Study Material

Of

Principles of Management (BB101A)

BBA I semester

Subject Faculty
Dr. Tanuja Singh
Assistant Professor
School Of Management Studies
Sangam University, Bhilwara

Session 2024
Unit: 1
 1. DEFINITION OF MANAGEMENT:

“Management is the process of working with and through others to effectively achieve the organizational

objectives by efficiently using limited resources in the changing environment.”

Kreitner

2. MEANING/CONCEPT OF MANAGEMENT:

Management is the process of getting things done with the aim of achieving goals effectively and

efficiently.

a. Process: refers to the primary function like planning, organising, staffing, directing and controlling
performed by the management to get things done.

b. Effectiveness: means completing the right task to achieve the deputed goal within the time frame.

c. Efficiency: means completion of task using minimum resources

3. EFFECTIVENESS VS EFFICIENCY

Effectiveness is about doing the right task, completing the assigned job on time, no matter whatever the
cost.

Efficiency is about doing the job in cost effective manner i.e. getting maximum output with minimum
input

Basis Effectiveness Efficiency

Meaning It refers to the completion of It refers to the completion of work

work on time. correctively with minimum cost and
maximum profit
In simple words It simply means doing right It simply means doing things
things correctly in a faster and cost
efficient manner.
Objective To achieve end results on time Performing task with least wastage of
time and effort(cost)
Main Focus Is on time Is on cost
4. CHARACTERISTICS OF MANAGEMENT:

I. Management is a goal-oriented process: An organisation has a set of simple and clearly stated

goals, which are the basic reason for its existence. Management unites the efforts of the individuals in

the organisation towards achieving these goals.

II. Management is all pervasive: Management is common to all organisations whether economic, social

or political. For e.g. management is applicable for a government company, school, private company or a

NGO.

III. Management is multidimensional:

Management is a complex activity that has three main dimensions:

(a) Management of work

(b) Management by people

(c) Management by operation

IV. Management is a continuous process: It is a series of continuous, composite, but separate functions,

performed by all managers all the time.

V. Management is a group activity: All the individuals in the organisation contributes towards achieving

the goals set by the organization.

VI. Management is a dynamic function: It has to adapt itself to its changing external environment, which

consists of various social, economic and political factors.

VII. Management is an intangible force: It cannot be seen but its presence can be felt from the way

organization functions.

5. MANAGEMENT OBJECTIVES:

Organizational Objectives: Organizational Objectives can be divided into Survival (Earning enough

revenues to cover cost); Profit (To cover cost and risk); and Growth (To improve its future prospects).
(a) Survival: Earning enough revenues to cover cost. Management by taking positive decisions with

regard to different business activities ensures survival of business for long term.

(b) Profitability: Earning adequate profit in order to survive and grow. Profits provide a vital incentive

for the continued successful operation of the enterprise

(c) Growth: Growth indicates how well it exploits the potential opportunities. Growth of a business can

be measured in terms of sales volume increase, number of employees, products etc.

Social Objectives: Is to provide quality products at reasonable rates and generating employment

opportunities for disadvantaged sections of society. To provide basic amenities like schools and crèches to

employees and by using environmental friendly methods of production.

Personal Objectives:

Includes meeting the financial needs like competitive salaries and perks and Social and safety needs of the

employee like basic amenities, peer recognition etc.

6. IMPORTANCE OF MANAGEMENT

1. Management helps in achieving group goals: Management creates teams and coordinates with
individuals to achieve individual goals along with organizational goals
2. Increases efficiency: Management increases efficiency by using resources in the best possible
manner to reduce cost and increase productivity.
3. Creates dynamic organization: Management helps the employees overcome their resistance to
change and adapt as per changing situation to ensure its survival, growth and its competitive edge.
4. Achieving personal objectives: Through motivation and leadership management helps the
individuals in achieving personal goals while working towards organizational objective.
5. Development of society: Management helps in the development of society by producing good quality
products, creating employment opportunities and adopting new technologies.
7. NATURE OF MANAGEMENT

1. Management as an Art

Art refers to skillful and personal application of existing knowledge acquired through study, observation
and experience. The features of art are as follows:
a. Existence of theoretical knowledge: In every art, Systematic and organized
study material is available to acquire theoretical knowledge and experts in the
respective fields apply these principles to their respective art forms.
b. Personalized application: The use of basic knowledge differs from person to
person and thus, art is a very personalized concept.
c. Based on practice and creativity: Art involves creativity and practice of the

experts. For e.g. the music created by musicians are different though the musical notes

used are the same.

Every manager has his own unique style of managing things and people. He/she uses his creativity in

applying management techniques and his skills improve with regular application. Since all the features of art

are present in management. So it can called an art.

2. Management as a Science

Science is a systematized body of knowledge that is based on general truths, which can be tested
anywhere, anytime. The features of Science are as follows:
a. Systematized body of knowledge: Science has a systematized body of knowledge based on cause

and effect relationship.

b. Principles based on experiments and observation: Scientific principles are developed through

experiments and observation.

c. Universal validity: Scientific principles have universal validity and application.

Management has systematic body of knowledge and its principles are developed over a period of time based

on repeated experiments & observations which are universally applicable but they have to be modified

according to given situation.

 As the principles of management are not as exact as the principles of pure science, so it may be

called-an inexact science. The prominence of human factor in the management makes it a Social

Science.

3. Management as Profession

Profession means an occupation for which specialized knowledge and skills are required and entry is

restricted. The main features of profession are as follows:

a. Well-defined body of Knowledge: is complete set of principles, concepts, terms and

activities that make up a professional domain.
b. Restricted Entry: The entry in every profession is restricted through examination or through

educational degree.

c. Professional Associations: All professions are affiliated to a professional association, which

regulates entry and frames code of conduct relating to the profession. Eg. IMA, ICAI
d. Ethical Code of Conduct: All professions are bound by a code of conduct, which guides the
behavior of its members.
e. Service Motive: The main aim of a profession is to serve its clients.

Management does not fulfill all the features of a profession and thus it is not a full-fledged
profession like doctor, lawyer, etc.
8. LEVELS OF MANAGEMENT

Top Management: Designations and Functions

Comprises of CEO, Board of Directors, MD, GM, VP. Main task is conceptualizing of organizational

goal, policy and strategy formulation and organising, controlling and monitoring activities and resources.

Controlling the work performance of individuals and approving Budgets.

Middle Management : Designations and Functions

Comprises of Departmental, Sub‐Departmental and Divisional heads, its main task is execution of plans,

policies framed by the top level management and preparing organisational set up & appointing

employees and issuing instructions and motivating employees. Ensuring interdepartmental cooperation as

well.
Supervisory and operational Level : Designations and Functions

Consists of Foremen and supervisor etc. Main task is to ensure actual implementation of the policies as per

directions of top and middle level managers and also to Bring workers’ grievances before the management

& maintain discipline among the workers.

9. FUNCTIONS OF MANAGEMENT:

I. Planning : Setting objectives and targets and formulating an action plan. It bridges the gap between
where we are and where we want to reach.

II. Organising: Involves assigning duties, grouping tasks, establishing authority and responsibility

relationships and allocating the resources required to perform a specific plan.

III. Staffing: Finding and placing the right person for the right job at the right time. It involves
recruitment, selection, placement, induction and development of employees.

IV. Directing: Refers to leading, influencing, motivating the staff chosen to perform the assigned task

efficiently and effectively.

V. Controlling: Refers to monitoring organizational activities towards the attainment of organizational

goals. It involves setting standards measuring current performance, comparing with the standards, and

taking corrective action for any deviations.

The significance of Principles of Management:

The significance of principles of management can be discussed in terms of the following points:

● Providing managers with useful insights into reality: The principles of management present the
managers with valuable insights into real-world circumstances. Adherence to these policies will
supplement their education, capability and perception of managerial conditions and circumstances.

● Optimum utilisation of resources and efficient management: Both material and human resources
are obtainable with the firm are restricted. They have to be placed to best use. By the best utilisation,
the resources must be put to utilisation in such a way that they should give the most profit with
minimum cost. Principles provide the managers to predict and influence relationships of their
choices and activities.

Importance of Principles of Management:

(1) Providing Managers With Useful Insights Into Reality

● The application of principles of management helps the managers to take right decisions at the right
time.

● These principles of management help managers to tackle the diverse problems in a dynamic business
environment.

(2) Optimum Utilization of Resources & Effective Administration

● Resources are always scarce and limited.

● By applying the management principles, the managers can focus on optimum use of available
resources so as to achieve productive results at minimum cost and maximum profits.

● It results in effective administration by channelizing resources (human and material) into the best
possible way.

(3) Scientific Decisions

● Application of principles of management makes the manager more realistic, thoughtful, justifiable
and free from personal bias.

● The decisions taken on the basis of principles of management are subject to evaluation and objective
assessment.

(4) Meeting Changing Business Environment

● Although the principles are in the nature of general guidelines, they are modified and help managers
to meet the changing requirements of the environment.

Example: With the rapid rise of online market sellers, offline vendors have also started selling their goods
on online platforms.

(5) Fulfilling Social Responsibility

● Principles of management not only help in achieving the goals of the organisation effectively and
efficiently, but they also guide the managers to fulfil their commitment towards its employees and
society.

Example: Principles of fair remuneration and equity ensure social justice to employees and compliance
with government norms towards corporate social responsibility which improves the company’s image in the
society.

(6) Management Training, Education and Research

● Proper understanding of principles is the base of training, research, and development in the field of
management.

● Management is taught on the basis of these principles which help the management institutes prepare
future managers.

● These Principles help managers to take decisions and actions in the right manner.

● Application of these principles by the managers brings innovation in the field of management.
Example: It is the result of such training, education, and research that Sunil Mittal could run Airtel in a
successful way.

The Evolution of Management Thoughts

Introduction

The evolution of management can be traced back to the days when human beings started
living in groups. One can argue that management took the form of leadership which was
essential to coordinate the efforts of the group members in order to arrange the necessaries of
life.
According to Egyptian literature of 1300 B.C., the art of management was being practised in
different forms by different people. The literature clearly indicates the recognition of the
importance of organisation and administration in the bureaucratic setup. Similar records exist
for China. According to L.S.Hsu, Confucius’s parables include practical suggestions for
proper public administration and admonitions to choose honest, unselfish and capable public
officers.

Modern management has developed through several stages or approaches. These approaches
to the study of management may be classified as under:
I. Classification Approach
II. Neo-classical Approach
III. Behavioural Science Approach
IV. Social System Approach
V. Modern Organization Approach
VI. Contingency Approach

Classical Approach

The classical theory represents the traditionally accepted views about organisations. In a way,
it signifies the beginning of the systematic study of organisations. That is why it is said to be
the oldest school of thought about organisations and their management.

The classical theories concentrated on organisation structure for the achievement of

organisational goals and also developed certain principles of management.

The classical writers thought of the organisation in terms of its purpose and formal structure.
They placed emphasis on the planning of work, the technical requirements of the
organisation, principles of management and the assumptions of rational and logical
behaviour. Thus, the classical theorists dealt almost exclusively with the anatomy of formal
organisation structure.

The classical theory ignored the impact of the external environment on the working of the
organisation. Thus, it treated organisations as closed systems.

The classical thought can be studied under three streams, namely:

Administrative Theory
As organizations grew and became more complex, the need for a
systematic understanding of the overall management process was felt.
Managers became more concerned with the management of
organizations than with improving the efficiency of individual jobs.
They tried to identify the functions of a manager with emphasis on
coordination of resources towards the achievement of stated objectives.
This stream of the classical approach is known as Administrative
Theory or Functional Approach or Management Process
Approach. This school of thought is also known as the ‘universalist’
school because it believed that management principles are applicable to
all kinds of group activities.

Henri Fayol is regarded as the father of this thought, i.e., the father of general
management. Henri Fayol defined management in terms of certain functions and then laid
down fourteen principles of management which according to him have universal
applicability. He argued that managerial ability can be acquired as any other teaching ability.
He not only recommended formal teaching in management but also practised it by founding
the “Centre for Administrative Studies” in Paris.

Management Principles: Fayol gave the following general principles of management:

1. Division of work
According to this principle, work should be divided into small tasks/jobs; each performed
by a specialist or trained employee. Division of work leads to specialisation. This results
in efficient and effective output.
o For example, in a company, there are separate departments for finance, marketing,
production and HR. All the departments perform specialised tasks. This leads to
functional specialisation.

2. Authority and Responsibility:

Authority is the right to get things done and responsibility is answerability for certain
work. Fayol suggested that there should be a balance between authority and
responsibility. Giving authority without fixing responsibility may lead to misuse of
authority. For example, if a sales manager requires to offer a credit period of 60 days to
negotiate a deal with a buyer (to fetch the company net margin of Rs.25 lakh), he/she
should not be given authority to offer a credit period of 100 days. He/she may misuse
his/her authority.
At the same time, responsibility without adequate authority will make the subordinate
ineffective, i.e., he/she will not be able to perform his/her duties properly. For example,
suppose the production manager of a company manufacturing scooters asks his/her
foreman to achieve a target production of 250 scooters per day. But he/she does not give
him the authority to requisition tools and materials from the store’s department. The
foreman is not able to achieve the target. Then, the production manager cannot blame
him.

3. Discipline
Discipline is the obedience to organisational rules and employment agreements, which are
necessary for the working of the organisation. According to Fayol, discipline requires:
 ● Good superiors at all levels,
● Clear and fair agreements, and
● Judicious application of penalties

For example, suppose management and a labour union have entered into an
agreement whereby workers have agreed to work overtime without any additional
payments to revive the company out of loss. In return, the management has
promised to increase wages when this mission is accomplished. Here ‘discipline’
would mean that workers and management both honour their commitments.

4. Unity of Command
According to Fayol, there should be one and only one boss for every individual employee.
Dual subordination should be avoided. This principle resembles a military organisation.
If an employee gets orders from two or more superiors at the same time, the principle of
unity of command is violated.
Consequences of violation:
● Authority is undermined
● Discipline is in jeopardy
● Order is disturbed and
● Stability is threatened
o For example, suppose a salesperson is asked to make a deal with a buyer by the
marketing manager and is allowed to give a 10% discount by the marketing
manager. But the finance manager does not permit him to offer more than a 5%
discount. Now, there is no unity of command. There will be confusion in the mind of
the salesperson regarding whose instructions to follow. This can be avoided if there
is coordination between the two departments.

5. Unity of Direction
All the units of an organisation should be moving toward the same objectives through
coordinated and focused efforts. Each group of activities must be having the same
objective and must have “one head and one plan”. This ensures unity of action and
coordination.
o For example, If a company is manufacturing motorcycles as well as cars, then it
should have two separate divisions. Each division should have its own in charge,
plans and resources. The working of two divisions should not overlap on any
account.

6. Subordination of individual interest to general interest

According to this principle, the interests of the organisation should take priority over the
interests of any one individual employee.
o For example, a company may want to get maximum output from its employees at a
competitive cost (salary), while an employee may want to get a maximum salary
while working the least. Here, the interest of the company will supersede the
interest of the employee.

This is so because larger interests of various stakeholders, i.e., workers, owners,

shareholders, creditors, customers and society cannot be sacrificed for one individual or a
small group of individuals who want to exert pressure on the company.
A manager can ensure this by his/her exemplary behaviour. For example, he/she should not fall
into
 the temptation of misusing his/her powers for individual/family benefit at the cost of the
larger general interest of the workers/company. This will ensure the same behaviour by the
workers.

7. Remuneration of employees: Remuneration of employees should be just and equitable

so as to give maximum satisfaction to both employees and the organisation.
- The employees should be paid fair wages/salaries, which would give them at least
a reasonable standard of living
- at the same time, it should be within the paying capacity of the company.
This will ensure good relations between workers and management. Consequently, the working of
the company would be smooth.

8. Centralisation and Decentralisation

The concentration of decision-making authority by top management is called
centralisation. On the other hand, the delegation of authority throughout all the levels of
the organisation is called decentralisation. Those organisations in which decision-making
authority lies with the top management are termed centralised organisations whereas
those in which decision-making authority is pushed down the chain of command are
decentralised organisations.
● Fayol says that an organisation should have a balance between complete centralisation
and decentralisation. For example, the major decisions like setting up of goals, plans,
policies and strategies can be centralised; but there can be a policy of decentralisation
for the activities of routine work such as the purchase of raw materials, assignment of
targets to workers, etc.
An organisation can never be completely centralised or completely decentralised. As an
organisation grows in size and complexity, there is a tendency to move towards
decentralised decision-making. This is because, in large organisations, employees are
more directly and closely involved with the business operations than the top management.

9. Scalar Chain
An organisation consists of superiors and subordinates. The formal lines of authority from
highest to lowest ranks are known as the ‘Scalar Chain’. According to Fayol,
‘organisations should have a chain of authority and communication that runs from
top to bottom and should be followed by managers and the subordinates.’

We consider a situation where there is one head ‘A’ who has two lines of authority under
him/her. One line consists of B-C-D-E. Another line of authority under ‘A’ is L-M-N-O.
if ‘E’ has to communicate with ‘O’, who is at the same level of authority, he/she has to
transverse the route E-D-C-B-A-L-M-N-O.

According to Fayol, this chain should be violated in the normal course of formal
communication. However, if there is an emergency then ‘F’ can directly contact ‘P’ through
‘Gang Plank’. There is a shorter route that has been provided so that communication is not
delayed in case of an emergency.
o Example: A worker cannot directly contact the CEO of the company. If at all he/she
 has to, then all the formal levels, i.e., foreman, superintendent, manager, director,
etc. must know about the matter. However, in an emergency, it can be possible
that a worker can contact the CEO directly.

10. Order
The principle of ‘order’ states that – ‘a place for everything (everyone) and everything
(everyone) on its (his/her) place.” Essentially, it means orderliness.

According to Fayol, “people and materials must be in suitable places at the appropriate time for
maximum efficiency”
If there is a fixed place for everything (everyone) and it (he/she) is there, there will be no
hindrance in the activities of the business/factory. This will lead to increased productivity
and efficiency.

11. Equity
The principle emphasises kindness and justice in the behaviour of managers towards
workers. There should be no discrimination on account of sex, religion, language, belief,
nationality, caste, etc. This will ensure loyalty and devotion. There will be cordial
relations between managers and workers.
o For example, Nowadays in MNCs, we find people of various nationalities working
together in a discrimination-free environment. Equal opportunities are available
for everyone to rise.

12. Stability of personnel

According to this principle, employees once selected, should be kept at their post/position
for a maximum fixed tenure. In other words, they should have a stability of tenure. They
should be given reasonable time to show results.
Fayol suggests that labour turnover should be minimised to maintain
organisational efficiency. The stability of tenure of personnel is good for the
business because of the following reasons:
I. Any adhocism will create instability/insecurity among employees. They would
tend to leave the organisation.
II. Recruitment, selection and training costs of new employees will be high.
III. There will be poor output levels and customer service till new employees are appointed.

13. Initiative
Initiative means eagerness to initiate action without being asked to do so. In other words,
it means taking the first step with self-motivation.
According to Fayol, subordinates should be encouraged to make and execute plans within
the prescribed limits of authority.
For example, a good company has an employee suggestion system whereby
initiative/suggestions, which result in cost/time reduction, is rewarded.

14. Esprit de corps

‘Espirit de corps’ means unity is strength. According to Fayol, management should
promote a team spirit of unity and harmony among employees.
A manager should replace ‘I’ with ‘We’ in all his/her conversations with workers to foster
team spirit. This will rise to a spirit of mutual trust and belongingness among team
members. It will also minimise the need for using penalties.
Management should promote teamwork, especially in large organisations; otherwise, it
will result in a loss of coordination and hence the organisation will not be able to achieve
its objectives.
 Scientific Management
The impetus for the scientific management approach came from the
first industrial revolution. Because it brought about such an
extraordinary mechanism of industry, this revolution necessitated the
development of new management principles and practices.

Frederick W. Taylor was the first person who insisted on the

introduction of scientific methods in management and it was he who,
along with his associates, made the first systematic study of
management. He launched a new movement in 1910 which is known
as ‘Scientific Management’. That is why Taylor is regarded as the
father of scientific management.

Scientific management means knowing exactly what you want men to do and seeing that
they do it in the best and cheapest way.
F.W. Taylor
 Scientific management implies the application of science to management. It means
conducting business activities according to standardised tools, methods and trained personnel
in order to increase the output, improve its quality and reduce costs and waste.

Principles of Scientific Management

The basic principles of scientific management are as follows:

1. Develop a true science for each element of a worker’s job to replace the old rule of
thumb method. Each element of a job and the motions required to perform should be
scientifically analysed to determine and use the most efficient ways of doing it. Intuition,
experience and hit-or-miss methods are replaced by scientific methods.
The selection of scientific methods will result in a tremendous saving of human efforts,
time and materials.

2. Harmony, not discord: Taylor emphasised that there should be complete harmony
between the management and workers. Both should realise that each one is important. To
achieve this, Taylor advocated a complete ‘Mental Revolution’ on the part of both
management and workers.

3. Cooperation, not individualism: This principle is an extension of the principle of

‘Harmony, not discord’. According to this principle, there should be complete
cooperation between the labour and the management instead of individualism.
Competition should be replaced by cooperation. Both should realise that they need each
other. For this, management should not close its ears to constructive suggestions made by
employees and should reward their suggestions which result in a substantial reduction in
costs.
For all important decisions taken by the management, workers should be taken into
confidence. According to Taylor, there should be an almost equal division of work and
responsibility between workers and management. Management should work almost side
by side with the workers helping, encouraging, and smoothing the way for them. This is
called the ‘paternalistic style’ of management, whereby the employer takes care of the
needs of the employees.

4. Development of each and every person to his/her greatest efficiency and prosperity:
According to Taylor, to increase efficiency each person should be scientifically selected
and the work assigned should suit his/her physical, mental and intellectual capabilities. To
increase efficiency, they should be given the required training to learn the ‘best method’.
Efficient employees would produce more and earn more. This will ensure the greatest
efficiency and prosperity for both company and workers.

Techniques of Scientific Management

1. Functional Foremanship
Functional foremanship is an extension of the principle of ‘Division of work and
specialisation’ to the shop floor level of a factory. It is a technique which aims to improve
the quality of supervision on the shop floor by putting workers under eight specialist
foremen.
In this technique, planning is separated from execution so that the foremen under
‘planning incharge’ may concentrate on planning the job of workers, and the foremen
under ‘production incharge’ may involve themselves in the execution of jobs.
Taylor suggested four foremen for planning and four foremen for execution, as shown below:
Role of foremen under planning incharge:
● Route clerk – specifying the route of production
● Instruction card clerk: drafting instruction for workers
● Time and cost clerk: Preparing time and cost sheet
● Discipline officer: Ensuring discipline

Role of foremen under production incharge:

● Gang boss – keeping machines and tools, etc. ready for operation by workers
● Speed boss – timely and accurate completion of job
● Repair boss – ensuring proper working conditions of machines and tools
● Inspector – checking the quality of work

2. Standardisation and Simplification of work

Standardisation of work refers to the process of setting standards for every business
activity, e.g.., standardisation of process, raw material, time, product, machinery, methods
and working conditions.
Objectives of standardisation of work are:

● To reduce a given line or product to fixed types, sizes and characteristics

● To establish standards of excellence and quality of materials
● To establish standards of performance of workers and machines
● To establish interchange ability of manufactured parts and products

Simplification of work aims at eliminating unnecessary diversity of products.

● It results in savings of the cost of labour, machines and tools

● It implies reduced inventories, fuller utilisation of equipment and increasing turnover.

3. Work-Study
a) Method Study: Taylor suggested that management should find out ‘one best way’ to
perform the task. For example for designing a car, the assembly line production will need
to decide the sequence of operations, a place for men, machines and raw materials, etc.
 This is a method study.
The objective of the Method study is to find out the best way of doing a job so as to
minimise the cost of production and maximise the quality and satisfaction of the
customer.

b) Motion Study: Motion study refers to the study of movements like lifting, putting
objects, sitting, changing positions, etc. which are undertaken while doing a typical job.
In recent times, Videography can be used to identify different types of motions –
productive, incidental and unproductive,
The objective/aim of the motion study is to eliminate the unproductive
or unnecessary motions/movements so that it takes less time to
complete the job efficiently.

c) Time Study: It determines the standard time taken to perform a well-defined job. Time
measuring devices (e.g.., stopwatch) are used for each element of the task. The standard
time is fixed for the whole task by taking several readings/observations.
o For example, on the basis of several observations, it is determined that the standard time
taken by the worker to make one lunch box is 30 minutes. So, in one hour he/she will
make 2 boxes. Assuming that a worker works for 8 hours a day, he/she should make
16 lunch boxes per day. Now, this is the standard task a worker has to perform.
Wages can be decided accordingly.
The objective of the time study is to determine the number of workers to be employed,
frame suitable incentives schemes and determine labour costs.

d) Fatigue Study: Fatigue, physical or mental, has an adverse effect on workers’ health
and efficiency. Fatigue study helps in reducing fatigue among the workers.
The objective of the fatigue study is to determine the amount and frequency of rest
intervals in completing a task.

4. Differential Piece Wage System: It is a technique which differentiates between efficient

and less efficient workers. It rewards efficient workers and motivates the less efficient
ones to improve their efficiency.
● In this wage system, there are two-piece rates – one for those workers who
produce the standard output or more, and the other for those who produce less
than the standard output. The difference in wages is enough for the inefficient
worker to be motivated to perform better in future.

Worker A Worker B
Actual output 110 units 80 units
Total wages 110*Rs.4 = Rs. 80*Rs.3 = Rs.
440 240

According to Taylor, this loss will be the strongest motivator for worker B to reach
 standard performance in future.

Bureaucratic Approach

Max Weber contributed to the organisation theory by propagating

bureaucracy as an ideal form of organisation. His model is
characterised by the following features:

1. Division of work: There is a high degree of specialisation or

division of labour in a bureaucratic organisation. Tasks are divided
into very specialised jobs and each member performs his specialized
function in a predictable manner.

2. Rules and Regulations: The rules, regulations and procedures are

clearly laid down by the top administration. Their benefits are as
under-
● They standardised operations and decisions
● They serve as receptacles of past learning
● They protect incumbents and ensure the quality of treatment

3. Hierarchy of Authority: There is a hierarchy of authority in the organisation. Each

lower position is under the control of a higher one. Thus, there is a unity of command.

4. Technical Competence: Selection and promotion of jobholders are based on their

technical competence. Qualifications are prescribed for each job/position. Special
training is given to provide knowledge of rules and administrative processes.

5. Record Keeping: Every decision and action is recorded in a wide array of written
documents and preserved in its original as well as draft form. The official records serve
as the memory of the organization and make it independent of the individuals.
6. Impersonal Relations: A notable feature of bureaucracy is that relationships among
individuals are governed through the system of official authority and rules. Official
positions are free from personal involvement, emotions, and sentiments. Thus, decisions
are governed by rational factors rather than personal factors. This impersonality concept
is used in dealing with organizational relations as well as relations between organizations
and outsiders.

According to Weber, there are three types of legitimate authority in organizations:

Traditional
Rational Legal Authority Charismatic Authority
Authority
This type of authority is
It means the authority which a
vested in a legally
person acquires because he established position or rank people obey a person due to
belongs to a particular class or within the organization’s their belief that the person has
occupies a position that by hierarchy, e.g., chief some special power or appeal.
tradition possesses authority executive of a company
e.g., member of a royal family.

Weber considers rational-legal authority as the most important. Traditional authority

 overlooks the competence of the leader whereas charismatic authority is very emotional and
irrational.

Advantages of Bureaucracy

I. Competence: There is proper delegation of authority in the organisation. People are

given tasks according to their competence.
II. Rules and Regulations: Because of rules and regulations, all actions are taken carefully.
There is a consistency of actions.
III. Rationality: The behaviour of the employees is rational. They make decisions as per
laws, rules and regulations. They don’t go by their whims, emotions or prejudices.
IV. Predictability: The behaviour of the employees is predictable. It is known how they will
react under different situations as guidelines are already there in writing.
V. Efficiency: Bureaucracy leads to efficiency in the organisation. There is a division of
work leading to specialisation which results in efficiency.
VI. Impartiality: Officials are guided by the policies, rules and regulations rather than their
personal whims and faces. They are not supposed to shower personal favours on anybody.

Disadvantages of Bureaucracy

I. Rigidity in Operations: Rules and regulations in a bureaucracy are often rigid and
inflexible. Strict compliance with rules and regulations discourages initiative and
creativity. It may also provide a cover to avoid responsibility for failures.
● The bureaucratic structure is not effective in turbulent or dynamic environments. It
can’t undergo the change required by the fast-changing environment.
II. Delay and Red Tape: The rules may be followed in letter and not in spirit. Thus, the
rules may become a source of inefficiency leading to delays in operations. The rules may
be misused by the persons concerned with the implementation of rules. Red tape and
technicalities may follow as a result.
III. Goal Displacement: Goal displacement may take place in a bureaucratic organisation.
The bureaucrats may give priority to rules and regulations or the secondary goals and
forget about the primary goals. In other words, means become the ‘ends’ and the ends or
goals become the ‘means’ leading to goal displacement.
IV. Ineffective Communication: The bureaucratic structure is tall consisting of several
layers of executives. Thus, communication from the top level to the lowest level will take
a very long time.
V. Lack of personal touch: Bureaucracy is based on impersonal relationships. It does not allow
inter- personal relations between employees and informal groups in the organisation.

Neo-Classical Approach

The classical writers including Weber, Taylor and Fayol neglected the human relations
aspect. The neo- classicists focussed on the human aspect of the industry. They modified the
classical theory by emphasizing the fact that organisation is a social system and the human
factor is the most important element within it. They conducted some experiments (known as
Hawthorne Experiments) and investigated informal groupings, informal relationships,
patterns of communication, patterns of informal leadership, etc. This led to the development
of the Human Relations Approach. Elton Mayo is generally recognized as the father of the
Human Relations School.
 The human relations approach is concerned with the recognition of the importance of the
human element in organisations. It revealed the importance of social and psychological
factors in determining workers’ productivity and satisfaction. The neo-classical or human
relations approach put stress on inter-personal relations ad informal groups at the workplace.

The human relations argued that the achievement of organisational objectives is impossible
without the willing cooperation of people and such cooperation cannot be automatically
secured or ordered. It has to be consciously achieved. The neo-classical approach advocated a
people-oriented organisation structure which will integrate both formal and informal
organisations.

The basic tenets of neo-classical theory or human relations approach are as under:
I. The business organisation is a social system
II. The behaviour of an individual is dominated by the informal group of which he is a member
III. An individual employee cannot be motivated by economic incentives alone. His social
and psychological needs must be satisfied to improve the level of management.
IV. In an organisation, it is ultimately a cooperative attitude and not the mere command which yields
results.
V. Management must aim at developing social and leadership skills in addition to technical
skills. It must take interest in the welfare of workers.
VI. Morale and productivity go hand in hand in an organisation.

Hawthorne Experiments

George Elton Mayo is considered the father of the neo-classical

approach. He was the leader of the team which conducted the famous
Hawthorne Experiments. These experiments were conducted during
1924-32 at a plant of the Western Electric Company. The plant was
located at Hawthorne near Chicago in the USA. A brief description of
these experiments is given below:

I. Illumination Experiment: The object of this experiment was to assess the effect of
illumination on employees. Two groups were selected from among the employees. One
group was placed in a room where the lighting remained constant. The other group was
placed in another room where the lighting varied periodically. Surprisingly, the output of
both groups increased steadily. It was concluded that lighting was a minor factor and
there were other more important factors influencing the output. The
result prompted researchers to investigate other factors affecting the output. It was later
concluded that productivity is not dependent upon physical conditions alone but human
psychological conditions also.

II. Relay Assembly Test Room Studies: The relay assembly tests were designed to evaluate
the effect rest periods and hours of work have on efficiency.
In this experiment, a small homogeneous work group was constituted. Several new
elements were introduced to the work atmosphere of this group. These included shorter
working hours, rest pauses, improved physical conditions, friendly and informal
supervision, free social interaction among group members, etc. Productivity and morale
increased considerably during the period of the experiment. Morale and productivity are
 maintained even if improvements in working conditions are withdrawn. The researchers
concluded that socio-psychological factors such as a feeling of being important,
recognition, attention, participation, cohesive work groups, and non-directive supervision
held the key to higher productivity.

III. Mass Interview Program: In this experiment, a large number of workers were
interviewed to judge their attitudes and opinions on the factors influencing productivity. It
was found that the opportunity to talk freely about things that are important to workers
had a positive effect on their morale and productivity.

IV.

Bank Wiring Observation Room Study: In this experiment, a group of fourteen

workers was put under close supervision. The pay of every member was made dependent
on the performance of the group as a whole. It was found that the informal group had its
own norms of performance and various forms of social pressure were exercised to enforce
these norms. As a result, output could not increase despite the group incentive scheme.

Contributions

The main conclusions (contributions) of Hawthorne Experiments:

I. Social System: The organisation, in general, is a social system composed of numerous
interacting parts. The social system defines individual roles and establishes norms that
may differ from those of formal organisations. The workers follow a social norm
determined by their co-workers, which defines the
 proper amount of work, rather than try to achieve the targets management thinks they can
achieve, even though this would have helped them to earn as much as they physically can.

II. Social Environment: The social environment on the job affects the workers and is also affected
by them.

III. Informal Organisation: The informal organisation does also exist within the framework
of formal organisation and it affects and is affected by the formal organisation.

IV. Group Dynamics: At the workplace, the workers often do not act or react as individuals
but as members of groups. A person who resists pressure to change his behaviour as an
individual often changes it quite readily if the group of which he is a member changes its
behaviour. The group plays an important role in determining the attitudes and
performance of individual workers.

V. Informal Leader: There is an emergence of informal leadership as against formal

leadership and the informal leader sets and enforces group norms. He helps the workers to
function as a social group and the formal leader is rendered ineffective unless he
conforms to the norms of the group of which he is supposed to be incharge.

VI. Two-way communication: Two-way communication is necessary because it carries

necessary information downward for the proper functioning of the organisation and
transmits upward the feelings and sentiments of people who work in the organisation.

VII. Non-economic Reward: Money is only one of the motivators, but not the sole motivator
of human behaviour. Man is diversely motivated and socio-psychological factors act as
important motivators.

Evaluation

Hawthorne Experiments proved a landmark in the evolution of management thought. They

made a significant contribution towards humanising organization and management. These
experiments directed attention towards social and psychological needs, informal groups,
motivation, morale, communication, leadership, etc. Several new sub-disciplines like
industrial psychology, individual sociology, social psychology and group dynamics emerged.

Hawthorne Experiments have been criticised on the following grounds:

I. Pro-Management Bias: In Hawthorne studies, the ends of the company were assumed to
be correct. Mayo has in fact been criticised for implying that management is always
logical whereas workers are largely driver by emotions.

II. Clinical Bias: The research methods used in Hawthorne Studies overstressed empirical
observations. Mayo’s work has been described as “radical empiricism”

III. Doubtful Validity: The reactions of small groups of American women can hardly be
taken as sufficiently representative to provide a valid solution in different countries. The
conclusion cannot be generalised.

IV. True but Irrelevant: The conclusions of Hawthorne Experiments are true but irrelevant.
Some industrialists argue that the main object of a business is to make profits rather than
to keep workers happy.
 V. Limited focus on work: The human relations approach lacks adequate focus on work. It
puts all the emphasis on interpersonal relations and on the informal group.

VI. Over-emphasis on Group: The human relations approach emphasises group and group
decision-making. But in practice, groups may create problems and collective decision-
making may not be possible.

VII. Over-stress on Socio-psychological factors: The human relations approach undermines

the role of economic incentives in motivation and gives excessive stress on social and
psychological factors. If the wages are too low, the employees will feel dissatisfied
despite good interpersonal relations at the workplace. Thus, it may be said that the human
relations approach seeks to exploit the sentiments of employees for the benefit of the
organisation.

Despite the criticism, Hawthorne’s studies are regarded as ‘a milestone and a turning point’
in the history of man at work and in the development of management thought. These studies
challenged some of the basic postulates of the classical approach and focused attention on the
human factor in the industry. This revealed the inadequacy of studying the workers in
isolation and focusing on the physical aspects of the industry. The studies indicated that an
improved understanding of the human factor in the organization was necessary for achieving
major gains in productivity.

Behavioural Science Approach

The human relations movement focused on interpersonal relations and overlooked the wider
subject of organizational behaviour.
Organizational behaviour involves the study of attitudes, behaviour, and performance of
individuals and groups in an organizational setting. It is also known as the human resource
approach because it stresses the development of human beings for the benefit of both
individuals and the organisation.

The behavioural approach is multi-dimensional and inter-disciplinary in nature. Under it,

the knowledge is drawn from behavioural sciences, e.g. psychology, sociology, anthropology,
etc is applied to understand, explain and predict human behaviour. Therefore, this approach is
also known as the Behavioural Science Approach.

Under the behavioural science approach, the knowledge drawn from behavioural sciences is
applied to explain and predict human behaviour. It focuses on human behaviour in the
organisation. It lays emphasis on the study of motivation, leadership, communication, group
dynamics, participative management, etc.

Further, the behavioural scientists made the following propositions:

a) An organisation is a socio-technical system.
b) Individuals differ with regard to attitudes, perceptions and value systems. As a result, they
behave differently to different stimuli under different conditions.
c) People working in the organisation have their needs and goals which may differ from
organisational goals. Attempts should be made to achieve fusion between organisational
goals and human needs.
d) A wide range of factors influences inter-personal and group behaviour of people in organisations.
 The main features of the Behavioural Science Approach are as follows:

● Behavioural science is an inter-disciplinary approach and integrates the knowledge drawn

from different disciplines (psychology, sociology, anthropology, economics, political
science and history) for the study of human behaviour
● It is an applied science with the objective to apply various researches to solve organisational
problems
● It is also a normative science which not only suggests cause and effect relationships but
also prescribes ways and means to solve organisational problems and effects results
● It focuses attention on people from a humanistic point of view. It accepts the value of an
individual as a thinking, feeling and living organism and his needs and motivations play
important role in determining his behaviour in the organisation
● It is goal-oriented. It recognizes goal conflicts in the organisation and suggests
reconciliation of goals of the individuals and the organisation for a better organisation
climate and greater organizational effectiveness
● It adopts a systems approach which takes into account all the factors affecting organisational
behaviour

The sum up, the behavioural science approach gives emphasis on increasing productivity
through motivation and leadership. The central core of this approach lies in the following
aspects of human behaviour:
- Motivation, leadership. Communication, participative management and group dynamics

The behavioural sciences have provided managers with a systematised understanding of one
of the most critical factors in the process of management – the human element. Insights
evolving from that understanding have been used to design work situations that encourage
and increase the productivity of employees.
It has enabled organizations to formulate programmes to more efficiently train workers and
managers, and it has effects in numerous other areas of practical significance.

Social System Approach

According to Social System Approach, an organization is a cooperative system in which

persons are able to communicate with each other and are willing to contribute to a common
purpose. It is based on the generalisation that an organisation is a system and its components
are interrelated and interdependent. A system is an interrelated set of elements that are
organised according to a plan and function as a whole. Its important feature is that it is
composed of a hierarchy of sub-systems.

The world as a whole can be considered to be a system in which various national economies
are sub-systems. In turn, each national economy is composed of its various industries, each
industry is composed of firms, and of course, a firm can be considered a system composed of
sub-systems such as production, marketing, finance, accounting and so on. Thus, each sub-
system may comprise several sub-systems and, in turn, each sub-system may be further
composed of sub-systems. Chester Barnard is regarded as the founding father of this
system.

An organisation as a system has the following characteristics-

I. A system is goal-oriented.
II. A system consists of several sub-systems which are interdependent and interrelated.
 III. A system is engaged in the processing or transformation of inputs into outputs.
IV. An organisation is an open and dynamic system. It has continued with the external
environment as its gets inputs from the environment and also supplies its output to the
environment. It is sensitive to its environment such as government policies,
competition in the market, changes in tastes of people, etc.
V. A system has a boundary which separates it from other systems.

Open Systems Approach

A system may be closed or open. A closed system is self-sufficient and does not recognise
the external environment. A closed system concentrates completely on internal relationships
i.e., the interaction between sub-systems only. Because of a lack of interaction with the
environment, it is unable to monitor changes occurring in the external environment. On the
other hand, an open system has an active interface with the environment through the input-
output process. It can respond to the changes in the environment through the feedback
mechanism. That is why modern authors consider the organisation as an open system.

An open system obtains inputs, such as raw materials, labour, capital, technology, and
information from the environment. Operations are performed on the inputs combined with the
managerial process to produce desirable outputs which are supplied to the environment (i.e.,
customers). Through a feedback process, the environment’s evaluation of the output becomes
part of the inputs for further organisational activity. If the environment is satisfied with the
output, business operations continue. If it is not, changes are initiated within the business
system to that the requirements of the customers are fully met. This is how an open system
responds to the forces of change in the environment.

Contributions

I. The systems approach examines inter-relationship and inter-dependency between

different parts of an organisation. It suggests a balance between different sub-systems so
as to ensure the efficiency and growth of the system.
II. The systems approach calls attention to the dynamic and adaptive nature of the
organisation. A change in environment calls for modification in the organisation. It
acknowledges environmental influences which were overlooked in the earlier approaches.
III. The systems approach represents balanced thinking for organisation and management. It
exherts managers to avoid analysing problems in isolation and to develop integrated or
holistic thinking in place of fragmented and piecemeal approaches.
 IV. The systems approach stresses the dynamic and multi-dimensional nature of
organisations. It provides a strong conceptual framework for meaningful analysis and
understanding of organisations. It recognises the interaction, between different variables
in the environment. It provides clues to the complex behaviour of people in the
organisation.

The systems approach is criticised as being too abstract and vague. It cannot easily be applied
to practical problems. It does not offer specific tools and techniques for practising managers.
Moreover, this approach does not recognise differences in systems. It fails to specify the
nature of interactions and inter- dependencies between an organisation and its external
environment.

Limitations

The system approach is not free from drawbacks. Its critics have pointed out the following
deficiencies:
I. Lack of Unification: The systems approach cannot be considered a unified theory of
organisation. A unified theory is one which can be applied to all types of organisations
and present a comprehensive analysis so that various people who want to study
organizations from different angles can derive knowledge. That is what the systems
approach was expected to do so. However, the systems approach failed to do so.
II. Abstract Analysis: The systems theory is too abstract to be of much use to practising
managers. It indicates that various parts of the organisation are interrelated and this inter-
relationship is dynamic. But it has failed to spell out the precise relationship between
various sub-systems.
III. Limited View of Organisation-Environment Interface: This systems approach has
failed to specify the nature of interactions and inter-dependencies between an
organisation and its external environment.
IV. Limited Application: The systems approach has limited application. It does not provide
an action framework applicable to all types of organisations. For example, modern
structural designs, such as matrix organisation, cybernetic, control and communication
systems are applicable to smaller organisations.

Thus, the systems theory has not lived up to the expectations it raised at the beginning. It is
promoted to provide an adequate and comprehensive explanation of organisations, but this
promise does not seem to be fulfilled.

Modern Organization Theory

Modern organization theory is considered far superior to the earlier theories due to the following
features:
a) The open system of Organization: The classical theory treated organisation as a closed
system. But modern theory considers the organisation as an open system which has
continuous interaction with the environment. It gets various resources from the
environment and transforms them into outputs desired by the environment.

b) Adaptive Change: Organisation is an open system, its survival and growth in a dynamic
environment demand an adaptive system which can continuously adjust to changing
environment. Management tends to bring changes in the sub-systems of the organisation
to cope with the challenges of environmental forces.
c) Integrative: The classical theory focused on formal organizations, whereas neo-classical
theory concentrated on informal organizations.
Modern organization theory considers both formal and informal organizations and tries to
integrate these with the concepts drawn from behavioural and quantitative approaches.
Problems in an organization are dealt with in an integrated rather than in a piecemeal
manner. This provides better and holistic solutions rather than patchwork.

d) Traditional and neo-classical theorists were prescriptive in nature: They provided

some appropriate ways to design and manage organizations. The focus was on prescribing
‘one best way’, but the systems approach adopts a realistic view and recognizes the
complex problems organizations face. It considers both formal and informal relations and
tries to generate unique solutions to unique problems that organizations face.

Contingency Approach

The contingency approach is a relatively new approach to organization and management. It is

related to the system approach. The belief that organizations are open systems widened the
perspective further leading to the development of the contingency approach. It is also known
as the situation approach.

The contingency approach is based on the belief that there is no one best way to tackle the
problems of management. The application of management principles and practices is
contingent upon the environment. In the words of Kast and Rosenzweig, “The contingency
view seeks to understand the inter-relationships within and among sub-systems as well as
between the organisation and to define patterns of relationships of variables”.

The basic theme of the contingency approach is that there is no single best way of
managing applicable in all situations. The best solution is that one that is responsive to the
peculiarities of the given situation. Significant differences exist between one substation and
others. Therefore, management should deal with different situations in different ways. In
other words, the effectiveness of any technique is contingent on the given situation. The
conditions and complexities of the situation determine which approach is applicable and
effective. The approach or technique should be chosen keeping in view the peculiarities of
each situation. It is the responsibility of management to analyse the contingencies or
conditions peculiar to each situation and then choose the right approach to deal with it.

The contingency approach rejects the universality of management concepts. It appeals to

common sense. But it is much more than common sense. It requires the ability to analyse and
diagnose a managerial situation correctly. It also requires knowledge and understanding of
different principles, techniques and styles of management. The use of a contingency approach
is not possible without the ability to match the management knowledge and skills to the
demands of the given situation.

It also stresses that there is no one best style of leadership which will suit every situation. The
effectiveness of a particular leadership style will vary from situation to situation. For
instance, participative leadership may be more effective in an organisation employing
professional personnel in a high technology operation in an atmosphere of non- materialistic
orientation and free expression. On the other hand, authoritarian leadership would be more
effective in an organisation which employs unskilled personnel on routine tasks with social
values oriented towards materialism and obedience to authority.
Practical Utility of Contingency Approach

The main contributions of the contingency approach are as follows:

I. The contingency approach provides a clear view of the managerial job. The
classical approach suggests pre-conceived principles and techniques as
having universal validity ignoring the situational differences.

II. The contingency approach has common sense value and wide-ranging
practical utility. It widens the horizons of managers from the concepts,
principles, and techniques of management theory. It goads them to be alert
and adaptive to changing situational needs. In promotes analytical, critical
and multi- dimensional thinking with the help of which managers can
innovate new and better approaches and widen their choice.

III. The contingency approach does not suggest that the findings of earlier
approaches are useless. Rather it attempts to integrate them and make them
contingent upon the demands of the situation. It recognizes that managerial
functions and principles are useful but should be used with discretion and
care to suit the specific situation.

IV. The approach accepts that organizations and their environment are too
dynamic to be always effectively managed in the same manner. Managers
must be capable of changing their approach and style to match the changes in
the environment. This approach stresses the need for a comparative study of
organizations so as to develop guidelines for coping with different situations.

Strategic Management
Strategic management is the management of an organization’s resources to achieve its goals and
objectives. Strategic management involves setting objectives, analyzing the competitive
environment, analyzing the internal organization, evaluating strategies, and ensuring that
management rolls out the strategies across the organization.

Understanding Strategic Management

Strategic management is divided into several schools of thought. A prescriptive approach to

strategic management outlines how strategies should be developed, while a descriptive approach
focuses on how strategies should be put into practice. These schools differ on whether strategies
are developed through an analytic process, in which all threats and opportunities are accounted
for, or are more like general guiding principles to be applied.

Business culture, the skills and competencies of employees, and organizational structure are all
important factors that influence how an organization can achieve its stated objectives. Inflexible
companies may find it difficult to succeed in a changing business environment. Creating a
barrier between the development of strategies and their implementation can make it difficult for
managers to determine whether objectives have been efficiently met.
The 5 Phases of Strategic Management

Strategic management involves managing an organization's resources, analyzing internal and

external forces, and developing strategies to realize goals and objectives. There are five key
phases that can help businesses execute their strategies.

1. An organization must first establish clear, realistic goals. Its goals should answer what
the company wants to achieve and why. Once set, the company can then identify the
objectives, or how the goals will be reached. During this phase, the company can
articulate its vision and long and short-term goals.

2. Organizations must then be able to examine, understand, and codify what internal and
external forces affect their business and goals, as well as what it needs to remain
competitive. Analytical tools, such as SWOT analysis, are helpful during this phase.

3. Based on the results of the analysis, the company can then develop its strategy, outlining
how the company will achieve its goals and how. In this phase, the company will
identify the needed people, technology, and other resources; how these resources will be
allocated to fulfill tasks, and what performance metrics are needed to measure success. It
is also critical to gain buy-in from stakeholders and business leaders.

4. Once the strategies are defined, it is time for execution. The strategy is taken from
planning to implementation. During this phase, the allocated resources are placed into
action based on their roles and responsibilities.

5. The final stage of strategic management is to evaluate the effectiveness of implemented

strategies using defined metrics. The company will also visit whether ineffective
strategies should be replaced with more viable ones. The company should continue to
monitor the business landscape and internal operations, as well as maintain strategies
that have proven effective.

Example of Strategic Management

For example, a for-profit technical college wishes to increase new student enrollment and
enrolled student graduation rates over the next three years. The purpose is to make the college
known as the best buy for a student's money among five for-profit technical colleges in the
region, with a goal of increasing revenue.

In that case, strategic management means ensuring the school has funds to create high-tech
classrooms and hire the most qualified instructors. The college also invests in marketing and
recruitment and implements student retention strategies. The college’s leadership assesses
whether its goals have been achieved on a periodic basis.

Types of strategic management strategies

The types of strategic management strategies have changed over time. The modern discipline of
strategic management traces its roots to the 1950s and 1960s. Prominent thinkers in the field
include Peter Drucker, sometimes referred to as the founding father of management studies.
Among his contributions was the seminal idea that the purpose of a business is to create a
customer, and what the customer wants determines what a business is. Management's main job
is marshalling the resources and enabling employees to efficiently address customers' evolving
needs and preferences.

SWOT analysis

A SWOT analysis is one of the types of strategic management frameworks used by

organizations to build and test their business strategies. A SWOT analysis identifies and
compares the strengths and weaknesses of an organization with the external opportunities
and threats of its environment. The SWOT analysis clarifies the internal, external and other
factors that can have an impact on an organization's goals and objectives.

The SWOT process helps leaders determine whether the organization's resources and abilities
will be effective in the competitive environment within which it has to function and to refine the
strategies required to remain successful in this environment.

Balanced scorecard in strategic management

The balanced scorecard is a management system that turns strategic goals into a set of
performance objectives that are measured, monitored and changed, if necessary, to ensure the
strategic goals are met.

The balanced scorecard takes a four-pronged approach to an organization's performance. It

incorporates traditional financial analysis, including metrics such as operating income, sales
growth and return on investment. It also entails a customer analysis, including customer
satisfaction and retention; an internal analysis, including how business processes are linked to
strategic goals; and a learning and growth analysis, including employee satisfaction and
retention, as well as the performance of an organization's information services.

As explained by the Balanced Scorecard Institute: "The system connects the dots between big
picture strategy elements such as mission (our purpose), vision (what we aspire for), core values
(what we believe in), strategic focus areas (themes, results and/or goals) and the more
operational elements such as objectives (continuous improvement activities), measures (or key
performance indicators, or KPIs, which track strategic performance), targets (our desired level
of performance), and initiatives (projects that help you reach your targets)."
Value of organizational culture

Organizational culture can determine the success and failure of a business and is a key
component that strategic leaders must consider in the strategic management process. Culture is a
major factor in the way people in an organization outline objectives, execute tasks and organize
resources. A strong organizational culture will make it easier for leaders and managers to
motivate employees to execute their tasks in alignment with the outlined strategies. At
organizations where lower-level managers and employees are expected to be involved in the
decision-making and strategy, the strategic management process should enable them to do so.

It is important to create strategies that are suitable for the organization's culture. If a particular
strategy does not match the organization's culture, it will hinder the ability to accomplish the
strategy's intended outcomes.

The 3 Types Of Strategies In Strategic Management?

To begin, let’s take a closer look at three of the most popular types of strategies in strategic
management.

Corporate Strategy

Corporate strategy is a vital component of a company’s success, encompassing high-level plans

and initiatives that determine the overall direction and scope of the organization.

These strategies are designed to manage multiple business units, allocate resources, identify
growth opportunities, and optimize organizational efforts from the C-suite level down to new
hires.

One example of a popular corporate strategy is vertical integration, which involves expanding a
company’s operations into upstream or downstream businesses related to its core operations.
This approach can create cost efficiencies, secure supply chains, and enhance the overall value
proposition.

Corporate-level strategies are concerned with the organization’s long-term health and success as
a whole, ensuring that the company remains competitive and sustainable in the long run.
Business Strategy

Business strategy refers to an organization’s set of action plans to gain a competitive edge in a
particular industry or market to drive growth, boost sales, and attract more customers.

It is a subset of organizational strategy primarily concerned with a company’s broader, long-

term direction. Business strategy, on the other hand, focuses on leveraging competitive
advantages to capture a larger market share, streamline operations, reduce expenses, and
generate other beneficial outcomes.

Every business strategy has four key aspects: the objective, the vision, resource allocation, and
evaluation. The objective outlines the overarching goal of your business strategy, and the
competitive analysis seeks to discover strengths, weaknesses, opportunities, or threats that can
be capitalized on to bring your organization closer to its long-term objectives.

Resource allocation is the stage where you outline how you’ll deploy business units and allocate
resources to bring the plan created in the previous stage to fruition. Finally, the evaluation stage
involves creating a framework for testing and evaluating your business strategy.

Another aspect of business strategy is determining how a company will compete with rivals
regarding the goods or services offered, the target market, pricing, and marketing strategies.

By carefully crafting and implementing a business-level strategy, companies can differentiate

themselves from competitors, maintain a cost advantage, and create a unique value proposition
that appeals to customers.

Functional Strategy

Functional-level strategy refers to the actions and decisions taken by specific departments within
an organization to support and contribute to the overall organizational strategy. These
departmental strategies are designed to align with and support the company’s long-term
objectives.

Put simply, functional-level strategies encourage businesses to take advantage of each of their
department’s unique capabilities and resources to drive growth and success.

For example, implementing a new functional-level strategy may mean your marketing
department will shift its focus toward promoting new or improved products, while the sales
department may begin to prioritize targeting new customer demographics to maximize profits.

Functional-level strategies may also call for updating your departmental processes, tools,
technology, and structure to support initiatives like entering new markets, enhancing customer
service and satisfaction, and developing new revenue streams.
Unit : 2
 Planning
Meaning of Planning
Planning is ascertaining prior to what to do and how to do. It is one of the primary managerial
duties. Before doing something, the manager must form an opinion on how to work on a specific
job. Hence, planning is firmly correlated with discovery and creativity. But the manager would
first have to set goals. Planning is an essential step what managers at all levels take. It requires
making decisions since it includes selecting a choice from alternative ways of performance.

Importance/Significance of Planning
1. Planning provides Direction:

Planning is concerned with predetermined course of action. It provides the directions to the
efforts of employees. Planning makes clear what employees have to do, how to do, etc. By
stating in advance how work has to be done, planning provides direction for action. Employees
know in advance in which direction they have to work. This leads to Unity of Direction also. If
there were no planning, employees would be working in different directions and organisation
would not be able to achieve its desired goal.

2. Planning Reduces the risk of uncertainties:

Organisations have to face many uncertainties and unexpected situations every day. Planning
helps the manager to face the uncertainty because planners try to foresee the future by making
some assumptions regarding future keeping in mind their past experiences and scanning of
business environments. The plans are made to overcome such uncertainties. The plans also
include unexpected risks such as fire or some other calamities in the organisation. The resources
are kept aside in the plan to meet such uncertainties.

3. Planning reduces over lapping and wasteful activities:

The organisational plans are made keeping in mind the requirements of all the departments. The
departmental plans are derived from main organisational plan. As a result there will be co-
ordination in different departments. On the other hand, if the managers, non-managers and all
the employees are following course of action according to plan then there will be integration in
the activities. Plans ensure clarity of thoughts and action and work can be carried out smoothly.

4. Planning Promotes innovative ideas:

Planning requires high thinking and it is an intellectual process. So, there is a great scope of
finding better ideas, better methods and procedures to perform a particular job. Planning process
forces managers to think differently and assume the future conditions. So, it makes the managers
innovative and creative.

5. Planning Facilitates Decision Making:

Planning helps the managers to take various decisions. As in planning goals are set in advance
and predictions are made for future. These predictions and goals help the manager to take fast
decisions.
6. Planning establishes standard for controlling:

Controlling means comparison between planned and actual output and if there is variation
between both then find out the reasons for such deviations and taking measures to match the
actual output with the planned. But in case there is no planned output then controlling manager
will have no base to compare whether the actual output is adequate or not.

For example, if the planned output for a week is 100 units and actual output produced by
employee is 80 units then the controlling manager must take measures to bring the 80 unit
production upto 100 units but if the planned output, i.e., 100 units is not given by the planners
then finding out whether 80 unit production is sufficient or not will be difficult to know. So, the
base for comparison in controlling is given by planning function only.

7. Focuses attention on objectives of the company:

Planning function begins with the setting up of the objectives, policies, procedures, methods and
rules, etc. which are made in planning to achieve these objectives only. When employees follow
the plan they are leading towards the achievement of objectives. Through planning, efforts of all
the employees are directed towards the achievement of organisational goals and objectives.

Limitations of Planning:
1. Planning leads to rigidity:

Once plans are made to decide the future course of action the manager may not be in a position
to change them. Following predefined plan when circumstances are changed may not bring
positive results for organisation. This kind of rigidity in plan may create difficulty.

2. Planning may not work in dynamic environment:

Business environment is very dynamic as there are continuously changes taking place in
economic, political and legal environment. It becomes very difficult to forecast these future
changes. Plans may fail if the changes are very frequent.

The environment consists of number of segments and it becomes very difficult for a manager to
assess future changes in the environment. For example there may be change in economic policy,
change in fashion and trend or change in competitor’s policy. A manager cannot foresee these
changes accurately and plan may fail if many such changes take place in environment.

3. It reduces creativity:

With the planning the managers of the organisation start working rigidly and they become the
blind followers of the plan only. The managers do not take any initiative to make changes in the
plan according to the changes prevailing in the business environment. They stop giving
suggestions and new ideas to bring improvement in working because the guidelines for working
are given in planning only.

4. Planning involves huge Cost:

Planning process involves lot of cost because it is an intellectual process and companies need to
hire the professional experts to carry on this process. Along with the salary of these experts the
company has to spend lot of time and money to collect accurate facts and figures. So, it is a cost-
consuming process. If the benefits of planning are not more than its cost then it should not be
carried on.

5. It is a time consuming process:

Planning process is a time-consuming process because it takes long time to evaluate the
alternatives and select the best one. Lot of time is needed in developing planning premises. So,
because of this, the action gets delayed. And whenever there is a need for prompt and immediate
decision then we have to avoid planning.

6. Planning does not guarantee success:

Sometimes managers have false sense of security that plans have worked successfully in past so
these will be working in future also. There is a tendency in managers to rely on pretested plans.

It is not true that if a plan has worked successfully in past, it will bring success in future also as
there are so many unknown factors which may lead to failure of plan in future. Planning only
provides a base for analysing future. It is not a solution for future course of action.

7. Lack of accuracy:

In planning we are always thinking in advance and planning is concerned with future only and
future is always uncertain. In planning many assumptions are made to decide about future
course of action. But these assumptions are not 100% accurate and if these assumptions do not
hold true in present situation or in future condition then whole planning will fail.

For example, if in the plan it is assumed that there will be 5% inflation rate and in future
condition the inflation rate becomes 10% then the whole plan will fail and many adjustments
will be required to be made.

Planning Process
As planning is an activity, there are certain reasonable measures for every manager to follow:
(1) Setting Objectives

● This is the primary step in the process of planning which specifies the objective of an
organisation, i.e. what an organisation wants to achieve.

● The planning process begins with the setting of objectives.

● Objectives are end results which the management wants to achieve by its operations.

● Objectives are specific and are measurable in terms of units.

● Objectives are set for the organisation as a whole for all departments, and then
departments set their own objectives within the framework of organisational objectives.

Example:

A mobile phone company sets the objective to sell 2,00,000 units next year, which is double the
current sales.

(2) Developing Planning Premises

● Planning is essentially focused on the future, and there are certain events which are
expected to affect the policy formation.

● Such events are external in nature and affect the planning adversely if ignored.

● Their understanding and fair assessment are necessary for effective planning.

● Such events are the assumptions on the basis of which plans are drawn and are known as
planning premises.

Example:

The mobile phone company has set the objective of 2,00,000 units sale on the basis of forecast
done on the premises of favourable Government policies towards digitisation of transactions.

(3) Identifying Alternative Courses of Action

● Once objectives are set, assumptions are made.

● Then the next step is to act upon them.

● There may be many ways to act and achieve objectives.

● All the alternative courses of action should be identified.

Example:

The mobile company has many alternatives like reducing price, increasing advertising and
promotion, after sale service etc.

(4) Evaluating Alternative Course of Action

● In this step, the positive and negative aspects of each alternative need to be evaluated in
the light of objectives to be achieved.
 ● Every alternative is evaluated in terms of lower cost, lower risks, and higher returns,
within the planning premises and within the availability of capital.

Example:

The mobile phone company will evaluate all the alternatives and check its pros and cons.

(5) Selecting One Best Alternative

● The best plan, which is the most profitable plan and with minimum negative effects, is
adopted and implemented.

● In such cases, the manager’s experience and judgement play an important role in
selecting the best alternative.

Example:

Mobile phone company selects more T.V advertisements and online marketing with great after
sales service.

(6) Implementing the Plan

● This is the step where other managerial functions come into the picture.

● This step is concerned with “DOING WHAT IS REQUIRED”.

● In this step, managers communicate the plan to the employees clearly to help convert the
plans into action.

● This step involves allocating the resources, organising for labour and purchase of
machinery.

Example:

Mobile phone company hires salesmen on a large scale, creates T.V advertisement, starts online
marketing activities and sets up service workshops.

(7) Follow Up Action

● Monitoring the plan constantly and taking feedback at regular intervals is called follow-
up.

● Monitoring of plans is very important to ensure that the plans are being implemented
according to the schedule.

● Regular checks and comparisons of the results with set standards are done to ensure that
objectives are achieved.

Example:

A proper feedback mechanism was developed by the mobile phone company throughout its
branches so that the actual customer response, revenue collection, employee response, etc.
could be known.
 Types of Planning
Types of Planning
Planning is an essential part of every business, whether that is in the form of laying out a
strategic framework, or making contingency plans for emergencies. Organizations that are not
well-planned may be faced with serious consequences. The four main plans are strategic,
tactical, operational, and contingency.
The four main plans of business are strategic, tactical, operational and contingency.

● Strategic planning looks at the long-term issues of the organization, and helps develop a
plan for growth or change of business function. Goals developed at the strategic
planning-level are often increased by dividing them into tactical and operational levels.
● Operations planning focuses on day-to-day issues, such as staffing levels or inventory
quantities. Operational-level planning includes more detailed objectives with concrete
deadlines and task assignments.
● Tactical planning is used to reach the goals set out by strategic and operational planning.
Tactical planning includes short-term objectives and tasks designed to create specific
results within a limited time span. Tactical plans often include operational level plans,
and make way for the development of contingency level plans.
● Contingency-level planning includes more detailed action items with specified responses
in case of unexpected events or emergencies, such as natural disasters or extreme
weather events that disrupt business operations.

All four levels of planning are necessary for a business, or individual business projects to
succeed.

Strategic Planning: Strategic planning is a management process for defining a company's

long-term vision, direction, and actions. It is a strategy to figure out what potential
business opportunities exist for the company. It helps to align different initiatives, and get
people focused on a single goal.

Strategic planning is an organizational process

that involves defining the current situation, setting
goals for the future, and finding a way to bridge
the gap between the two.

A good example of strategic planning is when an organization wants to expand their business
globally. They will first need to define their current situation which might include mapping out
all their resources, setting goals for what they want to achieve, and assessing how much
resources are available in various regions. Once they have all this information, they can then
create a map of where they want to expand and what steps need to be taken in order for them to
get there.

Tactical Planning: Tactical planning is the practice of prioritizing tasks and delegating
them to team members in a way that will get the task accomplished. Tactical planning
means figuring out what needs to be done in order to achieve a goal, which team member
can do it, and when they can get it done.
The tactical planning process begins with a strategic plan. The strategic plan establishes the
goals for an organization or business unit. These goals are then translated into tactical plans by
identifying processes, and necessary tasks required to achieve these goals. Tactical plans are
assigned to individual team members who prioritize their tasks, in order for these tasks to be
completed in the most effective manner possible.

Decision and Decision Making Process

Introduction:

Every action of a manager is generally an outcome of a decision.

Owing to this fact, P.P. Drucker in his book “Practice of Management,” observes “Whatever
a manager does, he does through making decision.” True, the job of management involves the
making of innumerable decisions. That is why many persons think that management is
decision-making.

The word ‘decides’ means to come to a conclusion or resolution as to what one is expected to
do at some later time. According to Manely H. Jones, “It is a solution selected after
examining several alternatives chosen because the decider foresees that the course of action
he selects will do more than the others to further his goals and will be accompanied by the
fewest possible objectionable consequences”‘.

Decision is a choice whereby a person comes to a conclusion about given circumstances/

situation. It represents a course of behaviour or action about what one is expected to do or not
to do. Decision- making may, therefore, be defined as a selection of one course of action
from two or more alternative courses of action. Thus, it involves a choice-making activity
and the choice determines our action or inaction.

Definition of Decision-Making:

Some of the important definitions of decision-making are given as under. Decision-

making is the selection based on some criteria from two or more possible alternatives.
 “-—George R.Terry

A decision can be defined as a course of action consciously chosen from available

alternatives for the purpose of desired result —J.L. Massie

A decision is an act of choice, wherein an executive forms a conclusion about what must be
done in a given situation. A decision represents a course of behaviour chosen from a number
of possible alternatives. -—D.E. Mc. Farland

From these definitions, it is clear that decision-making is concerned with selecting a course of
action from among alternatives to achieve a predetermined objective.

Features or Characteristics of Decision-Making:

From definitions and elements we can draw the following important features of
managerial decisions:

1. Rational Thinking:
It is invariably based on rational thinking. Since the human brain with its ability to learn,
remember and relate many complex factors, makes the rationality possible.

2. Process:
It is the process followed by deliberations and reasoning.
3. Selective:
It is selective, i.e. it is the choice of the best course among alternatives. In other words,
decision involves selection of the best course from among the available alternative courses
that are identified by the decision-maker.

4. Purposive:
It is usually purposive i.e. it relates to the end. The solution to a problem provides an
effective means to the desired goal or end.

5. Positive:
Although every decision is usually positive sometimes certain decisions may be negative and
may just be a decision not to decide. For instance, the manufacturers of VOX Wagan car once
decided not to change the model (body style) and size of the car although the other rival
enterprise (i.e. the Ford Corporation) was planning to introduce a new model every year, in
the USA.

That a negative decision and is equally important was stressed by Chester I. Bernard- one of
the pioneers in Management Thought-who observed, “The fine art of executive decision
consists in not deciding questions that are not now pertinent, in not deciding prematurely, in
not making decisions that cannot be made effective, and in not making decisions that other
should make. ”

6. Commitment:
Every decision is based on the concept of commitment. In other words, the Management is
committed to every decision it takes for two reasons- viz., (/) it promotes the stability of the
concern and (ii) every decision taken becomes a part of the expectations of the people
involved in the organisation.

Decisions are usually so much inter-related to the organisational life of an enterprise that any
change in one area of activity may change the other areas too. As such, the Manager is
committed to decisions not only from the time that they are taken but upto their successfully
implementation.
 7. Evaluation:
Decision-making involves evaluation of alternatives.

Environment of Decision Making

It is said that every manager’s primary responsibility is decision-making. Managers follow a
sequential set of steps to make good decisions that are in the interest of the firm. This process
is known as decision making process. However, the decision making environment is also an
important factor in the process. Let us learn some important aspects of the Decision making
environment.

The quality of the decisions made in an organization will dictate the success or failure of the
said business.

So all the available information and alternatives must be studied before arriving at an
important decision. The process of decision making will help a great deal.

Another factor that affects these decisions is the environment in which they are taken. There
are a few different types of environments in which these decisions are made.

Six C’s of Decision Making:

1. Construct: a clear picture of precisely what must be decided.
2. Compile a list of requirements that must be met.
3. Collect information on alternatives that meet the requirements.
4. Compare alternatives that meet the requirements.
5. Consider the ―what might go wrong factor with each alternative.
6. Commit to a decision and follow through with it

Types of Decisions
Decision-making is one of the core functions of management. And it is actually a very
scientific function with a well-defined decision-making process. There are various types of
decisions the managers have to take in the day to day functioning of the firm. Let us take a
look at some of the types of decisions.

Strategic Decisions and Routine Decisions

As the name suggests, routine decisions are those that the manager makes in the daily
functioning of the organization, i.e. they are routine.

Such decisions do not require a lot of evaluation, analysis or in-depth study. In fact, high-
level managers usually delegate these decisions to their subordinates.
On the other hand, strategic decisions are the important decisions of the firm. These are
usually taken by upper and middle-level management. They usually relate to the policies of
the firm or the strategic plan for the future.

Hence such decisions require analysis and careful study. Because strategic decisions taken at
this level will affect the routine decisions taken daily.
Programmed Decisions and Non-Programmed Decisions
Programmed decisions relate to those functions that are repetitive in nature. These decisions
are dealt with by following a specific standard procedure. These decisions are usually taken
by lower management.

For example, granting leave to employees, purchasing spare parts etc are programmed
decisions where a specific procedure is followed.

Non-programmed decisions arise out of unstructured problems, i.e. these are not routine or
daily occurrences. So there is no standard procedure or process to deal with such issues.

Usually, these decisions are important to the organization. Such decisions are left to upper
management. For example, opening a new branch office will be a non-programmed decision.

Policy Decisions and Operating Decisions

Tactical decisions pertaining to the policy and planning of the firm are known as policy
decisions. Such decisions are usually reserved for the firm’s top management officials. They
have a long term impact on the firm and require a great deal of analysis.

Operating decisions are the decisions necessary to put the policy decisions into action. These
decisions help implement the plans and policies taken by the high-level managers.

Such decisions are usually taken by middle and lower management. Say the
company announces a bonus issue. This is a policy decision. However, the calculation and
implementation of such bonus issue is an operating decision.

Organizational Decisions and Personal Decisions

When an executive takes a decision in an official capacity, on behalf of the organization, this
is an organizational decision. Such decisions can be delegated to subordinates.
However, if the executive takes a decision in a personal capacity, that does not relate to the
organization in any way this is a personal decision. Obviously, these decisions cannot be
delegated.

Individual Decisions and Group Decisions

When talking about types of decisions, let us see individual and group decisions. Any
decision taken by an individual in an official capacity it is an individual decision.
Organizations that are smaller and have an autocratic style of management rely on such
decisions.
Group decisions are taken by a group or a collective of the firm’s employees and
management. For example, decisions taken by the board of directors are a group decision.

Steps of Decision Making Process:

Decision making is one of the most basic yet significant management skills for all of us to
have. And it can differ from person to person. Making decisions that are based on careful
analysis of numerous circumstances especially in a timely manner is critical. Therefore, it
shouldn’t be procrastinated or taken in haste.

Making decisions can be hard, especially when the odds are not in your favor.
Step 1: Identification of the purpose of the decision

In this step, the problem is thoroughly analysed. There are a couple of questions one should
ask when it comes to identifying the purpose of the decision.
● What exactly is the problem?

● Why the problem should be solved?

● Who are the affected parties of the problem?

● Does the problem have a deadline or a specific time-line?

Step 2: Information gathering

A problem of an organization will have many stakeholders. In addition, there can be dozens
of factors involved and affected by the problem.
In the process of solving the problem, you will have to gather as much as information related
to the factors and stakeholders involved in the problem. For the process of information
gathering, tools such as 'Check Sheets' can be effectively used.

Step 3: Principles for judging the alternatives

In this step, the baseline criteria for judging the alternatives should be set up. When it comes
to defining the criteria, organizational goals as well as the corporate culture should be taken
into consideration.
As an example, profit is one of the main concerns in every decision making process.
Companies usually do not make decisions that reduce profits, unless it is an exceptional
case. Likewise, baseline principles should be identified related to the problem in hand.

Step 4: Brainstorm and analyse the different choices

For this step, brainstorming to list down all the ideas is the best option. Before the idea
generation step, it is vital to understand the causes of the problem and prioritization of
 causes.
For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool. Cause- and-
Effect diagram helps you to identify all possible causes of the problem and Pareto chart
helps you to prioritize and identify the causes with highest effect.
Then, you can move on generating all possible solutions (alternatives) for the problem in
hand.

Step 5: Evaluation of alternatives

Use your judgement principles and decision-making criteria to evaluate each alternative. In
this step, experience and effectiveness of the judgement principles come into play. You need
to compare each alternative for their positives and negatives.
Step 6: Select the best alternative

Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection of the
best alternative is an informed decision since you have already followed a methodology to
derive and select the best alternative.

Step 7: Execute the decision

Convert your decision into a plan or a sequence of activities. Execute your plan by yourself
or with the help of subordinates.

Step 8: Evaluate the results

Evaluate the outcome of your decision. See whether there is anything you should learn and
then correct in future decision making. This is one of the best practices that will improve
your decision-making skills.
Conclusion
When it comes to making decisions, one should always weigh the positive and negative
business consequences and should favour the positive outcomes.
This avoids the possible losses to the organization and keeps the company running with a
sustained growth. Sometimes, avoiding decision making seems easier; especially, when you
get into a lot of confrontation after making the tough decision.
But, making the decisions and accepting its consequences is the only way to stay in control
of your corporate life and time.
INDIVIDUAL AND GROUP DECISIONS

Individual decisions are taken by a single individual. The one-manager decision-making set up is still
prevalent in India as many business units are owned by a single individual. But when business grows in
size and complexity it may not be possible for one individual to take all the decisions himself. He needs
the help of specialized people and also other individual.

Group decisions are taken by individuals who are identified as a Group for making a decisions. Group
decisions have plus values such as greater participation of individual and better quality in decisions. They
are generally more effective decisions. They, however, suffer from delay in decision making process and
difficulty in fixing the responsibility for decisions.

Group decision making Techniques

Brainstorming

This technique includes a group of people, mostly between five and ten in number, sitting around a
table, producing ideas in the form of free association. The main focus is on generation of ideas and not
on evaluation of these ideas.
If more ideas can be originated, then it is likely that there will be a unique and creative idea among
them. All these ideas are written on the blackboard with a piece of chalk so that all the team members
can see every idea and try to improvise these ideas.
Brainstorming technique is very effective when the problem is comparatively precise and can be simply
defined. A complex problem can be divided into parts and each part can be dealt with separately at a
time.

Nominal Group Thinking

This technique is similar to brainstorming except that this approach is more structured. It motivates
individual creativity. Members form the group for namesake and operate independently, originate ideas
for solving the problem on their own, in silence and in writing. Members do not communicate well with
each other so that strong personality domination is evaded.
The group coordinator either collects the written ideas or writes them on a large blackboard so that each
member of the group can see what the ideas are. These ideas are further discussed one by one in turn and
each participant is motivated to comment on these ideas in order to clarify and improve them. After all
these ideas have been discussed, they are evaluated for their merits and drawbacks and each actively
participating member is needed to vote on each idea and allot it a rank on the basis of priority of each
alternative solution.
The idea with the highest cumulative ranking is selected as the final solution to the problem.

Didactic Interaction

This technique is applicable only in certain situations, but is an excellent method when a situation
actually demands it. The type of problem should be such that it generates output in the form of yes or no.
Say for example, a decision is to be made whether to buy or not to buy a product, to merge or not to
merge, to expand or not to expand and so on. These types of decision requires an extensive and
exhaustive discussion and investigation since a wrong decision can have serious consequences.
There are many advantages as well as disadvantages of this type of situation. The group that makes the
decision is divided into two sub-groups, one in favor of the “go” decision and the opposing in favor of
“no go” decision.
The first group enlists all the “pros” of the problem solution and the second group lists all the “cons”.
These groups meet and discuss their discoveries and their reasons.
After tiring discussions, the groups switch sides and try to find weaknesses in their own original
standpoints. This interchange of ideas and understanding of various viewpoints results in mutual
acceptance of the facts as they exist so that a solution can be put together around these facts and
ultimately a final decision is reached.

Delphi Technique
This technique is the improvised version of the nominal group technique, except that it involves
obtaining the opinions of experts physically distant from each other and unknown to each other.
This isolates group members from the undue influence of others. Basically, the types of problems sorted
by this technique are not specific in nature or related to a particular situation at a given time.
For example, the technique could be used to explain the problems that
could be created in the event of a war. The Delphi technique includes the
following steps −
● The problem is first identified and a panel of experts are selected. These experts are asked to
provide potential solutions through a series of thoughtfully designed questionnaires.
● Each expert concludes and returns the initial questionnaire.

● The results of the questionnaire are composed at a central location and the central coordinator
prepares a second set of questionnaire based on the previous answers.
● Each member receives a copy of the results accompanied by the second questionnaire.

● Members are required to review the results and respond to the second questionnaire. The results
typically trigger new solutions or motivate changes in the original ideas.
● The process is repeated until a general agreement is obtained.

Quality circle and teams

● Quality circle is a people building philosophy based on the premise that an employee doing a
particular job is biggest expert of that field and thus is in a better position to identify, analyse and
resolve the work related problems through their innovative and unique ideas.
● In fact, it is a practical application of McGregor’s Theory ‘Y’ that if given the right environment
and decision making power, people will enjoy and take pride in their work thus leading to
enrichment of their work life.
● Quality circle is a small group of employees in the same work area or doing similar type of work
who voluntarily meets regularly for about an hour every week to identify, analyse and resolve
work related problems. The objective is to improve quality, productivity and the total
performance of the organisation and also to enrich the quality of work life of employees.

Self managed teams

A self-managed team is responsible and accountable for all or most aspects of making a product
and/or delivering a service. They carry out supporting tasks (eg plan and schedule workflow,
 manage annual leave and absence, handle issues among colleagues, train and hire new workers), as
well as technical tasks

Individual decision making techniques

1. Linear programming is a mathematical modeling technique used to determine a level of

operational activity in order to achieve an objective, subject to restrictions called constraints.
Many decisions faced by an operations manager are centered around the best way to achieve the
objectives of the firm subject to the constraints of the operating environment. These constraints
can be limited resources, such as time, labor, energy, materials, or money, or they can be
restrictive guidelines, such as a recipe for making cereal, engineering specifications, or a blend
for gasoline. The most frequent objective of business firms is to maximize profit—whereas the
objective of individual operational units within a firm.

2. Decision Tree

A decision tree is a branched flowchart showing multiple pathways for potential decisions and outcomes.
The tree starts with what is called a decision node, which signifies that a decision must be made.

From the decision node, a branch is created for each of the alternative choices under consideration. The
initial decision might lead to another decision, in which case a new decision node is created and new
branches are added to show each alternative pathway for the new decision. The result is a series of
decision pathways. The flowchart might include only one or two decisions with only one or two
alternatives, or it can become a complex sequence of many decisions with many alternatives at each node.

Along the decision pathway, there is usually some point at which a decision leads to an uncertain
outcome. That is, a decision could result in multiple possible outcomes, so an uncertainty node is added
to the tree at that point. Branches come from that uncertainty node showing the different possible
outcomes.

Eventually, each pathway reaches a final outcome. The decision tree, then, is a combination of decision
nodes, uncertainty nodes, branches coming from each of these nodes, and final outcomes as the result of
the pathways.

3. SIMULATION: Simulation Definition

Simulation typically uses statistical and computer modelling to investigate the performance of a business
process either for a new situation or to improve an existing set of processes. By modelling different
process scenarios and outcomes, companies can minimise the traditional risks associated with change
management initiatives without having to make changes in a 'live' business environment where
performance could adversely be affected .

4. Network techniques

Meaning and Concept of Network Analysis: Project formulation and Project implementations are two
essential functions of project management. Project formulation ensures the scientific selection of a project
whereas project implementation ensures an optimal allocation of time and resources to the project
activities. All project design should have contain five elements it should systematically formulates and
describe each of the basic elements i.e. inputs, activities, outputs, effects, and impact. Project design
should start with defining the desired impact. So we work from the Top down i.e what effects are needed
 to achieve the desired impact? what outputs are needed to achieve the desired effects? and so on

Classification of Network Techniques: There are number of network techniques which are used by the
various people according to their purpose. The main techniques are given below:

1. CPM: It is popularly known as Critical Path Method. Critical path method is a project management
tool used to formulate a time frame for a project in order to determine where potential delays are most
likely to take place.

2. PERT: The Programme Evaluation and Review Technique is basically a scheduling technique. It
helps project manager in planning, scheduling, monitoring, evaluating, and controlling large and complex
projects. It is a probabilistic model and introduces uncertainties in project network.

Organising

Meaning of Organizing

Once the objectives and plans are laid down, management has to identify and establish productive
relationships between various activities and resources for implementing plans. In general words organising
refers to arranging everything in orderly form and making the most efficient use of resources. The aim of
organizing is to enable people to work together for a common purpose.
‘Organizing is the process of identifying and grouping the work to be performed, defining and delegating
responsibility and authority and establishing relationships for the purpose of enabling people to work most
effectively together in accomplishing objectives.’
Steps Involved in the Process of Organizing
1. Identification & Division Of Work: –
The total work to be done should be divided into specific jobs as according to predetermined plans.
–Job = a set of related tasks that can be performed by an individual. It should have specific and

definite tasks to be performed. As far as possible, it should define expected results along with the

job.

– Division of work → specialization of efforts and skills + avoids duplication of work.

– Management must ensure that all the activities required to achieve organizational objectives

are identified.
2. Departmentalization:
– Grouping similar and related jobs into larger units called departments, divisions or sections and placing
them under a department head. It facilitates specialization.
– The departments are linked together and are interdependent.
– Aims at achieving co-ordination and facilitate unity of action. Departmentation can be done on the basis
of:
•Functions: marketing, personnel, finance etc.
•Products: Textiles, chemical, power division etc.
•Territories: Western, northern, central, eastern etc.
3. Assignment Of Duties:
– Define the work of different job positions and allocate work accordingly.
– Once departments are formed, the dept is placed under the charge of an individual.
– Jobs are assigned to an individual best suited to perform it.
– Qualifications, experience, ability and aptitudes of people should be matched with duties.
– E.g. activities of finance should be assigned to persons having qualifications and experience in finance e.g.
C.A‘s.
4. Establishing Reporting Relationships:
– Granting requisite authority to enable employees to perform the job satisfactorily.
– Superior subordinate relations between different people and job positions created, so that everybody
knows from whom he is to take orders and to whom he can issue orders.
– Creates management hierarchy = a chain of command from the top manager to the individual at the lowest
level.
– This helps in coordination.

Importance of Organizing

1. Benefits of specialization: In organizing every individual is assigned apart of total work and not the
whole task. This division of work into smaller units and repetitive performance leads to specialization. Thus
organizing promotes specialization which in turn leads to efficient & speedy performance of tasks.
2. Clarity in working relationship: It helps in creating well defined jobs and also clarifying the limits of
authority and responsibility of each job. The superior-subordinate relationship is clearly defined in
organizing.
3. Effective Administration: It provides a clear description of jobs and related duties which helps to avoid
confusion and duplication. Clarity in working relationships enables proper execution of work which results
ineffective administration.
4. Optimum utilization of resources: The proper assignment of jobs avoids overlapping/duplication of
work. This helps in preventing confusion and minimizing the wastage of resources and efforts.
5. Adoption to Change: A properly designed organizational structure is flexible which facilitates
adjustment to changes in workload caused by change in external environment related to technology,
products, resources and markets.
6. Development of Personnel: Sound organization encourages initiative and relative thinking on part of the
employees. When managers delegate their authority, it reduces their workload so they can focus on more
important issues related to growth & innovation. This also develops the subordinates’ ability and helps him
to realize his full potential.
7. Expansion and growth: It helps in growth & diversification of an enterprise by adding more job
positions, departments, products lines, new geographical territories etc.
Meaning of Organizational Structure
It seeks to establish relations among all the persons working in the organization. Under the organizational
structure, various posts are created to perform different activities for the attainment of the objectives of the
enterprise. Relations among persons working on different posts are determined. The structure provides a
basis or framework for managers and other employers for performing their functions. The organization
structure can be defined as the frame work within which managerial and operating tasks are performed.
Relation between Span of Management and Organization structure:
Span of management refers to the number of subordinates that can be effectively managed by a superior.
The Span of management to a large extent gives shape to the organization structure. This determines the
levels of management in the structure. Arrow span of management results in tall structure whereas wider
span of management results in flat structure.

(A) Functional Structure: In functional structure activities are grouped and departments are created on the
basis of specific functions to be performed. For example, all the jobs related to production are grouped under
production department, sales departments etc.

Suitability
(1) Large organizations producing one line of product.
(2) Organizations which require high degree of functional specialization with diversified activities.
Advantage
1. Specialization: Better decision of labour takes place which results in specialization of functions and its
consequent benefits.
2. Coordination is established: All the persons working within a departmental are specialists of their
respective jobs. It makes the co-ordination easier at departmental level.
3. Helps in increasing managerial efficiency: Managers of one department are performing same type of
function again and again which makes them specialized and improves their efficiency.
4. Minimizes cost: It leads to minimum duplication of effort which results in economies of scale and thus
lowers cost.
Disadvantages
1. Ignorance of organizational objectives: Each departmental head works according to his own wishes.
They always give more weight to their departmental objectives. Hence overall organizational objectives
suffer.
2. Difficulty in Inter-departmental Coordination: All departmental heads work as per their own wishes
which leads to coordination within the department easier but it makes inter-departmental coordination
difficult.
3. Hurdle in complete development – because each employee specializes only in a small part of the whole
job.
(B) DIVISIONAL ORGANIZATION STRUCTURE
Dividing the whole enterprise according to the major products to be manufactured (like metal, plastic,
cosmetics etc.) is known as divisional organization structure.

Suitability: This structure is suitable in organizations producing multi product or different lines of products
requiring product specialization. Also growing companies which intend to add more lines of products in
future adopt this structure.
Advantages
1. Quick decision-making: Divisional manager can take any decision regarding his division independently
which makes decisions quick and effective.
2. Divisional results can be assessed: Division results (profit/loss) can be assessed easily. On this basis any
unprofitable division can be closed.
3. Growth and Expansion: It facilitates growth and expansion as new divisions can be added without
disturbing existing departments.
Disadvantages
1. Conflicts among different divisions on allocation of resources.
2. Duplicity of Functions: Entire set of functions is required for all divisions. It gives rise to duplicity of
efforts among divisions & increases cost.
3. Selfish Attitude: Every division tries to display better performance and sometimes even at the cost of
other divisions. This shows their selfish attitude.
FORMAL ORGANISATION
– Refers to the org. structure that is designed by the management to accomplish organizational objectives..
– It specifies clearly the boundaries of authority & responsibility and there is a systematic coordination
among the various activities to achieve organizational goals.
– Louis Allen – System of well defined jobs, each bearing a definite measure of authority,
responsibility & accountability. .
Features
1. It is deliberately created by the top management.
2. It is based on rules and procedures which are in written form.
3. It is impersonal i.e. does not takes into consideration emotional aspect.
4. It clearly defines the authority and responsibility of every individual.
5. It is created to achieve organizational objectives.
Advantages
1. Easier to fix responsibility since mutual relationships are clearly defined.
2. No overlapping of work – because things move according to a definite plan.
3. Unity of command through an established chain of command.
4. Easy to achieve objectives – because coordination and optimum use of human and material resources.
5. Stability in the organization – because behavior of employees can be fairly predicted since there are
specific rules to guide them.
Disadvantages
1. The Work is based on rules which causes unnecessary delays.
2. Lack of initiative: The employees have to do what they are told to do and they have no opportunity of
thinking.
3. Limited in scope: It is difficult to understand all human relationships in an enterprise as it places more
emphasis on structure and work.
INFORMAL ORGANISATION
An informal organization is that organization which is not established deliberately but comes into existence
because of common interests, tastes and religious and communal relations. The main purpose of this
organization, structure is getting psychological satisfaction. For example, employees with similar interest in
sports, films, religion etc. may form their own informal groups.
Features
1. It originates from within the formal organization as a result of personal interaction among employees.
2. It has no written rules and procedures.
3. It does not have fixed lines of communication.
4. It is not deliberately created by the management.
5. It is personal means the feelings of individuals are kept in mind.
 Advantages
1. Speed: Prescribed lines of communication are not followed which leads to faster spread of information.
2. Fulfillment of social needs – enhances job satisfaction which gives them a sense of belongingness in the
organization.
3. Quick solution of the problems – because the subordinates can speak without hesitation before the
officers, it helps the officers to understand the problems of their subordinates.
Disadvantages
1. It creates rumours: All the persons in an informal organization talk careless and sometimes a wrong
thing is conveyed to the other persons.
2. It resists change and lays stress on adopting the old techniques.
3. Priority to group interests: Pressurizes members to conform to group expectations.
Difference between Formal Informal Organisation

Basis Formal Organisation Informal Organisation

It refers to the structure of well It refers to the network of social

1. Meaning defined authority and relationships which develops
responsibility. automatically.

2. Nature Rigid and stable Flexible and unstable

Arises by virtues of positions in

3. Authority Arises out of personal qualities.
management.

4. Adherence to Violations of rules may lead to No such penalities and

rules penalities and punishments. punishments.

5. Flow to Takes place through the scalar Not through a planned route, it can
Communication Chain. take plane in any direction.

To achieve planned To satisfy social and cultural needs

6. Purpose
organizational objectives. and fulfill common interests.

Emerges spontaneously as a result

Deliberately planned and created
7. Formation/ origin of social interaction among
by management.
employees.

Well defined structure of tasks No clear cut structure because of

8. Structure
and relationships. complex network of relationships.
9. Flow of Authority flows from top to Authority flows vertically as well
Authority bottom i.e. downwards. as horizontally.

10. Interdependence Independent. Depends on formal structure.

Delegation of Authority
Meaning: It means the granting of authority to subordinates to operate within the prescribed limits. The
manager who delegates authority holds his subordinates responsible for proper performance of the assigned
tasks. To make sure that his subordinates perform all the works effectively and efficiently in expected
manner the manager creates accountability.
Process/Elements of Delegation
1. Authority: The power of taking decisions in order to guide the activities of others. Authority is that
power which influences the conduct of others.
2. Responsibility: It is the obligation of a subordinate to properly perform the assigned duty. When a
superior issues orders, it becomes the responsibility of the subordinate to carry it out.
3. Accountability: When a superior assigns some work to a subordinate, he is answerable to his superior for
its success or failure.
Principle of Absoluteness of Accountability: Authority can be delegated but responsibility/accountability
cannot be delegated by a manager. The authority granted to a subordinate can be taken back and re-
delegated to another person. The manager cannot escape from the responsibility for any default or mistake
on the part of his subordinates. For example, If the chief executive asks marketing manager to achieve a
sales target of sale of 100 units/day. The marketing manager delegates this task to deputy sales manager,
who fails to achieve the target. Then marketing manager will be answerable for the work performance of his
subordinates. Thus, accountability is always of the person who delegates authority.

Process of Delegation of Authority

Difference between Authority, Responsibility and Accountability

Basis Authority Responsibility Accountability

Accountability for the

•bligation to perform
1. Meaning Right to command outcome of the assigned
an assigned task.
task.

Arises from formal Arises from delegated

2. Origin Arises from responsibility.
position. authority.
 Upward- from
Downward- from Upward- from subordinate
3. Flow subordinate to
superior to subordinate. to superior.
superior.

Can be withdrawn
4. Cannot be withdrawn Cannot be withdrawn once
anytime by giving
Withdrawl once created. created.
notice.

Importance of the Delegation of Authority

1. Reduction of Executives’ work load: It reduces the work load of officers. They can thus utilize their
time in more important and creative works instead of works of daily routine.
2. Employee development: Employees get more opportunities to utilize their talent which allows them to
develop those skills which will enable them to perform complex tasks.
3. Quick and better decision are possible: The subordinate are granted sufficient authority so they need
not to go to their superiors for taking decisions concerning the routine matters.
4. High Morale of subordinates: Because of delegation of authority to the subordinates they get an
opportunity to display their efficiency and capacity.
5. Better coordination: The elements of delegation – authority, responsibility and accountability help to
define the powers, duties and answer ability related to various job positions which results in developing and
maintaining effective coordination.
Decentralization
• Decentralisation of authority means dispersal of authority to take decisions throughout the organization,
upto the lower levels.
• It implies reservation of some authority with the top level management and transferring rest of the
authority to the lower levels of the organization. This empowers lower levels to take decisions regarding
problems faced by them without having to go to the upper levels.
According to Allen,‘ Decentralisation refers to systematic efforts to delegate to the lowest level, all authority
except the one which can be exercised at central points.‟
Centralization = authority retained at top level and Decentralization = Systematic delegation of authority
at all levels and in all departments of a firm. Firm needs to balance the two.
• In case of a decentralized firm, Top level retains authority for:
o Policies and decisions w.r.t the whole firm
o Overall control and coordination
• Middle and lower levels have authority to take decisions w.r.t tasks allocated to them
Centralization and Decentralization: represents the pattern of authority among managers at different
levels. Centralization of authority means concentration of power of decision making in a few hands. In such
an organization very little authority is delegated to managers at middle and lower levels. No organization
 can be completely centralized or decentralized. They exist together and there is a need for a balance between
the two. As the organization grows in size, there is tendency to move towards decentralization. Thus, every
organization is characterized by both.
Importance of Decentralization
1. Develops initiative amongst subordinates: It helps to promote confidence because the subordinates are
given freedom to take their own decisions.
2. Quick and better decisions: The burden of managerial decisions does not lie in the hands of few
individuals but gets divided among various persons which helps them to take better and quick decisions.
3. Relieves the top executives from excess workload: The daily managerial works are assigned to the
subordinates which leaves enough time with the superiors which they can utilize in developing new
strategies.
4. Managerial Development: It means giving authority to the subordinates up to the lower level to take
decisions regarding their work. In this way the opportunity to take decisions helps in the development of the
organization.
5. Better Control: It makes it possible to evaluate performance at each level which results in complete
control over all the activities.
Difference between – Delegation and Decentralization

Basis Delegation Decentralization

1. Nature It is a compulsory act. It is an optional policy.

2. Freedom Less freedom to take decisions due More freedom of action due to less
of action to more control by the superiors. control by the top management.

It is a process of sharing tasks and It is the result of policy decisions

3. Status
authority. taken by top management.

Narrow- as it is confined to a Wide- It includes extension of

4. Scope superior and his immediate and delegation to all the levels of
subordinate. management.

To increase the role and the autonomy

5. Purpose To reduce the burden of manager.
of lower level of management.
Unit : 3
 Coordination
Meaning:
Coordination is the energy that connects all the other functions of management. It is the common strand that
runs through all actions such as production, purchase, finance and sales to assure perpetuity in the
functioning of the establishment. Coordination is seldom deemed a separate role of management.
According to Theo Haimann, coordination is the orderly synchronizing of efforts of the subordinates to
provide the proper amount, timing and quality of execution so that their united efforts lead to the stated
objectives, namely the common purpose of the enterprise.

According to Brech, Coordination is balancing and keeping together the team by ensuring suitable allocation
of tasks to the various members and seeing that the tasks are performed with harmony among the members
themselves.

Characteristics of Coordination:
The definition that is furnished above highlight the following characteristics of coordination:
 Coordination assimilates group efforts
 Coordination assures unity of action
 Coordination is a perpetual process
 Coordination is an all extensive operation
 Coordination is an obligation of all the fellow managers
 Coordination is an intentional (deliberate) function

Need and Importance of Coordination

The need and importance of coordination can be highlighted from the following points:
 Promotes working as a team

 Effective in guiding and motivating

 Effective utilisation of resources

 Enhances performance and productivity

 Expansion of business

 Controls conflicts
  Establishes unity of action

 Interconnectivity of units

Promotes working as a team

In any organisation, as people having different thoughts, ideas and expectations work together, so
sometimes, rivalries and conflicts occur amongst them. There can be conflicts between different departments
and units regarding the goal of the organisation.
The sense of coordination helps in smoothening these conflicts and encourages people to work together in
unity. This is important for every organisation to achieve its goals.
Effective in guiding and motivating

Every organisation is divided into several units and departments. Every department or unit has its own set of
tasks and activities. They all need to be guided in their actions and this coordination is very important.
Coordination helps in working out solutions wherein everyone can work towards the goal of the
organisation.
The process of coordination is important since it gives freedom to the workforce for completing their
responsibilities. It rewards people for their good work that motivates them to show better work and initiative
in their work and perform better in the organisation.
Effective utilisation of resources

Coordination has an important role to play with the synchronisation of physical and human resources
towards a common goal for the success of the organisation. Coordination plays a significant part in bringing
them together.
Increases teamwork and establishes human relationships: The people in the organisation learn to work
together in unity and the different levels of management interact regularly with the workforce. This
establishes a good relationship between workers and managers in the system. Coordination of activities and
the flow of communication keep workers happy and satisfied in their jobs.
Enhances performance and productivity

An increase in efficiency leads to an increase in output. Efficiency helps in better utilisation of resources
that brings in lesser cost with more returns. Coordination helps in the smooth flow of organisational
activities that improve the employees’ working capacity and increase productivity.
Expansion of business

Effectively-coordinated activities lead to the expansion of the company and the growth of the business due
to better management of the system. Larger organisations need better control and coordination for managing
more number of people, different tasks and activities. Better coordination is required across various and
different levels of units and departments for smooth and efficient functioning.
Controls conflicts

Coordination and control help to handle the behavioural issues of the workers and are effective in keeping
the conflicts away. Coordination helps in bringing harmony in the system by ensuring conducive working
conditions for the people and the workers. People realise the importance of their job and work together in a
united manner for achieving the goals of the company.
Establishes unity of action

Every organisation has different methods of working and controlling different departments. Coordination is
effective in bringing connectivity amongst the workforce and helps to unite the actions of the people.
Interconnectivity of units

Coordination is effective in handling the operations between the different units and divisions in an
organisation. For example, in a steel plant, the purchasing department coordinates with the production
department in order to do a coordinated supply of raw materials.
The different units are connected regarding their supplies and output. Coordination of activities plays a
major role in these industries.

Types of Coordination

Coordination is an important principle of management that is applied for blending the group activities and
tasks that are part of the organisational structure. Coordination is an ongoing process that plays a vital role in
the continuous existence, growth and profitability of the organisation.
It promotes working as a team, encourages the workforce and provides the right direction with effective
utilisation of the resources. Therefore coordination is rightly called the “Essence of Management” for
providing harmonious conditions and smooth functioning of an enterprise.
The various forms of coordination are as follows:
 Internal and external coordination

 Vertical and horizontal coordination

 Procedural and substantive coordination

Internal and external coordination

The process of coordination among units of an organisation is called internal coordination. Internal
coordination is used to align the actions of different departments and units to make the organisation work
without a problem.
For instance, internal coordination exists when production activities of a manufacturing organisation is
coordinated by establishing a relationship between production managers, purchase department, warehouse
executives and other departmental heads (finance, human resource and marketing).
For instance, internal coordination exists when production activities of a manufacturing organisation is
coordinated by establishing a relationship between production managers, purchase department, warehouse
executives and other departmental heads (finance, human resource and marketing).
Internal coordination is required for all kinds of organisations which could be engineering firms, political
units, or religious units. Internal coordination is needed for every function of management for ensuring that
every unit and department of an organisation is aligned with each other most suitably.
Coordination is needed for regulating the direction of the enterprise, for determining the manpower
requirement through effective methods of recruiting, selecting and placing the right people in their job roles.
Effective coordination ensures successful completion of all the activities and tasks in the organisation and it
is true for all fields irrespective of the type of organisation.
The factors for effective internal coordination are as follows:
 Every department works together in harmony

 Clear delegation of roles and responsibilities of the workforce in every department

 Work of every department should adapt to the changing environment

External coordination relates to the coordination aimed at maximising the synchronisation of efforts and
activities of an organisation with the external environment. For instance, purchase department establishes
synchronised relationships with suppliers to provide raw material as per the schedule provided considering
the ‘Just-In-Time’ approach. The various types of external situations could be in terms of new technologies,
the needs of the community and the policies of the government.

Coordination is needed for managing the social objectives of the enterprise, where changes would be
required due to the pressure of competition or the changes in the market demand. It is necessary to identify
these changes at the right time for the smooth functioning of the enterprise.
The external factors could be in the form of the following:
 Competitors

 Government

 Technology changes

 Customers

 Community

 Industrial and commercial entities

  Financial institutions

Vertical and horizontal coordination

Coordination can take place at different levels of hierarchy or authority in an organisation from top to the
bottom, from the bottom going upwards and sideways. Vertical coordination takes place from the top level
of the hierarchy in the organisation to the bottom.
For instance, the production manager of a textile manufacturing organisation needs to coordinate the
activities with production supervisor. Likewise, production supervisor needs to establish cordial relations
with his superiors.
Similarly, sales manager of the textile manufacturing organisation coordinates his work with the activities of
the sales superintendent and the sales superintendent is required to establish coordinated and cordial
relationships with his superiors. There is proper coordination amongst people at different levels of the
organisation to work collectively.
Effective coordination requires delegating and dividing the tasks and power to the different levels of the
organisational structure for better coordination of work. The managers coordinate the activities and tasks of
the workforce at the various levels of the organisation. There is proper delegation of authority through
effective monitoring and controlling the workforce to work harmoniously and avoid conflicts. Vertical
coordination takes place in tall organisations (an organisation with many levels of hierarchy).
Horizontal coordination refers to the relationships and association between employees working at the same
level and in different units and departments too. For instance, horizontal coordination establishes between
different departmental heads, foremen of different workshops, superintendents of different sections, etc., to
execute the activities and achieve organisational objectives.

The employees involved belong to the same hierarchical level and have same authority level too. These
forms of organisational structures work effectively with proper coordination. It is the process of interlinking
the activities through the units and departments at the same level.
The horizontal coordination can be maintained with the following:
 Maintaining extra resources

 Facilitating information and communication systems

 Establishing lateral relationships through:

o Method of direct contact

o Coordinating through liaison officers

o Creating a task force

 o Organising committees

o Role of different managers

Procedural and substantive coordination

Procedural coordination defines the relationships and determines the level of authority delegated for the
work to be done among the people within the organisation. According to Herbert Simon, procedural
coordination is the specification of the organisation itself—that is, the generalised description of the
behaviour and relationships of the members of the organisation.

Substantive coordination refers to the specific and detailed content of the tasks and activities done in the
organisation. The job could be based on a certain specialisation of knowledge. For instance, the organisation
chart of an automobile plant reflects the procedural coordination; whereas, the blueprints for the engine
block of the car being manufactured shows the substantive coordination.

Techniques of Coordination

Coordination is required for making activities and tasks of an organisation well balanced and integrated.
Coordination is a continuous and ongoing process that requires the interlinking of the people and activities
for achieving the unity of purpose within the enterprise.
The different techniques that are used for achieving good coordination are as follows:
 Sound and proper planning

 Cleary defined goals

 Sound organisational structure

 Effective communication

 Proper guidance and supervising

 Chain of command

 Group discussion and cooperation

 Establishes interpersonal relationships

 Through special coordinators

Sound and proper planning

Coordination requires sound planning, so the workforce of the organisation must be aware of the goals and
mission of the enterprise. The objectives should be set properly and the rules should be clearly defined for
people to follow them.
Cleary defined goals

The goals must be clearly defined since the organisation cannot work on complicated systems. Coordination
requires simple and clear procedures, systems and policies for people to follow. The responsibilities of the
workers and the departments should be defined clearly for the proper working of the system for avoiding
conflicts or problems.
Sound organisational structure

Coordination requires sound organisational structure that clearly defines the roles and responsibilities of
each person of the organisation. There should be proper organisation charts and manuals maintained.
According to J.O. Shaughnessy, You cannot always bring together the results of department activities and
expect to coordinate them. You must have an organisation which will permit inter-weaving all along the
line.
Effective communication

The process of communication is very important for the working of a system and effective coordination.
There is an exchange of information and knowledge between workers, managers and departments.
Communication helps in coordinating the work and sorting out problems for the smooth functioning of the
system. Coordination takes place when people take part in decision making, exchange of ideas and
information for making policies with an effective system of feedback.
Proper guidance and supervising

Managers guide and supervise the people through effective leadership by smoothly aligning the tasks and
activities of the people through coordination. Effective supervision helps to accomplish tasks and establish a
good relationship between the people and the managers.
People are directed and guided by supervisors and they accept and respect the leadership that helps them to
work in a united way for achieving the goals of the organisation.
Chain of command

Exercise of power and authority is necessary for coordinating the functions in the organisation. The different
departments and levels of the organisation are brought together by the chain of command through the
different levels of hierarchy within the organisation.
Chain of command along with coordination is used to handle the complexities of the organisation system.
Though this is an old method of taking control, it is still the most accepted way of coordination. The
different departments are combined with one supervisor to control and coordinate activities of the
organisation.
According to Chris Argyrols, the hierarchy technique of coordination makes individuals dependent upon and
passive towards the leader.
Group discussion and cooperation

Group discussion and cooperation are necessary tools for coordination. People in an organisation cooperate
only when there is a free and open exchange of views, ideas, information problems and solutions. The face-
to-face method of communication with one another leads to better coordination. It creates a harmonious
relationship between the people working in the organisation.
Establishes interpersonal relationships

It is important to have connectivity between the different departments and also between the management and
workers of the organisation. The interpersonal relationships are set through the managers or liaison officers
who act as intermediaries between the different departments. ‰
Through special coordinators

Large organisations have specialised employees for specialised jobs known as special coordinators. The
special coordinators give specialised advice regarding planning, controlling and coordination of various
activities of the organisation.

Difficulties in Coordination

Coordination helps to create order and a harmonious situation throughout an organisation. Many difficulties
are encountered in the process of coordination. These difficulties must be overcome so as to enable smooth
working in the organisation. Difficulties in coordination may arise due to many unintentional reasons.
For instance, the marketing department at a famous car dealership posts advertisements for specific
upcoming cars. However, the salespeople do not have any information about which cars were advertised.
This has created confusion when a customer calls and shows his interest in knowing about a specific car
shown in the ad.
The marketing department has no intention of information-hoarding. It is just that the people of both
departments do not sit next to each other or have frequent conversations about the activities of their specific
departments. Even if the information would have been shared, it would have to be translated to a format
usable by the salespeople.
Some of these difficulties are mentioned as follows:
 Unclear objectives and goals

 No clarity in the division of work

 Lacking administration skills

  Unstructured organisation

 Undefined lines of authority

 Ineffective communication

 Ineffective leadership

Unclear objectives and goals

It is not possible to have proper coordination if people are not clear about the objectives and goals of the
organisation. It is necessary for every person working in the organisation to understand their roles and
responsibilities.
The management of the company should clearly define its objectives along with the different activities and
functions to be carried out in the company. The different actions and roles should be designed to connect
and interrelate with each unit and department for the system to work smoothly in a coordinated manner.
No clarity in the division of work

The difficulties in coordination arise when there is no clarity in division and delegation of work in the
organisation. An effective organisation requires proper delegation of work and defining of roles and
responsibilities. Coordination becomes challenging if the work assigned to the people is not according to
their qualifications and skills.
Lacking administration skills

Lack of administration skills can lead to bad management of people leading to confusion, delay in the work
and low productivity. Coordination helps to integrate the activities of people for achieving a common goal.
The manager should have the experience of handling people and there should be mutual respect among
people in the organisation.
Unstructured organisation

If the organisational structure is not created properly, then it becomes challenging to handle people without
any definite line of authority and span of control. People are unclear regarding their roles and
responsibilities due to poor organisational structure making coordination very difficult.
Undefined lines of authority

Line of authority needs to be properly defined for achieving effective coordination where the people in the
organisation should know what is expected from them. The authority should be determined clearly and the
workforce should be aware of their responsibilities and should be accountable for working in their domains.
Ineffective communication

Coordination cannot work properly without proper communication since the flow of communication helps in
developing networks and helps with coordinating activities. There needs to be a two-way flow of
communication for gathering accurate information between the people in the organisation.
A lack of communication in the organisation leads to a decrease in productivity, complicates processes and
delay the completion of tasks.
Ineffective leadership

There should be proper delegation of work by the manager with proper planning and direction so that the
work moves in the right direction. The manager through effective leadership should be able to coordinate the
activities during the stage of planning and implementation.
He should amicably handle the conflicts between the people and offer incentives that help in enhancing
team-spirit and establish a relationship between employers and employees.

Directing
Introduction: -
Directing is the fifth function of management. It is the heart of management process. Directing refers to
instructing, guiding and overseeing the performance of the workers to achieve the predetermined goals.
Directing helps to create an appropriate work environment that facilitates efficient discharge of duties. It is
Directing that initiates action. Other functions create preconditions only. Directing is to related to dealing
with human elements and is concerned with directing human efforts towards achieving organizational goals.
The quality of direction determines the Satisfactory or non satisfactory performance of the organization.

Definition: According to Haimann: “Directing consists of the process and techniques utilized in issuing
instructions and making certain that operations are carried on as originally planned.”

According to Koontz and O’Donnel: “Direction is the interpersonal aspect of managing by which
subordinates are led to understand and contribute effectively to the attainment of enterprise objectives”

According to Urwick and Brech: “Directing is the guidance, inspection and the leadership of those men
and women that constitute the real course of responsibility of management.”
According to G. R. Terry “Directing means moving to action and supplying simulative power to a group
of persons”.
Direction Ensures that sub-ordinates do their work. well as per the expectation of management in order to
achieve the goals. It also develops interpersonal relations in a group.
There are four elements of Directing:
• Supervision
• Motivation
 • Leadership
• Communication

Nature of Directing Nature of Directing can be briefly explained as follows:

1. Pervasive Function: - Directing is required at every level in an organization. every manager provides
guidance and inspiration to his subordinates. It is to be performed from top level to lower level in the
organization.
2. Executive Function: Directing is an executive function. The guidance and instructions are given by all
managers and executive at all levels throughout the working of an organization. A subordinate always gets
instructions from his superior only
. 3. Human Factor: - Directing function is related with human beings. It relates to guiding and inspiring
subordinates. And since human behaviour is complex and unpredictable, Direction function becomes all the
more important.
4. Continuous Activity: - Directing is a continuous activity as it continues throughout the life of an
organization. The mangers has to give direction to his subordinates, guide and motivate them continuously
so that the desired goals can be achieved.
5. Creative Activity: - Directing function helps in converting plans into performance. A manager needs to
have a creative and innovative thinking so that he can guide and motivate his subordinates in such a way,
that it leads to realization of organization objectives. Without directing, employees become inactive
6. Flow from Top to Bottom Level: - Directing functions includes providing instructions to the
subordinates. Directing flows from top to bottom. It starts with top level management and ends with
subordinates at the lower level.
7. Facilitates Co-ordination: - Directing brings harmony among employees and balance between all the
activities of an organization. A good system of communication between the superior and his subordinates
helps to improve coordination. Upwards communication helps a manager to understand the subordinates
feelings.
8. Dual Objective: - Direction helps to achieve dual objectives of an organization. On the one hand it aims
at getting things done by the subordinates and on the other hand, it provides an opportunity to the managers
to prove their leadership qualities
. 9. Psychological Factor: -Directing function is directly related to an individual working in the
organization. Directing function deals with human behaviour which varies from individual to individual and
is unpredictable. Leader has to take care of feelings, emotions, etc. while giving direction to the
subordinates.
The manager has to take care that the feelings and emotions of any employee do not get hurt. Importance
of Directing Direction is described as the heart of the management process. It is the life spark of an
organization which sets the organizational machine into motion.
Direction function is important because of the following reasons:
1) Direction initiates action: Management through direction motivates individuals in the organization to
function in the desired way to achieve organizational objectives. In the absence of direction no one can
understand what he is supposed to do and whether he is doing it in the right way or not.
2) Integration of objectives: Direction helps in integration of personal goals with the organizational goals.
Employees are made to know as how the achievement of organizational goals will help in fulfilling their
personal goals as well. Thus Employees feel motivated to achieve their personal goals through achieving
organizational goals.
3) Direction facilities changes in the organization: Changes in the work system are disliked by the
employees and they always resist it. Any changes in the business environment may necessitate changes in
the organization as well. Resistance to change can be avoided through proper direction. In order to accept
and implement these changes management has to motivate the employees affected by these changes, which
is the essential part of direction.
For example, a company wants to introduce computerization, employees will hesitate to accept it as they
may lose their jobs since they don’t know how to handle the computers. Here leadership plays an important
role. Leaders can communicate employees that they will be given training to use computers and also there
will be no loss of jobs.
4) Direction provides stability and balance to the organization: Direction through effective motivation
communication and leadership provides stability to the organization and helps in maintaining balance
between different departments in the organization. Hence the organization can function efficiently and
effectively over a long period of time.
For example, a Sales Manager is of the opinion that the price of a product be reduced so that more orders
can be generated whereas, General Manager does not hold the same opinion.. In such a situation, directing
function may try to balance both the opinions by instructing and guiding say, the Sales Manager to find out
other ways of increasing sales. Thus direction stands out as an important function of management. It has
also been observed that there is a high correlation between direction and work performance.

Elements of Directing:
Communication, Supervision, Motivation and Leadership are the four essential elements of directing.

1) Communication: - The word communication is derived from the Latin word “Communis” which means
common i.e. sharing of information. Communication refers to the process of sharing knowledge, elements
in directing motivation supervision communication leadership information and understanding from one
person to another.
Communication is the sum of all things one person does when he wants to create understanding in the mind
of others. Not only the human beings but also animals and plants communicate. The main purpose of
communication is to convey ideas, thoughts, and opinions by one person to other.
Definition: According to Keith Devis: “Communication is the process of passing information and
understanding from one person to other. It is essentially a bridge of meaning between people by using this
bridge of meaning a person can safely cross the ruin of misunderstanding that separates all people.”

According to Leland Brown: “Communication is the transmission and interchange of facts, ideas, feelings
or course of action”.
According to George Terry: “Communication is a continuous and thinking process dealing with the
transmission and interchange with understanding of ideas, facts and course of action.”

Thus, communication has the following features:

Communication is a two way process.
There are two parties, one is known as the sender and the other is known as receiver;
There is a message sent by the sender to the receiver
The receiver receives the message and understands it.
Communication is not complete until the other person perceives it in the same way as intended by the
receiver.

Communication does not always flow from supervisor to subordinate. It can also be from a subordinate to a
supervisor.
For example, subordinates can pass information to the supervisor about the problems at work. Importance
of communication: - Communication in organisations is so important that it is said to be the lifeblood of the
organisation. Success of direction largely depends on how effectively the manager can communicate with
his subordinates. Proper communication in organisations at all levels and between all levels can improve
both the quantity and quality of output.

Some of the benefits of communication are as follows:

• Communication helps employees to understand their role clearly and perform effectively.
• It helps in achieving co-ordination and mutual understanding which in turn, leads to industrial harmony
and increased productivity.
• Communication improves managerial efficiency and ensures cooperation among the staff.
• Effective communication helps in moulding attitudes and building up employees’ morale.
• Communication is the means through which delegation and decentralisation of authority is successfully
accomplished in an organisation.

Process of communication: - Communication is a two way process. The process of communication has
been shown in the fig

1. Sender: When an idea or information is generated in the sender’s mind the communication cycle begins.
The sender should have some idea which he wants to convey to the receiver.
2. Encoding: Sender cannot convey his idea until he gives some form to that idea. The process of converting
thoughts into any form of message which may be verbal or non verbal is called encoding. In simple words,
giving shape to the idea is called encoding. When the sender wants to sends the information, the choice of
the form should be made carefully so that receiver can properly understand it and is suitable for the receiver.
The most common form of encoding is using verbal encoding i.e. encoding in words, either written or oral.
3. Dispatch and reception: A message is the actual physical product from encoding .When we speak,
speech is the message and when we write, writing is the message. For sending the message some medium
has to be used. It may be oral or written communication for eg. face to face communication . The encoded
message is dispatched to its destination using the appropriate medium. There may be some time interval
between dispatch and reception. Face to face communication reach immediately. Today medium of
communication have become too fast. The message gets transmitted at the click of a button.
4. Decoding: Receiver receives the message and tries to understand the meaning of it. The receiver’s
understanding of the message that was sent to him, is called decoding or The process of retranslation is
called as decoding. The message should be understood by the receiver in same sense as intended by the
sender. Sender Encoding Dispatch Reception Decoding Feedback
5. Feedback: Feedback is the response which is communicated back to the sender. Feedback again includes
the process of encoding, dispatch, reception and decoding. So the receiver of the message becomes sender
and original sender becomes the receiver. Feedback can be given by using same signals or different signals.
One cycle of the communication is completed by decoding of feedback. In face to face communication both
the sender and receiver continuously give feedback. The responses likely to be as rewards are called as
positive feedback and the responses likely to be as punishment are called as negative feedback.
Communication becomes complete if message is understood by the receiver in same sense as intended by
the sender.
Types of Communication:
Communication may be categorised based on:
a) Organisational structure
b) Direction
c). Expressions

On the Basis of Organisational Structure

(a) Formal Communication. Communications which are associated with a formal organisation structure and
which are to be sent through the formal or officially recognised channels are called formal communications.
Generally, orders, instructions, decisions, of the superior officer, etc. are communicated through this
channel.
(b) Informal Communication. Informal communications are also known as 'grapevine' communications. In
the case of informal communication, the formal channels of communication are not used. In this channel,
very often, a person can obtain information which would take a few days for him to receive through the
officially recognised organisational channel. Informal communication may be conveyed by a gesture, nod,
smile etc.
(c) Non-verbal Communication. This is a type of communication according to which the message will be
communicated to the concerned without words. Encoding of thoughts used in this type are facial
expressions, vocal tones, gestures, etc. Non-verbal communication method is adopted naturally in all
communication systems. Perhaps this is more powerful communication system. Research studies bear
testimony to this.
Almost three decades passed since Albert Meherabian developed a formula which exhibits a relative usage
of verbal and non-verbal communication methods. According to this, 0.55 facial expressions, 0.38 vocal
tones and 0.07 words are used in a communication process. From this, it can be observed that 0.93
(0.55+0.38) are non-verbal elements of communication system. This clearly indicates that in every
communication system, non-verbal; factor of communication plays a vital role. But, the communicators
should take care of the fact that both verbal and non-verbal communication methods are properly
synchronised in communication process. Both elements (verbal and non-verbal) should give the same
message and should not contradict each other. If the verbal message communicates the acceptance of an
issue to be communicated, nonverbal system should also give acceptance. Not the non-acceptance.
Grapevine-some Facts
— The alternative name for informal communication is "GRAPE VINE".
— This has certain characters:
(i) It comes to the fore instantaneously
(ii) Not regularly used in the organisation
(iii) It mainly serves self-interest of workers with in it
(iv) Top management will have no control over this, neither they can influence this.
— Organisational communication is better understood, if grapevine is properly understood.
— Nearly 70 to 80 per cent of the organisational communication follows grapevines.
— Grapevine moves at a faster rate.
— Its impact is so much that employees believe that it is the most reliable and credible source of
information.
— Keith Davis's classification of Grapevine such as (i) The single-strand Grapevine, (ii) The Gossip
Grapevine, (iii) The Probability Grapevine and (iv) Cluster Grapevine, has helped managers to understand
the concept in a better way.
On the Basis of Direction of Communication
(a) Downward Communication. In the case of downward communication, the communication flows from
the superiors to the subordinates. Communications sent through this channel are generally directives
requiring actions to be initiated by the subordinates. These communications include orders, policy
directives, instructions, etc.
(b) Upward Communication. In the case of upward communication, communication flows from the
subordinates to the superiors. It includes reports, suggestions, reactions of workers, proposals, etc. Upward
communication enables the management to evaluate the effectiveness with which its orders have been
carried out and also to know the grievances or suggestions of the subordinates.
(c) Horizontal or Lateral Communication. It means communication among the subordinates who are
working at the same level of organisation. For example, communication among foremen or superintendents,
or functional managers or supervisors is horizontal communication.
(d) Diagonal Communication. It means communication between people who are neither in the same
department nor at the same level of organisational hierarchy. In this type, communication cuts across
departmental lines (see Fig. 9.3).

Communication Flow

On the basis of Way of Expression

(i) Oral or Verbal Communication. In the case of oral or verbal communication, communication is made
direct face to face or through telephone or intercom system. Oral communication has some merits. They are:
(a) It saves time and money.
(b) On-the-spot clarification of any doubt is possible.
(c) Because of personal touch between the communicator and listener, communication is more effective.
(d) While communicating, important points can be emphasised by the communicator.
Some of the disadvantages of oral communication are:
(a) There is no permanent record of communication passing through this device.
(b) Oral communication is not suitable for a subject that has to be kept as a record.
(c) There is greater possibility of communication being misunderstood or misinterpreted, if the
communicator is poor in vocal expression.
(d) It is suitable only for communications which are not lengthy.
(ii) Written Communication. Written communications include statements, circulars, letters, reports, memos,
manuals etc. Some of the advantages of written communication are:
(a) Written communications can be kept as a permanent record and it can be referred to by the management
whenever it wants.
(b) This method is suitable for communications which are lengthy.
(c) As communication is in writing, there is a lesser chance of missing any points in the communication.
(d) This method is suitable for passing of messages to far-off places.
Written communication, however, suffers from certain limitations. They are:
(a) Generally, written communications are more time-consuming,
(b) If the communication is not clearly worded, it may lead to confusion and interpretation.
(c) There is no face-to-face discussion between the parties. Hence, doubts of the receiver of the message
may not be clarified.
(d) Maintaining of secrecy is difficult in this type of communication.
 UNIT : 4
Controlling: Meaning, nature, importance, techniques and process. Motive & Motivation:
Meaning, types, basic theories of motivation
Leadership: Meaning, and styles of leadership
 Controlling
Every organisation aims at achieving some goals from its business activities and it is essential to ensure
whether or not the firm is performing activities according to the pre-determined goals. The controlling
function of management helps an organisation in ensuring the same. Hence, Controlling means
comparing the actual performance of an organisation with the planned performance and taking corrective
actions if the actual performance does not match the planned performance. Controlling cannot prevent the
deviation in actual and planned performance; however, it can minimise the deviations by taking corrective
actions and decisions that can reduce their recurrence.
Managerial Control implies the measurement of accomplishment against the standard and the correction
of deviations to assure attainment of objectives according to plans.
– Koontz and O’ Donnell
Control is the process of bringing about conformity of performance with planned action.
– Dale Henning

Nature of Controlling
1. Controlling is a goal-oriented function of management. It aims at ensuring that the resources of the
organisation are used effectively and efficiently for the achievement of pre-determined organisational
goals.
2. Controlling is a continuous process. It means that once the actual performance and standard
performance of a business are compared and corrective actions are taken, the controlling process does not
end. Instead, the firms have to continuously review the performance and revise the standards.
3. Controlling is all-pervasive. It means that the controlling function is exercised by the firms at all levels
of management. The extent of control and nature of the function may vary at every level. Also, a
controlling process is required in both non-business and business organisations.
4. Controlling process is both a forward-looking and backward-looking function. As a forward-looking
function, it aims at improving the future performance of an organisation on the basis of its past
experiences. However, as a backward-looking function, it measures and compares the actual performance
and planned performance (fixed in past) of the organisation.
Importance of Controlling
Controlling function is important for every organisation due to the following reasons:

1. Accomplishing Organisational Goals

Controlling is a goal-oriented process as it aims at determining whether the pre-determined plans are
being performed accordingly and whether required progress is made towards the achievement of the
objectives. With the help of controlling, an organisation can keep the business activities on the right track
and can achieve the organisational goals effectively and efficiently, and take the necessary corrective
actions if required.
2. Judging Accuracy of Standards
An effective controlling process can help an organisation in verifying whether or not the firm has set the
standards accurate. It also helps in keeping a check on the changes taking place in the business
environment and making required changes in the standards whenever it is necessary.
 3. Making Efficient Use of Resources
Controlling helps an organisation in reducing wastage of resources, as it aims at ensuring that every
activity of the firm is performed according to the pre-determined goals.

4. Improving Employee Motivation

As controlling process includes comparing the pre-determined goals of an organisation with its actual
performance, it properly communicates the role of employees in advance. It means that the employees
know in advance on what standards their performance will be measured, compared, and appraised. This
set of pre-determined goals motivates them to give a better performance.
5. Ensuring Order and Discipline
An efficient control system in an organisation can help its managers in creating an atmosphere of
discipline and order in the firm. Besides, controlling also helps in keeping a continuous check on the
employees so they can minimise undesirable activities, such as theft, corruption, fraud, etc.
6. Facilitating Coordination in Action
Controlling process also helps an organisation in facilitating coordination between different divisions and
departments by providing the employees with unity of direction. In other words, every employee and
department of the organisation is governed by a pre-determined set of goals. It also motivates employees
in achieving these common goals through coordination to avoid duplication of efforts.
Features of a Good Control System

1. Suitable: A good control system should be suitable for the needs and nature of the organisation.
2. Simple: A good controlling system should be easy to operate and understand.
3. Economical: The cost of setting, implementing, and maintaining a control system should not be more
than the benefits gained from it.
4. Flexible: A good control system should have the ability to adjust according to the changing business
environment and internal conditions.
5. Forward Looking: A good control system should move in a forward direction so that the managers
can easily determine the deviations before they actually happen in the organisation.
6. Objective: The standards of the organisation, its measurement of performance, and corrective actions
should be impersonal and objective.
7. Management by exception: A good control system should focus its attention on the significant
deviations which are crucial for the organisation, instead of looking for the deviation which does not
have much impact on the business.

Limitations of Controlling

1. Difficulty in Setting Quantitative Standards: When an organisation cannot define its

standards in quantitative terms, the controlling system becomes less effective. For example, it is
difficult to measure the human behaviour of employees in quantitative terms, which makes it
difficult for the firm to measure their performance from the standards.

2. Little Control on External Factors: The controlling system of an organisation can effectively
control the internal factors; however, it is not easy to control the external factors of an
organisation. For example, a firm can check and control any change in its production (internal
factor), but cannot keep a check on the changing technological advancement, government policies,
etc. (external factors).
 3. Resistance from employees: The effectiveness of the controlling system highly depends on
whether or not the employees have accepted the process. It means that if the employees think of
the control system as a restriction on their freedom, they will resist the system. For example, the
employees of an organisation might object when they are kept under various restrictions making
them feel their freedom is being taken.

4. Costly Affair: Controlling is an expensive process, which means that every employee’s
performance has to be measured and reported to the higher authorities, which requires a lot of
costs, time, and effort. Because of this reason, it becomes difficult for small business firms to
afford such an expensive system. Besides, a controlling system is effective only when the benefits
gained from it exceed the expenses made on them.

Techniques of Control in Management

There are two types of control techniques in management.
A) Traditional
The traditional techniques are as follows:
#1 – Budgeting
A budget is a statement reflecting an organization’s future expenditures, profits, and earnings. It is an
estimate of a company’s future financial position. Units sold, units produced, and unit labor and material
costs are a few of a budget’s crucial components. Budgeting control involves comparing the actual
performance with the budgeted or planned performance. Some of the different types of budgets are cash
budget, sales budget, and production budget.
#2 – Personal Observation
This is the easiest way for managers to control organizational activities. Managers of a business can observe
the work in progress to accumulate information as first-hand information. Then, if they spot any
performance gap, they correct it instantly by taking the necessary action.
#3 – Break-Even Analysis
Managers utilize this method to study the relationship between volume, profits, and costs. This helps them
understand the possible losses or profits at different activity levels while analyzing the organization’s overall
position.
#4 – Statistical Reports
This refers to analyzing data and reports presented to an organization’s managers to give them an idea
regarding the business’s performance in different areas. The information is presented in tables, graphs,
charts, etc., enabling managers to compare with previous periods’ performance easily.
Modern

Modern control techniques used in organizations.

#1 – Return On Investment
Also called ROI, it is a useful technique that helps determine whether the business has been able to utilize
the available capital efficiently. Besides the overall organizational performance, one can gauge the
performance of individual divisions or departments using this technique.
#2 – Ratio Analysis
Companies use ratio analysis to measure the organization’s performance. The different types of ratios
commonly used are profitability ratios, solvency ratios, liquidity ratios, and turnover ratios.
#3 – Responsibility Accounting
This is an accounting system where the involvement of different sections, departments, and divisions is set
up as ‘Responsibility Centers’. These centers can be of various types, like revenue and cost centers. Every
center’s head is responsible for achieving the center’s predetermined objective.
#4 – Management Audit
This is the systematic appraisal of an organization’s management team based on performance. It aims to
assess the efficiency of the management. Moreover, it plays a crucial role in improving future performance.
Example
Suppose Organization ABC focuses on the control process more than any other management function to
ensure efficient allocation of resources and coordination in the team. All superiors across different
Management levels assign work to the subordinates and then measure their performance.

Motivation and Motive

Introduction
The biggest challenge faced by the organisations is to get the work done by their employees. This entirely
depends on the motivation levels of the employees. Their motivation is a result of their needs and
organisational expectations. If the employees are adequately motivated, the organisation will be able to meet
its objectives.
The term ‘motivation’ is derived from a latin word movere which means to move. A motive is an inner state
that encourages, activates or moves and that directs behaviour towards goals. Thus, motivation is
psychological force within an individual that sets him in motion for the achievement of certain goals or
satisfaction of certain needs.

Motives:
Motives are somewhere a reflection of human needs.
E.g. A factory worker knows if he will complete his work on time, he will be rewarded with a bonus or
some kind of financial incentive which can be spent. Thus, here we can understand that needs are
physiological and psychological drives. On the other hand, drives for which an individual has money and
wants to spend become wants.
The factors which are utilised for satisfying or motivating people are called incentives.
Definition of Motivation Several authors have defined motivation in different ways. According to Robert
Dublin, “Motivation is the complex set of forces starting and keeping a person at work in an organization.”
According to Stanley Vance, “Motivation represents an unsatisfied need which creates a state of tension or
disequilibrium, causing the individual to march in a goal-directed pattern, towards restoring a state of
equilibrium by satisfying the need.” Characteristics of Motivation
On the basis of the definitions of motivation discussed above, following characteristics of motivation can be
inferred

Nature of Motivation

1. Continuous Process
Human wants are unending and with the fulfillment of one want, new wants might pop up. This is why
motivation is a continuous process.
2. Psychological Concept
Motivation is associated with the psychological aspects of human inclinations, desires, goals, and behavioral
conducts.
3. Every Individual is Motivated
Every individual in itself can be understood as an integrated and comprehensive system that has his or her
own conditioning and belief system to stay motivated in some or another way.
4. Frustrated Individual Fails to get Motivated
When an individual is frustrated, he or she can not be motivated until they come out of their frustrations. It
might also be due to the wide gap between their inspiration and rewards.
5. Goals Lead to Motivation
Goals are one of the most integral parts of the whole process of motivation. Accomplishing a goal helps a
motivated individual be satisfied.

What is Motivation in a Workplace?

While understanding what is motivation in a workplace or work-goal setting, different psychological factors
that can increase motivation are-
1. Desire for money
2. Recognition or acknowledgment
3. Success
4. Teamwork
5. Job satisfaction, etc.
One of the main roles of workplace managers or leaders is to make willingness among the workers to
perform with full enthusiasm. In this manner, a leader or manager’s job is to create interest in the heart and
mind of the employee, so they can be intrinsically motivated.

In addition to this, external incentives also play a key role in motivating employees.
Different phases through which the process of motivation takes place are the felt drive or need, a stimulus to
arouse the need or drive, and the fulfillment of objectives or needs being satisfied.

Why Motivation is Important

It is essential for the growth and success of an individual, plus, for a leader or manager, motivation is also
important for guiding the team or employees towards an objective.
For a manager, leader, or administrator, having a team that offers genuine commitment is essential to
optimize the success rate. If you can motivate your team members, they will work with more enthusiasm and
dedication to meet their goals.
Importance of Motivation
Motivating the subordinates is the fundamental duty of the manager as it ultimately helps in fulfilling the
goals of the organisation.
The significance of motivation is discussed below and has been summarised in

1. Cooperation and Goals: Motivated employees cooperate willingly with the management and thus
contribute maximum towards the goals of the company.
2. Productivity: Motivated employees attempt to enhance their knowledge and skills. This enables increase
in the productivity.
3. High Efficiency: It has been observed that when motivated employees work sincerely towards their given
tasks; they develop a sense of belongingness which results in conserving the organisational resources. This
results in improvement in efficiency.
4. Job Satisfaction: Higher motivation paves the way for a higher job satisfaction of the employees. A
motivated employee yearning for opportunities for satisfying needs becomes loyal and committed towards
his work and eventually the organisation.
5. Better Relations: The number of complaints and grievances reduce when the employees are motivated.
6. Good Image: If the employees of the organisational are motivated and satisfied with the work
environment, the image of the company as a good employer boosts in the industry.

Theories or Models of Motivation Various theories of motivation have been classified on diverse bases
in research. These have been discussed below:
1. Content Theories
Content theories emphasise on the idea that motivation depends upon the individual needs. Need could be
defined as a state in person’s life that triggers action and activates behaviour. Content theorists have
gathered that there is a variation in the individual needs and hence the motivation levels. These theories are
also referred as needs theories, because they are generally related with a view that focuses on the
significance of determining 'what' motivates us. They try to recognize what our 'needs' are and thus relate
motivation to the fulfilling of these needs. The important content theories are discussed as follows:
1.1. Maslow’s Hierarchy of Needs
Need hierarchy model developed by Abraham Maslow is one of the earliest works in the area of motivation.
This theory has classified the human needs into five categories. According to him, once a lower level need
of an individual is met, he moves towards the next level needs.

Physical or Physiological Needs: These needs include the basis needs of an individual which include food,
air, water and shelter. They are lower-order needs and they need to be met first in order to move an
individual for higher level needs.
 Safety needs: After meeting physical needs, an individual is concerned about the safety needs which
include staying in a safe and secure environment. At a work place, the managers ensure meeting of the
safety needs by providing job security, medical insurance and safe gadgets and machines for working.

Social or Belongingness Needs: These needs include the needs for love, affection and interaction with
people. These needs are also called affiliation needs. Social needs are essential to humans so that they do not
feel isolated and depressed. Social needs are met through friendships, family and intimacy. A manager can
work upon satisfying the social needs by ensuring that employees are provided with cooperative teamwork,
kind supervision and sufficient work-life balance.

Esteem Needs: These needs include two aspects- self esteem or self respect through personal achievement
and social esteem through respect and appreciation from others. Managers should motivate their
subordinates by giving those awards and appreciation certificates for their achievements
Self Actualisation Needs: It is the pursuit of reaching one's full potential as a person. These needs are not
necessarily fully satisfied owing to the exploration of new opportunities by an individual. This depends upon
the individual to individual. The management should help in meeting these needs by providing the
employees with a challenging tasks and inviting them for decision making.

1. 2. Herzberg Two-Factor theory

Frederick Herzberg developed motivation-hygiene theory on the basis of studies to understand the factors
affecting satisfaction or dissatisfaction in a work environment. These factors have been classified as
motivators and hygiene factors respectively.
Hygiene Factors: These are the basic factors in a job and also known as extrinsic factors. Although, they
may not provide positive satisfaction but absence of these factors lead to dissatisfaction. Examples of
hygiene factors include status, job security, salary and fringe benefits.
Motivators: These factors are internal to the jobs that provide satisfaction. These are called intrinsic factors.
Absence of these factors may not to yield to dissatisfaction but their presence in a job give a sense of
satisfaction. Examples of motivators are job challenge, advancement, autonomy, responsibility, etc.
1.3. McClelland’s Achievement Model
David McClelland advocated a model of motivation classifying the needs classifying as achievement,
affiliation and power. He proposed that an individual’s behaviour at any time is guided by multiple motives.
But in most situations, one or two motives are dominant and thus motivation varies with variation of needs.
* Need for Achievement: People with a high need for achievement seek to excel and thus tend to prefer
moderate risks. They choose those tasks whereby they can take personal responsibility for finding solutions
to the problems. Achievers require regular feedback in order to check the progress of their achievements.
The management should give high achievers challenging projects with attainable goals.
* Need for Affiliation: Those with a high need for affiliation look out for pleasant relationships with other
people and need to feel accepted by other people. Such people are desirous of companionship and helping
each other. High affiliation individuals prefer work that provides them with significant personal interaction.
They tend to conform to the norms of their work group. The managers should create an atmosphere of
supportive interpersonal relations for the individuals seeking for affiliation and thus such kind of group
formation leads to achievement of goals.
* Need for Power: The need for power is stated by the desire to influence others. People seeking a need for
power tend to be outspoken and forceful. They are willing to engage in confrontation. Need for power could
be one of two types - personal and institutional. Those who need personal power want to direct others and
this need is often considered as undesirable. Persons who need institutional power want to manage the
efforts of others to promote the goals of the organization. It has been seen that managers with a high need
for institutional power tend to be more effective than those with a high need for personal power.

1.4. Alderfer's ERG Theory

Alderfer developed a model of motivation aligning with Maslow’s motivation theory by reducing the five
needs suggested by Maslow to three needs. These needs are Existence, Relatedness and Growth. According
to Alderfer, there is no hierarchy of needs and any desire to fulfil a need can be activated at any point in
time. This results in the lower level needs not requiring to be satisfied in order to satisfy a higher level need.

Existence: It refers to our concern with basic material existence motivators.

Relatedness: It refers to the motivation we have for maintaining interpersonal relationships.
Growth: It refers to an intrinsic desire for personal development.

2. Process Theories
Process theories concentrate on “how” part of motivation. They describe and analyse how behaviour is
energised, directed and sustained.
The theories under process theories are discussed as follows:
2.1. Expectancy Theory
Expectancy theory was propounded opposing the Herzberg’s two-factor theory. This theory was developed
by Vroom. The theory explains the behavioural process of why individuals choose one behavioural
alternative over another. It suggests that individuals are motivated towards objectives if they think that their
performance will be rewarded for the efforts they will put. Vroom suggested three variables in this study-
Expectancy, Instrumentality and Valence.

Expectancy: Effort Performance

It is the confidence that better efforts will result in better performance. It is influenced by factors like having
appropriate skills for performing the job, availability of right resources, availability of critical information
and getting the required support for accomplishing the goal.

Instrumentality: Performance Outcome

It is the faith that the individual will receive an award if he performs well. This depends upon trusting the
people who decide who recieves what outcome, understanding the relationship between performance and
reward and finally the transparency in the system that decides who get what outcomes.

Valence: Valence is the importance associated by an individual with respect to the expected outcome. It is
an expected and not the actual satisfaction that an employee expects to receive after achieving the goals.
This is dependent on individuals’ needs, values, goals, preferences and source of motivation.

2.2. Equity Theory

Equity theory was suggested by J.S.Adams. The assumption behind this theory is that the employees
experience strong expectations of justice, balance and fairness in treatment by their employers. This theory
propounds that individuals are motivated by a desire to be treated equally at work. In this theory, two
variables are important namely inputs and outcomes. According to this theory, the employee constantly
assesses their level of effort against fellow workers and the reward they receive for their effort. When the
employee feels that the compensation and treatment for his efforts are fair with reference to his skills and
efforts, he feels satisfied and motivated. The definition of equity is described in following diagram:

Inputs: These constitute of the quality and quantity of employee’s contribution to work. They include time,
effort, loyalty, hard work, commitment, ability, adaptability, flexibility, tolerance, determination,
enthusiasm, trust in management, support from colleagues and skills.

Outputs: The outputs encompass the positive and negative results that an individual gets after putting
inputs into a task. They can be tangible and intangible. Examples of outputs are job security, esteem, salary
employee benefits, praise, recognition, etc.
3. Reinforcement Theory
Reinforcement theory is the process of influencing behaviour by controlling the consequences of the
behaviour. The theory is based upon “law of effect” which means an individual tends to repeat behaviour
which is rewarded while the behaviour which gives punishment is not repeated. They learn from the past
and thus develop patterns of behaviour to regulate the future consequences. This approach is called operant
conditioning. This theory was propagated by B.F.Skinner. Application of operant conditioning is called
Organisational behaviour modification whereby the managers focus on positive rewards to elicit desirable
behaviour.

4. Behavioural Theories
Behaviour is described as the way a person conducts themselves towards others. When workers are treated
as humans rather than machines, they take action to their particular work situation in a constructive way by
increasing individual productivity. Thus, in lines of understanding and improving the human behaviour,
McGregor and William Ouchi suggested Theory X and Y and Theory Z respectively.

4.1.McGregor’s Theory X and Theory Y

McGregor has suggested two contrasting theories on motivation based on certain assumptions
Theory X Theory X revolves around the traditional approach to motivation and control. It represents
traditional stereotyped and authoritarian management style. It has following assumptions:

i. An average human being is lazy and doesn’t like to work. He will avoid work if he can.
ii. Most human beings lack ambition and thus don’t want responsibility. They prefer to be directed rather
than to lead.
iii. Most human beings are self centred and indifferent to the organisational goals.
iv. Most people are not creative to solve organisational problems.
v. Most human beings are motivated with physiological and safety needs.

These assumptions suggest that the human beings can be motivated by money and the benefits required for
satisfying the physical and safety needs. According to the theory, the employees are managed by
punishments and strict control. This type of motivational process can only work in the environment whereby
the work is repetitive in nature and promotions are not frequent. McGregor advocated Theory Y refuting the
assumptions of Theory X as nowadays the employees don’t just get motivated with money and related
benefits.

Theory Y Theory Y assumes that people are not unreliable and lazy by nature. It has a positive view on
employee motivation and their behaviour. The management undertakes the responsibility of helping the
employees to develop and express their creative skills. The assumptions of McGregor’s Theory Y are as
follows:
i. An average person doesn’t dislike work rather work is natural as play.
ii. An average human being will exert self control and direct himself for his objectives.
iii. An average individual knows that he will be rewarded if he is committed for the objectives. And
generally these rewards are higher order needs namely ego satisfaction and self-actualisation.
iv. An average person tends to seek responsibility and is ambitious.
v. Imagination, creativity, and ingenuity can be used to solve work problems most of the people.
vi. Considering the present scenario of present industrial life, the intellectual potential of an average man is
only partly utilized.

Theory Y is more real and generally used in the organisations. In support of this theory, McGregor
suggested motivational practices like decentralisation, delegation, job enlargement, participation and
consultative management.

4.2. Ouchi’s Theory Z

This theory was given by William Ouchi which is based upon a comparative study of American and
Japanese management practices. He concluded that many Japanese management practices can be adopted in
American perspective. The theory is a mix of both Theory X and Theory Y inclining more towards Theory
Y as it has focuses on long term employment and job securityand higher concern for happiness and well-
being of the employees.
Following should be the features of an organisation according to Theory Z:-
Trust, integrity and openness should be essential ingredients of an effective organisation.
Theory Z says that involvement of employees in related matters improves their commitment and
performance.
The leader’s role should be to coordinate the efforts of his subordinates.
The organization and management team should ensure that measures and programs in place should be
there to develop employees.
Employees should be given greater responsibility to make decisions and understand the organisational
aspects; they should be generalists. But still, they should also undertake specialised job tasks.
The organization should recognize the contributions of individuals, but always within the context of the
team as a whole.

This theory has its limitations as well as it does not provide complete solution to motivational problems
owing to difference in the environments of different organisations. But still, it is considered as a philosophy
of managing organisations.

Different Methods of Motivation

Organisations have evolved different techniques of motivating their employees which have been generally
classified into financial and non-financial incentives. An incentive is something that stimulates a person
towards some goals. It stimulates human needs and generates the desire to perform. Therefore, an incentive
is a method of motivating employees. Incentives are directly linked to increase performance in companies.
Example of financial Incentive
Financial Incentives are the ones which are linked with money. Examples of financial incentives are wages
and salaries, commission, bonus, stock options.
On the other hand, non-financial incentives are those which are not related with money. Examples of non-
financial incentives are status, praise, recognition, employee.

Incentives have been classified into different types in the following:

Financial Incentives Financial incentives also known as monetary incentives are needed for meeting the
basic needs of the employees. The usual incentives given to employees are discussed below:
1. Pay and Allowances: Pay and allowances include salary and allowances in form of dearness allowance,
house rent allowance, etc. Salaries differ from company to company whereas allowances are dependent on
various factors like inflation. Some organisations offer a compensation including both salary and allowances
while some provide a consolidated salary.
2. Bonus: Some organisations have a tendency to distribute bonus to the employees. Minimum bonus limit
is 8.33% of salary or wages in India under the Payment of Bonus Act, 1965.
3. Profit Sharing: Under profit sharing scheme, the employees are given a certain share in the profits of the
company when the profits increase beyond a given limit. This conduct of the management induces the
workers to perform more hard to gain their share of company’s profits.
4. Commission: Commission is the variable part of compensation. This is generally given as a percentage of
sales to the sales personnel as per their contribution to the sales. The commission rate varies from
organisation to organisation.
5. Performance linked incentives: Organisations also provide salary/wages linked incentives where the
amount of incentive is associated with the performance of the employee.
6. Stock options: There are many companies which offer this kind of financial incentives. The stock options
give employees the right to purchase company’s shares at a future date on a predetermined price. The
companies offer shares in lieu of profits to the employees which make them co-owners of the companies and
hence a higher sense of belongingness in the organisation.
Non-Financial Incentives
Financial incentives are linked to money which is meant for meeting basic needs and hence they can
motivate the employees to a certain extent. Employees cannot be always be satisfied by financial needs. The
management also uses non-financial incentives to motivate the employees. These are explained as follows:
1. Status: Status means rank in the society. It is also applicable in organisational structure whereby the
individuals are given designations or positions as per their abilities, skills and experience. This is a way of
promotion which provides motivation to the employees.
2. Praise: Praise is more effective than any other incentive. However, this incentive should be used with
great care because praising an incompetent worker would create resentment among competent workers. Of
course, a pat on the back of an incompetent worker may act as an incentive to him for improvement.
3. Group Incentives: At times, group incentives act as more effective than individual incentives to motivate
the employees. Particularly, when the prestige or even existence of a group is at stake, the group members
work with a team spirit. This result in high morale and sequentially, increases in its productivity.
4. Participation & Involvement: Involving workers to participate in management gives worker’s a
psychological satisfaction that their voices are also heard. This imbibes a sense of importance among the
workers.
5. Opportunity for Growth: When the employees are provided proper opportunities for growth and career
advancement and opportunity to develop their personality, they feel motivated and become more committed
to the organizational goals.
6. Suggestion System: Many organizations which use the suggestion system make use of cash awards for
useful suggestions. Sometimes, they publish the workers name with his photograph in the company’s
magazine or newsletter. This motivates the workers to be in search for something which can be of greater
use to the organization.

Job Enrichment
Job enrichment basically means adding the contents to a job leading to increased responsibility, scope and
challenge in its performance. This concept was pioneered by Frederick Herzberg in 1968. It is also referred
as vertical loading of the job. He suggested that the management should make following efforts to enrich the
job:-
i. By providing more freedom to the employees regarding the decision about pace and techniques at the
place of work.
ii. By encouraging participation from the employees
iii. By increasing the responsibility for the job.
iv. By giving continuous feedback to the employees.
v. By instilling a feeling of achievement.

It has been observed that the executives working at the higher levels often prefer to job enrichment because
it makes job more challenging. They derive higher satisfaction by performing more and more challenging
jobs. Thus, job enrichment as an incentive stimulates the executives to exert for achievement of their
objectives.

Job Enlargement
Job enlargement is a technique by which scope of the job is increased by increasing the number of tasks
associated with the job but at the same level in the organisation. It is the horizontal expansion of job as it
includes performing a variety of jobs or operations at the same time. It is done to reduce monotony in a job.

E.g. A person is administration who is doing typing work may also be assigned the tasks of drafting letters,
sorting of incoming mail and filing the letters.

Leadership
Introduction
Leadership is the ability to get desirable action, voluntarily and without force, from the followers. Success
of a leader depends upon his qualities and characteristics. These characteristics are natural in some cases but
there are many cases where these have been developed by constant effort. Leadership is the process of
influencing the subordinates so that they cooperate enthusiastically in the achievement of group goals.

Definition
Leadership can be defined as the art of motivating a group of people towards achieving a common goal. OR
Leadership is the ability to convince others to achieve defined goals enthusiastically.
According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds a group together and motivates it towards goals.”
According to Rauch & Behling, “Leadership is defined as the process of influencing the activities of an
organized group toward goal achievement”

Characteristics of leadership
1. Leadership is a process of influencing the group members.
2. Leadership is related to a situation.
3. Leadership is the function of motivating the people to strive willingly to attain organizational objectives.
4. Leadership helps in attaining the common objectives.
5. Employees must be satisfied with the types of leadership provided.
Leadership Styles
Leadership styles refer to the behavioral approach employed by leaders to influence, motivate, and direct
their followers. A leadership style determines how leaders implement plans and strategies to accomplish
given objectives while accounting for stakeholder expectations and the wellbeing and soundness of their
team.
Leadership styles have been studied in various fora to establish the appropriate or most effective leadership
style that motivates and influences others to accomplish set goals. The major tenet of effective leadership
style is the degree to which it builds follower trust.
Studies carried out indicate that followers who trust in their leader are more likely to follow through with the
leader’s instructions over and above the expected. In turn, they will accomplish set goals while being
allowed to speak freely to air their ideas and suggestions on the direction of the projects at hand.
The leadership styles discussed in this article are based on studies and findings by several accomplished
leadership researchers, which include Robert K. Greenleaf, Karl Lewis, Daniel Goleman, Bruce Avolio, and
Bernard M. Bass.

Importance of leadership

A leadership style adopted by any leader is usually a combination of their personality, life experiences, level
of emotional intelligence, family dynamics, and way of thinking. Thus, leaders should be able to understand
their leadership style in relation to a combination of traits listed above and determine how best they can be
more effective.
Effective leadership has more to do with leadership style. Hence, a leader’s ability to take charge and know
whether a situation requires an executive decision or a more consultative one is vital. Furthermore, a leader
needs to have the ability to know the most effective leadership style that is suitable for an organization or
situation to succeed. Understanding one’s leadership style allows a leader to take ownership, control, and
responsibility for the size and scope of the tasks ahead.
A study by Daniel Coleman in a Harvard Business Review article, Leadership That Gets Results, reviewed
and analyzed more than 3,000 middle-level managers to find out specific leadership behaviors and their
effect on profitability. The results revealed that a manager’s leadership style was responsible for 30% of the
company’s bottom-line profitability.
An understanding of one’s leadership style and the ability to be flexible based on changing circumstances
will likely result in the additional benefits below:
 Improvement in communication and collaboration
 Increase in employee engagement
 Strengthening of team effectiveness
 Leadership effectiveness becomes conspicuous in the organization leading to recognition
Below are the most common leadership styles.
Common Leadership Styles

1. Democratic Leadership
A democratic leadership style is where a leader makes decisions based on the input received from team
members. It is a collaborative and consultative leadership style where each team member has an opportunity
to contribute to the direction of ongoing projects. However, the leader holds the final responsibility to make
the decision.
Democratic leadership is one of the most popular and effective leadership styles because of its ability to
provide lower-level employees a voice making it equally important in the organization. It is a style that
resembles how decisions are made in company boardrooms. Democratic leadership can culminate in a vote
to make decisions.
Democratic leadership also involves the delegation of authority to other people who determine work
assignments. It utilizes the skills and experiences of team members in carrying out tasks.
The democratic leadership style encourages creativity and engagement of team members, which often leads
to high job satisfaction and high productivity. However, establishing a consensus among team members can
be time-consuming and costly, especially in cases where decisions need to be made swiftly.
2. Autocratic Leadership
Autocratic leadership is the direct opposite of democratic leadership. In this case, the leader makes all
decisions on behalf of the team without taking any input or suggestions from them. The leader holds all
authority and responsibility. They have absolute power and dictate all tasks to be undertaken. There is no
consultation with employees before a decision is made. After the decision is made, everyone is expected to
support the decision made by the leader. There is often some level of fear of the leader by the team.
The autocratic type of leadership style can be very retrogressive as it fuels employee disgruntlement since
most decisions would not be in the employees’ interests. An example can be a unilateral increase in working
hours or a change in other working conditions unfavorable to employees but made by leadership to increase
production. Without employee consultation, the manager may not be fully aware of why production is not
increasing, thereby resorting to a forced increase in working hours. It can lead to persistent absenteeism and
high employee turnover.
However, autocratic leadership can be an effective approach in cases where the leader is experienced and
knowledgeable about the circumstances surrounding the decision in question and where the decision needs
to be made swiftly. There are other instances where it is also ideal such as when a decision does not require
team input or an agreement to ensure a successful outcome.
3. Laissez-Faire Leadership
Laissez-faire leadership is accurately defined as a hands-off or passive approach to leadership. Instead,
leaders provide their team members with the necessary tools, information, and resources to carry out their
work tasks. The “let them be” style of leadership entails that a leader steps back and lets team members
work without supervision and free to plan, organize, make decisions, tackle problems, and complete the
assigned projects.
The laissez-faire leadership approach is empowering to employees who are creative, skilled, and self-
motivated. The level of trust and independence given to the team can prove to be uplifting and productive
and can lead to job satisfaction.
At the same time, it is important to keep such a type of leadership in check as chaos and confusion can
quickly ensue if the team is not organized. The team can end up doing completely different things contrary
to what the leader expects.
According to research, laissez-faire leadership is the least satisfying and least effective.
 UNIT : 4
Crony Capitalism, Some practical problems in Implementation of Management, Recent
Trends in management, Future of Management Practices in India, Gender Issues in
Management, Management Environment in India.
Management Practices of Dhirubhai Ambani, Narayan Murthy, Azim Premji, Ratanlal Tata,
Steve jobs & Bill Gates
 Crony capitalism
Why in News?

Parliament witnessed sharp exchanges over the Adani-Hindenburg issue and the opposition is accusing it
of crony capitalism and raising demands for a probe by a Joint Parliamentary Committee or a Chief
Justice of India (CJI)-designated committee.

What is Crony Capitalism?

o Crony capitalism is a term used to describe a capitalist economic system in which individuals
or businesses with close ties to political leaders and government officials use their political
connections to gain an unfair advantage in the marketplace.
o In the Crony Capitalism Index 2021 published by The Economist; India was ranked
at 7th position where crony sector wealth accounted for 8% of Gross Domestic Product
(GDP) of the country.
 Issues Associated with Crony Capitalism:
o Unfair Advantage in Marketplace: Crony capitalism can lead to corruption as businesses use
their political connections to gain an unfair advantage in the marketplace, often by bribing
government officials.
 This can undermine the rule of law and erode public trust in government institutions.
o Distorted Market Competition: When some businesses are given an unfair advantage through
their political connections, it distorts market competition and makes it difficult for smaller
businesses and entrepreneurs to succeed.
 This can lead to a concentration of wealth and power in the hands of a few individuals
or corporations.
o Reduced Innovation: The dominant position of large businesses often erodes competition
and discourages them to further innovate or improvise their products/services.
 This can stifle innovation in the overall economy and lead to a decline in
competitiveness.
o Public Distrust of Government and the Economy: Widespread crony capitalism can lead to
a loss of public trust in government institutions and the economic system.
 This can make it difficult for policymakers to implement reforms and for businesses to
operate effectively.
How can India Address the Issues Related to Crony Capitalism?

 Improving Transparency and Accountability: India can improve transparency and accountability in
its political and economic systems by implementing measures such as open data initiatives,
increasing the independence of regulatory agencies, and improving the transparency of
government contracts and subsidies.
 Encouraging Competition: India can encourage competition by reducing barriers to entry for
smaller businesses and entrepreneurs, such as reducing red tape and streamlining regulations.
o This can make it easier for new entrants to compete with established businesses and reduce the
concentration of wealth and power in the hands of a few individuals or corporations.
 Towards Corporate Ethical Responsibility: India can promote responsible business practices by
implementing measures to ensure that businesses act ethically and sustainably, in lines of corporate
social responsibility and sustainability initiatives.
o This can increase public trust in the economic system and encourage businesses to act in the
best interests of society as a whole.
 Encouraging Responsible Political Behaviour: India can encourage responsible political behaviour
by increasing the transparency of political donations and lobbying activities.
o This can reduce the potential for corruption and ensure that elected officials are held accountable
for their actions.

Some practical problems in Implementation of Management

While a career management can be fulfilling and lucrative, it comes with its own set of difficulties and tough
moments. It is necessary for managers to know how to deal with these and motivate their team members to
do better and achieve professional success. By understanding the various issues that managers face in the
business environment, you can decide if a career in management might suit you. In this article, we discover
some of the top management challenges and the ways managers can overcome them.
Common Management Challenges
Here are some of the most common management challenges and ways to overcome them:
1. Decreased performance levels
In a fiercely competitive business environment, companies expect their employees to perform their best and
meet their productivity goals. While it is common for employees to go through periods of time where they
are less productive and motivated, there are ways to help them feel motivated again. If left unresolved, a
decrease in productivity can affect the performance of other team members and overall project goals.
2. Hiring skilled employees
Making the right hiring decisions is crucial for the long-term success of a business. Apart from the right
skills and experience, managers look for people who can fit in with the company culture. The team can
benefit from new employees who can settle in quickly and do not require extensive guidance. A wrong
hiring decision can negatively impact your team's morale. If some employees constantly fail to handle their
assigned tasks, it could affect the team's overall performance and result in friction within the team.
3. Poor communication
Another challenge that managers face when overseeing teams is ensuring effective communication. Because
every team member has a different personality, there is a chance for miscommunication from time to time.
Communication problems can escalate and affect work relationships and productivity.
4. Poor teamwork
A lack of cohesiveness in a team can cause several managerial issues. The team might have poor
communication or face trouble working well together. Some team members may focus more on completing
their specific tasks and less on collaborating with the rest of the team. This can have a detrimental effect on
a project's progress and can even affect the company's long-term business interests.
5. Difficult employees
Dealing with difficult employees is among the top problems that many managers face. Every manager
would prefer a team that gets along well and does its work without creating unnecessary issues. However,
there can be team members who cannot get along socially and professionally with others. They may be
unpleasant to work with and can create a negative, conflict-ridden office environment. Unless the manager
intervenes to stop their behaviour, it can harm the team morale and productivity. It can even cause the top
performers to leave the company rather than endure the daily stress.
6. Time management
Managers are in charge of ensuring that the team completes their work on schedule. If the team falls behind,
it might affect other planned schedules and the company's business interests. This can create stress within
the team and lead to poor productivity or work quality. In their rush to finish the project, the employees
might lose their focus and make mistakes, resulting in revisions and more delays.
7. Performance pressure
Managers often report to senior executives or directly to clients and may feel the pressure to improve their
work and get more done in less time. They may find it stressful to satisfy their superiors and follow up with
their subordinates. Long work hours, constant pressure to meet deadlines and maintain high standards can
cause excessive stress, anxiety, fatigue and even diseases like high blood pressure and diabetes.
8. Skepticism
Teams often question the transparency of management when they feel distanced from their supervisors,
especially if certain employees feel like they are doing more work than others. When people feel they are
not part of the plan, their level of trust becomes compromised.
9. Retaining high performers
Employees with specialised skills are in demand across industries. It is part of a manager's job to make an
effort to retain these high performers. Otherwise, they are likely to move on to other companies where they
are better appreciated. Staff retention is one of the most pressing issues in management.
10. Firing employees
It may become necessary for a company to let go of some of its employees for various reasons. The
company may be downsizing its staff, moving to another location or changing its business model. It may
also decide to dismiss some employees for not meeting work standards or violating the company policies.
The manager is in charge of relaying the news to the concerned employees, and it can be one of the most
challenging parts of their work duties.
 Recent trends in management

According to Harold Koontz, “Management is an art of getting things done through and with the people in
formally organised groups. It is an art of creating an environment in which people can perform and
individuals can cooperate towards the attainment of group goals”. As a manager, one has to effectively
manage the employees to get better outcomes. Practises implemented by the managers for better
management are known as Recent Trends in Management.

Emerging Trends in Management

Managerial trends keep changing from time to time based on dynamic market conditions. Some of the
emerging trends in management are :

Total Quality Management

Total Quality Management (TQM) is a systematic approach followed by the entire organisation to
efficiently achieve the company's objectives to provide services and products with a high level of quality
that satisfies the customer. TQM aims at continuous improvement of practises in the organisation.
The Principles of TQM are as follows:
 Customer Focussed- Customer satisfaction is the basis for determining the quality. An organisation
may perform various methods to promote better quality but ultimately quality is determined by the
customer.
 Continuous Improvement- Continuous improvement steers an organisation towards creativity to
find more ways and become more competitive and meet the stakeholder expectation.
 Total Employee Involvement- All employees are committed to performing and accomplishing
common goals when an appropriate environment is provided for them.
 Process-Centric- The processes are well defined in this approach and are continuously monitored to
find variations.
 Systematic and Strategic Approach- A systematic and strategic approach is involved to
accomplish the mission, vision and goals set by the organisation.
 Decision Making- Data collection and analysis play an integral part in performance evaluation and
decision making.

Crisis Management
A crisis is any situation that poses a threat to an organisation or its stakeholders. Such situations are
something that cannot be predicted or prevented. However, what organisations can control is how they
respond to the crisis. Crises can be grouped as follows:
1. Natural Disasters
2. Confrontational Crisis
3. Rumours
 4. Technological Crisis
5. Workplace Violence
6. Organisational Misdeeds
7. Malevolence
8. Man-made Disaster

Risk Management
A risk is an uncertain event happening in an organisation that may lead to a positive or negative result. It is a
future event that has not occurred. A risk that has already taken place is considered an issue.
Risk Management is a process of identifying, assessing and prioritising risks followed by the application of
resources to minimise or control or monitor the impact of negative future events or to take maximum
advantage of positive risks.

Change Management
Change is to modify or make something different from the previous state of a thing or a condition. Change
management is a process in which the organisation implements change by preparing and supporting the
employees, taking necessary steps for change, etc. Monitoring the activities before and after the change is
implemented to ensure its success.
Change often includes many different entities in an organisation. A systematic approach is to be followed to
bring in the transition and alleviate disruption. There can be resistance to change by people or processes or
systems that are outdated.

Globalisation
Due to globalisation, various global business practises have emerged. Global management refers to practises
followed to manage the international business.
When a business runs in different countries, its managers face challenges in such global scenarios. There is a
need to have proper planning, decision making, controlling and organising because of the differences in time
zones, distances and cultural factors. Communication is the key to leading the employees across borders.
Global managers must have a thorough understanding of environmental and competitive issues.
Apart from the generic trends, there are specific trends related to operations, human resources and marketing
management. A few are mentioned below.

Recent Trends in Operations Management

 Supply Chain Management- Supply chain managers have the responsibility to fulfil the end-user
needs at a quick pace because of shorter product life cycles, demanding customers and technology
 expansions. Supply chains are now revamped to incorporate digitalization along with traditional
physical operations to create improvement in business outcomes.
 Shrinking Product Life Cycle- In contrast to the earlier years where a product developed would
stay in the market for a longer period, the need to rapidly change in a short period due to the fast-
expanding technologies can be seen nowadays.
Organisations are forced to bring in the rapid development of products to be more competitive and
innovative, thus a product gets replaced by a new one quickly.
 Computer-aided Design and Manufacturing- In this age of computerization, the design and
manufacturing of products with the help of computers make operations more efficient and quick.

Recent Trends in Marketing Management

 Customer Relationship Management- This plays a very important role in retaining customers by
maintaining a good relationship with them by addressing their grievances on time and offering them
desired products and services.
 Emphasis on Quality, Customer Satisfaction, and Retention- Marketers emphasise providing the
best quality to customers and also intend to “offer more for less” to give utmost satisfaction to their
customers. This helps in retaining their customers for the long term.

Recent Trends in Human Resource Management

Workforce diversity is the inclusion of people in an organisation based on various aspects such as age,
gender, cultural background, physical abilities, and disabilities, etc.

Organisations that embrace workforce diversity will have a wide pool of applicants to choose from as their
employees. When people from different backgrounds collaborate, they bring in innovation and new ideas to
solve organisational problems and promote business growth. A problem will be dealt with in different
perspectives from different people in contrast to a homogeneous group or an individual's perception which
may be limited.

Different people think differently because of the experiences they come from, different backgrounds and
having solved problems in different manners in the past. It also attracts diverse customers.

Trends in Leadership Management

 Soft Skills Development

As a leader one needs to interact with numerous people. They are experts in different areas and they have
different technical skill sets. Soft skills play a vital role in communicating with all these people. Soft skills
include time management, interactive skills, communication skills, cultural intelligence, etc. Technical skills
also referred to as ‘hot skills’ are specific to a role but soft skills are learnt over time and experience. Soft
skills enable satisfaction in the workplace, improve the performance of employees, build a positive work
environment, increase leadership potential. Hence firms are investing in soft skills training courses for their
employees.

 Gender Balance
Nowadays women are seen in leadership roles and they are very successful. In the workspace, gender
equality is seen, it leads to professional growth and overall development. Many female managers have set an
example for successful leadership Programs.it improves the economic growth of the country. It increases
performance and enhances the reputation of the organisation. It helps in talent recognition and retaining
employees. Many companies are trying to reach gender equality.

 Remote Working
Post pandemic, the entire world shifted to remote working and It is very flexible. Before the pandemic,
people used to work remotely for various reasons like health, child care, etc. The latest technologies
smoothen the process of remote work. work-life balance is achieved. It helps in recruiting people from
different countries, backgrounds and also helps in having a pool of talent that promotes the growth of the
business.

 Flat Organisational Structures

Flat organisational structures enhance the communication between the employees, morality, and help in
decision making. It enhances the responsibility of employees and improves job satisfaction.

 Self-development
As the world is progressing with the latest technologies, competition increases. So there is a need to update
yourself. At every stage of your career path, master your role and don’t be outdated.

 External Consultants
When leaders accept that they don’t know about these specific topics, then consultants from outside are
given an opportunity. They can share their experiences and knowledge. They can facilitate communication
skills, leadership skills, interactive skills, time management and other technical skills.

Future of Management Practices in India

According to a quote by John F. Kennedy, "Change is the law of life, and those who look only to the past
and present are certain to miss the future," This is particularly true in the field of project management.
Significant changes in the project management environment over time have shifted businesses from sticky
notes to enterprise SaaS solutions. Organisations must keep up with these developments or risk failing as
project management continues to significantly evolve with the introduction of emerging technologies and
management paradigms.
What will management look like in the future?
Unprecedented technical advancements are upending the business environment and altering what and how
things are done. In terms of both speed and extent, the change is both constant and exponential. These
modifications led to:

 A significant shift in the commercial landscape

 A new division of labour is created as a result of organisational structure changes that support
innovation and the new workflows that are occurring as a result of the platform economy, a new
trend that uses technology to link people from various backgrounds and skill levels.

Artificial Intelligence And Automation

According to 81% of experts, artificial intelligence is having an impact on their organisations, according to
the Artificial Intelligence (AI) And Automation Project Management Institute. In the upcoming years, that
number is probably going to rise even further. The Chief Technology Officer at Levity.ai, Thilo Huellmann,
notes that automation has enormous potential.

An Increase In Remote Work

Even though remote work has become more popular, in recent years, adoption has reached previously
unheard-of heights. Despite the fact that the global pandemic caused businesses to allow telecommuting
because of safety concerns, it is likely that this practice will continue for the foreseeable future. Project
managers face some intriguing difficulties as a result of this. Up to 97% of workers, according to Forbes,
are not interested in returning to their jobs full-time.

In these situations, cloud-based project management software might be quite important. For hybrid or
remote workforces, these technologies may be quickly implemented globally, enabling them to efficiently
keep on top of their duties and projects. Regardless of shift timings and locations, the program can capture
all the pertinent data that must be tracked, checked, and used by project managers to make more educated
decisions in real-time.

The Need For Leaders Who Are Emotionally Intelligent

While project managers need to be organised and have analytical skills, emotional intelligence has become
more and more in demand in recent years. The World Economic Forum's Future of Jobs research confirms
that companies are placing a greater emphasis on social skills and emotional intelligence. This is important
for project managers to know since, at the core of what they do, they need to have a profound grasp of
people. They must more effectively manage their human resources in order to lead initiatives to success, and
in order to do that, they must first comprehend their constituents. One of the main project management
trends, the increase in remote working, has made it much more crucial to be able to relate to and empathise
with people.

Increased Attention To Data Data-Driven Project Management Using Analytics

Every day, businesses of all kinds produce enormous volumes of data. Therefore, using that data to inform
judgments is only smart. Project managers may assess project progress rates, spot early indications of scope
creep, and more with the aid of data analytics and reporting.

Analytics driven by AI gives a complete picture of the whole company and its projects. They provide
granular-level visibility into the activities and produce customised reports to assist in helping the project
managers visualise the data exactly how they need it. By using these technologies, project managers can
avoid making snap judgments based on manually prepared data and make well-informed decisions in real-
time.
Management Of Hybrid Projects
The search for a more dependable and effective methodology for project success has picked up again in the
post-pandemic age. To that purpose, businesses have started to test out a hybrid methodology that combines
various components from two or more approaches. Agile, scrum, and lean are no longer the only topics to be
discussed; now, it's about combining particular qualities for more flexibility in promoting project success.
This has made it possible for corporations to create distinctive strategies to suit particular projects and
industries.

Greater Focus On Soft Skills

In the past, a project manager's worth was based on their credentials and ability to apply various approaches.
But more and more businesses are now putting a greater emphasis on soft talents. This trend in project
management is unsurprising given that AI-powered systems can now manage the more difficult technical
aspects of project management. Managers are free to concentrate on other duties, and here is where soft
skills are required.

Bringing Together Projects and Organisational Strategy

Organisational strategy and projects have historically been two distinct fields. In essence, a project
manager's job was to see a project through to completion. However modern developments in project
management indicate that this function is currently being broadened. Project managers are becoming more
actively involved in carrying out the overall organisational strategy.
Increasing Awareness of Mental Health

The importance of mental health has increased recently. There will undoubtedly be higher levels of stress
among employees as a result of firms starting to reopen offices or transition to hybrid or remote working.
Organisations must look for strategies to successfully support their staff in managing stress and mental
health in order to maintain employee motivation and productivity.

Prioritise Change Management

Putting Strong Cyber security Measures Into Practice

 What are gender issues?
Gender issues need to be addressed. These are the issues or problems affecting women and men that result
from society’s perceived generalizations and beliefs on characteristics, capabilities, and behavior of women
and men. Often times, these generalizations and beliefs limit the understanding of what women and men can
be and can do. Gender issues may happen anywhere, such as the organization, workplace, community,
family/household, and other groupings wherein people interact.

We are dealing with gender issues when we box in women and men, that is, make stereotypes on how they
should think, feel, and behave; and if we hinder their natural abilities and true selves. Men and women may
each be differently affected by gender issues, but studies and experience show that it is the women who are
in the more disadvantaged position.

Gender issues are inter-related and integral to one another. There may be times that gender issues do not
directly concern people’s own lives. However, that does not mean that that these issues are too distant
because it must be remembered that people’s lives are interlinked and intertwined.

People should be able to understand the implications and effects of these issues on themselves and their
groupings, organizations, and households. They should also realize that they can act on the gender issues
and, thereby, become better persons and also improve family and community relations.

A manifestation of one gender issue may be either the cause or effect of another gender issue. Thus it is
actually difficult to discuss each gender issue separately. But just to have a name for those gender issues,
they can be each defined as marginalization; gender stereotyping; multiple burden; subordination; and
violence:

 Marginalization: forces women into the periphery of economic and social life and of the decision-
making process; diminishes value of women’s activities through which they contribute to the
national development process.

 Gender stereotyping: attributes a set of favorable or unfavorable characteristics, roles, and traits to all
members of a social group based on sex

 Multiple burden: the involvement in the three spheres of work—reproductive, productive, and
community management and governance. A person’s involvement in any of these spheres,
sometimes too much and sometimes unwillingly, lessens her or his time for herself or himself, and
for the things that she or he really wants to do.

 Subordination: one sex becoming inferior to the other. Gender subordination is the institutionalized
domination by men of women (or vice versa). Subordination is a power relationship. Power has four
categories: power over, power over, power to, power with, and power within.

Power over—power based on socially sanctioned threats of violence or intimidation that invites passive or
active resistance and, in order to maintain it, the holder requires constant vigilance. This type of power is an
either/or relationship of domination and subordination.

Power to—the type of power that is creative and enabling, the essence of individual empowerment. This
power is best described in situations where an individual solves a problem, understands a situation, or learns
a new skill.
Power with—power that involves a sense of the whole being greater than the sum of the individuals,
especially when people felt empowered by engaging in collective efforts like organizing themselves toward
a common purpose.

Power within—refers to the spiritual strength and uniqueness that is within each individual that makes
her/him human. Its basis involves self-acceptance and self-respect that, in turn, enables an individual to
respect and accepts others as equals.

In the so-called hierarchy of subordination, the subordination uses power over someone or something, which
may then lead to abuse, oppression, and, finally, violence.

In “gender subordination,” one sex is under the submission or the authority of another sex. In most cases, the
women are under the subordination of the men. This situation often results to women having lesser or no
control at all over available economic and other resources.

Subordination and also violence against women are of equal importance as that of political, economic, caste
and religious subordination. If all forms of subordination are violations of human rights, then women’s
subordination is a violation of human rights.

Violence: any act that instills fear and pain to injure or abuse a person. The two types of violence are
domestic violence and sexual harassment.

Domestic violence—has four types: physical violence, sexual violence, destruction of properties, and
psychological violence. Occurs in forms like spousal abuse, child abuse (including sexual abuse), elderly
abuse, parents abused by children, or violence between siblings, etc.

Sexual harassment—violence that can occur in the workplace, manifested as verbal, visual, gestural and
physical sexual harassment. It includes sexist remarks, propositions, coercive pressure for sexual activity,
and assault. Physical forms of sexual harassment include touching, patting, punching, brushing on a
woman’s body, and physical and sexual assaults. Two types of sexual harassment-- coercive and non-
coercive. Coercive sexual misconduct offers benefit or reward. Non-coercive sexual misconduct simply
annoys or offends a person.

The existence of gender issues in many aspects of people’s lives has various negative implications.
Eliminating or considerably reducing gender issues needs the strongest commitment of those concerned to
be sensitive to differences between and among women and men. People who work to address gender issues
need to further commit themselves to search for ways and to work for change.

Management Environment in India

Introduction to Managerial Environments

A manager's environment is made up of constantly changing factors — both external and internal — that
affect the operation of the organization. If a new competitor appears in the marketplace, the managerial
environment is affected. If key clients take their business elsewhere, managers feel the impact. And if
technological advances date an organization's current methods of doing business, once again, the managerial
environment has to adapt. Although managers can't always control their environments, they need to be
aware of any changes that occur, because changes ultimately affect their daily decisions and actions. For
example, in the airline industry, deregulation opened up the market to new airlines, forcing existing airlines
to be more competitive. Managers in existing airlines couldn't afford to ignore the cheaper airfares and
increased service that resulted. Not only did managers have to identify the new challenge, but they also had
to act quickly and efficiently to remain competitive.
The External Environment
All outside factors that may affect an organization make up the external environment. The external
environment is divided into two parts:

Directly interactive: This environment has an immediate and firsthand impact upon the organization. A
new competitor entering the market is an example.

Indirectly interactive: This environment has a secondary and more distant effect upon the organization.
New legislation taking effect may have a great impact. For example, complying with the Americans with
Disabilities Act requires employers to update their facilities to accommodate those with disabilities.

Directly interactive forces include owners, customers, suppliers, competitors, employees, and employee
unions. Management has a responsibility to each of these groups. Here are some examples:

Owners expect managers to watch over their interests and provide a return on investments.

Customers demand satisfaction with the products and services they purchase and use.

Suppliers require attentive communication, payment, and a strong working relationship to provide needed
resources.
Competitors present challenges as they vie for customers in a marketplace with similar products or
services.

Employees and employee unions provide both the people to do the jobs and the representation of work
force concerns to management.

The second type of external environment is the indirectly interactive forces. These forces include
sociocultural, political and legal, technological, economic, and global influences. Indirectly interactive
forces may impact one organization more than another simply because of the nature of a particular business.
For example, a company that relies heavily on technology will be more affected by software updates than a
company that uses just one computer. Although somewhat removed, indirect forces are still important to the
interactive nature of an organization.

The sociocultural dimension is especially important because it determines the goods, services, and standards
that society values. The sociocultural force includes the demographics and values of a particular customer
base.

Demographics are measures of the various characteristics of the people and social groups who make up a
society. Age, gender, and income are examples of commonly used demographic characteristics.

Values refer to certain beliefs that people have about different forms of behavior or products. Changes in
how a society values an item or a behavior can greatly affect a business. (Think of all the fads that have
come and gone!)

The political and legal dimensions of the external environment include regulatory parameters within which
an organization must operate. Political parties create or influence laws, and business owners must abide by
these laws. Tax policies, trade regulations, and minimum wage legislation are just a few examples of
political and legal issues that may affect the way an organization operates.

The technological dimension of the external environment impacts the scientific processes used in changing
inputs (resources, labor, money) to outputs (goods and services). The success of many organizations
depends on how well they identify and respond to external technological changes.

For example, one of the most significant technological dimensions of the last several decades has been the
increasing availability and affordability of management information systems (also known as MIS). Through
these systems, managers have access to information that can improve the way they operate and manage their
businesses.

The economic dimension reflects worldwide financial conditions. Certain economic conditions of special
concern to organizations include interest rates, inflation, unemployment rates, gross national product, and
the value of the U.S. dollar against other currencies.

A favorable economic climate generally represents opportunities for growth in many industries, such as
sales of clothing, jewelry, and new cars. But some businesses traditionally benefit in poor economic
conditions. The alcoholic beverage industry, for example, traditionally fares well during times of economic
downturn.

The global dimension of the environment refers to factors in other countries that affect U.S. organizations.
Although the basic management functions of planning, organizing, staffing, leading, and controlling are the
same whether a company operates domestically or internationally, managers encounter difficulties and risks
on an international scale. Whether it be unfamiliarity with language or customs or a problem within the
country itself (think mad cow disease), managers encounter global risks that they probably wouldn't have
encountered if they had stayed on their own shores.
The Internal Environment
An organization's internal environment is composed of the elements within the organization, including
current employees, management, and especially corporate culture, which defines employee behavior.
Although some elements affect the organization as a whole, others affect only the manager. A manager's
philosophical or leadership style directly impacts employees. Traditional managers give explicit instructions
to employees, while progressive managers empower employees to make many of their own decisions.
Changes in philosophy and/or leadership style are under the control of the manager. The following sections
describe some of the elements that make up the internal environment.

An organization's mission statement describes what the organization stands for and why it exists. It
explains the overall purpose of the organization and includes the attributes that distinguish it from other
organizations of its type.

A mission statement should be more than words on a piece of paper; it should reveal a company's
philosophy, as well as its purpose. This declaration should be a living, breathing document that provides
information and inspiration for the members of the organization. A mission statement should answer the
questions, “What are our values?” and “What do we stand for?” This statement provides focus for an
organization by rallying its members to work together to achieve its common goals.

But not all mission statements are effective in America's businesses. Effective mission statements lead to
effective efforts. In today's quality‐conscious and highly competitive environments, an effective mission
statement's purpose is centered on serving the needs of customers. A good mission statement is precise in
identifying the following intents of a company:

Customers — who will be served

Products/services — what will be produced

Location — where the products/services will be produced

Philosophy — what ideology will be followed

Company policies are guidelines that govern how certain organizational situations are addressed. Just as
colleges maintain policies about admittance, grade appeals, prerequisites, and waivers, companies establish
policies to provide guidance to managers who must make decisions about circumstances that occur
frequently within their organization. Company policies are an indication of an organization's personality and
should coincide with its mission statement.

The formal structure of an organization is the hierarchical arrangement of tasks and people. This structure
determines how information flows within the organization, which departments are responsible for which
activities, and where the decision‐making power rests.

Some organizations use a chart to simplify the breakdown of its formal structure. This organizational
chart is a pictorial display of the official lines of authority and communication within an organization.

The organizational culture is an organization's personality. Just as each person has a distinct personality,
so does each organization. The culture of an organization distinguishes it from others and shapes the actions
of its members.

Four main components make up an organization's culture:

Values

Heroes

Rites and rituals

Social network

Values are the basic beliefs that define employees' successes in an organization. For example, many
universities place high values on professors being published. If a faculty member is published in a
professional journal, for example, his or her chances of receiving tenure may be enhanced. The university
wants to ensure that a published professor stays with the university for the duration of his or her academic
career — and this professor's ability to write for publications is a value.

The second component is heroes. A hero is an exemplary person who reflects the image, attitudes, or values
of the organization and serves as a role model to other employees. A hero is sometimes the founder of the
organization (think Sam Walton of Wal‐Mart). However, the hero of a company doesn't have to be the
founder; it can be an everyday worker, such as hard‐working paralegal Erin Brockovich, who had a
tremendous impact on the organization.

Rites and rituals, the third component, are routines or ceremonies that the company uses to recognize
high‐performing employees. Awards banquets, company gatherings, and quarterly meetings can
acknowledge distinguished employees for outstanding service. The honorees are meant to exemplify and
inspire all employees of the company during the rest of the year.

The final component, the social network, is the informal means of communication within an organization.
This network, sometimes referred to as the company grapevine, carries the stories of both heroes and those
who have failed. It is through this network that employees really learn about the organization's culture and
values.

A byproduct of the company's culture is the organizational climate. The overall tone of the workplace and
the morale of its workers are elements of daily climate. Worker attitudes dictate the positive or negative
“atmosphere” of the workplace. The daily relationships and interactions of employees are indicative of an
organization's climate.

Resources are the people, information, facilities, infrastructure, machinery, equipment, supplies, and
finances at an organization's disposal. People are the paramount resource of all organizations. Information,
facilities, machinery equipment, materials, supplies, and finances are supporting, nonhuman resources that
complement workers in their quests to accomplish the organization's mission statement. The availability of
resources and the way that managers value the human and nonhuman resources impact the organization's
environment.

Philosophy of management is the manager's set of personal beliefs and values about people and work and
as such, is something that the manager can control. McGregor emphasized that a manager's philosophy
creates a self‐fulfilling prophecy. Theory X managers treat employees almost as children who need constant
direction, while Theory Y managers treat employees as competent adults capable of participating in
work‐related decisions. These managerial philosophies then have a subsequent effect on employee behavior,
leading to the self‐fulfilling prophecy. As a result, organizational philosophies and managerial philosophies
need to be in harmony.

The number of coworkers involved within a problem‐solving or decision‐making process reflects the
manager's leadership style. Empowerment means delegating to subordinates decision‐making authority,
freedom, knowledge, autonomy, and skills. Fortunately, most organizations and managers are making the
move toward the active participation and teamwork that empowerment entails.

When guided properly, an empowered workforce may lead to heightened productivity and quality, reduced
costs, more innovation, improved customer service, and greater commitment from the employees of the
organization. In addition, response time may improve, because information and decisions need not be passed
up and down the hierarchy. Empowering employees makes good sense because employees closest to the
actual problem to be solved or the customer to be served can make the necessary decisions more easily than
a supervisor or manager removed from the scene.

Management Practices of Dhirubhai Ambani

•A man far ahead of his times, he epitomized the dauntless entrepreneurial spirit
•His life and achievements prove that backed by confidence, courage and conviction, man can achieve the
impossible.
•He has voyaged through a journey of rags to riches. He had been an opportunist right from his
childhood. Due to financial problem he left his education after matriculation and went to Aden and had
worked there at a petrol pump station for 8 years and then came back to India with a vision of starting his
own business.
CHRONOLOGY
•1932 Dhirubhai Ambani was born.
•1949 At the age of 17, he went to Aden, and worked for A. Besse & Co., the sole selling distributor of Shell
products.
•1958 Dhirubhai Ambani returned to India and Started his first company in Mumbai, Reliance Commercial
Corporation, a commodity trading and export house.
•1966 Set up a textile mill in Naroda, Ahmedabad – the first step in Reliance's road to success.
•1988 Fiber intermediates and chemical production starts.
•1995 becomes the first Indian company to report a net profit of rs-10 billion.

LEADERSHIP QUALITIES OF MR. AMBANI

 HIGH ON EQ AND IQ : Dhirubhai ambani as a person was not very expressive. His feet was always
grounded. He was often unfazed by the allegations put on him
 PROMPT DESCISION MAKER: Reliance textile industry was hit by a selling hysteria using a
technique of short term selling .Reliance brokers were however quick to respond by buying Reliance
shares forcing scrip to rise giddily. Ambani knew sellers couldn’t possibly have the shares they sold.
The crisis created a legend out of Ambani.
 THINK BIG THINK FAST THINK AHEAD : Ambani was notan MBA, nor an economist. But yet he
took traditional market theory and stood it on its head. And succeeded. When everyone in India
would build capacities only after a careful study of market, he went full steam ahead and created
giants of manufacturing plants with unbelievable capacities. He created capacity ahead of actual
demand and on the basis of latent demand
 INTER DEPENDENCE : Dhirubhai Ambani depended on Reliance Family’ professionals and
technocrats drawn by him from may quarters who were able to convert his expectations into fruitful
results. By depending on them and looking after them simultaneously he achieved superlative results.
 INTELLIGENCE: Dhirubhai Ambani was a shrewd businessman. He had a knack of getting right
information appropriate to the situation and used it to his advantage wherever necessary. He had the
ability to deal with problems at right time and in right perspective.
 PICKED BEST TALENT: The habit of plucking talent from wherever available would become a
classis Reliance management strategy. The Amban is wouldn’t rely on paper qualifications. On
the contrary whoever showed initiative got the job.
 INFLUENCE : Dhirubhai Ambani was known for his influence in political circles and his ability to
acquire the most difficult licenses during the license raj
 RISK TAKER: Dhirubhai Ambani took calculated risks based on expected future trends. He invested
his entire earnings to purchase a huge stock of polyster yarn which was felt as wrong decision as
cotton fabric was predominant at that time. But he proved right and made him a billionaire as
polyester caught the fancy of people for better value and longer wear and tear.

 STRONG AREA OF CONTROL: Dhirubhai Ambani was never rattled by what people used to say or
talk about him. There were a number of questions raised on his integrity. He was very clear about
what he did and would say if people are talking about him that mean she is getting famous. He was
least perturbed by what others thought

Management Practices of Narayana Murthy’s

N.R. Narayana Murthy is an IT industrialist and co-founder of Infosys. As of September 2015,
Murthy has been listed by Forbes Magazine as an entrepreneur having a net worth of $1.8 Bn.
Infosys, from starting in 1981 with six people, is now a company with 92, 000 people, 10-12 million
square feet space, $4 Mn+ in revenue, a billion dollar plus in profits, have around $20 Bn market cap
and is operating in 39 countries.
Narayana Murthy is one among those people whom lives are real life epitome of success. To learn a
bit from his experience, here are 10 points from Narayana Murthy to be a great leader:
Be Nimble
In Murthy’s words, today it’s the nimble one who eats up the bigger corporates as they lose the value
they used to have 50 or 30 years ago. So, in that sense it’s important to keep innovating and bring
new ideas and paradigms to the platform.
Start Mentoring
The primary objective of every leader should be to ensure that there is successive generation of
leaders. And one of the instruments for doing that is mentoring. A good mentor can not only train the
team but can also get the best from each member. “I am the first among the equals as far as
mentoring process is considered.”
Be Courageous
Courage is the most important attribute of great leadership. One should be courageous to dream big
and to take bold decisions. As Murthy says that one should have Courage of Conviction, Courage.. to
go against conventional systems and Courage..to travel the road less travelled.
Respect Your Competitors
One should never ever underestimate their competitors.”Always respect them and learn whatever
you can. And that’s the way you can beat them.”
Stick To Your Ideas
Always believe in your idea and despite of any challenge, stick to it. “When we started, the
environment was completely business unfriendly. It took a year to get the telephone connection and
three years to get import license for computers. But we know, there was a huge global opportunity
and we stick to our idea.”
Be In A Great State Of Mind
Most of our energy is based on what our mental state is. As long as one is full of enthusiasm, hope,
confidence and Joy, then physical energy will come to him on its own.
Walk The Talk
A leader should be able to imbibe a great value system in the company. If you have gained the
respect of our stakeholders, investors, consumers or anyone around you, revenues will follow on
their own. Although it seems difficult to achieve, but as per Murthy, “Once you have demonstrated
your value system by deed, then grapevine travels so fast that it replicates itself.”
Be Prepared To Seize Luck
Luck is an important part of any journey. There are many smart people who have worked so hard in
their life but have reached nowhere. But as they say it, Luck comes to all, but only those who are
prepared for it can seize it.
Be Trustworthy
“I have learnt that leaders have to be trustworthy first before being high performers.” One should
always bring bad news to the investors early on a pro-active basis. “Let the good news take the steps
and bad news the elevator. Investors will respect those organisations that disclose their mistakes and
resolve to improve themselves.”
Don’t Take Yourself Too Seriously
One should not let expectations around to pressurize his way of doing things. For instance, a
golgappa seller will always maintain the same pace in making rounds despite of increasing crowd at
the stall, to maintain his counting and avoid losses. “While we take our work seriously, we don’t take
ourselves very seriously.”

Management Practices by Ajim Prem Ji

Azim Hashim Premji (born 24 July 1945) is an Indian businessman and philanthropist, who was the
chairman of Wipro Limited. Premji remains a non-executive member of the board and founder
chairman. He is informally known as the Czar of the Indian IT Industry. He was responsible for
guiding Wipro through four decades of diversification and growth, to finally emerge as one of the
global leaders in the software industry. In 2010, he was voted among the 20 most powerful men in
the world by Asiaweek. He has twice been listed among the 100 most influential
people by Time magazine, once in 2004 and more recently in 2011.
Premji, who is one of India’s biggest philanthropists, will retire from the post of executive chairman
and managing director of Wipro on July 30. He oversaw Wipro through four decades of
diversification and growth to become a global leader in the software industry.
Here are his 10 Management Lessons:
 Lesson 1: Take Charge
Be responsible.
Lesson 2: Earn Your Happiness
You really have to earn it.
Lesson 3: Nothing Succeeds Like Failure
Failure is a stepping stone to success.
Lesson 4: Nothing Fails Like Success
There is a little difference between arrogance and confidence.
Lesson 5: There Has to be a Better Way
There is always, always, always a way.
Lesson 6: Respond, Not React
A calm mind is key.
Lesson 7: Remain Physically Active
Body and its language matters.
Lesson 8: Never Compromise on Your Core Values
Principles.
Lesson 9: Play to Win
Strategies to end the game.
Lesson 10: Give Back to Society
Give back.

Management Practices by Ratanlal Tata

Ratan Tata was a visionary leader who transformed the Tata Group into a global enterprise. He was a
humble, compassionate, and decisive leader who was always willing to listen to others. He was also an
effective manager at all levels of the organization. Ratan Tata's leadership lessons can be applied to any
organization that wants to succeed in the 21st century.
Introduction
Ratan Tata was born into a wealthy family in Bombay, India. His father was a successful lawyer and his
mother was a philanthropist. Ratan Tata was educated at the best schools in India and the United Kingdom.
He then joined the Tata Group, the largest conglomerate in India, where he worked his way up through the
ranks. In 1991, he was appointed chairman of the Tata Group.
Events that led to his becoming a leader
Ratan Tata's early life and education gave him the foundation he needed to become a successful leader. He
learned the importance of hard work, discipline, and integrity from his parents. He also learned the
importance of compassion and social responsibility from his mother.
His personal qualities
Ratan Tata was a visionary leader with a strong sense of social responsibility. He was also a humble and
compassionate man who was always willing to listen to others. Some of his personal qualities that made him
a successful leader include:
Humility: Ratan Tata was known for his humility and his ability to connect with people from all walks of
life. He was always willing to listen to others and learn from their experiences.
Vision: Ratan Tata had a clear vision for the future of the Tata Group. He was always looking for new ways
to grow the company and make a positive impact on society.
Decisiveness: Ratan Tata was a decisive leader who was not afraid to make tough decisions. He was also
willing to take risks, which helped the Tata Group to grow and succeed.
Integrity: Ratan Tata was a man of integrity who always put the interests of the Tata Group and its
employees first. He was also a strong advocate for social responsibility and corporate ethics.
How he managed work pressure/stress
Ratan Tata was a very demanding boss, but he was also a very supportive one. He was always there for his
employees, and he was always willing to help them succeed. He also knew how to manage work pressure
and stress. He would often take breaks to relax and rejuvenate, and he would also make sure to spend time
with his family and friends.
His leadership styles
Ratan Tata's leadership style was characterized by his humility, his vision, and his decisiveness. He was a
hands-on leader who was always willing to get involved in the day-to-day operations of the Tata Group. He
was also a very collaborative leader who was always willing to listen to the ideas of his employees.
His way of leading and managing people
Ratan Tata believed in leading by example. He was always willing to roll up his sleeves and get his hands
dirty. He also believed in empowering his employees and giving them the freedom to make decisions. He
was a very approachable leader who was always willing to listen to his employees' concerns.
His ways of managing downward, sideway, or upward
Ratan Tata was a very effective manager at all levels of the organization. He was able to build strong
relationships with his employees, and he was able to get them to work together towards a common goal. He
was also able to manage upward effectively, and he was able to get the support of his board of directors.
How he led and managed change in his team/organization/institution
Ratan Tata was a great leader of change. He was able to successfully transform the Tata Group from a
traditional conglomerate into a global enterprise. He did this by embracing new technologies, investing in
new businesses, and expanding into new markets. He was also able to change the culture of the Tata Group,
making it more open and innovative.
Discussion
Ratan Tata's leadership lessons can be applied to any organization that wants to succeed in the 21st century.
These lessons include:
Be humble and approachable. Leaders should be able to connect with people from all walks of life. They
should be approachable and willing to listen to others.
Have a clear vision for the future. Leaders should have a clear vision for the future of their organization.
They should be able to articulate this vision to their employees and stakeholders.
Be decisive and willing to take risks. Leaders need to be able to make tough decisions and take risks. They
should not be afraid to fail, as failure is often a necessary step
Conclusion
Ratan Tata was a visionary leader who transformed the Tata Group into a global enterprise. He was a
humble, compassionate, and decisive leader who was always willing to listen to others. He was also an
effective manager at all levels of the organization.

Management Practices by Steve Jobs & Bill Gates

Bill Gates' love for software programming and technology started in his early childhood. After completing
his schooling, Gates enrolled at Harvard University. However, his journey at Harvard didn't last quite long,
as he quit in 1973 after reading an article about Altair microcomputers.

To pursue his passion, Bill Gates, along with his friend Paul Allen, started “Microsoft”, which is the world's
largest personal computing software company in today’s time. On starting this company in 1975, Bill Gates
along with his co-founder had many breakthroughs including the programming language BASIC and the
MS-DOS program for IBM.

Besides being a business owner, Bill Gates juggled multiple roles like software developer, philanthropist,
humanitarian, author, and investor. After a decade of starting Microsoft, Gates was included in the Forbes
list of the richest people in the world. He held this position for 14 years (1995-2003).
Software like Coastal Explore can help a lot when you start your business like Bill Gates model

Bill Gates’s unique approach - Transformation leads to success!

As the co-founder and former head of Microsoft, Bill Gates adapted a transformational leadership that not
only changed the company culture but also motivated its employees to be the true advocate of the
company.

Time management

"No matter how much money you have, you can't buy more time.” - Bill Gates

Bill Gates considers time to be the most valuable asset in his life. He knows success doesn't happen
overnight and instead; it is cumulative of your hard work and efforts.

Till today, he is very peculiar about his time. Bill Gates believes that he can buy anything in the world,
except for more time. Following this ideology, he plans his day very precisely and ensures that his time is
used orderly. He maintains a tight schedule with every minute being dedicated to a specific task.

While adopting this approach himself, Bill Gates encourages his team members to do the same.

Lead with a vision

A leader without a vision can never create history. Even after these many years, we can spot this approach in
Bill Gates' leadership style, and it is one of the many reasons why Microsoft is as successful as it is today.

While working with thousands of employees, Gates knew that expressing his vision clearly and intensely
can motivate employees and encourage them to work with passion and clear vision. This not only benefited
the employees but the company at large, by having everyone work towards a common goal.

Care for your people

Being a humanitarian, Bill Gates cared for his employees, its business, and the world. He founded the Bill
and Melinda Gates Foundation - an organization that focuses on saving lives and improving global health to
give back to society.

Whereas for his company, he believed that caring for your people is the best way to grow. He established the
said so by acknowledging employee feedback, both negative and positive, being present for its employees,
and creating a work culture that empowers, boosts engagement, and ignites passion.

Learning is an ongoing process

Bill Gates dropped out of school, but that didn’t stop him from learning. He believes that there is something
to learn every day, and we just need to be adaptable. Even after building a huge empire, Bill Gates'
leadership skills pushed him and his team members to keep on learning and advancing their skill set. This is
the only way to be successful and a better version of yourself.

Advocate innovation and creativity

The world is changing at a fast pace, and without innovation, your business can die. To stay in the game or
be the pioneer, you must keep innovating your products, the process, the approach, and other things, as it
just takes one wrong action to pull you out.

Fueled by his passion for technology, Bill Gates encouraged employees to put in efforts and develop
innovative ideas that can turn into a long-run revenue generator. As a transformational leader, he is all about
mixing innovation and creativity with research. It goes for both while creating software and helping the
world.

Take big risks

What differentiates a successful leader from an average one is their willingness to take risks and adapt to
changes. An article from Polymes report that from dropping out of college to starting a business born out of
passion from his parent’s garage, Bill Gates has been a risk-taker from day one.

Playing safe didn’t make Bill Gates a pioneer in the software industry. His ideology shaped the life of many
people, including his employees at Microsoft. Some employees look up to him because they want to be like
him, while others believe he can help them become better leaders.

Bill Gates' leadership approach:

Empower your employees

A company’s success largely depends on the employees. So, the first step to having a productive workspace
is to bring out the best in your team. Empower your employees to explore new things that help them
understand their skill set, motivations, and abilities.

Enjoy success, but learn from failures

Each failure brings you one step closer to success. So, instead of being scared of it, embrace it and learn
something from it. As Bill Gates always said, “It is fine to celebrate success, but it is more important to heed
the lessons of failure.”

Develop a continuous learning attitude

94% of employees say they would stay at a company longer if they invest in training. Creating a learning
culture allows employees to upskill their knowledge and abilities. This helps improve their performance that
benefits not only the employee but also the company.

Bring the change you wish to see

There you have it, the best leadership skills used by Bill Gates to become who he is. So, it is not a big deal if
you are just starting or have many businesses. Try the approach that suits you well. Nothing can get you
more success than being your best self.

Steve Jobs’ Autocratic Leadership

Steve Jobs founded Apple in 1976. In 1985, he was forced to leave Apple, amongst many reasons for his
intense, controlling leadership style. Nevertheless, with the company plummeting shortly afterwards, in
1997, he was asked to return to Apple to save the company from bankruptcy, which he did perfectly.

He was impatient and high expectancy traits portrayed him as a tough boss to work with. He liked to work
with the best people in their field, and yes, he didn’t have a good reputation when it came to being friendly
or polite with others. In his interview with Walter Isaacson, he told Isaacson about his being tough “I don’t
think I run roughshod over people,” and added, “but if something sucks, I tell people to their face. It’s my
job to be honest.”

Steve Jobs’ autocratic leadership worked well in Apple when he was the CEO. He was described as one of
our times’ strong and successful leaders, alongside Bill Gates, Elon Musk, Jeff Bezos, and others.

When is Autocratic Leadership Effective?

Even though others have criticised Jobs’ leadership, his autocratic leadership style clearly turned Apple into
one of the most successful companies out there. In the following passages, we’d like to have a closer look at
autocratic leadership and see under which circumstances it can work.

Strong Leadership

An autocratic leader is needed for quick and efficient solutions to complex problems. In these environments,
autocratic leadership provides the direction that may be lacking when teams are inexperienced.

People who worked with Steve Jobs said he was quick at making critical decisions about products. For
instance, Jony Ive talked about the decision process for the colours of the first iMacs, “in most places that
decision would have taken months. Steve did it in a half-hour.”

Effective Handling of Pressure

In stressful situations when the company needs to solve short-term and urgent issues, autocratic leaders are
the ones who are in charge of the situation. Their experience and expertise allow them to solve the issues
quickly.

Steve Jobs rejoined Apple in 1997 when the company was going bankrupt. He dealt with the pressure
effectively, saved the company and turned it into a profitable one.

Provides Structure

In start-ups, it’s normal to see employees struggling with tasks. Autocratic leadership works well under
these circumstances as those in charge assign tasks to employees, providing guidelines and control the
whole process. This creates an easy-to-follow structure for the employees and themselves.

When Is Autocratic Leadership Disadvantageous?

Like every other leadership style, autocratic leadership comes with some downsides:

Insane Workloads

Steve Jobs struggled with his insane workload. Many people even say it was the reason for his death. When
you are keen to participate in every part of the product journey, you’ll find yourself working 16 hour days
and having to trouble shoot on a regular basis. This can be immensely stressful and lead to sever burn out.
Most leaders are not capable of keeping an autocratic style as organisations grow. Not everyone can be like
Steve Jobs and summon the same amount of energy.

Trust Problems

Autocratic leaders like to control everything. Because of that, they tend to micromanage their employees,
discouraging their input and feedback. This causes trust problems within the company and ultimately hurts
productivity. If leaders are not as inspiring as Steve Jobs, they will run into trust problems and even lose
many great employees.

Communication Problems

Autocratic leaders set very high goals and expectations, which are often not clearly communicated to the
team. They expect the business to run the way they envision it, but sometimes it’s hard for the team to grasp
what their leader is thinking. They must set clear guidelines and make the team aware of them.

Moreover, autocratic leaders often communicate criticism very poorly. Both former employees and
journalists often mentioned Steve Jobs’ communication problems. For example, they especially disliked
how he handled firing people and how he raged when he didn’t like things.

Dependence

Autocratic leadership creates dependency in the workplace. Employees will need feedback from their leader
before taking further steps. Especially when a company is sold and such a leader leaves, the company often
is in huge trouble. If one company is built on the total dependence of one person, that person’s fate
determines the fate of the company.

Damages Creativity

An autocratic leader is the only one in charge of any process that eventually damages creativity. This
leadership style doesn’t offer enough space for employees to let their creativity run free. Usually, employees
end up keeping their ideas to themselves. In the long run, it affects the employees’ creativity and
productivity.

That’s a Wrap

Today, Apple is a well-known brand. Even though Steve Jobs’ was highly criticised for his leadership style,
we know that his way of running Apple played a role in the company’s success.

Due to its nature, autocratic leadership is not suitable for every business, especially since today’s business
world focuses on teamwork. However, in the early stages of a business, autocratic leadership can help run a
business smoothly until you find a more suitable structure for your growing team. And, for those with the
energy, skillset, and stamina of Steve Jobs, continuing an autocratic leadership style might even work way
beyond the company having achieved unicorn status.

Thank You