PPM

Samaresh chhotray 9717219922

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SYLLABUS

Section I

Definition, nature, purpose and scope of management. Functions of a manager, an overview of planning, organizing and controling. Is managing a science or art? Ethics in managing and social responsibility of managers.

Evolution of management thought. Contributions made by Taylor, Gantt, Gilbreth,

Fayol, Weber, Elton Mayo, Chester Bernard, Maslow, Herzberg, Likert and McGergor. Management Science, Operations Research/Mathematical School/ Decision Theory approach. Systems Approach: Key concepts in systems - Closed

system versus open system, Subsystems, System Boundary. McKinsey’s 7-S Approach. .

Planning: Types of plans, steps in planning, and process of planning. Nature of objectives, setting objectives. Concept and process of Managing by Objectives.

Nature and purpose of strategies and policies. Strategic planning process. SWOT analysis, Portfolio matrix, premising and forecasting. Section II

Decision-Making: Importance and steps in Decision Making; Traditional approaches to decision-making; Decision making under certainty - programmed decisions;

Introduction to decision-making under uncertainty, non- programmed decisions; decision tree; group-aided decisions; Brain storming; Creativity - creative problem solving.

Organizing: Concept of organization, process of organizing, bases of departmentation, Authority & power - concept & distinction. Line & Staff concept;

problems of use of staff & ways to avoid line-staff conflict, Delegation - concept of delegation; elements of delegation - authority, responsibility, accountability.

Reasons for failure of delegation & how to make delegation effective. Decentralization - concept, reasons for decentralization and types (or methods) of decentralization. Span of Management – concept, early ideas on span of

management, factors determining effective span-situational approach. Section III Coordination- Concept and importance of coordination; factors which make

coordination difficult; techniques or methods to ensure effective coordination. Control: Concept, planning-control relationship, process of control -setting objectives, establishing standards, measuring performance, correcting deviations.

Human response to control. Dimensions or Types of Control - (a) Feed forward

control (b) Concurrent Control (Real Time Information & Control), (c) Feedback

Control v) Techniques of Control - Brief review of Traditional Techniques & Modern Techniques of Control. Comparative study: Comparative study of main features of Japanese Management

and Z-culture of American Companies.


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Chapter 1 Meaning and nature of management According to Harold Koontz, “Management is the art of getting things done through

and with people in formally organized groups”. Management creates environment where individuals work together efficiently towards attaining the objectives. It

brings together all the other factors of production in the right proportion and leads them to attain predetermined goals.

Management is …Getting work done through others.

Managers are concerned with: Efficiency

� Getting work done with a minimum of effort, expense or waste.

Effectiveness

� Accomplishing tasks that help fulfill organizational objectives.

Managers give direction to their organizations, provide leadership, and decide how to use

Organizational resources to accomplish goals. Peter Drucker The art of getting things done through people. Mary Parker Follet

Complete definition of management: “Management is a distinct process consisting of planning, organizing,

staffing, leading and controlling utilizing both in each science and art and followed in order to accomplish predetermined objectives of the

organization”. Thus, management refers to the development of bureaucracy that derives its importance from the need for strategic planning, co-ordination, directing and

controlling of large and complex decision-making process. Essentially, therefore, management entails the acquisition of managerial competence, and effectiveness

in the following key areas: problem solving, administration, human resource management, and organizational leadership. First and foremost, management is about solving problems that keep emerging all

the time in the course of an organization struggling to achieve its goals and objectives. Problem solving should be accompanied by problem identification,

analysis and the implementation of remedies to managerial problems. Second, administration involves following laid down procedures (although procedures or rules should not be seen as ends in themselves) for the execution, control,

communication, delegation and crisis management. Third, human resource management should be based on strategic integration of human resource,

assessment of workers, and exchange of ideas between shareholders and workers. Finally, organizational leadership should be developed along lines of interpersonal


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relationship, teamwork, self-motivation to perform, emotional strength and maturity to handle situations, personal integrity, and general management skills.

Functions of management

Management functions can be broadly classified as under: 1. Planning Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes

both the broadest view of the organization, e.g., its mission, and the

narrowest, e.g., a tactic for accomplishing a specific goal. In order to achieve the business objectives every activity should be carefully planned. Each task

should be well thought in advance as to who is to perform the task, when why and how it is to be done. A well conceived plan must be simple flexible,

balanced and should make the best possible use of available resources. 2. Organizing Organizing is establishing the internal organizational structure of a business.

The focus is on division, coordination, and control of tasks and the flow of information within the organization. It is in this function that managers distribute authority to job holders. The management is required to make the arrangement of requisite human and physical resources. Physical

organization consists of making the right raw materials, machines, tools and equipment. Human organization involves placing the right men to do the right job and to ensure that they activities are assigned according to the

plan.

3. Staffing Staffing is filling and keeping filled with qualified people all positions in the

business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing

includes all paid and unpaid positions held by family members including the owner/operators. It consists of selection of employees, remuneration of

employees and development of employees.

Right men should be selected for the job. They must be given adequate training to perform their job efficiently. Management should fix remuneration

on the basis of their job requirement, qualification and experience of employees and the availability of the persons to do the job. Management

also should make proper facility for the professional growth and development of employees. There should be proper arrangement for the training, placement, transfer and promotion of employees.

4. Direction and Leadership

Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of


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directing is to channel the behavior of all personnel to accomplish the

organization's mission and objectives while simultaneously helping them accomplish their own career objectives. Direction concerns the manner in

which the management influences actions of his subordinates. Direction is viewed as the function of command, and moving to action and supplying

stimulating power to the group.

5. Control Controlling is a four-step process of establishing performance standards

based on the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary

Controlling is the process of ensuring the activities of the organization conforms to the predetermined goals. It is continuous monitoring of results

and comparison with the objectives. The function of controlling also involves the corrective measures when deviations from goals to ensure the success of

the plan. Each of these functions involves creative problem solving. Creative problem solving is broader than problem finding, choice making or decision making.

It extends from analysis of the environment within which the business is functioning to evaluation of the outcomes from the alternative implemented.

6. Coordination:

Finally, coordination is the essence of manager-ship for achieving harmony among individual efforts toward the accomplishment of group goals. Each of the managerial functions discussed earlier on is an exercise contributing to

coordination. Because individuals often interpret similar interests in different ways, and their efforts toward mutual goals do not automatically mesh with the efforts of

others, it, thus, becomes the central task of the manager to reconcile differences in approach, timing, effort, or interest, and to harmonize individual goals to contribute to organizational goals.

‘Management is the art of getting this done through other people’.

Explain Management is very essential for successful running of a business. It

ensures proper utilization of physical and human resources and derives best results. It leads to higher productivity and prosperity. The importance of management can be outlined as follows:

i) It helps in achieving group goals Management assembles and coordinates group efforts in achieving organizational goals. It adds effectiveness to the goals of the enterprise.

ii) Optimum utilization of resources Management helps to derive maximum result from minimum resources. In other words it brings out the best out of the available resources. This leads

to increased productivity and higher profitability.


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iii) Reduces cost Efficiency in utilizing the physical resources directly result in reduced cost.

Management prepares the program for utilization of resources and monitors the utilization of such resources. It continuously strives to keep cost under

control to generate maximum profit out of it.

iv) Establishes a sound organization Management ensures soundness of the organizational structure. All

departments are coordinated to ensure smooth flow of work. It is the function of management to ensure the process of communication,

implementation and feed back comes automatically. Thus the organization remains lively, active and efficient.

v) Maintains equilibrium

Management maintains the right balances every factor in a business. Application of any factor of production beyond proportion will result in inefficiency. Unused resources put pressure on the available revenue and

bring down the overall performance of the organization. It is the management that keeps an eye on the application of resources efficiently in

the organization. Scope of Management Managers must make decisions to establish the purpose of the organization and to

perform a variety of activities to make the goal a reality.

All organizations have collective or shared goals, over and above the individual

goals of their members, for the achievement of which the organization is responsible to its owners and stakeholders.

The collective goals of the organization can be achieved by controlling the activities being performed by the individual members of the organization. This controlled

performance means that: (a) The collective goals are known and understood by all members - planning; (b) The necessary resources are obtained and utilized

efficiently - implementation; (c) The performance can be controlled and measured to determine the extent of reaching the goals - control. In order to implement the plan by utilizing obtaining and utilizing the necessary

• Let us now classify managers in the organization.

• Managers are customarily classified vertically in organizations as top, middle, or first-line managers.

• First-line managers are usually called supervisors. They are responsible for

directing the day-today activities of operative employees.


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• Middle managers manage other managers – and possibly some operative employees – and are typically responsible for translating the goals set by top management into specific details that lower-level managers can perform. • Top managers are responsible for making decisions about the direction of the organization and establishing policies that affect all organizational members.

• The other major difference in management jobs occurs horizontally across the organization:

• Functional managers are responsible for departments that perform a single

functional task and have employees with similar training and skills. Functional departments include manufacturing, marketing, finance, and human resources.

• Line managers are responsible for the manufacturing and marketing departments that make or sell the product or service.

• Staff managers are in charge of departments such as finance and human resources that support line departments.

• General managers are responsible for several departments that perform different

functions. Project managers also have general management responsibility, because they coordinate people across several departments to accomplish a specific project.

The Process of Management

We have now reached the stage where we can describe and categorize what exactly managers do in organizations and exactly how they do this.

In the early twentieth century, the French industrialist Henri Fayol wrote that all managers perform five management activities of planning, organizing,

commanding, coordinating, and controlling referred to as management process or functions of management.

• Planning encompasses defining an organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive hierarchy of

plans to integrate and coordinate activities.

• Organizing includes determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.

• Fayol called commanding as ‘maintaining activity among the personnel’. It

involves instructing and motivating subordinates to carry out tasks. • Coordinating is the task of harmonizing the activities of individuals and groups

within the organization, reconciling differences in approach, timing and resource requirements in the interest of overall organizational objectives.


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• Controlling is the task of monitoring the activities of individuals and groups, to ensure that their performance is in accordance with the plans, standards and

objectives set for them. Deviations must be identified and corrected.

What are the objectives of management? Optimum utilization of resources

The most important objective of management is the effective utilization of economic resources of the business. This will ensure maximum return or profit to the

business Fair return on investment

The primary goal of a business is to ensure that the investor gets a fair return. Without profit a business cannot survive long. The investors must derive adequate

benefit out of their investment. Adequate reward for employees

Efficiency of business will directly result in economic gain to employees. Efficient management utilizes all the resources effectively, which will enable them to offer

best salaries and service conditions to the staff.

Human betterment and social justice Business is an important organ of the society. The business goals cannot be attained disregarding the social expectations. When the business makes progress

the benefit passes on to society by way of employment opportunities and increased purchasing power for people.

‘Management is the art of getting this done through other people’. Explain

the importance of management in light of the statement. OR

Explain the significance of management in running a modern enterprise.

Management is very essential for successful running of a business. It ensures

proper utilization of physical and human resources and derives best results. It leads to higher productivity and prosperity. The importance of management can be

outlined as follows: i) It helps in achieving group goals

Management assembles and coordinates group efforts in achieving organizational goals. It adds effectiveness to the goals of the enterprise.

ii) Optimum utilization of resources Management helps to derive maximum result from minimum resources. In other

words it brings out the best out of the available resources. This leads to increased productivity and higher profitability.

iii) Reduces cost


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Efficiency in utilizing the physical resources directly result in reduced cost. Management prepares the program for utilization of resources and monitors the

utilization of such resources. It continuously strives to keep cost under control to generate maximum profit out of it.

iv) Establishes a sound organization Management ensures soundness of the organizational structure. All departments

are coordinated to ensure smooth flow of work. It is the function of management to ensure the process of communication, implementation and feed back comes

automatically. Thus the organization remains lively, active and efficient. v) Maintains equilibrium

Management maintains the right balances every factor in a business. Application of any factor of production beyond proportion will result in inefficiency. Unused

resources put pressure on the available revenue and bring down the overall performance of the organization. It is the management that keeps an eye on the application of resources efficiently in the organization.

Management as an activity, process, discipline and as a group

Explain the meaning of management as a process.

i). Social process The main function of management is to deal with the human element in the

business. Human factor is the most sensitive factor of production. It activates other factors of production in the business. Therefore it is essential that the management

deal with human factor with care and skill. ii) Integrating process

Every business requires the right combination of human, physical and financial resources. Management integrates the factors men, machines, materials, methods

and money to achieve organizational goals.

iii) Continuous process

Since business is a continuous activity, the management is a continuous process. It is the constant process of leading the business activities in the pre determined

course. It involves verifying results at every stage with the targets set. Management continuously identifies the potential areas of trouble and implements corrective measures before they become crisis in business.

iv) Universal process

Management functions are not restricted to business alone. They are important in every form of organization whether it is social, religious or cultural organization. When there is an activity to be performed by a group all managerial functions such

as planning organizing, directing and controlling becomes essential to make that group activity successful.


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Explain the meaning of management as an activity.

According to the functional point of view management is classified into three activities as follows:

i) Informational activity It basically considers the communicative part of the management activity.

Management is to receive and give information. It links between subordinates and superiors. The managerial authority and responsibility varies at various levels of

management. The nature of communication will also vary accordingly. ii) Decisional activity

Management involves decision making. Timely decisions of management trigger actions in the business and they bring in prosperity into the business. It ensures

smoothness in the business activity. iii) Interpersonal activity

Management is a team work and group activity. Maintaining good relations between various individuals involves in the business is an essential factor for success. The

managerial success depends on the efficiency in building up harmonious relationship between individuals and departments.

What is meant by management as a discipline? 5 marks

Management is identified as a separate field of study. The following factors highlight management as an academic discipline:

i) Systematic body of knowledge There is a systematic body of knowledge in the field of management which can be

effectively imparted in academic setting.

ii) Presence of Experts

There are experts in the field of management who have rendered dedicated service to develop and organize knowledge in the field of management in a formal setting.

They are available for analysis and improvement. The knowledge is formally organized for presentation in academic use.

iii) Presence of specialized institutions There are several managerial institutions all over the world imparting the

knowledge and training the prospective mangers through carefully planned system of education.

Explain management as a group. 2 marks Management as a group refers to the section of people in an organization whose

responsibility is to perform managerial activities. It is the group occupying managerial positions in the organization. Technically all the individuals starting from

the Chief Executive to the lowest level supervisor comes under the category of management. However the term management is commonly referred as the top


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segment involving the Board of Directors and the Chief Executive of an organization.

Explain briefly the nature and characteristics of management.

Purposive or goal oriented activity Management is an activity with specific aim. It is goal oriented. Management aims at making maximum benefit out of the available resources. Management without

objectives does not have meaning.

Integrates human and physical efforts Management is an activity integrates the resources. They are brought together in the organizational framework. All these factors work in coordinated motion to

achieve the objectives.

A continuous process Management is a process that never stops. The business has unlimited life. The continuous existence of business requires a brain that functions continuously.

Managerial programs should be charted out to the minute details possible on daily basis. It is the activity of fixing the program on one side and monitoring it on the

other side. Deviations are immediately detected and corrected.

Group activity Management of an organization involves coordinated efforts of many people. Decisions, communication, implementation, feed back and further decision all take

place in the management process. The success depends on how effectively the top management could motivate the lower levels and how much each individual or

department cooperates towards achieving the targets. Science as well as art

Management involves systematic study. There are predetermined rules and regulations in business. At the same time it cannot be considered a pure science. It

is influenced by the human side. The skill efficiency in leading a team is more of art

than science. Therefore management is said to be an activity in which art and science inseparably linked.

Management is pervasive

Management is relevant in all types of organizations. It is important in social, economic, religious or political organizations. Wherever group activity is required to achieve predetermined objectives management principles and techniques are

applicable.

Management as science, art and profession ‘For managing an enterprise effectively both knowledge of principles of

management as well as their systematic application is required”, explain

Management is both science as well as art. As a Science


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Science is the systematic body of knowledge which establishes the relationship between causes and their effects. Management is regarded as a science because

the following characteristics of science are applicable to management as well.

i) Existence of systematic body of knowledge Management is often referred as management science. There is a systematic body of knowledge as part of the management study. This

ii) Scientific methods of observation

Management principles evolved from scientific methods of observation. The cause effect relationship which normally part of science is applicable in management also. Therefore management principles are accurate and reliable.

iv) Universally accepted principles

Management principles are universally valid. The established principles of modern management have universal applicability. Principles of division of labour and specilisation, unity of command etc. are accepted everywhere.

v) Predictability of results based on cause / effect relationship

The result of application of any management technique can be predicted due to the direct cause / effect relationship. Management theories have been formulated after

carefully observing the behavior in the organization and market to the application of management techniques.

As Art Practical application of knowledge is art. It is application of skill and knowledge to

achieve the desired results. Following features of art is present in management. i) Practical knowledge Practical knowledge is highly essential to implement management principles. A

manager is to work in real situations to experience the pressure and gain skill in taking wise decisions. While theoretical knowledge provides a firm foundation to

further polishing the skills, it can never substitute experience.

ii) Personal skill and creativity Success of a manger is largely dependent on his personal skill. He should be able to

establish a cordial relationship in the organization without compromising on discipline. An efficient manager is the one who knows how to maintain the delicate relationship between these two objectives.

iii) Tangible results

Efficiency is always judged on the basis of results. Management is continuous process of goal oriented march. Thus the art of management is achieving the results.

iv) Constructive Objectives

Managerial objectives are creative and constructive. It is always striving to achieve better and better results every time. It builds up economic strength and nurtures the existing achievements.


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v) Perfection thorough practice

Each moment of practice fine tunes the skills of an artist. Management is also a skill that can be perfected by practice. Experienced managers handle stress with relative

ease. They often suggest right solutions to problems that often crop up in business. Is management a profession? Explain in brief.

“Management has not yet gained the status of a full fledged profession”. Why?

Why is management not considered as a profession comparable to medical or legal profession?

A profession is an occupation based on highly specialized skill. The practice of the profession is controlled by professional body which sets the code of conduct which

the members are expected to observe. Management meets the following criteria of profession:

i) Specialized body of knowledge Successful management requires specialized knowledge. Without high degree of

training and skill, the complex task of modern management cannot be carried out.

ii) Formal Training Excellent management professionals are produced by management training reputed management institutes. Student for such institutes are carefully selected and

trained through highly specialized management program.

iii) Professional Association A professional body to formulate code of conduct and regulate the practice of members is essential in any profession. There are management associations in

several countries. In Indian we have All Indian Management Association and India Management Development Association.

iv) Ethical Standards or Code of Conduct Ethical standards are set by the professional body. Every professional is expected to

follow these standards. There are no universally accepted formal ethical standards for management profession. However, the All India Management Association laid

down a code of conduct for its members. Management has a great degree of characteristics of a formal profession. This is a

relatively new field of specialization. Management falls short in certain criteria to be recognized as a full fledged profession even though it is fast moving towards that

direction. Management fall short on the following areas to be recognized as a full fledged profession like medicine or law.

i) Not obligatory for registration Registration or membership is not compulsory to practice management. There are

practical difficulties in insisting everybody who manages a business should first obtain registration from the management association. This is mainly because every economic activity involves some kind of management. Thus an association can not


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draw a line that distinguishes the management skill that requires professional approval and the one which does not require approval.

ii) Not subject to any formal code of conduct

Medical or legal profession involves a skill that is easily identifiable and therefore it is easier for a professional body to formulate code of conduct and expect the members to comply. Management on the other hand is a fluid concept. A code of

conduct by a management association cannot have an effect beyond an advisory status. It is hard to pin point violation and equally hard to establish responsibility. If

a member ignores the Association, there is hardly anything that the Association can do abut it, beyond stop sending the management magazine.

iii) No prescribed educational qualifications Educational qualification is the most essential pre condition for every profession.

But it is not practical to prescribe an educational qualification for managing a business. Nobody can question the right of a person to manage a business that he owns. If the owner of a business decides to hire a person having no formal

qualification to manage a business it is an unquestionable decision. Nobody can practice other recognized professions without academic qualifications.

Thus the management, in spite of all the recognition and respect it commands, is

not a fully recognized profession, in comparison with medical or legal professions. What is meant by the term administration?

Administration is the activity mainly concerned with the formulation of objectives and the policies for attaining those objectives. It is often referred as management.

But administration is mainly a thinking function at the top level. It determines the goals and decides the broad outline of activities for reaching those goals.

Distinguish between administration and management .

Points of Difference

Administration Management

1. Function

2. Decision

Making

3. Ownership

4. Supremacy

It formulates broad policies of the business

Major decisions are made by

the administration. Decisions are influenced by the Government policies, public

opinion and social factors.

Administration refers to the owners of the business of

Board of Directors in a joints stock company.

Administration holds superior

power in the organization

It implements the policies of the administration

Management takes routine

decisions. Its decisions are based on administrative policies and organizational

concerns.

Management refers to the employees of the business who

work for salary and allowances Management is considered

subordinate to administration


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5 . Physical

involvement

6. Type of reward

Administration is a thinking

function

Administration is rewarded with profit or loss, because it

represents owners of the business

Management is a doing function

Management is rewarded with salaries and allowance since management personnel are

employees of the business.

Levels of Management – top, middle and supervisory

Define the various levels of management

Who are regarded top management in a business? 2 marks (refer common answer below) Who are considered operative management in a business? 2 marks (same answer)

Three are three levels of management, which are top level management, middle

level and supervisory level management. Top level management

To management holds the highest level in the managerial hierarchy. This level consists of Board of Directors Chief Executive and the Departmental Heads. The

activities at this level is mainly the formulating the policies of the business. It also determines the overall program of the business. The top management is also concerned with keeping cordial relations with outside world. It keeps it maintains

good relation with government policies and try to influence the government decisions related to the business.

Middle level management This level consists of departmental managers. This level is mainly acts as a link

between the top management and the supervisory management. This level of management transmits orders, explains and interprets decisions made by the top

level management to the lower level supervisory management. They issue details instructions to lower levels of management and co-ordinates the activities of

various divisions and departments. Their tasks involve taking departmental decisions and inspiring lower level managers towards better performance.

Supervisory / operative management The lowest level of management consists of first line supervisors. They generally

have designations such as superintendent, section officer, supervisor, foreman etc. They are directly in touch with the workers, clerks, salesmen etc. Managers of this level have the primary task of getting thing done by the workers and staff at the

operative level. There are no managers below this level. These managers have to supervise the work directly and ensure the production meets the exact

requirements of plans both in quality and quantity. State any there functions of lower level management.


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The operative level is the first level of management. This group consists of superintended, supervisors, section officers etc. The following are the important

functions of supervisory management: a) Planning day-to day activities

b) Arranging machinery and tools for the day’s work c) Assigning jobs and duties to workers d) Assisting and advising workers by explaining work procedures

Describe briefly the role of middle level management in an organization.

Middle level management consists of departmental managers. Following are the main functions of middle level management.

a) Linking the top management and the supervisory management

b) Transmission of orders from the top management to supervisory management and communication of problems and suggestions to the top management

c) Explaining and interpreting policy decisions to lower management d) Issuing detailed instructions to lower level management e) Co-ordination of various levels of management

State any three functions of top level management.

Top level management consists of the Board of Directors, Chief Executive and departmental heads. The functions generally performed by top level management

are: a) Determining the policies and long term goals of the organization b) Maintaining liaison with the outside world

c) Providing direction and leadership to the organization

Management functions – planning, organizing, staffing, directing and controlling

Explain briefly the functions of management Management functions can be broadly classified as under:

1. Planning

Planning is the ongoing process of developing the business' mission and objectives and determining how they will be accomplished. Planning includes both the

broadest view of the organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific goal. In order to achieve the business objectives every

activity should be carefully planned. Each task should be well thought in advance as to who is to perform the task, when why and how it is to be done. A well conceived plan must be simple flexible, balanced and should make the best possible use of

available resources.

2. Organizing Organizing is establishing the internal organizational structure of a business. The focus is on division, coordination, and control of tasks and the flow of information

within the organization. It is in this function that managers distribute authority to job holders. The management is required to make the arrangement of requisite

human and physical resources. Physical organization consists of making the right raw materials, machines, tools and equipment. Human organization involves placing


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the right men to do the right job and to ensure that they activities are assigned according to the plan.

3. Staffing

Staffing is filling and keeping filled with qualified people all positions in the business. Recruiting, hiring, training, evaluating and compensating are the specific activities included in the function. In the family business, staffing includes all paid

and unpaid positions held by family members including the owner/operators. It consists of selection of employees, remuneration of employees and development of

employees. Right men should be selected for the job. They must be given adequate training to

perform their job efficiently. Management should fix remuneration on the basis of their job requirement, qualification and experience of employees and the availability

of the persons to do the job. Management also should make proper facility for the professional growth and development of employees. There should be proper arrangement for the training, placement, transfer and promotion of employees.

4. Direction and Leadership

Directing is influencing people's behavior through motivation, communication, group dynamics, leadership and discipline. The purpose of directing is to channel

the behavior of all personnel to accomplish the organization's mission and objectives while simultaneously helping them accomplish their own career objectives. Direction concerns the manner in which the management influences

actions of his subordinates. Direction is viewed as the function of command, and moving to action and supplying stimulating power to the group.

5. Control Controlling is a four-step process of establishing performance standards based on

the firm's objectives, measuring and reporting actual performance, comparing the two, and taking corrective or preventive action as necessary Controlling is the

process of ensuring the activities of the organization conforms to the predetermined

goals. It is continuous monitoring of results and comparison with the objectives. The function of controlling also involves the corrective measures when deviations

from goals to ensure the success of the plan. Each of these functions involves creative problem solving. Creative problem solving

is broader than problem finding, choice making or decision making. It extends from analysis of the environment within which the business is functioning to evaluation of the outcomes from the alternative implemented.

Coordination - nature and importance

What is meant by coordination? Coordination is an important management function. It is the task of integrating the activities of different departments and functional areas of an organization according

to the common program. The purpose of coordination is to ensure the smooth functioning of various activities in perfect harmony. Estimated demand for goods in

the market should guide the production targets which in turn should decide the procurement of raw-materials and labour deployment. . Absence of coordination will


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result wastage and shortage in various areas and overall inefficiency of the organization

State the meaning and nature of co-ordination

Coordination is an important management function. It is the task of integrating the activities of different departments and functional areas of an organization according to the common program. Coordination is the process

whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit of common purpose

In a group performance mismatches should be removed. Supply of material should come, when production needs it. If there is a mismatch in the time schedule it is an

instance of lack of coordination. It is the central task of the manager to reconcile differences in approach, timing, effort or interest and to harmonize individual goals

with organizational goals. Coordination is the effort to ensure a smooth interplay of the functions and forces of all the different component parts of an organization so that its purpose will be realized with minimum friction and maximum collaborative

effectiveness.

The nature / characteristics of coordination can be summarized as follows: a. Coordination is needed at all levels

Coordination is an essential function at all levels of management. The content and scope of coordination will vary at different levels. However it is part of duty of every managerial personnel right from operational level to the top management.

b. Coordination is the essence of management

Management function revolves round making arranging things; moving thing is an organization in relation to overall objective of the organization. Thus coordination can be considered the core function of management which ensures all the factors in

the business work together smoothly.

c. The object of coordination is to unify, integrate and harmonize the different

activities in the undertaking towards common objective.

Co ordination is the essence of management. Explain this statement briefly.

Explanation should cover any five of the following points: Co-ordination is needed at all levels of management, as various persons in an organisation have to :

1. Interdependent on one another Business activities are interdependent. Therefore they should be coordinated.

Coordination enables the business to make efficient use of available resources. 2. attain objectives of the organisation

It is essential that the various functional areas of business are focused on the

objectives of the business. Proper coordination ensures this essential focus to the organization.

3. achieve the unity of direction


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Each individual department attempt to pursue independent goals the organization cannot achieve its goals. There should be one common goal for the entire

organization, and the activities should be directed on the basis of the common goal. 4. avoid duplication of work

Coordination ensures proper guidance and planning. When the work is properly divided and allocated, there will be predetermined individual, group or department responsible for each task. Thus the organization can avoid the wastage of

duplication of work. 5. ensure the timely completion of the target, objectives, and

Coordination promotes efficiency. The work runs in a smooth flow. This helps faster completion of work

6. harmonize and integrate the various activities

The core of coordination is harmony. Various sections of productions runs with harmonious relation with each other.

Distinguish between co ordination and co operation 3 marks

Points of

Difference Coordination Cooperation

1. Freedom

Coordination is planned and implemented by the

administrative authority. It is obligatory to honour it

Cooperation depends upon the will of the employees.

They may or may not cooperate.

2. Priority

Coordination is a wider term covering all areas of business

Cooperation may be considered part of

cooperation

3.Support

Coordination seeks the

whole-hearted support of the employees and departments

Cooperation without

coordination is fruitless. Cooperation alone may lead

to unbalanced development.

4. Relationship

Coordination establishes

formal and informal relationships

Cooperation establishes

informal relationship only.

Goals of All Managers

First and foremost, the logical and publicly desirable aim of all managers in all kinds of organizations, whether business or non-business, should be a

surplus. Thus, managers must establish an environment in which people can

accomplish group goals with the least amount of time, money, materials, and personal dissatisfaction or in which they can achieve as much as

possible of a desired goal with available resources. In a non-business


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enterprise such as units of a business (such as an accounting department)

that are not responsible for total business profits, managers still have goals and should strive to accomplish them with the minimum of resources or to

accomplish as much as possible with available resources. A manager who achieves such an aim is said to be a strategic manager.

The second goal or aim of all managers is that they must be productive. Indeed, government, and the private sector recognize the urgent need for

productivity improvement. Productivity improvement is about effectively performing the basic managerial and non-managerial activities. Simply

defined, productivity is about the output-input ratio within a time period with due consideration for equality.

Lastly, productivity implies effectiveness and efficiency in individual and organizational performance. Effectiveness is the achievement of objectives.

Efficiency is the achievement of the ends with the least amount of resources. Managers cannot know whether they are productive unless they first know

their goals and those of the organization.


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Chapter

Planning Planning is the process of thinking before doing. It involves determination of objectives and steps to be taken to achieve those objectives. It is a

continuous intellectual process of anticipating the future and deciding the activities. It is the process of deciding what is to be done, how where, when,

and by whom is it to be done. PLANNING FROM TOP TO BOTTOM DIAGRAM

NATURE OF PLANNING

1. Intellectual Process

Planning is an intellectual process. A good plain is based upon collection, study and analysis of facts, evaluating the alternatives, combination of

factors and deciding the most appropriate line of action. The efficiency of plans depends on the ability of the management.

2. Planning is goal oriented

Planning is made to achieve the desired objectives of the business. The objectives of the business should become the focus of management team. It

should be guided towards the selected objective of the business.


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3. Planning is the primary function

Planning is the first function of management. Every other managerial function is based on the plans. It is the framework on which the other

management functions are built. All managerial functions are interrelated and equally important. However planning is the basic function.

4. Planning is Pervasive

Planning is required at all levels of management as well as in all departments of the organization. It is not an exclusive function of top

management alone. It is not reserved to one department alone. However the scope of planning differs at different levels of management. It differs from

department to department.

5. Planning is flexible and continuous Plans are prepared for a specific period of time. It is not a permanent

structure in the process of management. The plan has to be modified within the period for which it is made according to actual situations. At the end of the period there may be a drastic revision of plan. At every stage there is

continuous monitoring, evaluation and modifications in plans.

6. Planning is forward looking Planning essentially involves looking ahead. It is preparing for the future.

The purpose of planning is to meet the future situations effectively. It requires the management to foresee the future events on the basis of past.

It must consider all other factors having influence on business environment. Planning is the activity making use of favourable factors in future to achieve

goals. It also involves finding solutions to possible negative factors such as increased competition, fall in demand shortage of materials etc.

7. Planning is selection of best alternative

Planning is the identification of alternatives and selection of the best. If there

is only one objective and only one course of action, there is no scope of planning. The planning process evaluations all the options and the strengths and weakness on the basis of resource availability and decides what exactly the best course of action is. Thus the planning process is the selection of the

right course of action from the wide range of options. Importance of planning

Planning is the primary function in the process of management. Planning involves forecasting the future, imagining various scenarios, selecting the most likely scenario and then organizing resources to put the plan into action Planning is concerned with the future impact of today's decisions. It is

the process of thinking before doing. It is involves determination of goals


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and deciding the course of action. Planning is important due to the following

benefits derived from planning:

1. Planning helps in achieving the objectives The objectives of the business are the guide posts to decide the course of

action. Management process involves continuously monitoring what the management is achieving on daily basis in the wider canvas of the objectives

of the organization 2. Reduces uncertainties

Many of the problems that can arise in future are beyond the control of management. It however can prepare the organization to face problems to

reduce the impact. Planning anticipates advantages and disadvantages in future events and suggests suitable course of action. Strength, Weakness,

Opportunities and Threats (SWOT) are to be analyzed to determine the most suitable course of action.

3. Enables the best possible use of resources The resources of business are to be put to the best use to achieve maximum

result. Underutilization of resources is a symptom and cause of inefficiency. Planning determines the nature and volume of each resource at various

stages in future. Thus the management can make provision to put them to the best use. Management can regulate and organize the supply of various

resources to ensure that there is no over supply or scarcity. It reduces misuse and wastage.

4. Effective coordination

To coordinate is to fine tune the activities in the scale and rhythm of objectives. Planning leads to regulation of all activities in the business. It

ensures smoothness in the functioning of business. In the absence of proper planning, interrelated activities fail to meet each others’ requirement and

lead to inefficiency. For example production department should be

coordinated with sales plan to make sure that there is no over production or scarcity. 5. Planning facilitates decision-making

Planning estimates future situations. The management is more or less aware of the prospective opportunities. It also gets a realistic picture of the problems that can crop up in future. Plans are made on the basis this analysis. Decision making process becomes simple implementation of plans

in action. It is relatively easier, because the available options are considered in advance at the planning stage. 6. Planning helps in expansion of business

No business can survive by being stagnant. Business world is always mobile. This mobility is either upward or downward. Thus progress is not just a


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question of well being; it is the fundamental question of survival. In a

competitive environment, when the rivals make their strategies to expand their market share, a stagnant company is a losing company. It may not be

losing the absolute numbers in sales figure. But will be evident when their market share over a period of time is compared. Lost opportunity is a

permanent loss. Planning involves allocation of resources and implementation of programs for expansion of the business.

7. Effective control

Planning establishes rules of action. It establishes procedures. Management knows the situations that are likely to emerge. When there is a well thought

out plan, it is easier to compare results. When problems are detected at implementation stage, it can be sorted out, before it leads to more problems

and inefficiency and ultimately a crisis. Thus planning is an effective tool of control.

Limitations of planning

Planning suffers from internal and external limitations. Internal limitations are inherent limitations and to some extent the management can take

precautions and reduce their effect. However external limitations are mostly beyond the control of management.

The following are the limitations of planning:

a. Internal Limitations

1. Rigidity

Plan is the rigid framework for future activities. Planning reduces operational freedom to management. Business environment keeps on changing. The

planned activities sometimes do not fit in the renewed circumstances.

Problems once anticipated may not become realities. At the same time new problems may emerge. The requirements of strict planning sometimes cause opportunities slip through while the management strictly follow the order of preset priorities.

2. Misdirected Planning Planning is anticipating a certain set of future situations which create physical and economic and physical environment of the business. It is a

powerful force when the situations are accurately assessed and planned. But many of the future situations can change drastically which will make the entire plan meaningless. If the priorities are wrong in light of the new situations and the administrative procedures prevent a quick patch up, the

strength and energies of the organization will be directed to some targets that are less meaningful.


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3. Time Consuming Planning is an activity covering the entire range of functions in the business.

Gathering information from a wide range or sources analyzing them to arrive at meaningful conclusion is a time consuming matter. Management often fail

to gather information at the right time to make effective plans. In many cases the situations change by the time management gather the required

information, which compels them to do the work all over again.

4. False sense of security Plans often give a false sense of security to the management. The activities

are planned. All the business decisions simple logical extension of the plans. Management often fail to recognize the change in situations. They

expect the natural progress of events according to plans. This false sense of security makes the management complacent which ultimately result in

inefficiency.

5 Dependence on forecasting

Forecasting is the foundation of planning process. The future can be predicted only to a vey limited extent. Uncertainties can topple the best

estimate of management. In fact most the variables that are taken into account while planning change continuously. Many things can go wrong

within the planning period. Lack of monitoring will drain the prospects of business while the management sits back and relax to reap the profits as a

reward for effective planning.

6. Expensive process Planning process is an expensive affair. Big organizations have planning

department staffed by professionals, supported by subordinate staff. The company has the bear the burden of salary and service requirements of this

additional department.

7. Bias – promoting self interest Planning sometimes reflect the personal interest of the planners, rather that the interest of the business. If the planners have vested interest they may

influence the planning process and tilt the direction of the business to serve those interests. In addition to vested interest there are personal opinions which influence the plans. Plans can reflect individual tastes and preferences rather than the best interest of the business.

Purposes of Planning Planning is important and serves many significant purposes.

1. Planning gives direction to the organization. 2. Planning reduces the impact of change.


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3. Planning establishes a coordinated effort.

4. Planning reduces uncertainty. 5. Planning reduces overlapping and wasteful activities.

6. Planning establishes objectives or standards that are used in controlling.

THE PLANNING PROCESS

TERRY has defined “Planning is the selection and relating of facts and making and using of assumptions regarding future in the visualization and

formulation of proposed activity believed necessary to achieve desired results.”

Planning is a process for accomplishing purposes. It is a blue print of

business growth and a road map of development. It helps in deciding objectives both in quantitative and qualitative terms. It is setting of goals on

the basis of objectives and keeping in the resources. A plan should be a realistic view of the expectations. Depending upon the activities, a plan can be long range, intermediate range or short range. It is the framework within

which it must operate. For management seeking external support, the plan is the most important document and key to growth. Preparation of a

comprehensive plan will not guarantee success, but lack of a sound plan will almost certainly ensure failure.

Process of Planning involves

1. Perception of opportunities 2. Establishing objectives

3. Planning premises 4. Identification of alternatives

5. Evaluation of alternatives 6. Choice of alternative plans

7. Formulation of supporting plans

8. Establishing sequence of activities The explanation of the following points are as follow : 1. Perception of Opportunities : It includes a preliminary look at possible opportunities and the ability to see

them clearly and completely, a knowledge of where the organization stands in the light of its strengths and weaknesses, an understanding of why the organization wants to solve uncertainties, and a vision of what it expects to gain.

2. Establishing Objective: The objective should be specified before starting the business, its should be a clear idea what’s we are going to achieve in a future. 3. Planning premises:

It mean a planning assumptions, the expected environment and internal conditions. Thus, planning premises are external and internal. In externalits


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include political, social, technological, competitors’ plans and actions, govt.

policies etc. internal factors includes organization's policies , resources of various types, etc

4. Identification of Alternatives: There are various alternative you have to identify the alternative which meet

the requirement of your objective. 5. Evaluation of Alternatives:

After the identification of the various alternative you have to evaluate how each alternative contributes to the organisational objectives in the light of its

resources and constraints, because every alternative have certain positive and certain negative points.

6. Choice of Alternative: After evaluation of various alternatives, which alternative most fit with the

organisational objective. Some time evaluation shows more than one alternative is equally good. In that case they choose more than one

alternative because future is uncertain, therefore planner is ready with the another alternative. 7. Formulation of Supporting Plans:

After formulating the basic plan, various plans are derived so as to support the main plan. In an organization there can be various derivative plans like

planning for buying equipments, buying raw materials, recruiting and training personnel,

developing new product, etc. 8. Establishing sequence of Activities:

After formulating basic and derivative plans, the sequence of activities is determined so that plans are put into action. Based on plans at various

levels, it can be decided who will do what and at what time. Budgets for various periods can be prepared.

Management by objective (MBO)

Background:

Management by Objectives was introduced by Peter Drucker in the 1950s and written about in his 1954 book, The Practice of Management. It gained a great deal of attention and was widely adopted until the 1990s when it seemed to fade into obscurity.

Management by objective (MBO) is a process through which specific goals are set collaboratively for the organization as a whole and every unit and individual within it; the goals then are used as a basic for planning, managing organizational activities, and assessing and rewarding

contributions. In Management by objectives (MBO) specific performance goals are jointly determined by employees and their managers, progress toward accomplishing these goals is periodically reviewed, and rewards are allocated

on the basis of this progress. 1) MBO was first described by Peter Drucker and consists of four elements:


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i) Goal specificity

ii) Participative decision making iii) Explicit time period

iv) Performance feedback 2) MBO makes objectives operational through the process by which they

cascade down through the organization. Although there is considerable variation across organizations, MBO processes

typically include six steps: 1. Organizational goals are developed based on organizational missions.

2. Specific goals are established for departments, subunits, and individuals. a. In the top-down process, upper-level managers, conferring with their

immediate managerial subordinates, formulate specific objectives for their areas of responsibility. These in turn enter into the formulation of objectives

for the next level down, and so forth. b. In the bottom-up process, operational goals are proposed by lower-level

managers on the basis of what they think they can achieve. These in turn are developed into tactical and finally strategic plans. 3. Action plans are formulated, describing what is to be done, how, when,

where, and by whom in order to achieve a particular goals. 4. Individuals are given the responsibility of reaching their objectives and

that goals will ultimately be met.

5. Performance is appraised at the end of the goal-setting cycle, typically at one-year intervals. Praise, recognition, and rewards should be given for

effective performance.

The strengths of MBO are that it 1. Aids coordination of goals and plans.

2. Helps clarify priorities and expectations. 3. Facilitates vertical and horizontal communications.

4. Fosters employee motivation.

The weaknesses of MBO are that it 1. Tends to falter without strong, continual commitment from top management.

2. Necessitates considerable training of managers. 3. Can be misused as a punitive device. 4. May cause overemphasis of quantitative goals. The “spirit” of MBO is tremendous. In practice however, MBO has been

successful only about 20 to 25 percent of the time, primarily because of lack of support from top management and poor goal-setting and communication skills.


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Chapter 3 Evolution of management thought Principles are fundamental truth that explains the relationship between variables

factors. Principles are based on scientific study, inquiry and analysis. They establish relationship between causes and effect. They are universally acceptable, verifiable

and their results predictable. Since management principles are fundamental truth, they provide guidelines for managerial decision making.

Nature of principles of management

Management principles are fundamental truth. These principles help management

as guidelines in decision making. Following are the following features highlights the

characteristics of management principles: 1. Universal application

Management principles are applied in every situation where the objectives are attained through group efforts. All social, economic, political or religious organizations apply management principles for their successful operations. Every

organization must make the best possible use of its available resources by the application of management principles such as planning, organizing, staffing

directing and controlling. 2. Flexibility

Management principles are dynamic guidelines not static rules. Management helps the business to maximize the profit at minimum cost. The business situations and

the socio-economic environment are rapidly changing. Therefore the management principles are dynamic to adapt to the changing situations.

3. General Statements Management principles are concerned mostly with human behavior, which cannot

be tested under laboratory conditions. Human behavior cannot be predicted accurately. Therefore management principles are not as exact as the principles of

physical science. 4. Influencing human behavior

Management explains how to get work done by people. Human element is an essential factor of production. It activates and extracts work from other factors

also. Each person is different from other as regards his ability, knowledge, skills social status, attitudes and ideologies. Management is concerned with the integration of individual efforts to group objectives.

5. Cause and effect relationship

Management principles also display a cause and effect relationship. They indicate the consequences of certain action or inaction in the business. For example if he wages are paid on piece-rate system, the quantity of work will increase, but the

quality will suffer. The principle of unity of command will avoid confusion,

duplication and overlapping.


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6. Equal importance All principles of management are equally important. There is no superiority or

inferiority between them. No one principle has greater significance than the other. We cannot say that the principle of unity of command is more important than the

principle of unity of direction or vice versa. 7. Careful and discreet application

Management principles cannot be applied blindly because these principles are relative, not absolute. These principles should be applied according to original

needs and situations. 8. Decision making

Management is always concerned with decision-making. Factors of production are scarce and they have alternative uses. Management has to decide the best possible

combination of available resources and the most suitable technique of production. Management principles are the source of decision making process.

Importance of principles of management

Management principles are essential for the successful running of business organization. These principles are guideline to management. They highlight the

areas where the management should pay immediate attention. These principles simplify the process of management, increase the all round efficiency of management and help in the achievement of objectives. The significance of

management principles can be summarized as follows:

1. Generating sound understanding Management principles generate sound understanding of the complex problem of business. They develop scientific approach to the problem to arrive at the right

solutions to the problems. The management cannot adopt ‘trial and error, methods in a business.

2. Increasing Efficiency Management principles provide guidelines to management in handling complex

situations in the business. It facilitates management in performing their duties smoothly. The efficiency of the management is increased when the management

adopts management principles in decision making. The work will be systematic and efficient.

3. Directing the areas of training The management principles identify the present and prospective areas of

management where managers should be specially trained. Besides situations are themselves complex and they change considerably with the change in business environment. Management principles identify these areas and impart required

training to business executives

4. Guide to research work in management Management principles are guidelines which require necessary modifications with the changing situations. In order to make management meaningful and practical,


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researchers examine these principles, justify their utility and suggest modifications if necessary.

5. Achieving social objectives

Management develops spirit of cooperation and coordination among workers and employees. It also helps in the optimum utilization of social resources. The principles of management are directed towards maximizing profit without sacrificing

the social objectives. Modern management is keen to fulfill the social objectives along with the economic objectives.

Fayol’s Principles of Management

Henry Fayol (1841 – 1925) was a French Industrialist and management expert. He developed the theory of management. According to Fayol, managerial excellence is

a technical ability and can be acquired. He was the pioneer of formal education in management. He views management as more technical at lower level and more administrative at higher level. He suggests the following 14 principles of

management:

1. Division of work Henry Fayol stressed on specialization of jobs. It requires that every job and its part

should be identified as a separate work and be entrusted to most suitable person. The quality and quantity of production will improve by assigning the work to the right person. According to Fayol “the worker always on the same post, the manger

always concerned with the same matters, acquire an ability sureness and accuracy which increases heir output”

2. Parity of authority and responsibility Authority and responsibility are co-existing. If authority is granted to a person, he

should also be made responsible. In the same way if anybody is made responsible for any job, he should also have the required authority. An efficient manager makes

the best use of his authority and does not escape from responsibility.

3. Discipline

According to Fayol, discipline means sincerity about the work. The workers should have faith in the policies and programmes of the business. Fayol does not advocate

warning, fines, suspension and dismissals of workers for maintaining discipline. These punishments should be rarely used. A well-disciplined work force is essential to improve the quality and quantity of production.

Discipline is obedience, application, energy, behavior, and respect. Discipline is absolutely essential for the smooth running of business and without discipline no

enterprise could prosper. When a defect in discipline is apparent or when relations between superiors and subordinates leave much to be desired, responsibility for this must not be cast heedlessly, and without going further, on the poor state of the

team, because the ill mostly results from the ineptitude of the leaders

4. Unity of command


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According to Fayol, every employee should receive orders and instructions from one boss only. The employee should be responsible and accountable to him only, the

violation of this principle will have the following consequences: a. It will be very difficult to maintain discipline

b. Duplication of work c. Overlapping of orders and instructions d. Escaping responsibility e. Disrespect to work and management

Unity of command will have the following benefits: a. Orders and instructions will be honoured b. Employees will receive exact orders

c. Fixing responsibility will be easy in case of default d. Easier to achieve goals e. No duplication of work

Thus unity of command makes the enterprise disciplined, stable and organized. It promotes harmonious relationship between superiors and subordinates in an

organization.

5. Unity of direction One head and one plan for a group of activities having the same objective

(centralization of authority). There should be only one plan, and the person should be responsible for supervising it; all activities have the same objective should be supervised by one person.

Difference between unity of command and unity of direction

Points of

Difference Unity of command Unity of Direction

1. Guiding

Principle

One subordinate and one

boss

One organization, one head,

one aim

2. Aim Aims at avoiding duplication, overlapping and confusion and fixing responsibility

Aims at coordinating group efforts and brings uniformity in work

3. Emphasis

It stress the need for

subordinates to be accountable to the boss

It emphasizes the attainment

of common goal under one boss.

6. Subordination of Individual to General Interest Fayol believed that the individual should subordinate self-interest to the general

good. This is difficult, though. In a work situation in which employees perceive no managerial concern for individual well-being. It is incumbent upon management to

reduce conflict between the individual and the general wellbeing wherever possible. The interest of the home should come before that of its members and that the

interest of the State should have pride of place over that of one citizen or group of citizens. Constant supervision is needed to ensure that the general interest will not be lost sight in favor of individual interest

7. Remuneration


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Remuneration for work must be fair and accurate, affording maximum satisfaction for both employee and employer. The manager must examine tasks, identify

responsibilities, and decide upon a just level of compensation. The next step is to find someone to carry out the defined duties for the established salaries. Fayol

recommends that non-financial benefits such as free education, medical facility, residential facility etc. must be provided.

8. Centralization Fayol thought centralization of authority to be desirable, at least for overall control.

Certainly, both formulation of policy and the generation of basic rules and procedures ought to be centralized. Managerial decisions may be made at a lower level, but only within the framework established by the central administrative

authority. Centralization belongs to the natural order. The degree of centralization must vary according to different cases. If the moral worth of the manager, his

strength, intelligence, experience and swiftness of thought allow him to have a wide span of activities he will be able to carry centralization quite far. The choice between centralization and decentralization must be taking after taking into

consideration the efficiency, experience and decision making capacity of the managers.

According to Fayol there should be centralization in small units and proper decentralization in big organizations.

9. Lines of Command or Scalar Chain The scalar chain is the chain of superiors ranging from the ultimate authority to the

lowest ranks. Organizations need a formalized hierarchy that reflects the flow of authority and responsibility. Fayol suggested that a chain of command is necessary

most of the time, but, at times, it is best ignored. In case of urgency the established chains can be violated and Gang Plank (direct contact) between the two concerned authorities, departments or between superior and subordinates may be

established. The following diagram illustrates this:


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In normal practice messages should pass through the established chain ie. E -- D—C—B—A—L—M—N—O. In case of emergency direct contact between E and O may

be established.

Utility of Gang Plank (direct contact) The idea of gangplank suggested by Henry Fayol shows that management principles are flexible and not absolute. If we follow the principle of scalar chain strictly there

will be possibility of unnecessary delay in the communication. Business opportunities may be lost because the communication not reaching the person

concerned on time. Business opportunities must be immediately availed of. If we need to make direct contact with the concerned employee for the purpose, management the established

procedure should not stand in the way. When immediate solutions are required for certain problem, the concerned person can by-pass the established channel and

seek emergency help. 10. Order

Relationships between various units must be established in a logical, rational manner, so that these units work in harmony. In the case of material things it

means "A place for everything and everything in its place". In case of human order -- "A place for everyone and everyone in his place"

11. Equity Managers/supervisors elicit loyalty from employees only when they deal with them

as individual persons. Employees must be seen as persons, not things to be manipulated. If managers hope to create a good working environment, they must

treat everyone fairly and with equity. For the employees to be encouraged to carry out duties with all the devotion and loyalty’ they must be treated with kindliness. Equity results from the combination of kindliness and justice

12. Stability of Tenure

A high rate of employees leaving the organization is expensive for an organization.

Lack of stability of work force is both a cause and an effect of bad management, and one way of evaluating a manager/supervisor is to examine the resignation rate

of persons working under that manager. Stability of work force may or may not indicate a good manager, but a high rate of resignation of employees indicates the

existence of a problem that the manager/supervisor has failed to correct. Naturally, every time an employee leaves, the organization incurs significant costs in time and money spent recruiting, selecting, and training a new employee. Furthermore, the

new employee will require time to become an integrated member of the staff. A person who is often absent can create bottlenecks in the flow of material, hindering

the entire organization's efficiency (and often costing the organization far more than his or her salary).

Another form of absenteeism not usually reflected in statistics is that of employees who are "present but absent." These people arrive at the last possible moment,

take longer than necessary to set up for work, begin coffee breaks early and drag them out, extend lunches beyond the normal schedule, and push cleanup further and further into the working period. The equivalent of one workday per week may


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be lost by such persons; if this happens, the supervisor (and the supervisor's supervisor} must examine the situation.

13. Initiative

Initiative should be encouraged at all levels and subordinates should be asked to submit plans and new ideas. All of these should be carefully reviewed, and each person who makes a suggestion should be informed as to its status. Although this

principle is given lip service by many organizations, in actuality, it is often not practiced. This was not Fayol's intention, and it should not be the intention of a

good manager. 14. Esprit de Corps

It refers to team spirit and harmony in work group and mutual understanding among workers. As a good Frenchman, Fayol believed in esprit de corps. He felt

that all successful organizations survive only when a feeling of unity pervades the group and that viable organizations cleat with crises as a team. Managers should take steps to create a sense of belonging among the members of a work group.

When there is spirit of cooperation default is minimized.

Scientific Management – Principles and Techniques Frederic Winslow Taylor is regarded as the father of Scientific Management. He

published works on scientific management based on his keen observation and experience. He started his career as an operator in a machine-making factory and rose to the position of its Chief Engineer of Midvale Steel Works in 1884. He later

joined Bethlehem Steel Company where he introduced scientific management.

By far the most influential person of the time and someone, who has had an impact on management service practice as well as on management thought up to the present day, was F. W. Taylor. Taylor formalized the principles of scientific

management, and the fact-finding approach put forward and largely adopted was a replacement for what had been the old rule of thumb.

However, there were problems-Taylor's papers were not always well received, as many of his ideas were associated with bad practice, such as rate-cutting by

unscrupulous managers. In 1911 and 1912 Taylor was questioned at length by a special committee of the US

House of Representatives. As a result laws were passed banning the use of stopwatches by civil servants and it was only in 1949 that this restriction was lifted.

What do you understand by scientific management? Scientific management refers to the use of scientific methods in decision making to

resolve management problems rather than depending on rule of thumb or ‘trial and error’ methods. FW Taylor is regarded as the Father of Scientific Management. Basically scientific management consists of:

a. Scientific study and analysis of work b. Scientific selection and training of workers c. Standardization of raw-materials and, equipment and working conditions d. Reasonable remuneration to employees e. Work done in efficient manner.


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Briefly explain the principles of scientific management.

Replacing Rule of thumb with Science The development of a science for each element of a man's work to replace the old

rule-of-thumb methods is the first principle of scientific management. First the employer must know what exactly is expected of the worker instead of going on wasting the resources until the final product comes out. Time, movement, methods

and fatigue should be analyzed to set standard output for the work.

Scientific selection, training and development of workers The scientific selection, training and development of workers instead of allowing them to choose their own tasks and train themselves as best they could, is another

important principle of scientific management. Under scientific management right men are selected for the right job. Employees are selected on the basis of

predetermined standards in an impartial way. Close cooperation between workers and management (Harmony not

discord) The development of a spirit of hearty cooperation between workers and

management to ensure that work would be carried out in accordance with scientifically devised procedures. Workers should have a sense of belonging

towards the enterprise. Taylor believed that the interest of workers and management are basically the same. By producing more there will be more profit to the organization and the same time more reward for the employees.

The division of work between workers and the management in almost equal shares,

each group taking over the work for which it is best fitted instead of the former condition in which responsibility largely rested with the workers. Self-evident in this philosophy are organizations arranged in a hierarchy, systems of abstract rules and

impersonal relationships between staff.

Maximum output in place of restricted output

The workers and management must try their best to maximize the output at the minimum input. There should not be restricted output. Maximum production will

reduce cost and will lead to maximum profit. There will be reward for both management and workers for their effort.

Mental revolution The workers and management should change their outlook and with respect to their

mutual relation and work efforts. Coordination and adjustment between the efforts of management and workers are essential for scientific management. The

management should create favourable working conditions and the workers should cooperate with the management in implementing progressive policies.

Techniques / Elements of Scientific Management

Mention briefly the techniques of scientific management What is meant by time study? What is meant by motion study?


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The ultimate aim of scientific management is to maximize production at the

minimum cost. Scientific management is introduced though the techniques of work studies, standardization, administrative reorganization, and scientific rate setting.

1 Work Study Work study is the careful evaluation of time taken at different processes, method of

doing the work, efforts involved etc. to estimate to pin point the wastage of efforts or to plan out better ways of doing the work.

i) Time Study This involves the analysis of time taken at each work or each part of a work. Time

taken by different workers is recorded first and to arrive at time required by an average worker to finish a standard work. The following are the steps in time study:

a. Subdividing the work b. Recording the time taken by different workers c. Selection of average worker d. Recording the time taken by average worker under normal circumstances e. Standardizing the time allowed for a work

ii) Motion Study

This is the analysis of physical movement in doing a work. Every work involves various forms of human movements such as lifting, holding, turning etc. Under motion study the movements will be analyzed to find out easier ways of doing the

work. Following steps are involved in motion study: a. Selection of efficient workers b. Analysis of the motions involved in a work c. Finding the minimum time involved in doing a work d. Keeping record of the best moves

e. Suggesting the appropriate physical movements to eliminate wastage of efforts

iii) Methods Study Method study is aimed at standardizing the job.

Methods study simplifies the operations by: a. Reducing the distance between the place of storage and the place of

consumption of raw materials. b. Simplifying the use of tools and equipment c. Eliminating unnecessary actions

d. Integration of identical activities

iv) Fatigue Study Fatigue in the work is natural. When the worker is given continuous work, he will get tired and lose speed and efficiency. He needs rest after working for a few hours.

Scientific management studies the nature of work to determine the standard time for finishing the job and to find out when the worker needs rest. The nature, time

and period of rest are predetermined. Necessary changes may also be made in the working methods and conditions to reduce fatigue.


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2. Standardization According to Taylor, maximum objectives of the business can be achieved only

when the raw materials, labour, machines and methods are standardized. Standardization may take the following forms:

a. Standardization of product The product, their design, weight and quality must have uniformity. Standardization

of product must be based upon the tastes and preferences of the customer.

b. Standardization of raw materials Standardization of raw materials helps regulate the amount of work and the quality of products. The use of standardized raw materials helps to reduce wastage,

increases output and simplifies the work.

c. Standardization of machines and equipment Machines, tools and equipment must also be standardized on the basis of raw-materials used and the quality requirements.

d. Standardization of methods

Methods and techniques of production must also be standardized after carefully analyzing the time and energy required in each activity. Taylor suggests that the

methods should be standardized before commencing the production. e. Standardized working conditions

Management should arrange suitable working conditions. There should be adequate lighting, ventilation and refreshing atmosphere for work.

3. Administrative reorganization – Functional foremanship Taylor suggested functional foreman ship for better supervision of workers. Under

functional foremanship there are specialist foremen at each job. He classified specialist foremen into two departments namely planning and production

departments. Both the departments have four foremen each. The names and

functions these foremen are as follows:

Planning Department 1. Route Clerk – Determining the process of production and the route through

which the raw materials will pass. 2. Instruction Card Clerk – Laying down instructions according to which the workers

are required to perform work.

3. Time and Cost Clerk – Setting the time table for doing a job as per predetermined route and time schedule. He specifies the material and labour cost in respect to each operation

4. Shop Disciplinarian – Maintaining proper discipline in the factory.

Production Department


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1. Gang Boss – Arranging machines, materials, tools, workers etc. for the job.

2. Speed Boss – maintaining the planned speed of production, investigating the

causes for delay and to remove them. 3. Repair Boss – Maintenance of the machines and equipment. Proper

arrangements for their oiling, greasing, cleaning and repairs and preventing misuse of machines.

4. Inspectors – Seeing that the work conforms to the standard of quality laid down the planning department.

Functional Foremanship

Factory

Manager

Planning Department Production

Department

Route

Clerk

Instruction

Card Clerk

Time and

Cost Clerk

Discipli-

narian

Gang

Boss

Speed

boss

Repair

Boss Inspector

4. Scientific Rate Setting – Differential Piece Rate System

Under differential piece rate system Taylor suggested higher wage rate for higher

efficiency. This system is a source of incentive to workers who will continuously attempt to improve efficiency for higher rate of wages. Under differential piece rate system more efficient workers are paid at a higher rate for their entire output.

When the production falls below the standard, wages are paid at lower rate. The important characteristics of this system are the following:

a. Different piece rates b. Lower rates for those who produce less than the standard quantity c. Minimum wages is not guaranteed

d. Standard time is fixed for standard amount of work

What is the basic difference between unity of command and functional foremanship?

Unity of command Unity of command is part of General principles of management by Henry Fayol. He

firmly believed that the employees should be under direct command and supervision of one boss only. This makes the business more disciplined stable and


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organized. It promotes harmonious relationship between superiors and subordinates in an organization.

Functional foremanship

Functional foremanship is part of Scientific Management advocated by FW Taylor. His principles are basically related to manufacturing activity. Functional foremanship helps specialization in supervisory management level. This will help

solving problems faster, which in turn will generate more production.

Taylor’s Principles of scientific management and Fayol’s principles of management are mutually complementary. Do you agree with this view?

Give any four reasons in support of your answer.

1. Fayol’s principles of management and Taylor’s principles of scientific management are mutually complementary. Fayol is mainly concerned about the overall administration of a business whereas Taylor’s principles are

developed on the basis of his experience in factory. Taylor believed firmly in the efficiency in production is the foremost aspect that would ultimately

determine the destiny of a business. Following are the reasons for considering these two principles of management are mutually

complementary:

i. Taylor’s principles begin from the lowest level or from the level of

the ordinary factory worker. Fayol’s principles start with the problems and solutions at the top administrative level from where it

comes down to lower level.

ii. Taylor’s principles are focused on the production activity, while

Fayol’s principles cover all the functional areas of business

iii. Taylor’s techniques are more specific. It tells exactly what to do.

Fayol’s principles are general advises.

iv. Taylor’s principles are focused on the efficiency of workers, while Faylol’s principles are based on the efficiency of management.

v. Taylor’s principles require the workers to be accountable to various

supervisors while Fayol considers unity of command extremely

important.


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Herzberg's Motivation-Hygiene Theory (Two Factor Theory)

To better understand employee attitudes and motivation, Frederick Herzberg

performed studies to determine which factors in an employee's work environment caused satisfaction or dissatisfaction. He published his findings in the 1959 book

The Motivation to Work. The studies included interviews in which employees where asked what pleased and

displeased them about their work. Herzberg found that the factors causing job satisfaction (and presumably motivation) were different from those causing job dissatisfaction. He developed the motivation-hygiene theory to explain these

results. He called the satisfiers motivators and the dissatisfiers hygiene factors, using the term "hygiene" in the sense that they are considered maintenance factors

that are necessary to avoid dissatisfaction but that by themselves do not provide satisfaction. The following table presents the top six factors causing dissatisfaction and the top

six factors causing satisfaction, listed in the order of higher to lower importance. Factors Affecting Job Attitudes

Leading to Dissatisfaction Leading to Satisfaction

Company policy Supervision

Relationship w/Boss Work conditions

Salary Relationship w/Peers

Achievement Recognition

Work itself Responsibility

Advancement Growth

Herzberg reasoned that because the factors causing satisfaction are different from

those causing dissatisfaction, the two feelings cannot simply be treated as opposites of one another. The opposite of satisfaction is not dissatisfaction, but

rather, no satisfaction. Similarly, the opposite of dissatisfaction is no dissatisfaction. While at first glance this distinction between the two opposites may sound like a play on words, Herzberg argued that there are two distinct human needs portrayed.

First, there are physiological needs that can be fulfilled by money, for example, to purchase food and shelter. Second, there is the psychological need to achieve and

grow, and this need is fulfilled by activities that cause one to grow. From the above table of results, one observes that the factors that determine

whether there is dissatisfaction or no dissatisfaction are not part of the work itself, but rather, are external factors. Herzberg often referred to these hygiene factors as "KITA" factors, where KITA is an acronym for Kick In The A..., the process of

providing incentives or a threat of punishment to cause someone to do something. Herzberg argues that these provide only short-run success because the motivator

factors that determine whether there is satisfaction or no satisfaction are intrinsic to the job itself, and do not result from carrot and stick incentives.

Implications for Management


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If the motivation-hygiene theory holds, management not only must provide hygiene factors to avoid employee dissatisfaction, but also must provide factors intrinsic to

the work itself in order for employees to be satisfied with their jobs. Herzberg argued that job enrichment is required for intrinsic motivation, and that it

is a continuous management process. According to Herzberg: The job should have sufficient challenge to utilize the full ability of the

employee.Employees who demonstrate increasing levels of ability should be given increasing levels of responsibility.If a job cannot be designed to use an employee's

full abilities, then the firm should consider automating the task or replacing the employee with one who has a lower level of skill. If a person cannot be fully utilized, then there will be a motivation problem.

Critics of Herzberg's theory argue that the two-factor result is observed because it

is natural for people to take credit for satisfaction and to blame dissatisfaction on external factors. Furthermore, job satisfaction does not necessarily imply a high level of motivation or productivity.Herzberg's theory has been broadly read and

despite its weaknesses its enduring value is that it recognizes that true motivation comes from within a person and not from KITA factors.

Maslow's Hierarchy of Needs If motivation is driven by the existence of unsatisfied needs, then it is worthwhile

for a manager to understand which needs are the more important for individual employees. In this regard, Abraham Maslow developed a model in which basic, low-

level needs such as physiological requirements and safety must be satisfied before higher-level needs such as self-fulfillment are pursued. In this hierarchical model, when a need is mostly satisfied it no longer motivates and the next higher need

takes its place. Maslow's hierarchy of needs is shown in the following diagram: Maslow's Hierarchy of Needs

Self-Actualization

Esteem Needs

Social Needs

Safety Needs

Physiological Needs

Physiological Needs Physiological needs are those required to sustain life, such as:


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air water

nourishment sleep

According to Maslow's theory, if such needs are not satisfied then one's motivation will arise from the quest to satisfy them. Higher needs such as social needs and esteem are not felt until one has met the needs basic to one's bodily functioning.

Safety Once physiological needs are met, one's attention turns to safety and security in

order to be free from the threat of physical and emotional harm. Such needs might be fulfilled by: Living in a safe area

Medical insurance Job security

Financial reserves According to Maslow's hierarchy, if a person feels that he or she is in harm's way, higher needs will not receive much attention.

Social Needs Once a person has met the lower level physiological and safety needs, higher level

needs become important, the first of which are social needs. Social needs are those related to interaction with other people and may include:

Need for friends Need for belonging Need to give and receive love

Esteem Once a person feels a sense of "belonging", the need to feel important arises.

Esteem needs may be classified as internal or external. Internal esteem needs are those related to self-esteem such as self respect and achievement. External esteem needs are those such as social status and recognition. Some esteem needs are:

Self-respect Achievement

Attention

Recognition Reputation

Maslow later refined his model to include a level between esteem needs and self-actualization: the need for knowledge and aesthetics.

Self-Actualization Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest of reaching one's full potential as a person. Unlike lower level needs, this need is

never fully satisfied; as one grows psychologically there are always new opportunities to continue to grow.

Self-actualized people tend to have needs such as: Truth Justice

Wisdom Meaning

Self-actualized persons have frequent occurrences of peak experiences, which are energized moments of profound happiness and harmony. According to Maslow, only a small percentage of the population reaches the level of self-actualization.


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Implications for Management If Maslow's theory holds, there are some important implications for management.

There are opportunities to motivate employees through management style, job design, company events, and compensation packages, some examples of which

follow: Physiological needs: Provide lunch breaks, rest breaks, and wages that are sufficient to purchase the essentials of life.

Safety Needs: Provide a safe working environment, retirement benefits, and job security.

Social Needs: Create a sense of community via team-based projects and social events. Esteem Needs: Recognize achievements to make employees feel appreciated and

valued. Offer job titles that convey the importance of the position. Self-Actualization: Provide employees a challenge and the opportunity to reach

their full career potential. However, not all people are driven by the same needs - at any time different people may be motivated by entirely different factors. It is important to understand the

needs being pursued by each employee. To motivate an employee, the manager must be able to recognize the needs level at which the employee is operating, and

use those needs as levers of motivation.

Limitations of Maslow's Hierarchy While Maslow's hierarchy makes sense from an intuitive standpoint, there is little evidence to support its hierarchical aspect. In fact, there is evidence that

contradicts the order of needs specified by the model. For example, some cultures appear to place social needs before any others. Maslow's hierarchy also has

difficulty explaining cases such as the "starving artist" in which a person neglects lower needs in pursuit of higher ones. Finally, there is little evidence to suggest that people are motivated to satisfy only one need level at a time, except in situations

where there is a conflict between needs.

Likerts theory of management

Dr Renesis Likert has studied human behaviour within many organisations.After

extensive research, Dr. Rensis Likert concluded that there are four systems of

management. According to Likert, the efficiency of an organisation or its departments is influenced by their system of management. Likert categorised his four management systems as follows;

Exploitive authoritative system (1)

In this type of management system the job of employees/subordinates is to abide by the decisions made by managers and those with a higher status than them in

the organisation. The subordinates do not participate in the decision making. The

organisation is concerned simply about completing the work. The organisation will


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use fear and threats to make sure employees complete the work set. There is no teamwork involved.

Benevolent authoritative system (2)

Just as in an exploitive authoritative system, decisions are made by those at the top of the organisation and management. However employees are motivated

through rewards (for their contribution) rather than fear and threats. Information

may flow from subordinates to managers but it is restricted to “what management want to hear”.

Consultative system (3)

In this type of management system, subordinates are motivated by rewards and a

degree of involvement in the decision making process. Management will constructively use their subordinates ideas and opinions. However involvement is

incomplete and major decisions are still made by senior management. There is a

greater flow of information (than in a benevolent authoritative system) from subordinates to management. Although the information from subordinate to

manager is incomplete and euphemistic.

Participative (group) system (4)

Management have complete confidence in their subordinates/employees. There is lots of communication and subordinates are fully involved in the decision making

process. Subordinates comfortably express opinions and there is lots of teamwork. Teams are linked together by people, who are members of more than one team.

Likert calls people in more than one group “linking pins”. Employees throughout the organisation feel responsible for achieving the organisation’s objectives. This responsibility is motivational especially as subordinates are offered economic

rewards for achieving organisational goals which they have participated in setting.

Likerts Ideal System

Likert believes that if an organisation is to achieve optimum effectiveness then the “ideal” system to adopt is Participative (system 4).

Webers theory of management As a German academic, Weber was primarily interested in the reasons behind the

employees’ actions and in why people who work in an organization accept the authority of their superiors and comply with the rules of the organization.

Weber postulated that western civilization was shifting from “wertrational” (or value oriented) thinking, affective action (action derived from emotions), and traditional

action (action derived from past precedent) to “zweckational” (or technocratic) thinking. He believed that civilization was changing to seek technically optimal

results at the expense of emotional or humanistic content.


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Weber then developed a set of principles for an “ideal” bureaucracy as follows: fixed and official jurisdictional areas, a firmly ordered hierarchy of super and

subordination, management based on written records, thorough and expert training, official activity taking priority over other activities and that management of

a given organization follows stable, knowable rules. The bureaucracy was envisioned as a large machine for attaining its goals in the most efficient manner possible.

However, Weber was cautious of bureaucracy when he observed that the more fully

realized, the more bureaucracy “depersonalizes” itself – i.e., the more completely it succeeds in achieving the exclusion of love, hatred, and every purely personal, especially irrational and incalculable, feeling from execution of official tasks. Hence,

Weber predicted a completely impersonal organization with little human level interaction between its members.

Weber made a distinction between authority and power. According to Weber power

educes obedience through force or the threat of force which induces individuals to

adhere to regulations. In contrast, legitimate authority entails that individuals

acquiesce that authority is exercised upon them by their superiors. Weber goes on

to identify three types of legitimate authority:

Traditional authority – Traditional authority is readily accepted and unquestioned by

individuals since it emanates from deeply set customs and tradition. Traditional

authority is found in tribes and monarchies.

Charismatic authority – Charismatic authority is gained by those individuals who

have gained the respect and trust of their followers. This type of authority is

exercised by a charismatic leader in small and large groups alike.

Rational-legal authority – Rational-legal authority stems from the setup of an

organization and the position held by the person in authority. Rational-legal

authority is exercised within the stipulated rules and procedures of an organization.

Key Characteristics of a Bureaucracy

Weber coined this last type of authority with the name of a bureaucracy. The term

bureaucracy in terms of an organization and management functions refers to the

following six characteristics:

Management by rules. A bureaucracy follows a consistent set of rules that control

the functions of the organization. Management controls the lower levels of the

organization's hierarchy by applying established rules in a consistent and

predictable manner.


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Division of labor. Authority and responsibility are clearly defined and officially

sanctioned. Job descriptions are specified with responsibilities and line of authority.

All employees have thus clearly defined rules in a system of authority and

subordination.

Formal hierarchical structure. An organization is organized into a hierarchy of

authority and follows a clear chain of command. The hierarchical structure

effectively delineates the lines of authority and the subordination of the lower levels

to the upper levels of the hierarchical structure.

Personnel hired on grounds of technical competence. Appointment to a position

within the organization is made on the grounds of technical competence. Work is

assigned based on the experience and competence of the individual.

Managers are salaried officials. A manager is a salaried official and does own the

administered unit. All elements of a bureaucracy are defined with clearly defined

roles and responsibilities and are managed by trained and experienced specialists.

Written documents. All decisions, rules and actions taken by the organization are

formulated and recorded in writing. Written documents ensure that there is

continuity of the organization’s policies and procedures.

Advantages and Disadvantages of Weber’s Bureaucracy

Weber’s bureaucracy is based on logic and rationality which are supported by

trained and qualified specialists. The element of a bureaucracy offers a stable and

hierarchical model for an organization.

Nevertheless, Weber’s bureaucracy does have its limitations since it is based on the

roles and responsibilities of the individuals rather than on the tasks performed by

the organization. Its rigidity implies a lack of flexibility to respond to the demands

of change in the business environment.

The McKinsey 7S Framework The Seven Elements

The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements:

Hard Elements Soft Elements

Strategy

Structure Systems

Shared Values

Skills Style

Staff


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"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting

lines; and formal processes and IT systems. "Soft" elements, on the other hand, can be more difficult to describe, and are less

tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful. The way the model is presented in Figure 1 below depicts the interdependency of

the elements and indicates how a change in one affects all the others.

Let's look at each of the elements specifically: Strategy: the plan devised to maintain and build competitive advantage over the

competition. Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to get the job done. Shared Values: called "superordinate goals" when the model was first developed,

these are the core values of the company that are evidenced in the corporate culture and the general work ethic.

Style: the style of leadership adopted. Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the

company.

The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you:

• Improve the performance of a company;

• Examine the likely effects of future changes within a company; • Align departments and processes during a merger or acquisition; or

• Determine how best to implement a proposed strategy.


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Chapter 2 Ethics and social responsibility What is Ethical and Unethical Workplace Behaviour?

� Ethical behaviour follows accepted principles of right and wrong

� Intentional managerial unethical behaviours � company resources for personal use

� mishandling information � encouraging others’ unethical behaviour

� Unintentional managerial unethical behaviour

� poorly constructed policies � unrealistic employee goals

Types of Workplace Deviance Production deviance

� leaving early � taking excessively long breaks

� purposely working slower � intentionally wasting resources

Property deviance

� sabotaging, stealing

� damaging equipment

Political deviance

� using favouritism

� spreading rumours � falsely blaming others for mistakes

Personal aggression � sexual harassment

� verbal abuse � threatening co-workers

Influences on Ethical Decision-Making

� Ethical intensity of the decision � Moral development � Principles of ethical decision-making

Kohlberg’s Stages of Moral Development

Preconventional Level Stage 1: Punishment and Obedience Stage 2: Instrumental Exchange

Conventional Level Stage 3: Good Boy — Nice Girl

Stage 4: Law and Order Post Conventional Level Stage 5: Legal Contract

Stage 6: Universal Principle


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Principles of Ethical Decision-Making � Principle of long-term interest

� Principle of personal virtue � Principle of religious injunctions

� Principle of government requirements � Principle of utilitarian benefits � Principle of individual rights

� Principle of distributive justice Principle of Long-term Self-interest

� People should never take any action that’s is not you or your organization’s long-term self-interest

Principle of Personal Virtue

� People should never do anything that is not honest, open, and truthful, and which you would not be glad to see reported in the newspapers or on TV

Principle of Religious Injunctions � � People should never take any action that is not kind and that does not build a

sense of community; a sense of everyone working together for a commonly accepted goal

Principle of Government Requirements � People should never take any action that violates the law, for the law

represents the minimum moral standard Principle of Utilitarian Benefits

� People should never take any action that does not result in greater good for

society. Instead, do whatever creates the greatest good for the greatest number.

Principle of Individual Rights � People should never take any action that infringes on others’ agreed-on

rights

Principle of Distributive Justice � People should never take any action that harms the least among us: the

poor, the uneducated, the unemployed

Practical Steps to Ethical Decision-Making � Selecting and hiring ethical employees

� Codes of ethics � Ethics training

� Ethical climate Codes of Ethics Corporate statements on ethics

� To encourage ethical decision-making and behaviour � Companies must communicate the codes to others both within and

outside the organization � Management must also develop practical ethical standards and

procedures specific to the company’s line of business

Ethics Training � Develop employee awareness about ethics

� Achieve credibility with employees � Teach employees a practical model of ethical decision-making

Ethical Climate


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� Managers act ethically � Top managers are active in the in the company ethics program

� An effective reporting system � Fairly and consistently punish those who violate the ethics code

A Basic Model of Ethical Decision-Making 1. Identify the problem 2. Identify the constituents

3. Diagnose the situation 4. Analyze your options

5. Make your choice 6. Act

What is Social Responsibility?

To Whom Are Organizations Socially Responsible? � Shareholders

� managers must satisfy the owners

� social responsibility is maximizing shareholder wealth � Stakeholders

� persons or groups with a legitimate interest in a company’s actions � Social responsibility is satisfying the interests of multiple stakeholders

Shareholder Model: Friedman � Managers cannot act effectively as moral agents for shareholders � Time, money, and attention diverted to social causes undermine market

efficiency

Firm’s stakeholders:

� Governments

� Investors � Political groups

� Customers

� Communities � Employees

� Trade associations � Suppliers

Social Responsibility and Economic Performance � Social responsibility can sometimes cost a company significantly if it chooses

to be socially responsible

� Sometimes it does pay to be socially responsible � While socially responsible behaviour may be “the right thing to do,” it does

not guarantee profitability.


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Chapter 5 Decision making Decision making in management is an important skill - and making the right decisions is

essential. Every manager should be looking to improve their decision making skills. The

process of corporate decision making is of the utmost importance for effective

management. Your decision making process in management must be informed by

expert knowledge and experience.

“ A decision in its simplest form , is a selection of alternatives”

“Decision making is the study of identifying and choosing alternatives based on the values

and preferences of the decision maker.Decision making is the process of sufficiently

reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made

from among them.”

Steps to Rational Decision-Making

1. Define the problem

2. Identify the decision criteria 3. Weight the criteria 4. Generate alternative courses of action 5. Evaluate each alternative 6. Compute the optimal decision

Define the Problem A problem is a gap between a desired state and an existing state

� To make decision to solve problems, managers must:

� be aware of the gap � be motivated to reduce the gap � have the knowledge, skills, abilities, and resources to fix the

problem

Identify Decision Criteria Decision criteria are standards used to guide judgments and decisions

� generally, the more criteria a solution meets, the better that solution

will be Weight the Criteria

Which criteria are more or less important? � Absolute comparisons

� each criterion is compared to a standard or ranked on its own merits

� Relative Comparisons � each criterion is compared directly to every other criterion

Absolute Weighting of Decision Criteria for a Car Purchase Performance Criteria

� Starting/acceleration

� Fuel efficiency � Handling/steering

� Transmission � Ride quality


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� braking Design Criteria

� Overall look � Interior

� Seats � Accessories � Cargo space

� Fit and finish Criteria Used to Evaluate Best Company Locations

� Commuting distance � Operating costs � Tax rates

� Education level � Labour costs

� Housing costs Rankings of Cities by Selection Criteria in Canada Values

Regina 6.10 Saskatoon 5.40

Saint John 5.35 Halifax 5.05

Winnipeg 4.25 Edmonton 3.75 Calgary 3.40

Ottawa 2.75

Limits to Rational Decision-Making

Bounded Rationality Managers try to take a rational approach to decision-making. Constrained by:

� limited resources

� attention problems � memory problems

� expertise problems

Choosing Solutions

Bounded Rationality

Risk and Decision-Making Under

Risky Conditions

Common Decision-making Mistakes


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� Maximizing decisions � choosing the best solution

� this is impossible to do � Satisficing decisions

� choosing the “good enough” solution � fits with bounded rationality

Risk and Decision-Making under Risky Conditions � Rationality assumes decision making under a condition of certainty

� complete information and knowledge of all possible outcomes � Most decisions are made under a condition of risk

� there exists a real possibility of losing

Effects of Framing on Decision Making � Positive frame

� a problem presented as a gain � become more risk-averse

� Negative frame

� a problem presented as a loss � become more risk-seeking

Conditions of Uncertainty

The odds or winning or losing are unknown. Risk propensity:

� a person’s tendency to take or avoid risks � a high risk propensity needed to take risks under conditions of

uncertainty

Common Decision-Making Mistakes � Over-reliance on intuition

� Availability bias � Representative bias

� Anchoring and adjustment bias Over-Reliance on Intuition

� Intuition plays a part in many managerial decisions � Intuition works bets for experienced managers

� Over-reliance can cause people to become over confident, careless, and inconsistent

Availability Bias

� Tendency of decision makers to give preference to recent information, vivid images that evoke emotions, and specific acts and behaviours that they

personally observe � May overlook data

Representative Bias

� Unrecognized tendency of decision makers to judge the likelihood of an event’s occurrence based on its similarity to previous events

Anchoring and Adjustment Bias � Judgment (good-bad, large-small, yes-no) is “anchored” by an initial value � Once the anchor is “dropped”, two things happen

� all subsequent experiences are judged by their similarity to the anchor � all possible decision alternatives tend to cluster around the anchor


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Improving Decision-Making Decision Rules

A set of criteria that alternative solutions must meet to be acceptable to the decision maker

Two types: � dictionary rule � minimum threshold rule

Using Groups to Improve Decision-Making � Advantages and pitfalls

� Structured conflict � Nominal group technique � Delphi technique

� Stepladder technique � Electronic brainstorming

Advantages of Group Decision-Making Improved problem definition and increased alternative generation

� groups view problems form several perspectives

� groups can find and access more information than individuals � greater information and knowledge allows for more alternative

solutions to be generated Pitfalls of Group Decision-Making

� Groupthink � It takes considerable time � One or two people dominate discussions

Groupthink A barrier to good decision-making caused by pressure within the group for

members to agree with each other. Occurs when:

� group is insulated from different perspectives

� leader expresses a strong preference for one solution � no established procedure for defining and exploring alternatives

� group members are similar in background

Decision making methods:

a. Delphi Technique � Assemble a panel of experts

� Create a questionnaire of open-ended questions � Analyze, summarize and feedback members’ responses in a report � Experts list reasons for agreeing or disagreeing with the report

� Repeat steps 3 and 4 until consensus is reached.

b. Scenario Analysis

The process of estimating the expected value of a portfolio after a given period of time, assuming specific changes in the values of the portfolio's securities or key

factors that would affect security values, such as changes in the interest rate. Scenario analysis commonly focuses on estimating what a portfolio's value would decrease to if an unfavorable event, or the "worst-case scenario", were realized.


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Scenario analysis involves computing different reinvestment rates for expected returns that are reinvested during the investment horizon.

There are many different ways to approach scenario analysis, but a common method is to determine what the standard deviation of daily or monthly security

returns are, and then compute what value would be expected for the portfolio if each security generated returns two or three standard deviations above and below the average return.

In this way, an analyst can have reasonable certainty that the value of a portfolio is unlikely to fall below (or rise above) a specific value during a given time period.

c. Brainstorming

In one research experiment, individuals working alone. and then in groups were asked to brainstorm a list of ideas using procedures that encouraged creativity and

discouraged criticism and evaluation. The scores of the individuals who worked alone were combined. averaged, and compared with the scores of the groups. The

results indicated that " individuals not only produce more Ideas when working alone but they do this without sacrificing quality."1 One possible explanation is that people. fear they'll look foolish or stupid, and ,therefore censor themselves. This

may occur despite instructions in how brainstorming is to be done (that is, without criticism or evaluation)

d. Nominal Group Technique

A possible alternative to brain storming is NGT. This technique was originally developed by

Delbecq and VandeVen2 and has been applied to adult education program planning by

Vedros3. This technique is a structured variation of small group discussion methods. The

process prevents the domination of discussion by a single person, encourages the more

passive group members to participate, and results in a set of prioritized solutions or recommendations. The steps to follow in NGT are:

1. Divide the people present into small groups of 5 or 6 members, preferably seated

around a table.

2. State an open-ended question (" What are some ways we could encourage

participants to car pool?").

3. Have each Person spend several minutes in silence individually brainstorming all the

possible ideas and jot these ideas down.

4. Have the groups, collect the ideas by sharing them roundrobin fashion (one response

per person each time), while all are recorded in key term, on a flipchart. No criticism

is allowed, but clarification in response to questions is encouraged.

5. Have each person evaluate the ideas and individually and anonymously vote for the

best ones (for example, the, best idea gets Points, next best 4 Points, etc).

6. Share votes within the group and tabulate. A group report is prepared, showing the

ideas receiving the most points. 7. Allow time for brief group presentations on their solutions.

e.Creativity

Creativity is a mental and social process involving the generation of new ideas or concepts,

or new associations of the creative mind between existing ideas or concepts. An alternative

conception of creativness is that it is simply the act of making something new.


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Creativity has been attributed variously to divine intervention, cognitive processes, the

social environment, personality traits, and chance ("accident", "serendipity"). It has been

associated with genius, mental illness and humour. Some say it is a trait we are born with;

others say it can be taught with the application of simple techniques.

creative insights and illuminations may be explained by a process consisting of 5

stages:

(i) preparation (preparatory work on a problem that focuses the individual's mind on the

problem and explores the problem's dimensions),

(ii) incubation (where the problem is internalized into the unconscious mind and nothing

appears externally to be happening),

(iii) intimation (the creative person gets a 'feeling' that a solution is on its way),

(iv) illumination or insight (where the creative idea bursts forth from its preconscious

processing into conscious awareness); and

(v) verification (where the idea is consciously verified, elaborated, and then applied).


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Chapter 6 Organizing Definition Organizing is the process of identifying and grouping of the work to be

performed , defining and delegating responsibility and authority and

establishing relationship for the purpose of achieving organization golas. --- louis Allen In this function it typically follows planning and reflects how the organization tries to

accomplish its goals and objectives. In relation to the structure of a company, organizing

involves the assignment of tasks, the grouping of tasks into departments and the allocation

of resources to departments. Organizing also involves establishing the flow of authority and

communication between position and levels within the organization. Top manager performs

these activities. Like wise middle manager and supervisors organize the tasks to create

positions within their departments. Job analysis and job design activities are organizing

function.

Explain briefly the meaning of organizing. Define organizing as a function of management.Defin e organizing as a process. Organization is an important management function. Organization can be viewed as process as well as a structure. As a process it identifies the essential resources for the achieving organizational goals. Organization brings together physical, financial and human resources or a business. Thus organization involves finding out the detailed sets of activities, grouping them into jobs and grouping the jobs into sections and departments. It establishes a working relationship between the available resources to bring out best results. It creates inter-relationships between different parts positions and jobs in an organization. Organization also involves establishing authority responsibility relationships. Organization can be viewed as a structure or framework within which a business should function. Organization creates jobs and positions, formulates rules and delegates authority to fulfill responsibilities. The aim of organising is to enable the people to work together for a common purpose. Thus the structure of organization regulates and coordinates the activities in the business. The organized group of people in a collective sense is known as organization. Explain the steps involved in the process of organi zing. The most important aim of organization is to establish a working relationship between various factors with clarity. It breaks down the overall task into individual jobs and assigns them to departments and sections. The organization process involves the following steps. 1 Division of work The first step in the process of organization is to divide the work into specific activities. Dividing the work is essential to because one individual cannot perform the entire work. It also facilitates specialization. 2. Grouping of jobs and departmentation The second function of organisation is to group identical jobs under formal departments. This grouping process will enable coordination and unity of efforts. The deportments are linked together on the basis of their interdependence. There are different ways of grouping the departments. Departments can be organized on the basis of function such as finance, production, marketing etc. There can be departmentation on the basis of products such as textiles division, cosmetics department etc. 3. Establishing authority relationships The third function in the organization process is the establishment of authority relationship among job holders or job positions. The authority relationship specifies who is accountable to whom in the organization. The authority structure creates superior-subordinate relationships as well as channels of communication. The decision making authority varies from position to position. The owner of a business


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has the ultimate authority to make decisions which is delegated to subordinates. Thus the scope of authority reduces at lower levels of management. The levels of authority are called organizational hierarchy. The chain of authority runs through these levels. Organizational hierarchy implies a definite ranking order. Importance and Objectives of Organizing Explain the importance of organization as a function of management. Why is organizing considered as an important functio n of management? How does organization function brings in administrative efficiency? The organization process creates the structure of organization. It establishes the authority relationship in a business. It provides the basic framework for the various managers and other staff. The importance of organization is outlined as follows: i. Specialization As part of the organization process, similar jobs are grouped together to easy coordination. It enables speedy completion of work. Employees in a department get more chance to do the same work over and over again. They will gain skill and specialization. ii. Clarity of roles Organization defines the managerial and non managerial jobs. The tasks and activities associated with each job are clearly described. It clarifies what a person holding a position is supposed to do. It also enables the selection of right employees for the right job. iii. Establishes authority and responsibility The authority responsibility structure is extremely important for the smooth running of a business. The organization structure specifies the authority available at each level and position in the organization. Every manager knows his exact position in the organization structure. The responsibilities of each position are also clearly stated. This reduced the tendency of passing the blame for mistakes. It minimizes conflict and confusion about the respective powers and privileges of managers. iv. Avoiding duplication of work Organization helps avoiding duplication of work and overlapping in responsibilities among various employees and departments. Jobs and responsibilities of each department and individuals are clearly stated as part of the organization process. v. Coordination The authority and responsibility of each position is distributed and shared in the organization through a well designed system. Each department and job position functions as part of large system. Each individual is aware of his position and responsibility. Thus the work can be shared in the right balance in good harmony. vi. Source of support and security Organization is a source of support, security and satisfaction ot mangers and employees. It recognizes their relative status in the establishment. vii. Adaptation Proper organization enables easy changes according to requirement. When jobs and responsibilities are well defined it is easy for a new employee to adjust with the jobs he is supposed to do. When an employee is promoted to higher position or transferred to a different section, it would be easier for him to adjust with the new job and different set of responsibilities. Organization Structure – Functional Structure, Divi sional Structure Define Organization as a structure. Explain different types of organizational structure .


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The process of organization leads to the creation of organization structure. The term organization structure may be defined as a system of job positions, the roles assigned to them and the authority relationships among the various positions. The structure provides a basis or a framework for the managers and other employees for performing their functions. Organization structure can be developed and customized according to the specific need of a business. The two most commonly found organization structures are functional and divisional organizational structures. Functional structure Functional structure is formed by organizing the entire work to be done into functional departments. In functional organization all identical works are placed together under one functional head. For example production, marketing, finance and marketing are considered essential functions of a manufacturing enterprise. For a retail store, purchase, sales and warehousing are the major functions. The major functions may be further subdivided into sub functions or departments. For example production function can be divided into material store, components manufacturing, assembly unit, quality control etc. These departments can be further divided into sections and sub sections. There is no hard and fast rule as to how the division is to be carried out. Companies can tailor the organizational structure according to their requirement and resources and facilities available. Even manufacturing units in the same line of production can have different forms of functional structure. Divisional Structure In many organisation activities and personnel are grouped on the basis of products manufactured. This kind organization structure is known as divisional structure. Divisional structure enables the personnel to develop expertise in the business activity. Divisional structure allows further sub divisions into production marketing and finance. Group executives are responsible to coordinate manufacturing, sales. Group managers are responsible for profits of the divisions also. Give considerations to be kept in mind while buildi ng an organization structure. Following are the important considerations to be kept in mind while selecting an organization structure: i.. Job Design Since the manger has to get jobs done he must specify what activities and related tasks must contain each of these jobs. The individual responsibility should be predetermined. The task and role of individual should be organized to avoid duplication of work. ii. Departmentation Once the jobs are defined they have to be grouped together to form a department. Coordination becomes easier when identical jobs are grouped together in one department. Production, fnance, marketing and every other function can be organized into separate departments. iii. Span of control Span of control refers to the number of employees or jobs that are arranged under one manager. This also clarifies the chain of command and established who will report to whom. Some jobs are specialized requiring lot of interaction between manger and employees. In such cases span of control will be restricted to enable the manager to provide adequate attention to details of the job. iv. Delegation of authority The content of each job should be analyzed to delegate adequate authority to subordinates. Responsibility without authority is meaningless. When a sales target is given to a sales-representative he should also have the authority to decide terms of sales or delivery schedules within limits. The "secret" of effective delegation is to define:

o the task

o the accountability requirement

o the responsibility being given o the authority being given.


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• Definition of the Task. The task should constitute a "whole," that is, a

project for the individual to undertake. It should be worthwhile and relate to

the overall mission of the organization. The purpose of delegation is two-fold:

to accomplish the task and to develop the employee. Both are important.

Some aspects of good task definition are:

1. clearly defined outcome(s), e.g., what is the deliverable?

2. clear statement of the time frame, e.g., when is the deliverable due?

3. specification of the monitoring procedures to be used, e.g., when will

review meetings be scheduled? or when are interim reports due?

4. indication of how the outcome will be used, e.g., will the result be

implemented immediately or will it be sent for higher level? or is it to

be used as input to a decision; if so, when will the decision be made?

• Accountability Requirement. The manager should specify what the task

parameters are so that the delegatee realizes the limits of his/her authority

and will not make unilateral decisions prejudicial to the organization. The

delegatee should also learn the manager's expectations for periodic

monitoring. The monitoring itself may be delegated, e.g., the individual may

be asked to produce regular written reports.

• Responsibility Delegation. The manager remains accountable for the

outcome(s) of the task but must confer on the delegatee the power to make

decisions needed to ensure success of the project. Once the boundaries of

responsibility are clearly defined, the delagatee should be allowed to do the

work without any interference. In delegating a task, the following should be

made clear (preferably in writing):

o the overall goal of which the task being delegated is a part

o the precise outcome(s) required

o how far the delegatee can interpret events and the extent to which

his/her actions must conform to set rules

o the nature of circumstances that will require authorization by a higher

level person

o how (and at what intervals) accountability monitoring will take place

• Authority given. Possibly the most frequent complaint made against

managers is that they give responsibility without authority, that is, they ask

an employee to undertake a task without giving him/her the necessary

resources to succeed. At the initiation of the delegation, the manager should

transfer to the delagatee the following:

o the financial resources needed. A major task (think of it as a

project) should carry its own budget and the delegatee should have

the power to spend money as required by the task without requesting

permission from a superior. Because financial accountability remains

with the manager, it may be necessary to have periodic reviews of the

financial situation to be sure that funds are being spent appropriately

and that the amount allocated was sufficient for the task. Typically the

reviews take the form of an accounting report submitted on a regular

basis.

o the material resources needed, e.g., materials, facilities, technical

aids. If resources are to be shared with others, the priority of the

particular project should be clarified at the outset. Is the delegatee to

wait in a queue for a shared resource? If so, has the time lag been

built into the time frame for the project?

o technical support in the form of secretarial or technical assistance. If

these support services are shared, the level of priority for the project

and/or the number of hours of secretarial or technical help should be

specified.


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o political power in the form of the authority to require other

personnel to participate in the task as the delegator specifies. This

enables the delegatee to form committees, to delegate sub-tasks, to

sign his/her own letters, to represent the manager to outside agencies.

It is poor delegation to review and sign letters prepared by the

delegatee or to brief him/her on what to say at meetings with outside

agencies.


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Chapter 7 Co-ordination and control Coordinating

In this function coordinating refers to management activities related to achieving an

efficient use of resources to attain the organization's goals and objectives.

“ coordination deals with the task of blending efforts in order to ensure successful

attainment of an objective.it is accomplished by means of planning , organizing , actuating

and controlling” --- Terry

techniques to ensure effective coodination:

1. clearly defined goals

2. clear lines of authority and responsibility

3. comprehensive programmes and policies

4. staff meetings

5. special coordinators

6. cooperatons

7. effective communication betwween all the participants

Controlling

In this function manager performing the controlling management function translate

organizational goals and objectives into performance standards for divisions, department

and individual position. Controlling also involves assessing actual performance against

standards to determine whether the organization is on target to reach its goals and taking

corrective actions as necessary. Managers practicing the evaluative component of

controlling assess how well the organization has achieved its objectives.

All well-designed control systems involve the use of feedback to determine whether

performance meets established standards. Managers set up control systems that consist of

the following four key steps:

1. Establish standards of performance

Within the organization’s overall strategic plan, managers define goals for organizational

departments in specific operational terms that include a standard of performance against

which to compare organizational activities.

In an industrial enterprise, standards and measurements could include sales and production

targets, work-attendance goals, waste products produced and recycled, and safety records.

In service industries, standards and measurements might include the amount of time

customers will have to wait in line at a bank, the amount of time they have to wait before

the telephone is answered, or the number of new clients attracted by a revamped

advertising campaign. Managers should carefully assess what they will measure and how

they will define it when the organization will reward employees for the achievement of

standards, these standards should reflect those activities that contribute to the

organization’s overall strategy in a significant way.

Standards should be defined precisely for managers and workers since:

1. Vaguely worded targets are just empty slogans until managers begin to specify what they

meanand what they intend to do to reach these goals-and when.

2. Precisely worded targets enable managers and workers to easily determine whether

activities are on target.


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3. Precisely worded, measurable objectives are easy to communicate. This ease of

communicating is especially important for control since different people usually fulfill the

planning and control roles.

2. Measure actual performance

Like all aspects of control, measurement is an ongoing repetitive process. The frequency of

measurements depends on the type of activity being measured.

In a manufacturing plant, levels of gas particles in the air, for example, could be

continuously monitored for safety, whereas progress on long-term expansion objectives

might need to be reviewed by top management only once or twice a year.

Most organizations prepare formal reports of quantitative performance measurements that

managers review daily, weekly, or monthly. These measurements should be related to the

standards set in the first step of the control process.

For example, if sales growth is a target, the organization should have a means of gathering

andreporting sales data. If the organization has identified appropriate measurements,

regular review of these reports helps managers stay aware of whether the organization is

doing what it should be.

In most companies, managers do not rely exclusively on quantitative measures. They get

out into the organization to see how things are going, especially for such goals as increasing

employee participation and learning.

3. Compare performance to standards

The next step in the control process is comparing actual activities to performance standards.

When managers read reports or walk through the plant, they identify whether actual

performance meets, exceeds, or falls short of standards.

Performance reports simplify comparisons by placing the performance standards for the

reporting period alongside the actual performance for the same period and by computing

the variance, that is,the difference between each actual amount and the associated

standard. If performance matches the standards, managers may assume that everything is

under control.

When performance deviates from a standard, managers must interpret the deviation. They

are expected to dig beneath the surface and find the cause of the problem.

If the sales goal is to increase the number of sales calls by 10 percent and a salesperson

achieved an increase of 8 percent, where did she fail to achieve her goal? Perhaps several

businesses on herroute closed, additional salespeople were assigned to her area by

competitors, or she needs training in making sales calls more effectively.

Managers should take an inquiring approach to deviations in order to gain a broad

understanding of factors that influenced performance. Effective management control

involves subjective judgment and employee discussions as well as objective analysis of

performance data.

4. Take corrective action

This step is necessary if performance falls short of standards and the analysis indicates

action is required.

When performance deviates from standards, managers must determine what changes, if

any, are necessary. The corrective action could involve a change in one or more activities of

the organization’s operations.Or, it could involve a change in the original standards rather

than a change in activity.

Managers may encourage employees to work harder, redesign the production process, or

fire employees. In contrast, managers using a participative control approach collaborate

with employees to determine the corrective action necessary.

In some cases, managers may take corrective action to change performance standards.

They may realize that standards are too high or too low if departments continually fail to

meet or routinely exceed standards. If contingency factors that influence organizational


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performance change, performance standards may need to be altered to make them realistic

and provide continued motivation for employees.

Managers may wish to provide positive reinforcement when performance meets or exceeds

targets. They may reward a department that has exceeded its planned goals or congratulate

employees for a job well done. Managers should not ignore high-performing departments at

the expense of taking corrective actions elsewhere.

Principles of effective control

1. Effective controls are timely.

2. Control standards should encourage compliance.

3. Setting effective standards is important since they are:

a. Viewed as fair.

b. Observable and measurable.

c. Specific.

d. Difficult.

e. Relevant.

f. Complete.

g. Participatively set.

4. Use management by exception.

5. Employees should get fast feedback on performance.

6. Do not overrely on control reports.

7. Fit the amount of control to the task.

Feed forward control

Control that attempts to identify and prevent deviations before they occur is called feed

forward control, sometimes called preliminary or preventive control.

It focuses on human, material, and financial resources that flow into the organization. Its

purpose is to ensure that input quality is high enough to prevent problems when the

organization performs its tasks.

For example, managers in an organization may hire additional personnel as soon as they

win a major contract. Feed forward control is future directed. It allows management to

prevent problems rather than having to cure them later.

Feed forward controls require timely and accurate information that is difficult to develop.

Feed forward controls are evident in the selection and hiring of new employees.

Organizations attempt to improve the likelihood that employees will perform up to

standards by identifying the necessary skills and using tests and other screening devices to

hire people who have those skills.

Another type of feed forward control is to identify and manage risks. The large accounting

firms have recognized that they can offer value to their clients by looking for risks the

clients have knowingly or unknowingly taken on, rather than merely evaluating their

financial performance after the fact. The firms have developed methods to study a client’s

industry, strategy, and operations to identify key business risks not shown on typical

financial statements.

Concurrent control

Control that monitors ongoing employee activities during their progress, to ensure they are

consistent with quality standards, is called concurrent control.

When control is enacted while the work is being performed, management can correct

problems before they become too costly.

Concurrent control assesses current work activities, relies on performance standards, and

includes rules and regulations for guiding employee tasks and behaviors. Its intent is to

ensure that workactivities produce the correct results.

Many manufacturing operations include devices that measure whether the items being

produced meet quality standards. Employees monitor the measurements; if they see that

standards are not met in some area, they make a correction themselves or signal the


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appropriate person that a problem is occurring. Technology advancements are enabling

concurrent controls in services as well. For example, trucking companies are using

computers to help plan their routes for efficiency. These also employ electronic

devices, satellites, and antennas to transmit data back to headquarters indicating their

position at all times to enable monitoring the status of deliveries.

An organization’s cultural norms and values influence employee behavior.

Feedback control

This is the most popular type of control. In this case, the control takes place after the

action. Sometimes called post-action or output control, feedback control focuses on the

organization’s outputs in particular, the quality of an end product or service.

The major drawback of this type of control is that by the time the manager has the

information the damage has already been done. But, for many activities, feedback is the

only viable type of control available. An example of feedback control in a manufacturing

department is the intensive final inspection of a product.

Besides producing high-quality products and services, businesses tend to earn a profit, and

even nonprofit organizations need to operate efficiently to carry out their mission.

Therefore, many feedback controls focus on financial measurements. Managers evaluate

whether they have operated within their budget targets, whether they have generated

sufficient sales and profits, and so on. Feedback has two advantages over feedforward and

concurrent control:

1. Feedback provides managers with meaningful information on how effective their planning

effort was.

2. Feedback control can enhance employee motivation. People want information on how well

they have performed. Feedback control provides that information.

The six major purposes of contrlol are as follows:

1. controls make plans effective

2. controls make sure that organisatioanal activities are consistent

3. contols make organisations effective

4. controls make organisations efficient

5. controls provide feedback on project status

6. controls aid in decision making

techniques of control:

traditional view:

1. budgeting

modern view:

1. management audit

2. PERT

3. CPM

4. management information system

PPM

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