INTRODUCTION TO MANAGEMENT

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

Overview of the management process

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

Organizing- is the process of bringing together physical, financial and human resources
and developing productive relationship amongst them for achievement of organizational
goals. To organize a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process involves:
1. Identification of activities.
2. Classification of grouping of activities.
3. Assignment of duties.
4. Delegation of authority and creation of responsibility.
5. Coordinating authority and responsibility relationships.

Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behaviour etc. The main purpose o
staffing is to put right man on right job i.e. square pegs in square holes and round pegs in
round holes. According to Kootz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection; appraisal &
development of personnel to fill the roles designed and the structure”. Staffing involves:
1. Manpower Planning (estimating man power in terms of searching, choose the person
and giving the right place).
2. Recruitment, Selection & Placement.
3. Training & Development.
4. Remuneration.
5. Performance Appraisal.
6. Promotions & Transfer.

Directing
It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered the life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Direction is that inert-personnel
aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Directing has following
elements:
a) Supervision- implies overseeing the work of subordinates by their superiors. It is the
act of watching & directing work & workers.
 b) Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
c) Leadership- may be defined as a process by which manager guides and influences
the work of subordinates in desired direction.
d) Communications- is the process of passing information, experience, opinion etc
from one person to another. It is a bridge of understanding.

Controlling
It implies measurement of accomplishment against the standards and correction of
deviation if any to ensure achievement of organizational goals. The purpose of controlling is
to ensure that everything occurs in conformities with the standards. An efficient system of
control helps to predict deviations before they actually occur. According to Theo Haimann,
“Controlling is the process of checking whether or not proper progress is being made
towards the objectives and goals and acting if necessary, to correct any deviation”.
According to Koontz & O’Donell “Controlling is the measurement & correction of
performance activities of subordinates in order to make sure that the enterprise objectives
and plans desired to obtain them are being accomplished”. Therefore controlling has the
following steps:
 Establishment of standard performance.
 Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if
any.
 Taking corrective action

Features of management
The fundamental features of management are: -
(i) Management is universal – principals of management can be applied universally.
(ii) Management applies to all levels of organization
(iii) Management is purposeful – it aims to achieve a specific objective
(iv) Management is concerned with productivity – this implies effectiveness and
efficiency
(v) Management is an integrative process; the essence of management lies in the co-
ordination of individual effort into a team.

(vi) Management involves the allocation and control of resources, human, money and
other physical resources.
(vii) Management is a social process – management is done by people, through people
and for people
(viii) Management is multi-disciplinary – it depends upon wide knowledge derived from
several disciplines
(ix) Management is a continuous process – it is dynamic and an ongoing process.
Management is an art as well as a science.

Importance of management
 Achievement of group goals.
 Optimum utilization of resources.
 Minimization of costs.
 Survival and growth.
 Generation of employment.
 Development of the nation.
THEORIES OF MANAGEMENT
Ancient origins of management
The art of management is as old as human civilization. Instances of the application of
management principles are found in ancient civilizations like Athenian commonwealth of
Greece, the Roman Empire, the states of Egypt and China e.t.c. the pyramids of Egypt, the
architectures, the iron pillars of ancient Greece, the Great Wall of China are all
manifestations of the administrative skill of those times. The bible contains references to
effective public administration. In the holy bible, Moses of Israel is advised by the father in-
law to follow the principles of span of control. Socrates’ definition of management as a skill
separate from technical knowledge and experience is remarkably close to current
understanding of management.
In antiquity, management developed largely in the Roman Catholic Church, government and
military organizations. The hierarchy of authority, functional specialization, staff specialists
and so on, were employed successfully in the Roman Catholic Church. Many management
principles including scalar principles, unity of command, effective communication had their
origin in the administration of armies. A group of Austrian and German public administrators
known as Cameralists advocated the principles of functional specialization, careful selection
and training of administrators, simplifications of administrative procedures etc. for effective
administration of the state.
The techniques of management, like the art of administration and the science of
organization, has ancient roots and medieval branches

Management theories
The systematic development of management thinking is viewed as dating from the end of
the 19th century with the emergence of large industrial organizations, and the ensuing
problems associated with their structure and management. A central part of the study of
management is the development of the management thinking and what might be termed as
management theory. The application of theory brings about change in actual behaviour.
The following are the main approaches to organization, structure and management
1) Classical Approaches – Underlying assumptions of classical theory are:
 There is “one best way” to organize.
 There are “universal” principles of management.
 Organizations are “mechanical” and “closed-systems“. They ignore human factors,
cultural dimensions and external environment.
 Organizations exist for “production related” goals, thus the emphasis is on “Internal
efficiency“.
 Structures of “formal organizations” are defined.
(1) Classical approaches are:
 Scientific Management,
 Administrative Process,
 Bureaucracy.
2) Neo –classical approaches represented by human relations movement and
behavioural approach. Attention is given to social factors at work, groups, leadership, the
informal organization and the behaviour of people.
3) Modern approaches, represented by quantitative approach, systems approach and
contingency approach.

EVOLUTION OF MANAGEMENT THOUGHTS

INTRODUCTION
The origin of management in the organized way can be traced as back as the origin
of human beings. They earned their livelihood by hunting that was carried out in groups.
Later possession of land mass became important hence the arising of conflict between the
groups. Local conflicts were resolved by power using primitive weapon system. Management
practices were undertaken in a scientific way early 18th century when industrial revolution
took place. World War I saw a marked development in evolution of management concepts.
Various systems that evolved in those days can be seen even today. Management of
education, eradication of social evils and various religious systems are evidence of existence
of proper management. Management as a field of study was considered early 20Th century.
Management principles like delegation of authority, empowerment, leadership, scalar chain,
unity of command and motivation were clearly demonstrated in Roman Umpire and their
ability to organize can be seen from its expansion. People have displayed tremendous
amount of ability and skill in planning, organising, and directing people as to what is to be
done, how it is to be done and anticipating future plans. They also evolved various models of
controlling the planned work being executed properly. Various wars have been fought where
use of human resources, heavy weapon system, its procurement and use and shifting it to
various theatres of war based on threat perceptions are the examples of management.
Egyptian pyramids, Great Wall of China are the tangible examples where hundreds

CLASSICAL THEORIES OF MANAGEMENT

SCIENTIFIC MANAGEMENT – F. W. TAYLOR

Fredrick Winslow Taylor (1856-1915), Frank Gilberth his wife Lillan Gilberth and Henry Gantt have done
pioneering work in the field of management. They evolved methods and techniques and
transformed the field of management in which all works were to be done in the scientific way.
Taylor’s work was so unique that he eventually came to be known as the father of scientific
management.
Taylor joined Midvale steel company as a worker and later he was promoted as supervisor. While
working, he completed post graduation in industrial engineering and subsequently joined
Bethlehem Steel Company.
Salient points of scientific management propagated by Taylor are given as under:
a) Effective use of human beings in industrial organizations particularly at the shop floor.
He introduced various systems to improve the efficiency of workers.
b) Taylor stated that managing workforce is an art. He further defined managing as
‘knowing exactly what you want men to do and then see that they do it the best and
cheapest way’
c) He standardized the work and introduced better methods of doing it.(T i m e a n d
motion study(
d) Introduction of differential piece- rate system of payment offering additional reward for
production beyond the standard laid down.(Functional foremanship), creating
supervisors having direct authority over the workers

Features of Scientific Management

1) Separation of Planning and doing- Earlier entire work was done by workers. There
were no separate teams for planning and executing the work. Taylor divided the
entire work into two parts namely planning and doing. It was the responsibility of
supervisors to plan the work that an individual worker is required to do and ensure
that the tools required by them are made available to them.

2) Functional foremanship. Separation of planning from doing resulted in introduction

of supervisory staff system, which could undertake planning work separately. This
has led to introduction of Functional foremanship though it went against the principle
of unity of command. The entire work was divided into two parts i.e. planning and
doing. Supervisors headed these departments. Each of the departments was further
divided into four functional parts. Planning department therefore consisted of route
clerk, instrument card clerk, time and cost clerk and disciplinarian. Supervisor
“doing” department work had under him speed boss, inspector, maintenance
foreman and gang boss.
 3) Scientific selection and training of workers. Workers selection should be carried out
on scientific basis. Taylor suggested that workers should be given adequate training
and work allotted based on their physical and technical aptitude.

4) Financial incentives Taylor was a visionary in his approach. He always balanced

organizational responsibilities and worker’s responsibilities towards the organization.
In his approach he tried to introduce scientific way of doing a job and went in details
as to how it could be improved at the same time keeping interests of the workers in
mind. He introduced various methods to motivate workers by introducing differential
piece- rate of payment system. He fixed targets for each work and pay based on
efficiency. Anybody who worked beyond the laid down target were paid higher rate of
wages and any employee who could not meet allotted target was paid below the laid
down rate. He also introduced various incentive systems in the organization so that
higher productivity was achieved.

5) Economies. Taylor insisted that internal economy must be ensured by each worker
ensuring that there was no wastage in time and material while carrying out the job.
Adequate care must be taken at all levels that the work was carried out as per the
planning done by the supervisors. Organizations must ensure adequate profitability,
which was necessary for survival, he maintained.

6) Mental revolution. Taylor was a firm believer that there must be sound relations
between the management and the workers. All disputes should be resolved by
mutual discussion within the organization. Close supervision therefore was a part of
supervisor’s job. Gang boss was responsible for the smooth flow of the work. Workers
were provided necessary tools, instructions pertaining to the job, perfect work
environment and advise when necessary.

Principles of Scientific Management

1) Replacing Rule of Thumb with Science: Taylor introduced standardization, differential
piece-rate of payment and carried out detailed work-study about each job in industry. He
was the first engineer who separated planning and execution of work in the scientific
way and allotted specific responsibilities to each of the persons involved in planning and
doing.
2) Harmony in Group Action: All work groups should work in harmony. They must develop
the spirit of give and take.
3) Co-operation: Taylor recommended “co-operation among workers as against chaotic
individualism. He insisted peace for war; replace suspicion with mutual confidence,
friends for enemy”. From these principles one can find out and imagine that there was a
shadow of World War I prevailing at the time he carried out his work. He carried out
tremendous work to put the organizations on scientific footing and evolved methods to
develop harmonious relations among workers.
4) Maximum output and development of workers: Taylor was of the opinion that
development of workers was central to improvement of productivity. He incorporated
Gantt graphics in industrial operations. He disliked estimation and insisted precision in
measuring the job. Work of Taylor brought near revolution in management and therefore
was called the “father of Scientific Management”

Techniques of scientific management

Scientific work study
This refers to the systematic objective and critical examination of all factors influencing the
efficiency of operations to improve thereon. It involves the measurement and improvement
of work. The study includes
 Method study: the purpose of this study is to maximize efficiency in the use of materials,
machines, manpower and capital by improving work methods. It involves the critical
examination of plant layout, product design, material handling and work processes, to
minimise time, distance and cost involved in the transportation and storage of materials.
 Motion study: refers to the study of the movement of the operator or machine involved in
a task with a view to eliminate useless motions and to improve the others. The intention
is to remove wastefulness resulting from using unnecessary ill-directed and inefficient
motions.
 Time study: this refers to the study of the time taken to perform each operation of a job
in order to find out the proper time that should be taken in doing the job. It is the art of
recording, analysing and synthesising the time elements of any operation.
 Fatigue study: this seeks to find out how long a person can perform the standard task
without adverse effect on his health and efficiency.

Scientific task setting

Scientific planning of a task is the technique of forecasting and viewing ahead every step in
a long series of separate operations. Each step has to be taken in the right place, of the right
degree, and at the right time so that work can be done with maximum possible efficiency.
This involves the following tasks:
 Routing: it implies laying down the route or path to be followed by each piece of raw
material before its conversion into a finished product.
 Scheduling: is a time table of operations which is prepared to ensure completion of each
piece of work at the right time. It determines the order of priority for each operation and
the time to be taken for its completion.
 Dispatching: involves assembling of necessary resource assignment of jobs, supervision
of work, enforcing discipline and coordinating activities of different individuals.
 Follow up: this is checking of work and taking corrective steps to ensure that each piece
of work is completed at the right time in the right amount and at the right cost.

Standardisation
This is the process of fixing well thought out and tested standards of norms with a view to
maximise efficiency of work. It eliminates needless variety and simplifies the process of
production.

Selection and training

Proper selection and training is done to match the job and the job holder. After employees
are selected they should be placed on the right job.

Differential piece rate system

This is the use of different piece rate system in order to motivate workers to produce
maximum quantity. Two piece rates are used, one higher rate for those who produce more
than the standard output and the other lower rate for those who those workers who produce
less than the standard output. Standard output is fixed through time and motion study.

Functional foremanship
According to this concept instead of having one foreman in charge for all production
activities, the worker should report to different supervisors depending on the activities to be
carried out.
Taylor’s principles and concepts were refined and enlarged by several of his followers,
notable among them being Henry L. Gantt and the Gilbreths.

Contributions of Scientific Management

 Work units with clear purpose and direction
  Work organization and scheduling
 Higher competency
 Financial reward system to motivate workers
 Work coordination

Limitations of scientific management

 It offered a one-dimensional approach to motivation which ignored job satisfaction;
 It tended to generate fears of mass redundancies, strikes and long-lasting resentment;
 It promoted resistance to change;
 Worker suspicions of work measurement and time and motion studies arose due to one-
sided applications – working harder for the same money!
 Power was concentrated in the hands of the production controllers and decision power
was removed from workers, thereby losing their potential contribution;
 Rationalisation, division of labour and specialisation led to de-skilling;
 Specialisation led to boredom and monotony and ignored individuality and the desire for
variety.

BUREAUCRACY
Max Weber (1864-1920) a German sociologist introduced the theory of Bureaucracy. His
major contribution to the theory is the concept of authority, structure and its interrelationship. Weber in his
model of bureaucracy stated that there are three types of authority in any organization.
 First, legal authority indicating that a person holds authority based on legal position or a rank
within the hierarchy. For example, a production manager in the industry or a battalion commander in
the military organization.
 Secondly, Traditional authority, employees obey a person because he comes from a
traditionally recognized power holding family or a person belonging to a royal family.
 Lastly, charismatic authority, which indicates special power or an appeal that a leader
possesses.

Elements/Characteristics of Bureaucracy
Bureaucracy plays a vital role in business, government, education or any other large
organization. Though the bureaucratic model was suggested about 80 years ago it still holds
good.

Features of Bureaucracy
a) Specialisation of labour: jobs are broken down into routine, well defined tasks so that
members know what is expected of them and can become extremely competent at what
they do.
b) Formal rules and procedures: written rules and procedures specify the behaviours
desired from members, facilitate coordination and ensure uniformity.
c) Impersonality: rules, procedures, and sanctions are applied uniformly regardless of
individual personalities and personal considerations.
d) Well defined hierarchy: multiple levels of positions with carefully determined reporting
relationships among levels provide supervision of lower offices by higher ones, a means
of handling exceptions and the ability to establish accountability of actions.
e) Career advancement based on merit: selection and promotion are based on the
qualification and performance of members.

Merits of Bureaucracy
a) H i e r a r c h y o f a u t h o r i t y e x i s t s i n t h e o r g a n i z a t i o n , w h i c h i n v o l v e s
s u p e r i o r - subordinate relationship and chain of command.
b) Division of work based on competence and functional foremanship.
c) System of policy, rules, and regulations is necessary to regulate
subordinate behaviour and to ensure rationality, objectivity, discipline and control.
 d) In bureaucratic model, rule of law exists that leads to impersonal behaviour
of employees. Relations are based on position in the hierarchy.
e) Weber suggests standardization of methods, systems, processes, job contents and
tools for smooth operation.
f) Selection and promotion of employees should be based on competence.
g) Bureaucracy recognizes legal power derived from the official position held by an
individual.

Drawbacks of Bureaucratic Theory

a) The theory is based on rigid rules and regulations having no consideration for interpersonal
relationship based on emotions and human qualities.
b) Power has been considered as the dominant factor to administer the organization
leading to self-perpetuation. There are glaring drawbacks in the bureaucratic model namely
rigidity, impersonal and mechanistic relationship, higher cost of control and umpire
building.
c) Lack of co-ordination and interpersonal communication and
d) Existence of blind faith in rules and regulations. The system may work in large
government organizations or the organization where there is no change anticipated.
e) The theory does not promote fulfilment of human needs and does not exploit full
potential of employees.

Administrative Theory of Management

1) Financial – search for capital and its optimum utilization.
2) Security – protection of property and human beings
3) Accounting – accounting of stores and equipment. Statistics is also covered under
accounting.
4) Managerial – activities include planning, organizing, commanding, coordinating and
control. Fayol divided his approach of studying management into three parts.

Managerial Qualities
Fayol considered that manager must have following qualities:
1. Physical ability: relating to health, vigour and ability to effectively address the people.
2. Mental ability: to understand and learn judgment, mental vigour and adaptability.
3. Moral ability: energy, firmness, initiative, loyalty, tact and dignity
4. Educational ability: General acquaintance with matter not belonging exclusively to the
function performed
5. Technical ability: Particular to function being performed
6. Experience: Arising out of work

General Principles of Management

In order to develop managerial knowledge, he developed principles of management. These
are given below
1. Division of Labour: Fayol recommended that work of all types must be sub-divided and
allotted to number of persons. Sub-division makes each task simpler and results in
greater efficiency.
2. Parity of authority and responsibility: Authority refers to the right of a superior to give
orders to subordinates, take decisions on specified matter, and use the sources of
organization. Responsibility on the other hand includes obligation with respect to the
performance and achieving goals in a satisfactory manner. This principle suggests that
giving authority without corresponding responsibility leads to arbitrary and unmindful
use of authority. Authority relates to the power an individual acquire by virtue of his
official position. Personal authority can also be derived from intelligence, moral worth
and past experience of an individual.
3. Discipline: In the context of management means obedience, proper conduct in relation to
others and complying with the rules and regulations of the organization. Smooth
 functioning needs discipline. Discipline is also self-imposed in relation to the work
environment. If an individual does not display adequate self-discipline and if it has an
adverse impact on the work then he should be warned, suspended, demoted or even
dismissed depending upon the gravity of the indiscipline.
4. Unity of command: This principle states that subordinate should receive orders and be
accountable to one and only one superior. It is necessary for stability, orderly functioning
of the organization and accountability.
5. Unity of direction: the efforts of all the members of the organization should be directed
towards common goals. The principle seeks to ensure unity of action, coordination of
strength and focusing of effects. Eg –Production department should have a single plan
and all must work to achieve specified goals in terms of quality and quantity.
6. Subordination of individual to general interest: What is in the interest of the organization
as a whole must take precedence over the interest of individuals. The efforts should be
to bring about convergence of general and individual interest. Organizational interests
are common to all employees. These should be above the individual interests. All the
employees must set an example and be fair in their dealings. Supervisory staff must be
vigilant and carry out supervision of assigned job religiously.
7. Fair remuneration to employee: Remuneration of employee should be fair and
reasonable. It should be decided on the basis of work assigned, cost of living, financial
and position of business He recommends profit sharing by managers and not by workers.
Fayol recommends non-financial incentives for workers.
8. Centralisation and decentralisation: Centralization means the concentration of all powers
at the top level of management and decentralization means the authority or the power is
shared by middle as well as low level of management. Degree of centralization and
decentralization depends upon the size of the organization, experience of the superiors
and ability of subordinates.
9. Scalar chain: Fayol defines scalar chain as the chain of superiors ranging from the top
management to the lowest rank. The chain also determines the line of authority. The
principle suggests that there should be a clear line of authority from top to bottom
linking managers at all levels. It is a chain of command as well as communication.
10. Equity is combination of justice and kindness. Equity is treatment to subordinates
by their superiors for an exemplary behaviour. It brings loyalty in the organization.
It requires good sense, good nature and devotion to duty.
11. Stability of tenure of personnel: Employees should not be moved from their
positions frequently. Period of service in a position should be fixed. The
individual should not be transferred often as it takes time to settle down in the
new appointment. It does not mean that when an employee is due for promotion
and a vacancy exists at a new place, should not be transferred. Individual interests
must have priority over the other aspects of the organization.
12. Order: This principle is concerned with proper & systematic arrangement of things and
people. Arrangement of things is called material order and placement of people is called
social order. Material order- There should be safe, appropriate and specific place for
every article and every place to be effectively used for specific activity and
commodity. Social order- Selection and appointment of most suitable person on the
suitable job. There should be a specific place for everyone and everyone should
have a specific place so that they can easily be contacted whenever need arises.
13. Initiative: Employees at all levels should be allowed to take initiative in work related
matters. Initiative means eagerness to initiate action without being asked to do so.
However it does not imply freedom to do whatever people like to do. Initiative increases
zeal and energy.
14. Esprit de corps: It refers to team-spirit that is harmony in work group and mutual
understanding among workers. Managers must take steps to develop a sense of
belonging among the members of the work group. If there is team-spirit then everyone
comes forward to help each other. It must be remembered that ‘union is strength’.
 Written explanation from erring member complicates matter and all issues should be
resolved verbally.

Elements of Management
Fayol has regarded the ‘Elements of Management’ as principles of management. These
elements or functions of management are discussed in brief
1. Planning: It is the most important element or function of management and failure to plan
leads to hesitation, false step and untimely changes in directions, which causes
weakness in the organization.
2. Organising: It is the process of bringing together physical, financial and human resources
and establishing productive relations among them for the achievement of specific goals
3. Commanding: This function is necessary to execute plans. This function includes the
influencing the behaviour and work of others in a group to the realization of specified
goals in the given situation.
4. Coordination: Co-ordination as a function of management refers to the task of integrating
the acts of separate units of an organization to accomplish the organizational goals
effectively.
5. Controlling: Controlling refers to the process of ensuring that acts of subordinates and
use of resources is in conformity with the pre determined goals. Contribution of Fayol has
made the real beginning of development of management as a separate field of study.

Contributions of Administrative Management

 There is a strong element of common sense in the ideas put forward, and many are
recognized by practising managers.
 There is emphasis on the importance of objectives in the overall performance of the
organization.
 Focus was put on how the structure of the organization affects its performance.
 Management education was recognized as being important in the running of an
organization.
 There was recognition that organizations are open systems and therefore are affected by
the environment around them.

Limitations of the Administration Management

 The approaches are now seen as being too mechanistic and rigid, as there is demand
for a more flexible approach to management and organisation.
 This approach ignores the existence of the informal organization.
 All important decisions rest with management, with very little consultation with the
staff.
 His principle of specialisation produces the following dysfunctional consequences;
a) It leads to the formation of small work groups with norms and goals at odds with
those of management.
b) It results in the dissatisfaction of workers because it does not provide them the
opportunity to use all their abilities.
c) It results in an increase in the overhead costs because the more the specialisation
develops at one level, the greater becomes the need for coordination at a high
level.

NEO-CLASSICAL THEORIES

Human Relations Era

Human relations era started in 1927 onwards. It was a movement spearheaded by Elton
Mayo. The essence of the movement was the belief that the key to higher productivity was
employee satisfaction. Dale Carnegie, Abraham Maslow and Douglas McGregor also made
the contribution to above philosophy.

Hawthorne Studies
Hawthorne studies were initially sponsored by National research council at the Western
electric company’s Hawthorne works in Cicero, Illions in the year 1924 but eventually
expanded up to middle of 1930s. Engineers of the company carried out initial research, the
object of the study was to “examine the effect of various illumination levels on
productivity.”The study envisaged formation of control group and experimental group
Control group members worked under constant illumination intensity while the experiment
group was subjected to varying intensity levels. It was expected that the individual output
be directly related to intensity of light.

Conduct and Findings of the Study

As the illumination was increased in the experiment group, output increased in both the
groups. As the light level was dropped in the experimental group, productivity continued to
increase in both the groups. Productivity decrease was observed in the experimental group
only when the light intensity had been reduced to that of moonlight. These findings baffled
the engineers of the Western electric company, who concluded that illumination levels were
not responsible for higher productivity. No reason could be ascribed for this phenomenon.
Further studies were conducted in Western electric company. Elton Mayo, who at that time
was working at Harvard University as professor, joined the study group along with his team.
Following studies were undertaken by him, which started in the year 1927 and lasted up to
1932.
1. Redesign of jobs.
2. Changes in the length of workdays and workweeks.
3. Introduction of rest period.
4. Individual versus group wage plan.
5. Evaluation of effect of group piece incentive pay system
Elton Mayo and his colleagues carried out the studies where a number of variables were
tested. These were place of work, place and length of rest pause, length of working days,
length of work, method of payment, free mid morning lunch etc, in relation to productivity

Conclusions
1. Individual behaviour and sentiment are closely related.
2. Group influence significantly affects individual behaviour.
3. Group standards established individual output.
4. Money was less a factor in determining output.
5. Group standards, group sentiments and security provided by the group were responsible
for higher productivity.

Need Hierarchy Theory-Abraham Maslow Abraham Maslow’s original work of needs

theories were undertaken with the rehabilitation of people in mind. Today, the need
hierarchy theory of Maslow is often quoted and used in management to motivate workers.
Maslow’s theory generally state five needs of human beings vie, Physiological, safety,
belonging, (Social) esteem and self-actualization. Original theory of Maslow did recognize
that people’s needs varied at different times, and in hierarchical order. Before a person
enters to fulfil higher order needs he must achieve minimum two basic needs (Physiological
and Safety). He further stated that needs do not disappear but its potency is reduced and
the next higher order need takes precedence, once that is fulfilled the next needs becomes
dominating and so on. Needs which are commonly used in the theory and its meaning is
given below.
1. Physiological Needs –Decoration, Vibration, Temperature, Space, Noise, Gas, and
Canteen facilities.
2. Security Needs –Job description, regularity, role clarity, structure, communication, safety
report meetings, agreements, and contracts.
3. Social Needs–Joint Tasks, appreciation, sharing offices, recognition and team
membership.
4. Self – esteem–Being consulted, rank, success, achievement, encouragement,
recognition, pre-requisites.
5. Self – actualization–Personal or professional growth, autonomy, worthwhile job
“empowerment as recognizing and releasing into the organization the power, which the
people already have in their wealth of useful knowledge and internal motivation.
Empowerment is very closely tied to the study of organizational behaviour. “Empowerment
is the authority to make decisions within one’s area of operations without having to get
approval from anyone else. There are two major characteristics of empowerment.
1. Personnel are encouraged to use their initiative.
2. Employees are given not just the authority but resources as well, so that they are able to
make a decision and see that it is implemented.
In the highly competitive and rapidly changing environment caused due to globalisation and
liberalization of market economy there has been growing concern for empowerment. Those
organizations, which liberate themselves by empowering their people, can survive in the
present environment. It must be noted that empowerment is most effective tool
of managerial effectiveness to obtain the full potential of employees. In bureaucratic form
of organizational structure, there is an established hierarchy of command and the higher
authority controls the subordinates down the line. But in organizations where
empowerments practiced, performance of individual is achieved. Empowerment envisages
participation, innovation access to information and accountability. Maximum productivity is
achieved from the front line operators supported by management in creating value.
Empowering organization can be designed through the following:
1. Management by trust, Quality of work life and by implementing other organizational development
strategies.
2. Organising flexible production systems rather them mass production.
3. By introducing customized product with variations for customer needs.
4. By reducing waste and achieving global competitiveness in price.
5. By enhanced efforts in research and development activities.

Systems Approach to Management

Kast and Rosenzwing , “defines system as an organized, unitary whole composed of two or
more interdependent parts, components, or sub – systems and delineated by identifiable
boundaries from its environmental super system.”
From the above definition following aspects stand out.
a) A system has several parts. These are dynamic in nature and therefore interact with each
other
b) The parts or systems are interdependent and interrelated.
c) The interdependence is required due to specialized nature of job, division of labour,
sharing of limited resources and scheduling of activities.
d) Creating various departments that carries out the work in the organization, sub-
departments and sections.
e) Work is carried out by teams and groups who performed specialized task to
accomplish overall organizational objective.
f) Change in one department affect the other departmental work.

A system is therefore composed of several sub system and sub-sub system. Every system
or sub-system has its own objective and various processes. Personnel employed to manage
the system have to play their roles and work under systems that are open. Katz and Kahn
include importation of energy, throughput, output, and phenomenon. Organization import
resources, energy and information from environment, transform them into product and
services and export it to the environment where society uses the same. Organizations do
not export all that they produce but retain certain portion for its survival and growth.
Organizations carry out modification and improvement based on performance feedback.
Organization must also develop the ability to absorb the shocks and influences from the
environment by developing inbuilt flexibility and responses.

Contingency Theory of Management

Contingency theory of management is an extension of system approach to management.
There cannot be suitable management solutions for all situations. External and internal
factors keep changing. Since systems approach cannot appropriately suggest relationship
between organization and environment, the gap so created has been fulfilled by contingency approach.
The theory suggests what a manger should do in a particular situation based on the
examination of the facts relating to each situation.

Contingency theory suggests active inter-relationship between various variables in a

situation and managerial action devised. It not only suggests solution to the given situation
but also examines various influences of the situation on behaviour pattern of the individual
and groups in the organization. The contingency view of organization may be explained in
the words of Kast and Rosenzweing as follows: “The contingency view seeks to understand
the inter-relationship within and among sub-systems as well as between the organization
and its environment and to define patterns of relationship and configuration of variables. It
emphasizes the multivariate nature of organizations and attempts to understand how
organizations operate under varying conditions and in specific circumstances. Contingency
views are ultimately directed towards suggesting organizational designs and managerial
actions most appropriate for specific situations (Ref. Kast, F.E. and J.E. Rosenweing)
Tosi and Hammer states that when a sub -system in an organization behaves in response to
another system or sub – system, we say response is contingent on environment. Hence a
contingency approach is an approach where the behaviour of one sub- unit is dependent on
its environment relationship to other units or sub-units that have control over the
consequences desired by that sub-unit.

Features of the Contingency Theory

1. Management action is contingent on certain actions outside the system or the
subsystem.
2. Organizational action should be based on the behaviour of action outside the system so
that organization can be integrated with the environment.
3. Because of the specific organization – environment relationship, no action can be
universal. It various from situation to situation.
4. Internal functions of the organization are generally consistent with the technology;
demand placed on the organization by the society, external environment and needs of the members
of the organization.
5. Contingency approach suggests suitable alternatives for those managerial actions, which
are influenced by external and internal environment like organizational design, strategy
formulation, decision systems, leadership styles and organization improvement.
6. Organizational systems are not absolute. They have to adjust or modify considering
social, political, technical and economic situations.

Implications
Contingency approach to management is an important addition to the management theory.
It is a very sophisticated approach because it takes into consideration increasing complexity
of organization. The approach emphasizes multivariate nature of organization and suggests
organizational designs and managerial actions to specific situations. The theory is
contingent on environmental factors like politics, technology and economic situation
prevailing from time to time. Sharma (1997) explains that contingency views tend to be
more concrete and to emphasize more specific characteristics and pattern of inter-
relationship among sub-systems. The view recognizes that the environment and internal
sub-systems of each organization are somewhat unique and provide a basis for designing
and managing specific organizations.

THE CONTEXT OF MANAGEMENT

The levels of management
The number of levels of management in an organization will depend on its size, technology
and diversity in its range of production
In order to ensure greater efficiency and productivity, the levels of management should be
kept to the minimum. The different levels maybe classified into three categories
Levels of management or Management hierarchy
Top Level of Management
 It consists of board of directors, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies for an
enterprise. It devotes more time on planning and coordinating functions.
 The role of the top management can be summarized as follows -
 Top management lays down the objectives and broad policies of the enterprise.
 It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
 It prepares strategic plans & policies for the enterprise.
 It appoints the executive for middle level i.e. departmental managers.
 It controls & coordinates the activities of all the departments.
 It is also responsible for maintaining a contact with the outside world.
 It provides guidance and direction.
 The top management is also responsible towards the shareholders for the performance
of the enterprise.

Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only
one layer of middle level of management but in big enterprises, there may be senior and
junior middle level management. Their role can be emphasized as -
 They execute the plans of the organization in accordance with the policies and directives
of the top management.
 They make plans for the sub-units of the organization.
 They participate in employment & training of lower level management.
 They interpret and explain policies from top level management to lower level.
 They are responsible for coordinating the activities within the division or department.
 It also sends important reports and other important data to top level management.
 They evaluate performance of junior managers.
 They are also responsible for inspiring lower level managers towards better performance.

Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of
supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
“Supervisory management refers to those executives whose work has to be largely with
personal oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their activities include -
 Assigning of jobs and tasks to various workers.
 They guide and instruct workers for day to day activities.
 They are responsible for the quality as well as quantity of production.
 They are also entrusted with the responsibility of maintaining good relation in the
organization.
 They communicate workers problems, suggestions, and recommendatory appeals etc to
the higher level and higher level goals and objectives to the workers.
 They help to solve the grievances of the workers.
 They supervise & guide the sub-ordinates.
 They are responsible for providing training to the workers.
 They arrange necessary materials, machines, tools etc for getting the things done.
 They prepare periodical reports about the performance of the workers.
 They ensure discipline in the enterprise.
 They motivate workers.
 They are the image builders of the enterprise because they are in direct contact with the
workers

Essential skills of a manager

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

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

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

Diagnostic Skills – These are skills used to define and understand situations. They are
most important at the top, moderately important in the middle and least important at the
bottom of the managerial hierarchy.

Human Skills– the ability to work effectively with others in a personalised manner. This
requires a sense of feeling for others an appreciation of their rights, which can be
demonstrated by the way the managers interact with their subordinates, equals and
superiors. Human skills also refer to the ability to succeed, to cooperate with others for a
common goal, to delegate tasks and authority in ways to empower others, to deal with
conflict situations and generate consensus, and to build an enjoyable work environment.
These skills are necessary for all levels of management

Characteristics of successful manager

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

Management Roles and Responsibilities

One of the classic studies into the work of managers was conducted by Henry Mintzberg in
1980. Mintzberg identified three general roles:
a) interpersonal – dealing with the maintenance of relationships with others within and
outside the organisation;
b) informational – dealing with the gathering and provision of information, again within and
outside the organisation;
c) Decisional–dealing with organisational and operational problems and difficulties.
Within these three categories, ten more specific roles were set out, as summarized below.
a) Interpersonal roles
1. Figurehead – Formal, representational and symbolic duties
2. Leader – Relationship with subordinates – motivating, communicating, coaching, etc.
3. Liaison – Contacts with others outside work unit, for assistance, information, etc.
b) Informational roles
4. Monitor – Ensuring acquisition of information necessary for work
5. Disseminator – Distributing information throughout organization and outside
6. Spokesperson – Formal provision of information on behalf of organization
c) Decisional roles
7. Entrepreneur – Initiating, developing and facilitating change and innovation
8. Disturbance handler-Troubleshooting problems as and when they arise
9. Resource allocator – Distributing and arranging use of resources (staff, finance,
materials, time)
10. Negotiator – Representing organization in negotiations within area of responsibility
Whilst this categorization of roles is different from the functional definitions it does not clash
with them. Rather, Mintzberg's roles provide an alternative perspective, emphasizing three
key elements which spread across the spectrum of management processes – planning,
organizing and controlling.

PLANNING
Definition: Planning can be defined as deciding in advance what to do, how to do it, when
to do it and who is to it. Or planning is the management function of anticipating the future
and the conscious determination of a future course of action to achieve the desired results.

Elements of planning

The planning function requires making decisions about four fundamental elements of plans:
1. Objectives. Objectives are statements of future conditions that a manager hopes to
achieve. All sets of objectives have three characteristics: priority, timing, and
measurement. The phrase priority of objectives implies that at a given time,
accomplishing one objective is more important than accomplishing others. Time
dimensions imply that an organization's activities are guide by different objectives,
depending on the duration of the action being planned.
Effective planning requires measurement of objectives. A variety of measurements exists
to quantify objectives in the eight areas that management expert Peter Drucker
suggests: market standing, innovations, productivity, physical and financial resources,
profitability, manager performance and responsibility, worker performance and attitude,
social responsibility.
2. Actions. Actions are the means, or specific activities, planned to achieve the objectives.
The terms strategies and tactics refer to planned courses of action.
3. Resources. Resources are constraints on the course of action. It also involves budgeting -
identifying the sources and levels of resources that can be committed to the courses of
action. Management can select the type of budget that best suits the planning needs of
the organization.
4. Implementation. Implementation involves the assignment and direction of personnel to
carry out the plan. The three approaches to implementation are authority, persuasion,
and policy.
5. Planning is goal oriented – plans emanate from objectives.
6. Planning is a primary function –it is the basic of the management process.
7. Planning is a pervasive –it is the function of each and every of manager irrespective of
the level and area of his / her operation.
8. Planning is an intellectual process – it is a mental process involving imagination /
foresight and sound judgment.
9. Planning is a continuous process – as assumptions and events on which plans are
based change, old plans have to be revised or new ones have to be prepared
10. Planning is forward looking – planning involves looking ahead and preparing for the
future.
11. Planning involves choice – It presupposes the existence of alternatives.
12. Planning is an integrated process – different plans are interdependent and
interrelated.
13. Planning is directed towards efficiency – planning facilitates the achievement of
objectives economically and efficiently.

Types of plans

1. Purpose or mission identifies the basic function or task of an enterprise. It answers

the question “What is our Business” it states where the organization is now where it
wants to go and how it intends to get there. It acts as a guide to everything that is
done in the organization.
2. Objectives or goals are ends towards which activities are aimed and represent the
end of planning organizing, staffing, directing and controlling.

Definition of objective

Objectives are goals, targets or purposes that the organization wishes to achieve over
varying periods of time.

Objectives are important because they:

1. Provide specific direction to the individual efforts and activities of an organization.

2. They provide integration and coordination of employee action by causing their efforts to
be accomplished for common reasons.
3. The provide mechanism for control
4. They provide motivation for those who are assigned the task of accomplishing them.
5. They help to relieve boredom and monotony as they are revised from time to time.
6. Achievement of objectives when combined with feedback can increase job satisfaction.
7. Well-defined objectives are helpful for effective delegation of authority thereby allowing
for decentralization.

Features of objectives

 Objectives are basic plans. They provide justification for the establishment and operation
of an organization.
 Objectives are multiple in natures. The objectives of the business are multiple in order to
satisfy the goals of the various stakeholders who include investors, customers,
employees and the state.
 Objectives should be arranged in a hierarchy. Objectives of an organization differ in the
degree of importance and are arranged in a hierarchy based on their relative
importance.
 Objectives vary in the time span in which they have to be achieved. They may be short
term as well as long term.

Characteristics of objectives (SMART)

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

3. Strategy
Is a set of activities or processes that an organization intends to use in order to achieve its
goals & objectives.

a) Formulating the company's vision and mission- To be able to formulate a strategy

b) Conducting an analysis that reflects the Company's internal conditions and capabilities-
Employees believes, asset, etc
c) Assessing the Company's external environment in order to adapt to it- Assess economic
status.
d) Assessing the Company's options by matching its resources and the external
environment more effectively and efficiently. Limited resources
e) Identifying the most beneficial options in light of the Company's resources. - Put into
proper direction; choose the best strategy out of the many.
f) Selecting the long-term objectives and strategies that will lead to the most desirable
results
g) Developing annual and short term strategies that are compatible with the Company's
long term objectives and strategies- Into small parts
h) Implementing various strategies based on the company’s resources as well as the
structures, technologies and people. Actualize the strategy, workers, telecommunication,
etc.
i) Evaluating the success of the strategic process as an input for future decisions.

Characteristics of strategy

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

Essentials for effective strategy formulation

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

Importance/advantages of strategy

 It helps to ensure efficient consistency in the allocation and utility of resources.

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

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

Characteristics of policies

 A policy is formulated in the context of objectives and seeks to contribute to the

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

Importance of policies

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

Types of policies

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

Essential requirement of a policy

For a policy to be sound it should contain the following:

 A policy should be designed or based on objectives and should contribute towards

the attainment of objectives.
 A policy should be properly planned, coordinated, consistent and balanced.
 A policy should be clear and definite as well as understandable.
 A policy should be designed, based on careful consideration of the resources and
environment of the organization.
 Policies must be flexible and adjustable with the planning premises.
 Policies should be updated with the help of reviews and appraisals.
 Policies should be communicated to all so that objectives are understood by all in
order to carry out proper implementation.
 Policies should coincide and be consistent with the operations of the business.
 Policies should be designed with business ethics in order maintain sound ethical
standards of business.

Policies formulation process

1. Analysis of the environment. Management carries out an analysis of both the internal
and external environment of the organization. The internal relates to physical
resources, human resources, organizational structure, union/management relations,
skills availability, values and norms. External environment relates to social, political,
economic, technological, risk and opportunities. The two are interrelated and
interdependent so that a change in one factor flows to the other factors until all are
altered in some respect.
2. Policy alternatives. While doing this the relationship between goals and policies
should be constantly kept in view. These leads to generation of a number of
alternatives.
3. Examination of alternatives. Each alternative should be examined in light of its
contribution to organizational goals. Each alternative will be examined to see its
consequences on the attainment of organizational goals.
4. Selection of a particular policy. After knowing the effect of alternatives and the
consequences selection of the appropriate alternative is done.

Factors determining policy making

1. Values and beliefs of owners and top managers

 2. Availability of resources
3. Technology prevalence
4. Skills and reactions of employees
5. Competitor policies
6. Rules and regulations of government
7. General business environment
8. Objectives and mission of business
9. Public attitudes and behaviour.

5. Procedures
A procedure is a series of steps for the accomplishment of some specific task. It is a
chronological sequence of steps to be under taken to attain an objective.

Procedures are a guide to action rather than thinking and detail the exact manner in which
certain activities must be accomplished. They do not allow for discretion.

6. Rules
This spell out the specific required actions or non-actions, allowing no discretion, they are
the simplest type of plan. Rules serve as a guide but provide no discretion in their
application.

7. Programmes
A Program is a complex of goals, procedures, rules, tasks, assignments, steps to be taken,
resources to be employed and other elements necessary to carry out a given course of
action. They are ordinary supported by budgets.

A primary programme may call for many supporting programmes. These and other
programmes must be devised and implemented before the primary programme and this
calls for coordination since delay in one area may affect all the other programmes.

8. Budgets
A budget is a statement of expected results expressed in numerical terms for a definite
period of time in the future. It expresses a plan in precise terms.

 Budget serves as a means coordination and control

 They provide clarity, direction and purpose in the activities of an organization by
laying down verifiable and measurable goals for a specified period of time
 Budgets serve as standards of measuring actual performance
 Budgets may be prepared in terms of time – (labour hours) units of products, or
machine hours or in any either numerical terms
 Budgeting compels planning
 A budget communicates the policies and targets to every manager in the
organization responsible for carrying out part of that plan.

9. Schedules
A schedule specifies time limits within which activities are to be completed. Scheduling is
the process of establishing a time sequence for the work to be done. Schedules are essential
for avoiding delays and for ensuring continuity of operation. A schedule lays down a
timetable fixing starting and finishing dates for different activities

10. Project
Any undertaking that has definite, final objectives representing specified values to be used
in the satisfaction of some need or desire.

Project management knowledge areas

• Scope Management
• Time Management
• Cost Management
• Quality Management
• Human Resources Management
• Communication Management
• Risk Management
• Procurement Management
• Integration Management

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

Steps in planning

There are eight applicable steps in planning which should be followed by managers in
connection with major programs and in any other through planning.

1. Awareness of opportunities

An awareness of opportunities in the external environment as well as within the organization

is the real starting point for planning. All managers should take look at future opportunities
and see them clearly and completely. They should know where they stand in light of their
strengths and weakness, understand what problems they wish to solve and why, and know
what they expect to gain. Setting realistic objectives depends on this awareness: (i) About
market (ii) About expected competition (iii) What customers wants (iv) Awareness about their
qualities and weakness
2. Setting objectives

The second step in planning is to establish or set objectives for the entire enterprise and
then for each subordinate work unit. Objectives specify the expected results and indicate the
end points of (i) What is to be done (ii) Where the primary emphasis is to be placed (iii) What
is to be accomplished by the network of strategies, policies, procedures, rules, budgets and
programs.

3. Developing premises

The third logical step in planning is to establish planning premises. Such as forecasts,
applicable basic policies and existing company plan. There are assumptions about the
environment in which the plan is to be the carried out. It is important for all the managers
involved in planning to agree on the premises.

Forecasting is important in premising: What kind of markets will be there? What volume of
sales? What prices? What products? What technical developments? What cost? Etc

4. Indentifying alternative courses of action

The forth step in planning is to search and examined alternative courses of actions. The
planner must usually make preliminary examination alternative courses to accomplish the
goal.

5. Evaluating alternative courses

After determining alternative courses and examining their strong and weak points, the next
step is to evaluate the alternatives. That is which alternative will give the best results in
meeting goals at the lowest cost and highest profit in a given period.

6. Selecting a course/alternatives

Selecting an alternative is the real point of decision making. This is the point at which the
plan is adopted. After identifying and evaluating alternative the manager has to decide one
best alternative or several alternative courses of action.

7. Formulating derivative plans

The seventh step in planning is formulating derivative plans. When a decision is made next
step is to formulate a supporting plan, such as to buy equipment, materials, hire and train
workers and develop a new product.
8. Numberising plans by making budgets

After decision making and formulating plans the final step in planning is to numberise
decision and plan by converting them into budgets. The overall budgets of an enterprise
represent the sum total of income and expenses with resulting profit. Budgets are important
thing in planning process

Barriers to planning
1. Planning is based on forecasts which are never 100% accurate
2. Planning is a time consuming and expensive process
3. Planning may result in internal inflexibilities and procedural rigidities, which curb
initiatives and individual freedom.
4. Planning often requires some changes in the existing set up.
5. Planning may create a false sense of security in the organization.
6. Powerful people and other vested interest may exert pressure to ensure that plans serve
their own interests.
7. The effectiveness of planning may be affected by external forces, which are beyond the
control of those responsible for preparing plans.
8. Some managers may have a negative mental attitude towards planning.

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

Characteristics/essentials of a good plan

1. It should be based on clearly defined objectives
2. it must be simple and easily understandable
3. it must be flexible and adaptable to changing conditions
4. it must be balanced in all aspects and reasonably comprehensive
5. it should provide standards for evaluation of performance and actions
6. it should be economical allowing for optimum utilization of resources
7. it should be practicable and unambiguous
8. it should be prepared with consultations of all concerned parties
9. Different plans should be properly integrated and harmonized with one another to
ensure unity or consistency in plans.
10. It should provide for proper analysis and classification of actions.

DECISION MAKING
Definition: Decision-making is selection from among alternate courses of action.
Characteristics of decision making
1. Decision-making is a process of selection or choice among alternative courses of action.
2. The aim of decision is to find out the best possible course of action.
3. Decision-making is intellectual or rational process. It is an end process proceeded by
reasoning and judgment.
4. Decision-making involves a certain amount of commitment.
5. Decision- making is a pervasive function of management. It is performed by managers at
all levels and is a continuous process.
6. Decision-making is a human and social process. It involves the use not simply of
intellectual activities but also of intuition subjective values and judgment.
7. The choice in decision-making implies freedom to choose from among the alternatives
courses of action without coercion

Stages in decision making

Decision-making is a systematic and planned process consisting of several interrelated
phases. These various stages are:

1. Defining the problem.

2. Analyzing the problem.
a) Analyze performance, what should the results be against what they actually are
b) Problems are merely deviations from performance standards
c) Problem must be precisely identified and described
d) Problems are caused by some change from a distinctive feature
e) Something can always be used to distinguish between what has and hasn't been
effected by a cause
f) Causes to problems can be deducted from relevant changes found in analyzing the
problem
g) Most likely cause to a problem is the one that exactly explains all the facts
3. Developing alternative solutions it is essential to search for and identify possible
alternatives.
4. Evaluating alternatives. Evaluation involves measurements of merits and demerits of
various alternatives. The following can be used to evaluate the probable consequence of
difficult alternatives
 Risk. The manager should check the risk involved in each course of action against the
expected gains.
 Economy of effort – what effort is needed in terms of time and money in solving the
problem with the least disturbance in the organization?
 Timing– this involves determining the time available to make the decision
 Limitation of resources. This will involve determine whether there are adequate
facilities and resources in implementing the decision. Effective implementation of the
decision may require competence and skills, which are not available in the
organization. Finance, materials and power may be other limiting resources.
5. Selecting the best alternative. Selection is the point of ultimate decision-making. While
choosing the best alternative the following approaches may be used.
 Experience. In making a final decision, past experience in dealing with problems of a
similar nature can be helpful.
 Experimentation. Under this approach, the tentative decision is put into practice and the
results observed. Various alternatives are tried and the alternative giving the best results
is selected.
 Research and analysis. This approach focuses its attention on different parts of the
problem. However every problem may not lend itself to the use of this approach due to
the cost and delays involved.
6. Implementing the decision. Implementation or execution of the decision involves:

Communication of the decision,


Gaining of acceptance,

Development of detailed plans,

Getting support and cooperation of those concerned for converting the decision into

effective action and developing controls to ensure that the decision is being carried out
properly.
7. Evaluation of the decision process. The actual results of the decision should be compared
with the expected results and the deviations, if any analyzed. The feedback obtained
through the follow up of the decision will become the basis for necessary improvements in
the decision-making processes.

Types of decisions

 Organizational decision. Decisions taken by an executive in his official capacity or on

behalf of the organization are known as the organizational decisions.
 Personal decisions are decisions taken by an individual for himself in his personal
capacity and not on behalf of the firm.
 Routine decisions relate to the day-to-day operations. They are taken respectively in
accordance with the established policies, practices and procedures. Routine decisions
are normally taken at lower levels of management. Such decisions involve few
alternatives and relates to the economic use of resources.
 Top management normally takes strategic decisions. They are concerned with policy
matters and exercise fundamental influence on the objectives, facilities and structure of
the organization. Such decisions involve long-term commitments and therefore require
careful analysis and considerate deliberations.
 Policy and operational decisions. Policy and operating decision are of vital importance
and affect the entire organization. Top management undertakes them. Such decision set
forth the basic policies and general direction of the enterprise. Policy decisions are
sometimes published in the form of a policy Manuel for the guidance of lower level
executives.
 Operating or administrative decisions are generally taken at lower level of management.
They translate policies into specific actions that are the manner of executing the
established policies. Policy decisions serve as basis of taking operating decisions.
 Programmed decisions. Programmed decisions are routine and repetitive by nature and
they are dealt with according to specific procedures. Systematic procedures are
established for such decision so that the problem needs not to be treated as a unique
case each time e.g. application of leave.
 Non-programmed decisions are required to solve unstructured problems. They are non-
repetitive and new in nature. There exist no standard procedures for handling such
problems and every decision is a unique case. Considerable judgment, intuition and
creativity are involved in such decisions.
 Individual decisions Decision may be taken by an individual. A decision taken by an
individual or single person is known as individual decision. Individual decisions are taken
in small organization or those organizations that operate under autocratic style of
management. Individual decisions are taken in case of routine problems involving simple
analysis of variables factors and in situations where definite procedures to deal with the
problem already exist.

Group decision-making

Group decisions refer to a decision taken by a group e.g. board of directors, executive
committee. A group generally takes important and strategic decisions.

Group decision tends to be more balanced acceptable and practicable but they involve
greater expenditure of the money and effort. It is difficult to fix responsibility for such
decisions

Merits

1. Group judgment
2. Improved motivation in production of new ideas
3. Effective coordination
4. Involvement of diverse interest groups
5. Management development

Demerits

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

ORGANIZING

Definition: Organizing is the process of assigning tasks, allocating resources, and

coordinating work activities. Success begins with organizing.

 In organizing, managers create the structure of working relationships between

organizational members that best allows them to work together and achieve goals.
 Managers will group people into departments according to the tasks performed.
 They also lay out lines of authority and responsibility for members.
 An organizational structure is the outcome of organizing. This structure coordinates and
motivates employees so that they work together to achieve goals.

The following are the important characteristics of organization.

a) Identification of objectives that need to be achieved
b) It is fundamentally concerned with the allocation of the tasks to specific people or groups
of people.
c) It is concerned with the coordination of the efforts of several people needed to complete
large tasks.
d) It concerns resources and people. It may involve budgets, territories, production facilities
or intellectual abilities.
e) Continues process. An organization is a group of people with defined relationship to each
other that allows them to work together achieve the goals of the organization. These
relationships do not come to end after completing a task. Organization is a never ending
process.

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

Process of the organizing

The following are the steps to be followed:

1. Determination of objectives. The objectives to be achieved are identified.

2. Determination, identification and enumeration of activities.
3. Grouping and assigning of activities. All similar activities are grouped together and
assigned on the basis of divisions or departments. These groupings might be done on the
basis of such primary functions such as production, marketing, and so on, or these may
be done on a derivative basis such as types of customers, geographical area and so on
4. Delegation of authority. People assigned particular activities and responsibilities are
assigned the necessary authority for performing these duties. Responsibility and
authority are tied together.

Determinants of organizational structure and design

1. Size-This refers to capacity, number of personnel, outputs (customers, sales), and

resources (wealth). Differentiation in the number of levels, departments, job titles,
managerial practices, such as flexibility in personnel assignments, extent of delegation
of authority increases with size.
2. Technology/Task-A lot of organizational structures are determined by the kind of
technology that the organization uses and the task that the organization is assigned to
carry out.
3. Dependence-Every company is dependent on both their suppliers and their customers
for resources and money. To the extent that a company needs it's suppliers less than
they need it, the company has power.
4. Institutionalization-Under conditions of uncertainty, organizations imitate others that
appear to be successful. This can cause whole industries to adopt similar structural
features. .
5. Age/Life-cycle-Organizations progress through a four stage organizational life cycle.
 The first stage is the stage of “birth” when a company is formed.
 The second stage “youth” is characterized by growth and expansion of all
organizational resources.
 The third stage “midlife” is a period of gradual growth evolving eventually into
stability.
 The finale and fourth stage of “maturity” is a period of stability after which
sometimes a company evolves into a decline.
As the organization goes through these stages, the organization structure changes with each
stage of the organization. Older organizations will have different structures form young ones.

Changes to organizational structure/restructuring

These are caused by:

1. Desire to make more profits

2. Desire to grow
3. New technology
4. Need to keep customers
5. Competition

Benefits of a good organizational structure

 A good structure facilitates attainment of objectives through proper coordination of all

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

Types of organizational structures

Functional

It is most common for business organisations to have major departments for production,
marketing, finance and human resources, etc. Each functional division can itself usually be
further sub-divided on the basis of function: for example, a human resources department
may be broken into separate sections dealing with recruitment, training, welfare and
industrial relations, or the marketing department may be divided into advertising, sales and
public relations.

The advantages of functional division are:

 Work is not duplicated because each department has its own area of responsibility
across the organisation, i.e. it and it alone performs a given function.
 Professional support (education, training and development) is invariably available on a
functional basis and this can be accessed to further develop expertise.
 Effective supervision
 Good quality of production
 Reduced pressure on executives

The major disadvantages of functional division are:

 Over-specialisation, particularly coupled with the development of professionalism, may

result in a lack of understanding of the problems of other departments or an appreciation
of their role.
 Support functions may see their own goals and operational needs as more important
than the goals and needs of the front-line departments which they serve.
 Conflicts
 Expensive

Product/service
This will be an appropriate basis of grouping where an organisation produces a range of
quite different products/services. For example, a motor industry firm may have a car
division, a bus division, and a truck division. Each division will be responsible for all aspects
of the production and marketing of its product, although support functions (IT services,
human resources, finance, etc.) may be provided from outside the specialist division if the
individual divisions are not of sufficient size to justify having their own.

The main advantage of this form of grouping

 Gains are made by the concentration of specialist skills and techniques and the
development of expertise,
 It enables detailed financial analysis and control in respect of each product's profitability,
return on investment, cost control, etc.

Disadvantage
 There may be beneficial competition between different divisions in respect of
performance, although this may be disadvantageous if it is carried to the extreme of
acting against one another.
 The problem of departments assuming their own identity, separate from the rest of the
organisation, is perhaps most pronounced.

Geographical

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

The major advantage of this geographical division is that

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

The disadvantages include:

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

Type of Customer

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

Multi-Disciplinary Projects: the Matrix Approach

All organisations make use of multi-disciplinary groupings, drawing together specialists from
a variety of functional areas, for the purpose of tackling a problem of some kind. These may
vary from small-scale, short projects of limited scope to large-scale, very long projects of
application across the whole of the organisation, such as the development and
implementation of a policy of customer care.

The location of responsibility for such projects may be within one of the functional or output-
orientated divisions, or it may lie within the central, corporate level of the organisation. The
personnel brought together for the project will come from anywhere in the organisation,
their involvement being on the basis of the relevance of their expertise and their
commitment will be to the project and the tasks involved in it. The key organisational
feature of this approach is the matrix structure.

Matrix structures have the following features:

 The main basis for operations is the project.

 Membership of project teams is drawn from functional groupings.
 Full responsibility and authority in respect of the project objectives is delegated to the
project team as a whole, with individual members being responsible for those aspects
which fall within their particular functional specialism.
 Thus individual members have dual responsibilities: to the management structure in
respect of their own functional grouping and to the project objectives as part of the
project team.
In a complete matrix form of organisation, the project itself has decentralised of authority,

 Projects will be established by central management and the project goals agreed at the
corporate level, usually with the management of the functional divisions.
 Project objectives, strategies and plans will then be determined by the project team.
 Under such a structure, the role of divisions will be to serve the projects, providing a
home for staff which is mainly concerned with developing and sharing specialist
knowledge and experience.
Matrix structure
The advantages of this type of structure are as follows.

 It enables a flexible response to situations which put a sudden strain on resources.

 It allows for teams to be drawn from specialist departments in just the right strength to
achieve a given objective.
 There is a ready exchange of ideas, and departmental barriers are broken down.
 The project is emphasised by designating one individual as the focal point for all matters
pertaining to it.
 Utilisation of human resources can be flexible, because a reservoir of specialists is
maintained in functional organisations.
 Specialised knowledge is available to all programmes on an equal basis, and knowledge
and experience can be transferred from one project to another.
 Project people have a functional home when they are no longer needed on a given
project.
 Responsiveness to project needs and customer desires is generally faster because lines
of communication are established and decision points (for the project) are centralised.
 Consistency of policy between projects can be maintained through the deliberate
building of conflict resolution built into the project environment.
 A better balance between time, cost and performance can be obtained through the built-
in checks and balances and the continuous negotiations carried on between the project
and the functional organisations.

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

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

Definition: Delegation is the process which a manager shares some of his functions and
authority with his/her subordinates.

The process of delegation involves assigning duties, entrusting authority and imposing
responsibility on subordinates.

Characteristics of delegation

1. Delegation involves sharing of authority with others.

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

The process/steps of delegation

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

Importance of delegation

1. Relieves to top executives of routine work

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

Principles of delegation of authority

1. Functional definition-duties should be clearly defined

2. Delegation by results expected-the extent of authority delegated should be consistent
with the results expected
3. Unity of command-subordinate should be under the command of one superior at any
given time
4. Absoluteness of responsibility- the responsibility of a subordinate to his superior is
absolute and cannot be delegated
5. Parity of authority and responsibility-there should be no disparity between the authority
granted to a subordinate and the responsibility imposed on him
6. Exception principle-a manager should assign to his subordinates those tasks that they
are capable of performing, keeping for himself the work, which he can do better because
of his superior knowledge and abilities.
7. Scalar chain-the chain of command from the top to the bottom of the organization should
be such that every subordinate knows who has delegated authority to him and whom
matters beyond his authority must be referred to.
8. Authority level principle-subordinates should refer only those decisions to the superior
which cannot be made at their level.

Advantages of delegation

a) Basis of effective functioning of an organization.

b) Reduction in managerial load.
c) Benefits of specialized service.
d) An aid to employee development.
e) Aid to expansion and diversification of business.

Barriers to delegation

Why managers fear to delegate.

a) A feeling of superiority.
b) Habit/ pattern.
c) Fear of exposure.
d) Feeling of indispensability.
e) Risk avoidance.
f) Loss of importance.

Why subordinates do not accept delegation

a) Insecurity.
b) Fear of criticism.
c) Inadequacy of information and resources.
d) Lack of self – confidence.
e) Inadequate incentives.

How to achieve effective delegation effective

a) Determination of specific goals.

b) Accountability.
c) Sufficient Authority and responsibility
d) Chain of command.
e) Unity of command.
f) Motivation.
g) Training.
Distinction between Delegation and Decentralization
Delegation
 It is an act or process
 It refers to a relationship between two individual i.e. superior and his immediate
subordinate.
 It is vital to management process. Only through delegation of duties can subordinates be
involved in the activities aimed at the accomplishment of enterprise objectives.
 Control over a subordinate’s performance in exercised by his superior who constitutes
the source of delegation of authority.

Decentralization
 It is the end – results of delegation and dispersal of authority at various levels
 It refers to a relationship between the top management and various departments and
division in the enterprise.
 It is optional in the sense that the top management may or may not favour a deliberate
policy to work for a general dispersal of authority.

Factors determining the degree of centralization/decentralisation of authority

 Costliness of the decision
 Desire for uniformity of policy.
 Size and character of the organization.
 History, culture and Management philosophy of the enterprise.
 Desire for independence.
 Availability of managers.
 Control techniques
 Decentralization performance
 Business dynamics/Environmental influence

Advantages of decentralization
 Relieves top management of some burden of decision-making
 Encourages decision making and assumption of authority and responsibility
 Promotes establishment and use of broad controls
 Makes comparison of performance of different organization units possible and facilitate
setting up of profit centres
 Facilitate product diversification
 Promotes development of managers
 Aids in adoption to fast changing environment.

Limitations
 Makes it more difficult to have a uniform policy.
 Increases complexity of coordination of decentralized organizational units
 May result in loss of some control by upper levels of managers
 May be limited inadequate planning and control techniques
 Can be limited by the availability of qualified managers
 Involves considerable expense in training managers.
 May be limited by external forces (slept factors)
 May not be favoured by economics of scale of some operations.

Factors determining the degree of centralization

 To facilitate personal leadership

 To provide integration
 To achieve uniformity of action.
 To handle emergencies.
Disadvantages of centralization

 Top management is overburdened with work and lower level managers do not get
opportunity for development
 Most decisions taken are far away from the scene of actions and this may result into
delay and considerable cost
 The motivation and morale of subordinates executives tend to be low
 The growth of the enterprise is limited to the competence of a few top executives

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

Employee Resourcing

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

1. Human Resource Planning

Human resource planning is a process of forecasting an organization future demand for and supply
of the right types of people in the right number

Its purposes are:

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

Significance of human resource planning

 It defines the human resources required to meet the organizations objectives.

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

2. Job Analysis
Job analysis is a formal and detailed study of jobs. It refers to a scientific and systematic
analysis of a job in order to obtain all pertinent facts about the job.

Job analysis provides the following information about a job:

i) Identity of the job in terms of its title and code number.

ii) The operations and tasks’ involved in the job including their timing, significance, complexity and
sequence.
iii) Location, physical setting, hazards and discomforts, supervision given and received and other
significant characteristics of the job.
iv) Duties involved in the job along with the frequency of occurrence of each duty.
v) Materials, methods and equipments used in performing the job.
vi) How the job is performed i.e. the nature of operations like cleaning, lifting, handling, drilling,
feeding, driving, guiding, assembling, etc.
vii) Relationship of the job with other jobs in the organisation
viii) Personal attributes required for performing the job e.g. physical strength, education, mental
skills, attitudes, experience, training, etc

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

Benefits of Job descriptions

i) Job grading and classification

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

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

5. Recruitment
Outline five activities in the recruitment process.

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

Activities in the recruitment process

Recruitment Planning
 Number of contacts
 Types of contacts

Recruitment Strategy Development

 Make or Buy Employees
 Technological Sophistication
 Where to look
 How to look

Internal Recruitment (Source 1)

 Present employees
 Employee referrals
 Transfers & Promotions
 Former Employees
 Previous Applicants
 Evaluation of Internal Recruitment

Internal sources

 Transfers
 Promotions
 Present employees

Advantages of internal sources of manpower

 It is less costly than external recruiting

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

Disadvantages

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

External Recruitment (Source 2)

 Professionals or Trade Associations
 Advertisements
 Employment Exchanges
 Campus Recruitment
 Walk-ins Interviews
 Consultants
 Contractors
 Displaced Persons
 Radio & Television
 Acquisitions & Mergers
 Competitors
 Evaluation of External Recruitment

Merits

 Benefits of new skills and talents

 Benefits of new experiences
 Compliance with reservation policy becomes easy
 Scope for resentment, jealousies, and heartburn are avoided.

Demerits

 Heart-burning among existing employees.

 Orientation.
 Better morale and motivation associated with internal recruiting is denied
 It is costly method
 Chances of creeping in false positive and false negative errors
 Adjustment of new employees takes longer time.
 Danger of maladjustment.
6. Selection
Selection involves the choosing of suitable candidates by means of the recruitment process.

Selection is the search for the optimal match between the job and the amount of any
particular characteristics that the applicant possesses.

Selection criteria

Most organizations use the following variables in selection of employees:

 Formal education.
 Experience and past performance.
 Physical characteristics.
 Personal characteristics and personality type.

Selection methods
The main selection methods are the interview, assessment centres and tests.

Interviews

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

Assessment centres

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

Graphology

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

7. Training and development

Training

Training is the process of increasing the knowledge and skills of an employee for doing a
particular job. It is an organized activity designed to create a change in the thinking and
behaviour of people and to enable them do their jobs in a more efficient manner.

Purpose of training

 To enable the employees to get acquainted with their present or prospective jobs
 To increase the knowledge and skills of employees
 To make old employee familiar with new machines and techniques by refreshing their
knowledge
 To reduce time and money wastage which would result if workers learned through trial
and error

Benefits of training

 Higher productivity
 Better quality of work
 Less learning period
 Cost reduction
 Reduced supervision
 Low accident rate
 High morale
 Personal growth
 Improve organizational climate.

8. Staff performance appraisal

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

Objectives of performance appraisal

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

Importance of performance appraisal

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

DIRECTING/LEADING—(motivation, leadership and communication)

Directing is telling people what to do and seeing that they do it to the best of their ability.
Directing provides the following benefits:

 It initiates action
 It helps in getting maximum output of individuals
 It integrates individual effort
 It facilitates change in the organization

Direction is characterized by the following:

 It is a dynamic and continuing function. It is management in action, the essence of

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

The process of directing

1. Issuing orders and instructions to subordinates. An order is a means of initiating,

modifying or stopping an activity. It is the primary tool of directing by means of which
activities are started altered guided and terminated.

2. Continuance guidance and supervision of employees to ensure that they carry out their
assignment in the proper manner.

3. Motivating subordinates to work for the achievement of the organizational objectives.

4. Communicating with the employees to understand their needs aspirations problems and
suggestions.

5. Maintaining discipline and rewarding those who perform efficiently.

6. Providing leadership to the subordinates so that they work with zeal and confidence.

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

SUPERVISION
Supervision implies expert overseeing of people at work in order to ensure compliance with
established plans and procedures. Supervision is an essential step in the process of
directing. To be effective a supervisor must possess technical and human skills.
Factors of effective supervision
a) Human relations skills. An effective supervise must possess human relations skills. He
must recognize individual differences and adopt a people oriented approach in order to
build up harmonious interpersonal relations in his department.
b) Technical job knowledge. He/she must be technically competent to guide his workers in
the best way of doing their work.
c) Knowledge of the company. He or she should know fully the plans and policies of his
company and should keep abreast of any changes in such policies or plans
d) Proper leadership. The leadership style should be appropriate to the nature of the task
and the type of workers.
e) Favourable work climate. Top management should create a climate conducive to
effective supervision. Supervision should be given adequate authority and status in the
organization

Principles of supervision

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

Types of supervisors/Supervisory Styles

Autocratic Style
 Task and procedure-oriented
 Closed communication and secretive with information
 Believes people do not like to work and generally avoid responsibility
 Believes people are motivated by fear of punishment
 Places emphasis on control, procedures, and techniques for telling people what to do
 Works best with: Dependent, new, or inexperienced workers

Task/people oriented supervisor/Mixed Style

 They’re “type A” personalities, highly focused on achieving goals and driving

productivity. Nonetheless, employees tend to rate taskmasters highly in terms of ethics
and competence, although few employees admit to preferring this kind of boss.
 Mixture of characteristics from both groups with degree depending upon placement on
the scale

Participative Style/People oriented supervisor

 People-oriented
 Open and direct communication
 Believes people find work satisfying and generally seek responsibility
 Emphasis is on nature of relationships and creation of an environment which encourages
support for company goals
 Group decision making
 Works best with: Independent, self-reliant, experienced workers

COORDINATION
Definition: Coordination is the process of synchronizing activities of various persons in the
organization in order to achieve goals. It is undertaken at every level of management. It
deals with the task of blending efforts in order to ensure successful attainment of an
objective. It is accomplished by means of planning, organizing and controlling. It is a part of
all phases of administration and that is not a separate and distinct activity.

Characteristics of coordination
 Coordination is not a distinct function but the very essence of management.
 Coordination is the basic responsibility of management and it can be achieved through
the management
 Coordination does not arise spontaneously or by force. It is the results of conscious and
concerted action by management.
 The heart of coordination is the unity of action, which involves fixing the time and
manner of performing various activities.
 Coordination is a continuous or an ongoing process.
 Coordination is required in-group effort, not individual effort.
 Coordination has a common purpose of getting organizational objectives accomplished
 Balancing, timing, and integrating are the three elements of coordination

Need and importance of coordination

 Increase in size and complexity of operations. Need for coordination arises as soon as
the operations become multiple and complex.
 Specialization. Division of work into specialized functions and departments’ leads to
diversity and lack of uniformity. Coordination thus becomes necessary.
 Clash of interest. Individuals may pursue their own personal goals at the expense of
organizational goals. Coordination brings about harmony between the two types of goals
by making individuals see how their jobs contribute to the common goals of the
organization.
 Different outlook. Capacity, talent and speed of people differ widely. It becomes
imperative to reconcile differences in approach, timing and effort to secure unity of
action.
 Interdependence of units. Various units of organizations depend upon one another for
their successful functioning. The output of one unit serves as the input of another.
Coordination increases with an increase in the interdependence between organizational
units.
 Conflicts. Coordination avoids potential sources of conflict.

Factors for achieving effective coordination (principles of coordination)

 Early beginning. Effective coordination can be achieved if commenced early especially

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

Methods of coordination
 Internal coordination is coordination between the different units of an organization
 External coordination refers to coordination between an organization and its external
environment comprising government, community, customers, investors suppliers
competitors etc
 Vertical coordination implies coordination between different levels of the organization. It
ensures that all levels in the organization act in harmony and in accordance with the
goals of the organization.
 Coordination between different departments and other units at the same level of
management is called horizontal or lateral coordination.

Effective coordination skill/techniques

 Sound planning. Clear-cut objectives harmonized policies and unified procedures ensure
uniformity of action.
 Simplified organization. The line of authority and responsibility from top to bottom of the
organization structure should be clearly defined.
 Effective communication. Effective interchange of opinions and information helps in
resolving differences and in creating mutual understanding.
 Effective leadership and supervision. A good leader can guide the activities of his
subordinates in the right direction and can inspire them to pull together for the
accomplishment of common objectives.
 Chain of command. Exercise of authority through the chain of command or hierarchy is
the tradition means of coordination.
 Indoctrination and incentives. Indoctrinating organizational members with the goals and
mission can transform a neutral body into a committed body. Incentives may be used to
create mutuality of interest and to reduce conflicts.
 CONTROLLING
Definition: The managerial function of controlling involves the measurement of actual
performance, comparing it with the standard and correcting deviations to ensure attainment
of predetermined objectives.

Nature of control
1. It is a follow up action to other management functions. It completes the management
process.
2. Control is a continuous process. It involves continuous review of performance and
revision of standards of operations.
3. Control is based on planning. Measurement of performance requires certain standards,
which are laid under planning.
4. Action is the essence of control. An effective control system facilitates timely action to
adjust performance to predetermined standards so that there is minimum wastage of
resources.
5. Information is the guide to control. Feedback enables the manager to determine how far
the actual operations are proceeding according to plans or standard and where remedial
action is needed.
6. Control aims at the future. Control action seeks to regulate events in future, as the past
is uncontrollable. It is thus backward looking as well as forward-looking.

Relationship between Planning and Control

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

Steps in the control process

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

Essential requirements of a good control system

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

Benefits of control
1. Facilitates decision-making.
2. Facilitates decentralization.
3. Stimulate action. It prevents recurrence of mistakes.
4. Enhances employee morale by enabling management to identify changes that are
affecting the organization so that advance action can be taken to cope with the threats
and opportunities created by change.
5. Promotes efficiency of operation. It helps to measure progress, detect deviations and
adjust operations.
6. Promotes coordination. Controlling helps to ensure that actions proceed according to
plans, that proper direction is taken, and that the various factors are maintained in their
correct interrelationships so that adequate coordination is attained.
7. Psychological pressure. The existence of a control system has a positive impact on the
behaviour of employees. They become conscious while performing their duties because
they know that they are being observed and their performance will be evaluated against
standards.