for a group of activities aimed at
achieving the same objectives.
 Balance. The various parts of the organization should be kept in balance and none of the
functions should be given undue emphasis at the cost of others.
 Exception principle. Every manager should make all decisions within the scope of his
authority and only matters beyond the scope of his authority should be referred to higher
levels of management.
 Coordination. The purpose of organizing is to secure unity of effort.
 Flexibility. Device, techniques, and environmental factors should be built into the structure
to permit quick and easy adaptation of the enterprise to changes in the environment.
 Continuity. The organization should be structured so as to have continuity of operations.

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 Types of organizational structures

Functional
It is most common for business organisations to have major departments for production, marketing,
finance and human resources, etc. Each functional division can itself usually be further sub-divided
on the basis of function: for example, a human resources department may be broken into separate
sections dealing with recruitment, training, welfare and industrial relations, or the marketing
department may be divided into advertising, sales and public relations.
The advantages of functional division are:
 Work is not duplicated because each department has its own area of responsibility across
the organisation, i.e. it and it alone performs a given function.
 Professional support (education, training and development) is invariably available on a
functional basis and this can be accessed to further develop expertise.
The major disadvantages of functional division are:
 Over-specialisation, particularly coupled with the development of professionalism, may
result in a lack of understanding of the problems of other departments or an appreciation
of their role.
 Support functions may see their own goals and operational needs as more important than the
goals and needs of the front-line departments which they serve.

Product/service
This will be an appropriate basis of grouping where an organisation produces a range of quite
different products/services. For example, a motor industry firm may have a car division, a bus
division, and a truck division. Each division will be responsible for all aspects of the production and
marketing of its product, although support functions (IT services, human resources, finance, etc.)
may be provided from outside the specialist division if the individual divisions are not of sufficient
size to justify having their own.
The main advantage of this form of grouping
 Gains are made by the concentration of specialist skills and techniques and the development
of expertise,
 It enables detailed financial analysis and control in respect of each product's profitability,
return on investment, cost control, etc.
 There may be beneficial competition between different divisions in respect of
performance, although this may be disadvantageous if it is carried to the extreme of acting
against one another.
 The problem of departments assuming their own identity, separate from the rest of the
organisation, is perhaps most pronounced.

Geographical
This type of grouping is appropriate where the organisation has a distinct geographical spread to its
operations: for example, where the markets for products differ from one region (or even country)
to another. Many large companies organise at least their sales operations on this basis.
The major advantage of this geographical division is that

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  It allows close links to be built up with the region/country which is the focus of the division,
based on an understanding of the particular local conditions and requirements.
 This can result in greater responsiveness to customer needs.

The disadvantages include:

 There may be problems where decisions are taken at headquarters without reference the
division's knowledge of the local situation.
 There may be problems in deciding just how many geographical divisions to set up: too few
and each may be called upon to service too large an area, too many and resources will be
wasted.
 Each geographical division will require its own support services and possibly management
resources, so an organisation with numerous divisions will have considerable duplication of
resources and incur considerable additional costs.
 Again, the problem of divisions taking on their own life rather than seeing themselves as
part of the whole may be very pronounced where they operate far apart from each other
and from their home base.

Type of Customer
This type of grouping is appropriate where the needs of customers vary and the organisational
response must be different for different categories of customer. Perhaps the best example of this
is in respect of hospitals where the structure is designed to meet the needs of different types of
patient:
 maternity,
 intensive care,
 orthopaedic, etc.
Again, the main advantage of this is increased responsiveness to customer needs and the main
disadvantages relate to the potential cost of duplication of support services across different
divisions.

Multi-Disciplinary Projects: the Matrix Approach

All organisations make use of multi-disciplinary groupings, drawing together specialists from a
variety of functional areas, for the purpose of tackling a problem of some kind. These may vary
from small-scale, short projects of limited scope to large-scale, very long projects of application
across the whole of the organisation, such as the development and implementation of a policy of
customer care.
The location of responsibility for such projects may be within one of the functional or output-
orientated divisions, or it may lie within the central, corporate level of the organisation. The
personnel brought together for the project will come from anywhere in the organisation, their
involvement being on the basis of the relevance of their expertise and their commitment will be to
the project and the tasks involved in it. The key organisational feature of this approach is the
matrix structure.

Matrix structures have the following features:

 The main basis for operations is the project.
 Membership of project teams is drawn from functional groupings.

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  Full responsibility and authority in respect of the project objectives is delegated to the
project team as a whole, with individual members being responsible for those aspects which
fall within their particular functional specialism.
 Thus individual members have dual responsibilities: to the management structure in respect
of their own functional grouping and to the project objectives as part of the project team.
In a complete matrix form of organisation, the project itself is the location for the
decentralisation of authority,
 Projects will be established by central management and the project goals agreed at the
corporate level, usually with the management of the functional divisions.
 Project objectives, strategies and plans will then be determined by the project team.
 Under such a structure, the role of divisions will be to serve the projects, providing a home
for staff which is mainly concerned with developing and sharing specialist knowledge and
experience.

Matrix structure

The advantages of this type of structure are as follows.

 It enables a flexible response to situations which put a sudden strain on resources.
 It allows for teams to be drawn from specialist departments in just the right strength to
achieve a given objective.
 There is a ready exchange of ideas, and departmental barriers are broken down.

Management, come down strongly in favour of matrix structures. They develop the advantages as
follows.
 The project is emphasised by designating one individual as the focal point for all matters
pertaining to it.
 Utilisation of human resources can be flexible, because a reservoir of specialists is
maintained in functional organisations.
 Specialised knowledge is available to all programmes on an equal basis, and knowledge and
experience can be transferred from one project to another.

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  Project people have a functional home when they are no longer needed on a given project.
 Responsiveness to project needs and customer desires is generally faster because lines of
communication are established and decision points (for the project) are centralised.
 Consistency of policy between projects can be maintained through the deliberate conflict
built into the project/functional environment.
 A better balance between time, cost and performance can be obtained through the built-in
checks and balances and the continuous negotiations carried on between the project and the
functional organisations.

Disadvantages
1. Violation of unity of command principle
2. Power struggle
3. Excessive emphasis on group decision making
4. Excessive emphasis on conflict resolution
5. Heterogeneity
6. Administrative costs

Committee Organization
A committee is a group of persons constituted to deal with specific issues or problems of the
organization. It functions only as a group and requires the free interchange of ideas among its
members.

Characteristics Of a committee
1. Plurality Of Persons
2. Limited scope
3. Authority structure
4. Executive or non-executive

Types of Committees
There are many types of committees operating with various degrees of effectiveness. Important
among this are as follows:
1. A standing committee
2. An ad-hoc committee
3. An executive
4. An advisory committee
5. A Line-committee
6. A staff committee
7. A formal committee
8. An informal committee

Merits
1. Group judgment
2. Improved motivation

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 3. Effective coordination
4. Involvement of diverse interest groups
5. Management development
6. Tool Of Managerial Strategy
Demerits
1. Expensive
2. Time Consuming
3. Compromise decision
4. Tyranny of the minority
5. Lack of accountability
6. Tool of managerial strategy to avoid responsibility.

Free Form Structure/organic organization

Also known as boundary-less structure
 Roles, authority and relationships are not clearly defined
 Members of organisation jointly exercise authority and are jointly responsible
 Suitable for highly sophisticated activities
Virtual Organisation
Also known as network or modular organisation
 Small, core organisation that outsources major business functions
 Highly centralised

AUTHORITY RELATIONSHIPS
Authority
Definition: authority is the power to command others, to act or not to act in a manner deemed by
the possessor of authority to further organizational goals.

Characteristic/features of authority
1. It is the legitimate right of an individual
2. It is the right to command and control others
3. It is bound by certain limits
4. It is used to achieve organizational goals
5. It may be exercised through persuasions and sanctions
6. Authority is the key to the manager’s job
7. Authority can be delegated by a manager
8. Authority may be differentiated from power. Power is the capacity to influence others
while authority is the right to influence others. Power is personal while authority is
associated with a position or rank

Sources of authority
1. Formal authority
2. Competence authority
3. Acceptance authority

Responsibility

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Definition: the obligation to perform the given task to the best of one’s ability.

Accountability
Definition: obligation of a subordinate to report back to his superior that the job entrusted to him
has been completed

Power and influence

Power refers to the ability of a person to influence others. A person’s power may be measured in
terms of his capacity to give rewards or punish individuals etc.
Types of power
 Reward power
 Coercive power
 Legitimate power
 Referent power
 Expert power
The five sources of power are interrelated and the use of one type of power (for example, coercive)
may affect the ability to use another type of power (for example, referent). Furthermore, the same
person may exercise different types of power, in particular circumstances and at different times.
Coercion and expertise are the main sources of power. Like authority power is a means of exercising
influence on others. Power is a personal force and a means of exercising influence

DECENTRALISATION OF AUTHORITY
Decentralization is the tendency to disperse decision-making authority in an organized structure. It
is a fundamental aspect of delegation.

Delegation
Definition: Delegation is the process which a manager shares some of his functions and authority
with his/her subordinates.
The process of delegation involves assigning duties, entrusting authority and imposing responsibility
on subordinates.

Characteristics of delegation
1. Delegation involves sharing of authority with others.
2. Delegation is done within certain limits
3. Delegation never means abduction of responsibility
4. Delegation does not mean reduction in the authority of the superior
5. A superior exercises control to ensure that the subordinates are using their authority in
the proper manner.
6. A person can delegate authority only when he himself has the authority
7. Delegation does not mean avoiding decisions
8. Delegation of authority is based on the elementary principle of division of work.
9. Delegation of authority is a systematic process rather than an arbitrary or ad hoc exercise.

The process/steps of delegation

1. Assignment of duties

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  Define the task to be done
 Results to be expected
2. Granting of authority
 Involves authorization to use resources
 Make decisions to achieve the results expected
 Limits of authority must be clearly defined
3. Creating of responsibility
 Accountability for the performance expected

Importance of delegation
1. Relief to top executives
2. Scalar chain-directs and regulates the flow of authority
3. Specialization-superiors benefit from the specialisation of their subordinates
4. Decisions are made quickly and are relevant to the area of operation
5. Motivation-it provides a feeling of status and importance to subordinates
6. It can be used for executive development
7. It can result in growth and diversification.

Principles of delegation of authority

1. Functional definition-duties should be clearly defined
2. Delegation by results expected-the extent of authority delegated should be consistent
with the results expected
3. Unity of command-subordinate should be under the command of one superior at any given
time
4. Absoluteness of responsibility- the responsibility of a subordinate to his superior is
absolute and cannot be delegated
5. Parity of authority and responsibility-there should be no disparity between the authority
granted to a subordinate and the responsibility imposed on him
6. Exception principle-a manager should assign to his subordinates those tasks that they are
capable of performing, keeping for himself the work, which he can do better because of his
superior knowledge and abilities.
7. Scalar chain-the chain of command from the top to the bottom of the organization should
be such that every subordinate knows who has delegated authority to him and whom
matters beyond his authority must be referred to.
8. Authority level principle-subordinates should refer only those decisions to the superior
which cannot be made at their level.
Advantages of delegation
a) Basis of effective functioning.
b) Reduction in managerial load.
c) Benefits of specialized service.
d) Efficient running of branches.
e) An aid to employee development.
f) Aid to expansion and diversification of business.

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Barriers to delegation
Why managers fear to delegate.
a) A feeling of superiority.
b) Habit pattern.
c) Fear of exposure.
d) Feeing of indispensability.
e) Risk avoidance.
f) Loss of importance.
Why subordinates do not accept delegation
a) Insecurity.
b) Fear of criticism.
c) Inadequacy of information and resources.
d) Lack of self – confidence.
e) Inadequate incentives.
Steps to make delegation effective
a) Determination of specific goals.
b) Accountability.
c) Sufficient Authority and responsibility
d) Chain of command.
e) Unity of command.
f) Motivation.
g) Training.

Authority
Definition: authority is the power to command others, to act or not to act in a manner deemed by
the possessor of authority to further organizational goals.

Characteristic/features of authority
1. It is the legitimate right of an individual
2. It is the right to command and control others
3. It is bound by certain limits
4. It is used to achieve organizational goals
5. It may be exercised through persuasions and sanctions
6. Authority is the key to the manager’s job
7. Authority can be delegated by a manager
8. Authority may be differentiated from power. Power is the capacity to influence others while
authority is the right to influence others. Power is personal while authority is associated
with a position or rank

Sources of authority
4. Formal authority
5. Competence authority
6. Acceptance authority

Responsibility
Definition: the obligation to perform the given task to the best of one’s ability.

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Accountability
Definition: obligation of a subordinate to report back to his superior that the job entrusted to him
has been completed

Accountability Responsibility Accountability

1. Right to use resources 1. Obligation to perform 1. Obligation to render on
2. Can be delegated the assigned task account of
3. Arises from law or 2. Cannot be delegated performance
contract 3. Arises from authority 2. Cannot be delegated
4. Always flows 4. Always flows upward 3. Arises from
downwards 5. Temporary responsibility
5. Continuing 6. Cannot be withdrawn 4. Always flows upward
6. Can be withdrawn by 5. Temporary
notice 6. Cannot be withdrawn

Distinction between delegation Decentralization

Delegation
 It is an act or process
 It refers to a relationship between two individual i.e. superior and his immediate
subordinate.
 It is vital to management process. Only through delegation of duties can subordinates be
involved in the activities aimed at the accomplishment of enterprise objectives.
 Control over a subordinate’s performance in exercised by his superior who constitutes the
source of delegation of authority.
Decentralization
 It is the end – results of delegation and dispersal of authority at various levels
 It refers to a relationship between the top management and various departments and
division in the enterprise.
 It is optional in the sense that the top management may or may not favour a deliberate
policy to work for a general dispersal of authority.
 Even the power to control may be delegated to the department concerned.
Factors determining the degree of centralization/decentralisation of authority
 Costliness of the decision
 Desire for uniformity of policy.
 Size and character of the organization.
 History and culture of the enterprise.
 Management philosophy.
 Desire for independence.
 Availability of managers.
 Control techniques
 Decentralization performance
 Business dynamics
 Environmental influence

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Advantages of decentralization
 Relieves top management of some burden of decision-making and forces upper level
managers to let go.
 Encourages decision making and assumption of authority and responsibility
 Promotes establishment and use of broad controls
 Make comparison of performance of different organization units possible and facilitate
setting up of profit centres
 Facilitate product diversification
 Promotes development of managers
 Aids in adoption to fast changing environment.
Limitations
 Makes it more difficult to have a uniform policy.
 Increases complexity of coordination of decentralized organizational units
 May result in loss of some control by upper levels of managers
 May be limited inadequate control techniques
 May be constrained by inadequate planning and control systems.
 Can be limited by the availability of qualified managers
 Involves considerable expense in training managers.
 May be limited by external forces (slept factors)
 May not be favoured by economics of scale of some operations.
Factors determining the degree of centralization
 To facilitate personal leadership
 To provide integration
 To achieve uniformity of action.
 To handle emergencies.
Disadvantages of centralization
 Top management is overburdened with work and lower level managers do not get
opportunity for development
 Most decisions taken are far away from the scene of actions and this may result into
delay and considerable cost
 The motivation and morale of subordinates executives tend to be low
 The growth of the enterprise is limited to the competence of a few top executives

STAFFING
The staffing function is concerned with the acquisition, development and maintenance of efficient
and satisfied team of employees in an organization. It involves the recruitment, training,
development and appraisal of employees

Employee Resourcing
This is concerned with assessing future people requirements in terms both of numbers and levels of
skills and competences, and formulating and implementing plans to meet those requirements

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 1. Human Resource Planning
Human resource planning is a process of forecasting an organization future demand for and supply of the
right types of people in the right number
Its purposes are:
1. Provide timely advice to the management on status of existing HR in the enterprise and the
availability of skills in the market
2. Interpret the plans relating to production, sales, support, marketing and other such functions so as
to understand the need of the enterprise in terms of number and quality of employees in the
short /long term
3. To evolve strategies for the effective utilization of internal resources including process
improvements, organization re-structuring, automation, training etc
4. To evolve hiring strategies in order to acquire the right resources at the right time.
5. To influence the enterprise in the evolution of an appropriate culture in the adoption of suitable
managerial styles and development of the right personnel policies that are conclusive to the hiring
and retention of qualified personnel in the organization.

Significance of human resource planning

 It defines the human resources required to meet the organizations objectives.
 HRP provides a sound basis for the selection and training of manpower.
 It estimates the size and makeup of the future work force in order to adjust supply of
personnel to the demand.
 By matching skills to job requirements it helps in ascertaining the status of the available
personnel and to discover untapped talent.
 It warns management of upcoming manpower shortages and surpluses.

The advantages of human resource planning include the following.

 The organization will be better equipped to cope with human resourcing consequences of
changing circumstances
 Careful consideration of likely future human resource requirements could lead the firm to
discover new and improved ways of managing human resources.
 Labour shortfalls and surpluses might be avoided.
 It helps the firm create and develop employee training and management succession
programmes.
 Some of the problems of managing change may be foreseen and their consequences
mitigated.
 Management is compelled to assess critically the strengths and weakness of its labour force
and personnel policies.
 Duplication of effort among employees can be avoided; co-ordination and integration of
workers efforts is improved.

Limiting factors to HRP

 The type of industry:
 Opposition or scepticism among members of management; all must be convinced of the value
of human resource planning if it is to be a success.
 Resistance to changes expressed in the plan.

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  The difficult of forecasting social and economic changes accurately, particularly in an era of
high unemployment.
 The rapid growth of new technologies
 The plan may indicate recruitment and training programmes which, although desirable may
be impossible to put into practice because the money to pay for them may not be available
now.
 Non-involvement of operating managers tends to make HR planning ineffective

2. Job Analysis
Job analysis is a formal and detailed study of jobs. It refers to a scientific and systematic analysis
of a job in order to obtain all pertinent facts about the job.
Job analysis provides the following information about a job:
i) Identity of the job in terms of its title and code number.
ii) The operations and tasks’ involved in the job including their timing, significance, complexity and
sequence.
iii) Location, physical setting, hazards and discomforts, supervision given and received and other significant
characteristics of the job.
iv) Duties involved in the job along with the frequency of occurrence of each duty.
v) Materials, methods and equipments used in performing the job.
vi) How the job is performed i.e. the nature of operations like cleaning, lifting, handling, drilling, feeding,
driving, guiding, assembling, etc.
vii) Relationship of the job with other jobs in the organisation
viii) Personal attributes required for performing the job e.g. physical strength, education, mental skills,
attitudes, experience, training, etc

Purpose and importance of job analysis

1. Organizational Design: Job analysis is useful in classifying jobs and interrelationship among them.
2. Human Resource Planning: Job analysis provides useful information for forecasting manpower
requirements in terms of knowledge and skills. It also helps in planning for promotions and transfers by
indicating lateral and vertical relationships between different jobs.
3. Recruitment and Selection: Job analysis provides understanding of what an employee is expected to do
on the job. Such understanding serves as the basis for meaningful forecast of job performance.
Selection methods are based upon such forecasts.
4. Placement and Orientation: A clear understanding of job requirements helps in matching these
requirements with the abilities, interests and aptitudes of people.
5. Training and Development: Job analysis provides valuable information required to identify training
needs, to design training programmes and to evaluate training effectiveness.
6. Performance Appraisal: Job analysis helps in determining performance standards in critical parts of a
job. Employee performance can then be evaluated against known standards and critical activities.
7. Career Path Planning: Job analysis provides a clear idea of opportunities in terms of career paths and
jobs available in the organisation.
8. Job Design: With the help of knowledge about job requirements, improvements in work design and work
methods can be made to improve productivity and job satisfaction.
9. Job Evaluation: Job analysis serves as the basis for determining the relative worth of different jobs.
It therefore helps in developing appropriate wage and salary structures, with internal pay equity
between jobs.

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10. Labour Relations: Information obtained through job analysis is helpful to both management and trade
unions for collective bargaining. It can also be used to resolve disputes and grievances relating to work
load, work procedures, etc.
11. Employee Counselling: Job analysis provides information about career choices and personnel limitations.
Such information is helpful vocational guidance and rehabilitation counselling
12. Health and Safety: Job analysis reveals unhealthy and hazardous environmental and operational
conditions in various jobs. Heat, noise, dust, fume etc. are examples of such conditions. On the basis of
such information management can develop measures to ensure the health and safety of employees.

3. Job description
The data collected through job analysis provides the basis for preparing job descriptions and job
specifications. It is a factual and organised statement describing the job in terms of its title,
location, duties, and responsibilities, working conditions, hazards and relationship with other jobs.

Benefits of Job descriptions

i) Job grading and classification
ii) Placement of new employees on a job
iii) Orientation of new employees towards basic duties and responsibilities
iv) Promotions and transfers
v) Defining and outlining career paths
vi) Defining the limits of authority
vii) Developing performance standards

4. Personal specification
Job specification is a statement which tells us minimum acceptable human qualities which helps to
perform a job. Job specification translates the job description into human qualifications so that a
job can be performed in a better manner. Job specification helps in hiring an appropriate person for
an appropriate position. The contents are:
 Job title and designation
 Educational qualifications for that title
 Physical and other related attributes
 Physique and mental health
 Special attributes and abilities
 Maturity and dependability
 Relationship of that job with other jobs in a concern.

Advantages of Job Specification

 It is helpful in preliminary screening in the selection procedure.
 It helps in giving due justification to each job.
 It also helps in designing training and development programmes.
 It helps the supervisors for counseling and monitoring performance of employees.
 It helps in job evaluation.
 It helps the management to take decisions regarding promotion, transfers and giving extra
benefits to the employees.

5. Recruitment

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Recruitment is a process of finding and attracting capable applicants for employment.

Sources of recruitment
Internal sources
 Transfers
 Promotions
 Present employees
Advantages of internal sources of manpower
 It is less costly than external recruiting
 Organizations have a better knowledge of internal applicant’s skills and abilities than acquired
candidates in an external recruiting effort.
 Through performance appraisal and other sources of information about current personnel, decision
makers will have much more extensive knowledge on internal candidates and thus make more and valid
selection decisions.
 An organization policy of promotion from within can enhance organizational commitment and job
satisfaction, leading to lower employee turnover and productivity
 Best used for succession planning.
 No need for initiation

Disadvantages
 Internal recruitment approach simply propagates the old way of doing things.
 Complaints of unit poaching good employees from another unit
 Personal biased decision rewards specific candidates not necessary based on performance or job
requirements.
 Employees who apply for jobs and do not get them may become discontented;
 It may be difficult for the insider to shake off the reputation of being “one of the gang”
 Inbreeding is another potential drawback.
 Delays may sometimes result from the fact that a series of replacement have to be
recruited, starting from a vacancy at the lowest level.
 Those no selected may feel a sense of grievance.

External Sources
 Advertisements.
 Professional magazines.
 Educational institutions.
 Professional bodies.
 Personnel consultants.
 Circulars and posters.
 Field trips.
 Unsolicited applicants.
 The Internet

Merits
 Wide choice. It enables a wide choice of personnel from a large number of applicants. This
allows for the selection of the best candidates.

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  Fresh air and outlook. The enterprise greatly benefits from freshness of outlook of persons
chosen from external sources.
Demerits
 Heart-burning among existing employees.
 Expensive.
 Orientation.
 Danger of maladjustment.

6. Selection
Selection involves the choosing of suitable candidates by means of the recruitment process.
Selection is the search for the optimal match between the job and the amount of any particular
characteristics that the applicant possesses.

Selection criteria
Most organizations use the following variables in selection of employees:
 Formal education.
 Experience and past performance.
 Physical characteristics.
 Personal characteristics and personality type.
Selection methods
The main selection methods are the interview, assessment centres and tests.
Interviews
 Personal interviews (one on one - two people meet alone and one interviews the other by seeking oral
responses to oral inquiries.
 Sequential – several persons interview the applicant in sequence, before a decision is made. This can be
structured or unstructured.
 Panel/selection board – a group of interviewers questions the candidate. This may have advantage over
the others because in sequential candidates may cover the same ground over and over again with each
interviewer. But panel format lets the interviewers ask follow up questions based on the candidates
answer. This may elicit more responses.
 Computerized interview – in this case a job candidate’s oral and visual responses are obtained in
response to computerized oral or visual or written questions and/situation. The questions are
presented in a multiple choice and questions come in rapid sequence. After the computerized interview
there is usually a one on one

Selection interview
The purpose of the selection interview is to obtain and assess information about a candidate which
will enable a valid prediction to be made of his or her future performance in the job in comparison
with the predictions made for any other candidates. The selection interview is aimed to provide
answers to the following questions:
 Can individuals do the job-are they competent?
 Will individuals do the job-are they well motivated?
 How will individuals fit into the organization?
Advantages of interviews

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  Provide opportunities for interviewers to ask probing questions about the candidate’s
experiences and to explore the extent to which the candidate’s competences match those
specified for the job;
 Enable interviewers to describe the job and the organization in more detail, suggesting some
of the terms of the psychological contract;
 Provide opportunities for the candidates to ask questions about the job and to clarify issues
concerning training, career prospects, the organization and terms and conditions of
employment.
 Enable a face-to-face encounter to take place so that the interviewer can make assessment
of how the candidate would fit into the organization and what he or she would be like to
work with;
 Give the candidate the same opportunity to assess the organization, the interviewer and the
job.
 They enable a number of different people to have a look at the applicants and compare
notes on the spot.
Disadvantages
 First impression – which one gets from the interviewees application form, and personal appearance may
prejudice the whole exercise.
 Misunderstanding of the job – interviewers who do not know precisely what the job entails and what
sort of candidates is best suited for it usually make their decision based on incorrect stereotype of
what a good applicant is.
 The order in which you see applicants affect how you rate them. After first evaluating unfavourable
candidates, an average candidate can score quite highly
 Pressure to hire highlight problems like the error or contrast.
 Non verbal behaviour and impressions mismanagement – eye contact, low voice etc can influence the
interviewer’s decision.
 Body language, smile, posture may interfere with the interviewer’s judgment.
 Effect on personal characteristics stereotyping. Involves categorizing groups according or general
traits then attributing those traits to a particular individual once the group membership is known.
 Attractiveness, gender, race in general, individual ascribe more favourable traits more successful life
outcomes to attractive people.
 Some see men or women as more suitable or a certain race as more suitable.

Assessment centres
 Is a 2 to 3 days simulation in which 10-12 candidates’ are presented with realistic tasks (like making
presentation, meetings, caser study analysis – each under watchful eye of experts. Also included are
interviews, leadership, group discussions, and management games. At the end candidates are selected
based on their performance

Graphology
This can be defined as the study of the social structure of human being through his/her writing.
Its use in selection is to draw conclusion about a candidate’s personality from his/her handwriting
as a basis for making predictions about future performance in a role. However a very small
percentage of firms use this selection method.

7. Retention

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Why people leave organizations and areas of action
 Uncompetitive, inequitable or unfair pay systems.
 Feeling that they are not being treated well.
 Jobs may be designed poorly resulting job dissatisfaction.
 Employees feeling that they are not recognized for their contributions.
 Lack of loyalty.
 Lack of career development.
 Poor selection and promotion procedures.
 Poor orientation programmes.
 Lack of work-life balance.
 Poor working conditions.
 Lack of understanding by line managers of their role in retention of employee.

8. Training and development

Training
Training is the process of increasing the knowledge and skills of an employee for doing a particular
job. It is an organized activity designed to create a change in the thinking and behaviour of people
and to enable them do their jobs in a more efficient manner.
Purpose of training
 To enable the employees to get acquainted with their present or prospective jobs
 To increase their knowledge and skills
 To make old employee familiar with new machines and techniques by refreshing their
knowledge
 To reduce time and money wastage which would result if workers learned through trial and
error
Benefits of training
 Higher productivity
 Better quality of work
 Less learning period
 Cost reduction
 Reduced supervision
 Low accident rate
 High morale
 Personal growth
 Improve organizational climate.

Training programmes
 Orientation or induction training
 Apprenticeship
 Delegation
 Promotion and transfer
 Refresher training and retraining
 Job rotation
 Creation of “assistant to” positions
 Committee or board membership

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External training or off- the-job programmes
1. Training by management institutions
 Special courses
 Case study
2. Executive development
3. Off the job training methods
 Conference
 Role playing
 Management or business games

 Multiple management; Top management integrating lower and middle level managers in the
planning and administration of corporate affairs. Multiple-management plans provide an
enhanced opportunity for an on-the-job training and assessment process whereby future
top level managers are chosen and trained.
 Sensitivity training
 Brainstorming
 Assertive training

9. Staff performance appraisal

Performance appraisal or evaluation is the process of assessing the performance and progress of an
employee on a given job and his/her potential for future jobs.

Objectives of performance appraisal

 Provide feedback on employees so that they can know how to improve on their job.
 Provide a valid database for personal decisions concerning placement, pay, promotions, transfers
and even punishments.
 Diagnose strength and weakness of the individual employee so as to identify further training needs.
 Provide coaching, counselling, career planning and motivation to the subordinates.
 Test the effectiveness of recruitment, selection, placement and induction programs.

Importance of performance appraisal

a) It provides valuable information for personnel decisions such as pay increases, promotion,
demotions, transfer and terminations.
b) Helps judge the effectiveness of recruitment, selection, and placement and orientation system of
the organization.
c) Useful in analyzing training and development needs, Needs can be assessed because performance
appraisals reveal people who require further training to remove their weakness.
d) Can be used to improve performance through appropriate feedback, working and counselling
employees.
e) It facilitates human resource planning, succession and career planning

Limitations of performance appraisal

1. Errors in Rating
 Halo effect: It is a tendency to rate an employee consistently high or low on the basis of overall
impression.

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  Central Tendency: It means assigning average ratings to all employees in order to avoid
commitment or involvement.
 Constant Errors: Some evaluators tend to be lenient while others are strict in assessing
performance: the first case performance is overrated (leniency) while the second type it is
underrated (strictness).
 Personal Bias: Performance appraisal may become invalid because the rater dislikes an employee.
 Spill over Effect: This arises when past performance affects assessment of present
performance. For instance, recent behaviour or performance of an employee may be used to
judge him/her.
2. Lack of reliability Lack of consistency overtime and among different raters may reduce the reliability
of performance appraisal.
3. Incompetence Raters may fail to evaluate performance accurately due to lack of knowledge and
experience.
4. Negative Approach Performance appraisal may lose most of its value when the focus of management is
punishment rather than on development of employees.
5. Multiple Objectives Raters may get confused due too many or unclear objectives.
6. Resistance Trade unions may particularly resist on the ground that it involves discrimination among its
members.
7. Lack of knowledge The staff appraising performance of employees may not be trained and experienced
enough to make correct appraisal.

DIRECTING
Directing is telling people what to do and seeing that they do it to the best of their ability.
Directing provides the following benefits:
 It initiates action
 It helps in getting maximum output of individuals
 It integrates individual effort
 It facilitates change in the organization

Direction is characterized by the following:

 It is a dynamic and continuing function. It is management in action, the essence of
management practice
 It provides a link between all other functions of management by initiating effective action
towards the accomplishment of organizational objectives.
 Direction produces results by converting plans into performance.
 It is pervasive. Managers at all levels and in all organizations perform it.
 It is concerned with relationships between people and is concerned with creating
cooperation and harmony among the members of a group

The process of directing

1. Issuing orders and instructions to subordinates. An order is a means of initiating, modifying or
stopping an activity. It is the primary tool of directing by means of which activities are started
altered guided and terminated.
2. Continuance guidance and supervision of employees to ensure that they carry out their
assignment in the proper manner.

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3. Motivating subordinates to work for the achievement of the organizational objectives.
4. Communicating with the employees to understand their needs aspirations problems and
suggestions.
5. Maintaining discipline and rewarding those who perform efficiently.
6. Providing leadership to the subordinates so that they work with zeal and confidence.
Principles of directing
 Harmony of objectives. Managers should design a system under which people can satisfy their
personal interests by working for enterprise goals.
 Unity of command. A subordinate should at a time receive orders from and be accountable to
only one superior.
 Individual contribution. Performance is effective when every individual in the organization
makes a distinct and maximum contribution to enterprise objectives.
 Direct supervision. Personal supervision improves the motivation and morale of subordinates
and improves their loyalty to the organization
 Appropriate techniques. The techniques of direction should be efficient and appropriate to
the people, the task and the situation.
 Managerial communication. Two-way-flow of information is the most effective means of
securing understanding and cooperation among members of the organization.
 Comprehension. The communicator should ensure that the receiver actually understands the
communication
 Principle of follow through. A manager should take action to ensure that orders and
instructions are well understood and properly carried out by the subordinates to accomplish
the task.
 Strategic use of informal organization. Managers should accept and use the informal
organization to supplement and support the formal channels of communication
 Effective leadership. Managers should provide effective leadership by guiding and counselling
their subordinates on work as well as on their personal problems.

CONTROLLING
Definition: The managerial function of controlling involves the measurement of actual performance,
comparing it with the standard and correcting deviations to ensure attainment of predetermined
objectives.
Nature of control
1. It is a follow up action to other management functions. It completes the management
process.
2. Control is a continuous process. It involves continuous review of performance and revision of
standards of operations.
3. Control is based on planning. Measurement of performance requires certain standards, which
are laid under planning.
4. Action is the essence of control. An effective control system facilitates timely action to
adjust performance to predetermined standards so that there is minimum wastage of
resources.
5. Information is the guide to control. Feedback enables the manager to determine how far
the actual operations are proceeding according to plans or standard and where remedial
action is needed.

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 6. Control aims at the future. Control action seeks to regulate events in future, as the past is
uncontrollable. It is thus backward looking as well as forward-looking.

Relationship between Planning and Control

 Planning serves as basis of control. The plans act as the standards for evaluating actual
performance.
 Control cannot be effective unless a clear goal or target has been laid down. Planning sets
the course, control attempts to make operations adhere to the course.
 The control process may reveal deficiency of planning and may lead to revision of plans.
 Control makes planning a focused exercise and planning provides direction to control.
The two are interdependent and complimentary to each other.

Steps in the control process

 Establishment of standards.
 Measurement of actual performance.
 Analysis of variances.
 Taking corrective action.

Essential requirements of a good control system

1. Suitability. It should be tailor made suit the nature and requirements of the activity
controlled.
2. Promptness’. It should detect and report deviations as soon as possible to minimize wastage
and losses.
3. Forward looking. A good control system should enable the manager to think ahead and to
plan for the future to avoid recurrence of the problem.
4. Control by exception. It should focus attention on the key areas where control action is
most urgent.
5. Objectivity. Standards and measurement of performance should as far as possible be
objective, verifiable and specific.
6. Flexibility. The control system should be flexible enough to be adjusted according to
changes in needs and circumstances.
7. Organization structure is a means of control. The control system should conform to the
basic structure of the organization.
8. Economy. Controls should be worth their cost. A small company cannot afford the elaborate
control system of a giant firm.
9. Simplicity. The control system should be simple to administer.
10. Suggestive. A good system should detect failures and also discloses where they are
occurring, who is responsible for them and what should be done about them.
Importance of control
1. Facilitates decision-making.
2. Facilitates decentralization.
3. Stimulate action. It prevents recurrence of mistakes.
4. Enhances employee morale by enabling management to identify changes that are affecting
the organization so that advance action can be taken to cope with the threats and
opportunities created by change.

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 5. Promotes efficiency of operation. It helps to measure progress, detect deviations and
adjust operations.
6. Promotes coordination. Controlling helps to ensure that actions proceed according to plans,
that proper direction is taken, and that the various factors are maintained in their correct
interrelationships so that adequate coordination is attained.
7. Psychological pressure. The existence of a control system has a positive impact on the
behaviour of employees. They become conscious while performing their duties because they
know that they are being observed and their performance will be evaluated against
standards.

COORDINATION
Definition It is the task of blending the activities of individual and group effort in order to
maximize contribution towards the accomplishment of common goals.
Characteristics of coordination
 Coordination is not a distinct function but the very essence of management.
 Coordination is the basic responsibility of management and it can be achieved through the
management
 Coordination does not arise spontaneously or by force. It is the results of conscious and
concerted action by management.
 The heart of coordination is the unity of action, which involves fixing the time and manner
of performing various activities.
 Coordination is a continuous or an ongoing process.
 Coordination is required in-group effort, not individual effort.
 Coordination has a common purpose of getting organizational objectives accomplished
 Balancing, timing, and integrating are the three elements of coordination
Need and importance of coordination
 Increase in size and complexity of operations. Need for coordination arises as soon as the
operations become multiple and complex.
 Specialization. Division of work into specialized functions and departments’ leads to
diversity and lack of uniformity. Coordination thus becomes necessary.
 Clash of interest. Individuals may pursue their own personal goals at the expense of
organizational goals. Coordination brings about harmony between the two types of goals by
making individuals see how their jobs contribute to the common goals of the organization.
 Different outlook. Capacity, talent and speed of people differ widely. It becomes imperative
to reconcile differences in approach, timing and effort to secure unity of action.
 Interdependence of units. Various units of organizations depend upon one another for their
successful functioning. The output of one unit serves as the input of another. Coordination
increases with an increase in the interdependence between organizational units.
 Conflicts. Coordination avoids potential sources of conflict.

Types of coordination
 Internal coordination is coordination between the different units of an organization
 External coordination refers to coordination between an organization and its external
environment comprising government, community, customers, investors suppliers competitors
etc

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  Vertical coordination implies coordination between different levels of the organization. It
ensures that all levels in the organization act in harmony and in accordance with the goals of
the organization.
 Coordination between different departments and other units at the same level of
management is called horizontal or lateral coordination.

Factors for achieving effective coordination (principles of coordination)

 Direct personal contact. Coordination is best achieved through direct personal contact with
the people concerned.
 Early beginning. Effective coordination can be achieved if commenced early especially during
the early stages of planning and policy-making through mutual consultations and
participation.
 Reciprocity. When people appreciate the reciprocity of relations they avoid unilateral action
and coordination becomes easier.
 Continuity. Coordination is an ongoing or never ending rather than a once for all activity.

Effective coordination skill/techniques

 Sound planning. Clear-cut objectives harmonized policies and unified procedures ensure
uniformity of action.
 Simplified organization. The line of authority and responsibility from top to bottom of the
organization structure should be clearly defined.
 Effective communication. Effective interchange of opinions and information helps in
resolving differences and in creating mutual understanding.
 Effective leadership and supervision. A good leader can guide the activities of his
subordinates in the right direction and can inspire them to pull together for the
accomplishment of common objectives.
 Chain of command. Exercise of authority through the chain of command or hierarchy is the
tradition means of coordination.
 Indoctrination and incentives. Indoctrinating organizational members with the goals and
mission can transform a neutral body into a committed body. Incentives may be used to
create mutuality of interest and to reduce conflicts.
 Liaison department. Where frequent contacts between different organizational units are
necessary liaison officers may be employed.
 Voluntary coordination occurs where organizational units appreciate the working of related
units and modifies its own functioning to suit them. This is possible when there is dedication
and mutual cooperation.

SUPERVISION
Supervision implies expert overseeing of people at work in order to ensure compliance with
established plans and procedures. Supervision is an essential step in the process of directing. To be
effective a supervisor must possess technical and human skills.

Functions of a supervisor
A supervisor performs the following functions:
1. Arrange work assign tasks and define responsibilities
2. Issue orders and instructions and explain management plans

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 3. Establish methods and procedures and enforce rules and regulations
4. Maintain teamwork and discipline
5. Keep management informed of the progress of work and supply data on current operations
6. Ensure supply of tools materials etc to workers
7. Listen to workers complains grievances and suggestions and convey them to higher
authorities
8. Coordinate individual efforts and control day to day operations
9. Recommend pay increase promotions transfers etc
Factors of effective supervision
a) Human relations skills. An effective supervise must possess human relations skills. He must
recognize individual differences and adopt a people oriented approach in order to build up
harmonious interpersonal relations in his department.
b) Technical job knowledge. He/she must be technically competent to guide his workers in the
best way of doing their work.
c) Knowledge of the company. He or she should know fully the plans and policies of his company
and should keep abreast of any changes in such policies or plans
d) Proper leadership. The leadership style should be appropriate to the nature of the task and the
type of workers.
e) Favourable work climate. Top management should create a climate conducive to effective
supervision. Supervision should be given adequate authority and status in the organization

Principles of supervision
a) Impartiality:
 No favours should be shown and all workers be treated similarly. Personal likes and dislikes
should not affect actions taken.
b) Practice participative management:
 Every member of the work group is given the right to make suggestions and discuss work
methods. It is not only supervisors who have a monopoly of new and better ideas.
c) Prompt enforcement of all rules and regulations:
 Rules and regulations must be enforced promptly and any delay will reflect in decision and
inability to cope with the situation.
d) Simple instructions:
 Issue clear and simple instructions and show great patience where asked to repeat or deal
with new hands who are not familiar with the work.
e) Insist on proper work output:
 Satisfactory work output is the chief responsibilities of the supervisor and therefore he
should stress upon the need for every employee to perform his best.
f) Watch waste of material and time:
 He/she should guide against waste of material and time. He/she should guide against waste
of material and time.
g) Security opinions of employees regarding supervision:
 It is necessary to do so to avoid trouble in due course. This can be done through spot
interviews, attitude surveys, casual conversations and discussion with groups to find out
what is bothering subordinates.
h) Inform the employees about policies etc:
 Supervisor should interpret the policies etc of the organization to the workers.

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 i) Inform the higher management of the supervisory action:
 The higher management should know what supervisory action is taking place and why some
supervisors’ action requires the backing of higher management.
j) Development of capable assistants:
 Develop understudies many a time failure to do so may jeopardize the chances of the
promotion of the supervisor himself.

Types of supervisors
Task oriented supervisor- These bosses—about 10% of all supervisors, are tough, controlling and
task-driven. They’re “type A” personalities, highly focused on achieving goals and driving
productivity. Nonetheless, employees tend to rate taskmasters highly in terms of ethics and
competence, although few employees admit to preferring this kind of boss.
People oriented supervisor Although mostly pleasant, they get low marks from employees. They see
them as incompetent, inconsistent and clueless. Employees give these bosses little respect, and are
loyal to them about as much as they are to taskmasters. Employees often consider them friendly
and fun to be around, but Employees also recognize the dishonesty, unreliability and cluelessness
these bosses may bring to the workplace
Task/people oriented supervisor is a caring mentor, relating well to direct reports, and greatly
appreciated by employees. They care about their people, and are cheerful, generous, friendly and
flexible. These types of supervisors provide the greatest levels of satisfaction and commitment for
their subordinates. Employees serving under this type of supervisor normally reported the longest
tenure in their jobs.

COMMUNICATION
Communication is the process of passing information and undertaking from one person to another. It
is a process by which meaning or thoughts are exchanged between individuals through a mutually
understood language or symbol.
The main aspects of communication that need to be considered are:
 The source of communication i.e. the sender
 The content of communication
 The process by which the communication is transmitted e.g. dictation and typing
 The method by which the communication is transmitted e.g. letter, telephone telex.
 Procedures involved in receiving a communication e.g. mail handling distribution
 The understanding of the communication by the recipient
 Communication is a circular process. Every communication leads to some reaction or
feedback, which in turn generates future communication.
The communication process
The various steps or elements in the process of communication are as follows
1. Communicator: the communication process begins when the communicator or sender has a
message to communicate to others. The communicator serves as the source and initiates
the communication process.
2. Message: Message is the body or the subject of communication. It contains words symbols,
pictures, or some other form, which will make the receiver understand the message.
3. Encoding: The communicator or sender of the information express his ideas into words,
symbols or even signs or gestures to convey the message. This is known as encoding the

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 message. The use of symbols increases the speed of communication and helps in keeping the
message secret.
4. Communication channel: Channel is the media through which the message passes from the
sender to the receiver. It may be formal or informal or oral.
5. Receiver: The person who receives the message is known as the receiver. It is the receiver
to whom the message is directed and the communication process is incomplete without the
receiver of the message.
6. Decoding: The receiver of the message decodes the message to derive meaning from the
message.
7. Feedback: The reaction, reply or response, which the receiver of the message sends to the
sender, is called feedback. The communication process is said to be complete when the
feedback information is received by the communicator
Sender Message Encoding Channel Receiver Decoding

Feedback
Types of communication
Communication may be classified on more than one basis. On the basis of relationship between the
parties concerned, communication may be: -
a) Formal, or
b) Informal
On the basis of its flow of direction may be: -
a) Downward
b) Upward
c) Sideward
And on the basis of the methods used for the purpose communication may be: -
a) Oral
b) Written
c) Gestures.
Importance of communication
The object of communication is to secure action or reaction. Communication is a part and parcel of
the overall management function
a) Aid to managerial performance.
b) Aid to understanding and acceptance of work.
c) Aid to leadership.
d) Aid to coordination.
e) Aid to job-satisfaction.
f) Aid to economy in time and effort
g) Aids to public relations.

Barriers to communication
The distortion or filtering of information may be due to the following:
1. Mechanical barriers.
2. Organisational barriers
3. Personal barriers.
Mechanical barriers

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  Distortion:
 Filtering:
 Overloading

Organisational Barriers
 Inadequacy of facilities:
 Inadequate policies, rules and procedures:
 Status patterns:
Personal barriers:
 Lack of attention or interest.
 Hasty the conclusion:
 Lack of confidence in the communicator.
 Improper state of mind
 Love of status quo.

Principles of effective communication or essentials of effective communication

 Clarity: The basic purpose of communication is to create an understanding and cooperation.
The ender must use simple and commonly understood words so that the receiver can
comprehend the message without difficulty. The contents of the communications must not
be vague or amendable to misinterpretation.
 Adequacy: Organisation members must be provided with all the information that is needed
for effective performance of work. Inadequate information delays action spoils relations
and reduces the efficiency of operations.
 Right timing: The message should be sent at the proper time and should reach the receiver
when he requires. The utility of the communication is lost if it’s delayed.
 Integrity: All messages should be formed and transmitted to support the integrity of the
organisation. The communication system should reflect the objectives of the organisation.
 Participation: The receiver must be involved in the planning and transmission of the message.
Such participation helps to promote mutual trust and confidence.
 Strategic use of the grapevine: Management should employ informal communication to
supplement and strengthen formal channels. The grapevine can be used to transmit
information not considered appropriate for formal communication.
 Two-way communication: A good communication system must contain a feedback mechanism.
The sender should try to know the reactions of the receiver. This will enable the
management to ascertain whether or not the message is properly understood and acted upon
by subordinates.
 Economy: The communication system should not be unreasonably expensive.
 Appropriate channels: The media of communication should be appropriate to the message
and the receiver .It should be tailor made to the problems and requirements of the
organisation.
 Flexibility: The system of communication must be flexible enough to adjust to the changing
of requirements of the organisation.
 Attention: The receiver of the communication must be attentive and should have an open
mind.

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 Administration in management
The distinction between management and administration is academic. In actual practice, the two
terms are used interchangeably. The term administration is more popular in government or public
organizations while the word management is more commonly used in the business world where
economic performance is of primary importance.
Both management and administration is based on the same principles and functions. In order to
resolve the terminological conflict between management and administration we can classify
management into:
1. Administration management-this involves determination of objectives and policies.
2. Operative management –is primarily concerned with the execution of plans for the
achievement of the objectives.

At every level of management, an individual performs both types of functions. Every manager
spends a part of his time on administrative management and the remaining time on operative
management.
Managers at higher levels spend more time on administrative functions, that is, determining
objectives and policies while managers at lower levels devote greater time on managerial functions.

Distinction between administration and management

Points of distinction Administration Management
Nature It is determinative or thinking It is an executive or doing function
function
Type of work It is concerned with the It is concerned with the
determination of major objectives implementation of policies.
and policies
Levels of authority It is mainly a top level function It is largely a middle and lower level
function
Influence Administrative decisions are Managerial decisions are influenced
influenced by public opinion and by objectives and policies of the
other outside forces organization
Direction of human It is not directly concerned with the It is actively concerned with
efforts direction of human effort direction of human efforts in the
execution of plans
Main functions Planning and control are the main Directing and organizing are the
functions involved in it main functions involved in it
Skills required Conceptual and human skills Technical and human skills
Usage Used largely in government and Used mainly in business
public sector organizations

Illustrations Commissioner, registrar, governor General manager , Sales manager,

general manger, sales manger Branch manager

Development and use of manuals

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A manual is a written record of information and instructions regarding policies, regulations,
functions, systems, procedures and methods framed with a view to guide the efforts of the
employees in the organization.
Manuals are needed for a variety of reasons;
 Elimination of repetition of instructions
 Standardization of instructions
 Fixation of responsibility
 To aid employee training

Types of manuals
This can be grouped under the following broad categories;
 Policy manual. A policy manual contains decisions, resolutions and direction of the board of
directors stating the policies of the company.
 Company manual: It provides the set up of the company as a whole. It describes the duties
and responsibilities of various departments as well as of various managers. It outlines the
formal chain of command and lines of promotion in the company.
 Operational and functional level manual: It defines the established standards, procedures
and methods for various jobs. It gives an overall view of the procedures and practices to be
followed by employees.
 Departmental manual: It gives detailed information about the organization policies and
procedures of one department. The interdepartmental relationships are shown with the help
of charts and diagrams. Each department has its own manual such as production manual,
marketing manual etc.
 Rules and regulations manual: This manual gives information about operating rules and
employment regulations. It describes rules regarding hours of work, timing, leave, canteen,
library and recreation. It may explain employee benefit plans like group insurance,
hospitalization, housing, safety, etc.

Advantages of manuals
 It contains in writing all important decisions regarding the internal structure of the
business which are useful to them.
 It contains rules and regulations and instructions and procedures in writing form which are
helpful to employees
 It is useful in the orientation and induction programme and training for new employees.
 It permits quick decisions at lower levels. Instructions and policies are stated in precise
terms and supervisors can take decisions promptly by reference to the manual.
 It helps to avoid jurisdiction conflicts by identifying clearly the source of authority.
 It facilitates delegation of authority and provides consistency and uniformity of delegation
of authority and management by exception.

Limitations of manuals
 Preparation of manuals is an expensive and time consuming process. The small industrial
houses cannot afford to have manuals.
 It may create rigidity in the organization. The detailed description of procedures and
practices in writing leaves little scope for individual initiative and discretion.
 Manuals may put on record those relationships which should not be exposed.

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 Overview of types of business organizations
A business organization exists to provide goods and services at a profit. Making a profit may not
necessarily the sole aim of a business, but it is what distinguishes it from a non-business
organization. The most common types of business organizations are as follows;
 Limited companies
 Sole trader
 Partnerships
 Cooperatives
Limited companies
When a limited company is formed, it is said to be ‘incorporated’ that is endowed with a separate
body, or person.
 The corporation so formed is treated in law as a separate entity, independent of its
members.
 The corporation or company is capable of owning property, employing people, making
contracts, and of suing or being sued.
 Unlike a sole trader or partnership, it does have continuity of succession, as it is unaffected
by the death or incapacity of one or more of its members.
 If it fails it can only require its members (shareholders) to meet its debts up to the limit of
the nominal value of their shares. This was introduced to encourage investors to give
support to inventors, engineers and others who were at the forefront of the industrial
revolution.
 Company acts lay down the various principles and procedures to be followed in the conduct
of business organizations. This legislation are meant to minimize the risk to suppliers and
customers as well as to shareholders, and to a lesser extent employees, arising from
mismanagement of, or deliberate restriction of information about a company
Limited liability companies fall into two categories:
1. Public limited companies(p.l.c.s.)
2. Private limited companies.
 The memorandum of a public limited company must state that the company is a public
company (its shares can be sold to the public) and the company name must end with the
words ‘public limited company’.
 A private limited company by comparison may not offer its shares to the public, and is even
restricted in the transfer of its share between the private shareholders. The name of a
private limited company must end with the word ‘limited’.
 Both kinds of company must have at least two members and one director.
 Once registered under the Companies Act, a private company can commence trading.
 A public limited company has to obtain a certificate of trading from the Register of
Companies.
 All limited companies have to fulfil certain procedures before they can be incorporated.
These include filing of;
a) Memorandum of Association
b) The Articles of Association

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The main advantages of limited liability are:
 In the event of failure of the business, shareholders are protected against the loss of
more than the nominal value of their shareholding
 The separate legal person of the company exists independently of members
 Shares in a public limited companies are readily transferable
 Wider share-ownership is encouraged
 Companies are required to submit annual returns to the Register, and these are available
for public inspection.
The disadvantages are:
 Precisely because liability is limited, it may be difficult for small companies to burrow as
extensively as desired, since banks and other financial institutions may be unable to
recover their funds if the business fails.
 There are considerable legal procedures involved in setting up a company, as well as the
procedure incurred in publishing the various financial accounts of the company.

Sole trader
It is the simplest form of business organization-one person in business on his own.
 The legal requirements of setting up such a business are minimal.
 The owner is fully liable for any debts incurred in running the business, since the owner is
literally the business.
 Ownership and control are combined
 All profits made by the sole trader are subject to income tax rather than corporation tax
levied on company profits.
 Apart from the need to maintain accounts for controlling the business and dealing with
revenue authority, there are no formal accounts to be published.
Advantages
 The formalities for starting are minimal.
 There is complete autonomy to run the business as the individual wishes.
 The profits of the business belong to the trader.
 Various expenses are allowable against income tax
 No public disclosure of accounts except for KRA.
Disadvantages
 The sole trader is entirely responsible for the debts of the business.
 The individual as owner and manager has to be responsible for all aspects of the business-
marketing, product development, sales and so on.

Partnership
A partnership exists when at least two, and usually not more than twenty, persons agree to carry
out a business with a view to profit.
 The legalities required to set up a partnership are minimal, although it is advisable to have
a formal partnership agreement drawn by a solicitor.
 Such an agreement can specify the rights and obligations of individual partners
 It can specify changes brought about by the death or retirement of partners.
 Members of a partnership are owners of its property and liable for its contracts. They are
therefore fully responsible for meeting their debts to third parties.

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  Partners are not automatically entitled to a salary for the services they provide for the
partnership, but are entitled to their proper share of the profits of the business.
 Many professional persons, and especially accountants and solicitors, maintain partnerships
as their form of business in order to preserve the principle of individual professional
accountability towards the client.
Advantages
 Fewer formalities required for starting up.
 Sharing of partners’ knowledge and skills.
 Sharing of the management of the business.
 No obligation to publish accounts except for KRA purpose.
 Sharing of profit or losses.
Disadvantages
 Each partner is liable for the debts of the partnership, even if caused by the actions of
other partners.
 There is a risk that partners may not be able to work together at persona level.
 The death or bankruptcy of one partner will automatically dissolve the partnership, unless
otherwise provided for in the partnership agreement.

Cooperative enterprises
Small groups of people, who wish to set up business along explicitly democratic lines and with the
benefit of a liability, can choose to establish a cooperative. Every cooperative must have a set of
rules approved by the registrar of societies. The rules must embrace the following principles:
 Each member must have equal control on the ‘one person, one vote’ principle.
 Members must benefit primarily from their participation in the business, as employees as
well as investors.
 Interest on loan or share capital has to be limited.
 Surplus (profit) must be shared between members in proportion to their contribution, or
must be retained in the business.
 Membership must be open to all who qualify.
Advantages
 They provide opportunity for genuine pooling of capital between groups of people.
 They encourage active collaboration between all sections of the workforce.
 They enable decisions to be made democratically
 They provide rewards on an equitable basis among those involved
 They provide limited liability if registered.
Disadvantages
 There is less likelihood of a level of profitability and growth that could be achieved by a
limited company.
 As with partnerships, relationships can deteriorate especially when some members are seen
to be making a smaller contribution than the rest.
 Democratic decision-making can lead to lengthy discussions before action is taken.
 Members, who are not truly dedicated to the democratic ethos of the business, may find
themselves at odds with the openness of communication and decision-making.

Contemporary issues in Management

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  Gender
 Technology
 Political environment

Globalization
Globalization (or globalisation) describes the process by which regional economies, societies, and
cultures have become integrated through a global network of communication, transportation, and
trade. The term is sometimes used to refer specifically to economic globalization: the integration
of national economies into the international economy through trade, foreign direct investment,
capital flows, migration, and the spread of technology. However, globalization is usually recognized
as being driven by a combination of economic, technological, socio-cultural, political, and biological
factors. The term can also refer to the transnational circulation of ideas, languages, or popular
culture through acculturation.
Globalization has various aspects which affect the world in several different ways
 Industrial - emergence of worldwide production markets and broader access to a range of
foreign products for consumers and companies. Particularly movement of material and goods
between and within national boundaries. International trade in manufactured goods
increased more than 100 times
 Financial - emergence of worldwide financial markets and better access to external
financing for borrowers.
 Economic - realization of a global common market, based on the freedom of exchange of
goods and capital. With globalization, companies can produce goods and services in the
lowest cost location.
 Health Policy - On the global scale, health becomes a commodity. In developing nations
under the demands of Structural Adjustment Programs, health systems are fragmented and
privatized. Global health policy makers have shifted during the 1990s from United Nations
players to financial institutions. The result of this power transition is an increase in
privatization in the health sector.
 Political - some use "globalization" to mean the creation of a world government which
regulates the relationships among governments and guarantees the rights arising from social
and economic globalization.
 Informational - increase in information flows between geographically remote locations.
Arguably this is a technological change with the advent of fibre optic communications,
satellites, and increased availability of telephone and Internet.
 Language - the most popular first language is Mandarin (845 million speakers) followed by
Spanish (329 million speakers) and English (328 million speakers).[30] However the most
popular second language is undoubtedly English, the "lingua franca" of globalization:
 About 35% of the world's mail, telexes, and cables are in English.
 Approximately 40% of the world's radio programs are in English.
 About 50% of all Internet traffic uses English
 Competition - Survival in the new global business market calls for improved productivity and
increased competition. Due to the market becoming worldwide, companies in various
industries have to upgrade their products and use technology skilfully in order to face
increased competition.

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  Ecological - the advent of global environmental challenges that might be solved with
international cooperation, such as climate change, cross-boundary water and air pollution,
over-fishing of the ocean, and the spread of invasive species. Since many factories are built
in developing countries with less environmental regulation, globalism and free trade may
increase pollution and impact on precious fresh water resources.
 Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and
identities which embodies cultural diffusion, the desire to increase one's standard of living
and enjoy foreign products and ideas, adopt new technology and practices, and participate in
a "world culture". Some bemoan the resulting consumerism and loss of languages. The
construction of continental hotels is a major consequence of globalization process in
affiliation with tourism and travel industry. Worldwide sporting events such as FIFA World
Cup and the Olympic Games.
 Social - development of the system of non-governmental organisations as main agents of
global public policy, including humanitarian aid and developmental efforts.
 Technical Development of a Global Information System, global telecommunications
infrastructure and greater trans-border data flow, using such technologies as the Internet,
communication satellites, submarine fibre optic cable, and wireless telephones. Increase in
the number of standards applied globally; e.g., copyright laws, patents and world trade
agreements.
 Legal/Ethical
a) The creation of the international criminal court and international justice movements.
b) Crime importation and raising awareness of global crime-fighting efforts and
cooperation.
c) The emergence of Global administrative law.
 Religious
a) The spread and increased interrelations of various religious groups, ideas, and practices and
their ideas of the meanings and values of particular spaces.

The positive aspect of globalization

Globalization has a positive side as well. Supporters of globalization argue that it is good and
beneficial. Some of their arguments are listed below.
 Globalization has created the concept of outsourcing. Work such as software development,
customer support, marketing, accounting and insurance is outsourced to developing countries
like India. So the company that outsourced the work enjoys the benefit of lower costs
because the wages in developing countries is far lower than that of developed countries.
The workers in the developing countries get employment. Developing countries get access to
the latest technology.
 Increased competition forces companies to lower prices. This benefits the end consumers.
 Increased media coverage draws the attention of the world to human right violations. This
leads to improvement in human rights.
 Globalization of and by the economy
 Globalization of and by business
 Globalization of and by politics
 Globalization of and by information/communication technology

 Globalization of and by education

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The negative effects of globalization
Opponents of globalization point out to its negative effects. Some of them are listed below.
 Developed nations have outsourced manufacturing and white collar jobs. That means fewer
jobs for their people. This has happened because manufacturing work is outsourced to
developing nations like China where the cost of manufacturing goods and wages are lower.
Programmers, editors, scientists and accountants have lost their jobs due to outsourcing to
cheaper locations like India.
 Globalization has led to exploitation of labor. Prisoners and child workers are used to work
in inhumane conditions. Safety standards are ignored to produce cheap goods.
 Job insecurity. Earlier people had stable, permanent jobs. Now people live in constant dread
of losing their jobs to competition. Increased job competition has led to reduction in wages
and consequently lower standards of living.
 Terrorists have access to sophisticated weapons enhancing their ability to inflict damage.
Terrorists use the Internet for communicating among themselves.
 Companies have set up industries causing pollution in countries with poor regulation of
pollution.
 Fast food chains like McDonalds and KFC are spreading in the developing world. People are
consuming more junk food from these joints which has an adverse impact on their health.
 The benefits of globalization are not universal. The rich are getting richer and the poor are
becoming poorer.
 Bad aspects of foreign cultures are affecting the local cultures through TV and the
Internet.
 Enemy nations can spread propaganda through the Internet.
 Deadly diseases like HIV/AIDS are being spread by travellers to the remotest corners of
the globe.

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