Вы находитесь на странице: 1из 320





M.Com., M. Phil, L.L.B., B.A. (Addl.), Ph.D. Associate Professor, Vice Principal, Dr. Ambedkar College, Nagpur.


1. Management and Its Process 1 2. Management of Change and Conflict 63 3. Planning 4. Decision Making 103 5. Recruitment and Selection 112 6. Organising 135 7. Departmentation and Delegation 173 8. Direction 9. Communication 217 10. Co-ordination 231 11. Motivation 240 12. Leadership 261 13. Morale 14. Control 15. Business Ethics 305 16. Management Information System (MIS) 309 278 292 209 81

AUTHOR No part of this book shall be reproduced, stored in retrieval system, or translated in any form or by any means, electronic, mechanical, photocopying and/or otherwise without the prior written permission of the publishers.


ISBN: 978-81-920041-6-7

Published By: Sai Jyoti Publication C-9 Shrinath Sainagar, Near Onkar Nagar, Ring Road, Manewada, NAGPUR. Ph. No.: 9764673503, 9923693506. email id: sjp10ng@gmail.com

Type Set ter: Om Sai Graphics Plot No. 29 Behind T.B. Ward, Indira Nagar, Nagpur 440003.

In present scenario management education and training has assumed the prime place in the educational servi ces. Intensified competi tion among domesti c, private and public sector companies and multinational companies, amangement task became challenging. Business world had realized that professionalism in business operations will prove more beneficial in achieving the economic objectives of the business. Management is as old as human civilisation. As a distinct academic field the management is considered a product of 20th century. In fact management is a developing and dynamic discipline. In the modern era, due to rapid, diverse, complex and unstructured changes, the ma nagement theory has also undergone through radical changes. In the changed situations existing techniques and approaches of management which constitute a larger part of a management theory have become less effective and inadequative. Therefore, the application of management t heory is become situational. To become more sensible and responsible to the changing environment the manager has to assume new roles as per demand of the situation. New dimensions have been added to the management theory and its application and emphasis ha s been shift ed to new thurst areas such as management of strategic alliances, improvement in productivity. World wide demand of qualit y management, of change and conflict, growi ng emphasis on ethics, strategic management and employment process in organisat ion etc. Management is not challenging task, requires t echnical, human, conceptual, deci sion-making skills. Managers are not born but are made. this statement is absolutely true in private as well as public sector. Principles of Management is a paper to Commerce and Management students. The text of thi book has been designed and arranged essentially to provide clear understanding of the subject in todays context to the students of commerce and management. The subject matter of this book has been coll ected from various authentic literature. Attempts have been made to familarise with the latest developments taking place in the theory as well as practice of management. W hile designing the text of this book, the syllabus of various uni versities and management institutes have been into consideration. I am greatly thankful to S.N. Pathan. I am greatly thankful to Dr. S.N.Pathan, Vice-Chancellor, RTM Nagpur University, Ex-Director, Higher Education, Maharashtra State, for constant support and encouragement for writing this book. I am thankful to His excellency, Shri. R.S. Gavai, Governor of Kerala, for his unstinted support extended to me for this venture. Its my great pleasure to express my heartful gratitude to my beloved husband Shri Mahendra H. Siriya a Judge at Mumbai. My talented son Shekhar M. Siriya an engineer, Asst. Executive, My in-laws Shri Harnamsingh and Smt. Nirmala Siriya who have shouldered my burdens for the successful completion of this book. I also extend my thanks to Shri Abhay Harsulkar who helped me to computerize this book in a lucid manner. I take this opportuni ty to express my sincere thanks to Sai Jyoti Publications, who have readily agreed to publish the book and finish the task within a short span of time. Dr. (Mrs.) Pratibha Siriya Author.


INTRODUCTION TO MANAGEMENT After industrial revolution tremendous acceleration and growth took place in business and industrial world. Eventually drastic changes became inevitable in the field of Promoting, Organising, Managing and Administrating business as well as industrial establishments. Although, India, too, after independence, has made a remarkable progress in development of business, commerce and industry, its pace is slower as compared with developed countries. Natural resources are abundant in India. But they could not be explored to the extent, they should have been. If one goes to the root cause of this, one can find that it is non-else than lack of integrating and co-ordinating their explosion with proper utilisation aimed at optimum profitability. The agency which undertakes this job is Management and personnel or group of persons are known as Managers. A manager is supposed to bring about effective co-ordination between human and non-human resources with a view to achieve broad objectives of business organisations at a minimum cost. Thus, management becomes a force that brings together various resoruces and coordinates them. As such management can be termed to be t he level which actually accomplishes organisational goals and objectives. Naturally, it becomes essential to have trained personnel with maximum and up-to-date knowledge of the process i.e. management. It is continuous, l ively, fast developing science known as Perspective management. Any organisation either commercial, industrial, educational, religious or charitable, when comes into existence with a group of people joining hands for the attainment of certain objectives, needs some- one to channalise its activities towards achieving the goals. This some-one functionary is Management. Management manages the men tactfully getting the things done, achieving the objectives and goals, gaining the profits for its organisation. Management is a live asset of any organisation. It is activative, catalytic, creative, innovative and a dynamic force too, which seeks to secure the best results by using available resources. Management provides new ideas, inventions and vision to the work group and integrates its efforts in such a manner as to account for best possible results. The success, survival, smooth functioning, stability of the business orgainsation depends upon the management. Management is the life blood of an organisation. Management is the primary force within an organisation which coordinates the acti vities of a sub-system related to environment. Management is primarily a human activity. The role of management in business organisations is to cater to the present and future needs of the community, to create and generate wealth. Generation of wealth is of paramount importance in the sense that without it the enterprise will neither be able to achieve its economic nor social aims. An organisation without good management is a house built on sand. People are individually known as managers and collectively as management. Management is a body of people who perform the managerial functions of planning, orgainising, directing, coordinating, motivating and controlling. The management of any organisation tries to satisfy the interest of three unidentical groups of people i.e. customers, sha reholders and employees. The success of any organi sation is determined by ability of its top management to fulfil the interest of these three groups without undermining its own. Management is a thinking organ of the enterprise. All the policy decisions are taken by it.

Management keeps itself in touch with the external environment and takes steps to ensuring the ability of the enterprise, to meet the demands of changing environment. Thus, management of any organisation plays a role of decision making machinery. According to Dalton Mc. Farland , Mana gement is the basic intergrating process of the organisational activity that surrounds our daily life. The need for management arises out of the scarcity of resources that satisfy human wants out of the diversity and complexity of human activities. Following are the concised definitions of Management made by eminent personalities1) Management is the process by which manager creates, directs, maintains and operates purposive organisation through systematic, co-ordinated and co-operative human effort. Dalton Mc. Farland. 2) Management is a disti nct process consi sting of planning, organizing, staffing and controlling, performed to determine and accomplish stated objectives by use of human beings and other resources. G.R. Terry. 3) Management may be broadly defined as the art of applying the economic principles that underline the control of men and materials in the enterprise under consideration. - Kimball 4) Management is the art of getting things done through and with people in formally organised groups. - Koontz 5) Management is simply the process of decision making and control over the action of human being for the express purpose of attaining predetermined goals. - S. Vance 6) Management is the function of getting things done through people and directing the effect of individuals towards a common objectives. - Theo Haimann 7) Management is the co-ordi nation of all resources through the process of planning, organising, directing and controlling in order to attain stated objectives. - Dr. Henry L. Sisk 8) Management is a multipurpose organ that manages worker and work. - P. Drucker 9) Management is principally a task of planning, co-ordinating, motivating and controlling the efforts of others towards specific obj ectives. -J. Lundy 10) Management is knowing exactly what you want the men to do, and then seeing that they do it in the best and cheapest way. - F. W. Taylor 11) Management is social process entailing responsibility of the effective and economical planning and regulation of the operations of an enterprise in fulfilment of a given purpose or task with responsibility involving. a) Judgement and decision in derermining plans, and the development of procedures to assist control of performance and progress against plans, and b) The guidance, integration, motivation and supervision of the personnel compri sing the enterprise and carrying out its operations. -Breach 12) Management is defined as the process by which a co-operative group directs act ion - Joseph Massie towards common goals. 13) Management is the art and Science of preparing organising and directing human efforts

to control the forces and utilise the material of nature for the benefit of men. - American Society of Mechanical Engineers. 14) Management is the process of planning, organising, leading and controlling the efforts of organisational members and of using all other organisational resources to achieve the stated organisational goals. - Michael H. Mescon 15) Management may be defined as the art of securing maximum prosperity and happiness for both employer and employee and give the public t he best possible service, with minimum effort. - John F. Mee 16) Management is the Art of getting things done through people. - Mary Parker Follett 17) Management means decision-making. - Ross Moore 18) Management is the Art and Science of decision-making and leadership. - J. Clough 19) Management is the development of people and not the direction of things. - Applex L. 20) To manage is to forecast, to plan, t o organise, to command, to co-ordinate and to control. - Henry Fayol After carefully studying the above definitions one can very clearly conclude that management1) Is concerned with getting things done through and with people. 2) Is directing the efforts of people to achieve the goals of the organisation. 3) Is integration of all kinds resources like men, material, machine, money to achieve the predetermined goals of organisation. 4) Is development of people as an essential aspect of management. 5) Is an art of creating favourable performance environment enabling the working force attain stated objectives. Gett ing the thinge done through and with people Creating favourable environment Management Directing peoples efforts for achievement of organisational goal Developing the people Figure Integration of 5 Ms.

Thus, management, in terms of personnel manning the group, is a body of personnel having organised knowledge in the field, which is an outcome of perpetual principles taken together skilfully, As such management is a science underlining the art.

NATURE OF MA NA GEMENT 1) Interdisciplinary discipline : The concept of management is universal and very old.
Therefore, different views have been expressed about its nature by different authourities. Emergence of giant corporations in large number has necessitated the growth of management as a discipline. For this, it has drawn knowl edge, tools and techni ques from a number of discipli nes. That i s why management perspective is an int erdisciplinary activity. Thus, a special independent management discipline is merged with combination of so many other disciplines.

2. Social proc ess M : anagement is a continuous process of getting things done through
people. Management is a social process of motivating people to work together to accomplish common goals. It indicates the social nature of management. 3. Management as an inborn quality : In the prescientific management period i.e. prior to 1880 there has been a leading concept that management is an inborn quality. At that time people thought that it was not necessary to study any of management concepts as they believed that, managers are born and not made. In their opinion some people are so efficient and talented since their birth that they lead and get success in the field of business. But as we see today, this concept is totally reversed by the new development. In modern era managers are not born but are made by equipping people with specialized knowledge in the field of management.

4. Management as a science :In order to ascertain the status of management as a science,

it is necessary to know the meaning of the word Science and then apply that to management. A science is a systematised body of knowledge. It is based upon information that has been empirically verified through the scientific methods. The scientific method involves identification of conditions or facts through observation and verification of principles through experimetation. When certain facts and principles are interpreted into broader conclusions, they constitute the theory of a particular science or body of knowledge. Verified principles of a science are useful for a practitioner as they help to predict the outcome of certain actions. Science is an organised body of knowledge based on proper fi ndings and exact perpetual principles. It establishes relationship between cause and effect and its findings are safely applicable in all the situations. There are a number of branches of natural sciences like physics, biology, chemistry, astronomy etc. There are social sciences like sociology, political science, economics etc. Management mainly relates to t he social science. It is a behavioural science of inexact nature. The process of management is very much related with behaviour of people at work and their behaviour cannot be predicted in exact manner. Management deals with human beings, so it is a social science and is not an exact science like natural sciences. Management is a developing science. It has now evolved certai n basic theories based on behavioural science. The form of process of management which has universal application in each branch of human activity. Thus management can be known as a science though not natural science. It is quite obvious that principles of management are not fundamental truths and their application may not yield the desired results always because human behaviour is ever changing and most unpredictable. It cannot be governed by the laws of mechanics as a human being is not an inanimate machine. Hence, management dealing with complex human beings is bound to be an inexact science. Even the theoretical

base of knowledge is essential for developing sound practice. In fact, theory must be supplemented by prctical knowledge continuously. Science and art are complementary and each supplements the other.

5. Management as an art :Art is the best way of doing things. Art is the bringing about a
desired result through the application of skills. Art is concerned with the exercise of the know- how for the effective accomplishment of desired results. It is concerned with the application of knowledge and skills. Every manager has to apply certain knowledge and skills while dealing with the people to achieve the desired results. Like any art, management is also creative. It develops new situations, new designs and new systems needed for further improvement. Management is one of the most creative art as it requires a vast knowledge and certain innovating, initiating, implementing and integrating skills in relation to goals, resources, techniques and results. Moulding the behaviour of people at work towards achievements of certain goals in a changing environment is an art. As an art management calls for a corpus of abilities in continuous practice of management theories and principles. Ma nagement is an art because i t requires vision. knowledge and communication. Artistic skills are developed, likewise managerial skills can be developed. Management is an art in the sense that management principles are developed not for the sake of knowledge only but for application in specific situations also.

6. Management is both a science and an art : Management is a science and an art.

Theoretical knowledge must be supplemented and perfected by practical knowledge. Both theory and practice are equally important for management. According to koontz and ODonnell, Managing as practice is an art ; the organinsed knowledge underlying it, may be referred to as a science. Art needs the existence of science and science requires skillful application of knowledge. They are two sides of the same coin and to obtain the best of both, theoritical knowledge must be supplemented and perfected by practical knowledge. Both theory and practice are equally important and there is nothing to choose between them. Hence science and art are not exclusive but are complementary. It is , for practical purposes, accepted now that management is a science as well as an art.

7. Manegement as a profession : Since the emergence of separation of mana gement

from ownership, the management is being taken as a profession also. The term professional management has acquired an important position in the corporate sector. *A professional manager is one who specialises himself in the work of planning, organising, leading and controlling the efforts of others and does so through systematic use of classified knowledge, a common vocabulary and pri nciples and who subscribes to the standards of practice and code of ethics establ ished by recognised body. Hence management is assuming a professional character during the last four decades. It should be noted that all professions are occupations in the sense that they provide means of livelihood. But all occupations are not professions because some of them do not possess the basic characteristics of a profession. An occupation can be a profession if it has in it the followings basics :I) Requirement of specific knowledge. II) Competent application of specific knowledge. III) Social responsibility IV) Community sanction V ) Self control According to Dalton Mc. Farland the include :bench marks of a professional

a) the existence of a body of specialised knowledge or techniques. b) formalised methods of acquiring training and experience c) establishment of a representative organisation with professionalisation as its goal. d) formation of ethical codes for the guidance of conduct. e) charging of fees based on services but with due regard for the priority of service over the desire for monetary reward.

a ) Body of Knowledge
Management has now developed a special ised body of management theory and philosophy. Management literature is growing in almost all countries. In modern era we have a systematic body of knowledge that can be used for development of professional managers. Management is also taught in many educational institutions and in universities. More the more Management is emerged as a separate discipline like science arts etc. It is a fact that management as a discipline contains a well defined body of knowledge and a number of sophisticated tools and techniques meant to translate the theory into practice.

b ) Formal Education
Many institutes of management have come into being in India and other countries which offer courses in management. In the modern era competent application of management knowledge and skill has becomes almost indispensable. Therefore it is essential that the managers acquire certain management skills through formal education and training. The people having formal education in management can definitely give better performance. Therefore giant organisations give preference to graduates and post graduates who have acquired specialisation in some area of management like personnel, marketing, financial, production etc.

c) Repre sentative Organisation

A representative body or association is that which enforces standards and controls the entry to the field through licensing and so on. For the regulation of the activity of the members of a profession, existence of such a representative body is a must.Frankly speaking we do not have such a body or an association in the field of management in our country. This body may lay down the code of conduct for the members and the level of education and tra ining for those who want to enter this particlar professi on. We have very few organisations like Indian Management Association., The all India Management Development Association which try to impose code of conduct to their member but do not have means for enforci ng it. These organisations do not have any authourity to set or prescribe minimum qualification for taking up manageri al posts, unlike the recognised professional groups such as the Medical Council of India, The Bar Council of India etc.

d ) Ethical Standards
It is essential to have professional ethics. Unfortunately whole world lacks in this. Simple reason for this is, that there are very few organisations representing professional managers. Existing such organisation do not have proper co-ordination. Eventually this profession, though of outmost importance for gearing up and developing industrial and business economy aimed at national goal of economic developement , is being neglected. What is needed today is that there should be strong associations having affiliation to the international association, thus fixing global standards. If this need is catered to some universal standards can be formul ated to regul ate

education, training, entry in the profession and so on.

e ) Community sanction and monetary rewards

Management professionals are expected to have commitment to services rather than financial reward. Management professionals have a high status in the eyes of community as a whole including the men who are directlty involved in achievement of goals. As these can be satisfied if they a re properly rewarded i n terms of money. Their achievements are ultimat ely the achievement of the organisation to which they render their services. Naturally they deserve high monetary rewards. That is why management consultants or professionals charge high fees,which they feel to be commensurate to the services rendered by them. Community sanctions and monetary rewards go hand in hand which is a precondition for terming an occupation to be profession.

8. Management is an universal process

Application of principles and techniques of management is not restricted only to business but they have universal application also. They are applied to social, religious, charitable and non profit organisations also. In absence of management, none of the orgnisations can walk a single step. Wit hout management, organi sational goal s and obje cti ves would not be achieved. Management is the life blood of the organisation.


Every business enterprise has certain pre-determined objectives. No business enterprise can achieve its objectives until and unless all the members of the unit make an intergrated and planned effort under the directi ons of a centra l co-ordinating a gency, which i s techni cally known as MANAGEMENT and the methodology of gett ing things done is known as management process. The process in general is defined as a series of actions or operations conducted to an end. The logic of the management and the sequence in which they are performed is designated as Management process. Generally this includes the main functions of a manager viz. i ) decision making, and ii ) implementaton of decisions. Naturally these two are the functi ons which are included in management process. These functions are performed by : Planning, organising, staffing, motivating and controlling.

Planning Organising Actuating Controlling

Business goals Figure: The Management Process Management process, aimed at achievement of organisational goal includes these five functions. These functions are to be performed in the sequence they are mentioned. Thus we can say that managers have to walk along the route of management process to reach organisational goals. The desired result, objective or goal is attained by performing certain fundamental management functions.

They can be grouped under five basic heads mentioned earlier .

1)Planning : Planning means thinking in advance the future course of action. Planning is
intellectual in nature. It is a mental exercise. It is a vision of future and preparing for it. Planning, as decision making, is selecting among many choices. Planning forecasts future problems and involves selection of courses of action to handle them. Foreseeing the probl ems is one of the essentials of planning. Their severity is anticipated so that preparatory provisions can be made to handle them. Planning, as decision, answers to the following basic questionsi) What should be done ? ii) How should it be done ? iii) Who will be responsible for doing it ? iv) Where it should done ? v ) Why is it to be done ? vi) When should it be done ? Planning involves taking decisions of action in advance. Planning emphasizes the fact that if one knows where he is going, he is more likely to get there. Good managers endeavour to draft a plan which will make things happen in the desired way. This is also stressed by the saying. Good managers make things happen. Things do not just happen to them. Best planning is concerned with fixing the objectives, determining the strategies policy and prescribing the procedures as guidelines to future action. It is the most important step in the process of getting results. It enables the management to be a step ahead of each activity, retain initiative to make use of any opportunity and anticipate problems which may actually arise. Thus planning assumes first step in management process. The process of planning involves the steps shown in the figure. It means that the plans must be in detail but flexible so that bear the capability of being re-adjusted in case there is a change in working condition or in objectives of the organisation.

2)Organising : Once plan is prepared and methodology to achieve goal is decided, the jobs
are required to be allotted and allocated to a group or groups. Naturally groups are formed. The whole process of forming groups and allocating jobs is organisation. Thus, after planning the next important step is organising. In order to accomplish the work it is necessary to distribute or allocate the necessary component activities among the members of the group. Generally the component time and cost , wi ll be realised. After assignment of a component activity it is a must to delegate authority, so that the allotted activity can be accomplished. From this authority delegation arises various organisational relationships. This task of allocation, authority delegating and establishing relat ionship by the manager is known as organising. Thus organising is basically concerned with grouping the activities required to attain the planned objectives, defining responsibilities of the people in the organisation, delegating appropriate authority to them to discharge their respective responsibilities and establishing structural as well as, working relationship to enable coordination of the individual efforts towards accomplishment of objectives of the enterprise. The process of organising involves the steps given in the fig. It is a fundamental function of management authority and the key to the managerial job. Delegation of authority is the key to organisation. We cannot speak of manager unless he has authority and we cannot speak of creating an organisation unless authority is delegated. The organisation structure is, of course, not an end in itself but a tool for accomplishing enterprise objectives.Efficient organisation will contribute to the success of the enterprise and for this reason,

application of organisational principles is very important.

3)Staffing :Staffing is concerned with ensuring that the right type of personnel isavailable to
undertake and execute the varied activities required to attain the planned objectives of the organisation. Staffing involves filling the positions needed in the organisation structure by appointing competent and qualified persons for the jobs. It, therefore includes activities such as anticipating manpower needs. adopti on of an appropriate selection procedure, providing ma npower appraisals and development. This needs manpower planning and manpower management. Much of the work relating to human resource planning and management is delegated to personnel manager. However, top management is ultimately responsible for all activities to staffing.

4)Motivating :Motivating means inspiring the personnel with zeal to work and co-operate
for the accomplishment of common objectives. Motivation is the process of creating organisational conditions which will impel employees to strike to attain objectives and development. Motivation is the complex of forces starting and keeping a person at work in an organisation. We may define motivation as a willingness to expend energy to achieve a goal or reward. It is a force that activates dormant energies and sets in motion the action of the people. It is the function that kindles a burning passion for action among the human beings of an organisation. Motivation is a powerful tool in the hands of a manager for getting things done. Effective motivation improves the performance of the employees. Employees can be motivated by giving them reward, proper appreciation of work, fair treatment which helps in increasing their enthusiasm and performance too. There are four types of motivation techniques i.e. a) positive or incentive motivation b) negative or fear motivation c )financial motivation d)non-financial motivation. If a manager wants to get work done by his employees, he may either hold out a promise of a reward for them for doing work in a better or improved way, or he may constrain them, by installing fear in them or by using force, to do the desired work. In other wards, he may utilise a positive or negative or financial or non financial type of motivation. All these types of motivation are widely used by management.

5) Controlling : Controlling means observing whether everything is going on according to

plan or not. Controlling is nothing but conciliation of the plan with the actual work. ensuring that the objectives in terms of the plan are fullfilled. Controlling includes an eva luation to determine whether the planned objectives have been achieved or not. Controlling shows where improvements are required. Adequate control can thus lead to innovation, improvements or modifi cat ions in previously determined objectives. Control is a fundamental management functi on that ensures work accomplishment according to plans. It is concerned with measuring and evaluating performance so as to secure the best result of managerial efforts. It is an essential feature of scientific successful management. Controlling is nothing but conciliation of the plan with the actual work and locating the lapses, if any, so as to bring the methodology of work on correct track. For this the manager has to be very alert and find out the reasons for such lapses or deviations. He is also responsible for implementing

corrective measures. All these things are ultimately aimed at achievement of business goals. Management can be looked upon as a process by which mangers formulate, direct and operate organisations with coordinat ive human effort t o attain predetermined objectives. Management is a process concerned with planning executing and controlling the activities of an enterprise. Managerial behaviour must be goal directed which results in a succession of activities and events by which the organisations work proceeds. Management is concerned with evolving workable plans which are then put into action result ing in certain consequences which have to be observed, evaluated and constantly compared with the objectives prescribed in the plan. This cyclical process can be described as the management process. Thus this process starts from a point i.e. planning and till it reaches the point i.e. goal some certain distance is covered. But this wheel does not stop. It further moves to cover further distance in forms of another activity. A ladder, to be climbed to reach the goal is management process.


Modern era is of knowledge explosion and Technology improvisation. This is, naturally, adopted by business., industry and all other organisations including Government. Added to this is Globalisation and thereby cut throat competition. This has to be managed efficiently. Survival of the Fittest has become a symbol of efficiency. If new technologies are not adopted by industries, competitive goods, consumer demand globally spread over, automation, computerisation and specialisation have become very important. One can not eliminate the behavioural psychology of human element involved through out this process. Marketing of the consumer goods has also become very complex. Therefore it will not be exaggeration if we say that complexity at all levels of business, industry and any other field has become their characteristic. Naturally, one, who is at the helm of the situation and who is responsible to look after efficient and profitable conduct of all operation in business, industry or elsewhere, must be efficient and profitable conduct of all operations in business, industry or elsewhere, must be efficient and ntelligent enough to pave a smooth way through this specialised but complex and ticklish situation. Person or group of persons responsible for this is Manager and all his activities towards fulfilment of predetermined goals taken together is Management. In this discussion lies the importance, role and scope of Management. A Government and /or any organisation without good and efficient ma nagement is a struct ure buil d on holl ow founda tion. In short , mana gement is an essential accompaniment of all social organisations and it is to be found everywhere as a distinct, separate and dominant activity. Importance of management in developing, underdeveloping and underdeveloped countries is more. Only the experienced, capable and efficient managers would be able to shoulder the responsibilities of future. Increased productivity and output is the goal of countries like ours having mixed economy. Developing country like India and others have a dream of higher porductivity. Management organises the factors of production for better performance, greater productivity and increased supply of goods as well as services. Indirectly it gives a helping hand to the development of society and better welfare of the public. It is by efficient management that limited resources can be utilised more effectively to meet the demands of growing population. During the last three decades countries like US and Canada doubled their industrial output and increased their agricultural production by 50%,through application of better technology and introduction of new managerial methods. There are a number of instances in the history of industrial development in which managers with outstanding abilities had revolutionised the conditions of business firms and made them prosperous.

GOALS CONTR OLLING MOTIVATING STAFFING ORGANISING Anticipate PLANN ING Divide work into Cr ystallise component MANAGER objective activities Collect and Design job synthesise structure informa tion Define resCompair ponsibilties alternatives Establish in terms of structural objectives relationship feasibility & to secure consequences co-ordination Select optimum course of action Establish policies procedures and methods.
Ma npower nee ds Develop job descr iption and man specifications Decide appropriate source of recruitment Arrange se lection procedure Decide manpower developm ent activities Determine suitable training programmes & Techinques. Provide effec tive leader ship Motive discipline d behaviour Communicate Provied climate for subordinates development Identify potential problems Select mode of control Audit measure & evaluate in terms of planning Spot significant deviation Ascertain causes Take remedial action.

Figure: Management process

The higher the degree of managerial skill, the faster will be the economic growth. Management is the one and perhaps the only resource of production which generates life and momentum in the enterprises as a whole and makes its impact by improving the competitive position and the scale in operation. It helps to manufacture better production at reasonable cost and enables to bring greater returns to shareholders and the society. The role of management has been pin-pointed by Franklin Moore in the following words. We look to the managers of our business companies to make most of the changes which are to improve our wel l-being, we expect management to preserve and add to the nations supply of capital,industrial know-how and productive capacity. We expect management to increase the nations supply of goods and services, year by year and to maintain widespread employment, good wages so that all of us will have jobs and more and more leisure, more conveniences and less drudgery. And how is management to produce more goods ? By getting rid of all kinds of waste, by becoming ever more efficient, by making products with fewer manoeuure by bringing out new products and by getting products distributed to customers at reasonable price. Harbison and Myers have analysed

this role from three aspects :1) an economic resource 2. a system of authority and 3. a class or an elite. Management is itself an economic resource or a factor of production and as such it is similar to capital, labour or natural resources. Managerial skill like capital must be acquired and effectively employed or invested in productive capacity. Capital-intensive industrial development is inconceivable without talented manpower. In many instances management is even more critical factor in industrialisation than capital and almost more essential to development than either labour or natural resource. Management is a system of authority It is ineffective as a resource unless it can operate effectively as a system of authority in industrial society. Within the managerial hierarchy itself there are lines of command and patterns of authority at all levels of decision-making. In a very real sense, management is a rule making and rule-enforcing body. The exercise of authority by it is indispensable to industrial development. Management is a class or an elite. In any industrial society the members of management are a small in number but are usually aggressive minority. In varying degrees indifferent countries they enjoy a measure of prestige, privilege and power as an elite. This particular perspective has also been prominently emphasized by James Burnham in the managerial revolution (1941). According to him, capitalist, society is undergoing rapid transformation. The actual managers are not the capitalist, Within the new social structures a different social groups or class the managers will be the dominent or ruling class. Co-ordination of human effort for better production is another important contribution of management. It does this by adopting practices and procedures through which the rewards of labour can be increased without reducing the returns of risk-taking enterprise. Management is not just building factories, dams or highways, employing skilled workmen, training supervisors or using mechanical devices. It is also playing with the aspirations, feelings and reactions of people and getting more work from them through willing effort. There cannot be any impressive improvement of industry or agriculture without the motivation or greater productivity or workers engaged in it. Drucker has gone a step ahead. He regards management not merely as a basic institution, a dealing group but as link with the survival of Western Civilization. Management , he wrote, is not only grounded in the nature of the industrial system and in the heads of the modern business enterprise to which an industrial system must entrust its productive resources both human and material . Management also expresses basic beliefs of modern western society. It expresses the belief that economic changes can be made the most powerful engine for human betterment and social justice. Management reflects the basic spirit of the modern age. It is in fact indispensable. (Management organisation and practice - by Harper and Row)


Urwick and Breach has rightly observed, No ideology, no political theory can win a greater output wi th less effort from a given complex of human and material resources, but only sound management. And it is on such greater output that a higher standard of life, more leisure, more amenities for all must necessarily be founded. In fact the structure of a welfare state can be said to be safe and sound provided it is based on a well organised management. Management contributes a lot towards the making of a state and its citizens. It is the art of developing men, and this fact clearly reflects upon its significance. The task of the manager is not an easy one. As he directs the enterprise, he endeavours to

allocate human and physical resources wisel y to underst and and solve a host of problem and to recognise and act upon his opportunities. In fact he faces organisational difficulties. He is expected to make decision and to behave with responsibility. He is concerned with the needs of individuals coordinating and maint aining subordinates. colleagues and superiors. There responsibi lities demand careful observation objective analysis and sound Judgment- traits of the true professional. There are ten basic roles of managers. The work of managers is very challenging. Managers working at various levels is extremely complex and openended at the same time. It is more artistic than scientific. Although the activities of managers at different levels vary, they have important elements in common. The crux of Mintzbergs work is the identification of ten managerial roles. Fig. No. 4 helps us to see managerial work across levels and to integrates some of the vast amount of fragmented information on the subject. Mi ntzberg felt that the ten of managers fall into three groups namely, interpersonal role, process information role and decision making role. All these ten roles are described briefly as under : It describes the manager as a symbol required by the status of his (a) As figure head : office, to carry a variety of social, legal and ceremonial duties. It describes the manager relationship with his own subordinates, his need to (b) As leader : hire, train and motivate them. As a leader the manager must bring their needs in accordance with those of his organisation. (c) As liaison officer : organisation. It focusses on the managers dealings with people outside his own

2. Process information role :

It refers to the manager continuously seeking and receiving information (a) As monitor : about the organisation in order to understand his milieu thoroughly. Much of the information is privileged. He alone receives it because of the contacts he develops in his liaison role and because of his status in leaders role. In this role, the manager shares some of the privileged information (b) As disseminator : with his subordinates. (c) As spokesman : organisation. In this role, the manager informs outsiders about the progress of his

3. Decision- Making Role :

In this role, the manager takes the responsibility for bringing about (a) As enterpreneur : change in his organisation. He looks the problems and opportunities and initiates projects to deal with them. In this role, the manager has to take charge when his organisation (b) As disturbance handler : faces a major disturbance or crisis like the loss of key executive, a strike, destruction of a facility etc. In this role, the manager decides as to who will get what in the (c) As resource allocator : organisation. He schedules his own time according to his priorit ies. He designs his

organisation, decides who will do what, a nd allocates authority to take all important decisions. In this role, the managers take charge whenever organisation their enter (d) As negotiator : into crucial negotiations with other parties. His presence is required because he has the information and authority to make the real time decisions as difficult negotiations require. Mintzberg emphasised on the inseparability of these ten roles and advocated for viewing them as forming a Gastalt an integrated whole. For example, status, as manifested in the interpersonal roles, brings information to the manager and it is this information (together with the status) that enables him to perform the decision making role effectively. Further he observed that different managers emphasis different roles.

George has viewed managers job in a broader context, Determining the collective objectives of an undertaking and generating an environment for their achievements is the t otal function of a manager. This environment consists of two parts. First is the physica l part which includes all the physical aspects of which it is compared i.e. light, noise, ventilation, the tools and materials that employees work with and the sequence of work performance. The second part is conceptual in natrue and refers to the mental facet of the environment which affects an employees attitude towards his work and his work place. An effective mental environment makes the employee particapate willingly in the endeavours of the organisation. A managers prime task, therefore, is the creation of a healthy, physica l and ment al work climate which wi ll i nduce other to willingly contribute their efforts to achieve the objectives of the undertaking. Without this, proper physical concept ual environment or work climate, the participants efforts be ineffective or even lacking. Management has a wide scope in every field. It is very difficult to precisely define the scope of management. Yet the following may be considered to evaluate the scope of Management : 1) Subject matter of management 2) Functional area of management

1) Subject matter of Management : In modern days, every activity of any organisation is

basically looked after and manged by management. Whole of the management process is a chain of activities. Thus from starting with planning it has to go a long way to achieving objectives. All these activities assume the status of subject matter of management. In nutshell planning, organising, directing, co-ordinating, motivating, staffing, leading, communicating and controlling areas becomes the subject matter of management. There is no area which remains untouched by the management. It can, therefore, be said that management has a very wide scope in any organisation.

2) Functional area of Management All : the act ivities added with others become total
management. But different skills and knowledge are required to manage them. Secondly it becomes a hard task, for one person to handle all these properly. Need for specialisation is emerged out of this. Now-a-days a qualified manager tries to acquire specialised knowledge of one or two of the areas of management. Such specialised areas are: (a) Finance (b) Human resource

(c) Materials (d) Marketing (e) Machines Money occupies prime import ance in successful running a) Financial management : organisation. Only applying or pouring money in organinsation does not ensure success. Therefore, now-a-days, money is being taken as a part of finance. Finance includes cash and fund flow, application of different management tools to transcript the financial accounts in the form of management accounting which provides data of decision making. Cost of product ion occupies major port ion in outflow of funds. As such a financial manager must know the cost as well as financial accounting. As far as external fianance is concerned, managing the creditors and investors along with government statutes is also a major area where the management has a wide scope. Next M is men. It is not only a human b) Personnel or Human Resource Management : but a resource also. Managing this human resource is much ticklish and thus intelligent, as it is a live resource and not a dead resource. A dead resource will not complain for any untowa rd handling, immediately. No doubt it will tell upon the profitabi li ty of the undertaking in long run. W hereas mismanagement of human resource immediately affects the organisation. Fortunately development of this human resource has gained a fast momentum. It has resulted in efficiency and , in turn, profitability of any undertaking. This includes various fuctions right from recruitment to retirement of employees. A Japanese management scientist has rightly said that they take care of their employees from womb to tomb. Thus this area of management has a very wide scope and management skills are essential for this. Raw material is the most important fa ctor of (c) Materi al / Purchase management : production and thereby important element of production cost. Unless it is controlled, this cost will inflate and finally tells upon the profit of any organisation. There are ways and means to control it. But, again, it is a specialised job. Right from procurement of material to its utilization, that too, efficiently and conservatively is the area of material management. It involves procurement of right material at right time and at right cost, stocking of material, its preservation, its issue to production department and fi nall y its proper accounting. Al l these require management skills. Thus purchase / material management fall under the preview of scope of management. d) Marketing management : Marketi ng of the goods produced i s equally important, in todays competitive world. Unless your product is made known to its consumers, it is very difficult to market it. Marketing does not simply mean selling. On the other hand selling is a part of marketing. It involves, market research, creating demand, good packaging, effective a dvert ising, regular and continuous supply, transportation, selling, warehousing, allowing credit and finally post sales service which is most important as far as mechanical and electronic goods are concerned. Functions and area of marketing are very vast. It also requires specialisation in management. Thus marketing has assumed a very specialised and expertised branch of management. Naturally scope of management is very vast in marketing. e) Machine / maintenance management : Just as bad workman creates a mess in production, bad and ill- maintained machines deteriorate quality of production. As the saying goes one can be fool ed once and not all the time. Inferior qua lity of goods cannot be continuously marketed. Standardisation of production has become the need of the time. This standardisation can be maintained onlyof all five Ms. are of good quality. Todays consumer is more quality conscious, and purchases

quality goods. This good quality, can be maintained by utilisation of modern machines and their quality maintenance. Managers have a wide scope in this also. All the above are main areas where management has wide scope. Following areas are also covered by management : (1) Office management : This includes the selection of office location, adopting appropriate office layout, staffing function, smooth flow of work, office forms design, control, office appliances and machines, giving best services from office to different parties or people. (2) Development management : This is an area where in allround development of managers and managerial skills is developed by way of experimentation and research. Thus training, orientation refreshers, conferences and seminars are arranged.

(3) Manage ment as an interdisciplinary approach : For correct appl ica tion of the
management principles, study of commerce, economics, sociology, psychology and mathemati cs is very essential. For better discipline in the whole orgainsation,management must adopt an inter-disciplinary approach which is very essential due to complexity of business organisation.

4. Principles of management are of universal application T : he principles of management

have universal aplicati on. Business organisation, indust ry, trade, commerce, educational, religious, charitable, political and social institutions etc. can be run successfully and efficiently by applying modern principle and techniques of management everywhere. (5) Essentials of management are Following : three are essentials of management : i) Scientific methodology ii) Human relationship iii) Quantitative techniques Scientific methodology must be adopted while applying management principles. Management must concentrate on human relation and follow quantitative technique for productivity as well.

6) Modern management is an agent of change The : technique of management can be

improved by proper research and development. Due to fast changes within and outside the business organisations, improved and appropriate techniques of management must be developed through research.


After going through the forgoing paragraphs one can easily understand as to how important and significant management is in modern era. Proper outcome of all the management are as and their functions can lead the organisation to the everest of all round success. Following points will elaborate the importance.

1) Management meets the challenges of change In : the era of globalisation, liberalisation,

computerisation, privatisation mult inati onals,fast and growing changes are taking place. In recent years the challenge of change has become intense and critical. This challenge of changes can be met by professional and efficient management only. Complexities of modern business can be overcome only by scientific management. 2) Effective, efficient and profitable utilisation of the seven Ms : era two Ms In this ( Methods, Markets, ) are added to traditional Ms i.e. men, materials,money, machines and management. Among all these seven, management stands at the top. It determines and controls all other factors of business, and manages them for achieving the predetermined objectives and goals of the organisation.

3) Development of resources Good : management always tries for development of other

resources.It produces good business by creating a vital, dynamic and life giving force in the organisation. 4) Management direc ts the organisation Role : of management as a director is very important. For instance, mind directs and controls the body to fulfil its desires, like wise management directs and controls all the organs of organisation to achieve the desired goals. 5) Management integrates various interestsBusiness : organisation activities are carried out by working groups, involving a number of individuals. There are various interest groups and they put pressure over other groups for maximum share in the total output.Management balances these pressures and integrates various interests. Interest of the business organisation and that of the individuals is integrated by the management in such a way, that interests of both the parties are achieved. As a result both the parties are satisfied and work together happily in the organisation. 6) Management provides stability : S moot h and cont inuous running of busi ne ss organisation depends upon the efficiency of management. Degree of stability of any organisation is positively correlated with the degree of efficiency shown and adopted by the management. It is necessary to change and modify the resource in accordance with the changing environment of the society. If the business enterprieses do not change according to the changing environment, their stability may be in danger. 7) Management provides innovation : Innovation is a must for business and i ndustry. Otherwise it becomes rigid and outdated. Innovation requires new ideas, improved or new suggestions, new dimension, new vision, excellent imagination etc. All this is provided by management, which makes the business and industry modern, live and dynamic. 8) Management provides co-ordination establishes teamspirit : In an organisation, different activities are performed by different departments. A large number of activities are going on cont inuously and / or simultaneously in a business enterprise. The management onl y, has to coordinate all these activities and establish team-spirit among the working groups. Coordination in activities, maintaining and establishing team spirit, is a great task to be done by management alone. 9) Management tackles business problems Management : is the only instrument with the enterprise to tackle all sorts of problems of business enterprises. Management possesses the skill for tackl ing the variety of problems. It very well knows how to face the crit ical problems of the organisati on like compet ition of technology, problem of marketing, probl em of human resources, physical resources, financial resources and so on. It provides a tool for the best way of doing a task. 10) Management is a tool of personality development : Management at tempts t o improve the personality of personnel. Management is not only for the things but the development of men also. Management is always searching new ways and means for developing the personality of the employees. It tries to develop alround personal ity of employees through education training. It also at tempts how to raise t heir efficiency and productivit y. Management contribution in personality development of employees is indispensable.

11) Importance of management in Indias developing economy :Our country is a

developing country. Role of management in such situations and circumstances is very important.Total economics of a nation depends upon how the managers are giving their honest and loyal contribution for it. We have a small number of managers. Added to this is scarcity of professional managers as well as experienced managers. There is a great demand for professional managers, business executives to successfully run business enterprises. History of business reveals the fact that t he complexity and sophistication of a business need professional management. There is a direct co-relation between the

sophistication of business / industry and the kind of managment needed. For fast development of economy after industrial revolution, we are required to establi sh industries like machines, t ools equipments, electronics, engineering petrochemicals, chemicals, iron and steel, pharmaceuticals, cement, fertilisers, computers,etc. and to manage these industries we need the managers with the abilit y to manage them successfully. These ma nagers must have the knowledge of technical and scientific know-how, professional and administrative competence and dynamic personality. It is universally admitted that scientific training can build good managers. The managerials skills have to be acquired by training and education and the scientific managerial approach calls for initiative, entrepreneurship, goal setting drive and dynamism. Professional managers must have necessary training and ability to spot t he problem areas and bring in together al l the diffused talent s of t he various technical and professional experts such as engineers, scientists, economists psychologists, sociologists etc. to tackle the problem spots with confidence. If business administ ration and management is founded upon a science, if its practice is a profession, then in the near future we must expect its exponents to be men of high ability and perfect knowledge. Men who have graduated in their profession and are qualified thereby be entrusted with the responsibilities which its practice imposes. Thorough knowledge of the principles, and practice of business administration is needed for developing more good managers. Thus in short management is an essential accompaniment of all social organisations and it is to be found everywhere as a distinct, separate and dominant activity. Management is the custodian of the economic welfare of the community.

Following are the unique features of management. 1) Management is an Activity : Management is an activity which is concerned with the efficient use of human and non human resources of production. It is the driving force that inspires an undertaking,to knit it into an entity and creat the conditions and relationship which bring about full use of its power and resources. Management deals with the achievement of some 2) Management is a purposeful activity : clearly defined objectives. The purpose of manufacturing enterprise is to profi tably manufacture products for satisfying the consumers. For this purpose, management organises plans, directs and controls and enterprise. There may be cert ain other goals also. Managerial success is commonly considered by the extent to which these objectives are achieved. All business organisations are social organisations as 3) Management is a social process : they are constituted of men. The management has to control , organise and motivate them. It can improve their lives and create a favourable climate for their development. Because of these social organisations, which produce variety of products, the standard of living of society is concerned. 4) Management is a science : Now-a-days the science of management is universally accepted as a wide and distinct discipline. It has assumed professional charact er. That is why managerial effectiveness requires the use of certain knowledge, skill and practice. There are certain fundamental concepts, theories, tools and techniques which constitute the subject matter of this social science. They are communicable hence being taught to would-be managers in the schools of management. There are definite principles of management. It is a science because by the application of these principles predetermined objectives can be achieved. Management is also a social scince. It is supposed to be the Behavioural science of in exact nature. Its principles and theories are situation bound despite the fact that a large number of theories

and principles of management that have been established their applicability may not necessarily lead to the same result. The process of management is very much related with the behaviour of people at work and their behaviour cannot be predicted in exact manner. So the limitations of social sciences are there wi th sci ence of ma nagement. But with the int roducti on of quanti ta ti ve tools in the field of decision-making, management is growing as science. It has an organised body of knowledge having its own nature. It can be communicated to new-comers also through formal training. To conclude we can say that management is a social science having its own approach and dynamics in different work situations. 5) Management is an Art : Management is an art of getting things done through people. Managers must possess this art. Artistically, managers get the things done through people. Art is the best way of doing things. Art i s concernd wit h the exercise of the know-how for the effective accomplishment of desired results. As a matter of fact the process of managing is a fine art, as it is concernd with the application of the principles, keeping in view the real life sit uations. The same process is followed in a repetitive manner and the practice is moulded according to the experiences after applying the set body of knowledge. Design and redesign of systems continue until the managers find a proper solution and desire results. So the art management is also creative. It develops new situations new designs and new systems needed for further improvement. But there is not, one best way of managing. Every manager has his individual approach and technique in solving problems. One of the scholars has very aptly said that business is the oldest of the arts and youngest of the sciences. Management is the management of 6) Management is associated with effort of a group : people and not the direction of things. Business activities are group activities. Management is a directive activity aiming at the effectiveness of collective human effort. A good management inspires them and increases their willingness to work. 7) Management is getting the things done : A manager does not do any operating work himself. He gets the work done by, with and through the people. He has to direct them and develop their talent by adopting technical, human and psycology skills. Management is not an abstract thing. It is a social 8) Management is an intangible force : which cannot be seen with the eyes but it is evidence by the quality and level of the organisation. Whatever 9) Management is to achieve the predetermined objectives of the organisation : objectives are determined by the business organisation they are achieved by the management only. Every managerial activity has certain objectives, which should be expressible in spoken words or in writing or implied. These objectives, if determined by administration without the positive help of the management, cannot be achieved at all. 10) Management is an integrating process : Management is an integrating process in the sense, it integrates the men, machine and material to carry out the operations of the enterprise. This intergration process is result oriented. Management is meant for optimum 11) Management aims at maximisation of profits : utilisation of human and non human resources which ultimately results in maximisation of profits to the organisation. It is the expectation of the owners from management, to bring desired results for the organisation. Rational utilisation of available resources to maximise the profit is the economic function of management. 12) Management is a must for group activity : When the activities are carried out by an individual, himself it is not that difficult to manage them. But whenever the activities are carried on by

a group of individuals, management is a must for carrying on the activities. Without management, group activities may not be started at a right time and finished at the right time, Management plans, organises, co-ordinates, directs and controls the group efforts, for achieving the enterprise goals. Management is always concerned with the group efforts and not indiviudual efforts. It is one of the important features of the 13) Management is separated from ownership : joint stock company, that management is separated from ownership. This only means that owners and managers are not the same persons. Owners are not managers and managers are not owners. In modern times there i s a separation of management from ownership. Todays big corporations are owned by a vast number of shareholders scattered through out the world, while their management is in the hands of qualified and competent managers who normally do not possess ownership interest in the enterprise. 14) Management is an universal activity : Managing involves getting things done through and with the people. Management means getting things done skilfully from others. Managers perform the same functions regardless of their place in the organisation structure or the type of enterprise in which they are engaged. The techniques and tools of management are universally applicable. 15) Management is a profession : In modern days management is a profession like other recongnised professions. Even management is based on certain princi ples and theories, and their application in practice is becoming a must. 16) Management has a separate identity : Management is an art and science of getting things done through and with people. Yet their identity as thinkers is quite different from the identity of the doers. Administrators and managers are doers or executors. As an executors they are having a separate identity. Management changes according to the changes 17) Dynamic principle of management : arising within and out of organisation. Management is an adjustable element. It, not only, adopts itself according to social changes, but also introduces innovation in techniques of getting things done. 18) Management-need of organisation : Managements achieves the predetermined objectives of the orgainsation with the help of organisation. Organisation works as a tool for management for desired results. According to the size and 19) Management is needed at different levels of organisation : nature of business enterprise, either three or five levels of management are required. If the business enterprise is small only three or two levels of management are required e.g. Top level, Middle level and Lower level of management. If the business enterprise is large enough then top level,upper top level, middle level. upper middle level and lower level of management may be required. It simply means that, management is essential at different levels of organisation. Every manager 20) Management is also characterised by the quality of leadership : must possess the quality of leadership. A person who does not have quality of leadership cannot become a manager. According to R.C. Davi s management is the funct ion of executive leadership everywhere. Management having special skills activates it 21) Management is a system of authority : for achieving the objectives of the organisation , making the organisation profitable, keeping the organisation going , its smooth running , making the organisation successful, getting the suitable type of people to execute the operations is the significant aspect of management. Perfection in this skill can be achieved only after practice, called as experience. There is a great demand for skilled and experienced

managers. Thus we see that management is so complex that our mind cannot catch all its specialities at the same moment. In nut shell, it is such a social and technical process that comprises a series of actions that leads to the accomplishment of objectives. It is such a function of an enterprise which concerns itself with the direction and control of the various activities to attain the business objectives. It is the dynamic life giving element in every business. without its leadershi p the resources of the production remain mere resources and are never converted into production. Managers focus their attention and efforts in 22) Management makes things happen : bringing about successful action. They know where to start, what to do to keep things moving and how t o follow through. Successful managers have an urge for accompl ishment. Ma nagement is acceptable because things are accomplished through them. 23) Management is an outstanding means for exerting real impact upon human life : A manager can do much to improve the work environment, to stimulate people to do better things and to make favourable actions take place. Frustrations. and disappointment need not be accepted at face value and passively viewed as inevitable. A manager can achieve progress, can bring hope and can help the group members to achieve better things in life. All the characteristics as mentioned above, certainly, help us in understanding the real meaning of the term Management.

Study of the functions of management is an important point in the theory of management. Management is the art of getting things done through and with people. Overall job of a manager is to create within the organisation, an atmosphere which facilitates the accomplishment of its objectives. For this purpose he has to perform a series of functions. Management is what management does- points out the functional approach to management and emphasises the importance of distinctive managerial functions which together give us an unified concept of the process of mana gement. Functions of manageme nt are al so called el ements of management. Many management thinkers have discussed the functions of management but it is a strange thing that each thinker, author accepts the pervasiveness of the managerial functions, but there is hardly any unanimity in them. Everyone has his own list of functions and tries to defend his classification. If we go through the management l iterature,we shall come across a large number of classification of management functions. The chief reason for this is that different scholars discussed the functions of management by studying different organisations and from different angles. For example R.C.Davis enumerates only four functions organising, executing and controlling. L. A. Appley too describes three functions planning, executing and controlling. Breach says that they are four - planning, motivating, coordinating and controlling. Fayol has described five functions as planning, organising, commanding, coordinating and controlling. But this defference of opinion does not come in our way. According to Koontz and ODonnell - The most useful method of classifying managerial functions is to group them around the activities of planning, organising, staffing, directing and controlling. This classifcation of managerial functions is a helpful and realistic tool for analysis and understanding. i) Planning,

ii) iii) iv) v) vi) vii)

O rganising D irecting S taffing C oordinating R eporting and B udgeting

G.R. Terry described managerial functions under four heads namely planning, organi sing, actuating, and controlling. According to L. Hall there are five main functions of management. They are i) Forecasting ii ) Planning iii) Controlling iv) Motivation and v) Co-ordination Massie has stated the fol lowi ng management funcitons - Planni ng, organising, staffing, communication and direct ion. According to Niles functions of management are organisation,co-ordination, administration and leadership. In classifying the functions of management one must remember clearly, the important operations such as marketing, manufacturing, accounting, engineering and purchasing. It differs from one enterprise to another but the functions of manager are common to all. We can broadly classify the functions of management under the following two broad categories. 1) Managerial functions 2) Operative functions Functions of Management Managerial Functions Operative Functions 1. Planning 2. Organisation 3. Staffing 4. Directing 5. Co-ordinating 6. Motivating 7. Communicating 8. Decision making 9. Controlling 1. Production 2. Purchasing 3. Marketing 4. Finance 5. Personnel

We propose to discuss here the managerial functions which are listed under 1 above for they are common to all the operative functions viz. production, purchasing, marketing, financial, personnel.

1) Planning :
Planning is an indispensable as well as first and foremost function of management. Almost all managers, whether they are at the top, middle or bottom of the organisation have to plan. In the words

of M.E. Hurle Planning is deciding in advance what is to be done. It involves the selection of objectives, policies, procedures and programmes for attaining enterprise goals. Planning determines the objectives to be achieved and the course of action to be followed to achieve them. It is a menta l process requiring the use of intellectual faculties, foresight and sound judgement. It is selecting and relation of facts. Making and using of assumptions regarding the future in the visualisation and formation of proposed activities are believed to be necessary to achieve the desired results. It involves deciding in advance what? when ? where ? how ? and who ? is to do it and how the results are to be evaluated. Thus planning is the systematic thinking about the ways and the means for the accomplishment of predetermined objectives. Planning virtually pervades the enti re gamut of managerial activity. This function is performed by the managers at all levels. The managers at the top level of the organisation devote more time on planning as compared to the managers at the lower levels. The lower level managers have to follow the policies, programmes and procedures laid down by the top management. The process of planning includes:i) determination of objectives ii) forecasting iii) search of alternative courses of action iv ) their evaluation v) drawing policies and programmes vi ) budgeting Planning is a prerequisite of doing anything. It is todays projection for tomorrows activity. Planning makes things happen that would not otherwise have happened. Systematic planning is necessary for any business activity, otherwise it will be done in a haphazard manner. Proper planning is a must to ensure proper utilisation of human and non-human resources to achieve the desired goals. Once the plan is formulated the manager has to indicate the objectives of the plan and steps to be taken by his subordinates. By communicating them, he makes the objectives effective. In practice, planning function is all pervading. It is involved in organising, leading, motivating and controlling. Budget is a part of planning as well as an instrument of control. Planning involves developing objectives, strategies policies, procedures, programmes etc. As it involves making choices, decision making is the heart of planning.

2 ) Organising :
Managing a business is not just planning. It includes putting life into the plan by bringing together the executive personnel, workers, capital, machinery, materials, physical facilities and other things or services to execute the plans. The process of organising is very essential for accomplishing the objectives of the enterprise set by administration and planned by ma nagement. It involves the establishment of an organisation structure through determination and grouping the activities, assignment of activities to the specific departments and individuals,defining role and establishing relationships, delegation of authority to carry out the responsibility and provision of coordination of men and work. Devel opment of sound organisation requires certain principles. Delegation of authority creates an organisation. It determines authority-responsibility relationship. These relationships must be properly co-ordinated to secure unity of organisation. Organisation provides a framwork of management of or a mechanism of purposive, integrated and co-operative action by many people, in a joint effort to implement any plan. Planning decides what management wants to do, while organising provides an effective machinery for achieving the plan or objectives. In brief, organisation is the process of dividing work into convenient tasks or duties by grouping such duties in the form of posts, by delegati ng

authority to each so that work is carried out as planned . Under organising we have mechanical as well as human aspect. Mechanical aspect provides an organisation structure or chart, describing the authority- responsibility- relationship side by side with formal organisation structure. We have also an informal or social organisation having an informal group leader, unwritten conventions and code of conduct and manager has to int egrate both these organisations in order to execute the plans and policies.

3) Staffing :
Staffing an executive functi on which involves recruitement, selection training, placement, compensating, promotion or demotion and finally the retirement of the employees. Thus staffing is a process of manning the organisation and keeping it manned.The sole aim of staffing is to take right man for the right job. It needs manpower planning, job analysis and such other staff functions. It is the quality of hired personnel which governs the future of the business enterprise. The staffing function has assumed greater importance these days because of rapid advancement of technology, size of organisations and complicated behaviour of human beings. According to Harold Koontz and Cyril ODonnell the managerial function of staffing involves manning the organisational structure through proper and effective selection, appraisal, development of personnel to fill the roles designed into the structure. Every manager is continuously engaged in performing the staffing function. He is actively associated with the recruitment, selection, training, and appraisal of his subordinates. Finally the first line managers or supervisors perform the staffing function when they participate in selecting, training and appraising their subordinates. Staffing is also a pervasive function of management for all activities relating to staffing.

4) Directing
Direction is also an important function of management. As the process of management is concerned with getting work done through and with people, it requires continuous encouragement to the people to work effectively. As such management guides and leads them continuously. It imparts instructions to them, communicates to them orders, rules and decisions, motivates, provides leadership, and guidance, supervises their work and behaviour and inspires them towards improved performance. All these functions are in the orbit of direction, thought it is very simple to define direction than to practice it. It requires foresight and experience. George Terry has used the word actuating for directing. Once subordinates are employed, the superior has a continuous responsibility of guiding and leading them for better work performance and motivating them to work with zeal, confidence and enthusiasm. Some management experts prefer leading in place of directing, particularly under democratic managerial set up. The function of leading has been termed as motivating, directing, guiding, teaching, stimulating and organisation. The manager must know how to direct others i.e. how to issue orders and instructions without arousing resentment or offencives. He must be able to secure willing obedience from his subordinates without destroying their initiative and creativity. Directing or leading is the art of influencing people so that they work with interest and enthusiasm in order to achieve group goals.

5) Co-ordinating :
In modern days organisations have grown in size and in character. There is a lot of complexities in business world. A large number of people work therein. Therefore co-ordination has become very necessary. In the words of Koontz and ODonnel The best co-ordination occurs when individuals see

how their jobs contribute to the dominant goa ls of the enterprise. This impli es knowledge and understanding of enterprise objectives. Some authors consider co-ordination as a separate function of management while many ot hers call it essence of management. The process of co-ordination involves synchronising individual actions with the goals of the enterprise. Co-ordination is an integral part of direction. It is concerned with harmonious and unified action directed towards a common objective. It involves inter-relating various parts of the work or organinsation. Co- ordination is an orderl y arrangement of group efforts to provide unity of action. It ensures that all groups and persons work efficiently, economically and in harmony. Co-ordination is a must in large scale business enterprises because of its complex and elaborate organisation structure multiple levels of management due to limited span of control, division of labour specialisation of work, inter-dependency of work or activities channels of communication. Direct, face to face, person to person communication is most effective for coordination. Coordination can be accomplished automatically if we have sound organisation structure. Co-ordination is an orderly arrangement of group efforts to provide unity of action.

6 . Motivating :
Motivation means inspiring the subordinates with a zeal to do work for the accomplishment of organisational objectives. A successful manager makes appropriate use of motivation to actuate the subordinates to work harmoniously towards the achievement of organisational goals. Motivation is a psychological technique of executing the plans and policies through the efforts of others. Desire and willingness on the part of the worker to perform a given task depends upon his attitudes, satisfaction, morale as well as the systems of communication incentive, fair treatment and human approach builtup by management. Through motivation, the manager inspires the subourdinates to do what exactly he wants them to do. This managerial function is fully reflected when we define management as the art of getting things done willingly t hrough and with other people. Management is interested i n two primary elements (1) Material or non-human resources and (2) Human resources. Motivation relates exclusively to human resources. Motivation and leadership are the master keys to successful management. They are also responsible to ensure productivi ty of human resources. Motivation can set int o motion a person to carry out certain activity. Human relation in industry has special emphasis to this managerial function. Effective communication and participation enhance the power of motivation. Democratic leadership heavily relies on motivation of employees. Different people are motivated by different types of rewards. To some, non-financial incentives like job. security, job enlargement, freedom to do work, recognition, achievement, respect, status etc.

7 ) C ommunicating :
It is process of passing information and understanding from one person to another. A manager,to be successuful, must develop an effective system of communication so that he may issue instructions, receive the reactions of the subordinates and guide and motivate them. A flow of information from the top level to the bottom level and from the bottom level to the top level as well as horizontally on the same level of organisation is communication. Communication also leads to sharing of information, ideas and knowledge. Existance of the organisation is based on good syatem of communication network. When communication breaks down, an organisation may collaps at any time. According to Barnard the first function of a manager is to develop and maintain a good system of communication. Organisational decisions are based on the effective communication of relevant information-facts feelings, ideas,

massages etc. Understanding, thoroughly the process of communication, can enable a manager to improve a lot the performance of the enterprise. In inter- personal communication between two or more persons we have transmission of information as well as flow of understanding based on two way- traffic of communication. Personal communication is the best form of communication. Managerial leadership depends upon upward communication to the leader in the form of feedback so that he can understand the feelings, emotions, motives and problems of subordinates and his power will have support and acceptance from below. Communication system serves two fold purposes. (i) It can integrate and co-ordinate all managerial functions as well as all enterprise operations and areas. (ii) It links the organisation with its environment and enables the enterprise to adopt with all variable forces of the environment. The business enterprises are aware of customer needs, competition, marketing opportunities, threats and risks only through effective system of communication. Communication helps in securing largest possible participation or consultation in decision making, planning and general administration. It provides democratic character to managerial process and strengthen the morale of the people.

8) Decision making :
It is most important function of management. Every manager has to take a number of decisions. Scientific decision-making is a well tried process of arriving at the best possible choice for a solution within a reasonable period of time. According to R. S. Davar, Decision making can be defined as the selection based on some criteria of one behaviour alternative from two or more possible alternatives. To decide means to cut off or in practical content, to come to, a conclusion. A decision is an act of choice wherein an executive forms a conclusion about what must and must not be done, in a given situation. A decision is something that takes place prior to the actual performance of the action that has been decided upon. It is a conclusion that the manager has received as to what he or others should do at some later time. It is a solution after examining several alternatives. Decision making involves two or more alternatives because,if there is only one alternative, there is no decision to be made. Decision-making i.e. selection of a suitable course of action is at the heart of planning. It is an important function of management. Management without decision is like a man without backbone. Nothing can be performed without taking decisions. Every aspect of management functions such as planning organising, motivating and controllig is determined by decisions, the result of which is the performance of the organisation in accordance with predetermined set of goals. Decision-making is, therefore, vital to all management activities. It helps set definite objectives, prepare plans of action, determine organisational structure, motivate personnel and introduce innovations etc.

9) Controlling :
It involves the process of visualising whether the activities have been or are being performed in the same way as contained in the plans because any deviation will result in inefficiency in the organisation. Control is the process of measuring actual results or present performance and comparing those results with plans or some standard of performance, finding out the reason for deviations of actual from desired and taking corrective action when necessary. The corrective action may lead to a change in the method of implementation of the plan or change in the plan itself or even a change in the objectives. Koontz and ODonnell have defined controlling as the mea surement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and the plans

devised to attain them are being accomplished. According to Haimann, a control is the process of checking to determine whether or not proper progress is being made towards the objectives and goals and acting. if necessary, to correct any deviation. Controlling is seeing that actual performance is guided towards expected performance. It is related to all other management functi ons. All ot her management functions cannot be completed effectively without performance of the control function. Thus controllig generally invloves the following steps. 1) Determination or setting up of standards. 2) Measurment of actual performance 3) Compairing actual performance with the standards 4) Correction of deviations to ensure attainment of objectives. Control is very much related to planning. Planning must be followed by control if it is to be successful. But in a running concern, planning and control go togehter because planning seeks to set consistent, integrated and articulated goals while control seeks to compel events to confirm to plans. The controlling function brings to light in the deviations, if any, and assists the management in making the necessary changes in the plan or policies.

10 ) Innovation
The famous modern thinker of the science of management Peter Drucker says that management is a creative rather than an adaptive task. The management must try to create new product s, new practices, new ideas and new structure looking to the needs of the future. Furthermore the function of innovation involves preparing people and organisation to face new challenges. Otherwise the organisation will become stale and static. Innovation function relates to research and development, which is essential in this age of competition. All big business concerns have started Research and Development Departments to keep pace with modern technique and up-to-date demand. Innovation becomes the part of business enterprises. If manager does not perform this function at a ri ght time, his business concern ma y become out dated or rigid.

LEVELS OF MANAGEMENT 1 ) Managerial Hierarchy and Number of Le vels :

Managerial Hierarchy means classification of managerial positions into a number of levels in the organisation. There is no Tailor-made formul a t o determine the number of management levels required in an organisation for efficient management. The number of levels of management depends upon the size of the business concern. The number of levels of management increases when the size of the business and work force increases. As well as span of control is one of the important factor for determining the number of levels of management. There is a limit to the number of sub-ordinates, a person can supervise and guide. Levels of management are increased to achieve effective supervision. It does not mean that an unlimited number of management levels be created. If there are so many levels of management, instead of effective supervision more problems may crop up. The problems may be of effective communication, coordination, control etc. These may ultimately harm the discipline of the business organisation. Classification and understanding of levels of management is very important as they substantially determine authority relationships and give social status to their occupants. The time and effort spent on different functions will depend on the level on which the manager is placed in the managerial hierarchy. Though every manager has to perform all the managerial functions, the

stress placed on individual functions varies at different managerial levels. The term manager includes all managers right from the Managing Director up to the first line supervisor on the shop floor. Managing Director who occupies the position of top most level of management normally spends most of his time on planning and organising and less time on staffing, directing and supervision. On the other hand the foreman representing supervisory level of management will devote less time on planning and organising and more time on directing and controlling.


B oard of Directors Managing Directors General Manager Departmental Manager Deputy Manager Assistant Manager Foremen Supervisor First Line Workers (Core Groupe) Figure.
It is necessary to give prime regard to the span of control less or minimum number of levels. If managers exceed their feasible span of control less or minimum number of levels of management will be required but it will increase administrative and social distance. In a large scale business organisation there are generally five levels of management, namely :1) Upper top level 2) Top level 3) Upper middle level 4) Middle level 5) Lower level In many cases a job title indicates the management level to which an executive belongs. But in every case job title does not indicate management level. Some job title may be misleading. For example a Vice-President may have limited authority and minor impact on the overall operations of the firm. In a small organisation, designation of a manager may look attractive though all important decisions are taken by its owner, who also performs managerial functi ons. The number of managerial levels and also managers at a particular managerial level vary from firm to firm. For example in a small sole traders shop there is only one level of management represented by owner manager who takes all the decisions affecting the operation of the business. But in big corporations, multinationals, top management may include a large number of people who take strategic decisions affecting the entire firm.

Top Manage ment

Middle Management

Low er Level
Manageme nt

1) Upper top level and top level of management Top : level of management of a company
consists of the Board of Directors, the Chief Executive, the General manager, Secretary and others concerned with the policy making. General operations are distinct from some functional specialization. They are the ultimate level of authority in the operation of the enterprise. this level of management establishes objectives, frames policies and defines the goals of the enterprise. It is accountable to the

owners of the concern for the overall management of the company. Top management sees that the policies are put into effect and judge the results. Board of Directors is the trustee of the organisation. Its includes a) Deciding long-range poli cies, plans, objectives, goals, programmes, budgets, strategies et c. b) Designing structure of organisation c) Reviwing financial and operational results of the company. d) Issue of general directives for their implementa tion (implimentation of policies, plans, programmes etc.) e) Overall review of performance and progress. It also appoints top manageri al personnel and ratifies the appointment of managers at lower levels. Executive functions of top management are performed by the Chief Executive or the Managing Director. He is responsible for the day-to-day management of the company under the overall guidance of the Board of Directors. He is responsible for executing the policies and programmes laid down by he Board of Directors and also acts as a link between the board and other personnel in the organisation. He provides effective leadership to the organisation and acts as a co-ordinating link between various departments. The role of top level management is very important. Success as well as smooth running of an organisation depends upon the way, t he top level management adopts. Interest, hard work, honesty, willingness to work for long hours, their dedication devotion of the people at top level ultimately convert the business organisation into profits. All this help in creating good image of the organisation in the market.

2) U pper-Middle leve l of manageme nt : It consists of the head of the personnel

administration department, production or works manager, sales manager or ot hers responsible for research, finance, accounting and so on. It means upper middle management includes heads of various functional department s or divisi ons. Thus upper middle management consist s of the executives responsible for leading functions within the enterprise such a personnel admi nistration, production, sales, research etc. In certain companies these people are on the board of directors and are therefore part of top management. Main functions of this level are described by Hempel as under :(a) Establishment of an organisation. (b) Selection of best suited executives of staff or of employees. (c) Appointment of sufficient workmen to carry out the plans. (d) Installation of proper departments. (e) Designing of operating policies and operating routines. (f) Actual assignment of specific duties to each departments and to each individual. (g) Obtaining the necessary funds as well as control of costs, and the financial status of the company. (h) Solution of all problems of actual sales activities and distribution, finance production, labour relations, wages etc. A vital role is played by the upper middle management. This level of management is very essential in large organisations.

3) Middle management :Middle management stands between upper middle management

and lower management in five levels of management. It stands between top management and lower

management in case there are only three levels of management. Middle management may be further bifurcated into two parts as mentioned above, upper middle management and lower middle management. Upper middle management includes heads of various functions departments or divisions. The lower middle management is primarilly concerned with achieving specific goals of the departments to which they are attached. Lower middle management includes branch managers, superintendents and heads of various sections. Middle ma nagement consist s of the deputy hea ds of t he va rious sections of Pe rsonnel Administration and Management ; Mary C. Niles has described the functions of middle management in the following words : Middle management acts with and under top management to accomplish the following broad objectives of administration. (a) To run the details of the organisation, leaving the top officers as free as possible for their other responsibilities. (b) To co-operate in ensuring smooth functioning of the organisation. (c) To understand the ineterlocking of departments in major policies. (d) To achieve the co-ordination between the different parts of the organisation. (e) To build up a contented and efficient staff where reward is given according to capacity and merit and not according to change or length of service. (f) To develop leader for the future by broad training and experience. (g) To build up a team spirit in all the person working to provide a product or service wanted by others. All the above functions can be generalised in the follwing four important functions of middle management. i) To execute various functions in accordance with the policies, directions and guidance of the top management. ii) To work in making a smooth functioning organisation. iii) To achieve co-ordination between different parts of the organisation. iv) To promote team spirit in the organisation.

4) Lower level of Management :There are people in any organisation who are entrusted
with the job of supervising the functioning of operative staff. Such people form lower level management. Foremen are the officials manning this level of management. Foreman have direct supervision over the working force in office, factory, sales or other areas of activity of the concern. Lower or supervisory management is directly concerned with the supervision and control of the performance of operative or rank and file employees. Supervisory personnel perform those jobs which typically involve immediate and continuing contact with operative workers. Lower level managers are more concerned with directon and control functions of management. They devote more time on supervision of various jobs than on ot her ma nagement functions. In general, the following are the important functions of lower i.e. supervisory management: a) To supervise and guide the subordinates. b) To plan and organise the activities of the group. c) To arrange for necessary materials, machines, tools etc. for workers and to provide them necessary working environment.

d) To provide training to the workers. e) To solve problems of workers. f) To communicate workers, problems to the higher level of management. g) To maintain discipline among workers. h) To maintain good human relation in the organisation.

A dministration, Management and Organisation are distinct functions

Whilst there is general agreement in the meaning of the word business there is considerable confusion in the use of the words admininstration, management and organisation. These words are use by different people as if they are all synonymous. We shall study how these three terms are used in different senses by different authors. According to one school of though - administration is a top level function which centres round the determination of major policies and objectives of a business enterprise, while Management is a lower level function which relates to the implementation of the policies and directing operations to attain the objectives laid down by administration. In support of the concept the following authorities may be quoted. 1) According to W. R. Spriegel Administration is that phase of a business enterprise that concerns itself with the overall determination of institutional objectives and the policies necessary to be followed in achieving those objectives. Administration predetermines the specific goal and lays down the broad areas within which those goals are to be attained. Administration is a determination function, management on the other hand, is an executive function which is primarily concerned with carrying out the broad policies laid down by the administration. 2) Mr. J. N. Schulze in a paper read at the Taylor society and published in the Bulletin of that societ y for August 1919, has di fferentiated between administ ration, management and organisation in the following words. Administration is the force which lays down the object. Function of an organisation and its management are to strive for implementing broad policies under which they are to operate. Management is t he force which lea ds, gui des and di rects an orga nisat ion in t he accomplishment of the predetermined object. An organisation is the combination of the necessary human beings, materials, tools, equipment, working space and apprentieas brought together in systematic and effective correlation, to accomplish some desired object. 3) According to F. J. Wright Administration is the implementation of policy, the coordination of all the factors of production in accordance with the general direction laid down by those responsible for the formulation of the policy. In his opinion, Management comprises those functions which are involved in the carrying out of the decisions of the administration. And as such management is subordinate to administration. The former executes and implements the decisions of the later. 4) According to Ordway Tead the distinction between administration and management is as follows, - Administration is the process and agency which is responsible for the determination of the aims for which an organisation and its management are to operate and which gives general oversight to the continuing effectiveness of the total operat ion in reaching the objectives sought.

He goes on to say that Management is the process and agency which directs and guides the operations in an organisation in realisation of established aims. 5) Oliver Sheldon was perhaps the first scholar to made a distinction between management and administration. He has beautifully summarised the difference between the three terms in the following words. Administration is the function in industry concerned in the determination of the corporate policy, the co-ordination of finance, producti on and distribution, the settl ement of the compass of the organisation and the ultimate control of the executive. Management proper is the function in industry concerned in t he execution of policy, within the limits set up by the administration and the employment of the organisation for the particular objects set before. Organisation is the process of so combining the work which individuals or groups have to perform with the facilities necessary for its execution ; systematic, positive and co-ordinated application of the available effort. Organisation is the formation is an effective machine, Management is an effective direction. Administration determines the organisation, management uses it. Administration defines the goals. Management strives towards it. Organisation is the macnine of management in its achievement of the ends determined by administration. 6) Similarly G.F. Milward has distinguished the three words as below, Administration is primarily the process and the agency used to establish the object or purpose which an undertaking and its staff are to achieve, Secondly administration has to plan and to stabilise the broad lines or principles on which will go on the action. These broad lines are in their turn usually called policies. Management is the process and the agency through which the execution of policy so planned and supervised. Organisation is the process of dividing work into convenient tasks or duties or grouping such duties in the form of posts of delegating authority to each post and of appointing qualified staff to be responsible that t he work is ca rried out as planned. After studying the above views and opinions, the distinction between administration and management stands as follows : Basis of Distinction Administration Management 1.Managerial It is a top level Management. It is a middle or lower level of level. Personnel of the top level of management. like the ownership or the Personnel below the top level Board of Directors are like General Manager or incharge of it. Managing Director are incharge of it. 2. Illustrations Personnel are designated as Personnel are designated as Administrators : Managers, General Manager Collector, Commissioner of the company Vice-chancellor Managing Director of a comRegistrar, Minister, pany Director of Personnel chief Justice etc. Administration Deptt. etc.

3. Main Functions Planning & organising are Motivating & controlling the main functions. are the main functions. 4. Policy Administration is concerned Management is concerned Determination with policy making. It deter- with the implimentation of the mines the goals or the target policy. It has no direct con to be achieved. cern with goal or target fixation. 5. Implimentation Administration is not direct- Implemintation of policies of policies. ly concerned with the framed by administration is implimentation of policies. the main task of management. 6. Determinative Its functions are legislative Its functions are executive & vs. Executive. & largely determinative. largely governing. 7. Direction of It is not actively concerned It is mainly concerned with human efforts. with the direction of human the direction of human efforts in the execution of efforts in the execution of the the plan or policy. plan and policy. 8. Administrative It needs administrative Management requires vs rather than technical technical ability more than Technicality. ability. administrative ability. 9. Coordination Administration coordinates It uses organisation for the and control. finance, production and achievement of the targets distribution.It frames the fixed by administration. organisation structure and exercises control over the enterprise. 10. Men -boss Administration is the master Management is the employee Relation of industry which provides of administration, it gets salthe various agents of produ- ary or a part of the profit in ction and in lieu of this lieu of its services. service earns profit. 11. Expansion of Its functions expand at the Its function contract at the functions. upper level and decrease in upper level and expand at the importance at the lower lower levels. levels. 12. Govt. vs. The term administration is Management is mostly used Private sector used mostly in Government in the business or industrial or public sector. sector.


(Determinative function Thinking function ) 1. Board of Directors 2. Chief Executives. 3. General Manager. 4. Managing Director



( Doing executory functions ) 1. Supervisory management. 2. Sectional officers 3. Foremen etc.

From the above figure it becomes clear that Administration is the top of level of management. The principal task of administration is to determine the specific goals and lay down the broad areas within which goals are to be achieved. It determines plans, policies, frames programmes, prepared budgets, broad objectives. Therefore administration is called determinative function within an enterprise and is the primary responsibility of top management. Administration frames the polocies and makes the necessary adjustments. W hatever decisions are taken, by no means are final, as requirements of a dynamic society must be met by constant adjustments. Policies provide an objective and management provides the action to get things done. Management is the executive functions that concerns itself with the carrying out of the administrative policies laid down by administration. Management directs the active operations within the enterprise and combines the work of the employees with the available capital, equipment and materials to produce an acceptable product. Managment also markets the product or service according to the broad policies established by administration. According to Breach Management is a social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise in fulfilment of a given purpose or task. Administration is the part of management which is conceren with the installation and carrying out of the procedures by which the programme is laid down and communicated and the progress of activities is regulated and checked against plans. Thus Beach conceived administration as a part of management . Kimball and kimball also subscribed to this view According to them administration is a part of management. Administration is concernd with the actual work of executing or carrying out the objectives. It embraces such functions as issuing orders concerning the work to be done. seeing that the personnel are fit for work and trained to operate efficiently and carrying on, in general, the every day routine necessary to ensure that men, materials and equipment are functioning properly towards the desired end. Thus upper and top level of management may be termed as Administrative level of management. making administration as part of management. In modern era bi g companies and corporations are coming up. Their shareholders simply provide money and the total activity of these is managed by Board of directors. This is a part of management. Thus administration is a part of management.

An organisati on is a set of people working together to achieve certain common objectives. Organisation is the framework or medium of exercise managerial functions. Management is an effective execution. Administration devises the organisation and management uses the organisation. Administration defines goals and management tries its best to achieve those goals. Organisation is the machine to be used by management to discharge managerial functions to accomplish the set goals. Organisation is the process of so combining the work which individuals or groups have to perform

with the faculties necessary of its execution that the duties, so formed, provides the best channels for the efficient, systematic, positive and co-ordinated application of the available effort. Some people consider organisation as synonymous to management. But this is a wrong notion as organisation is simply a funciton of management like planning. directing and controlling.It is through organising that the management brings together various resources required for the achievement of enterprise goals. Organisation involves the establishement of an international structure of roles through determination and enumaration of the activities required to achieve the goals of the enterprise. Grouping of these activities and assignment of such groups of activities to the managers, delegation of authority to carry out and provision for coordination of authority relationship horizontally and vertically is the organisation structure. Thus the terms mangement and organisation may be differentiated as under Management Organisation 1. Management is an executive function which is prima ri ly concerned wit h getting the things done with others. 2. Pl anning or ga ni s ati on, s t affi ng, motivation, direction, co-ordination and control are all functions of management. 3. Management functions are executed by bringing into being an organisation. 4. It is like entire body of a human being. 5. There are different levels in management viz, top m iddl e, l ower level of management etc. 6. Management uses the organisati on determined by administration. Organisation is an organic function of putting together different parts of an enterprise into working order. Organisation is one of the important functions of management. Organisati on i s the framework of management. It is li ke the nervous system of a human body. There is no such level in organisation.

Organis ati on is the m achine of management in its achievement of the ends determined by administration.

Administration and Management are synonymous :

Some experts say that there is no distinction between administration and management. The third opinion which has gained wide a cceptance is that there is no distinction between the terms management and administration. The term management is used for higher executive functions like determination of policies, planning, organising, directing, and controlling in the business circles, while the term administration is ued for the same set of functions in the govrnment circles. So there is no diference in these terms and they are often used interchangeably. Thus, there is another school of thought according to which a dministration and management are synonymous, these are interchangeable terms. In the words of Mr. Henry Fayol, All undertakings require planning, organising, command, co-ordination and control and in order to function properly, all must observe the same general principle. We are no longer confronted with several administrative science, but with one which can be applied equally well to public and private affairs. William Newman, too, seems not to distinguish between these terms. He defines administration as the guidance, leadership and control of the efforts of a group of individuals towards some common goal. I perform a actual

practice some people may perform all the functions of administration as also management. For instance General Manager / Managing Director of a big company is found to take active part both in administration and in management. As well as many lower executives are asked to determine policies and to execute them. In fact, executives at all levels perform both the functions, through in varying degrees. Middle executives have to be associated with policy-making and in the determination of the broad objectives though on a limited scale, whereas top executives, besides initating policy decisions have often to guide a nd direct managerial functions at middle and lower l evels. Thus there i s no exact line of demarcation betwen the functions of thinking and doing or determinative and executive. According to The Haimann also No two separate sets of personnel are required, however to discharge administrative and managerial functions. Every Manager performs both the functions like administrative and managerial. All Managers working at any level perform the same functions. For solving the problem of terminology some expressed their views in this matter. The British management expert E.F.L. Brech, has made an attempt in solving the problem of terminology. From his point of view Management is a comprehensive genetic function embracing the entire process of planning, policy making co-ordination of activities, maintaining morale and discipline as well as controlling the operations so as to attain the best possible results. He has divided the management function into two categories ;1) Administrative management 2) Operative management Administrative management is directly concerned with policy making, preparing the plans, det ermini ng the object ives, fixing the standards as wel l as eval uating the performance against predetermined standards or targets. On the other hand, operative management is concerned with the actual execution of the plans, policies, by effective and efficient utilisation of men, materials. machines money and equipments, as well as running the day-to-day affairs of the business concern in a very smooth way with a minimum cost. This view has been advocated among others by E.F. Breach, one of the eminent management expert. According to him administration is that funciton of an industry which is concerned with the installation and carrying out of the processes by which the programme is laid down and the progress of activities is regulated and checked against plans. To conclude, it may be observed that top or upper level management may be designated as administrat ive management and the lower level management as operative management. Bot h the administraive and the managerial function must balanced properly, if the business is to grow properly and be able to meet changing conditions. The science of Business Administration and Management has gradually evolved with growth of Trade, Commerce and industry. Today business administration and management is emerging as the directing force of industry and is gradually becoming a profession. Administration and management are two sides of the same coin. Both are essential for effective and profitable running of an organisation.


Introduction : The origin of Management is as old as mankind. The co-ordination of human and material resources has been a concern of man ever since he started living in groups. History reveals that strong men organised the masses into groups according to their intelligence, physical, mental capabilities. In this sense management took the form of leadership which was essential to co-ordinate the efforts of the group members in order to arrange the necessaries of life. Management as a systematic field of

study is a product of the early 20th century. The 20th century is marked in history as the era of scientific ma nagement. The growth of modern management techniques began with t he indust rial revolution in England during the 18th and 19th centuries. A series of invensions were made by the scientist like Hargreaves, Arkwright, Crompton Kay and Cart Wright etc. They led to production on large scale and introduction of division of labour. The factory system of production started facing the problem of achieving good human relations. To meet the challenges of management several management thinkers such as Fredrick Taylor, Henry Fayol, Elton Mayo, Peter Drucker, Abraham Maslow, Frank and Lillian Gilbreth, Henry Gantt, Harrington Emerson, Mary Parker Foliet, Frank Bunker Gilbreth etc. contributed to the development of management through during the 18th and 19th century. They tried to achieve better utilisation of human resources and effective, efficient management of factories. The present position is therefore, best appreciated and understood in the light of its evolut ion over the years.Much of the development in this field has taken place during the last 100 years. A number of management thinkers have written books to convey their ideas about management of an organisation. There was no uniformity in their views. Because of the divergent directions of management thought,, Harold Koontz called it, as the Management Theory Jungle. From the brief historical survey several things become clear, that the management is ancient art and was initially of interest to political thinkers. The industrial revolution was oriented with the factory and mechanical production. The problem of management and administration was emerged. Therefore it is observed that the prior to the begining of he 20th centurey the essential elements were present for the emergence of syst ematic management thought. The time period in which different concepts management have developed may be divided into five parts : 1) Pre-scientific Management Era-Before 1880 2) Scientific Management Era-1880-1930 3) Human Relations Era-1930-1950 4) Social Sciences Era- 1950-onward 5) Management Science Era- 1950 - onward The above mentioned periods are only suggestive, they are not exact. It shows only the dominance of a management thought on particular time period. Various Schools of Management Thought : In different time periods as mentioned earlier different schools of thought emerged. Because of divergent directions of management thought Prof. Harold Koontz rightly called it The Management Theory Jungle. The schools of management thought can be classified as under : The following are the various approaches of the management 1) Scientific Management 2) Functional or administration Management 3) Human relations approach Management 4) Behaviour science approach to Management 5) Quantitative approach to Management 6) Systems approach to Management 7) Contingency approach to Management To sum up, it is evident that introduction of the factory system and the emergence of large

industrial organisation in society only are not the adequate reasons for the development of management thought. The development of management theory on a systematic basis began in the highly industrialised 20th century and contribution were made by theoreticians and practitioner in England, Europe, USA and other countries. In England and Europe this development was in response to top management and scholars. The management theory Jungle has identified six major schools of management. 1) The Management Process School 2) The Empirical School 3) The Human Behaviour School 4) The Social System School 5) The Decision Theory School 6) The Mathematical School They are described as below.:This school is devel oped during the scientific 1) The Management Proce ss School : management era. F.W. Taylor is regarded as the father of scientific management. Frederick Tayl or and Henry Fayol were the founders of the Management process school. They perceived the management theory as a process of getting things done through and with people in a business organisation. The management process was considered to be universal irrespective of the type of enterprise. 2) Empirical school : Earnest Dale was the founder of this school. It was started around 1952. This school is based on the premise that management problems could be solved in a better way depending on the experiences of the managers. Dale emphasised on experiences rather than general principles of management as believed by F.W. Taylor and Henry Fayol, founders of the management process school. The empirical school belived in experience and research. But too much reliance on experiences of managers is also not useful in changing circumstances. Elton Mayo was the founder of this school. This school 3) The Human Behaviour school : was started during 1930. According to Mayo the study of management mut be interpersonal relationship oriented. It must concentrate on people as a part of management. The manageres in different organinsation recognise that workers performance is related to psychological, sociological and physical factors. Chester Barnard is the father of the social system school. It is 4) The social system school : closely related to human relation school. This school is developed during social sciences era. It consists of all the management researchers and thinkers who look upon management as a social system. The Decision theory school was developed during the 5) The Decision theory school : management science era. The decision theory emphasised on rational approach to decision i.e. it is a selection of a possible alternative course of action or of an idea. It is observed that the mathematics is a tool and it is equally 6) The Mathematical school : useful of managers as well as like scientists and engineers. But it is not a substitute for management. This school emphasizes that the organisation or decision making is a logical process and it can be expressed in terms if mathematical symbols and relationships.


Application of management knowledge is as old as human civi lisat ion but developments of management thought and theory is relatively of recent origin. It was only from the begining of the 20th century that serious efforts were made to develope this field as a separate discipline. In the past few decades, ma nagement knowledge ha s undergone radical changes.There have been substantial contributions to management theory by scholars from different fields including psychology, sociology, anthropology, mathematics, economics and political science. Development of management thought in a time perspective can be divided into four stages namely :1) The scientific management stage. 2) The organisational stage. 3) The management process stage. 4) The general management theory stage. It is based on the assumption that the objectives of an 1) The scientific management stage : organisation may vary from one to another but the management of all organisation requires similar management processes. It has its roots in the basic concept of division of labour and specialisation and consists mainly of scientific management developed by F.W. Taylor administrative theory of management by Henry Fayol and Bureaucratic organisation by Max Weber. F.W.Taylor and others, the pioneers of management thought, began to be concerned with a desire to make intelligent use of human effort and to produce maximum output with minimum effort. It can be done by separating wastages and in efficiency from human work at the operative level. This stage concerned with setting work sandards, pre-planning of the work, using control devices intelligent use of human effort, increasing the operational efficiency of workers by solving their work related problems, minimising in efficiency and wastage, improving their relation with management and developing a best way of doing things. During the 1920s the conceptual approach was modified to include management reaserch and cooperation between managers and workers. Functional and like type of organisation structures began to develop with the need for speci alisation of the management function and the work functions. Taylor suggested that incentives should be directly linked with producti vity. The woker producing more should be given higher wages. For this purpose he devised differential piece rate plan which implies different rates of wages for different levels of efficiency of workers. This provides motivation to the workers. F.W.Taylor and Henry Fayol have given greatest contributions in the scientific management stage. 2) The organisational stage : The organisational stage during the 1930s was more concentrated on the organisation structure for carrying out managerial function as well as assignments. Administration is a representation of the owners point of view, seperated form the management, who are not the owners of the business organisation. Administration was separated from management. Administration was mainly concerned with policy formulation, organisation structure, preparing the overall plans, taking the important overall decisions of the business organisation. They were mainly concerned with determination or thinking functions. Management , on the other hand, was mainly concerned wi th with execution of poli cies, plans, decisions et c. taken by the administation. Management was the mechanism for carrying out the work assignments throughout the structure. They were responsible for proper work performance withi n the organisation struct ure. Both the concepts were later on modified by some authourities into administrative management and operative management. The former was related with general overall management of the enterprise and the later was concerned with the operative functions.

3) The management process stage : During the 1940s stress was placed on the process of managing. This stage emphasised on planning and organising. The concept of management process was highly developed during the period of 1940s , moreover more st ress was given on setting the clear cut, precise, specific objectives or goals, formulation of policies organising and staffing to put plans into operation, directing and motivating people at work, to carry out activites in the light of the pre-plans and standards. The management process consists of planning organising, directing, staffing and moti vating. functions. These managerial functions were made more effective by stress on the crystalizing of objectives towards which all the activities were directed. The process of managi ng was affected by 4) The general Management theory stage : technol ogy, communication, transport, information technology, devel opment and others ha s great impact on it. A strong system of engineering flavour has evolved in recent years because of these technological advances and also due to contributions made by Operation Research from the defence forces, particularly based on the experience in world war II. As a result of this the management concept could be synthesized into a conceptual framwork for a general management theory. Various schools of management thought began to evolve the general management theory.


Management knowledge is as old as human civilisation. But mangement is one of the important branch of social sciences is of a recent origin. Development of management thought and theory is of a recent origin. In the earlier days there was a jungle of management knowledge and people used it in their own way. It is only after the industrial revolution in the 19th century attempts were made to study management knowledge systematically.The tremandous changes due to indusrial revolution in industrial business world forced managemnt thinkers, scholars and executives to adopt a systematic approach to management. It was only from the beginning of the 20th century that serious efforts were made to develop management field as a separate discipline. It was only from the beginning of the 20th century that serious efforts were made to develop the management as a separte discipline. The scholars from different fields and the scholars from phychology, sociology, anthropology, mathematics, economics and political science have geen given substantial contributions to management theory and management is categorised as an inter-disciplinary approach. In the past few decades management knowledge has undergone radical changes. In the 20th century a study of development in management helps to undrstand the basic nature and history of modern management. Prior to industrial revolution the management was in crude form an after the indutrial revolution in England in middle of the 18th century only its development started in its true sense. The development of management thought can be broadly calssified into threee stages as under : I) Classical or Traditional Management Approach II) Behavioural / Neo-classical /Human Relation Approach III) Modern Approach to Management I) Classical or Traditional Management Approach The origin of Management can be traced back to the days when man started living in groups. The classical or traditional approach to management is one of the oldest and most popular process. This approach based on the assumption that the objective of an organisation may very from one to another but the management of all the oraganisation is same, in other words, Management is a

universal process irresepective of the nature. objective and type of the organisation. It has its roots in the basic concepts of division of labour and specialisation. It has in the second half of the 18th century a serious thought was given to the mangement of the industry and business. The contributions given by F.W.Taylor. Henri Fayol, James Watt, Boulten, Robert Owen and Charles Babbage. Max webber found significant in those days. A systematic approach to the study of management started only during the second half of the 19th century. History reveals the existence of mangement in the Egyptian, China, Greeks, Roman, and in Indian ancient literature such as Vedas Upanisahds, Ramayana and Mahabharata in some or the other form. In the earlier days Kautilyas literature consists of very valuable thoughts on the management of economic, political and social institutions in anciant India. Several management scholars, thinkers have propounded their ideas about how the organisations should be managed efficiently.

Scientific Management :Fredrick Winslow Taylor is regarded as the, father of Modern

Management Science has given a concrete shape to the theory of scientific management. Though the contribution have been made by various scholars and practitioners Taylors cont ribution provide significant. He has started his carrer as a mechanic in the Midvale Steel Works in Philadelphia (USA) in 1878 and rose to the position of Chief Engineer in 1884 in Bethleham Steel Company, USA and is known as, father of Scientific Management He was the most infulential of management pioneers known as a classist in management theory, he dealt primarilly with formal organisations. Taylors most widely recongised contrubution was his application of scientific methods to the solution of factory problems. He aims at increasing the operational efficiency of workers by solving their work related problems, reducing wastage, increasing efficiency, improving labour management relations, developing best way of doing things. He stressed in scientific way of doing things in physical work situation at the shop floor level and he has expressed the basic philosophy of scientific management in the following terms. : Science not Rule of Thumb :According to Taylor, a manager has to adopt scientific attitude while solving organisational problems and making decisions. The rule of Thumb or hit or miss approach should be replaced . In other words develop a science for each el ement of a mans work which replaces the old rule of Thumb method.

Harmony / Co-ordination not Discord :Taylor said all departments and workers are a part
of an organisation. There must be complete harmony of coordination in their functioning, avoid any kind of conflicts clash or disagreement, If it arises try to keep it to a minimum. Co-operation not Individualism :Taylor emphasis on the importance of competition instead of individualism. For the attainment of the organi sational objectives co-operative group efforts are most important It is possible not only by a dynamic and effective. leadership of a manager but it equally requires the whole hearted co-operation and commitment of all the employees. Maximum, not re stricted Productivity :The policy / decision of restricted productivi ty should be treated as outdated one. Taylor belived in maximum productivity which is economical, per unit cost of production will be minimum. Development of Employees :According to F. W. Taylor for the well being and prosperity of individual workers and the organisations. it is necessary to give scientific training to the workforce and develop their potential abilities which ultimately improve their thinking. Taylor has developed guide lines to the practice of management which was based on his own experience at the shop floor mentioned as under.

Scientific Study and Planning of Work : (Time and Motion study) Taylor has suggested that
every work should be scientifically studied and should be planned before its assignment to the concerning work. it is necessary to determine, the da ys fair work means, Standard work for each worker. The work study should be done on its various aspects such as time, speed, fatigue, work and motion study all this will give clear-cut and precise idea to the worker what is to be done? and How it can be done? Scientific Selection Training and Placement of the Workers T : aylor realised that selection of workers should be made on the scientific methods by tallying job requirements with abilities and skills of the workers. They should be placed on the basis of capability and aptitude. Moreover scientific training should be imparted to workers for developing their existing level of knowledge and potential. All These ultimately converted into building a team of efficient workers. Standardisation of Tools and Equipment :A worker needs not only machines but tools and equipments also. Taylor suggested there should be standardisation of tools, equipments and raw materials used by workers and physical working conditions provided to them. If they are substandard may directly affect level of efficiency of workers. Division of Work :Taylor advocated the two aspects of planning , one is thinking and other is doing, should be separated, planning of the work that is, thinking responsibility should be entrusted to the manager and doing responsibility should be entrusted to workers. He stressed an equal division of work management and the workmen. In this way benefit of division of labour and specialisation may be secured. Functional Foremanship : Taylor has introduced and pract ised the concept of functional foremanship. It means instead of having one foreman as an incharge for production department all activities should be grouped into two groups namely planning forum and workshop. Each forum should have four supervisors to command over the activities of workers.. Each worker will get orders and instructions from eight supervisors dealing with various aspects of his j ob such as route clerk instruction card clerk , time and cost clerk , shop disciplinari an, gang boss speed boss. Inspector/ inspection boss, Repai res boss/ Maintenance boss etc. The foremen should be expert in entrusted aspects of the job. Mental Revolution : According to Taylor, mental revolution has the power of bringing drastic changes among the workers attitude and behavioural patter towards their work, fellow workers, duties and employers. There should be complete mental revolution on the part of workers as well as management. Similar kind of changes in outlook should be take place amoung managers towards the workers and solve problems and difficulties while performing on the job. In order to get desired results of scientific management, similar kind of change in the mental attitude of workers and managers is must, he has suggested workers participation in management, sharing of surplus as bonus. Taylor suggested that incentives should be directly Wage Incentives (Differential Piece Rate) : li nked with productivity he stressed on differential piece rate system of wages. This system of remuneration gives justice to more skillful and efficient workers. Higher wages are paid to workers who perform the job in standard time. The workers producing more, should be given higher wages. This differential piece rate plan, implies different rates of wages for different levels of efficiency of worker s. Criticism : F.W. Taylors, contribution for developing the approach of scientific management was very significant and was accepted all the world but it was criticised on the following grounds. 1) Taylor used the word, Scientific before Management was objected simply because scientific management is nothing but a scientific approach to management and not more than that. 2. It was strongly criticised that the principles of scientific management as advocated by Taylor is

mostly applicable to producing the mana gers, the other aspects of management like finance, marketing, accounting, and personnel were ingnored by him. 3. His contribution was also criticised for his unrealistic assuption that workers veing economic man are having only economic needs may be most important and influence their working behaviour but their other needs such as social and psychological etc. effecting their working behaviour can not be ruled out completely. 4. The scientific management techniques have considered the workers only as a factor of production and not more than. have dehumanised the workers. 5. The concept of functional foremanship he advocated to bring specialisation in the organisation but in actual practice is not feasible because as it violates the principle of unity of command. 6. He advocated close supervision and control of workers to get maximum contribution and higher producti vity from them, this practice has limited use,self control, and supportive supervision have proved more affective. 7. According to Trade Unionist the scientific management i s a means of exploiting the workers because their wages are not increased in direct proportion to production increases. Thus the F.W. Taylors cont ribution reveals the philosophy of scientific management and its principles have considerable influence on modern management theory and practice. Most of the modern management approaches is based on Taylors philosophy of scientific management. Despite this criticism the techniques advocated by Taylor were further refined by his followers like Gatt, Frank, Lillian and Emerson.


Administrative theory of mangement is based on the contribution of Henry Fayol, Max, Webber, Sheldon, Mooey, Allen and Urwick etc. But its major part is related to Henry Fayols work. He was born in 1841 and was a French mining engineer in 1860 and became Managing Director of the same company in1880. He believed that managers job could be divided into five functions namely planning organising, command, co-ordination and control and these functions have to be performed by every manager, Fayol, wrote a Paper title General and Industrial Management published in 1916 It is in four parts. Its first part deals with classification of business activities into six parts that is Technical, Commercial, Financial, Security, Accounting and Managerial. Its second part deals with the basic functions of management that is planning and forecasting, organising, commanding,co-ordinating and controlling. Contribution of Henry Fayol : Henry Fayol was a mining engineer basically, but finally he rose to the position of chief executive. Though he belong to the same period that of Taylor he completed his studies in France. He stated that the principle of administration remain the same every where and thus he advocated teaching of management science which could become universal phenomenon. He, through his experience, divided entire activities of an organisation in six categories :1) Technical ( Production and adaptation ) 2) Commercial ( Buying and Selling ) 3) Financial ( Capital and its use ) 4) Security ( Protection of property and person ) 5) Accounting ( Financial as well as cost ) 6) Managerial ( Planning, organisation, control, co-ordination etc.)

Today even after 75 years of his death we find that these areas a re of utmost importance. Therefore specialisation in any of the above areas becomes essential for todays professional managers. Mr. Fayol, in his days onl y, stated that management is a process compri sing of planning, organisation, command, coordination and control. Todays management science added some more steps to this process. This process, according to him, is based on following 14 principles. 1) Division of work This lays importance to specialisation. These should go hand in hand. 2) Authority and Responsibility -

3) Discipline - This is obedience, application, energy and respect. Managers should see that discipline is maintained and punish the breakers. 4) Unity of command Orders should be given by one authority of respective activity. Functi ons of the personnel should be direct ed properly. Specific 5) Uni ty of direction procedure for every activity, by personnel, should be laid down. 6) Scalar chain - This is related to hierarchy of authority for the purose of communication. If quick communication is required at times, the principle of Gang plank i.e. Direct contact may be resorted to. But the chain should not be disturbed. 7) General interest should be supreme and individual interest should be subordinate. 8) Remuneration - It should be fair and satisfactory, commensurate to the services rendered. 9) Centralisation - Fayol did not favour either complete centralisation or decentralisation. He advocated a balance in these. 10) Order - Everything should remain in the place provided for it and should not break the order as to where it should be. 11) Equity - It is a combination of justice and kindness. This ensures devotion and loyalty from the workers. 12) Stability - Reasonable security of job makes the worker accustomed to the job. 13) Initiative - The workers be allowed to propose their plan and line of action in performing job but this should be within the limits of authority. At times, if the proposals given by them are nice, they may be allowed to execute. 14) Spirit-de -corps - This is a term-spirit synonym.

Contribution of Peter F. Drucker :

Peter Drucker was a Professor of Management in the New York University. He was a Management consultant. He researched upon various facts of management and wrote a number of research papers and authored some management books. His contribution in managementscience is of prime significance. The following are the books authorised by him. 1. The practice of Management. 2. The end of Economic Man. 3. The Future of Industrial Man. 4. The concept of Corporation. 5. The New society. 6. Economic Tasks and Risk-taking decisions. 7. The Landmarks of Tomorrow and Managing for results.

Peter Drucker emphasised on the following ideas: 1. He opined that bureaucratic management is unable to boost up production, therefore it is not a boon but curse to Management. 2. He strongly believed that Management must have professional base. 3. He opined that management must be creative and innovative which can easily adopt to change. 4. He believed that management is a distinct type of discipline. 5. According to Peter Drucker, management should define the clear cut task and objectives for each member and the group. 6. He said information generation and dissemination should be done continuously, so that employees will be well informed and can give better output and results. 7. Drucker advocated that for enhanced morale and motivation of the employees adopt the devices like self control and decentralised decision making process ultimately resulted into higher productivity and efficiency. 8. He advoc ated appklilcati on of management by objective (MBO) and participat uive management. So that t here wi ll be least domi nance of the supervisorsd over t heir subordinates. 9. He believed that proper planning, setting of standards, the performance appraisal and high morale and motivation are the important pillars of management. 10. According to Drucker departmentation should be done on the basis of products instead of on tasts or functions. He was rationalist and possessed sophisticated ideas and views about management of businiess enterprises. Managing a business can not be a bureaucratic, an administrative or even a policy making job, it must be a creative rather than adaptive task. Hence introducing innovation is an important task of a manager . This is the gist of what a professor, managment consultant, a great management thinker and legendary personality. Mr. Peter F. Drucker thinks about management. The term Innovation used by him includes development of new ideas, combining them with old and existing, adaptation of ideas from other fields and to encourage other for innovation. Drucker viewed management not as a science but as a Practice. He viewed and considered it as a discipline having its own tools, techniques and approaches. In his opinion Knowledge is the foundation of modern organisation. All major tasks and activities are required to be undertaken and performed by organisations because of the fact that todays society is a society of institutions. He did not believe in total centralisation. He thought that decentralisation of functions in different groups helps the management in devoting more to its functions. Secondly by such decentralisation responsibilities are given to employees who actually perform the jobs. It further helps creating standards and yardsticks to, measures the effectiveness in jobs. Drucker emphasises upon the competence in Managers as they have to perform three tasks1) Setting specific goals and missions. 2. Making the work productive and the worker achieving. 3. Managing social impacts and social responsibilities.


Druckers major contribution to management is MBO. A method of implementing compatible objectives of all organisational levels is management by objectives ( MBO ) Today the expression MBO has become very popular in view of its advantages. It is also described as Result Management or management by result. The thrust of MBO is on what must be accompli shed rather than how to accomplish. It is aimed at increasing the effectiveness of managers by placing the responsibility on each manager for achieving results for his part of the organisations activities. Thus objectives are set by ea ch manager either wit h pa rt icipat ion or consult ation or through t he top down approach. Fundamental principal of MBO is mutual setting of objectives between each subourdinate and his superior. It allows the subordinates to make creative decisions on his own. The supervisor from whom subordinate can seek assistance, is available for advice, counselling and direction. These objectives are then used as standards for evaluating the performance of subordinates. Ideally, the process should begin at the top of the organisational hierarchy. Following are the essentials of MBO. 1) The individuals and departmental objectives must be so devised that they get merged in overall organisational objectives with a view to be achieved. 2) Objectives must be clearly defined and communicated. 3) Objectives must be reasonably attainable because of too high goals, objectives may not be attained and may lead to frustration. 4) Factors uncontrollable by an idividual must be considered while fixing the objectives for the individual. Otherwise such factors may affect the achievement. 5) Objectives should be reviewed periodically for the necessary changes.

MBO has several advantages

1) Objectives provide a basis for planning and for development of other types of plans. 2) They result in a better appreciation of what the organisation tries to attempt to achieve and give direction to the people working in the organisation. 3) As the objectives are predetermined and communicated all efforts are direct ed to their achievement. Naturally co-ordination gets established. 4) They assume the status of standards to control human effort throughout the organisation. 5) Predetermination of objectives and their communication along with directions serve as motivation to workers to direct their energy for achievement. 6) Objectives give direction and force to management to look beyoud while establishing either short-term or long term objectives. They provide i ncentive to the managers to foresee eventualities and plan to meet them. This, in turn, helps the organisation to march ahead on the path of success. 7) It provides greater employee involvement and commitment . One works at ones best to achieve self set goals. 8) Under MBO objectives are more realistic because they are set by those who have to carry them out. 9) It provides greater scope for self control. However, use of MBO is criticised for its time consuming nature and emphasis on short-term rather than long-term objectives. Mis-application of the technique may result in unnecessary increase in costs by way of introducing a useless administrative system. For MBO to be successful the underlying

philosophy must be fully appreciated, the common goals must be crystallised and a goal structure should be established for the overall organisation as well as for each contributing unit. Conflicts between personel and organisational goals should be eliminated. A systematic effort on the right lines has to be made. If not, the technique should not be blamed for failure of management.

Nature of objectives
Determination of objective is an integral part of the planning process. Plans relate to future ( immediate future) or during a specific period of future span. Thus objectives are also determined as (1) Intermediate or short-term and (2) long-term or indistant future. Managerial objective is defined by Terry as - the intended goal which prescribed definite scope and suggests direction to efforts of a manager. It enable the physical and mental work to be directed towards some goal or purpose thus stimulates action in the desired direction. Objectives may thus be categoriesed as (A) Genera l or overall objectives and (B) Specific objectives.

(A) General or Overall objectives

Overall objectives of the business are determined by top management such as the chairman, the board of directors, and the chief executive.These objectives are based on the following : Motive and method are two factors which can describe any 1) Nature of the business : organisation. In business organisa tion Profit is a motive and Sale Purchase, munufacture and sale, General service and sale are the methods to earn profit. A top executive must understand these two, more specially the second i.e. method because it is method that describes the nature of an enterprise. This nature is further based on customer behaviour and need as well as paying capacity. According to Peter Drucker what is our business can best be answered by looking at it from outside i.e. from the view point of market and customer. Thus the top management which decides the method i..e. nature must have a broad vision so that future opportunities are not missed. As seen in previous chapters business has to shoulder social 2) Economic contribution : responsibilities. This entails supply of quality goods and services at moderate prices and suitable to the needs of the society i.e. customers. If is done it serves as a contribution to the economic satisfaction of the customers i.e. the human constitutes basic foundation. Unless the business provides opportunities for satisfaction of relevant human needs it cannot survive for long time. Peter Drucker stresess that the survival of a business primarily 3) The survival objectives : depends upon its ability t o cover the costs of staying in business such as costs of replacement. obsolescence, uncertainty and market risks. The questions of survival depends on the financial strenght of the company. The general business conditions as well as management ski ll . The economic and political environment have a changing tendency. The organisation must continue its profitable existence despite such changes. This survival. naturally, is the outcome of social satisfaction. Business should be a going concern is the universal principle. 4) The growth objective : This Going nature provides opportunities for growth. Such a growth is essential for any business if it wants to stand in the competitive world. Without growing, the concern may not be able to stand to the customers demands of product and / or services as t hey are constantly increasing. Growt h of business enables large scale production which, in turn, can be offered to customers at lower price. Growth also, creates promotional opportunities for the employees. This increase their morale and enhances integrity.

Thus Growth assumes status of important objective which should, at times, be achieved at the cost of immediate profits. This growth is, many times, affected by technological factors as well as political considerations and geographical area. But, in nut shell Growth is one of the most important objectives. It is human tendency and psychology to expect returns for his / her 5) Profit objectives : investments. These returns are possible only if a surplus over all expenditure is earned. This surplus is a profit. Thus objective of profit gathers prime importance. There is a differences in earning profit and profi teering. Earning profi t is essential and thus it is a noble motto. But profiteering means sqeezing t he consumers, taking a dvantage of their helplessness which, ma ny times, is artificiall y created. Unless profit is earned and ploughed in t he business, t he business can not grow. But then Growth is important objective which can not be ignored. Naturally profit becomes important objective of any business concern. Most important thing regarding profit is that it should be moderate and reasonable. At no time it should be excessive. There are charitable institutions who do not have profit motto. Their expenses are met from donations, grants, fees etc. As such when we talk about profit objective, we assume and all should assume that it is moderate and reasonable profit. The same time one should not forget that profit and rate of dividend is an indicator of efficiency and profitability of an organisation. Quantum of profit directly depends upon the turnover 6) Increasing productivity objective : of business. The more the turnover the more is the profi t. This turnover is directl y affect ed by production, which depends upon the productivity of the organisation. As we know that profit is a surplus over expenditure and cost occupy major portion of expenditure, all other expenses can be subjected to conservation but cost can not be. Lowering the cost is essential but it is equally important to see that reduction in cost is not by sacrificing the quality. Thus the only way available is increasing the productivity. If the productivity is increased cost controls become easy to be implemented. As such Growth, profit and productivity are inter- dependant and therefore, important. Every business organisation ha s to fulfil their soci al 7) Social obligations objectives : obligations. These obligations extend to smooth and adequate supply of products at reasonable price. A reasonable, assured and regular return on investment by shareholders in the form of dividend is another such obligation. Regular payment of Govt. taxes, repayment of loans and advances is obligatory to any concern. Paying adequate and satisfactory wages and salaries to the employees of the organisation is also an important obligation. To fulfil all these social obligations an organisations has to earn sufficient profits. Social obligation objective, thus, cannot be ignored.

B ) Specific objectives
In addition to the above overall objectives more specific objectives must be evolved in each area such as marketing, production and so on. For example, some of the specific objectives can be framed by answering the following questions. 1) What is the nature of the goods or services to be produced by the company? 2) What is the extent of diversification into different groups of products that are desired to be manufactured by the organisation ? 3) What is the extent of geographical area of market to be covered i.e. will it be local, national or inter-national ?

4) What is the type of the companys customers i.e. whether public or industry or Government or a combination ? These types of questions will have to be answered to arrive at more specific objectives. For example in the area of marketing apart from the overall marketing objectives regarding (1) The natures of the business (2) The extent of diversifications or (3) The minimum return desired on investment, speci fic objectives should be envolved in the areas of product, pricing, distribution and promotion. These specific objectives then must be integrated into the overall company objectives.

Multiplicity of objectives
Thus there is a large variety of business objectives. Drucker sets eight areas in which objectives of performance and results have to be set namely : 1) Market standing 2) Innovation 3) Productivity 4) Physical and financial resources 5) Profitability 6) Manager performance and developement 7) Worker performance and attitude and 8) Public responsibility Drucker points out, real protest against the inclusion of the last three intangibles. The proper selection and blending of appropriate objectives can alone set the business-ship on the right course of continued profitable growth and increased contribution to society.

Charactertics of MBO
The broad features of MBO are as follows : 1) Management by objectives is a highly objective technique. It is not goal oriented in the ordinary sense. The goals have to be set down in measurable or quantitative terms. As Drucker puts it, objectives must be operational. They must be capable of being converted into specific targets and specific assignment, and capable of becoming the basis, as well as the motivation, for work and achievement. 2) MBO represents a comprehensive and overall motto. It is not a piece-meal tool of personnel management or measuring performance, but an overall management policy, attitude and technique. 3) MBO emphasises participative approach to management. The goals are determined by managers in consultation with their subordinates. MBO is not merely a meeting of minds, but joint authourship of goals and their joint implementation. 4) MBO is performance-oriented. That is why, its other name is Management by Results. According to Fred Luthans, this approach concentrates on ends rather than means and is diagnostic rather than punitive in character. The person or unit is evaluated according to the results obtained. 5) MBO is not a soft approach. It is exacting and demanding. Proper use of MBO requires the administrator to clearly and identify poor performance as well as good performance and take affirmative steps to improve performance.

Basic steps in MBO are discussed below 1) Setting of objectives : The process of MBO revolves around the setting up of organisational goals and the goals of various divisions and sub divisions. The goals of individuals are derived from the divisional or departmental goals. Major activities of every enterprise are divided on some basis of departmentation. The managemnt must determine the objectives of every division. At this stage, the top management should discuss the objectives with the divisional managers so that a statement of agreed objectives may be evolved. Each department sets its long-range and short-range objectives with the approval of top management. This process of setting objectives is repeated at lower levels of management also. Objectives are set inveriable units at each level so that performance of every division, department and individual may be reviewed after the end of a particular period. Once this process is over each supervisor and his subordinates meet together to discuss and formulate the objectives to be achieved, how and why. 2) Developing action plan : As soon as the objectives and targets are set and apporved, next step is to prepare aciton plan for their accomplishment. Both of them have, once again, to meet for the purpose.The meeting will lead them to key result analysis as goals are represented in terms of results. The key result analysis should contain the following informantion. (a) Overall objectives for the subordinates. (b) The key results that are to be achieved to fulfil individuals objectives. (c) Task priorities, long-term and short -term both, adherence to which is a must. (d) The scope and extent of assistance that is expected from the superior and related departmental managers as well as the assistance that is expected to be provided to other departments. (e) Nature of informantion and reports expected to be received to carry out selfevaluation. (f) The standards for performance evaluation.

3) Establishing check points : MBO ensures periodic meetings between, the superior and
the subordinate to review the progress towards the accompli shment of targets of the subordinat es. The superior must establish check points or standards of performance for evaluating the progress of the subordinates. The standards should be defined quantitatively as far as possible and the subourdinates must understand them clearly. 4) Review of performance : While informal performance appraisal of a subordinate is done by his immediate superior almost everyday, formal appraisal at periodic intervals is usually done once or twice a year. The design format of the Performance review Form will depend on the nature of the enterprise. The performance of every individual is evaluated in terms of the standards and /or results clearly agreed to by the superior and the subodinates. Whenever MBO has been introduced, it has led to greater satisfaction, more agreement , greater comfort and less tension and hostility between the superiours and the subordinates, Under MBO the superior valuates not the individual concerned, but his performance. Moreover the performance review is aimed at assisting the subordinate to improve his performance in the future. It also helps in setting fresh goals for the next period.


MBO calls for regulating the entire process of managing in terms of meaningful specific and variable at different levels of management. MBO is a comprehensive management planning and control technique. It affects the ent ire organisational st ructure, culture and style. MBO moulds planning, organising, directing and controlling in a number of ways. It stimulates meaningful action for better performance and higher accomplishment. The merits of MBO are discussd below.:-

MBO involves setting of goals and targets through active participation of 1) Better planning : both superiors and subordinates. Such mutual goal setting improves goal clarity and results in realistic plans to which the people become committed. MBO makes objectives clear and specific and planning is directed towards these objectives. When the goals for each individual are reset under MBO there is a 2) Better organisation : considerable change in the job descriptions at various positions. This may call for a revision of the existing organisation structure. The organisation charts and manuals should be suitably amended to depict the changes brought by the introduction of management by objectives. The job descriptions of various jobs must define their objectives, responsibility and authority and the relationship with others, positions in the organisation. MBO serves as a tool of organisation control. There is a greater sense of 3) Self - control : identifacation by the management team wi th the objectives of the enterprise wherein controls are called as tools of self control rather than device to be used against them. There is a considerable improvement in productivity as management 4) Higher productivity : team concentrates on the important task of reducing costs and harnessing opportunities rather than wasting energies on less important matter. MBO provides an objective measuring instrument for 5) Better appraisal of performance : the evaluation of actual performance. The process of defining the expected results establishes accurate criteria for appraisal of performance. Appraisal is result oriented. an individual himself can evaluate the results of his own performance. Clear understanding of responsibilities or criteria of evaluation intensifies accountability. Performance appraisal can be done honestly by MBO. MBO emphasises long-term and comprehensive view point of 6) Executive development : the executives. It calls for finding new methods to deal with emerging situations. Thus MBO is a tool of self development of the executives, that is the individual acquiring the knowledge and skills in the job as a by-pr oduct of his meeting performance requirements. Opportunities for learni ng a nd experimenting naturally help executive development.


Successful use MBO requires continuous education 1) Resistance to adopt MBO technique : and training of supervisors and others in its implication. The idea of MBO appears to be simple, But it requires changes in traditional thinking and practices towards specialised functional classification, organisat ion structure, goal setti ng, t rait- oriented apprai sal etc. Above maj or a reas require successful.implementation of MBO and real hard work as well as patience on the part of managers. Naturally it is resisted. 2) Poor planning : One of the major weakensses often seen in MBO is poor planning of the programme prior to its implementation. Implimentors must be well-trained. They must know how to involve all levels of management and obtain their support. 3) Lack of traini ng : The superi ors, generally, l ack in training, which is required for implementing the programme. Actually the superiors have to sit together with their subordinates to dictate the goals and targets and the time to achieve the same. to decide whether the goals are realistic or not . Proper training is, thus essentially required for both superiors and their subordinates. MBO technique is not appropriate for all levels and for everyone. It 4) Limited application : should be adopted only when both managers and subordinates agree and feel comfortable with its application and are willing to participate in it. Managerial and professional employees generally demand for its application.

MBO technique may tend to introduce rigidity in the organisation. 5) Inflexibility ( Rigidity ) : Goals are basically set after every six months or a year. The superiors may not like to modify them in between because of fear of resistance from the subordinates. There may arise a need of revise the goal at lower levels to achieve the long-range objectives of the enterprise. The manager must handle such a situation properly. MBO is, costly and time consuming process. MBO requires a great 6) Expensive process : deal of rigorous analysis for which senior executives do not have sufficient time and patience. As well as the setting and evaluation of objectives is done over such a short period that it man not be able to provide for adequate interaction among all people in the organisation.

Max Webber a German social scientist had developed a bureaucratic model of organisation. According to him it is a more efficient form of organisation simply because it aims at high degree of precision, efficiency, objectivity and rationality. This model is popular in government and mi litary organisations. Division of labour, hierarchy of authority, rigidity in compliance with procedures and frame work if rulers i mpersonality, technical competence are the important characteristics of this model. Max Webber advocat ed that this model is the most rational ly efficient form of organisation aimed at high degree of precision perfection and objectivity but it reduces subjective judgment, emotion, fear tactics and favouritism, simply because employees have impersonal and very formal relationship and they have to observe a set of rules and procedures for doing the job. Moreover heirarchy of authority helps in maintaining discipline and controlling the activities of the employees. Division of labour leads to specialisation and rationality makes decision making process more effective. The negative aspect of this model is it is very slow, individuals needs are not considered, delay in decision making. encourage red-tapism, goal displacement,lack of initiative and positive motivation all these may result in inefficient functioning of the organisation. Administrative theory of management stressed on such principles and concept of management which are related to the structure of organisation. Most of t he principle are derived from military organisation. This theory like scientific management also ignores human aspect in the management or organisation. In fact organisation is not merelly hierarchy of authority but it is more than that. This model is based on rationality, finding limited applicability in actual practice and resulted into inefficient organisation. It reduces its validity simply because the changing business environment is very uncertain and diverse. The principles of this theory has given no guarantee of success and are often contradictory to each other. II) BEHAVIORAL OR NEO-CLASSICAL APPROACH In the Neo-classical or Behavioral approach of management human factor remains cont rol focus in the organisation. This approach stressed of successful management depends on managers ability to understand the work and people with different background, needs, values, perception and personality. This approach has been studied into two phases as under : A) Human Relation Movement. B) Behavioural Science Approach. A) Human Relation Movement : Human relation movement made managers more sensitive towards employees needs. This movement is marked by threats of unionisation. Elton Mayo is generally

recognised as the father of human relations school. Elton Mayo Mary Parker Follet and Douglas, Mc-Gregor have been main contributors to this movement. Elton Mayo was a sociologist at the department of industrial research at Harvard. Elton Mayo and his associates John Dewey Kert Lewin, F.J. Roethisberger and W.J. Dickson has conducted a study at Western. Elecric Hawthorn plant in USA during 1924 to 1932 to evaluate the attitudes and psychological reactions of workers in on the job. situations. Finally Mayo and his associates concluded Hawthorn Experiment as under : 1) The quantity of work to be done by a worker is not determined by his physical capacity but by the social norms. 2) Usually workers do not act or react as individuals but as members of the group. 3) Non-monetary rewards play a significant role in influencing the behaviour of the workers. 4) Informal leaders play an important part in setting and enforcing the group norms. Elton Mayo with his associates social scientists started experiments to examine t he effect of lighting on the productivity of the workers, rest pauses of different length and number shorter workday and so on. These social scientists for the first time recongnised the important of a new aspect of the problems of industrial civilisation and his new aspect adds to the complexity of the work situation.


Elton Mayo and his associates mainly focused of interpersonal relations, group dynamics, leadership skills and human motivation. But the critics of the human relations approach pointed out that human relations are not the ultimate answer to the problems of management. Moreover one more critic is made on the research methodology employed. The experiment is done in one plant on a small group of employees at work. Hawthorn researchers minimised the effects of economic incentives for appa rent justifiable reason an elevat ed supervison and int erpersonal relations has given pri mary importance. The supporters of t his experiment cl aimed that the Hawthorne studies ma de a significant contribut ion by placing monetary incentives in their proper place with in the social context. The researchers of this experiment did not ignore the importantce of economic incentives but said it is one of he factors infl uencing workers performance. Mayo authoured two books namely, The Industrial Civilisation (1933 ) and The Social Problems of Industrial Civilisation (1949). In both of the books discused in detail the factors which cause a change in human behaviour. He concluded that, for increasing productivity of workers here are not only factors such as changing working hours, rest pauses but there are a number of factors such as liberal supervision, autonomy to workers, allowing i nformal groups of workers, co-operation and mutual understanding between workers and managemnent. Hawthorne studies were landmark to analyse the behaviour of worker and his relationship to the job, his fellowworkers and the organisation. Moreover this studies proved that informal work groups, workers particpation in decision making have an important impact on the productivity of the workers. Because of the efforts of Mayo and his associates the managers in different organisations recognise that workers performanc is relat ed to psychological, sociological and physical factors. Hawthorne studies and its findings provided concrete base of human relation approach. This study made it clear that the workers is not merely an Economic man motivated solely by financial incentives but his working behaviour is more influenced by his social and psychological needs.

After rigourous studies it was also discovered that productivity of workers can not be increased merely by changing physical working condition but it can be increased by developing better human relationship between workers and supervisors and managers. In fact studies revealed that the worker responds to his tota l work setting and social relations and interpersonal relations. If focussed on importance of informal groups basd on personal and social relations among workers on their working behaviour. This studies advocated that effective communication, friendly supervision workers attitudes and informal leadership are more contributary to productivity than the physical working conditions, personal and emotional factors were more important determinant of productivity than any other factors. The Human Relation Movement was marked by the following factors : 1) Human organisation was considered as phcycho-social system. 2) This movement turned management theoriests away from Economic Man to social man model. 3) Highly positive / optimistic asumptions were made about the workers such as they like to work, assume responsibility are willing to cooperate for achieving organisational common goal. For the cooperation, managers have to establish congenial interpersonal relationship and by recognising and providing for their social, psychological and other needs. 4) It advocates strongly the Human Relations Approach and believes in avoiding conflicts or clashes. 5) For getting maximum contribution from workers managers should get along with them by fair and Frank communication with them. 6) Proper attention should be given to employees emotions beliefs attitudes and habits in loder motivate them. 7) Employees should be involving decision making process to create a sense of belongingness amongest them. 8) This approach aims at providing high degree of satisfaction and motivation through improved working condition liberal supervision and sense of security. Thus human relation theorists realised that satisfied employees are least interested in joining Trade Union Movements. Therefore managers should adopt morale boosting human relation techniques. They also recongnised the importance of psychological and social dynamics in work setting. Due to certain inadequacies and drawbacks associated B) Behavioural Science Approach : with man relation approach effotrs were made by a number of social and behavioural scientist for analysing human behaviour methodocally. Behavioural science approach is a systematic as well as scientific analysis of human behaviour to determi ne causes of working behaviour of an individual. This approach is also known as organisational behaviour approach.It is an interdisciplinary approach deals with human behaviour sociology dealing with behaviour of an individual in a group and anthropology is a study of physical, biological, and cultural variables affecting individuals behaviour as a member of group.The behavioural sciences are transactional. They are concerned with also relevant aspects of human behaviour including the interactions among all the important factors. Behavioural Science Approach is based on the following assumption: 1) According to this approach the organisation is a socio technical system, consist of individuals and their social and interpersonal relationship with each other and the techniques methods and procedures used by them for performing their jobs. 2) Behavioural science approach focused that the individuals goals and interest of employees had integrated with organisational goals as to avoid clashes and conflicts between them.

3) This approach advocates that the conflicts and co-operation is co-exist in organisation to some extent conflicts are inevitable and desirable because individuals are coming from different backgrounds perception and goals to work in the organisation, such type of diversity is bound to create some conflicts. The managers t end t o beha ve carefully continuously and have to handle the situation tactfully. 4) The behavioural scientists recognise the individual differences in terms of their personality, goals, bel ieves, values and percepti on and believes t hat these differences have great importance at the time of designing motivational techniques. 5) This approach assumes that the people are the key to productivity and higher performance and other physical factors technology, work stands do not give the guarantee of higher performance mostly productivity or performance depends on employee satisfaction their level of morale, motivation, attitude, sensitivity of manager towards employees and their needs etc. 6) The behavioural scientists such as, Douglas Mc.Gregor, Abraham Maslow, Chester Barnard, Rensis Likert and Herbett Simmon etc. have developed various aspects towards this apporach. It is observed that as compared to behavioural science approach human relation approach seems to be more limited in scope because it deals only with set of economic, social and psychological needs and physical working conditions which contribute to higher efficiency. But behavioural scientists were more concerned about technological aspect s of j ob design group dynami cs leadership communication and motivation which provide broad base to this approach.

Contribution of Elton Mayo (1880 - 1949) :

Elton Mayo born in Australia was graduated in Psychology and he was a professor in Harvard University. He is known as a Father of Human Relations Approach to Management. In 1927 Mayo and his associates conducted an experiment in Western Electric Company in Chicago in its Hawthorne Plant. This experiment aimed at determining the effect of illumination and other working conditions on the efficiency of workers. Initially this experiment was conducted on five workers and later on it was expanded to cover Twenty thousand workers. i) Elton Mayo and his associates, John Dewey, Kurt Lewin, F.J.Roethisberger and W.J. Dickson, evaluated the attitude and psychological reactions of workers in on-the-job situations. Elton Mayo was a sociologist at the Department of Industrial Research at Harvard. He and his team of social scientists, started experiments to examine the effect of illumination / lighting on the productivity of the workers. Later on other factors such as rest pauses of different length & number, shorter work day and so on. They also conducted experiment to determine the aspects of working conditions the employees either liked or disliked, to determine the nature and extent of employee satisfaction, or dissatisfaction, to determine the employee morale. This team first time recognised the importance of a new aspects of the problems of industrial civilisation and this new aspects adds to the complexity of the work situation. They used interview and observation methods for the research work. Their findings were as such that the sentiments, feelings and attitudes of the people at work is more significant. Mere economic factors do not influence the productivity and satisfaction of the workers but the social and psychological factors are highly influence the productivity, efficiency and satisfaction of the employees. Mayo concluded that the cause of increase in the productivity of workers is not a single factor like changing working hours or rest pauses, but a combination of these and several other factors such

as least supervision giving atonomy, allowing workers to form informal groups, creating favourable conditions which will encourage and support cooperation between workers and management. In fact because of the efforts of Mayo and his associates the managers in different organisation recognise that workers performance is related to psychological, sociological, and physical factors. The Hawthorne experiment was a sigificant landmark to analyse the behaviour of worker and his relationship to the job, his fellow workers and the organisation. It proved that informal work group and the opportunity to be heard and participation in decision making have an important impact on the productivity of the workers.

Criticism of Howthorne Studies :

This study focussed interpersonal relations, group dynamics (informal groups) leadership skills, human mot ivation and so on. But the critics pointed out that human relation approach is not the ultimate answer to the problem of management. The another criticism made on this studies related to the research methodology employed. It was done on small group of workers there for therefore findings may not be applicable t o other worker s. Other criticised by claiming that the Howthorne studies minimises the importance of monetary incentives within the social context. Elton Mayo authored two books that is 1) The Industrial Civilisation (1933 ) 2) The Social Problems of Industrial Civilisation ( 1949 ) In both the books, he discussed in detail the factors that cause a change in human behaviour. Elton Mayo a nd his associat es came to the following conclusions from the Howthorne experi ments: 1) Non-monetory / economic rewards and sanctions play a significant role in influencing the behaviour of the workers. 2) The amount of work to be done by a worker is not determined by his physical potential but by the social norms. 3) Informal leaders play a significant role in setting and enforcing the group norms. 4) Generally, workers do not act or react as indivisuals but a members of group. 5) Howthorne studies discussed the engineering approach as in scientific management, to the problems of work. Rather it proved that informal wor k groups and part ici pat ive management have animportant impact on the productivity of the workers.

Criticism on Neo- Classical Theory :

The modern management scientist criticised the Neo- Classical thoughts ideas and view points on the ground that it is one sided and not a balanced theory. It is simply a reflection of thoughts of classical theory. In fact mere consideration of human factor in management is not the solution of the problems faced by the organisation. The higher efficiency, productivity and overall organisational effectiveness is a combined effect of so many factors which are not considered at all by The NeoClassical Theory.

Features / Characteristics of Classical theory of Management :

The Classical Thinkers emphasised features of classical Theory of Management as under.

Classical Thinkers strongly belived in formal organisations which 1) Formal Organisation : is the essence of management . They stress on formal rules and procedures, dut ies/ responsibilities and authority, relationships, better working condition for the employees. In a formal organisation division of work is necessary 2) Division of work and specialisation : and should be based on specialisation which makes the employees expert i n their jobs ultimately improve employees performance. The Classical Thinkers emphasis on accountability of the individuals. In 3) Accountability : a formal organisat ion workers duties/ responsibilities are clearly defi ned therefore they should be made answerable for the completion of the tasks and responsibilities assinged to them. The Classical approach is task- oriented / centered rather 4) Task-Centered Approach : than employee Centered. And Stressed the use of some techniques like productive planning, machine layout, forcasting and market research, standardisation of products and procedures etc. Maximum utilisation of human research by placing right man on the right job. 5) Foundation for further scientist and researchers to advocate new principles of management on the basis of ideas, thoughts and theories advocated by Classical Thinkers.

Principles of Classical Theory of Management : Classical Thinkers proponded the following principles of management 1) Principle of Objective 2) Principle of Division of work and specialisation 3) Principle of Co-ordination 4) Principle of Direction 5) Principle of Athority and Responsibility 6) Principle of Unity of Command 7) Principle of Span of Control 8) Principle of Standardisation 9) Principle of Cost Reduction 10)Principle of hierarchy of positions 11) Better persone relation and working conditions 12)Distinction between personal and work matters Limitations of Classical Theory of Management and following are the limitations of this Theory. The ideas advocated by classical thikers did not have any 1) Lack of Scietific approach : scientific basis its just outcome of observations and experience of intellectuals in those days. This Theory did not leave any scope for workers t o show t hei r 2) Lack of initiative : initiative and leadership talents which helps in the workers growth and development. This theory stressed on task orientation rather t han 3) Lack of employee - orientation : employee orientation resulted in the exploitation and unjust remuneration and welfare measures. 4) Owne rship is not separated from management : There was no distinction bet ween

management and ownership resulted in poor management and was responsibility for slow growth and development of management movement. The ideas and management thoughts propounded by classical 5) Lack of Consistency : thinkers are inconsistence and failed to give any solutions to the problems faced by the organisation. A bureaucratic model of Max Webber resulted into delays 6) Delays in work performance : and ethargy in work performance. In those days plant layouts were defective or 7) Poor layout and working conditions : faulty. Moreover working conditions were unsatisfactory therefore the use of science and mathematics for improving the manufacturing operations, which was emphasised by Charles Babbage become imposible. In a classical theory of management there is no enough 8) More emphasis on formalities : scope for group dynamics simply because it stressed on strict adherence to the systems of rules, regulations and procedures. In those days decisions rest on trial 9) Decision making based on Trial and error method : and error method or rule of thumb or on guess work. The classical thinkers did not stress on information based decisions and on rational decision making process. 10) Lack of belongingness : In those days there was no sense of belongingness among the employees towards the organisation. During classical days t he ownershi p of 11) Absence of social business responsibil ity : industries and businesses were self centred and profit oriented. A concept of social responsibilities was totally neglected by them. III) MODERN APPROACH OF MANAGEMENT This approach represents latest developments which took place after 1950 this approach can be studied and analysed in the following four phases : a) Quantitative approach b) System approach c) Contingency approach d) Excellence approach a) Quantitative Approach : This approach was developed during 1950 known as Management Science Approach and is based on the scientific management approach. It aims at achieving high degree of precision, perfection and objectivity by utilizing mathematical and statistical tools for solving complex problems. Operation research consists of linear programming stimulation, querying theory and game theory etc. are the quantitative tools for decision making. It is regarded as application of scientific methods for solving problems and this scientific method consist of the four stages mentioned bel ow. 1) Dividing problem into small component. 2) Gathering the fact or relevant of required information on each small component. 3) Analysis of data collected on each small component 4) Finding the solution on the problem.

The approach utilises the knowledge and skill of various other discipline such as mathematics, statistics. engineering, electronics, economics, physical sciences, behavioural sciences, cost accounting as well as management experts. The knowledge and skill of several other disciplines has contributed significantly to management theory and practice.The use of logic and reasoning for solving problems may help in reducing personal bias and institution of managers. But in fact this approach has very limited application in respect of problem solving and decision making process. System approach t o management has developed after 1950 It has b) System Approach : represented new thinking and latest developments related to organisation and management. This approach emphasising interdependence among various activities of organisation. Basically this approach aims at identifying the nature of relationships of various parts of the system and sub-systems. The management should integrate and co-ordinate all the sub-system of the organisation, whenever this approach is applied organisations objectives and over all performance have to be taken into consideration and not only the object ives and performance of it s different departments or sub-systems. This approach stressed on the inter-relationship between different parts and the over all effects of these interrelationships. A system approaches to management provi des a conceptual basis and guideline for establishing a more efficient system from planning to controlling it stressed the managers to look to workers his business as an open adaptive system. Moreover information is an important aspect of the system simply because an organisation act and interact with its environment. This approach attempts to desi gn an overall theory of management by consi dering forma l and informal relations. The management should integrate and co- ordinate all the sub- systems of the organisation. The systems approach recognised that an organisation as an open system should not be merely adaptive but anticipate direct and help to create forces for change through appropriate leadership. No doubt an organisation influences and is influenced by its surrounding environment therefore relationship and interdependence of all the component or sub-systems. The management have to integrate and co-ordinate all the subsystems and systems of the organisation. Basically organisation is an input-out system and obtains various inputs both physical and human from the society which is l arger system. These inputs are processed and converted in some goal s and serri cer which i s considered as output of the system supplied back to the society. Through feedback an organisation gets valuable information which helps in adjusting the system. An organisation may not be considered as completely open system simply because to some extent it has to preserve its identify, maintain stability and protect its autonomy. Some management scientists criticise system approach as being purely theoretical conceptual vogue and abstract, it can not be applied successfully to practical situation. It is considered only a constructive way of thinking rather than providing solution to a problem. The approach did not provide any tool or technique for analysis and synthesis and did not recognises the differences which exist between the systems. The system approach can be concluded as it provides new style of thinking to management knowledge. The contingency approach is not new, the earlier writers like c) Contingency approach : Fayol and Mary Parker Follett have a ready emphasised he need for analysing situation and using the principal of management as required by situation different situations require different kinds of leadership. Contingency approach advocates that managerial actions and organisational design must be appropriate to the given situation and a particular action is valid only under certain conditions. none of the approach is best to the management,it all depends on the situation. This approach basically aims at attempting to take a step away from universal application of managerial principles and recommending that the application of these principles is subject to appropriateness of the situation. It is a systematic attempt to determine and utilize appropriate management techniques, approaches and practices which are

appropriate in specific situation. There are three major element of the overall conceptual framwork for contingency management that the environment, management concepts and techniques and the contingent relationship between them. This approach advocates that the managers should develop situational sensitivity and practical selectivity. The application of this approach require the managers should have thorough knowledge of the situation in terms of situation variables and external factors. Moreover he must possess enough knowledge of management theory, principles tools and techniques and analytical abilities on the part of managers about the contingencies under which a particular managerial response in the form of strategy or technique would work well. Contingency theory attempt to analyse and understand the inter-relationships between the variable in a situation and the managerial action. This approach is a combination of both analytical and situational. Moreover the effectiveness of a particular leadership style will vary from situation to situation. However the contingency approach suffers from two limitations. firstly it does not recognise the influence of management concepts and techniques on environment and secondly literature on contingency management is yet not adequate. Many management scientists criticised on his approach on the ground that it is totally a practical approach without being supported by required theorotical and conceptual framwork. In fact managers experience difficulty in analysing situation and discovering apropriate management techniques for understanding behaviour of the situation. However, this approach is regarded as a promising step towards the development of management theory a nd practice. The contingency approach has wide ranging applicability in organisation and management.

Que st ions
1. What do you mean by Management ? Define the terms of Management ? 2. Explain the nature of Management ? 3. What do you mean by Management Process ? What are the steps in Management Process ? 4. Explaine the role of Management ? 5. Describe the scope of management ? 6. State the importance of Management ? 7. Explain the characteristic of Management ? 8. Management is a science or art Explain. 9. How many are the levels of Management ? 10. What are the functions of various levels of Management ? 11. Distinguish between Administration, Management and Organisation ? 12. How the management has developed ? 13. Describe the stages in the development of management thought classical and Neo-classical systems. 14. Explain, the development of Management thought in a time of perspective.


Meaning and concept :

In the modern world, it is most important to utilise all kinds of resources economically and effeciently. None of the organi sations can achieve its objectives without the optimum use of the resorces. Organisation is a man made system working through individuals for accomplishing objectives. The individuals along with the formal organisation, also form the informal organisational groups based on their personal and social relations. These informal groups affect directly the functioning of the organisation. With the passage of time these groups get established and they feel more relaxed and comfortable with them. But when changes took place due to the internal or external variations, the individuals are not ready to change according to changes occured. The change is also expected it is inevitable and unavoidable in every organisation. A change is regulated to maintain stability to some extent into the functioning of organisation. An organisation which fails to change is sure to fail. For optimum utilisation of all the resources the manager has to moni tor both internal and external environment and its impact on the organisation. The changed may be minor or ma jor, is equally important from organisations point of view. The frequncy and nature of change differ from organisation to organisation depending on the degree of interaction of orgainsations with external environment.

Types of Change
According to Henry Mintberg : In an organisation there are periods of continuity in which established strategies remain unchanged and there are periods of change. These changes may be of four types (1) Incremental change (2) Piecemeal change (3) Transformational change (4) Flux change. These changes take place frequently and i n a gradual manner. 1) Incremental changes : These changes are logical and involve little deviation from the past, for example - upgradation of existing technology, expansion of existing market etc. It is simply a change only in some strategies while others remain 2) Piecemeal changes : unchanged. For example - marketing strategy of an organisation is being changed because of growing competition without affecting other functional strategies. This type of the change take place rarely. But the nature of 3) Transformational changes : these changes is major and involves significant departure from the past eg. adopting a new technology, diversification of organisation, operations etc. 4) Flux changes : When the strategies of organisation are changed without any clear direction it is known as period of flux. For example some new products are added to existing product line just for broadening. According to David Nadler and Michael Tushman a management professor, organisational changes may be of 4 types 1) Anitcipatory changes 2) Reactive changes 3) Incremental changes 4) Strategic changes

These changes are systematically planned by managers and are 1) Anticipating changes : made with an intention to take advantage of the situation which are expected to arise. The manager continuously monitors the situation and whenever he expects change, he attempts to make a change in organisation as to get maximum benefits. Such changes are generally made for survival of the organisation. 2) Reactive changes : These changes are forced on the organisation by unexpected environment pressure. In simple words if there is a change in external environment, reactive changes are made inorganisation, to cope with this changing environment. Reactive changes some times are also made to exploit new opportunities as provided by changing environment. These changes are made with an intention to maintain functioning 3) Incremental changes : of organisation on its selected / choosen path or way. For example, an organisation has many sub-systems. These systems may be adjusted from time to time so as to secure smooth functioning of the organisation. Such type of adjustments are known as incremental changes. This type of changes is more basic in nature and has great influnce 4) Strategic changes : on the overall functioning of organisation. It can alter, overall shape, size natue or direction of the organisation, for example Change in technology, changes in location of plant or diversification of organisational operations etc.

Concept of Planned Change : A planned change can be defined as the deliberate design and implementation of a structural innovation, a new policy or goal or change in operating philosophy, climate or style A planned change may be considered as systematic and deliberate change which the manager attempts to introduce in the organisation to face expected situation. It is a systematic attempt to redesign an organisation in a way that will help to cope with changing environment to achieve new goals. For this a manager keeps watch on and monitor the external environment. He makes an assessement of the impact of change in the environment.

Characteristic of Planned Change :

1) A planned change is always deliberate systematic and rational in nature. It is a result of innovative, creative, possible thinking of managers. 2) Planned change aims at coping with changing environment and achieving new set of goals of the organisation. 3) These changes result is both from internal as well as external environment. 4) Planned change is natural and inevitable. 5) Planned changes are broader in scope and magnitude. 6) Planned changes may have both positive as well as negative aspect. 7) Planned changes are difficult and expensive. 8) Planne d c hanges may focus on the structure, proce sses, technol ogy, peopl e a nd organisational goal, depending on the nature and magnitude of change.

Forces of change can be classified in two catagories namely;

(1) External forces and (2) Internal forces. 1) External forces : There are a number of external forces which may bring changes, in the organisat ion and which may directly or i ndirectly affect the functioning of an organisati on. The organisation has hardly any control on these factors. The external forces are as under. i) Socio-cultural forces : These forces mainly include changing socio-culture values, norms like education, population, literacy, traditions, customs, rate of urbanisation, leisure etc. ii) Economic forces : Economic forces are complex and dominent for example economic condition of the country, market condition, demand for the product, competition, price determination, buying capacity of the customer, cost and benefit position, distribution of income,cost index, quality and availibility of various resources and their distribution in various sectors of the economy. iii) Political and legal forces : Organisations have to function under the guidance of political and legal forces. These forces include political system, ideology of ruling and major opposition party, political stability, morality and values, various legislations for business and industries, various govt. policies towards labour, capital investment, foreign trade, licences etc. iv) Technological forces : Technological forces may bring major changes in organisation. They include new techniques of production, procedure, innovative ideas of production process and in product, research and development, transfer of technology, rate of obsolescence etc. v) Work environment forces : The work environment forces may also necessitate changes in organisation. These forces include customers loyalty, suppliers regularity, community attitude and recognition by society etc. 2) Internal forces : The internal forces include the following: 1) Top management, its philosophy and corporate policy. 2) Re tirement, promot ion, r esignation and transfer which are the key el ements of the organisation. 3) Changes in the perception, attitude,feeling, beliefs and expectations of employees of an organisation. 4) Change in work schedule, allocation of duties, job contents, duty hours and composition of work group etc. 5) Change in internal environment of the organisation. The above mentioned forces may either be the effect of the change in external environment or may be induced by management.

Changes are desirable order to have proper functioning of the organisation and standing to competition etc. But many times they are inevitable also such changes are required to be brought in higher level performance and making optimum use of all the resources in a profitable manner. The changes are taking alone in every field very fast and therefore the organisation has to change and in the opportunity profitable and maintain its survival. Whenever the changes are introduced the members of the organisation have to change or modify their attitude, perceptions and working behaviour. But in actual practice the members of the organisation resist to change. If the changes brought into organisation are more positive and benificial to the member, the degree of their resistance is on the lower side and if the change is less beneficial the degree of resistance is higher. In fact the change is a law of nature and t o resist the cha nge is a natural tendency of human behaviour. However for accepting the changes by the member of the organisation, it is good to give them temptation of some regards and attract them

for the changes. In this way changes can be implemented with least resistance.


The employees feel in secure about their employment as the direct 1) Insecurity of job : impact of change. This is one of the major reasons for resistance to change. If the change like redistribution of authority and responsibility, 2) Changes in status-quo : re-defining the job and reallocation of it amoung the employees are introduced in organisation existing position and schedule of the employees is bound to change. Under the situation their position does not maintain status-quo. They have to adjust with new situation which they feel inconvenient and uncomfortable. It is necessary to communicate the employees about 3) Lack or gap of communication : the expected changes. They must be taken into confidence and informed about the change. Their participation in implementation of change should be ensured. But if there is a communication gap or lack of communication among the employees and mangement about the change to be introduced then there may be resistance on the part the employees for the change. As a result of change present position of the employees 4) Socio- psychological reasons : may change and their by they may be deprived of the existing usual set up with, they are habituated, where in their superior subordinate relations may change as new and unknown person may replace the supervisors as well as subordinates. Under such a situation they may become psychologically weak and feel socially displaced. Resistance to change also arises due to such social and psychological reasons as mentioned above. The member of group generally remain loyal committed and sincere 5) Group pressure : towards the group norms, values and objectives. These individuals many times are prepared to sacrifice their individual interest, for the interest of the group. Because, of the group pressure members of the group resist change. Due to the change, the power of the individual employee or 6) Loss of power and control : of a group may be lost. Therefore,he or they may resist the change. So long as the nature of changes is minor, temporary and does not 7) Nature of change : affect the members significantly, the resistance may be minimum, But if the change is introduced suddenly that too major one, the resistance may be higher one. If the organisational structure is rigid where no change 8) Rigid organisational structure : is possible such inflexibility or rigidity in the organisation structure may also become a cause of resistance. On the other hand if the organisation structure is flexible, the pace of changes will be fast. Fexible in organisation can help the changes to be made without any problem or resistance from the employees. If the previous change had not been handled by the 9) Past experiences of the employees : organisation efficiently and the members of the organisational had a bitter experience about it they will oppose the existing as well as future changes too. Again due to lack of trust among the employees the i mport ants of change may be mis-interpreted a nd they may oppose it.


Resistance to change is a single rigid of something wrong either in the process of introducing or

implementing the change. The concerning authority must find out the real cause of resistance and overcome it as early as possible. There are some alternative means / ways / remedies for overcoming resistance to change. To reduce employees resistance to change 1) Employees participation and involvement : it is desirable to associate and involve the employees in the change process, because they are the part and parcel of the organisation and whatever change introduced in the organisation may affect them. The employees should be the party to change as to get their consent, co-operation and commitment. If the employees active participation in the implementation of the change is ensured the manager can easily overcome their resistance to change. One of the simplest way of getting the employees to 2) Education and communication : accept t he change is through t he process of education. It is necessary to educate the employees about to change so as to reduce their resistance. The employees can be educated through training, seminars, conference and meetings. The employees must be persuaded about the need and importance of the change. Communica ti on is also one of the best devices for proving information about the change. They should be taken into confidence and their doubts confusions etc. have to be removed. This will help to create a favourable atmosphere to change. 3) Leadership : The manager as a leader may develop his informal relationship with the subordinates for seeking their cooperation to implement the change. He can also influence to subordinates through leadership process and can convert their negati ve attitude into positive one. Basically the leadership process which is aimed at influencing the behaviour of others may prove helpful in the successful implementation of the change. The manager must assure the employee that he will provide all 4) Facilities and support : type of help whatever they require for adjusting with the new situation. And as well, if he gives all support to the subordinates, there may be minimum resistance for change. But this remedy is time consuming and expensive too. Negotiations and agreements are considered to be the 5) Negotiations and agreements : most effective way to overcome the major resistance to the change. For example if a particular group of the members which is very important and powerful, is losing significantly due to the change, the negotiation process is an effective way to overcome their resistance. The management may negotiate with the union leaders or representatives of employees on the matter to arrive at a settlement through some via media. An agreement between management and the employee be signed by both the parties and diffuse the resistance. Whenever the changes are required to be introduced it should be 6) Time of the change : done at appropriate time and in a gradual manners. Resistance to change by the affected members of the organisation can be reduced significant by two. Generally the sudden and untimely change may result in strong opposition. Therefore, the manager must introduce the changes at right time. Generally there are two types of groups in an organisation (a ) 7) Use of group pressure : Formal group - which is a work group (b ) Informal group (when like minded people come together as a natural process a group is automatically formed ) Such informal group have much influence of their own as well as other members. If these groups are convinced over the change and if they accept the change other members too accept the change, resulting in minimisation of resistance.

An agent or an initiater is appointed to make the employees 8) Change agent or initiator : accept the change, when all other effort turn futile. An agent is a person who by hook or crook, gets the change accepted by the members. He may use the method of threatening or coercion towards the resisting members. But when the things are managed to be done put their heart intelligence, and experience in doing the things i.e. job. Thus, the method may turn to be detrimental to the organisation in future.

The change is a must for successful growth and development. The change must be preplanned and has to be managed efficiently. The process of management of change is very crucial. It requires a lot of patience resources and efforts on the part of the manager. The steps that are involved in the process of management of change are as under:

Steps in the Process of Management of Change :

It is the first step in the process of management of change. 1) To indentity need for change: The manager must identify the need for change in terms of those internal as well as external factors which demand the change. He has also to ascertain whether the change is strategic, process oriented, people oriented or a minor one. The change is an outcome of internal as well as external 2) To develop new objectives: environment. Many times such environment and there by desired change demands some alterations in the organisational objectives and goals. The management is required to take steps in that direction. After determining, the need and objectives of the change 3) To determine type of change: the next step is to decide the type of change to be introduced. The change may take place in relation to the objectives, organisation structure, process or people etc. Thus, the third step is to determine the type of change required. The most important step is preparing a plan for t he 4) Preparing plan for the change: change such as, when, how, where and by whom the change is to be introduced. For making the change successful it must be introduced at a right time. Such plan facilitates proper and smooth implementation of the change with least resistance on the part of the affected members of the organisation. After preparing the plan, it is necessary to communicate it to 5) To implement the change: the concerning employees of the organisation, and convince the member about its need, objectives, nature and possible benefits of change. An effective and proper communication definitely helps in reducing resistance and receiving all support for implementation of the change. After implementation of the change it is necessary to make review 6) Review and feedback: and feedback evaluation. Regular review and feedback may provide necessary information to the manager for i ts desired implementation. For ensuring smooth implementation of change in the right direction it is necessary to make review and evaluation of the process of management of change. Thus, it is only through planned change and its efficient management, that the organisation can cope up with changing environment and may discover more profitable use of its resources.

Management In C hanging Environment :

Every sucessful manager always anticipates and adjusts himself to changing environment

rather than being passive and unprepared to face them. As the change takes place or likely to take place, the manager comes in action and develops new ways and means to cope up with the change as efficiently as possible. Every kind of change in environment does make the job of a manager more challenging, may it be random, casual complex and unstructural. The changes in business environment or not within the control of manager but he has to monitor and analyse them and has to take suitable action to overcome them and facilitate its survival , growth and development. The real test of knowledge, skill and other capabilities of the managers lies in how efficiently they work in the changing situation and how they adopt the new situations because of the rapid changes in economic, socio-cultural, legal, political, educational, technological environment throughout the world. The management knowledge is affected in various ways. The management theory has been greatly affected by these changes, development of new principle. Generalisation has rendered, traditional management techniques less effective. As well as due to uncertainties, complexcities associated with external environment, the application of management knowledge in practice has also become more difficult. To overcome challenging situation one ha s to have creativity, innovativeness, adaptability and other required capabilities. Due to the drastic changes in the theory as well as practice of management, a successful manger is required to acquire new skill and talent which is more useful in meeting new situation. The manager has to integrate theory and practice of management in such a way as to develop meaningful and useful way of managing.

Acquiring new skills and abilities by integrating theory and Practice Management Management Theory Traditional Principles techniques and approach Management Practice Post experience, knowledge and precedents New Skills and abilit ies New roles functions and relationship

Development of new approaches techniques and concept

Innovativeness, Creativity, Adoption

New ways o f managing challenging situation

The following are the Important Changes : 1) Environmental Changes :

a) Socio- cultural changes : The change in social values, objectives, population dynamics, immigration to cities, emerging middle income group, higher rate of literacy, changes in the life style, interface of industry with higher educational institution (by sharing a cost of education and making it more meaningful to be utilised in business) etc. example of sociocultural changes.

Changes li ke economic l ibe rl isation, growi ng competi tion, 2) Ec onomic changes : disinvestment in public sector, entry of multinantional organisations, changing credit policy, more operat ional autonomy to banking institutions, the governments relationship with industries, new regulations groverning trade and industry etc, are the examples of economic changes. Global economy has become a need of every country. 3) Globalisation of business : Working for foreign owned companies, meeting world a standards and pressure for free trade etc. are giving new explosure to the managers. Technology basically is an out put of innovation process. It is 4) Technological change : regarded as a key t o economic and social progress.It has also facilitat ed the gradual development of industrial age into information age The role of technology and information incoming future will assume an important place in managing the orgainsation efficiently. In modern era every country is in competition 5) Ecological and environment changes : of economic development and i s bound to face the problem of ecological imbalances. Rapid industrialisation would lead to higher degree of pollution along with increased industrial output. The manager of today and tomorrow will have t o develop suitable strategy for making enviromment friendly and to use of resources, for producing eco-friendly products. The ecology has assumed an important place in the social marketing. To restore ecological balance, the manager has to co-operate with Govt. to use natural resources in cautious manner and to prevent all types of pollution. Ecological and environmental factors can influence location decision of manager in a significant way. Acquiring new skills and abilities by integrating theory and Practice Management Management Therory Traditonal Principles techniques and approach Development of new approaches techniques and concept Management Practice Post experience, knowledge and precedents New Skills and abilities New roles functions and relationship

Innovativeness, Creativity, Adoptat ion

New ways of managing challanging situation.

Emerging horizons of Management in Changing Environment. The managers who are considered as custodian of socially, 6) Political and legal change : economically and politically powerful organisation, are greatly influenced by the changing political situations. The manager should be politically conscious and active in his approach as to preserve identity, the organisation and to seek its growth and prosperity.

Basic trends affecting management in future :

The analysis of above changes indicates the following trends to follow in coming days. 1) Growth of international business : There is a tremandous growth in the international

busi ness, which gives new opportunitie s to many organisat ions for expansion and diversification of their activities. In view of this changing situation the manager has to become global player. Due to the rapid development of communication and information 2) Information explosion : technology the world has become global. Because of both these technologies it has become very easy and simple to dessiminate information all over the world, promptly and accurately. Now the manager knows very well how to understand, measure and manage the knowledge. The manager has to set up research and development 3) Reasearch and Development work : department. It is only through this department that the scientifi c and technological department can be translated into products and services which are useful and available at cheapest rates to the customers. Due to the growing realisation among the 4) Reawaking of ethical and moral values : managers regarding the fact that observation and practi cing of high ethical and moral values will help them in long run for raising the level of profitability of the organisation. It is necessary to provide ethical training to manageres and specific code of conduct is enforced on them. In a competitive business world only those organisation can 5) Customer satisfaction : face the compitition and ma y survive, which are firmly committed to their customers satisfaction. Customer satisfaction is the themeof 21st century. Now a days the managers are expected to produce more 6) Productivity improvement : with less inputs. The higher productivity has becomes a central challenge in the organisations of all sizes. Due to the higher productivity, the cost of production will reduce eventually the prices will go down sal aries and wages will increase, more profits wil l be earned. Growth and development will take place and employment opportunities will be increased.


Due to the above mentioned environmental changes and new emerging the job of managers has become more challenging. The manager has to face the following challengs to survive and grow. In the context of global operation new dimentions and added to 1) Strategic management : management. One of them strategic management. In the last changing environment and growing competet ion th managere has to think a nd act strategi ca lly. The strat egic management process helps in mobilising the resourse and efforts of organisation in the direction and destination which are more profitable. The manager who succeds in thinking and acting strategically would move ahead in the organisation. 2) Creative decision making : Rapid, varied, random, unforseen, unpredicted unstructural changes in the environment, have forced the manager towards the creative decision making. It is only the creativity innovativeness, foresightedness, accurate decision making etc. that can help the managers to solve various problems of the orgainsation. In order to bring improvement in 3) Restructuring and re-engineering of organisation : the existing level of performance, usiness organisation are required to be restructured and re-engineered as per the demands of situation. In order to meet the future challeenge the manager has to fucus on modern forms of business organisation which are more flexible, open, transparent and adaptive.

Human resources is a live asset of an organisation. 4) Empowering the human resources : The organisational objectives are achieved by human resource alone. By empowering the human resources it can be used at optimum level. The multinational corporations are 5) Seeking strategic alliances and to manage them : seeking strategic alliances. These alliances are sought as to get the benefits of complementry compentencies of organisa ti on in different countries. The manager needs to devel ops required competance as to understand mutual interest of both self and partner and to manage it in the long run for the mutual benefit. The visionary leadership demands more authority to be given to 6) Visionary leadership : the lower level employees for improving the quality of product and productivity. Tomorrows manager is expected to have a clear future vision of organisation and mobilise the resources accordingly. It is the social responsibility of managers to maintain better 7) Managing relationship : and hormoni ous relati onship with the customers, empl oyees, gover ment, owners ( shareholder ), creditors, suppliers, community in genaral. All these parties must be satisfied with the business organisation. It is by improving relationship that the smooth functioning of an organisation can be achieved.

Modern business organization are complex organizations. The smooth running of business, is not an easy task. It requires effective and efficient planning, coordinating efforts, effective control from both the management and employees. Moreover attainment of organizational obj ectives and goals are also not easy. A desirable, suitable organization structure is required for the attainment of objectives. All the employees of the organization has to work hard. Despite all their efforts, the conflicting situations may arise at any time in the organization due to difference of opinion, internal or external forces may affect adversly and may cause hurdle in the smooth running of busi ness organization. Thus organizational conflicts are unavoidable and indispensable. Conflict is a one of the features of the modern complex organization, immediately the cognizance of it should be taken. Promptly these conflicts should be handled, settled and redressed. The conflicts may arise because of unpredicable behaviour and attitude of the individuals in the organization.

Meaning and definition of conflict :

In simple words organizational conflicts may be defined as a situations in which there is a breakdown in decision making, just because of irrational and incompatible stand taken by one or all concerning parties to decision making. According to S.R. Robbins defines conflict as a process in which an effort is purposefully made by a person or unit to block another that result in frustrating the attainment of others goals or furthering of his or her interests. According to Morton Deutsch, conflict as a situation whenever incompatible activities occur. James D. Thompson defines, conflict as organizational conflict is that behaviour by the organizational members which is expanded in opposition to other members. It is observed from the above definitions that if the individual employee, managers, department heads, top managerial people, trade union leaders opposes certain issue the smooth running of business organization gets obstructed and moreover it disturbs the routine work of the organization. It is called as a conflict situation. Strike, lockout, slow tactics, high rate of absenteeism, labour turn over etc are

the example of conflicting situations in an organization. It is necessary to handl e these situations carefully and tactfully.

Features or Characteristic of Conflict :

Following are the characteristics of conflict revealed from the definitions mentioned above . There must be two or more indi viduals or groups required for 1) Two or more parti es : organization conflict. In modern times work performs by the not individuals but group of individual & they achieves organizational objectives and goals. While performing in groups there are the chances of difference of opinion, point of view, expectations etc. While performing in groups, interacting 2) Conflicting objectives and goals, opinions etc. : with each other, conflicting situations may be arise due to different opinions, expectations, objectives or goals etc. Most of the conflicts arises suddenly, spontaneously. 3) Sudden and unplanned events : Basically they are unpl anned. Few of the conflicts can be planned for their occurance when the organization becomes static and rigid and the top management want to put life in the organization and to make it dynamic. The conflicts are expressed by 4) Expressed by behaviour and experienced by others : the concerned parties in different ways and forms through their conduct or behaviour attitude and actions and is experienced by others or managers. Genearally conflicts hinders 5) Conflict creates obstacles in the smooth flow of work : the smooth flow of work, it is of disruptive, interruptive and impairing in nature, therefore it becomes difficult to achieve the organizational goals. Whenever there are opposite opinions, viewpoints, 6) Opposite viewpoints of the parties : ideas, thinking, attitudes on any subject matter, issues or event conflict situation may arise. When conflicts arise between two different organization 7) Interorganizational conflicts : are called as inter organizational conflicts. W hen conflicts arises between two individuals or between 8) Intra organizational conflicts : two groups of individuals working in the organization are known as Intra organizational conflicts. Competition between individuals departments aims 9) Conflicts differ from competition : to win over the other without any intereference in the interest of other. But in conflict there is a strong opposition and intervention to cause disruption of the interests and objects of others. 10) Adverse effects : The effect of the conflict is always adverse on the organization, resulted in to delays in decision making, wastage, misuse and destruction of various resources, inefficiency in work performance, breakdown of flow of work. Organizations growth and development will be stopped.

Classification or conflicts :
The conflicts are broadly classified into two categories 1) Inter personal conflicts 2) Int er group conflicts 1) Inter personal conflicts : interest The managers has to take congnizance, when the personal

of two individuals clash with other and resolve the same such conflict is called as inter personal conflict. Interpersonal conflict occurs when there is a clash between personal interest of two individuals. There are three remedies on inter personal conflict, such as lose-lose strategy, means parties to the conflict prepared the conflict prepared to lose something and ready to accept a common solution and enter at a mutual compromise. The second solution is win-lose st rategy. Bot h the parties feel winning against thei r opponent.In fact none of the party gain much, but there is a psychologi cal satisfaction of their personal victory. And the third remedy on the interpersonal conflict is win-win strategy, which is the best amongst all the remedies. In this strategy parties to the conflict think positively and rationally on the issue and resolve the conflict with such a solution, which will satisfy both the parties. 2) Inter-group conflicts : The inter group conflict may be arise due to absence of joint or participative decision making, differences in goals and perceptions, opinion and veiwpoints in different groups.Each group and the department when strive for maximum share of limited resources, it leads to enter departmental conflict. Participation or Join decision making is the best solution to resolve the inter-group confl icts. There are 4 remedies to resolve inter group conflicts as under The inter group conflict may be resolved by According to this strategy management A) Interference or intervention of management : may interact with the parties hear and deal with both the parties and provide a amicable solution such as by providing incentives to them and over come the conflicting situations. Something by adopting coercive measures resolve the conflicting situations. This conflict can be resolved by formal agreement between the parties and by executing the agreements. A group conflict may resolve by the management by adopting the some procedures such as identifying the conflict, gathering the facts and information regarding it, analyzing the date, searching the reasons behind it and finding the solution on it and to eliminate the very source of conflict. According to this strategy, the B) Non-intervention or interference by the management : management is not intervene the conflict but left to parties concerned to come together and resolved the same. Generally the management ignore the conflict situation , simply because they have provided different techniques or machineries such as bargaining, persuations, consultation, counseling, politics etc. which the parties to conflict can approach and can work out the alternative solutions on this conflicts. Both the parties to conflict may be agree wi th the al ternative solution and on this way confli ct comes to an end. Bargaining is also one of the powerful, strong effective technique for resolving the conflicts. Labour management conflict can be resolved effectively by bargaining technique. There are a number of negative C) Visualise and reduce negative consequences of conflict : consequences of conflict such as, employee inefficiency, poor performance, negligence, carelessness, indiscipline reduced production quality and quantity chaos, disorder wastage of valuable human and non-huma n resources, delays in work, negative attitude towards the work, less involvement and interest in the work etc. all these negative consequences of conflict must be visualized by the top management and reduced it by developing and increasing inter group contacts, comminication between them, negotiations, between them etc. D) Adopting preventive measures : The inter group conflicts can be prevented by participating employees in decision making process, increasing their involvement, creating more interest in their work, developing communication network, facilltating inter group interaction by inculca ting team spirit, team work, by telling them how important their role and work is in an oraganization. Conflict

can be prevented if the organizational goals and objectives are clear cut and understandable. Keep the employees busy on their arrangements. Create the healthy and friendly environment in an organization. All these assist in prevention of conflicts where employees do not get time and energy in indulging in conflicts, clashes, disputes, quarrels, and frictions of any kind. There will be no scope for any kind of inter group rivalry, hatred etc.

Reasons / Causes / Purposes of Organizational Conflicts : 1) Inter-Relation- dependence of de partments : In a business organization vari ous
activities / functions are divided into various departments. There is a specilisation work and there is inter relationship and interdependency of department, the departmental executives have to interact and communicate each other on variety of matters for the attainment of organizational objectives. During this process there are the chances of difference of opinion, disagree on some matters, clashes friction and all this ultimately resulted into the conflicts which harmful to the organization. Wherever the resources are limited every 2) Due to scarcity or l imited resources : departmental head trying to get maximum resources their respective departments and this may give rise to conflict. Moreover if there is unequal distribution of resources, conflict may be arisen. Even if t here is any error is made distributi on of resources indifferent operative areas may give rise to organizational conflict. If the organizational objectives and goals are not clear 3) Ambiguous objectives and goals : cut and easily understandable conflict may arise and obstruct the smooth flow of work. Very individual is differ from the other individual. Every employee 4) Individual differences : possess a different personality traits and characteristic or features. This ultimately resulted in behaviour, conduct and attitude of the employees and may gives rise to organizational conflict. Individual differences is one of the main causes of the conflict. For smooth running of organisation and timely attainment 5) Absence of time management : of objectives, makes the organization profitable. If proper schedules are maintained for various activities the developmental executives may try to shift their responsibilities on one another and start blaming one another it gives rise to conflicts among departments. In modern times changes are taking 6) Lack of accurate forecasti ng of eventualities : pl ace very fa st i n and a round t he business concern. The envi ronment changes are indispensable and unavoidable in the world. If there is lack of accurate predictions of coming eventualiti es may give rise to conflicts in the organization. The adverse effects these eventualities creat es, problems tension, clashes, frict ion, and conflicts among t he people working in an organization. The employees may be dissatisfied due to number of reasons 7) Employees dissatisfaction : such as wrong placement, no promotion, poor wages and salaries, lack of leadership and motivation, demotion, transfer, changes in duties or responsibilit ies, unhealt hy working conditions, lack of welfare facilities etc. Such conditions depressed the employers. The stress, strain, tension, depression, frustration will be found among the employees at work place causes conflicts for other organizations. If the duties, responsibilities and 8) Poorly defined responsibilites, authority and role : authority of the employee is poorly defined, chaos and disorder may occur in the organization. If the role of the employee is also not clear, the role conflict is likely to occur.

One of the l eadi ng causes of 9) Undesirabl e demands of Trade Union /workers : organizational conflict is undesirable, unjustifiable demands of organizational conflict between the management and workers. 10) Lack of communication : If there is no proper communication between the employees definitely it gi ves rise to confli ct among the employees. In t he absenc of proper communication network, misunderstanding, confusion doubts may be created in the mind of the emloyees which ultimately resulted into organizational conflicts. The poorly defined system of wage and salary 11) Poorly defined system of payment : payment is one of the leading cause of conflicts among the employees at workplace. 12) Lack of discipline and rules and regulation : If there is no code of discipline, and formal rules and regulation for leaves, promotion, transfer, training, demotion, holidays may give the scope for chaos and disorder, irregularities, indiscipline among the employees which give rise to organizational conflict. If there i s faulty or defective 13) Faulty performance appraisal and reward system : performance appraisal and reward system is adopted, it definitely give rise to conflict among the employees and management. Whenever there is imbalance between 14) Poor, imbalanced authority / power distribution : authority and responsibility of the executives as well as employees give rise to conflicts. Moreover if there is authority hierarchy is not properly maintained there are chances of conflicts. The executives who gets more power may misuse it and conflicting situations may be arise.

Classification of C onflicts
The organizational conflict may be classified on different basis as under. In fact there are three basis of classification of conflicts. 1 On the basis of parties involved : a) Individual conflicts b) Inter personal conflicts c) Inter-group conflicts d) Inter organizational conflicts 2 On the basis of organizational structure a) Hierarchical conflicts b) Functional conflicts c) Line and staff conflicts d) Formal and informal conflicts 3 On the basis of effects of conflict a) Constructive conflicts b) Destructive conflicts On the basis of parties involved

1) Individual conflict : In business concerns, people possessing different personality traits

and other characteristic employee on variety of jobs. Every individual is differ from other individual. In modern times individual differences i s one of the important characteristics of modern busi ness

organization. Different individuals having different behaviour and attitude which creates obstacle in integrating and coordinating the activities cause to conflict. Moreover it create hurdle in co-ordinating the individual objectives / goals and organizational goals and objectives and may creat conflicting situations in a business organization. Inter organizational conflict : The conflicts arising between two different organizations are called inter organizational conflicts. It is arise due to unhealthy competition, rivalry etc. On the basis of organization structure. This type of conflict may arise between the people working at 1) Hierarchical conflicts : different levels of management. A conflict situation may arise between top and middle level or middle and lower level executives. Different department performs different functions. A conflict may 2) Functional conflict : arise between the department, such as production and finance, production and marketing, finance and research and development depart ment personnel and finance department, personnel and research development of department etc. The reasons may be inter relation and interdependence of departments. limited resources lack of proper coordination poor and defective planning etc. Most of the time there is conflict between the line authority and 3) Line and staff conflict : staff authority. Line executive posses the authority but staff executive does not, his role is only to give advise to line executives. Whatever adevice given by staff executive it is not mandatory on line execcutives to follow the advice given by him it may give rise to conflict. In formal organization structure whatever the conflicts 4) Formal and informal conflicts : arises are called formal conflicts It may arise due to their offi cially assigned duties, responsibilities and authorities. On the other hand informal conflicts arise in informal organization structure, here authority relationship does not exists. Due to informal groups and organization of employees conflicting situations may arise.

3. On the basis of effects of conflicts :

1) Constructive conflicts : Constructive conflicts are positive in nature. They helps to increase employee performance, efficiency, goal qualit y of production / servi ces, less cost of production, mi nimum absenteeism, smooth. And continous running of business, minimization of wast age etc. such conflicts are supportive to the attainment of organizational goals and objectives.

Positive / Healthy Effects of Constructive Conflicts :

1) Timely attainment of companys goals and objectives 2) Identify the problems and solve it promptly 3) Active participation and involment of the employees in decision making process. 4) Elimination of wastages, lethargy delays etc. 5) Fostering team spirit, zeal, teamwork and motivation and enthusiasm. 6) To accept challenging work, responsibilities, duties. 7) To keep the organization modern, update and dynamic. 8) Develops positive attiude, unity of objectives among all the employees 9) Assist in expansion, growth and diversification 10) Assist in smooth running of organization and its survival and stability

11) Assist in progress and prosperity of organization.

Management of Constructive C onflicts :

The following are the some of the important means or ways to manage t he constructive conflicts. A sound communication network can 1) Communication and Frequent Interaction : establish direct and healthy relations between the supervisor and his subordinates at any level of management. The misunderstanding, confusion, doubts, suspicion, differences of opinion etc will be removed and it can successfully develop among the employees a feeling of involvement positive attitude towards the work, cooperation honesty, oneness. The executive and managers 2) Positive and productive use of informal organization : shoul d use the informal organization of employees for producti ve purposes of t he organization such as activate them for better and effecient performance, develope among them team spirit, team work, stoping them from indulging themselves i n wasting their time, money and energy in unproductive activities, by threatening them of retrechment and layoff incase of poor performance etc. The employees should be educated on the recent trends 3) Educating and training : developments, advances indifferent areas of activities by inviting the experts and specialists. Arranging the training programme and adopting the different methods of training such as seminars, conference, symposia, workshops etc. Refresher and orientation training courses will be arranged for improving and upgrading the knowledge and skill of the employees. And employees hidden talents and qualities should be utilized for the companys betterment. All these 4) Betterment, Rationalisation, M odernisation, Automation, Reorganization : are the effective instruments or tools of managing constructive conflicts Rationalization, modernization, automation, reorganization keeps the organization, modern and update. By adopting new technology, modified methods and procedures simplification of the jobs is possible which helps the employees for better performance. All the department activities should be integrated and co5) Unity of objects and goals : ordinated in such a way that ultimately organizations common objectives and goals can be achieved. Remove all the clashes between the departmental heads and have to bring unity among them. Frequentl y the departmental meetings should be convenced to know and discuss their issues, problems and to solve them timely. In fact only monetary incentives 6) Motivate by monetary and non-monetary incentives : are not sufficient to motivate the employees but non monetary motivation is equally important to motivate them, such as, promotion, praising them, offering more facili ties, benefits, comforts, perks etc. at their workplace. By satisfying their higher needs such as social esteem, self actualization etc. If the employees are highly motivated they can make more profits for the organization. In fact constructive conflicts are in limited number but destructive 7) Destructive conflicts : conflicts are in large number. The organizational conflicts are always of destructive nature. Due to destructive conflicts, the superior subordinate relations will be spoiled, delay in decision making. employees will be frustrated, depress, distress, dissatisfied, their behaviour will be negative they are not interested in their work, lack of involvement in work. Because of these practices a company may suffer a loss. There will be low productivity, operative efficiency, profitability more wastages of limited and valuable resources, more expenses,

delays in work, adeversely affects the goodwill and image of the organization. Employees morale and enthusiasm will be reduced. All this adversely affects the organizational survival and stability.

The Major Effect of Destructive Conflicts

1) It reduces productivity and overall efficiency of the organization. 2) More wastages, losses, damages of human and non human resources. 3) Lack of co-operation and unity and integration of work. 4) Long term plans, schemes, programmes policies will be hampered. 5) More disorder, confusion, chaos and indicipline will prevail. 6) Prime importance to personal interests of employees and companys common interest would be neglected. 7) More accidents, poor quality of work, corruption, etc. 8) Companys image, reputation will be damaged. Nothing is gained by the company in case of destruction conflicts. They are dangerous and very harmful to the company. If these conflicts are severe company has to resolve them as early as possible. If possible company has to introduce one preventive measures for non occurrence of it. The following are measures of destructive conflicts :The management has to call the parties to destructive 1) Call the parties to compromise : conflicts to compromise and has to take the intiative and arrive at the compromise. For compromise between the conflicting parties some time management has to force them to it and resolve it. At a right time management has to take some 2) Action against the conflicting employees : warning type or punitive type of action against the destructive employees such as demotion, transfer, charging fine etc. Whenever informed organizat ion, of employees are 3) Politi cs and diplomatic tactics : powerful. Trade union are powerful the management has to do all effort to weaken them for this it has to, use politics and diplomatic tactics. The management has to arrange for mediation or arbitration to 4) Compulsory Arbitration : resolve the destructi ve conflicts. And the decision of arbitrator or mediator has to be binding on both the parties. The managers has to take the cognizance of destructive 5) Cognizance at the right time : conflict at the right time and have to resolve the same. The personnel policies should be reviewed at a proper 6) Appraisal of personnel policies : time. And there must be introduction of modified, reviewed personnel policies. It helps to minimize destructive conflicts. The management has to do all efforts to enhance t he 7) Enhancing employees morale : morale of the employees, which minimize the destructive conflicts among the employees. Two way communication should 8) Through communication and workers participation : devel oped and workers should be participated in management. Their effect ive measure keeps the control on destructive control. When employees resist the appeals, orders and commands 9) Punishment Punitive measure : of the management. Then management has to go for punitive action such as demotion,

suspension, termination, compulsory retirement, dismissal, retrenchment, lay-off etc. but such action or step should be the last resort. Even if the threaten are given to the employees of punitive action, would minimize destructive conflicts at a greater extent. In this way management has to resolved these conflicts by adopting various preventive and precautionary measures so that they do not arise.

Q uestions
1. What do you mean by Change ? 2. Explain the various types of change ? 3. What do you mean by Planned Change ? 4. What are the characteristic of Planned change ? 5. Explane the various forces of change ? 6. What are the causes of resistance to changes ? 7. Suggest the remedies to overcome resistance to change. ? 8. What do you mean by Management of Change ? 9. Describe the steps in the process of mangement of change ? 10. How the managers, manage the organisation in changing environment ? 11. Explain the various changes in environment ? 12. Explain, The basic trends affecting management in future 13. State the new challenge for the managers in future 14. What do you mean by conflict ? Define the term conflict ? 15. Write the characteristic of Conflict ? 16. Explain the classification of conflicts ? 17. Describe the causes of organizational conflicts ? 18. How the conflict can be classified on various basis ? 19. Explain the positive effects of constructive conflicts ? 20. What are the devices of management of constructive conflicts? 21. What do you mean by destructive conflicts ? Explain the effect of destructive conflicts ? 22. Describe the cases of organizational conflicts ? 23. How the conflict can be classified on various basis ? 24. Explain the positive effects of constructive conflicts ? 25. What are the devices of management of constructive conflicts?


Planning is a prerequisite of every management function, whether it is organising, staffing, directing or controlling. All these functions have to be preceded by a system of efficient planning otherwise the persons concerned with executing them will fi nd it difficult to perform them systematically and efficiently, Planning enable to provide for the uncertain future. Planning is the most basic rock bottom function of management. While performing the organisation function, the top management has to evolve the concept of proper flow of authority, responsibility among the superiors and the subordinates and also the extent of delegation of authority. Under staffing, the top management has to determine policies and programmes in respect of recruitment, selection, placement, training etc. The direction function can be performed efficiently, if the systems of communication and motivation are planned properly. The performance of t he control function is largely dependent upon t he effect iveness of planning. The designing of control system starts with the formation of various plans. Planning involves anitcipation of future course of events and deciding the best course of action. It is basically a process of thinking before doing. To plan is to produce a scheme for future action, to bring about specified results, at specified cost and in a specified period. It is a deliberate attempt to influence, exploit, bring about and control the nature, direction, extent,speed and effects of change. It may even attempt deliberately to create change. But, while incorporating changes, it should always be remembered that change (like decision ) in any one sector may in the same way affect other sector. Broadly speaking, planning is a major cluster of activities in the management process and consists of formulating the objectives and the actions to be taken to achieve them. It is a process concerned with what has to be done and how it is to be done. Its focus is on laying down the ends and means. Thus, there are two essential aspects of planning. Merely, selecting goals and targets to reach, is not planning. That is only one phase of his process. Other necessary phase involves selecting or designing appropriate techniques and procedurs that will be instrumental in arriving at the goals. One without the other does not provide a plan.

Meaning And Concept of Planning

Planning concentrates on setting and achieving objectives of an organisation. Planning is the first Management function to be performed in the process of management.It governs survival, growth and prosperity of any organisation in competitive and ever-changing environment. The planning function is performed by mangers at every levels of Management. It is necessary for discharging all other management functions. Planning is a primary function of Management. It decides in advance, what to do, how to do it , when to do it and who is to do it. Planning bridges the gap between where we are and where we want to be. Planning is an intellectually demanding process. It requires the conscious determination of course of action and founding of decisions on purpose, knowledge and considered estimat es. Planning is the determination of courses of actions to achieve the desired results. It involves anticipation of future course of events and choosing the best course of action. Thus,it is a process of thinking before doing. We can say that planning is a systematic attempt to decide a particular course of action for the future. It leads to determination of objectives of the group activity and the steps necessary to achieve them. In a way planning seeks to answer to the following questions :-

What should be done ? Why is action necessary ? Where shall it be done ? Who will do it ? How will it be done ? What physical resources will be required ? Planning is deliberate and conscious research used to formulate the design and orderly sequence of actions through which it is expected to help to reaching its objectives. Planning chalks out a course of action for the enterprise to follow. Planning is a major cluster of activities in the managing process and consists of formulating the objectives and the actions to be taken to achieve them. In other words, it can be said, Planning is an analytical thought process which covers :i) assessment of future, ii) determination of objectives and goals in the light of the future, iii) development of alternative courses of actions to achieve such objectives, and iv) selection of the best course of action and its alternatives Planning in business is an on going process because changes in business environment are continuous. A business enterprise is not living in a vaccum. It is an open, adaptive social sub system living in a dynamic world, always trying to adapt itself to the ever changi ng conditions of demand, supply, prices, competition, technology, goverment policies etc. A plan is based on reliable information and not on emotions and feelings. It reflects vision,foresight and wisdom. It is a blueprint of action. Planning is defined by different authorities as follows :Planning is the selecting and relating of facts and the making and using of assumptions regarding the furure in the visualization and formulation of proposed activities believed necessary to achieve desired results. -George Terry The process of planning covers a wide range of activities, all the way from initially sensing that something needs doing to firmly deciding who does, what,when. It is more than logic or imagination or judgment. It is a combination of all those that culminate in a decision- a decision about what should be done. The decision phase of planning is so important that we shall use the expression decision making as a synonym of planning. - William H. Newman and Charles E. Summer Jr. The planning function determines organisational objectives and the policies, programmes, schedules, procedures and methods for achieving them. Planning is essentially decision making since it involves choosing among alternatives and it also encompasses innovation.That planning is the process of making decision on any phase of organised activity. - Richard N. farmer and Barry M. Richman Planning is fundamentally choosing and that, a planning problem arises only when an alternative course of action is discovered. -Bill E. Goetz The selecting from among alternatives for future course of action for the enterprise as a whole and each department within it - Knnontz and ODonnell

However, they immediately indicate that planning is more than mere decision making. Planning does involve decision making and is intimately connected. Final selection from alternatives or decision making is merely a part of planning which depends on the existence of alternatives. To conclude, planning is thus the first step in the management process concerned with the establishment of objectives and goals to be attained in the future in the light of an analysis of present limitations for attaining such goals with a view to their removal or deduction, anticipation of the future environmental factors and their impact and designing the course of action and programmes for attaining such preselected goals. It involves both thought and communication. In fact Harwick and Landuyt described planning as gan. mesmanship or the employment of a strategy in the persuit of goals. They thus place special emphasis or imaginative thought , creativity and innovation. Thus, planning involves thinking and analysis of information, arriving at certain assumptions in connection with what is likely to happen in the future and then formulating the activities required to achieve desired results or goals or objectives. The planner must be able to look into the future and conceptuali ze the proposed pattern of activities. Planning concerns the future. As Terry indicates, Todays, efforts are tommorrows work that the manager thought about yesterday. Planning thus deals with the proposed actions. Great emphasis is placed on planning by the modern managements which strive for their organisations survival, growth, prosperity and healthy mode of operations. A Manager desires to provide stability to his efforts by considering many complicated future variables, since the future involves change and uncertainty. Moreover, planning is necessary to achieve results through the efforts of others. Hence, a manager must plan the efforts required to achieve the desired results. The main principle of planning is that adequate planning or mental exercise must take place before doing the physical efforts to accomplish a goal most effectively. Planning exists in all enterprises irrespective of their size. It is done consciously in some and unconsciously in others. Since planning is a continuous and never ending activity, most managers re-examine plans regularly with a view to modify or adjust them promptly in the light of the new situations or conditions.Managerial planning draws up a blue print of activities to be undertaken.It is consciously choosing out of saveral given alternative of the objectives to be achieved, policies to be followed, rules and methods to be adopted, and ascertaining i n advance the programmes,procedures and budgets so that they may serve as a guide to the action yet to be undertaken. According to Alford and Booty? Planning is the thinking process, the organised foresight, the vision based on facts and experience that is required for intelligent action. Millet observes, planning is the process of determining the objectives of administrative effort and of devising the means calculated to achieve them. Planning is essentially an intellectual process of careful thinking and analysis of facts, considering estimates of past events and future trends. It requires a difficult mental exercise, a keen foresight, analytical mind and broad based knowledge of facts. In planning, the manager must be able to manipulate abstract ideas and anticipate the impact of any possible outcomes which might affect the enterprise. Planning is pervasive. It is not an exclusive responsibility of the top management but is performed by each manager at every level in an enterprise. Although the nature and scope of planning will very with a managers authority, it is virtually impossible to circumscribe his area of choice, that he has no discretion in any of his actions. In fact, unless a manager has some function of planning,how so ever limited, it is doubtful that he is truly a Manager. In practice, the strategic and important plannings are performed by managers enjoying wider authority and the lower level managers formulate their own plans within the framework of objectives set by the Management.Business planning should be a way or mode of life essential to maintain the health of an enterprise. It demands a firm determination and conviction to plan constantly and systematically and business planning must be an integral part of the Management.


The basic features of managerial planning are given below : Planning is a basic function among 1) Planning is base for to all Management functions : all Management functions, since managerial operations in organising, staffing, directing and controlling are designed to support the accomplishment of enterprise objectives and goals, Planning logically precedes the execution of all other Managerial functions. A plan must concentrate on accomplishing certain objectives. It 2) Focus on objectives : lays down the ways and the means to achieve them. Planning is closely associated with the objectives of the organisation. A plan can focus attention on purposes. It can forecast which actions will tend towards the achievement of ultimate objective. Planning is the first of the managerial functions to be performed. 3) Primacy of planning : The beginning phase of the management process is planning. Planning is based upon the organisational objectives. Other managerial operations in organising, staffing directing and controlling are designed to support and accomplish organisational objectives. Planning is indispensable in every activity of the Management. 4) Forward looking : Planning is always concerned with looking into the future. It involves forecasting of future environment in which the organisation is expected to function. Planning is intimately related to future. It is forward looking, trying to see, through the uncertain future, what lies ahead. Planning is done by all managers, 5) Planning is a pervasive function of Management : although the scope of planning varies with their authority and with the nature of policies and plans outlined by their superiors. Planning is an important part of every managers job. However, the degree of planning skills required will depend upon the managers position. For example, the higher, one goes in the management structure, the more time of his will be spent in planning. Top management is concerned with strategic planning whereas middle management is incharge of administrative planning. Lower management has to concentrate on operational planning. Planning is concerned with selecting the best course of action 6) Selection of alternatives : from among the alternatives. Decision making is an intergral part of the planning function of management . Efficiency of plan is measured by its contribution 7) Efficiency, Economy and Accuracy : to the objectives as economically as possible. We must have the maximum results at minimum cost. Planning also focuses on accurate forecasts. Focus of every ki nd of pl an is on determination of the future course of action. But, the Course of action can be determined only on the basis of knowledge of future events. This automatically entails the need for the forecasting of future events. 8) Co-ordination : Planning co-ordinates all the what, who, how,where and why of planning. We cannot have united and synchronised efforts, without co-ordination of all activities. 9) Effectiveness of planning : The planning function should be conducted efficiently and effectively. The efficiency and effectiveness of planning is measured by its contribution in reaching organisat ional objectives versus its corresponding cost s. In other words, plans should be developed after due consideration of potential benefits to be received versus

costs to be incurred. 10) Limited factors : A planner must recognise the limiting factors like money, manpower, material s, machinery and management and formulate plans in the light of these critical factors. 11) Fixibil ity : The process of pl anning should be adaptable to changing environmental conditions. It is a bad plan that admits no modification. A plan must be adjustable, always ready to incorporate internal as well as external changes.

Relation between planning and c ontrol :

In a functional sense, planning is the determination of objectives, goals, strategies, policies and programmes of an organisation to give purpose and direction to its activities over a specified period of time. It involves decision ma king in the above areas to chalk out the future course of action in conscious, specific and comprehensive terms. Planning substantially reduces the areas of uncertainty, confusion, chaos, crisis etc.in organisational life, by setting standards and targets in advance to guide and control enterprise activity. Pl ans are meant to be implemented. Therefore, by its very nature, planning generates the need for control. The essence of control is action or directing the operations of the enterprise towards pre-determined standards and monitoring the progress in this regard for the purpose of feed-back and correction. The basis of control is precise and timely information in the hands of the manager which wil l give them an opportunity for preventive and corrective action, whenever called for. The need for control is paramount to ensure that the plans are in fact moving along the pre-determined paths with least deviation and disturbance. That the structure and pace of events conform to plan, that action towards securing results is as envisaged and that result do in fact meausure up to the desired standards. In an effective control system, the points of control are to be set up at their levels i.e. preventive level, current level and corrective level. At the first level, advance action needs to be taken to prevent deviation from occurring at all. At the second level, action is directed at guiding the ongoing activity along the set course. At the third level, actual deviations are corrected after they occur but before they do any damage to the system. Effective feed-back of information at all levels keeps the control stytem always on its toes.

Planning and decision making :

Decision making is the activity that diffuses itsel f throughout the entire process of planning. Decision making means making a choice between two or more alternatives. And the selected alternative means only the decision. The best alternative so chosen is expected to accomplish the desired results, with efficiency, economy and certainty. The principle of alternative planning and decision making process are identical or similar. Planning involves continuous collection, evaluation and selection of data. It involves scientific investigation and analysis of the possible alternative courses of action. The best alternative becomes the plan. Planning precedes nearly every decision except the most routine.

Managerial planning in business :

Business planning begins with the setting of goals or objectives of the enterprise. It is based on forecasting the environment in which objectives are to be achieved. It determined the approach by which the goals or objectives are to be achieved. The approach i s described in the form of strategies, policies, programmes and procedures for achieving the chosen objectives in a given business environment.A proper and sound organisation structure must be planned to implement the adopted plans and policies. The strategy of a company

(basic long-term goals and plans ) determines how the firm is to be structured and managed i.e. how the business is to be organised and managed. Management decision and actions need a sound organisation. It helps the continued implementation of pl ans and programmes. Business planning also includes a review of performance and sound machinery for feed-back of information to introduce corrections and a new planning-action-control cycle. Planning and control can ensure the accomplishement of stated goals.

Significance of Planning :
Planning is an indispensable activity in globalised modern organisations. Without sound and proper planning, the affairs of any enterprise are most likely to be haphazard. There may be repetition of certain activities, wastage of money, time, efforts and resources. Objectives and goals would not be achieved in time. In short, without plans, action becomes merely random activity, producing nothing but chaos. Therefore, planning is a must to achieve consistent and co-ordinated structure of operations focused on desired objectives. Henry Fayol has explained the significance of planning as a function of management in the following words : The maxim of Managing means looking ahead. It gives some idea of the importance attached to planning in the business world and it is true that its foresight is not the whole of management. It is an essential part of it. The plan of action, at one and the same time, is the result envisaged, the line of action to be followed, the stages to go through and the methods to use. An efficient system and planning enable a business enterprise to achieve the following advantages or benefits. Basic feature of planning is its relation with organisational 1) Concentrates on objectives : structure. All the operations are planned to achieve the organisational objectives. Planning facilitates the achievement of objectives by focusing attention on them. It provides clear definition of objectives so that the most appropriate alternative course of action is chosen. In absence of planning, there is a danger that Manager and other members of the organisation may get lost in the maze of routine activities and loose sight of the broad objectives, for the achi evement of which, t he organisati on is established. Thus it protects the management from being the victim of means-becoming ends in themselves. Future is always unpredictable and always full of uncertainties. 2) Reduction of uncertainty : A business concern has to function in these uncertainties. It can operate smoothly and successfully, if it is able to predict the uncertainties. Some of the uncertainties can be predicted by undertaking, systematic forecasting. Thus, pla nning helps in foreseeing uncertainties which may be caused by changes in technology, fashion and taste of people, government polici es, rul es and regulat ions, market condit ions etc. Coll ect ing such information provides a better understanding of what is likely to happen in the future and how an organisation should react, if different conditions crop up. It is one of the basic features of planning that it is related to the organisational 3) Co-ordination : objectives. All the operations are planned to achieve the organisational objectives. Planning facili tates their achi evement by focusing attention on them. Good pl ans unify t he interdevelopemental activities and clearly lay down the area of freedom in the develoment of various sub-plans. Various activities are performed by differente departments. Various department work in accordance with the overall plans of the organisation. Thus there is harmony in oraganisation and duplication of efforts and conflict of jurisdictions are avoided.

4) Economy in operations : Planning ensures economical operations because of emphasis on efficiency. Since planning involves the selection of the best possible courses of action, it is implied that best results would be achieved at the least possible cost. Planning and control are inseparable in the sense that unplanned 5) Planning facilitates control : action can not be controlled because cotrol involves keeping activities on the predetermined course and by rectifying deviations, if any, from plans. Planning helps control by furnishing standards of performance. Planning helps innovative and creative thinking among 6) Encouragement to innovations. : the managers because many new ideas come to the mind of a manager during planning. It creates a forward looking attitude among the managers. Effective pl anning gives a competitive edge t o the 7) Increase in competitive strength : enterprises over other enterprises that do not have planning or have ineffective planning. Thus, planning may involves expansion of capacity, changes in work methods, changes in quality, anticipation of tastes and fashion of people and technology changes etc. Countinuous 8) Planning focuses on the future directions, values and sense of purpose : planning by management shows precisely what the entrerprise wants to achieve in a given period as well as how it intends to accomplish the predetermined objectives. The organisation knows its present position and also where it wants to go. Basic objectives indicate the direction of growth. Every company has a 9) Planning provides a unifying decision making frame-work : number of functional departments, such as production, finance, marketing, personnel etc. Depart mental managers must develop their own functional st rategy or departmental direction. Whithout an overall corporate plan, there will be confusion and chaos. With a clear, effective masterplan, each department knows what it must do to contribute to the achievment of company goals. And thus all the departments would work in unity to achieve common corporate goals. Eventually planning improves the decision making process in the organisation. Peter Drucker has 10) Planning helps to identify potential opportunities and threats : pointed out that planning cannot completely eliminate the risk and uncertainties of t he decisions in long term planning. But, it can certainly hel p to i dentify the potential opportunities and threats and at least minimise the risk or uncertainties. A plan is based on concrete and reliable information both about internal and external environments and our sole aim is to secure a balance between our resources and our customer needs in order to offer maximum customer satisfaction. Objectives are set on the basis of inside and outside environmental forces revealing opportunities and threats. Need for planning is arisen from constant 11) Keeps the business organisation dynamic : changes, in economic, social, political, technological and cultural fields. Therefore, these changes must be noted and their influence must be given consideration in the plans and policies from time to time. A business enterprise and its surrounding environments are mutually interdependent and interacting with each other, continuously. A business enterprise lives in the world of resources, opportunities and limits. It can survive and grow only when it continuously adapts and responds in time to environmental changes. Change is the essence of life. If, there is anything constant, it is the change. We are living in a dynamic world. Change also implies progress. Management through comprehencive business

planning can anticipate, meet and adopt creativity to ever changing environmental conditions and demands. Planning aids the manager to assure the survival of the organisation under keen competition and changing environments. Ideal plan clearly specifies the 12) Planning provides performance standards : targets to be reached. For example- If a standards production of one lac units of certain article during a specific period is prescribed, it, therefore, becomes imperative to achieve this target. Secondly i f rate of ret urn on share holders investment is determined to be doubled within five years, the organisation has to work in that direction. The performance of a company is measured and control led on the basis of such a specific performance standard.


1) Integrated, consistent and purposeful action is more easily achieved by planning. All efforts are directed towards desired objectives or results. Unproductive work, unnecessary operative activities and waste of resources can be minimised. 2) Planning enables a company to remain competitive with other rivals in the industry. Progressive management can improve product or service, methods and facilities, well in time before it is forced to do so by the competition. 3) Through careful planning crisis can be aticipated and mistakes or delays avoided. Trouble can be more oftern easily removed in its earlier stages than after the crisis is developed. By anticipating the future risk or uncertainty or impending crisis, planning helps the manager to be prepared to meet such contingencies. 4) Planning can point out the need for future change and the enterprise can manage the change effectively. For instance, planning can reveal future uncertainties or changes in the economy and the management can be prepared to face t hem with reasonable success. Management of changes is based on planning. 5) Planning enables systematic and thorough investigation of alternative methods or alternatives solutions to a problem. Thus we can have sound decisions by selecting the best method or alternative to any business problem. 6) Plans are based on adequate information of the past and present as well as on the intelligent forecasting of the future. Hence, we have a ccurate and realistic plans of production, marketing, finance etc. Planning maximises the utilisation of available resources and ensures optimum productivity and profits. 7) Planning provides a sounds basis for reasonable and effective control. Planning and control go hand-in-hand. Under planning, we have deadliness for the starting and completion of a project. We have also standards of performance, reflected in the goals or targets. A budget is not only a plan but also an instrument of control. Thus, planning facilitates controlling. 8) Goals, policies, procedures and time-bound actions- programmes are determined in advance and are co-ordinated as well as directed among the channels. This removes the problem of confusion and thereby chaos. The organisation can, thus, reach the destination in the time that too effectively. 9) The systems approach to business planning and business management demands synthesis,

better co-ordination and integration of all functional areas of business organisation and to have overall planning if the enterprise as a whole. Planning enables management to relate the whole enterprise to its complex environment profitably. The manager can visualise the interrelation of different departments as well as interelations of the enterprises with all environmental forces. 10) Business planning in a comprehensive manner alone can assure survival, growth and prosperity, under keen competition and the fast changing environmental forces, particularly in the branch of science and technology. 11) Planning fa ci litates effective del egation of authority to act, removes communication defficulties, provides proper machinery for co-ordination and integration of all functions.

To sum up :
Planning is a must for modern, complicated, large and diversified business enterprises. It is because of planning, that business enterprises can make optimum use of resources and minimisation of the risks and uncertai nties is possible. Planning has assumed unique importance in the modern ma nagement process due to accelerated rate of change in sci ence and technology, powerful social changes, inter-dependence among modern organisations, emergence of complex and large business enterprises, and changing environments.

Demerits or Limitations of Planning :

Though there are so many merits of planning still there are some limitations of planning, which are mentioned below : The planning process starts with the collection of relevant 1) Lack of accurate information : data. The reliability of a plan depends upon facts and information on which, it is based. If reliable information and dependable data are not available, planning is surely to lose much of its relevance. Planning concerns future and its quality is determined by 2) Lack of accurate forecasts : the quality of forecast of future events. As no Manager can predict completel y and accurately the events of future, the plans may pose problems in operation. These problems are further intensified by problems in formulating accurate promises. Many times managers may not be aware about the various conditions within which they have to formulate their plan. It is difficult to measure immediately the correctness of planning, since it takes time for the results to start flowing, in the form of feed back data. Planning is a complex and expensive process. It 3) Complex and expensive process : demands detailed and serious thinking, tremendous hard work. It is time consuming also. Some managers do not like to undergo such a complicated process as they prefer shourt cuts. Such short -cut planning may not yield the desi red results. Planning is a t ime consuming and expensive process. Therefore, this may delay action in certain cases. But it is also true that if sufficient time is not given to the planning process, the plan so produced may prove to be unrealistic. Internal inflexibility in the organisation may compel the planners to make rigid 4) Rigidities : plans. This may prevent the managers from taking initiative and from doing innovative thinking. Rigidities appear from managers negligence to revise the plan, polici es and procedures. Qualitative objectives like social responsibility, 5) Lack of specific goals and objectives : management development, quality of work etc. are often expressed in vague generalisations

which defy proper evaluation. If these objectives conflict with quantifiable ones, managers tend to ignore them totally. Planning can not become effective unless goals are specific, clear and actionable. Plan can be no bet ter than the competence of the pl anner. 6) Lack of planning skills : Planning is an art and takes a special type of person to formulate it. Everyone is not capable of planning and solving organisational problems. A planner must possess not only skill but also intelligence and breadth of vision. Forecasting ability is a must for long term planning. Resistence to change is a nother factor which puts limits on 7) Resistance to change : planning. It is a commonly experienced phenomenon in t he business worl d. Somet imes, planners themselves do not like change and on other occasions, they do not think it desirable to bring change as it will create resistance on the part of the workers. This attitude makes the planning process ineffective. People who are not involved in the formulation of plan may tend 8) Lack of participation : to resist the plans at their implementation stage. Plans imposed from above often lead to resentment and resistence among those forced to implement. Psychological factors also limit the effectiveness of planning. 9) Psychological factors : Some people consider present more important than future because present is certain. Such persons are psychologically opposed to planning. But it should not be forgotten that dynamic managers always look ahead. Long-range well-being of the enterprise can not be achieved unless proper planning is done. 10) External factors : The planners are often confronted wit h external forces whi ch are beyond their control. The forces may be economic, social, legal, political, technological, geographical and international too. The managers have to formulate their plan keeping in view the demand of these factors Thus, their scope of action is limited, and thus make planning ineffective in many cases. The effectiveness of planni ng is sometimes limited because of external factors which are beyond the control of t he planners. Ext ernal stringencies are very difficult to predict. Sudden break cut of war, Government control, natural havocs and many other factors may make the implementation of plans very difficult. 11) Powerful group : Powerful group in the organisation may apply pressure to see that plan goes in the direction that increases their power which may not exactly be the direction from the view-point of overall good of the company. 12) Undue influence of chief executives : The planning organisation may be unduly influenced by what it considers to be the pet projects of the Chief Executive and may fail to apply critical analysis to its plans. Some of the above mentioned limitations of planning can be overcome by taking the following measures : Firstly , the management information system should be properly organised so that all the relevant facts and figures are made available to the planner before they make any plan. Secondly , a system of forecasting coupled with a keen insight into the dynamics of fut ure environment will improve the reliability of planned projections and estimates. Finally , management should give sufficient time and attention to plannings as it is the basis of every other managerial function.

The limitation of planning must be balanced against the benefits that can be expected, if the plans are simple, flexible and feasible, if we have well-defined objectives which are understood by all, if we evolve plans under democratic participative leadership and above all if we have adequate accurate and up-to-date data for planning, we can safely conclude that planning is bound to be a blessing or a boon to business organisations. In reality no enterprise can exist today without some planning. In the modern computer era, management information service, research and development department, marketing research section can provide ample raw material for building up the super structure of a comprehensive business plan. The raw material is usually in the form of statistical data i.e. facts and figures. The planners process this data by application of scinetific methods involving systematic clasification analysis and investigation. The latest mathematical or quantitative decisionmaking tools and techniques such as operations reserach enable us to secure rational solutions with minimum bias for many managerial problems. After the processing of data with the help of scientific methods, we have the finished products viz. a plan on the basis of adequate, accurate and up-to-date information. We can formulate a good plan of action which can yield optimum results and which can achieve the desired goals when it is implemented efficiently. Plans based on facts and figures can be very sound and realistic. Planning should never be on wishful thinking.

Features of a good and ideal plan :

1) A good plan should be based on clearly defined objectives-overall corporate objectives as well as functional and / or individual objectives i.e. precise objectives of the departments as well as the individuals workings in the departments. 2) A good plan should be simple and easily understandable. 3) It should be flexible or adaptable to deal with new conditions. 4) It should be balanced in all respects and gives equal emphasis to all vital areas of business. 5) It should provide for a proper analysis and classification of actions i.e. it establishes necessary guides and standards of performance. 6) It should provide to use the available resources to the utmost, before creating new resources and a new managerial set up. 7) It should be viable, feasible and reasonable.

TYPES OF PLANS ( Elements or components of planning )

There are different ways in which plans are classified. Basically plans are of two types, formal and informal. Formal planning is comprehensive and rational. Informal planning is exclusive for managers who develop plans but never formally put them on paper and may not even communicate them to others. The informal planning remains only within the minds of the managers as an image of what should or shall be done. It lacks definiteness, expression and even rationality in the sense that it is instinctive in nature and not systematic. But, however, i t is interesting to note that, at times, informal plans are more significant than formal ones. Another classification of planning can be done according to the time dimension i.e. (1) Short-term plans extending up to one year, (2) Medium-term plans of more than one year but less than five years, (3) Long-terns plans of five years or a longer period. Plans could also be classified in terms of functions like production planning, marketing planning and so on as against over all company planning. Another way to classify plans is to divide them into : (1) Objectives, (2) Policies, (3) Rules, (4) Procedures, (5) Programmes, (6) Shedules, (7) Budgets, (8) Methods, (9) Strategies and tactics, (10) Standards, (11) Forecasting. These are now briefly described

below : The end results to be achieved or towards which an activity is to be 1) Objectives or goals : directed, are described as objectives or goals. Objectives are plans for the futures that will serve to provide direction for subsequent act ivity. W e have a hierarchy of objectives. Primary or basic objectives are determined by top management. Each department has its own objectives within the framework of basic goals. Objectives of the organisation have to be crystalized for the enterprise as a whole which would constitute the basic plan of the organisation. This requires creative thinking and foresight. These objectives constitute a part of the planning activity. Effective management is always management by objectives, corporate objectives influence the management philosophy and practice. They have a great influence on the organisation, policies, personnel and leaderships as well as managerial control. All other elements of planning such as policies, procedures, rules and budgets assist and guide in selecting those alternatives that permit the achievement of predetermined objectives in the most economical and efficient manner. They guide on the path leading to achievement. 2) Policies : Policies are general statements aimed at guiding and thinking during making decisions. It is a guide to action or decision of Manager. They constitute broad boundaries, permitting initiative of the Manager to the extent of interpreting the particular policy. Policies need not necessarily be written as they may be implied from the past actions of managers. Policies are directives, providing continuous frameworks for executive actions on recurrent managerial problems. A policy helps in keeping work in line with objectives. Both objectives and policies guide the mental and physical actions of a manager. Policy assists decision making,but there may be deviations in certain extraordinary circumsta nces. That only means there is a limited scope for discretion in dishonouring a policy. 3) Rules : Rules are also looked upon as plans as they prescribe the course of action required. Rules are related to procedure as they guide action but there is no time sequence attached to them. Rules are the simplest type of plan chosen from alternatives. Rules provide for a specific action to be taken or not with respect to a situation. It is more rigid and more specific than policy. It guides action but provides no discretion in its strict application. Rules are essential for discipline and smooth operations of the business. A rule is designed to define in advance as to what alternative must be selected or what decision must be made. Rules are related to procedure. 4) Procedure : Procedure is another kind of plan as it involves selections and establishement of a logical series of tasks within the framework of predetermined policies and objevtives. Procedures a re, therefore, more definite than policies. It is a standing action plan as a means of implimenting the policy. For example, the sales department lay down a policy to execute all orders within 24 hours. The procedures of execution of orders will prescribe a sequence of steps that must be followed after the receipt of an order till the dispatch of goods to the customer. These chronologically arranged series of steps or taskes constitute a procedure. Procedures are, therefore, more definite than policies, defining specific activities to be completed towards a predetermined goal. Procedures exist throughout the organisation. Once a procedure is established, it ensures uniformly high level of performance. It results in work simplification and eliminates overlap or duplication of efforts. A procedure lays

down the manner or method by which work is to be performed in a standard and uniform way. A programme integrates policies, procedure etc. required for effecting a 5) Programmes : certain course of action. It thus integrates activities which are diverse but related. It may be looked uponas planned actions integrated into a unity and designated to bring about the stated objective. In other words, it is a sequence of activities designed to implement policies and accomplish objectives. It gives step by step approach to guide action necessary to reach predetermined targets. It is an instrument of coordination i.e. a timetable of action. A good programme ensures smooth and efficient operation. Procedure tells how it is to be done whereas programme tells what is to be done. It enables a manager to prepare himself carefully and systematically for difficulties before they arise. 6) Schedules : Schedules are the timings fixed for completing the programmed operations. They lay down timings when each step in a programme is to be executed. Schedules are necessary part of planning in order to ensure continuity in production, to secure constant flow of product into market and to avoid delays in various operations. A shedules specifies the time when each of a series of actions should take place. Once the tasks to be done and persons who must do them are clear according to our standing plans, scheduling may be only element needing immediate management attention. 7) Budgets : Budget is described as both a planning and a controlling device. A budget is a projcet of defining anticipated costs of attaining an objective.It is an appraisal of expected expenditure agai nst anticipated income for a future period. A budget is a st atement of expected results expressed in numerical terms like rupees, product units and man hours. It is also used as an instrument of managerial control. It provides the standard by which actual operations can be measured and by which variations can be checked. But it should not be forgotten that preparing a budget is clearly planning. A budget is a forecast of an enterprise to make, in advance, a numerical compilation of expected cash flow, expenses and revenues, capital outlays or machine hour util isation,etc. Budgeting is essential for control.coordinates the activities of various departments of a business enterprise by adjusting and incorporating the departmental budgets into the master budget. However, to be effective means of planning budgets should have functional flexibility. They should not be rigid instruments. They should be abl e to cope with unforeseen circumstances wi thin a predictable range of activities. 8) Methods : The method prescribes specifically and in detail how a task is to be performed constituting the best manner. Methods are sub-units of a procedure. They show clearly as to how a step of a procedure should be performed. They indicate the techniques to be employed to make the procedure effective. The primary focus is on finding out the best way of doning a piece of work. For example in a manufacturing concern, product sampling may be a method used as a part of quality control procedure. A method is the manual or mechani cal means by which each operation is performed. It means an esta blished manner of performing an operation. Thus, a method is more limited in scope, than a procedure, because it deals with a task that is only one step of a procedure. For example in the procedure for processing an order, there are methods for acknowledging the incoming order, checking the credit status of the customer, preparing the sales invoice and distributing its copies. Strategy is a military term which means to counter the moves 9) Strategies and tactics : of the enemy forces. This term is widely used in business also. A strategy involves preparing

oneself for unforeseen and unpredictable events. In other words a strat egy means placing oneself in the position of competitors and seeing what ones own reaction will be in a similar situaltion. Strategies may be regarded as interpretative planning or plans made in the light of the plans of a competitor. They are, therefore, a special type of plans based on the background of the plans of the competitor. Obviously, the best kind of strategy can be developed. The Manager has perfect knowledge of his competitors, plans. He can then weigh his own plan in the light of those of his competitor, modify them to take advantage of what his competitor is planning to do and reach his own goals with greater certainty. Strategic programmes are planned in accordance with top management policies, for accomplishig the companys objecti ves by properly managing resour ce allocation, environmental adaptation, internal co-ordination and organisational strategic awareness. Operational planning or tactical planning which systematises the operational activities to produce best results, is effectively guided by strategic planning while strategic plans are designed to accomplish the broad objectives of the organisation. Operational, plans provide details of how objectives can be achieved at the operational level to fulfil the expectation of the strategic plans. Thus operational tactical plans are meant to achieve the objectives enshrined in the plans through effective operations. 10) Standards : A standard is a meausre of the level of expected achievement. It is a model for comparison or evaluation. Standards are t herefore very useful in measuring deviations from the plan. Basically standards are set up to compare the standard with actual achievement and if there is any deviations, t o fi nd out the measures to do away from deviations. Circumstances, situations are always changeable. therefore, everything may not happen according to plans. The standards help in measuring the achievements as well as evaluation of achievements. It is an important tool in the hands of management . 11) Forecasting : Forecasti ng is a integral part of managerial planning. The purpose of forecasting is to offer the best available basis for managements expectation of the future and to help management understand the implications for alternative course of action. Forecasting implies the act of making a detailed analysis of the future to gain a foresight of background situations and talents forces. Planning is essentially based on forecasting. If the future could be forecasted accurately, planning would be relatively simple. But the future is unforeseen, uncertain, unpredictable and thus creates difficulties in designing the plans. The need of forecasting is self evident in the field of planning. But it has values otherwise also. It improves quality of management by compelling it to look into the future and provide for it. The very act of forecasting may disclose areas where control is lacking and where adequate control is necessary. It helps in smooth functioning of an enterprise. Henri Fayol speaks of pre-voance as the essence of management i.e. looking ahead which includes both assessing the future and making provisions for it. He further refers the plan as the synthesis of the various forecasts whether short or long term, special or otherwise. It is interesting that Fayal recommends yearly forecasts and ten yearly forecast, the later being revised at least each five years and earlier one if proved necessary by the yearly ones. Each forecast is to include a wide range of subsidiary and elemental forecasts, comprising of such data as capital output, production, costs, selling price and sales etc. Although accurate forecasting is highly desirable, yet it is always subject to a degree of error. Guesswork can never be omitted from forecasts, although guessing can be reduced to a minimum. Forecasts should therefore, carefully be made and still more carefully be relied upon by the managers.

PLANNING PROCESS Steps involved in planning

Planning process is concerned with making current decisions to allocate our resource in such a manner that we can achieve future objectives. Planning is a combination of information handling and decision making systems. We have information inputs, outputs and a feed-back. Let us now briefly view the steps generally involved in the planning activity. The following are the major steps in the planning process : Crystalizing at the primary stage 1) Crystalizing the opportunities or problems : means analysing the external environment and opportunities as well as threats. This further includes identification of problems to which solutions are to be provided and the opportuniti es that can be grabbed to make use of. It is necessary to clearly ascertain the areas requiring improvement for which planning is to be visualised. Answers to the following questions can help in planning. (i) Why a plan is required to be prepared. ? (ii) Is an entirely new plan necessary or is it sufficint to modify the existing plan. ? (iii) Will the organisation be benefited if such a plan is prepared and put into operation.? (iv) If yes how ? These answers will facilitate formulation of practical and realistic plans. Determination of crystal clear objectives is the first step in planning. Rather planning starts with it. Objectives are always at the center of plan because every planned action is directed to the objectives. This process can also be used as motivation to individuals in achieving the objectives because they have helped in establishi ng them al ongwith tasks to be performed for thei r achievement. Overall objectives define the goals to be achieved in general, whereas derivative objectives provide focus on their details i.e. what exactly is to be accomplished ? when action is to take place ? Who is to take this action.? How and when these derivated objectives are to be accomplished.?

2) Securing and analysing necessary information :Plans are blue prints of what is to be
done. how is to be done. who has to do etc. Plans provide the course of action to reach predetermined goals, by departments and ultimately by the organisation. Any forecast of future action must have some base which should further be improvised and processed with the help of anticipat ions. Such base and anticipation is the information pertaining to past, present and future. Naturally, after the setting of objectives, what is required t o be done is to secure required information from vari ous sources. Such sources are located as well as identifi ed and required informat ion is gathered from them. Past i nformation related to past object ives, courses of action being adopted, its effect and probability of achievement of objectives that can assess the effectiveness of current courses of action. Future informatin is nothing but logical anticipation of near as well as distant future. Such information is regarding internal as well as external environment. External environment includes Govt. policies, social values, political conditions, international situation and other externalities that may have effect on t he organisation in fut ure. Analysis of such information to the benefits of organisation only, must be made and thereby Plus and Minus or strong and weak points are assessed and identified. Such analysis further helps in identifying organisational strength in all vital areas. Constructive approach can reveal the deficiencies and pinpoint weaknesses, particularly in relation with competition. Such identified strength and weakness are assets and liabilities. They are required to be balanced in the form of balance sheet. This will help in knowing where we stand in the ma rket. This step involves making 3) Establ ishi ng planning premises and constraints : assumptions concerning the behaviour of internal and external factors mentioned in the second step. It is essential to identify the assumptions on which the plans will be based. An analysis of the data so collected will result in the formation of certain assumptions as a base. Assumptions denote the expected environment

in the future and are known as planning premises. Again forecasting is important in premising. It helps in making realistic assumptions about sale, costs, prices, products, technological developments etc. in the future. The assumptions along with the future forecasts provide a basis for the plans. Since future envi ronments are so complex and uncertain; it would not be realistic to make assumptons in great details about every environmental factor. It is advisable to limit premising to those factors which are critical or strategic to the planning process. Some of the premises such as population growth are uncontrollable by the organisation whereas others such as advertising policy to be adopted by the company are controllable. Constraints such as Governmental control will also exist. Planning will be in the backdrop of such premises and constraints which must be watched to detect changes and their effect on plans. There is always a possibility 4) Ascertaining alternaive courses of action or plans : of existence of certain limitations that could affect the ability of the work-group to reach its objectives. An intelligent manager must make plans anticipating the conditions or limitations that might restrict the smooth operation of the plans. A good planner must consider combination of all possible limitations and make provision for them. Determining the alternative courses of action is an important step in the planning process. In the light of the above analysis the possible alternative courses of action will have to be ascertained and examined. There is hardly any plan for which alternatives do not exist. Generally in all situations, there is more than one possible course of action. Ingenuity and imagination as well as experience are required to ascertain a number of possible alternative courses of action available in a given situation. A manager should try to screen out the most viable alternative so that he has a small number of alternatives for final selection. This will help in the thorough analysis of the alternatives so developed. The fifth and most important step in planning 5) Evaluation and selection of optimum plan : process is evaluation and selection of the optimum plan. After selecting the few viable alternatives, they should be evaluated with the help of number of parameters which are related to planning premises and objectives. These alternative courses of action will then be evaluated either by judgement alone or with the help of quantitative techniques and staff assistance. This will help in evaluating and selecting plan or course of action which will be the optimum or t he best , considering all the factors in t he interest of the company. The evaluation of various alternatives will help in knowing which of them offers the greatest chance of success in reaching the desired objectives. The purpose of evaluating the alternatives courses of action is to select the most suitable course of action, which will achieve organisational objectives. Techniques of decision-making are applied to choose a particular course of action. Some factors should be taken into account. While selecting the plan they are : (1) The plan should be objective oriented, (2) It should be flexible or adjustable, (3) It should be specific and clear, (4) It should be easily acceptable by the operating personnel, (5) The resources required for the implementation of the plan should be made available. Therefore, the management may decide to select two or more alternatives and combine them to have most feasible plan. Basic organisational plans can not be executed effectively 6) Determining derivative plans : unless they are supported by the derivative or sub-plans. From the basic plans as selected above, other plans will have to be developed, to support the basic plan. They are described as derivative plans.

These plans are developed within the framework of the overall planning. For instance a basic marketing plan may result in other derivative plans such as the advertising plan, recruiting personnel plan, training plan etc. Important derivative plans used in business include policies, procedures programmes, projects, methods, budget, rules etc. They help in achieving the overall organisational goals. 7) Fixing timing of introduction : The timing is fixed for introduction of plans. The question of timing and who will do that, will then have to be enunciated. An appropriate time schedule has to be prepared and detailed instructions are written for communication of the plan. The ultimate objective of the 8) Arranging future evaluation of effectiveness of the plan : plan is to achieve certain objectives, results or goals. The very fact of achievement of goals is required to be evaluated, by seeing whether these goals are accomplished. If not, it is essential to find out as to where was the slip up. Such an evaluation must be made at the earliest possible opportunity so that adequate controlling is resorted to for ensuring achievement of planned goals. This process is, at times termed as decision making, as planning process and decision making are very closely interrelated. Thus, planning is a continuing and ongoing process involving planning action-control and replanning and plans are subject to alterations in the light of new circumstances. Thus planning needs review, evaluation and recycling. Flexible plans can adapt with changes in the environment. Business enterprise is an open, adaptive system with its own environment. For a socio-economic system, the only vehicle for change (adaptation or innovation) is the business planning and decision making process as described above. Planning not only gives direction, but becomes a powerful instrument of control also. Managers throughout the chain of command are planners-cum-controllers.

There are severa l ways to cl assify plans. Classification of plans alongwith the basis of calassification is shown in the following chart : Basis of Classification Type of Plan a) Time span i) Long range plan ii) Short range plan b) Level of management i) Strategic plan ii) Administrative plan iii) Operational plan c) Repetitiveness i) Standing plan ii) Single use plan d) Scope i) Corporate or master plan ii) Functional plan iii) Divisional plan iv) Departmental plan. Thus there always exist heirarchy of plans i.e. objective, strategic and policy according to varying degree of scope and importance. This heirarchy relates to time period or futurity of the plans. Overall corporate or master plan interacts with administrative and operational plans, Long term plan interacts with tactical plans.

Scope of planning
Corporate planning is an intellectual process which requires analysis of future circumstances both internal and external and the development of objectives policies, strategies and programmes within the framework of that future. We have two divisions for total business planning. 1) Corporate or strategic or long-range plans. 2) Administrative (medium term) and operational (short range) plans. The concept of corporate planning has gained 1) Corporate or strategic planning : wide popularity particularly with the giant trans-national corporations. Corporate planning is defined as a systematic and comprehensive process of long-range planning taking account of the resources and capabilities of the organisation and the environment within which it has to operate and viewing the organisation as a total corporate unit. It is usually a long range-plan covering near about 5 to 10 years. It takes the overall view of the organisation and is prepared for the entire enterprise. A corporate plan must be frequently updated. Many organisations review performance at least once a yea r so that modifications can be made in the light of experience. In strategic planning we deal with the major, the most vital basic objectives, basic policies and corporate strategies. Under this planning we cover all important areas of business activities such as profits, capital expenditure for growth or diversification, organisation structure, managerial philosophy, pricing, leadershi p in the market, finance, personnel , advertising, labour relations, technological capabilities, product planning and development, research and development, management development, social responsibilities and such other company wide management development, social responsibilities and such other company wide areas or subject matters. Strategic planning gives special consideration to environmental changes and uncontrollable factors. Future behaviour of these environmental variables is predicted and alternative courses of action are formulated in the light of anticipated events. Strategic planning is mostly carried out by a planning committee consisting of top executives of the corporation. This committee follows the steps listed below to evolve efficient corporate planning. a) Determining long-range strategic objectives. b) An appraisal of the existing internal situation of the enterprise. c ) An review of the organisations position in the market. d.) An evaluation of the present competition and a prediction of the futur competition. e) An assessment of the genaral economic factors in the country like money condition, the phase of trade cycle boom, recession, depression and recovery. f) A review of Government policy. This involves study of government pol icy as regards employment, location of plant s, fi scal and budgetary measures, control of polluti on, consumer protection, taxation and so on. The planning committee should follow a proper procedure and make use of operations research techniques to ensure effective planning. SWOT approach may be followed which is a distillation of all the steps and considerations that should be taken to formulate an effective corporate strategic plan. The term SWOT means Strengths Weakness Opportunities and threats which are di scussed briefly as under :Strengths- This involves all the good or advantageous aspect s of the firm, for example, exceptional customer, good will, reputation, brand loyalty, adequate financial resources etc.

Weaknesses - This involves all the bad or demeritous aspects of the organisation. W eaknesses represent retarding influences on the success of the organisation. These must be thoroughly and honestly probed, for example, non adoption of advanced technology, poor sales, obsolescence of machinery, lack of arrangement for management succession at the higher level, inadequate research and development activities etc. Remedies must be sought on them. Opportunities- Opportunities are usually external whereas strength and weaknesses emanate chiefly from inside the organisation. The opportunities should be recognised and grasped firmly when they arise. Threats- Like opportunities, threats are most often from outside. Their adverse effect on the organisation may be mainly due to weak management, inter-personel conflicts, lack of financial resources and so on. Some example of threats are changing technology, cut-throats competition, economic and political uncertainty etc. Thus, it is esent ial that the SWOT approach requires management to look very closely and analytical at every aspect of its operations so that objectives can be assessed as atttainable and a clear picture of the strategies that must be followed , is built. Long-range planning : Long term planning deals with the futurity of present decision. It sets goals and develops strategies to achieve them. Warren-in long range planning-defines, long-range planning, as a process directed towards making todays decisions with tomorrow in mind and formulating means of preparing for future decisions so that they may be made more rapidly, economically and with as little disruption to the business as possible. Long-range planning has become famous in all the developed countries particularly in capitalintensive, complex and large industrial and multi-national concerns. Some thinkers call it programming. It 2) adiministrative and Operational planning : is responsible for establishingshort-term objectives and action programmes for each functional area. There is a budget allocation for each function or decision centre and programme and all functional budgets are incorporated in the master budget of the corporation. Administrative plans are essential to points out how an enterprise can optimise the use of its resources i.e. men, money, materials and facilities within the strategic objectives. Planning indicates what an enterprise would do ? Whereas adinimistrative strategic plans point out how to accomplish these objectives. Administrative and operational plans must be intergrated with planned control machinary of the organisation in order to ensure the achievement of goals or standards as per plan. If there is a big organisation having a number of divisions and each division is just like a separate company with its own set of functional departments then there is :1) overall corporate or strategic plan for the entire enterprise 2) divisional strategic plan for each division and 3) functional plan within each divisional strategic plan. A small organisation has only functi onal departments wit h departmental managers working under the Chief Executive, for example Managing Director, President or Chairman. In a small enterprise the Board of Directors and the Chief Executive formulate the companys strategic plan in consultation with Senior executives. The departmental managers formulate their functional or administrative plans for one year in consultation with their subordinate officers. Each functional plan and budget is approved by the top management with or without modifications. The master plan of the company is based on the functional or operating plans and budgets. In this way the comprehensive business planning covering

both long-range and short-range corporate objectives is integrated. Strategic and administrative plans are integral parts of the total planning process. Tactical planning is of shorter-range. For example production planning 3) Tactical planning : of a month or a week is a tactical planning. This type of planning has a narrow scope in comparison to strategic planning which has much broader scope. Planning at the corporate level is more strategic while planning at the departmental or functional level is more tactical. Strategic planning is cncerned with ends means prescribing goals and also means by which they can be achieved, while tactical planning is primarily concerned with selecting means by which the goals supplied by strategic planning can be accomplished. Tactical planning fills up the gaps within strategic planning with details of steps to be taken. A tactical plan is a short-term plan and it is more routine than a strategic plan. Strategic and tactical planning are bot h complementary parts of total planning process to secure maximum progress and realisation of set objectives.



There are three kinds of business planning Plans for doning current business are the funcitonal 1) Plans for current operations : or operating plans in details in the form of programmes and schedules i.e. time bound action plans. If the current operations are put on a sond footing and are under firm control the future is bound to be bright under normal conditions. These business plans ensure the survival in buisiness under the 2) Plans for survival : dynamic environment through timely adjustments in the business. 3) Plans for growth : (a) internal growth and (b) external growth Interna l growth is through product improvement , product line extension,introduct ion of innovations, new products emerging from research and development. External growth is through product acquisitions and corporate acquisitions and markets. Thus we can secure growth, product development, product acquisitions and lastly through mergers and amalgamations. Planning in a business organisations can be outlined by mentioning five main instruments a) Setting of objectives b) Determining basic policies c) Strategy d) Long range plans e) Operating plans. Corporate growth may be divided into two categories.




The planning board or committee is manned by 1) Planning Board or Committee : top executives and a few specialist staff members who are experts inplanning techniques. Planning for the entire enterprise which is a corporate planning is the responsibility of the Chief Executive and head of the Finance Committee.

It is formulated by the markieting manager with the help of sales 2) Marketing plan : manager and managers incharge of product development, marketing research as the manager is closely associated with marketing mix. 3) Financial plan : accountant and treasurer. It is formulated by the chief finance executive with the help of chief

It is formul at ed by t he chief execut ive incha rge of 4) Manufacturi ng plan : manufacturing operations with the help of manager of product engineering, manager of production planning and control, purchase manager and manager in charge of quality as well as inventory control. It is prepared by the chief executive with the 5) Research and development plan : help of manager incharge of research and development department. 6) Personnel plan : manager It is formulated by all line executives with the help of personnel

Questio ns
1. Planning is fundamentally choosing and that a planning problems arises when an alternative course of action is discovered. - Bi ll E. Goetz. Explain the statement and state role of decisions in planning process. 2. Unplanned actions may lead to a mess Elucidate the statement with the help of significance of planning. 3. Write merits and limitations of planning. 4. What do you mean by planning ? How can an ideal plan be prepared? 5. Write in details various types of plans. 6. Though planning is one of the management functions it is a process. Explain and explain planning process ? 7. Planning can be classified on the basis of Time, Management level, repetetiveness and scope, Explain such a classification and write different types of plans on the basis. 8. Write short notes on :(a) Types of Business plans (b) Planning organisation (c) Master plan (d) Planning nature of Budget (e) Defference between planning and Forecasting. (f) Schedules under planning (g) features of ideal plan. (h) Significance of planning as a management function. (i) Relation between planning and control. 9. Define corporate planning ? W hat its features ?

10. Explain the steps in corporate planning process ? 11. Write a short notes on Environmental Analysis and Diagnosis ? 12. Describe the scope of impact of external environmental on the s corporate planning ? 13. What do you mean by Planning ? 14. Describe the terms of planning. What is planning ? 15. Explan the nature of planning ? 16. Describe the importance of planning ? 17. State the merits of planning ? 18. State the demerits of Planning ? 19. Explain the characteristic of ideal plan ? 20. Explain the element or component of plannings ? 21. Describe the steps in Planning Process. ? 22. What are the terms / types of plans? 23. Discuss the Scope of planning?


Meaning and concept of decision making :

Decision making is one of the most important functions of management. The word decision is derived from a Latin word Decis which means Cutting away or cutting off to come to a conclusion this is itself means that a single thing is a to be brought in action by cutting off many other things that look alike. Thus decision making means choosing one alternative from available so many. Naturally it is a bought work. This is based on the mental ability of the manager who has to take decisions. A manager who is able to take proper and timely decision is supposed to be a good manager. Decision making is a human process and depends upon the immediate assessment of pros and cons of the available alternatives. Decision making is most important tool of management. This function of decision making is the essence of managerial process because it is the decision and its proper implementation that drives the organisation on right track. Every human being has to take decisions in his life. Peter Drucker - the father of scientific management -said, Whatever a manager does, he does through decision making. Haimann considers decision as, a course of action chosen by the manager as the most effective means at his disposal for achieving goals and solving problems.

Definitions :
According to Mc Farland , A decision is an act of choice wherein an executive forms a conclusion about what must be done in a given situation. A decision represents a course of behaviour chosen from a number of possible alternatives. According to G. R. Terry , Decision making is the selection based on some criteria from two or more possible alternatives. According to F. G. Moore, Decision making is a blend of thinking, deciding and acting. Haimann considers decision as, a course of action chosen by the manager as the most effective means at his disposal for achieving goals and solving problems. Characteristics of decision making : of decision making process can be derived. From the above mentioned definitions, following features

1) Decision making is an intellectual, human process. 2) Decision making consists of choosing a right, appropriate alternative from among many available alternatives. 3) Decision making process is a continuous process prevailing in all business activities. 4) Decision making is always related to a situation and involves a certain commitment for whatever dura tion. 5) Decision making aims at achieving organisational objectives. 6) Decision making process is always preceded by deliberations and reasoning.

Importance of decision making :

Following factors are indicative of the importance of decision making in the business organisation.

Decision making is a pervasive activity. 1) Decision making is the essence of managing : It perform through all mangement, exists in every part of enterprise and deals with every possible subject. It is inherent in all the managerial functions. The management has to take a large number of decisions while performing managerial functions. Management is not able to walk a single step without decisions. Basically decision 2) Decision making always aims at achieving the goals and objectives : making is a goal oriented process. In fact the very determination of objectives, policies, programmes, strategies etc. of the enterpris is a decision making process. Correct decisions at right time, right place and by right person only can enable a business organisations to achieve goals and objectives. Through decision making, managers 3) Decision making seeks to reduce unc ertainty : seek to reduce the element of uncertainty in the organisati onal environment. Managers have to exercise a good measure of judgement, based on knowledge and experience in seeking from the alternative courses of action. Priorities are given to the consideration of practicability and acceptability of decisions. Timely taken decisions also help in reducing uncertainty in business organisation. It is a great job to choose right alternative from among a set of 4) Choosing alternatives : alternatives. It is a difficult task on the part of the management. It requires an ability to select right alternative. The managers must possess this ability. A single mistake in decision making may cause collapse of the whole business organisation. 5) Decision maki ng is wider than or distinguished from problem solving and choice making : Decisions are to be taken to decide the policy, plans and the organisation through a long long period. No doubt, decision making is a choice of an alternative out of available many, like in solving problems, at time.s But the problems are not the policy or plan. They may crop up any time. They may hamper the process for a short while. But once a solution is arrived at this hindrance in implementing the decided policy, plan and objective is automatically removed. Secondly the problems, cropped up, may be restricted to a small area in the organisation. As such decision for solution of the problem is also restricted to that area. Thus the scope of decision ma king is vey wide whereas problem solving is restircted to a narrow area.

Types of Decisions :
Decisions to be taken in any organisation can be classified in the following types : Decisions in any organisation are taken by persons 1) Orgaisational and Personal decision : working in it. All the decisions are related either to organisation or to individual. Whenever a person assuming the charge of a manager takes any decision i t i s a decision of the manager and not the person. Such decisions are related to organisational matters and taken by a person as a manager. These decisions are known as organisational decisions. Capital formation, new methods or techni ques of production, new production line, closing any unit, rules, methodology of working etc fall in the preview of organisational decisions. Such decisions directly affect the organisation. On the other hand, if the same person decides to go on leave, retire, or resign, such decisions are his personal decisions. They directl y affect hi m though t hey may have indirect effect on the organisation. Organisational decisions are to be implemented through out the organisation and they are

binding on al l concerned people. W hereas persona l decisions have nothing to do wi th the organisation.They may have some indirect effect on the organisation as they are directly related to his individual personality and not his personality as a manager. Organisational decisions may 2) Basic (Strategic and Routine) operational decisions : be related to either strategies or operational methodology and allied matters. Strategic decisions are known as Basic decisions also. These are generally based on original plans and relate to formulate policy to implement the plans. Such decisions are mostly one time decisions and are in implementation for a pretty long period. These decisions provide guidelines for attainment of organisational goals. Once the strategies and guidelines are decided, all the lower level managers have to work according to the strategies and within the preview of guidelines. But methodology or the operational ethics are needed to be prepared. Decisions in this regard are known as operational or routine decisions. These decisions are required to be altered according to the prevailing situations. Naturally they are of repetitive nature. Such decisions are taken for routine work therefore they are at times, known as day-to-day decisions. Economic and Non-Economic Short termed long terms Types of Decisions Individual and Group Problem solving and opportunity Referred Crisis and Intuitive Figure. As seen 3) Structural (programmed) and Unstructured (Unprogrammed) decisions : above strategies are decided for a pretty long period alongwith guidelines for the implements i.e. lower level managers. In order to facilitate day-to-day working the lower level managers have to take some decisions to set right the operational machinery for better performance. For example- assignment of work to employee, grant of short leave to the worker, method of utilising resources etc. Such decisions are known as structured or programmed decisions. These have a very short impact and are changeable from time to time. But if a new unit is to be started or any of the existing units is to be closed, or change in product line or change in the wage or salary structure is to be made, decisions are required to be taken by the top level management. Such decisions have a long term impact on the organisation. These decisions are known as unstructured or unprogrammed decisions. Basic and unstructured decisions are major decisions. They 4) Major and Minor decisions : are taken by top management. Operational and structured decisions are of minor nature and are taken by Major and Minor Organisational and personal Basic/Strategic/ Routine/operational Structural and Unstructural

and Research

lower level managers. Major decisions may bring a major change in policy and strategy that affects the total organisation. These are independent decisions of the policy makers. Minor decisions are aimed at fulfilment of major decisions. Such minor decisions are to be kept in the sphere of major decisions. Minor decisins are generally taken by lower level managers. Whatever decisions are taken in crisis 5) Crisis and Intuitive and Research decision : situation like stress, surprise, unusual circumstances, emergencies are called as crisis or intuitive decisions. Crisis decisions are often based on experience, detailed analysis and confidence. These decisions are generally made under pressure. On the other hand research decision can be made under a minimum time-pressure. Lower level managers have to face situations arising during the 6) Referred decisions : course of working. They have to overcome such situations by taking immediate decisions, But some mnagers (Lower level) are unambitions, inactive and incapable of taking decisions. At time they are afraid about the correctness of the decision which they may taken for lack of confidence. They refer the matter to their superiors and request for their decision. Such decisions are called referred decisions. Top level management is required to pay 7) Problem solving and opportunity decisions : attention to problems that are existing and that may crop up in future. Capable top management can foresee future problems, The same way good managers can imagine and foresee future situations and probable opportunities. Naturally top level management remains in readiness with problem solutions and with utilisation plan of future situati ons and probable opportunities. Proper decisions are thus taken by them in present period i.e. in advance. Such decisions are known as problem solving and opportunity decisions. If a decision is taken by an individual person it is 8) Individual and group decision : known as individual decision. On the other hand when a number of persons collectively take t he decisions they are known as group decisions. Individual decisions are, often, taken in small organisation of small sized top level management. On the other hand big size organisatins like companies, are managed not by an individual but by group of individuals like board of directors. Naturally strategic decisions are taken by the group. Short-term decisions are taken for short span of 9) Short-term and long-term decisions : period. Such decisions generally involve less uncertainty and risk. On the other hand long term decisions are taken for a longer duration. Therefore there is more risk and uncertainty. Most of the times short term decisions are taken by subordinates and long term decisions are taken by the top management. Economic decisions are related with financial 10) Economic and non-economic decisions : ma tt ers and non-economic decisions are related with, social values, ethical values, moral val ues, social, cultural, religious, educational, political psychological factors.

Decision making process :

All the decisions by the managers have direct effect on the organisation as a whole. If decisions are not taken carefully they may prove to be wrong with adverse effect on the organisations. Any decision taken on spur of moment and with only mental instinct may not be a proper and correct deci sion. Thus the management has to go al ong a number of steps to ensure correct and proper decision, that too in a chronological order, Adherence to the following steps results in proper decisions. Decisions are required to be taken on varied issues and problems. 1) Identify the problem : It is, therefore, necessary first to know the issue or the problem. Many decisions are to be taken in anticipation of problems and situations. Unless such issues, problems, and situations are not identified,

taking decisions is not possible. Naturally the decision maker has first to identify the problems or issues or situations alongwith their importance, nature and so on. Thus identification of problems is the first step in decision making. to identify, is the responsibility of decision maker which he has to fulfil with proper knowledge, experience and capability. Identification of problem does not provide sufficient 2) Analysis of identified problem : information that may help in decision making. The known problem or the anticipated problem must be studied in depth. Such a study includes analysis of the problem. All relevant information is required to be collected, studied and arranged in a sequential order. This enables the decision maker to understand the pros and cons of the problem and of probable decisions. Thus anlysing and understanding the problem is next step in the decision making process. As we know decision making is choosing a fitting alternative 3) Discovery of alternatives : from amongst available many. Once the problem is thoroughly understood, various solutions can be evolved. Each such solution may be the final decision. Thus all such solutions are generally identical with some differences. All the solutions are thus discovered first. Every such possible solution is an alt ernative. These alternatives can be evolved either by giving a detailed thought or by consulting experts. As seen above almost all alternatives 4) Selecting the best alternative i.e. decision making : look alike. But there are some differences regarding nature, time of implementation, good-better-best effect, financial involvement. social impact etc. These differences matter more as they have organisation wide impact. Secondly it is to be seen whether the probable alternative provides long term solution or implementation. The problems may be temporary (timely) or permanent (constant) in nature. Naturally soluti ons should also have the same nature. Thirdly the deci sion maker has to assess as well as anticipate bad or good results (effects) of each of the alternatives. It, therefore, becomes a tough job for the decision maker. He has to use his wisdom, foresight ability and expereicne and hypothetically test every probable solution . It is, only after the whole exercise, possible to confirm an alternative which in turn becomes the decision. Decisions are taken to resolve t he problems. These 5) Implementation and follow up : problems are not with the decision makers. Thus the decisions have to reach the concerned people who face the problems. It is, therefore, essential to communicate these decisions to all concerned. Many times methodology of implementing the decision is also required to be communicated. Decisions can be impemented only after this. The top management has to observe the effects of decisions after implementation a feed back is sought. This enables the management to compare their assessment with actual effects. Correctness of the decisions can be finally confirmed only after their implementation. Such implementation must be supervised properly to ensure right compliance. If the decisions stand to be supervised properly to ensure right compliance. If the decisions stand to the expectations, improvement, solution of problem, their correctness and effectiveness is confirmed. If there are any lacunae, these can be removed by making required amendments to the decisions. All this is implementation and follow up state.

Decision making of techniques :

Decision may drive an organisation on right track or may make it stand still. Such is the importance of Decision in any organisation. An effort, therefore, is being made to evolve techniques that may facilitate proper, correct and factual decision making. Naturally several new techniques for the purpose have been evolved in recent years. We can classify these techniques in two broad categories. They are-

1) Non-Quantitative techniques 2) Quantitative or Mathematical techniques Non-Quantitative techniques : This is a quality based techniques. The word quality refers to the quality, capability and intelligece of decisi on maker. Some may have natural intuition towards decision making. Some may not possess it; or may possess this intuition in a smaller degree. Intuitive decision makers may reach the decision in the next moment of placement of problems before them. Ot hers are required to apply much more thinking and then only they can decide. But one thing is common in both these types of decision makers, that they do not take help of modern techniques of mathematical analysi s or comptuers. Therefore such techni ques are known as non-quantit ative techniques. This technique includes the following We have seen in previous paragraph that there are persons who have an a) Intuitive : intuition power in them. Intuition is nothing but a power to come to conclusion immediately. Such persons rely more on their inner feelings than any other thing. Such persons arrive at the decision at the spur of the moment. They do not require any analysis of the problem, or any suggestions from others.Such persons take decisons without any careful or detailed analysis and reasoning. Naturally such decisions are generally influenced by their psychology, previous knowledge and experience, wisdom, mental capability and other personal qualities. No doubt that such decisions come in much less time, money and energy. This can be taken as its only merit. But there is every possibility that such decisions may prove to be incorrect as they are not based on proper reasoning and analysis. A careful decision maker relies on reliable information and facts. He is never b) Facts based : inclined to take any decision off hand. He, for this, collects factual information and analyse it in the context of the problem and its analytical valuation. He arrives at the decision only after knowing and analysisng the things. Naturally he takes more time,may involve more money and may consume more energy. But this little extra time, may involve more money and may consume more energy minimise the chances of incorrect decisions, Since this technique or methodology is based on facts it is known as facts based non-quantitative technique of decision making. Fact based technique is further improvised by using experience of the c) Experience based : decision maker himself or the experiences, that are recorded in the files, of others. Past experience facilitates early analysis of information and problem. Secondly the decision maker might have to his credit the experience of tackling and resolving like problems. The only thing the decision maker has to do, under such circumstances, is that he has to tally the previous problems with present problems and amend his decisions accordingly. In such conditions he has not to discover and consider more alternatives. Such a technique of decision making is known as Experience based non-attention to changing circumstance. If a decision maker, along with his experience uses and applies his assessment of future probable changes as well as the changes in offing, there may remain negligible chances of decisions coming incorrect. Decisions to be taken may relate to temporary d) Based on opinions (considered opinion) : or permanent problems, concerning narrow area or wider area, affecting short period may be resol ved by ndividual consideration of a manager. But other types of problems may require wide consultations. These consultations may be in the form of group meetings soliciting opinions from subordinates, as well as superiors. Subordinates opinions, many times, are useful even for solving temporary or short term problems. The decision making

manager discusses the problem wit h his colleagues, He expects free exchange of ideas, views and opinions from those with whom he discusses. After listening and considering the views and opinions the decision maker arrives at a decision. Naturally his decisions are based on the opinions of others, which, being logical, scientific and analytical, are accepted by him. This technique is known as considered opinion non-quantitative technique. There may be some problems which may need technical consideration from the experts in the respective fields. In such a situation the manager may call for techical opinion from experts and may take decision on that basis.

Quantitative or matheatical technique :

In non-quantitative technique, the facts, infomation, experience are not quantified in terms of numbers and thus are not represented in exact number. Naturally mathematical practices cannot be used but in quantitative technique, all these things are quantified in terms of real numbers. Real numbers are the main components of mathematical practices. A mathematical model is prepared to quantify i.e. to convert the data in numerical form. It is, then, presented and preserved in mathematical terms. Whenever any problem arises and requires a solution by way of superiorss decision the problem is fitted in the pre-prepqred model it is, there after processed by various mathematical methods and practices. (generally linear programming) and the result is derived. Naturally such a result is in numerical form and is then translated in words form. Such decisions are usually factual and correct decisions provided a proper mathematical model is evolved and the data is correctly quantified and fitted in it. This method is very useful to resolve the problems of technical and mechanical snags, because all methanical data can be easily quantified and converted in numerical form. But its utility in social, psychological and abstract type of problems is negligible. This is one of the limitations of this technique. Secondly there may be limitations of mathematical model which is evolved and accepted. This technique has following three components. It is a vital part of this technique. Much care is essential a) Building a mathematical model : while building such a model.It requires complete understanding of the problems. Factors to be considered and their interrelationship as well as relationship with the problem must be carefully observed, while building a model. Whenever problems arise and decision is required this model b) Processing of the model : is to be processed with the data collected and in relation to the problem. Once the model is processed and required data is fitted c) Interpretation of the results : there in the model gives you results i.e. solution in its own language. This language is now interpreted in usual language. Apart from mathematical models, charts, graphs, statistical presentation, and some other formats are also used in quantitative technique. Following are other techniques of decision making 1) Judgement technique 2) Operational Research Technique 3) Delphi Technique 4) Decision Tree As is evident from the name itself, this technique is based on 1) Judgement technique : judgement. Every human being has a capacity to judge. This capacity is improvised by the experience.

As we know Experience is the best school of learning. Naturally human judgements are the results of thinking based on experience. But while taking decisions with the help of this technique it is essential to have proper knowledge of the problem of future implications, and of future situations. Such technique was being practised in the past for a pretty long period. It has its significance in modern days also. It is one of the cheapest and quick techniques of decision making. Operations research has different menaing to different 2) Operations Research Technique : people. It is the application of scientific method, tools and techniques to operations of system with optimum solution to the problem. It is a scienctific method of analysis of problem and to provide the manager the required quantitative information in making decision. It gives emphasis on defining the problem and careful compilation and evaluation of dat a, devel opment and testi ng of hypothesis, establishing relationship between various data and taking effective measures to control performance. The following are the steps involved in operations research. 1) Construction of a mathematical model in which important factors in the situation are pin pointed. 2) Definition of criterial to be used for comparing therelative merits of various possible courses of action. 3) Procuring empirical estimates of the numberical parameters in the model that specify the particular situation to which is applied. 4) Carrying through the matehematical process of finding courses of action which will give optimum solution. Operations research itself includes many techniques like linear programming, queuing theory , replacement theory, network analysis etc. This technique includes a systematic evaluation of plans, discovery a) Linear programming : of the possible improvements and the suggestions of modifications to determine the best plan- all within the predetermined limitations. This technique was evolved because the mathematics deals with linear equations. Linear programming is used for determining the operational combination of limited resources to acheive a given purpose. This technique is applicable in production planning, transporatation, warehousing, location etc., as these are the problem creating areas. This is applied to any situation which needs b) Queuing theory (Waiting line theory) : balancing of increasing cost. This theory uses mathematical techniques to balance services. A group of articles, items, waiting for services is known as queue. queue exists where the demand is more and services are less. Decisions in such situation are taken with the help of queuing theory. This theory is helpful when the problem is concerned fundamentally with c) Games theory : the actions of competitors. This theory assumes that the opponent will carefully consider what the decision maker may do before he selects his own strategy, For example, while deciding business strategy, a businessman will try to maximise his profit and minimise the loss, and to minimise competitors profit and maximise his loss. Machinery, equipment, plant etc. become obsolete in a certain d) Replacement theory : period and ask for replacement. Decisions are required for their replacement. The cost of production may go up and efficiency may go down if such replacements are not made. Therefore the management has to take replacement decisions in advance. Many times new

techniques and improvised machinery help in increasing profitability and profits. Decision in this respect are taken on the basis of replacement theory. e ) Network analysis : Generally network analysis is used for planning and controlling the project activities. According to this analysis, a project is divided into small operations, arranged in logical sequence. There are several network analysis techniques for instance PERT (Programme evaluation and Review Technique) CPM (Critical path method) etc. Under this technique decision is taken in relation to project activities, its division, sequential arrangement etc. Del phi technique : It is a group decision technique. This technique is used for long term forecasting planning. It is used to determining programme alternatives, to expose presumptions of information leading to differnent judgements. etc. This technique involves four steps, establishing a panel of experts for solving the problem each expert is asked to make predictions, each expert has to provide composite feed back, lastly, each expert is free to change his opinion on the basis of the feed back and finally a consensus decisions is reached. Decision tree : It is a graphic method. It is a visual device for illustrating all the chances that are available while taking a decision. The decisions form a kind of network or a tree, with decisions branching out from the trunk, according to the decisions made a t each stage. Oftenly uncertainty surrounds each step and a manager faces uncertainty after uncertainty. This technique deals with such a problem.

Questions 1. Define the Concept of decision making. 2. What are characteristics of decision making? 3. Explain the importance of decision making. 4. Explain the various types of decisions. 5. Explain the steps in decision making process. 6. Describe the various decision making techniques.

Recruitment :


Recruitment occupies prime status in the functions of personnel department. It is recruitment through which desired workforce is procured. This workforce is a factor on which, depends a major proportion of achievement of organisational goals. Thus it can be said that unless right people are hired for right jobs, even the plans, organisation charts and control system would not do much good. Recruitment is the first stage in the process which continues with Selection, Placement, Induction, Training of the manpower. It is the next-step in the procurement function. Recruitment makes it possible to acquire the number and types of human resource necessary to ensure the continued operation of the organisation. The success of an organisation la rgely depends upon the team of skilled and qualified workers who are selected out of a number of applicants for the concerned job. Recruitment is the first step in the employment process which aims at developing and maintaining the adequate manpower resources upon whom the organisation can depend when it needs additional employees. An analysis of job is a pre-requisite to any recruitment process. It involves the preparation of job description and job specification for individual job, Recruitment process begins only when the requisite number of persons and the requirements of different jobs are known.

Definitions :
(1) Recruitment is the process of searching for prospective employees and stimulating them to apply for the jobs in the organisation. (2) The term recruitment stands for discovering the sources from where potential employees will be selected. Systematic recruitment may ultimately result in greater productivity, higher morale, reduction in labour turnover and better reputation of the concern. (3) Recruitment is a process to discover the sources of manpower to meet the requirements of the staffing schedule and to employ effective measures for attracting that manpower in adequate number to facilitate effective selection of an efficient working force. According to the purpose, recruitment is to locate sources of manpower to meet job requirements and job specifications - Dale Yoder. (4) It is a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organisation. It is often termed positive, in that it stimulates people to apply for jobs to increase the hiring ratio of the number of applicants for a job and number of jobs to increase the hiring ratio of the number of applicants for a job and number of jobs. Selection on the other hand tends to be negative because it rejects a good number of those who apply, leaving only the best to be hiredFlippo. (5) Recruiting is the discovering of potential applicants for actual or anticipated organisational vacancies. In other words it is a Linking activity bringing together those with jobs and those seeking jobs. (6) Recruitment is the development and maintenance of adequate manpower resources. It

involves the creation of a pool of available labour upon whom the organisation can depend when it needs additional employees- D.S. Breach Thus the purpose of a recruitment function is to seek, to evaluate, to obtain commitment, and to orient the aspirants to fill positions, required for the successful conduct of the work of an organisation. Recruitment enables the management to select suitable employees for different jobs. It is significant to point out that hiring of employees through selection is a negative process since it involves the taking of suitable candidates for the organisations and rejection or elimination of other applicants.

Recruitment Vs. Selection

The recruitment process begins only when the number of persons required for different jobs and requirements of different jobs are known. Recruitment process aims at developing and maintaining adequate manpower resources upon whom the organisati on can depend when it needs additional employees. Recruitment is basically a positive process of searching the prospective employees and stimulating them to apply for the jobs in large numbers in the organisation, It increases the selection ratio and enables the management to select suitable employees. As against this, selection is a negative process as it involves the taking of suitable peoplefor the organisation and rejection or elimination of the other applicants. The process of select ion leads to employment which establishes more than contractual relationship between the employer and the employees. The recruitment and selection process should look to the human adjustment with organisational objectives. It is important that the selected candidates possess the ability to perform the job assigned to them and have the opportunity for development and growth in the organisation This is the most important feature of a sound personnel policy.

Before starting the process of recruitment of applicants, the organisation should consider and identify the most likely sources for the type which it needs. Most of the organisations do not want to go beyond the available sources with them. But there are some who always try to identify and develop new sources. Basically, there are two sources of recruitment : (1) Internal and (2) External

1. Internal sources :
Internal sources of recruitment are the most obvious sources. Many organisations may overlook the value and importance of recruitment from within. It is not only reasonable but wise to let t he existing employees know the vacancies by internal advertisement. But now it is being realised that the best source of supply for higher or top posts is the personnel who are already in the organisation. This type of recruitment source is the personnel already on the pay-roll of the organisation i.e. its present working force. Whenever any vacancy occurs, somebody from within the organisation is upgraded, transferred, promoted or sometimes demoted. This source also includes personnel who were once on the pay roll of the company and plan to return, or whom the company would like to rehire such as those on leave or absence, those who tetired voluntarily or those on prouduction lay-offs. Recruitment from internal sources includes transfer and/or promotion. Transfer. involves shifting of an employee from one job to another. While transferring an employee it is ensured that the employee to be tranferred to the new job, is capable of performing it. In fact transfer does not involve any drastic change in the responsibilities ad status of employee. On the other hand, promotion leads to shifting and employee to

a higher position, carrying higher responsibilities, facilities, status and pay. If a higher vacant post is given to an employee who deserves it, it will stimulate all other employees of the organisation. This source of recruitment is generally adopted to fill vacancies of middle and top level personnel. In order to achieve the advantages of recrut ment of personnel from the existing employees, the personnel manager should draw up a policy relating to pormotion from within and communicate it to all the employees. Such sources of recruit ment practice l eads to healthy and progressive atmosphere and lower the cost of training and the rate of labour absenteeism and labour turnover.

Merits of internal sources of recruitment

The advantages of recruiting from within the organisation are as follows : (1) It ensures stability and continuity of employment. (2) It creates a sense of security among the employees as well as opportunities for advancement. (3) It increases the morale among employees, for they are assured of The fact that they would be preferred over outsiders when vacancies occur. (4) The employees in the employment are fully aware of and well acquainted with its policies and know its operating procedures. They require little training and the chances are that they would stay longer in the employment of the organisation than a new outsider would. Moreover existing employees are already familiar with the organisations activities and requirements. (5) They are tried people and can, therefore, be relied upon. They look forward to hi gher posts. (6) The valuable contacts with existing major customers are materialised. (7) It is less costly than going outside to recruit employees. (8) It eliminates the chances of hasty decisions.

Demerits :
Internal sources of recruitment have certain demerits also. These are given below : (1) If vacancies are filled through internal sources i.e. by promotions, the scope for fresh blood entering the organisation is restricted or reduced. (2) Frequent transfers reduce the overall productivity of the organisation. (3) There are possibilities that the internal sources may dry up. It may be difficult to find the requisite personnel from within an organisation. (4) The employees may become lethargic if they are sure of time bound promotions (5) The spirit of competition among the employees may be hampered.

External sources of recruitment

Though the internal source of recruitment is available, it is always not possible to recruit the employee from within, specially in the vacancies at lowest level or recruitment at the time of expansion of the firm or where job specifications can not be met by the present employees. In this situation the employer has t o go t o external sources of manpower supply. Once it is decided to recruit from outside, there are many ways by which possible candidates from outside sources can be located.

Merits :
(1) External sources provide the requisite type of personnel for an organisation, having skill,

training and education upto the required standard. (2) When employees are recruited from a large market, the best selection can be made without any distinction of caste, sex or colour. (3) In the long run this sources proves economical because potential employees do not need extra training for their jobs. However, this system suffers from what is called brain drain especially when experienced persons are raided or hunted by sister concerns.

Methods Techniques of recruitment :

There are three methods (1) Direct methods (2) Indirect methods and (3) Third party methods.

1. Direct methods :
This type of recruitment refers to direct contacts of enterprises with prospective employees, as they think such a method to be more effective. This can be done by sending recruiters to concerned conventions and seminars, setting up exhibits at fairs as well as maintaining mobile offices to go to the right centres. Some big companies maintain continuing contacts with institutions placement officials with a view to recruiting staff regularly for different responsible positions. Sometimes firms directly solicit information from the concerned professors about students with an outstanding record.

3. Indir ect methods :

Indirect method of recruitment involves advertising in newspapers, on the radio, in trade and profession journals, technical magazines, brochures. etc. It is the most frequentl y used method of recruitment specially for higher rank positions, and when qualified or experienced personnel are not available from other sources. Even senior posts are largely filled by such method when they can not be filled by promotion from within. Other methods include advertising in publications, such as trade and professional journals, radio and television announcements, as is done by many Indian manufactures. Professi onal journals are read by people with special ised background a nd interest. Therefore advertisement in these are, generally, selective. 3. Third party methods : Third party methods include both commercial as well as private employment agencies. (a) Private agencies : Private agencies are quite successful in providing the personnel specially in technical and professional field. Such agencies charge commission for providingthe job to job seekers. Many private agencies tend to specialise in a particular type of job, like sales, office, engineering, production etc. These agencies provide a nationwide service in recruiting a variety of personnel. They are functioning very well. Thi s is one of the main agencies of public empl oyment. (b) Employment exchanges : Empl oyment exchanges are regarded as a good source of recruitment of skilled, semiskilled, unskilled and for operative jobs. Employment exchanges in India are in few number and they provide a clearing house for jobs and job information. The job seekers get their names registered with employment exchanges, managed and controlled by the central and state government. The employers give the information of vacancies to be filled in, to such exchanges and then the exchanges refer the names of prospective registered candidates to them. These agencies provide a wide range of services like counselli ng, assistance in getting jobs, information about the labour markets, wage rates etc.

The professional institutions like Insti tute of (c) Professi onal Bodies or organisations : Chartered Accountant, ICWA, Institute of company secretaries etc. maintain a register of qualified persons from which they recommend the names of the job seekers to the employers when asked for. These consultancy firms recommend persons of high calibre for higher posts as managers in general, marketing, production categories. like schools, colleges, universities, professional t echnical (d) Educational institutions institutions, are also the centres for procuring personnel. A close liaison between the organisation and educational institutions helps in getting suitable candidates for vari ous positions. These educational institutions offer opportuni ties for recruiting their students. These general, technical and professional institutions provide blue collar. white collar and managerial personnel. All the above are a very useful source of recruitment for a full range of jobs. They provide placement services where complete biodata and other particulars of the students are available. The employment managers of the business concern maintain close contact with these educational institutions for recruiting officers, apprentices or management trainees. These institutions refers the names of the prospective employees to the prospective employers as and when asked for. It is an import ant source of recruitment. (e) Recommendation of existi ng empl oyees : Existing employees are asked to recommend their friends, family members, relatives to the employer. The existing employees know both the organisation and the candidate being recommended by them. Some business concerns give opportunity to their existing employees to recommend the names of people (candidates) best known to them for filling the vacancies. It is expected from the present employees that they will recommend the candidates who have the potentital, qualification required for becoming successful on the job. In the past this sources of recruitment was very important and (f) Labour contractors : powerful. Today also labour contractors play vital role in recruiting semi skilled and unskilled employees. Labour contractors having contacts with the job seekers or labour, bring them at the place where they are required. They take commission from the labours for giving them job and also from the employer. Former employees mean those employees who worked in the (g) Former employee s : organisation and left afterwards for some personal reason for example for better prospects, bright future in some other organisation etc. Only such former employees who have good record at their credit may be entertained by the organisation many times. These former employees are eager to come back to the same organisation where they had worked. Thi s method of recruitment was most popula r in India . These (h) Interme diarie s : intermediaries called as jobbers, Mukadams, Choudharis etc. Employers generally consult these intermediaries through their managers at the time of their recruitment. In India this sources of recruitment is now out of date and not so popular. (i) Trade Union : In some business enterprises trade uniouns also assist in recruiting the staff. But only necessary thing that a required to be with them is that the trade union works positively towards the organisation and helps in achieving the targets and objectives, plans, policies, help in developing better labour relations. Such trade unions assist in recruiting the best employees.

Under this method a notice of recruitment is displayed (j) Recruitment at the factory gate : on the notice board at the gate of the factory or office. In this notice, the organisation specifies the details of the jobs or vacancies available This technique is used generally to fill casual vacancies. This is an important source of recruitment. (k ) Unsoliciated appli cations : Prospective employees apply for employment at their own initiative. Such applications are known as unsolicited appli cations. Special ly in case of reputed companies, a large number of unsolicited applications come to the office. These applications are maintained or preserved in a file A proper record is maintained either in computer or in file. This record is referred as and when vacancies occur and suitable candidates are recruited. Various sources for recruitment (as above) are available. But it is essential to know that any of the sources taken singularly is not useful for all types of jobs, and for all the times. The concerned organisation has to select one or more sources depending upon, the type of personnel it requires, job specification, the positions it wants to fill etc. Similarly a source which suits to an organisation may not be suitable for other because of the traditions followed by it, the atmosphere in which it works and so on. In nut-shell we can say that no sources is good at all the times, in all the circumstances and for all the employees and employers. Therefore the company has to use a variety of recuritument sources. Almost all the sources (third party) are widely used for recruitment by the organisations in India.

Selection is a negative process and it starts a fter the completion of the recruitment process, Selection is the process by which the qualified personnel can be chosen from the applicants who have offered their services to the organisation for employment. This process is called a negative process, since more candidates may be turned away than hired. Selection is the tool in the hands of the management to differentiate the qualified and unqualified applicants by applying various techniques such as tests, interviews etc. In this sense, it is a negative process of employment in which only a few who qualify for the job are offered employment and others are denied the opportunities. Selection is the process of logically choosing individuals who possess the necessary skills, abilities, qualities to suit the job. As against this, recruitment is called a positive process, as its objective is to increase the number of applicants. According to Dale Yoder Selection process divides the candidates for employment into two categories, namely those who will be offered employment and those who will not be. Sel ection of employees is a decision making process, where the management decides certain norms or principles on the basis of which, a discrimination between qualified and unqualified desirable and undesirable candidates can be made. A sound selection policy will ensure the selection of a suitable candidate. The objective of selection process is to determine whether an applicant meets the qualifica tions for a specific job and to choose the applicant who is most likely to perform well on that job.

Selection procedure :
After recruitment, the next important staffing function is selection. Selection of the best candidates is the next logical task in the execution of procurement function. Selection of suitable candidates is very essential because wrong selection adversely affects the organisation. Investment in an inefficient or misfit employee is a great loss to it. At the same time wrong adversely affects the employee in the

run as he can never get job satisfaction. It increases the labour turnover and absenteeism. It also reduces the morale among employees. Therefore it is essential that selecting authorities must be very compet ent, expert s a nd wel l knowledged.The selecti on procedure must be very efficient and satisfact ory. Selection problem does not have onlythe economic aspect but social aspect also. It affects not only the organisation but the whole community. The subjective, imbalanced, unsystematic, prejudiced, biased selection may have demoralising effects on the society. Therefore selection must be based on merits, and it must be just. Selection procedure is certainly a negative procedure of screening as many candidates as are likely to be rejected. It is concerned with securing maximum relevant information about an applicant. The main objective of selection procedure is to see whether an applicants qualifications meet the j ob requirements or not? Who is the right person for job? Who will be successful on the job? Who is most suitable ordesirable for the job? And who is most likely to perform well on that job? The selection procedure involves several steps and at each step secreening takes place. All these steps are necessary for screening every candidate. It depends upon the type the job i.e. operative, managerial, administrative, supervisory etc. Accordingly t he steps must be evolved in selection procedure. Even while selecting the steps, it should be seen whether the job requirements are properly tested or not. There is a series of steps, and every step is going to secure additional information of the candidates. At every step, facts must come to light whichmay lead to the rejection of the applicant. The applicant has to go through all these steps. This technique is known as the successive hurdle technique. Thus, an effective select ion programme is a non-random process because those selected have been chosen by assuming that they are more likely to be better employees than those who have been rejected. For best or ideal selection procedure a selection policy should be formulated. While formulating selection policy due consideration should be given to organisational requirements as well as technical and professional dimensions of selection procedures. In simple words an effective policy must assert the why and what aspects of the orgaisational objectives. The hiring process can be successful if the following preliminary requirements are satisfied. (a) A person should have the authority to hire. This authority comes from the employment requisition, as developed by an analysis of the work load and work force. (b) There must be some ideal or standard of personnel with which a prospective employee may be compared i.e. job description and job specification as developed by the job analysis. (c) There must be a sufficient number of applications from whom the required number of employees may be selected.

Following are some steps involved in selection proc edure.

On receipt of applicati ons they are screened to sort out the (1) Preliminary interview : desirable and undesirable ones. Only the desirable applicants be permitted to face preliminary interview. The preliminary interiew is generally quite brief and has the object of eliminating the unqualified, undesirable, and unsuitable candidates. Lack of certain requirements in academic qualification, training, experience, skill, capacity may determine unsuitability of the candidates. In this brief interview appearance, ability in communication, impression, salary expectation etc. of the applicant are quickly evaluated. This step is beneficial, not to the organisation only but to the applicant also, in a way that, if an applicant is eliminated in the early part of the selection procedure, he ma y be saved from the hurdle of passing through the long procedure, and organisation is saved from the expenses of processing

him through the remaining steps of the procedure. If the applicant appears to have some chance of being selected, he be given the application blank to fill in. (2) Application Blank : After clearing the preliminary interviews application blank is given to the candidates to fill up. The objective behind application blank is to secure information, in the applicants own handwriting sufficient to properly identify him and to draw tentative inferences regarding his suitability for employment. This is one of the important steps to get a written record of qualifications, experience as well as any other specialisation of the candidate. This application blank should be as simple as possible. It may prove to be useful in a big organisations, as to enable them to plan their training programmes, special assignments or promotions after the employee is hired. (3) Employment tests : Testing and employment interviews are two very important devices of screening. An employment test is an instrument designed to measure selected psychological factors. The factors so measured are usually the psychological type, such as ability to reason, capacity for learning, temperament, specific aptitude, interest, mechanical dexterity etc. Such psychological tests were first introduced in military services in the first world war and later adopted by business as a technique of selection. Employment tests are widely accepted in the selection process. Real value of the tests lies in eliminating those applicants who have very littl e chance of job success than in select ing applicants who would be defi nitely successful on the job. But one should not rely upon tests alone. There are psychological and other steps which can measure the extent of differences among the people. Tests reduce the cost of selection and placement because large number of applicants can be evaluated within small period of time. Tests provide healthy basis for comparing applicants background. Some important test are intelligence tests, aptitude tests, achievement tests, personality tests, interest t est s etc. They hel p in matching the charact eristics of individuals with the vacant jobs so as to employ right type of personnel. However, tests should be considered simply as a step and not a replacement for the other phase of the selection process . It should be remembered that when the tests are used, they should not be relied upon completely. Individuals differ from each other in almost all aspects. They differ in respect to physical characteristics, capacity, level of mental ability, likes anddislikes and also personality traits. Therefore right type of test should be applied to right type of personnel. Test should be selected according to job requirements. Interview is probably the most widely used selection tool. It is (4) Employment Interviews : a complete select ion technique because its scope includes measuring all the relevant characteristics and integrating as well as classifying all other information about the applicant. Although application blanks, tests and group discussions provide much valuable information about a candidate, yet they do not provide the complete set of information about a candidate to enable the organisation to know about the applicant and vice versa. The main aim of an employment interview is to find out the suitability of the candidate, to secure more information about the candidate, to give the candidate an accurate picture of the job with details of terms and conditions and idea of organisation policies and employer-employee relations. The factual data on the application blank may also be checked. It also tests the capabilities of the candidate. It is an extensive device. It tests not only the personality but also the skill and ability for the job, of an applicant. Interview procedures and technologies vary from organisation to organisation and from individual to individual according to the

purpose of the interview. Interviewing is the most widely used single method of sel ection despite its some obvious shortcomings. Sometimes the interviewers give different ratings to same candidate and therefore it suffers from subjectivity and unreliability. Interview tests only t he personality of the candidate and not his ski ll s and ability for the job. It depends too much on the personnel judegement of the interviewer which may not always be accurate. Prejudice may affect the result of the interview. Interview is personal, face to face meeting between the panel of interviewers and the candidate. They may also be used for testing certain qualities and capabilities of the candidates. A referee is potentially an important source of information (5) Checking of references : about a ca ndidat es personalit y special ly if he holds a responsible position in some organisation or has been the boss or employer of the candidate. Generally the applicant is also asked to give names of certain persons or firms where he has worked, for references. Such references are very useful in getting information about the candidates. An applicant may be asked in the application blank to supply two types of references (a) character reference and (b) experience reference. The references may be requested to provide information regarding behaviour of the applicant. It is very rare to get a frank opinion about the candidate, even after giving an assurance to them that the information supplied would be kept confidential. Reference checking has its drawbacks also. The reference may not give accurate information about the candidate. He may give his good impression about him because of his relations with him or if he is his employer, he may give a good report to get rid of him. Therefore one should not remain totally relied upon this method. After a candidate has cleared the above hurdles, he is (6) Physical /Medical examination : asked to go through a medical examination by doctors appointed by the employer for this purpose. The pre-employment physical examination or medical test of a candidate is an important step in the selection procedure. The physical examination may be thorough and comprehensive or it may be general and simple just to check up some important capabilities i.e. eyesight, hearing, lungs, heart or to detect contagious or serious disease the candidate is suffering etc. depending upon the nature of work. It is important, because the medically fit and healthy employee is likely to work more efficiently as compared to physically unfit, and disabled employee. If the employee suffers from some serious and contagious disease, other employees may suffer by coming in contact with such an employee or he may go on leave and claim medical benefit and compensation. Such employees are the liability than the asset of an organisati on. Such employees remain depressed havi ng l ow morale and disinterested, which may be very expensive for the organisaion. These are some objectives behind the medical check up. It serves to ascertain the applicants physical capabilities to meet the job requirements. It serves to protect the organisation against the unwarranted claims under the Workers Compensation Act. It helps to prevent contagious diseases entering the organisation. Simply making the prospective employee go through the medical test, ensures that employee is physically fit for the job at the time of actual entry. A proper medical examination ensures higher standard of health and physical fitness of the employees and reduces the rate of accidents, labour turnover and absenteeism too

(7) Approval of the supervisor : After the medical examination, sometimes, the personnel department, which is generally in the staff nature, submits the candidate so selected to the line superior for his selection and approval. The reason behind this is, that the organisational relationship often requires that the supervisor be given the right to pass upon his personnel, otherwise he cannot be held accountable for their performance. Thus the equality of authority and responsibility of the supervisors is preserved. It is better to have an appraisal to both the staff employment interviews and the supervisor, who he better acquainted with t he actual job conditions and the type of personnel at present in the department. This step may be eliminated either by giving authority of final selection to the personnel department or the superior concerned may be made the member of the interview committee, with a good voice in selection or interview. A final list of candidates, who have successfully passed all the (8) Selection and placement : hurdles and therefore selected, is prepared. Such selected candidates are informed about their selection and are asked to report to the department . They may be given a date before which they are supposed to report.This can be divided in two phases. In first phase only the selection list is published either by displaying it on the notice board or by sending individual letter or through circul ars. In second phase appointment letters are issued to individual candidates.

Preliminary Interview Applica tion Blank Employment Tests Employment Interviews Checking of References Physical or Medical Examination Approval of the Supervisor Selection and placement Rejection
Figure: Selection


The candidates may be appointed on a probation of six months or more. If during the probation period, an employee is not found suitable, the management may give him some training or transfer him to some other job to which he may be expected to do justice. Even after this if, he is not found fit for the job, he may be asked to leave the job. It is also courteous to inform the rejected candidates expressing the inability to select them.

In this way the selection procedure functions. The procurement programme should be evaluated from time to time in terms of realiability, validity, objectivity, difficulty, reasonableness, standardisation, practicability, independence and economy and appropriate corrective actions should be taken to improve upon the existing system. INTERVIEWING Interview is one of the important steps in selection procedure. It is probably the most widely used selection tools. Employment interview and tests are two of the most important screening devices generally used in hiring procedure. Interview is the oldest method of evaluating a persons potential for a job. It assists to reveal, examine and assess the capabilities, qualities and traits of an individual to be selected for the job in an organisation. Interview technique is quite complex in substance and difficult to use property. Its scope includes measuri ng all the relevant characteristics and integrating and classifying all other information about the applicant. Through this technique, needed information like nature, attitude, behaviour, perception, interest, motives, likes, dislikes, intelligence, personality etc. of candidate can be obtained by a face-to-face contact. This technique is practically used in every business and profession. Some activities call for a high degree of proficiency in interviewing candidates for the Posts like professors, engineers, psychiatrists, clinic al psychi atrist s, lawyers, soci al workers, employment managers, industrial relations, managers, market analysts, salesmen, supervisors etc.

Meaning and Defination :

Interview means a conversation between interviewer and intervi ewee a imed at assessing the potentialities for a job. It is a two way comunication between the condidate and the interviewer. In simple words interviewing means deliberate active listing with a purpose to draw the other person out, to discover what he really wants to say and to give a chance to express himself freely. Scott and others defined interview as, An int erview is a purposeful exchange of ideas, the answering of questions and communication between two or more persons. An eminent author defines an interview as a conversation with a purpose and the purpose may be to get information, to give information and to make a friend. Bingham Moore and Gustad has defined the term interview as under : An interview is a conversation directed to definite purpose other than satisfation in the converstion itself. There is give and take between the interviewer an interviwee and much of the interaction between these two is carried on by gestures, postures, facial expression and other communicati ve behaviour. Even the words acquire a veriety of meanings and values as they are spoken with different reflections and in different context. All of these are means of communication- the spoken words, the gestures, the expressions, the reflections- contribute to the purposeful exchange of meanings which is the interview In other words An interview is an attempt to secure maximum amount of information from the candidate concerning his suitability for the job under consideration. An interview may be defined as a systematic and scientific process used in the employee selection which helps to acquire needed information with regard to the candidates capabilities and his interest, aptitude and knowledge required for the job and also to provide him the requisit information about the concerned organisation through face-to-face communication, thus creating a feeli ng of trust and confidence in the mind of the prospective candidate.

Objectives of Interview :
The following are the objectives of a well designed and an effective interview programme. (1) To seek more information about t he candidate, which is not mentioned in Application Blank. (2) To judge an applicants qualities and characteristics as a basis for sound selection and placement. (3) To verify the information given in the application form and in the Appliation Blank. (4) To give essential and accurate facts about the job and the organisation such as nature of the job, hours of work, opportunities for advancement, employee welfare facilities, benefits and services available, organisations policies, plans, future prospects etc to the candidate. So that the candidate will be in a position to decide, whether to accept or not the employment in that organisation. (5) To establish rapport t o create a feeling of mutual understanding, confidence and trust between the organisation (personnel department) and the applicant who is to be employed. (6) To create a good image and to promote goodwill towards the organisation, whether the interview culminates in employment or not. (7) To give an idea of disciplinary action, grievence handling and relations with unions to the candidate, because interview is a valuable tool for all these. (8) Interview is the only technique which seeks correct and factual information a bout the candidate. Thus in brief, selection interviews give a chance to personally size up the candidate and to pursue questioning in a way employment tests can employ not. In other words interviews can be described as a very important screening tool of the candidate.

The interview can be classified in the following ways on different basis. This is the most common method of 1) Patterned, structur ed or Guided Interview : interview. It is a preplanned interview and more carefully designed to have a high degree of accuracy, precision and exa ctide. Under this type of interview a list of questions to be asked by the interviewer is prepared in advance on the basis of job specification, and to secure information from the candidate. The questions would be asked in a particular order with very little deviation, ideal and standard answers to the set questions are also determined in advance. Therefore there is no scope for bias on the part of the interviewer. An adequate opportunity is given to the candidate to express his ideas and viewpoints. The main purpose of this type of interview is fact-finding and not awarding a judgement. It measures personality, motivation and interest of the candidate, because this information can not be secured from elsewhere. This type of interview is useful in selection of semi-skilled employees. It is also called as directed or standardised interview. It assists in proper evaluation of the personality, attitude and motivation of the candidate. It guards against faulty conclusion, due to bias. It is an unstructured and non-planned interview. (2) Unstructured or Unguided interview : Therefore it is called as non-directed interview also. It is designed to let the interviewee speak his mind freel y. The idea is to give candidate complete freedom to sel l himself without

the encumbrances of the interviewers questions. It is not directed by pre-determined list of questions. It is very flexible in nature, candidate feels very comfortable and free. Full freedom is given to him to discuss and express his points of view and ideas. The basic objectives of this type of interview is to find out the feeling, desire or problems of the candidate. The interviewers look for trait of character and nature of his (candidates) aspiration and his strength and weakness, mainfest or potential. For conducting such type of interview, interviewer must be highly skilled and competent. This type of interview is more offen used in situation othe than hiring such a counselling, processing of grievances and exit interviews. The object of this interview is to examine intensively the cadidatess 3) Depth interview : background and thinking and to go into considerable details on particular subject of an important nature and of social interest of the candidate. It is semistructured in nature and quetions are used in key areas, which have been studied in advance by the interviewer. The typical subjects are discussed in such type of interview. The interviewer, as well, provides instructional information about his organisation, the nature of work, pay, opportunities for advancement and demands likely to be made on the employee. The capability of performance of the candidate in the specific area of work can be well-judged by asking relevant questions by the specialist interviewers. Under this type of interview the strain is put on the candidate deliberately. 4) Stress interview : It is designed to test the candidate and his conduct and behaviour by putting him under conditions of stress and strain, Usually the interviewer in such a stress circumstances asks questions rapidly, criticises the interviwees answers, interrupts him frequently, too many questions are asked at a time by many inerviewers, makes negative remarks, tries to put him in an awkward situation, and carefully watches the interviews emotional stability and balance. The purpose of the interview is to find out how the candidate behaves in a stress situation and see whether he looses histemper, gets confused or frightened. This type of interview does not necessarily reveal how a candidate will behave in real stressful life situations involved on job. 5) Group interview : It is also called as Discussion Interview. In this type of interview, groups rather than individuals are interviewed. A group of candidates (interviewees) is given certain problem and is asked to come to specific decision within a given time. The interviewer sits over there and watches the interviewees. The candidates enter into group discussion. The interviewer observes as to who has assumed leadership and the process by which leadership is exercised and how it is accepted by the other members of the group. Group interview is generally conducted in a situation where leadership ability is to be observed. Group intervi ew is resorted to for selecting management personnel. The object of this interview is, to see how well individuals peroform on the particular task or in a particular situtation. It is designed to save time, labour and cost and to see how t he candidates react to and against each other. In panel or board interview, candidate is screened by a group 6) Panel or Board Interview : of interviewers who are specialists in their respective fields. This type of interview is just opposite to Group Interview. A candidate is interviewed by a number of interviewers,

and t he questions are asked by them in serial or in random order. The interviewee is required to answer and to have dialogue with many interviewers at a time. This may cause pressure on the candidate. This is not a good practice. This type of interview pools the collective judgement and wisdom of t he panel of interviewers in the assessment of the candidate. The members of panel or board, jointly evaluate the performance of the candidate. 7) Formal interview : Formal interview may be held in the employment department by the employment officer in a more formal atmosphere with the help of preplanned questions and schedule, with predetermined procedures and practices. It may also be called as planned Interview. It is an oral interview, that may take place anywhere. Usually when 8) Informal Interview : staff is required urgently on some specific job, this type of interview is conducted. Informal interview is not at all preplanned and scheduled. Informally the questions are asked to the candidates. The exit interview is generally conducted at the time when an employee 9) Exit Interview : is leaving the business organisation. The objecti ve behind this interview is to know the opinion, view and feelings of the out going employee regading his job and organisation, and later on to develop/improve such policies in the light of defficiency so discovered.

Interviewing is a universal tool utilises in any selection procedure. The primary object of interview is to determine the suitability of applicant for the job. Interviewing is an art. Successful interviews follow established principles in matching man and his qualifications to the job requirements. Bingham and Moore have mentioned the following principles of interview. The interviewers must possess 1) Expert, Skilled, experienced and trained interviewers : the ability and skills required for interviewing the candidates. They should be expert, skilled, experienced and trained for interview. They should be familiar with the interview requirements or nature of the job, background of the organisation and industry which they represents. They should be well-versed in Behavioral Science, which helps them to Judge the different personality traits of the candidates. They have to get them prepared for interviewing by making a list of questions based upon the job specifications. Full privacy should be provided for conducting the 2) Provide Privacy and ample time : employment interview. There should be no di sturbances, obstacl es, phone calls, noise, visitors. Specific and healthy atmosphere should be deliberately created for interview purpose. Ample time should also be given for interview to the candidate during the interview. All the interviewees should be warmaly welcomed 3) Proper reception of the interviewees : and be treated nicely. A warm reception of the interviewees help to create a favourable impression in the mind of the candidate appearing for the interview. These help the interviewee feel at-ease and willing to give you the 4) Comfort and ease : facts a bout himself. The interviewers must be straight forward and frank rather than clever. The interviewers should ask t he questi ons in a simple 5) Skillful and tactful qestions : language, understandable to the applicant. Never argue or interrupt or change the subject

abruptly. They should not ask leadi ng (which gives clues or hints to the answer) or tricky questions, because one of the objectives of interview is to seek more and accurate information about the candi date. The interviewers must respect the interest of the candidat e. Direct and personal questions should be asked tactfully. The interviewer should try to get t he relevant information and also answer candidates questions also. This means indirect discl osure tha t the 6) Do not oversell the job opportunities : organisation is in need of the services of the candidate Even if the candidate is the right person for thejob, the organisation should not beg to him. On the other hand the interviewer should use his skill to impress the candidate in such a way that he himself accepts the job. The feeling that the candidate is obliging the organisation by accepting the job should never be created in the mind of candidate. The interviewers should adopt a courteous approach 7) Be courteous towards the candidate : towards the candidate and let him feel at home, so that she/he can say everything about her/himself with an open and free mind. Give full apportunity to the candidate to talk more and 8) Encourage the candidate to talk : there should not be much talking by the i nterviewers. The interviewer must avoid the temptation of too much talking and should give ample apportunity and encouragement to the candidate to talk more and in details about himself. The best interview is usually one in which the interviewers talk the least. The interviewer must listen attentively and patiently (9) Attentive and patient listening : to the interviewee during the interview. He should not divert his mind elsewhere during the interview, though the candidate may or may not be to their satisfaction. The interviewer should not impose upon the candidate, his own opinion, view points and beliefs. The information from the applicant can be elicited only when the interviewer give him a patient, prolonged and skillful hearing. The interviewer should understand the interviewees 10) Objectivity in decision making : point of view and has to keep himself away from the bias, prejudice, personal judement and whims. He must rely on the principle of objectivity rather than subjectivity. There should be a scientific process and methodology of testing and interviewing the candidates. The interview should be concluded at the point of time when the 11) Closing the interview : interviewer becomes sure collecting adequate information about the candidate and that he has judged the personality traits as required. At this point the interviewer should stop the interview extending his thanks to the candidate for the interest he exhibited towards the organisation. 12) Rational selection : After the interview is over, the chairman and members of the interview committe have to arrive at a specific decision with regard to the final select ion of the candidates for the jobs to be filled-in.The interview board should be very rational in this. Their decision should based on the performance of the candidates and the information the board has collected during the course of interview. Such decision should be conveyed to the concerned candidates in a clear-cut and simple language along with the terms of employment by timely sending them the appointment letters. Every interview should be result oriented. The interview programme should be scientifically impl emented for this

which ultimately helps in the final selection of the most suitable, competent and right employees for the jobs in the organisation.

Every job has its own speciality, Performining job does not only depend upon usual theoretical or technical knowledge possessed by the performers, but such a knowledge is required to be made appropriate and useful for the job also. Training is the act of increasing the konwledge and skill of an employee for doing a particular job. After selecting and placement of employees, they may be sent for training. These employees require a systematic training. Arranging appropriate training programme is one of the important functions of the personnel management. Every organisation has to make the arrangement of training for their employees. If there is no planned training programme, the employees may engage themselves in selftraining by trial and error or by observing others. In the absence of a planned, pre-determined, and systematic training programme, training cost will be much higher. For well planned, training programme, employees as well as managements interest are equally essential.

Meaning :
Training is the act of increasing of knowledge and skill of an employee for doing a particular job. The term training denotes a systematic procedure for transferring techincal knowledge to the employees so as to increase their knowledge and skills for doing particular jobs. Edwin B. Flippo defines, Training is the act of increasing the knowledge and skill of an employee for doing a particular job. Michael J. Jucius defines, the term training is used here to indicates only process by which the aptitudes, skills, and abilities of employees to perform specific jobs are increased. From the above meaning and definitions it becomes clear that, training is an organised procedure for increasing the knowledge and skill of the employee for better performance on the job. Training is not necessary for new employee alone it is equally essential for old, senior existing employees too, Reason behind this is that training for employees is necessary, to keep the business organisation dynamic. Emplyees are required to be trained all through their service. Imparting training once a while can not ensure refineness throughout. Naturally training becomes equally important for senior, existing as well as new entrants. Training is a continuous process. Training should be given to all old and new employees of an organisation, at regular intervals.

Significance of Training : (Employee point of view)

Training is equally imporant for employees as well as for the business organisation. From employees point of view imparting enables them to acquire more and greater skills and thus increasing their versatility for transfers and qualifications for promotions. Training helps in getting better status, safety as well as security of j ob. It provides for better remuneration also. Trained workers are not prone to accidents as they acquire knowledge of safety measures through training. Naturally various wastages are avoided and productivity is increased that too in reasonable time, alongwith betterment in quality. Employees can improve their proficiency and ultimately get satisfication. This reduces the chances of disputes, grievances and ensures optimum utilisation of skills.

All the above mentioned points show the significance of training from the employees point of view.

Importance of training (Management point of view )

Training increases productivity in terms of both quantity and quality. It reduces wasteages and scrap, damages to manchines and equipment. Training gives more safety to employees, so that are less or no claims for compensation. --- No much supervision is required. Therefore it reduces the cost of supervisory staff. It does not require direct control. So the supervisors or other upper level employees remain free from the burden of direct and regular control on the employees. This time, can be used for other important tasks of the organisation. It also increases organisational stability and flexibility. Stability in the sense, trained employees get attract ive remuneration therefore they continue i n the same organisation. Because of stable workforce a business concern enjoys stability to business with flexibility, i.e. the ability of an organisation to adjust with the changing circumstances, situtations and environment etc. Flexible organisation requires flexible work force. Training enhances employees, morale. Systematic training creates an atmosphere of competence and efficiency and employees find it a good place to work. Employees start feeling proud working in such orgaisations. Only the trained employees can boldly face new challenges such as new tchnology, greater specialisation, automation, mechanisation, computerisation, globalisation, liberalisation, privatisation. All these factors stress the need for training. Only highly trained skilled specialised personnel can meet such challenges.

Kinds of Training :
This type of training is concerned with the problem 1) Induction or orientation training : of acquainting a new employee to the organisation and its procedures, rules and regulations. Under this kind of training the new-comer is acquainted with the companys background, history, policies, plans, objectives, products, work environment etc. He is as well introduced to his fellow workers. This traini ng is aimed at introducing the new employee to the organisation. Job training is necessary for new employees to acquaint them with the job 2) Job training : are expected to perform. The objective behind the job training is to enable the employees to learn new techniques, skills and knowledge and create interest in the job and to minimise the accidents. It is a different kind of training, Under this kind of training workers are trained in handling machines, equipment and materials so that operations go on smoothly and failures as well as accidents are avoided. It is more formal in plant training programme. Apprenticeship training is the major method adopted for this type of 3) Craft training : training. This kind of training involves, training for craftsmansip, preparing them not for a single job but for many types of related jobs which can be assigned to a competent craftsman. The extent and intensity of training vary from craft to craft. The Governments of various countries have passed laws which make it obligatory on certain categories of employers to provide apprenticeship training to the young people. Interniship training is usually means for such vocations where 4) Interniship Training : advance theoretical knowledge is to be backed up by practical experience on the job. In modern era interniship training is quite popular just because of proper co-operation between employees and professional, and vocational institutions. The duration of this training generally varies from six months to two years. The way of imparting training is such that engineering students are sent to big industrial enterprises for gaining practical work experience and

medical students are sent to big hospitals to get practical knowledge. Management institutes students are sent to big business enterprises to get the practical knowledge of management. These trainees are students only and not the employees of the organisation but when suitable vacancies or jobs occur in the business organisation, these trained students get the preference. According to Dale Yoder, Retraining programmes 5) Refresher training or Retraining : are designed to avoid personnel obsolescence. This training is arranged for old or existing employees of the business organisation. The main objective of this type of training is to acquaint the employees with the latest or advanced methods of performing their jobs or functions and thereby improving their performance and efficiency. This training is necessary because, at every moment, there are lots of changes in technology, in methods of production as well as introduction of new machines, etc. Refresher training is essential in managing business organisation effectively, efficiently and profitably.

Methods /Techniques of Training :

Training is an organised procedure by which people learn knowledge and acquire the skills they need for a definite purpose. Training is rooted in the learning process and learning is that human process by which skills, knowledge, habits and attitudes are acquired and utilised in such a way that behaviour is modified. In simple words, training causes learning process that takes place within the trainees, in which behavioural changes occur as a result of experience. Learning can not be measured directly but the changes in behaviour that occur as a result of learning can only be measured. Under training the trainee has to learn something what he wishes to learn. There are so many methods or techniques for imparting training to the trainees. The forms and types of employee training methods are inter-related. In fact, methods are multifaceted in scope and dimension, and each is suitable for a particular situation. The best technique for one situation may not be the best for different groups or tasks. The choice of any method will depend upon cost, t ime available, number of persons to be trained, depth of knowledge required, background of the trainees, type of the job, objectives behi nd training and many other factors. The following are methods of training. 1) On-the-job-training 2) Vestibule training 3) Apprenticeship training 4) Classroom methods

(1) On-the-job-training :
This is considered to be the most effective method of training to the operative personnel. Under this method the worker is trained on the job while he is working, at his working place, on the same machine, material, methods, under same working conditions with the same process, that he will be using ultimately after completing the training. This type of training is given by his immediate boss. Thus, the superior knows exactly the problem of the employee, and what the trainee should learn to do. Sometimes, the professional outsider instructor, who is specialist in that area is invited for imparting training to the employees. The most important advantages of this type is training while working. So special time for training is saved. The workers start giving production and at the same time learn something rela ted to work. Working and trai ning goes on simultaneously under this method. Effectiveness of on the -job training depends upon qualified trainees alone. Following methods of

training come under the classification of on-the-job Training . Under this method a senior and experienced employee teaches a a) Under study method : new employee as his understudy. The trainee under this system may loose his motivation and morale because the person under whom he is working may not take interest in him. This method takes a long time and the trainee looses his motivation because of uncertainty in his promotion position. In other words under this system a man learns from the man above him and teachers the man below him. This system is more suitable in circumstances where the trainer requires an assistant. b) Rotation : Rotation is another method of training on the job. Under this system the employee is periodically rotated from one job to another instead of sticking to one job, just to acquire functioning of other jobs. The main objective is to broaden the background of trainee on various positions of jobs. The superior in charge is responsible for the training to the operative c) Training by superior : staff under t his system. The supervisor supervises and instructs the empl oyee while on work. Sometimes he demonstrates the system of working to the employee. It enables the supervisor and the employee to understand each other better and to maintain healthy relations between them. Every employee, from clerk to company president, gets some on-the-job training. when he joins it. Therefore William Trady has said that, the most common, the most widely used and accepted method of training and the most necessary methods of training employees in the skills is essential for acceptable job performance.

Merits :
1) The trainee learns on the actual machines and equipment in use and in the true environment of his job. So he gets a feeling of the actual production conditions and requirements. 2) If the employee is sent outside for training the organisation loses his working period. But under this method, there is no chance for loosing working time. Working and learning both go on simultaneously. 3) It is highly economical, since no additional personnel or facilities, special or artificial arrangements are required for impatimg such training. 4) The trainee learns the rules, regulations and procedures by observi ng their day-to-day appl ication. So the employees easi ly co-operat e with t he management in maintaining discipline in the organisation. 5) This type of training is suitable for all organisations because it is suitable for every type of job. 6) Time taken under this method is very less. It is a time saving method. It is most appropriate for teaching the knowledge and skills which can be acquired in a relatively short period. that is to say, a few days or weeks.

Demerits :
1) Main demerit of on the job training is that training instruction are not properly organised. They are haphazard and training is not properly supervised. 2) The experienced employees may not possess skill to impart training to the trainee.

3) The working hours of employees remain unproductive while giving instructions. 4) The trainee, more often, lacks in motivation for such training. 5) Trainees, learners are often distracted because of a noisy shop or office. 6) Low productivy, low quality of work and inefficiency come to forefloor especially when the employee is unable to fully develop his skills.

Vestibule training (off-the-job training) :

This method attempts to duplicate on-the-job- si tuations in a class room. It is a classroom training which is often imparted with the help of equipment and machines which are identical with those in use at the place of work. This technique enables the trainee to concentrate on learning the new skills rather than on performing actual job. After t raining the worker is put on similar job in the workshop. It should be noted that a well-qualified and trained insturctor is deputed as the incharge of the programme. This method is quite expensive because there is a duplication of material, equipment and conditions found in a real work place. But it is a correct way of imparting theory alongwith acquainting with the practical work. it means theoretical training is given in the class room while the practical work is conducted on the production line. This is an excellent method for a big number of employees to be trained for the same kind of job and for training semi-skilled personnel. This method is often used to train clerks, bank tellers, inspcectors, machine operators, testers, typist s etc. It is most useful when philosophic concepts, attitudes, theories and problem solving abilities have to be taught. This training is generally given in the form of class room lectures, conferences, case studies, role playing and discussion etc.

Merits :
1) There is less distraction because it is given in a separate room. 2) A well qualified and trained instructor who knows how to teach, can be more effectively utilised. 3) Trainees can be taught without interrupting production. 4) It permits the trainee to pract ice without the fear of supervisors or fel low workers observation, criticism and their possible ridicule.

Demerits :
1) Under this method responsibilities are split up between li ne and staff which l eads to organisational problems. 2) An additional investment in equipment is necessary. Therefore it is a costly method. 3) The traini ng sit uation is artificial. When employee goes back to his working place, the problem of working environment is posed before him. 4) It may lead to conflict between line and staff.

This type of training is designed for a higher level of skill. This t raining programme tends towards more education than on-the-job training. The Government have passed law which makes it obligatory on every employer to provide apprenticeship training to young people. Under this training system trainees are paid stipend during training period and generally offered jobs by the employer after the completion of training. In this type of training knowledge and skill in doing a craft or series of related jobs are involved. It involves both on-the-job training and experience with class room instructions in particular subjects. This type of training is desirable in industries which require cotinuous flow of

new employees expected to become all round craftsmen. This type of training is mainly suitable for employees working in printing trades, building construction and trades like mechanics, electricians, wel ders, a tool-make r, a pattern designer, carpenters, weavers, fitters, and in technical areas. Apprenticeship training is the oldest and most commonly used method, especially when proficiency in a job is required.

Merits :
1) A skilled and trained work force is maintained. 2) Instant returns can be expected from training-for example skil lful work, trained, more efficient and good quality of workers etc. 3) The workmanship is good. It reduces labour turnover. So hiring cost is lower. It also helps in reducing production cost. 4) It increases the loyalty and honesty among employees and opportunities for growth a re frequent .

Demerits :
1) The apprenticeship programme is generally too rigid. Every apprentice is required to undergo a prescribed routine and follow a prescribed series of subjects. Little attention is given to individual differences and to varying knowledge and skills. 2) It is an expensive training. It is quite lengthy also and after training there is no assurance that the apprentice will be absorbed in the firm. 3) If this programme is registered and sponsored by the government, the firm is required to maintain certain standards and frequent interference and inspections may create day to day difficulties.


Off-the-job training is provided to the employees away from their job. It is basically theoretical in nature and is imparted in class room type atmosphere. It simply means that training is not a part of everyday job activity. Methods adopted for this are : Lectures are the most simple way of imparting a) Lectures (Class room instructions) : knowledge to the trainees, especially when facts, concepts or principles, attitudes, theories and problem solving abilities are to be taught. This method is used when a large number of employees are to be trained for the same job, within a short time. This training reduces the cost per trainee. Lectures are essential when it is a question of imparting technical or special information of a complex nature. It is related discussions film shows, case studies role playing and demonstrations. Audio visual aids enhance their value. It is a formal lecture by an instructor to the trainee. the instructor possesses a considerable depth of knowledge of the subject at hand. The trainees, generally, take notes as aid to learning. It has certain limitation also. The learners may be passive. It is a one way communication, but students may be permitted to ask questions. Lectures can easily be combined with other techniques, but this is not done. The instructor through lecture adds new information only. It violates the principle of learning by doing. There are two types of seminar. The first is that in which b) Conferences, Seminars etc. : a student gives lecture on some predetermined topic and is followed by discussion and exchange of views under a chairman who sums up the discussion by his fruitful advice and comments. The second

method is where all students participate in the seminar under a chairman who sparks off the idea and discussion is followed, which in turn leads to further ideas. In conference method of training the group members are asked to discuss and share a problem common to them and to their experience. Sharing experience and giving solutions through participation of all members create interest and satisfaction.Analytical thinking is encouraged. Case studies are used to describe and provide c) Case study method (Learning by doing) : facts about entire situation. The purpose is to teach trainees to handle similar situations when they ari se. Case studies are often used to illsutrate te broad principles and are used more for middle ma nagement and executive training. Some busi ness organisations use case studies for supervisory training also. The case study is based upon the belief that managerial competence can best be attained case study is based upon the belief that managerial competence can best be attained through the study, contemplation and discussion of concrete cases. In a case study a practical problem that may be faced by an indsutrial unit is discussed at large in the group, possibly to find best solution. The trainee studies the problem a nd finds the solution. The supervisor reviews the solution and discusses it with the trainee. This system of class room method is not of much value for the operative staff. These are used generally to train the employees for various executive positions. In case study method, the trainees are expected to master the facts, become acquainted with the contents of the cases, define the objectives sought in dealing with the issues in the case, identify the problems in case and uncover their problem causes, develop alternative courses of action, screen the alternatives, select the alternative that is most in keeping with the stated objectives. This method was developed by Moreno, a venetian psychiatrist, He coined d) Role playing : the term as role-playing, role reversal, socio-drama, psychodrama and a variety of specialised terms, with emphasis on learning human relations skills through practice and insight into ones own behaviour and its effect upon others. The idea of role playing involves action, doing and practice. Under this system the trainees play the assigned roles, such as role of superior, instructor etc. Under the supervision of an instructor who prepares them and assigns different roles to play. This method is not of much value of the opertive staff. Role playing methods is mainly good for increasing the skill of the trainee in the field of human relations. Dramatisation and skits are other dramatic training methods somewhat related to role playing. The purpose of role playing is to aid trainees to understand certain business problems and to enable observers to evaluate their reaction. This technique makes trainees self-conscious and imaginative and analytical of their own behaviour. Big business organisations run libraries and reading rooms and encourage e) Special reading : and provide time to their supervisory and executive staff to study for advancing their general knowledge and background. Reputed books, magazines journals are given to these trainees for careful studies. Books in the field of management, human relations, job, advance studies in the concerning subjects etc., are made available. In such a programme, f) Programmed Induction (Teaching by the machine method) : knowledge is imparted with the use of a text book or a teaching machine. The programme involves, presenting questions, facts, or problems to the trainees, who, in turn utilise it and answer to it. They receive feedback instantly. Sometimes rewards are given or penalties are imposed on the trainees according to accuracy of answers. This method highly motivates the trainees. This usually comprises association, audio- visual aids, and planned g) T- group Training : reading programmes. Members of a professional association receive training by it, in new techniques

and ideas pertaining to their own vocations. Through a regular supply of professional journals and informal social contacts or gatherings, members are kept informed of the latest developments in their particular field. Audio visual aids-records, tapes and films are generally used in conjunction with other conventional teaching methods. Planned and supervised reading programmes are conducted.Technical publications and the latest journals are kept in the library for the use of the trainees. These are the available methods of training for the operative employees. These organisation has to select a method best suited to it. Suitability of training method depends upon, size and field of the organisations, its objects of training, jobs for which training is aimed at, abilities of the employees etc. Different methods may be used for different groups of personnel and at different times. It is, very difficult to choose a single method of training for all types of persons at all times. Proper evaluation of training methods should be done at frequent intervals.

Que stions
1. What do you mean by Recruitment ? 2. Define the term recruitment ? 3. What are the sources of recruitment ? 4. State the Merits and demerits of internal sources of recruitment ? 5. Explain the methods of recruitment. Explain the various internal sources State the various external sources of recruitment. 6. What is selection ? Define the term selection ? 7. Explain the steps in selection procedure. 8. Define interview? What do you mean by interview ? 9. Explain the objectives of interview. 10. Explain the principles of Interviewing 11. Define the term Training. What do you mean by training ? 12. State the significance of training. 13. What are the different kinds of training? 14. Explain the various methods of training.

Introduction :


Internal organisation is one of the aspects of management. Organisation is one of its important functions. The term organisat ion denotes different meanings to different people. For example to a sociologist, organisation means a study of the interactions of the people, classes or the hierarchy of an enterprise. To a psychologist organisation means an attempt to explain, predict and influence behavour of individuals, in an enterprise. To a top executive it may mean the weaving together of functional components in the best possible combination so that an enterprise can achieve its goals. Organisation is also used widely to mean a group of people, a structure of relationship and a function of management. To organise means to identity and demarcate the functions of an establishment, to list the activities to be contained in each function, to group the activities into to list the activities to be contined in each funciton, to group the activited into positions within a funciton to determine the responsibilities and authority of each position and to chart the organisation, showing the relationship between the positions in a function and between the functions in the whole sturucture. After the general and specific objectives have been determined and a plan prescribed, the next step in the management process is to organise the activities of the enterprise with a view to work the plan and ultimately attain the objectives. It, therefore, becomes necessary to ascertain the activities required to attain the objectives of the enterprise. For this, departments are set up and managers are made the incharge of these departements, to whom must be delegated authority commensureate with their responsibilities to enable them the attainment of pre selected goals. Proper ogranising would assist the most effective use of both physical resources such as plant, tools, equipmets, materials and supplies and human resources of the enterprise. Planning provides the destination and the road map to destination, but the road map is of little use without an efficient automobile. The implementation of plans requires an efficient organisation to achieve objectives. Organisation provides mechanism or apparatus for purposive, integrated and cooperative action in any social institution. The need for adequate organisation grows with the increase in size of the business unit. Organisation constitutes the foundation upon which the whole management structure i s constructed.

Definitions :
The word organising stems from the word organism which means to create a structure with parts so integrated that their rela tion to each other is governed by their relation to the whole. The organisation has two important ingredients (i) parts and (ii) their relationships. The parts mainly consist of human beings and physical resources whereas the relationship have to be established among the human beings in the sense, their relations with the work and activities and those with physical resources. The independent part are unified, intergrated and co-ordinated in such a way that the relationship leads to the achievement of the enterprise objectives. Organisation has been defined by various authors as follows : According to Henri Fayol To organise a business is to provide it with everything useful to its functioning-raw materials, tools, capital and personnel.

Fayol said that organising is an improtant function of managers. By organising, managers bring together the manpower and material resources for the achievement of the objectives of the enterprise. Thus organisation deals with establishing relationship between the factors of production. G.Terry defines organising as, The establishing of effective authority relationships among selected work persons and work places in order, for the group to work together efficiently. William spriegal defines, In its broadest sense, organisation refers to the relationship between the various factors present in a given endeavour. Factory organisation concerns itself primarily with the internal relationships within t he factory such as responsibilities of personnel arrangement and grouping of machines and material control. From the stand point of the enterprise as a whole, organisation is the structure of relationship between the various factors in an enterprise. Barnard defines, An organisation comes into existence when there are a number of persons in communication and relati onship to each otehr and are willi ng to contribute towards a common endeavour. Koontz and ODonnell defines as The establishment of authority relationships with provisions for structural co-ordination both vertically and horizontally between positions to which have been assigned specialized tasks, required for t he achievement of the enterprise objectives. It is, thus, structural relationships by which an enterprise is bound together and the framework in which individual effort is co-ordinated. Theo Haimann defines, Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them. Organisation is concerned with the building, developing and maintaining of a structure of working relationships in order to accomplish the objectives of the enterprise. Dimmock defines, Organisation is the systematically bringing together of interdependent parts to form a united whole, through which authority, co-ordination and control may be exercised to achieve a given purpose, because the interdependent parts are made up also of people who must be directed and motivated and whose work must be co-ordinated in order to achieve the objectives of the enterprise. Organisation is both structure and human beings ....... To try to deal with the organisation merely as a framework and without considering the people who make it up and those for whom its services are intended, would be wholly unrealistic. John M. Pfiffner and Frank P. Sherwood defines Organisation as the pattern of ways in which large number of people, too many to have intimate face-to-face contact with all others, and engaged in a complexity of tasks, relate themselves to each other in the conscious, systematic establishment and accompli shment of mutually agreed purposes. Herbert Simon defines The term organisat ion as the complex pattern of communication and other relations in a group of human beings. This pattern provides to each member of the group much of the information, assumptions, goals and attitudes that enter into his decisions and provides him also with a set of stable and comprehensible expectations as to what the other members of the group are doing and how they will react to what he says and does. An organisation, thus, represents a group of people who work together for the achievement of common objectives. To achieve a common purpose people form some group pool their efforts by defining and dividing the various activities, responsibilities and authority. Organising is an organisational structure which can be thought of as a framework which holds the

various functions together, according to a patt ern, order, logical arrangement and harmonious relationships. Organising supplies the nucleus around which human beings can unite thier efforts. Each contributing his maximum to the achievement of the stated goal. In other words an important part of the task of organising is to harmonize a group of different personalities, to fuse various interests and to utilize abilities all towards a given direction. O. Sheldon defines Organisation is the process of so combining the work which individuals or groups have to perform with facilities necessary for its execution that the duties so performed provide the best channels for efficient, systematic, positive and co-ordinated application of available effort. L. Allan defines Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility an authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. G. Dessler defines An organisation consists, of people who carry out differentiated tasks which are co-ordinated to contribute to the organisations goals. Mooney and Reiley defines Organisation is the form of every human association for the attainment of a common purpose. They visualise it as the process of relating specific duties or functions in a co-ordinated whole. E. H. Schein defines An organisation is the rational co-ordination of the activation or roles of a number of people for the achievement of some common explicit purpose or goal through division of labour and funcitions and through heirarchy of authority and responsibility. R. C. Davis defines Organisation is a group of people who co-operating under the direction of leadership for the accomplishment of a common end. J.C. Denyer defines Organisation is concerned with the arrangement of work with the division of activities and with the allocation of duties, authority and responsibilities. It may be noted that the term Organisation has been used in a two fold sense. Firstly, organisation may refer to the function of organising and secondly it may refer to the structure of individuals and facilities by means of which an office manager gets his plans carried out. We may also say that Organisaiton results from the exercise of the function of organising. Effectiveness of organisation depends upon two factors : i) The ease with which the organisation was set up and ii) The wise direction and control of the organisation by a competent executive.

Characteristics of Organisation :
On careful analysis of the above definitions, t he following characteristics of an organisation emerge:i) It is a group of individuals which may be small or large. ii) The group in the organisation works under the direction of executive leadership. iii) It is a function of the management. iv) It consists of some directing authority which controls the collective effort of the group. v) It refes to a structure of duties and responsibilities. vi) It is established for the accomplishment of common objectives.

vii) It is a continuous function and is performed in varying degrees by all levels of managment from the first line supervisor to the top executive of the enterprise. viii) It can not be static for the simple reason that an organisation which is effective today may not be satisfactory tomorrow. It needs periodic changes and modifications according to current needs and situations in terms of objectives, jobs and personnel. The characteristics of an organisation as a group of people are :i) Communication. ii) Co-operative efforts. iii) Common objectives. iv) Rules and regulations. People who form the organisation are in a position to communicate with each other and are willing to co-operate with each other for the achievement of their goals or objectives. The objectives must be common for which the organisation comes into existence. Rules and regulations govern the workbehaviour of the members of the organisation.

Scope of Organisation :
Organisation is the executive structure of an enterprise and a basic framework within which the executives decision making behaviour occurs. Organisation, as an element of management, is concerned with the following aspects, called as scope of organisation. 1) Identifying and grouping of activities to attain corporate objectives and goals. 2) Assigning these activities to appropriate divisions, departments, sections and individuals. 3) Providing authority, delegation, co-ordination and communication. 4) Providing facilities and equipments, i.e. physical factors of good work environment. There are four basic elements of all forms of living organisations around which any organisation centres : a) The work b) The People. c) The authority, responsibility and d) The relationships. Clear-cut division of work defines and prescribes each part of the work to be handled by each person, giving allocation of duties and responsibilities and defining authority or power at each position in the organisation chart. Co-ordination and integration ensure elimination of duplication of work and unity of action. A good organisation has to fulfil four special functions : 1) It must enable the management to maximise the outputs through provision of an efficient man-machine system. 2) It must ensure smooth and effective net-work of communication and information. 3) It must offer interesting and meaningful jobs to all individuals working in the organisation. This alone will ensure job satisfaction. Organisation is developed for people. It must, therefore, be humanistic also and not merely mechanistic. Both the approaches can be reconciled. 4) It must create, maintain and develop its own image or individuality. This ensures customer goodwill. Investors will also have confidence in the enterprise. Employees can develop a sense of belonging to the organisation.

Principles of Organisation :
Organising is a management process by which people, functions and physical factors are brought

together to form a controllable unit. Good organisation is based upon a careful planning of -what is to be done? Who is to do it? Who is to supervise it? and how it is to be done most efficiently? Efficiency means speed, accuracy and low cost. Good organisation results in the creation of well balanced, lowcost, teamwork that performs the necessary work. The organisation of business activities is a continuing process. It should not be sta tic, rigid or fixed. It should be flexible and adaptable to the changing objecti ves of enterprise. Because of exi stence of great varieties of organisations, there can be no standard principles which could be followed in all individual circumstances. However, there are certain principles which have more or l ess universal application and which may be used as guidelines for organising business concern. The object ive of the undertaking 1) Principle of Consideration of unity of objectives : influences the organisation structure.The organisation is a mechanism to achieve the goals. The objective of an enterpise should be clearly laid down. Not only the objectives be stated in clear terms, the method of achieving them too, should be indicated indetail and in precise terms so that the organisers may know the type of organisation that is needed. There must be unity of objectives so that all efforts can be concentrated on the set-goals. Organisational structure and generated operations must be measured against the effectiveness in achieving set objectives. Effective organisation must include specialisation. Optimum 2) Principle of Specialisation : output can be obtained when each person concentrates on doing the thing for which he/ she is best qualified, Precise dividison of work facilitates specialisation. Organisation should emphasise on the law of specialisation. However each area of specialisation must be interrelated to the total integrated system by means of co-ordination in all departments and activities. Co-ordination express the principles of organisation in toto; 3) Principle of co-ordination : nothing less. Co-ordination is the orderly arrangement of group effort to provide unity of action in the pursuit of common purpose. It is the beginning and end of all organised efforts. A manager is mainly a co-ordinator. Co-ordination is a facilitative function helping the integration of the basic managerial functions-Planning, Organisation, Motivation and Control. Organisation involves division of work among people whose efforts must be coordi nated to achieve common goals, Co-ordination of aims at higher efficiency and effect iveness. It points out clear and unbroken line of authority. The chain 4) Principles of Scaler chain : of authority must be clearly defined for sound organisational purposes. It is also called a chain of command. The line of authority flows from the highest executive to the lowest managerial level and the chain of command should not be broken. It should be short i.e. it should have few levels of management. Every subordinate must know as to who is his supervisor and to whom policy matters beyond his own authority must be referred to, for decision. According to this principle 5) Principle of commensurate authority and responsibility : when an individual is responsible for a certain task, he should be given the authority to carry out that task. Without commensurate authority and responsibility, he can not be held accountable for the unsuccessful completion of the task as he has very little control over the situation. Authority should be equal to responsibility i.e., each manager should have

enough authority to accomplish the task. The responsibility of higher authority for the acts 6) Principle of ultimate responsibility : of his subordinates is absolute. Responsibility to perform a task, is given to a subordinate by the supervisor and the subordinate commits mistake, in such situation the supervisor is answerable to his superiors. He can not escape responsibility by saying that mistake was committed by a particular worker. The organisation structure should enable the enterprise to attain 7) Principle of efficiency : objectives with the lowest possible cost. An efficient organisation structure operates without wasting its scarce resources. It permits maximum use of its human resources and their talents. The chief executive, for obvious limitations, cannot do the 8) Principle of delegation : whole work of the organisation himself and hence he takes assistance from others to accomplish the object ives. He divides the whole work int o a number of activities and groups then on the basis of their similarity and thus he creates a number of departments. The delegation is the process through which they are tied together by establishing relationship between them for co-operative and integrated action. Delegations may be vertical or horizontal. This process ties together the whole organisational structure for integrated and co-operative action. If delegation of authority is not carefully done, the very existence of the organisation is in danger and chaos and confusion may be arised. Authority and responsibility should be delegated as far down in the organisation as possible i.e. to the lowest level of the organisation at which the particular responsibility can be efficiently discharged. Delegation of authority and decentralisation of authority mean the same process. The core of this principle is that a man can serve only 9) Principle of unity of Command : one boss. It means that instructions and directions to a subordinate must come from one person only. Each subordinates must have one superior, to whom he should be answerable. This helps in avoiding conflict in command and in fixing responsibility. According to this principle each person should be accountable to a single superior. Thus, no one in t he organisation should have more t han one boss. It clarifies authority- responsibility and rel ationship. If an individual has to report to only one supervisor there is a sense of personal responsibility to one person for results. Let a person receive orders from and be responsible to only one superior. The maximum number of employees or subordinates that 10) Principle of span of control : can be supervised effectively by a person is known as the span of control. The span of control should be limited to a reasonable number according to circumstances. A span of control of six subordinates has been considered to be the most desirable. There is a limit to the number of subordinates which a manager can manage effectively. Grouping must ensure that each supervisor and manager is not over burdened with subordinates. There should be reasonable balance in t he size of various 11) Principle of balanc e : departments, between standardisation of procedures and flexibility between centralisation and decentralisation. Similarly, there should be balance between the principle of span of control and the short chain of command.

A good communicati on network is essential for smooth 12) Principle of communication : flow of information and understanding and for effective business performance. The line of authority offers a standing channel for downward and upward communication. Peopl e consti tute an organisation. Proper select ion, 13) Princi ple of personal ability : placement and training need not be over emphasized. Organisation structure must encourage management development programmes and ensure optimum use of human resources. 14) Principle of exception : Under the exception principle recurring decisions should be handled in a routine manner by the lower level manager, whereas problems involving unusual matters should be referred to the higher level. The executives at the higher level of an organisation have limited time and capacity. They should not be bothered by routine problems which can as well be managed by subordinates. 15) Principle of flexibility : The structure of an organisation must be flexible so that adjustments necessitated by changed circumstances may be planned and incorporat ed in it. The organisation is expect ed to provide build-in devices to facilitate growt h a nd expansion without dislocation. It should be adaptable to changing circumstances. It should not be rigid or inelastic. It enables the division of activities into specialised groups 16) Principle of departmentation : to attain organisational objectives. A good organisation involves precise and systematic distribution of work and responsibilities between managerial group and administrative group. Departmentation maintains balance and harmony in the working of the organisation. Specialisation in organisational functions is necessary for 17) Principle of division of work : the most effective attainment of objectives. Specialisation depends on division of work. Total activities of an enterprise should be divided and grouped into departmental, sectional and individual activities to facilitate division of work. Each activity must contribute to the primary or basic goals of 18) Principle of definiteness : an enterprise with minimum of effort and maximum efficiency on the part of the employees. This contribution should be well defined and definite. 19) Principle of discipline : Discipline is vitally important in all types of organisations. In its absence, it is difficult to achieve success. 20) Principle of simplicity : The organisation should be kept as simple as possible so that ther e should not be any confusion and misunderstanding among the superiors and subordinates. 21) Principle of separation of line and staff function : from the staff functions. Line function should be separated

The form of an organisation should be such that 22) Principle of continuity of operations : it facilitates the continuous performance of all the activities necessary for the continuance and growth of the enterprise. Organisation structure should create a favourable environment 23) Principle of leadership : or situation in which the manager can most effectively lead and motivate his subordinates. 24) Principle of definition : The duties responsibilities, authority and relations of every one in the organisational structure should be clearly and completely defined preferably in writing.

An individual will accomplish a task in a given period only when the responsibility for that task is fixed upon him. The work assignment for each individual in the 25) Princi ple of work assignment : organisation should take into consideration the special strength and talents of the individual. This means that an individual should be given an assignment commensurate with his or her ability and interest. Employees should be encouraged to participate, 26) Principle of employee participation : as much as possible, in the decision making process. Employees are given recognition and are motivated to work harder by encouraging their participation. But, in spite of participation by employees in the decision making process, the ultimate responsibility for the decision must rest with the manager or supervisor. Importance of Organisation : The need for organisation arises when two or more people work together. A one man business, will have no difficulty about co-ordinating the efforts of the buying, selling and other management functions of the business. But once the business starts to grow and separate departments are created for buying, selling, accounting, administration and so on, the need for organisation undoubtedly grows with it. With the growing concepts and complexities of large scale business, the need and importance of organisation has grown substantially. Organising makes possible the effective operations of a group. It is the basis for necessary team work among the various members of a common enterprise and helps in co-ordinating their efforts. In other words, the value of each i ndivi dual s contribution is enhanced and at t he same ti me the accomplishements of the group are increased. Every member knows how he and his work fit in to the total picture, what he is to do when and where he is to do it and who helps him The importance of organisati on can also be judged from the fact that a good organisation is now regarded as t he foundation of sound management. According to Allen, A sound organisation can contribute greatly to the continuity and success of the enterprise. It is a mechanism with the help of which management directs, co-ordinates and controls the business.

Efficient organisation offers the following benefits :

Organising provides proper assessment of t otal work to be i) Proper di vision of work : performed and its division among workable departmental units and individuals. Since total work can not be preformed by the manager alone, it must be divided among its staff in a well planned manner. This ensures that each person and department will contribute to his best capacity and skill, will feel definite and specific responsibility, will avoid duplications and overlaps and will improve the efficiency and speed of work. The person or department in the organisati on will neit her be overworked nor underworked. It thus ensures the optimum use of staff. Efficient organising provides for optimum and ii) Optimum use of physical resources : economical use of all physical resources such as buildings, machines, tools, materials, finance etc. By assigning definite duties and responsibilities, iii) Avoids confusion and misunderstanding : establishing definite superior-supbordinate relationships, clear cut delegation of authority and by proper selection and training of the staff, organisation brings definiteness and knits all its segments to operate together to realise its goals, Each of its departments or employees knows his specific mission, duty, authority and responsibility. Efficient organisation, thus, avoids all misunderstanding, confusions, conflicts, duplications and gaps.

Efficient delegation and iv) Brings unity in direction, facilitates control and co-ordination : effective communication system, and well knitted relationships bring unity in command and direction, fixed responsibilities and division of work and facilitate control and co-ordination. Good organisation assures a ll round efficiency by v) Increases management efficiency : bringing definiteness all around, matching jobs with individuals and individuals with jobs, by utilising best skills, experience, abilities and specialisation and by avoiding delays and wastages. vi) Efficient organisation prevents growth of laggards, intrigues, wire-pulling and other forms of corruption . Unsound organisation becomes breeding ground for dishonesty, lethargy and disloyalty. vii) Organisation provides scope to its employees for development. By providing training and practice on different jobs, and in different capacities, efficient organisation offers excellent scope to its employees for development. It gives them job satisfaction too. viii) It provides effect ive communication. ix) It gives smooth management and administration. x) It is more than a chart-it is the control. best mechanism for managerial leadership, co-ordination and

xi) It ensures close co-operation and higher employee morale. xii) It enables smooth management and operation of the enterprise, there by, enhancing managerial efficiency, e.g. quick disposal, minimum inter- department rivalry or friction, absence of divided responsibility, effective communication etc. xiii) It ensures steady growth and diversification. xiv) It ensures, above all, accomplishment of objectives and strategies. xv) It provides for the optimum use of technological improvement, computerisation. xvi) It offer ample scope for the training and development enlargement, delegation etc., e.g. automation and

of managers e.g. job rotation, job

xvii) It encourages creativity, i.e. resourcefulness, independent thinking, initiative, spirit of innovatin etc. with the help of clear-cut accountability, recognition, appreciation of talents etc., xviii) It permits management to respond in time to the changes in the environmental influences and make necessary adjustments to satisfy new demands of the society. xix) Sound organisation has flexibility and also stability. It responds in time to the changes in the environment and thereby justifies its existence. It promotes effective leadership and thereby ensures good employee morale. It develops voluntary co-operation and best motivation of employees. All these factors assure stability. xx) Sound organisation offers to innovations. effective managment of changes continuously and gives premium

Thus, the organisation climate is intangible. It can not be seen. It is fel t by people. It affects employee performance. It is a combination of many factors, such as management style, management values, the formal organisation (rules,policies, procedures, practices, organisation sturucture, reward system) informal organi sation (norms of behaviour beliefs, values and attitude of the group) the communication system and all other managerial systems. Good organisation improves interpersonal

and intergroup behaviour to secure team work, i.e. rise in the level of mutual trust, support, openness and completeness of communication, widespread participation in planning and decision making.

Steps in organisation process :

Organising refers to the grouping of activities necessary for the attainment of objectives. It also indicates the authority and the responsibility assigned to individuals charged with the execution of their respective functions. Following steps are involved in organising the structure of an enterprise. While organising it is important to bear in mind the objectives or 1) Knowledge of objectives : targets of the enterprise or department. The objectives must be determined keepi ng in view t he environmental situation. They must be clear, precise but complete and free from ambiguity or confusion. Unless the manager or supervisor knows the objectives he may not be able to organise properly and motivate people towards the attainment of the objectives. After laying down the objectives, the manager must identify 2) Division of work into activities : the total work involved in achieving them. The total work to be performed should be divided into component activities. For instance, the total work of a manufacturing enterprise may be divided into production, finance, personnel, marketing and such other activities. The next step is to group the various activities into practical units 3) Grouping the activities : based on similarity and importance as well as to indicate the person who would do the work. Similar activities should be grouped toget her under one headi ng, For instance purchasing, machining, assembling may be placed under manufacturing while recruiting, training, job grading, compensation may be placed under personnel, Other basis for gouping the activities may be utilised such as geographical location, particular equipment utilisation or process to be employed. Jobs must be clearly defined and the activities 4) Defining and assigning activities to jobs : related t o them must be clearly identified and assigned. Thi s will help the management to fix t he authority and responsibility of the employees concerned. A job must be allotted to a properly qualified person so that 5) Fitting personnel into jobs : none becomes a square peg in a round hole. Each person should be assigned specific job or jobs and be made responsible for it. Proper authority must be vest ed in the personnel to 6) Delegation of required authority : enable them t o ca rry out the job. Authority must be commensurate wit h responsibility. Authority without responsibility and vice-versa is meaningless and futile. Creation of different authority relationships such 7) Creating organisational relationships : as line, functional or line and staff is essential for the achievement of the objectives. Everyone in the organisation must know as to whom he is accountable and his relatiohship with other persons in the organisation should be clearly established.

Factors influencing organisation :

Organising is a very complex activity. One can formally divide the work, assign people, supply ideal work place, define authority and establish relationships with great care and precision to make the organisation effective but still the desired behaviour, co-operation and initiative may be lacking on the part of its incumbents. Organisation can not merely be a structure purely based on logic, rationality or economic factors. It is basically a social entity. The organisation influences the behaviour of its people. So the people

influence the organisation. People are influenced not only by the organisation in which they work but also by the society and environment in which they live and pass most of their ti me. So there is interaction between the individual and the organisation. Individual may be embodied in the organisation and the features of the organisation becomes embodied in him or in contrast. His feelings may be suppressed in the organisation and then he will eit her react to the organi sations features or try to impose his own behaviour or he will become non-co-operative and unenthusiastic. It is, therefore, essential that the following infleuences are properly organised and incorporated while organising any social institution. The society or environment immensely 1) Established social standards and relationships : influences the behaviour of the individuals working in an organisation. Their level of work performance, attitude, behaviour and satisfacion are determined by social norms, standards practices, belief, customs etc and not by only physiological capacities. These social norms must be understood and incorporated for effecti ve co-operation and satisfaction of the members of the organisation. For instance if the custom of the society does not permit free mixing of two sexes at common workplace, the management should provide for different places to work for men and women for better behaviour. This is because people learn most of the practices, values, beliefs etc. from the society rather tha n from their personal knowledge and conviction about a matter, and which are firmly established in their thinking and behaviour. Moreover, people usually dislike change because they fear that such changes may break the established relationship to which they are accustomed. Organisation requires human beings to assume obligations, exercise 2) Psychological factors : authority and to executive the work. Regardless of the duties and responsibilities assigned, the basic fact is that the organisation has to deal with human beings who have different needs, emotions, aspirations, personalities, interests, abilities etc., which must be recognised, utilised and satisfied for thier effective and harmoniuous behaviour towards the achievement of enterprise objectives. There may be primary needs such as food, water, air, rest, clothing, shelter, sex and general well being and there may be secondary social needs, such as the need of self assertion, self esteem social approval, freedom, association with others, selffulfilment and realisation, Such basic and social needs shoul d get due recognition and satisfaction for effective co-operation. Many informal practices, customes and traditions become 3) Informal customs and groups : well established in the organisation and many informal group crop up and influence the conduct and the working of the people. So long as the established customs are desirable and are in conformity with the formally prescribed way of behaviour, there is no difficulty in organising, rather they assist in securing the willing co-operation later on. The manager shoul d try to convi nce the incumbents for the change of undesi rable customes and behaviours. He should clearly note such undesirable practices, and explain the reasons for their change, demonstrate the benefits of the new customs and introduce changes slowly and gradually keeping in view the willing acceptance on the part of employees. Groups, not officially prescribed by formal organisation, are termed as informal groups, which strongly influence the behaviour of workers. One informal leader emerges out of the group, who is liked most by his group and then he represents the norms of his group. More than anyone else, his advice is solicited and accepted by group members. He controls the behaviour of his group. He

becomes the spokesman of that group to the management and other personnel in the organisation. In short, he leads the group of workers and helps them to function as a social group. These groups are usually bound together by common soical interests. It is folly to ignore the influence of these informal groups in organising.. Clever management organises in such a way that the influences and activities of such informal groups tend to support the organisation.

Organising is mainly establishing harmonious relationships among human and physical resources in the form of a structure which may help in achieving the pre-stated goals. Creating a humanistic structure embraces problems relating to determining the total work, its requirement of the personnel in terms of number and quality, selecting, training, remunerating, promoting and maintaining discipline and moral among the people, fixing authority and responsibility, delegatin of authority and creating subordinate superior relatinships as well as other thing relating to human beings and their internal relationships or that with the organisation as a whole. On the other hand the physical or technical aspects of organisation relates to the creation of a structure to secure the objectives. The physical aspect of organisati on embraces problems relating to location, buildings, layouts, machines, tools, fixtures, furniture, raw material, financing, accounting and audit. The human beings have to be provided with these physical resources in order to discharge their duties. The physical means will not achieve aims by themselves unless human beings work on them and with the help of them. The parts of an organisation are bound together by certain relationships. From the stand point of their bases, these may be classified as (a) formal and (2) informal. Social psychologists, under the leadership of Elton Mayo, focused attentions on informal organisation in primary social groups. It was chester I. Barnard who first drew a clear distinction and analysed the relationships between the formal and informal organisations. According to him an organisation is formal when the activities of two or more persons are consciously co-ordinated towards a given objective. It is informal when the aggregate of interpersonal relatiohship is without conscious joint purpose, even though common or joint results may come from them. (The functions of the executive, Harvard university Prest Cambridge mass, 1939 Chig) Formal organisatin, he said, Creates additional informal organisations. The inter-realtionship of authority that cannot be charted, the unwrittten rules of organisational conduct, the necessity for learning the roper and the patterns of behaviour that develop in any organisation are evidence of informal relationships derived in this way. Moreover, by its very nature an organisation creates many small gruping or associations which are not on the chart but which grow from departmentation. Machine-shop group, the production- engineering group, the floor group and so on. Formal relationships are those which flow from the structure of the organisation itself. They represent a system of formally defined duty authority and responsibility that set the limits for each individual employee. He must obey orders from designed individuals and can demand obedience from similarly market out subordinates. Because of its hard and fast requirements the formal organisation tends to restrict and circumscribe an employees activities. It sets up boundaries, signposts and path ways which must be followed. Informal relationships are those that develop outside the formal organisational structure. There are various undefined behavioural patterns and personal attitudes that come into operation for puposes of mutual co-operation as soon as the management acti on starts. In other words- wha t people do is because they are responsible human beings. Their actions in terms of needs and attitudes instead of procedures and regulation fall in the domain of informal relationship. Experiments have shown that

people working in the same section or small unit fall themselves into an informal group. If one of them is absent or transferred, the group behaviour is affected, as also the output of work. Informal relations in these days are no less important than the formal ones. If they are not cordial and in its place, there prevails conflict and opposition, and the smooth working of the organisation is greately affected, Formal relationship are of a mechanical nature whereas informal relationships are based on personal approach. From the stand pint of the involved persons, relationship may be broadly classified as (1) Direct (2) Functional and (3) Lateral. are those that exist between a superior executive and his subordinates 1) Direct relationships and vice-versa. In practice they resolve themselves into relationships of instruction and compli ance based ondirect authority. The supervisior gives orders and the subordinat es obey them or the later takes matters to him for decision and direction. Direct relationships are illustrated by relationship between a factory manager and the departmental managers responsibile to him, between a foreman and the workers under him, sales manager and salesmen and so on. are those that exist between specialist and the operation executives 2) Functional relationships including top management. The functional managers who have specialised knolwedge in certain technical fields, are responsible for rendering services in these fields to other parts as well as the whole of the organisation. The relationship of functional managers to others in the organisation is limited t o the prescribed functions. Of course, so far as his own subordinates are concerned each functional manager has direct relationship with them. But a personnel manager and organisation manager are bound by functional relationship with the general manager, the production manager and other in the management. The first renders specialist service in personnel matters whereas the second in methods, procedures, design of forms etc . represents the working relationship of co-operation 3) Lateral or crosswise relationship and co-ordination between executives or supervisors at the same level of managment. They are of equal status or rank and may be responsible to a common supervisor or to superiors of comparable status in the organi sation structure. Smooth working of the organisation calls for collaboration between them on points of material interest without referring back to the common supervisor. Lat eral relationships are maintained through regular conferences, meetings in formal committees or informal personal contacts. But committees include executives of higher level as well. While direct and functional relationships are prescribed by the organisation a structure, lateral relationships mostly arise in an informal setting.


One of the important components of the organisation process is the creation of appropriate organisation structure. An organisation combines and co-ordinates individual as well as group efforts in an enterprise. An organisati on st ructure is the machine through which management works to accomplish its objecteives. Various jobs of the enterprise are integrated into an effective operating system to achieve the organisational objectives.

Organisation structure represents the hierarchical arrangement of various positions in the enterprise It helps in allocating authority and responsibility formally. It specifies who is to direct and to whom and who is to report to whom. It also lays down the pattern of communication and co-ordination in the enterprise. Thus the need for a structure of clearcut authority relationship in any enterprise is quite clear. There is no best structure of organisational relationships which may be suitable for all organisations and for all time. The management of every enterprise has to evolve its own organisation structure. The form of organisation structure depends mainly upon the nature of activities of the business, competence of personnel and the philosophy of management. An organisation structure is primarily concerned with the allocation of duties and responsibilities and delegation of authority. It is a management tool for achi eving the objectives or goals of the enterpri se. The following are important forms of internal organisation found in many enterprise. These five basic types of organisation are quite popular in the business world : 1) Line organisation. 2) Functional organisation. 3) Line and staff organisation. 4) Staff organisation. 5) Committee organisation.

1) Line organisation :
Line organisation is the basic framework of the whole organisation. It is the backbone of t he organisational hierarchy. Line organisation represents a direct vertical relationship through which authority flows. It is the simplest form of organisation structure and is also known as scalar or military organisation. The relationships form a chain of comman or a hierarchy of authoirty in an organisation. It points out direct vertical relationships (Supervisor-Subordinate relationships) connecting the positions at each level with those above and below, Technically it describes a scalar principle. Line authority is a direct authority exercised by a supervi sor over his subordinates and the flow of this authority is always straigh downward. The characteristic of line organisation is superior subordinate relationships i.e., a supervisor delegates authority to a subordinate and who, in t urn, delegates authori ty to anot her subordinate and so on, forming a line from the very top to the vary bottom level of the organisational structure. the line authority relationships establish a chain of command. The essence of line organisation is the power of command of a supervisor to his subordinate. The line of authority flows vertically downward from top to bottom throughout the organisation. The quantum of authority is highest at the top and reduces at each successive level down the hierarchy. Every person in the organisation is in the direct chain of comman uninterrupted series of authority steps and forms a hierarchial arrangement. The line authority not only becomes the avenue of command to operating personnel, but also provides the channel of communication, co-ordination and accountability in the enterprise. Line authority is also called the operative authority. Some important features of line organisation are as follows : i) The lien managers possess wide authority of command to their subordinates. The line managers issue orders, instructions and command their subordinates. The line superiors have got authority over subordinates and are responsible for show of work to accomplish the objectives. The line operative people and the subordinates have to follow the instructions of their superiors and are accountable for accomplishment of the work assigned to them by their superior. Thus, line executives have command prerogatives.

ii) The line authority establishes a chain of command and becomes the avenue of communication. It provides the channel for communicating orders and instructions from t op to the bottom, and suggestions, reports and complaints from bottom to the top. The line authority acts as the artery in the organisational structure for carrying all messages to the desired places. iii) Line authority is a carrier of accountability. Accountability from the side of subordinate travels upwards in the organisation structure and this flows only through the line authority. The line men alone are responsible for show of work and accountability is the exclusive concern of line managers for securing goals of the organisation. Types of Organisation

Formal Organisation Informal Organisation Forms/Types of Organisation Structure

Line Organisation

Functional Line and Staff Organisation Organisation A Chain of Command Board of Directors President

Staff Committee Organisation Organisation

Vice-President (Production) Works Manager Plant superintendent Foreman Workers Carrier of accountability Figure: Line organisation of a manufacturing enterprise

iv) The delegation of line authority results in the shape of a pyramid. Several steps or grades of authority are created throughout the organisation and which are vertically linked to each other, connecting in the line. the top executive with the lowest operative men

v) The line authority provides the exist without a line authority.

basic framework to the organisation. No organisation can

Thus the line organisation refers to the direct relationships between a superior and his subordinates. It is by force of the line authority, that a superior command his subordinates i.e. issues instructions and demands accountability. The subordinates, in turn accepts the responsibility of carring out the instructions and discharging the assigned duties. The military organisations and small enterprises are commonly organised on the basis of line authority. Exclusive use of line authority in the organisation is also very common where the services of staff speciali sts are not required. In complex business organisations line autghority is granted overwhelmingly to those managers who are engaged in basic functions of the enterprise. The line authority is also given to the departmental head over its subordinates. Line organisation is the simplest and the oldest from of internal organisation. The line organisation indicates a direct straight line responsibility and control from the chief executive to the works manager to the foreman to the worker. In other word decisions are taken and directions are issued by the man at the top and are direct ly conveyed to the persons repsonsible for the implementation of these decisions. There are two types of Line organisation namely, Pure and Departmental. A pure line organisation is found only where the activities at any one level are the same with each man performing the same type of work and the division exists solely as a basis of control and decision. General Manager Works Manager Foreman Shop supervisors

Worker Worker Worker (Pure line organisation) Figure. In the departmental line organisation too, authority and control flow vertically as shown inFig. 5.3. The business is divided into different departments, depending on the identity of activities. Each department is under the charge of a manager. The chief executive delegates authority to departmental managers who in turn passes it on to supervisiors who pass it on to workers. The method is also known as the military type of internal organisation because it is based on military practice. The authority in the army flows vertically from top to bottom.

Managing Director General Manager

Purchase Manager Purchase Department

Works Manager

Accountant Sales Manager Accounts Department Sales Department

Foreman (Department-1)

Foreman (Department-2)

Foreman (Department-3)




Figure. (The departmental line organisation)

Merits of Line Organisation :

1) It is simple and easily understood. 2) It is flexible and is able to expand or contract readily. 3) It encourages the development of all-round executives at the higher levels. 4) Discipline is easily maintained. 5) Morale may be quite good because of personal contact between the boss and the ank and file. 6) It is best suited for small organisations because the line systems equires fewer members of the staff. 7) Line executive enjoys decision making power in his own area, as well as direct command is exercised by him over his subordinates. Quick decision making and its communications is fostered. Because of direct accountability on the part of a subordinate to discharge his duties, buck passing is eliminated. 8) The line organisation fosters the unity of command, direction and promotes co-ordination. 9) The line organisation fosters the unity of command, direction and promotes co-ordination. 9) Communication is easy and quick. 10) Each employee knows whom to hold responsibl e and who is responsible to him. Thus responsibility is more clearly fixed and clear-cut authority is nicely established.

Demerits of line organisation :

1) If business concern starts growing the top boss is overburdened. 2) It involves little use of specialisation.

3) Initiative at lower levels is killed because the decisions are taken only by the man at the top. 4) Because of concentration of authority in the top man, he may turn to be a dictator. 5) This type of organisation is unsuitable for large sized business concerns There is lack of specialisation. Many jobs create problems of their own and require specialisation by the persons concerned. It is rigid and suitable only for small enterprises, where the number of employees is limited. 6) It is sometimes characterised by absence of team work towards common end. 7) In such an organisations managerial planning, research and development activities may be neglected because of greater reliance on line authority. 8) There is concentration of authority at the top. If the top executives are not able, the enterprise will not be successful. 9) Departments may work for their self interest and may sacrifice the general interest of the enterprise. 10) If there are too many levels of management, process of comunication or flow of information becomes very difficult rather its speed is obstructed. In spite of demerits of line organisation, it is very much popular in smaller concerns. in case the enterprise expands to greater extent line organisation can be combined with staff organisation and thus adopting line and staff organisation.

In the functional organisation all activities in the enterprise are grouped together according to certain functions like production, marketing, finance and personnel, and are kept under the charge of different persons. The person incharge of a function fol lows it wherever it goes throughout the organisation and also controls the individuals working in the functional area. This means that if a person performs more functions, he will be under the direct charge of several persons i.e. incharges of these functions. The functional incharge is expert in his own field and brings out the best in himself. Many business enterprises follow functional plan to some extent to carry out the primary unctions. Managing Director General Manager

Purchase Department

Production Department

Sales Department

Personnel Department

Finance Department

Figure. Functional Organisation

This form of organisation structure is mainly of historical importance. Functional organisation,often called functional foremanship, was origi nated by F.W. Taylor, t o bring a bout specialisation of management. It permits a specialist in a given area to enforce his directive with the limited and clearly defined scope of authority. It decreases the problems of line management. Taylor pointed out that a foreman could not be a specialist in everything he is supposed to do. Instead of having a supervisor as in the line organisation, Tayl or arranged for a group of specialists to boss t he worker in various aspects of the business. So he advised the substitution of line authoirty by functional foremanship at the lower levels of the organisation structure. Taylor recommended that instead of the usual practice of putting one foreman incharge of 10 to 20 workers, there should be the following staff to guide the workers in various functional areas : i) Route clerk, ii) Instruction card clerk iii) Time and cost clerk (iv) Shop disciplinaria n (v) Gang boss (vi) Speed boss (vii) Repair boss (viii) inspector. There is functional relationship in the structure because every worker is responsible to speed boss in t he matter of his work, to shop disciplinarian in the matter of discipline and so on. This is the extreme form of functional organisation which is not found anywhere because it has been found to be urealistic and it violates totally the principle of unity of command. In order to maintain unity of command in the organisation, functionalisation is applied at the top of the structure only. Functional organisation uses the services of experts in various functional areas. In a functional organisation authority does not flow from top to bottom, as in line organisation are divided according to functions like production, finance, sales etc. A specialist is placed in charge of each function of a group of related functions. The specialist who may be called a functional manager, has control, has control over the functions in his charge, no matter where those functions are performed through out the organisation. For instance, the purchase manager is in-charge of the purchasing function, he will control this function where ever it exists in the organisation. This functional authority includes line authority with reference to a specialised function. In such an organisation consultation wi th the functional authority becomes necessary for decision making, However, the functional authority is confined to functional advise and/or guidance. The staff working in the various departments conti nue to be account able to their respective line supervisors.

1) Expertise of specialised knowledge is efficiently utilised. 2) Line authority is relieved of taking specialised decisions. 3) It facilitates work specialisation. It helps in achieving the benefits of specialisation of work. Every functional incharge is an expert in his area and he can help the subordinates in better performance. 4) It makes for uniformity of decisions. 5) It facilitates better control and supervision in the organisation. 6) The department executive and his subordinates have to perform a limited number of activities, It ensures his/her efficiency. 7) If facilitates standardization of operation, methods and equipment.

Demerits :
1) Subordinates get orders from different bosses. The principle of single accountability and unity of command does not apply. 2) Operating subordinates as well as functional specialists are often overburdened.

3) It affects the position and status of the line authority in the organisation. 4) It makes management rigid and inflexible. 5) Co-ordination becomes difficult to activise. 6) Problems of discipline get complicated at lower levels of the organisation. 7) There is generally lack of coordination among the functional executives and thus, delay in decision making, specially when it re quires the involvement of more than one specialist. 8) The operation of functional organisation is too complicated to be easily understood by the workers, workers are supervised by a number of bosses. This creates confusion in the organisation.

Line and staff organisation

Unlike the line organisation a pure functional organisation is rarely found in business houses. However the basic principles of both the line organisation and the functional organisation are combined in another form of organisation known as the line and staff organisation. This type of organisation retains the merits of the line, staff and functional types of organisation. This form of organisation is very popular. in business enterprises. It is an extension of the line organisation in which one or more of the ancillary services are functionalised. According to E. F. Breach, It is, in fact, a mixture of direct executive responsibilities with the specialist ancillary services. Board of Director Managing Director

Assistant to Managing Director

Personal Manager

Financial Controller

Legal Advisor

Purchaser and Traffice Advisor

Divisional Manager (1) Staff Authority. Line Authority.

Divisional Manager (2)

Divisional Manager (3)

Figure. The Line and staff organisation

According to Allen, line refers to those positions and element of the organisation which have the responsibil it y and authority and are accountable for accomplishment of primary objectives. Staff refers to those elements which have responsibility and authority for providng advice and service to line in attainment of objectives. Line elements provide decision, authority and a central means for the flow of communication through a scaler chain of authority, Staff element facilitates the decision process by bringing in expert and specialised knowledge. In the line and staff organisation there are staff officers in addition to line officers in contrast to the line type where only line officers are found at all the levels of authority. Line officers are those who have the authority to take decisions, enforce them, control the performance and who are answerable to their supervisors for results. The Managing Director, the General Manager, the works Manager and the Sales Manager are line officers. Staff officers are those who provide advice and service to the line officers. The Personnel Manager, the Industrial Relations officer, the Industrial Engineer, the Legal Adviser, the Cost Accountant etc. are staff officers. Both the line and staff officers are necessary for the effective functioning of an organisation.

Merits :
1) It enables an enterprise to secure full benefits of the specialised knowledge of its staff. 2) It permits line personnel to concentrate on the basic activities of the business because the necessary advice and service are provided by the staff. It thus improves efficiency and performance. 3) The principles of the unity of command and unity of direction are followed by line executives. They exercise full authority over their staff. 4) It facilitates executive training and management development.

Demerits :
1) It often creates confusion between line and staff executives. 2) Staff officers may lack initiative because they are merely advisory people. Their suggestions may be turned down by the line officers. 3) The line department may not admit and probably may not realise that without staff help, it would do a poor job. 4) There is a tendency to Pass on the Buck when thins go wrong. Line officers tend to blame the staff people for lapses ad vice versa. 5) Staff authority, because it is not responsible to higher authority, may act recklessly. 6) The expensive staff personnel may become a burden on the cost of production if i ts services are not properly utilised. 7) Line authority may not be implementing the advice of the staff, making the later absolutely ineffective and redundant.

Staff organisation
The staff refers to those elements in the organisation which provide advice and service to the line. The work of investigation, research, recording, standardization and advising is in the hands of staff . The responsibility of line is to arrange actual execution of the work planned by the staff. It is often said that the staff thinks while line acts.

Types of staff
Staff may be divided into the following three categories. The personal staff is meant to serve the executives and it refers to the a) Personal Staff : position created to help a manager in carrying out those parts of his responsibilities which he cannot or does not want to delegate to others. Personal staff is required by top managers because their responsibilities go beyond their personal capacities, for instance a General Manager of a company may have a personal secretary, to help him i n carrying out his responsibilities. In the words of Haimann the personal staff assistant can be considered as an extension of the managers hands, arms, legs and as an aid to his brain. Specialised staff helps the line by performing work that required special b) Specialised Staff : skills or more objectivity than the line can normally be expected to possess. Such specialised areas are Accounting, Public Relations, Research and Development etc. It counsels, advises and helps all line and other staff elements in the organisation. Staff specialists, generally, provide both advice and service to the line departments of the organisation. It consists of a group of experts in different areas who are attached to the c) General Staff : central office of the organisaton. It is generallyemployed to provide advice on specialised matters to the top management. This category of staff serves as advisers to top management in specialised area. d) Thus staff authorities are advisory or service oriented in nature. Staff functions have no direct responsibility for accomplishing the objectives of an enterprise. They only the line to work most effectively in achieving the primary objectives of the enterprise. Staff authority is purely advisory. The function of a pure staff authority is to investigate, research and give advice to line managers to whom they are to report. A pure staff authority has no right to command. It is the prerogative of a line authority.

Staff activity is an organisational element or component existing mainly to provide technical or special adivse and service to line units. As business grows, time must be allocated among many functions which the line manager prefers to be most efficiently performed. The other functions that are not preferred by line managers will sooner or later be given to specialists and their abilities can be included in the organisation.

Types of specialised staff authority

Generally in a formal organisation there are three types of specialised staff authority as under : A staff speicalist offers a specific service to the line organisation i.e. 1) Service authoirty : purchasing, supervising production planning etc. Control supervisor provides specialised service to the planning manager. A staff specialist may be required to offer only expert advice to the line 2) Advisory authority : organisation e.g., an industrial engineer, quality control supervisor and an accountant provide specialised advice to a planning manager. 3) Functional specialist : A staff manager may exercise effective directions and control of a functional speciality. A staff manager may be allowed to make decisions and assure power of comand in a given functional area. For instance a director in charge of industrial Relations will have functional authority over Industrial Relations Managers operating in each division and the industrial Relations managers will also report to the Divisional General Manager as a staff specialist. The specialist staff

form a kind of hierarchy of authority parallel to the operational or line heirarchy.

Conflict between line and Staff

One of the drawbacks of the line and staff organisation as mentioned earlier, is the conflict between lineman and staff people. 1) Major cause of line and staff conflict is the difference in their view points and perception. Conflict arises when any of them fails to appreciate the viewpoint of the other. When a conflict between line and staff arises, both the parties try to explain the causes of conflict in terms of behaviour of the other. Important causes of t he line and staff confl ict as reported by linemen and staff people are discussed below. 2) A line executive looks upon the specialist as a theorist, an academic and unrealistic. The staff specialist views the line executive as a mere log in the machine, incapable of thinking and discussing problems. 3) Staff officers encroach upon the line authority. They interfere in the work of line managers and try to tell them how to do their work. 4) Staff specialists are academicians and are not well acquainted with the practical problems of the enterprise. 5) Since staff men are not directly accountable for any result they are generally overzealous and recommend a course of action which is not pracitcable. 6) Staff men, generally, fail to see the whole picture objectively as they are specialists in their particular area only. 7) Line managers often resist the new ideas given by the staff specialists and are sometimes not prepared to listen to the arguments of staff specialists. 8) Staff specialists lack authority to have their ideas implemented. This creates frustration among them. 9) Line managers, generally, do not take a proper use of the services of the staff specialists 10) Sometimes staff advise is sought only as a last resort as line executive feels that asking for their advise is admitting defeat. 11) Staff men have the tendency to take credit for the decisions which prove succesful and lay the blame on the line men in case the decisions do not prove successful. 12) The confl ict erupts into the open when each tries to assert his opinion and at tempts to dominate the other. The conflict between the line manager and the staff speicalist is undesirable because it adversely affects the organisations functioning. Effectiveness of organi sation depends on the harmonious relationship between the two. It is the responsibility of the top management to ensure that the causes of conflict are eliminated and co-ordination between line executives and staff specialists is promoted.

Remedial measures for improving line staff relationship :

In order to eliminate conflict and to achieve cordial relationship between the line and staff people the following remedial measures can be suggested. 1) The limits of line and staff authority should be laid down clearly. For this the roles,

responsibilities and functions of line and staff officials must be clearly defined and made known to the concerned people. 2) Staff people should know that their role is advisory. They should be satisfied with rendering advice on important problems. Line executives should give due consideration to the staff advice and shoul d stat e reasons for not accept ing the staff advice. Line managers must respect the staff advice and utilise it for the betterment of the enterprise, as well. 3) The staff specialists should try to understand the diffi culties in implementing the new ideas. They should not consider it as a prestige issue if sometimes thier advice is not followed. 4) Line and staff people should try to understand the orientation of each other. They should try to achieve co-operation for the achievement of enterprise objectives. 5) Frequent and intimate contacts should be maintained between the two. 6) The staff specialists should not think themselves as supervisor and extraordinary in their area. This kind of feeling creates ego in their mind. 7) The fear complex, from which line managers suffer due to the proximity of staff specialists to and their intimacy with the top management should be removed. 8) It is necessary to allow both the parties the right of appeal to the chief executive. Some people argue that distinction between line and staff is an obsolete concept and should he done away with. They argue that it is meaningless to segregate organisation activities on the basis of their contribution to the achievement of goals. Moreover in the recent years, the horizontal and diagonal relationships and work flow are gaining greater importance than the vertical relationships represented by t he line authority. Line staff conflict and controversy may be meani ngless under the systems approach to organisation and management.

Committees being important components of an organisational structure and having various roles to play are found at all levels of organisation and almost in all social, business and government organisations. A committee organisation is not an independent form of organisation, but generally functions in conjuction with some other form of organisation. Formation of committees has become a usual and common feature of modern organisations. Committees are found to exist in different areas and at different levels of an organisatinal structure, in most business and non-business organisations. It is because of the fact that people reach more favourably to a group decision than the single authority of an individual. A committee may be defind as a group of persons entrusted with discharging some assigned duties as a group collectively. So group discussions and collective decisions are the identifying features of a committee. Committees are also known by different names, such as board, commission, council etc. In other words a committee may be defined as a body of persons entrusted with discharging some functions assigned to it as a group and in a corporate capacity. According to Terry A committee is body of persons elected or appointed to meet on an organised basis for the discussion and for dealing with the matters brought before it. According to Hicks, A committee is a group of people who meet by plan to discuss and to make a decision for a particular subject. In the words of Newmen, A committee consists of a group of people specifically designated

to perform some administrative acts. It functions only as groups and requires the free interchange of ideas among its members. A popular and highly prevalent form of organisational structure is committee organisation whether referred to as a committee, board, commission, team or task force. Its essential nature is the same, as a group of persons formed for group working. Thus we see that committee is a group of persons composed to perform certain work as assigned to it. As a matter of fact, committee organisation, as a method of managerial control, has very little practical importance. They are widely used for the proposes of discharging advisory functions of the management. In most of the enterpri ses, these advi sory committees are formed to introspect in finance, personnel, production, industrial relations etc., Committees may be temporary or permanent in nature. They may be named as adhoc committes or special commi ttees. They may be vested with line authority or staff authority, and they may be created for a specific purpose or for general purpose. Committees such as management committees, joint consultative committees or works committees are ideally suited for the interpretation and dissemination of policy or for the resolving of grievances or conflicts.

Reasons for the w ide spread use of committees :

1) Group decision M aking : The fundamental purpose of committee is to obtain a goup opinion or group decision after a careful consideration of the facts assembled by staff, executi ves of administrative management, to interchange ideas, concepts and points of view of the memnbers in selected groups, and to formulate joint decision based on a sound judgement of organised facts. McGregor is of the opinion that group decision making proves to be more effective as personal bias and prejudice are eliminated from such decisions. Through brain storming and other group creativity activities committees can 2) Creativity : produce creative ideas, that are valuable practially to every organisation function. Committee organisation encourages group co-operation and team spirit in 3) Co-operation : the organisation. 4) Co-ordination : Committees promise co-ordination of various activities of an enterprise. A committee is an excellent means of transmit ti ng information and 5) Communicating : ideas to interested organisational members. By participating in discussions and decisions in a committee a member will 6) Motivating : naturally be highly motivated to accept a situation or implement a decision. His reactions will be favourable and accepting. A more wide spread reason for the use of 7) Consolidation of power and authority : committee organisation is the fear of derogating much authority to a single person. A committee can be an excellent means of collecting and combining the authority of several individual members. This form of organisation pools the facts, knowledge 8) Facts, knowledge and experience : and experience on the part of several executive members of the committees. Committee organisation helps in determining the broad 9) Determining broad policies : policies of the business enterprise.

10) Representation : organisation.

Committee organisation gives representation to various groups in the

11) Continuous review : Because making a continuous review and seeking an honest and objective appraisal of the conduct of the business the management ensures that everything is well in the organisation. Most committees are however either decision making or problem solving committees.

Difference between Individual Executive and the Committee :

A committee differs from an individual executive in four important aspects. Firstly committee requires a president or chairman to give a directive push and to set the committee in motion. Without a co-ordinating and controlling authority a committee would merely be a gathering of a few persons unable to reach a decision an individual executive can initiate action of his own and does not require constant guidance from others. Secondly a committee is intermittent in existence while an individual is perpetually in existence. The committee dies for the intervening period between two sessions or meetings while the individual executive remains in actions. Thirdly, a committee normally has strictly defined authority, duties and spheres while in case of an individual executi ve such limitations are not so specific and therefore he enjoys more freedom in working. Fourthly, the committee proceedings and decisions must be in writing as a matter of necessity and must be formally communicated to all the committee members as well as to the operating people. The very nature of committee decision encourages evasion of responsibility by its members and so written decisions bind all of them. In contrast the authority of an individual is made co-extensive with his responsibility.

Types of Committee :
Committees can be classified from different angles. Classificati on basis of committees and the types of committee are discussed below On the basis of authority the committees may be having line authority 1) Executive Committee : or the staff authority. It is a committee having the power to act generally or specifically. It is, however more commonly, a body with power to govern or administer. It is coupled with the line authority. In case of line authority the committee is vested with power of decision making and its enforcement, i.e. the committee has command prerogatives. The Board of Directors is a classic example of line authority committee . In such a case the commttee is generally referred to as Plural executive. But where the committee is organised for discharging staff functions for advising and making recommendations to a line executive, it has only staff authority. The staff committee investigates, debates and discusses the problems and concludes their deliberations wit h some recommendations. Such committees do not take decisions nor enforce them but may make recommendations for the guidance, advice and help to a line executive who is authorised to take ultimate decisions. On the basis of Premanency, a standing or a permanent committee is 2) Standing Committee : formed for a specific purpose. It is a committee of a formal type and conducts the routine business delegated to i t at regular (Weekly or mont hly) meetings. For instance the finance committee, t he transfer committee, the working or consultative committee etc. The standing committees are mostly formal in nature.

On the basis of permanence an adhoc committee is formed which has a 3) Adhoc committee : temporary existance and formed for a particular purpose. It stops functioning as soon as its purpose is accomplished. Fact finding or exploration or investigation committees usually come under this category.When the purpose of an adhoc committee is accomplished it submits its report to the appointing authority and then ceases t o exist. For instance Finance commissions, pay commissions or some enquiry committees or commisssions are temporary or adhoc committees. It is generally formed for the purpose of co-ordinating the activities of 4) Joint Committee : two or more committees. For instance a joint consultative committee may consist of representatives of the employer and employees. A works committee or consultative committee is an example of joint committee. Office committees are those committees which are entrusted with the 5) Office Committee : task of office management. These committees may either be executive committees or standing adhoc committees or joint committees. Examples of office committee are the Management committee, the Finance comittee, the Audit committee, cost control committee, the Joint consultative committee etc. The purpose and functioning of an office committee, depends upon its nature and the work assigned to it. The committees may be classified as formal or informal 6) Formal or Informal Committees : committees on the basis of their organisational structure. A formal committee is one which has definite place in the organisational structure and its duties are clearly outlined. The standing committees are mostly formal committees. The informal committee is one which is organised without any formal standing within the organisation structure. It is created to achieve group thinking or group decision making on a particular problem. Such committees are not provided for in the organisational structure. On the basis of functions the committees may be called by different 7) Function Committees : names as the subject may justify. For instance finance committee may be for dealing with the finance ma tt ers., development committee might be for developing new products and methods and several such committees as Product committee. Policy committee, Bonus and Salary committee etc might be framed in business organisation dealing with different subjects. 8) On the basis of the organisational hierarchy the committees may committee, divisional committee, departmental committee etc. be classified as central

Advantages of committee organisation :

The group deliberations ensures 1) Integrated deliberations and Collective judegement : through considerations of problems with all their facts and ramifications before arriving at a decision. The wide range of experience, back ground and combined abilities are brough together by way of the committee and this pooling of knowledge and experience definitely improves the quality of decisions. More over a problem is discussed by different members having different interest and points of view. An individual executive has many limitations as regards knowledge and experience. Committees provide a platform for exchange of ideas, 2) Committees provide a platform : information, facts etc. They have an educative value. They can be used to train young executives to analyse and appraise critical and typical situation. Participation in committee meetings is an excellent training for junior as well as senior executives. A committee is a useful device for co-ordinating business planning 3) Promoter co-ordination : for execution of business policies, and for an effective communication between the executives of

various departments or functions. Such a committee provides an important technique of co-ordinating in ma ny enterprises. Particular commi ttee normally consists of members representing all necessary departments and interests. When joint deliberation takes place they are in a position to discuss and listen to the views of others and offer their own suggestions and points of view. This direct contact and opport unity of discussing, offering suggestions and listening to others before a ny decision is taken, go a long way in promoting co-ordination. No written or oral communication is a effective and informative as the participation in the discussions of the committee. Various co-ordination committees are formed which integrate, harmonize, and syncronize the activities of the departments or sections. A committees is one of the means of transmitting information and 4) Ease in communication : ideas to internal organisational members. It secures the facilitiy of communication and co-ordination between executives. The major objective, policies and decisions of many enterprises cannot be precisely stated in writing. The committees provide forum for communicating the real purport of such objectives and policies to the managers. The decisions along with their background discussions are conveyed clearly and uniformaly to all concerned through the committee members. In the committee organisation, the participation of 5) Greater motivation and co-operation : many subordinates and sectional heads, in the discussions of a meeting gives them a sense of belonging to the organisation. They are motivated towards the enterprise objectives. Moreover, once they have participated in the meeting, howsoever less might be their contribution, they are motivated to see that such decisions are executed which they themselves have taken. The concentration of authority and power 6) Avoids concentration and misuse of authority : in an individual is obviously dangerous. It is therefore, always safe to delegate authority to a group of persons rather than to an individual. The policy and strategic decision making power is therefore given to a committee in Government, educational organisations, and other institutions as a check and safeguard against the abuse and misuse of power. The fear of delegati ng too much command and executives authority to one person has given to the growth of plural executive in many institutions. The committee form of organisation is the best medium of 7) Medium of representation : giving representation to various interested groups on matters of executive authority. A central committee may be so constituted as to give representation to different departments and interests in an organisation. 8) Democratisation : Where desired, a committee can be used to, reduce the tyranny of an executive, and to permit greater member participation in decision mkaing. Various interested groups may be represented in the committee. A committee may often be a meeting gouped where difference are sorted out and comprmises are reached. 9) Avoiding action : Where an executive wishes to avoid action on a specific problem. he may assign it to a committee and avoid the action. In some circumstances i t is desirable that a committee takes 10) Excaping responsibility : responsibility for actions for which individuals do not wish to be responsible. 11) Stability : Committee organisation enjoys stability because it is never without members. Some members regularly retire or quit but they are replaced by others. Thus this type of organisation has perpetual succession. 12) Advising : Manager may wish advise and counselling before making decision. He may convence a committee to provide needed advise and counselling.

13) Committees : usually take more time to come to a decision than a single individual. Hasty decisions are, thereby, avoided. 14) Group discussion at committee meetings may lead to the emergence of new ideas. 15) Committee provides representation to various interests in the organisation. This generates a climate of involvement on the part of various sections in the organisation. 16) Other advantages : The decisions, by committee, are taken by experienced and liberal group members. Naturally they are never narrow minded. They always have a blending of various characteristics like balance, co-ordinativeness, comprehensiveness and liberalisation etc.

Disadvantages and misuse of committees :

A number of disadvantages are also inherent in committee organisation on account of which they are widely criticized and their use is avoided by the management. The following demerits of committee organisation are responsible for such reactions. 1) Delay in decisions : Because of conflicting view points of members or poor leadership a committee is sometimes unable to reach a needed decision in time. This delay in decisions destroys the utility of decisions. Committ ee is a n expensive form of 2) Exp ensive and time consuming organisation : organisation. Procedural activities like circulation of notice and agenda, recording discussions and decisions and group deliberations etc. involve high cost and time. Thus the monetary cost of committee decisions is very high. It becomes more pinching when a committee is assigned a problem that could as well or better be solved by a single individual. The high cost in terms of time and money is quite obvious as some member are expected to come from outstation. On the other hand the decisions by an executive are much less costly and less time consuming. If often happens that a committee decision is watered down and is 3) Least denominator : not the best from someones viewpoint. There is a general tendency of compromise in such decisions. So nobody may possibly be happy with a committee decision. It is often very difficult to enforce effective accountability against a 4) Split accountability : committee. Members do not show any personal initiative. They may hide behind the facade of the committee and may avoid personal responsibility by claiming, that it was not his decision, but the decision was taken by committee. Commitees are prone to a number of psychological weakeness 5) Psychological weaknesses : also. They have the tendency to indulge in irrelevant discussions, Members try to impress and flatter the superiors and show tendency to jump to conclusions. A committee, being a corporation, is neither a soul to be damned nor a body to be kicked. Therefore it tends to be less considerate than individual. Since committees usually seek a consensus of unanimous agreement 6) Tyranny of minority : it is easily possible for a minority of the committee to that committee action by refusing, to accept the majority viewpoint. Committees are usually formed for a specific pupose. It often happens, 7) Self perpetuation : however, that a committee continues to meet long after it has ceased to serve a useful pupose. The tendency to continue themselves is particularly noticeable in committees which have assembled their own staff.

8) Lack of secrecy : secrecy too.

The committee organisation being a form of plural executives, lacks in

It i s an old saying everybodys irresponsibility i s nobodys 9) Divide d responsibi lity : responsibility. Acting in a collective way, all members are jointly responsible for the decisions arrived at, by the committee. In the absence of fixed individual responsibility the committee members becomes, more or less irresponsible and the committee proves to be a breeding ground of ineffciency and evasion of real responsibility.

Misuses of C ommitt ees :

The committee form of organisation has fallen into disrepute due to its misuse. The following are some examples of mi suses of committee. The committees should not be assigned routine work in place of a 1) For routine work : manager. Leadership is essentially a quality of individuals. If decision making is to be sharp, clear, prompt and subject to unquestioned responsibility, it is better exercised by the individual. the committees should be entrusted with the advisory functions and decisions taken by them should be carried out by single person-managing director. The marketing research and study of consumer behaviour etc. are 2) For research Work : such works that can not be accomplished by committees successfully . These require personal attention, skill and individual attention. So committees should not be assigned such responsibilities. But they can be formed to analyse the results and for making final recomendations. The committees should not be set up to perform unimportant work 3) For unimportant work : otherwise it will be a sheer wastage of time and money. Generally members of a committee are the departments. 4) Nominations of representations : They do not have any authority of their own. They only refer the matter to their departmental boss. It results in delay and the committee can not function properly. Generally the nature of committees is advisory only. They 5) Reservation of final authority : do not possess any final authority. This also brings down their importance.


The number of individuals on a committee should be minimum, so 1) Minimum membership : that they may function fast and effectively. There is no st andard size of committees. Generally membership of three to four persons is a normal size . Too many members will result in much wastage of time in lengthy discussions resulting in delayed decisions. Committees authority should be carefully spelled out. 2) Well defined authority and scope : Members should know the exact scope of subjects that the committee is expected to consider. Persons to be appointed on committee should be selected 3) Proper selection of members : properly. They must represent all intrest that are intended to be served and t hey must be able to perform well in a group They should have the capacity for discussing and for reaching group decisions. The commi ttees should be used extensively. The chairman or secretary of 4) Extensive use : the meeting should prepare the agenda in advance and circulate it among the members of the committee so that the members get sufficient time to consier the matters beforehand. 5) Proper conduct of meetings : The chairman should control the behaviour of members of

the committee, while it is in session so that there is a minimum waste of time and money. Participants themselves should also behave in a nice manner. The success of a committee depends to a large extent on the skill and 6) Efficient Chairman : capabilities of the Chairman of committee. A good chairman can avoid many of wastages and drawbacks of committees by planning the meeting and conducting it properly. Last but not the least, the committee must be worth the cost. A committee 7) Cost consideration : can be justified only if costs, which are often considerable, are definitely offset by tangible and intangible benefits. 8) Wire Pulling tendency : The chairman or some strong member overshadows the decision and forces the members to simply endorse his views. Free opinions are not exchaged. Sometimes a minority resorts to expressing dissent and the issues are decided on the basis of voting, leaving behind bitterness, discontent and frustration. 9) Committees weaken future executives who rely on them for decision making. Such executives are reluctant to make decisions or to take responsibility.

Formal and Informal organisation :

An organisation may be divided into two categories, on the basis of the interrelationship of individuals, viz, formal organisation and informal organisation. Both types of relationships are necessry for any group action. Formal organisation : A formal organisation is one in which position, responsibility, authority and accountability at each level is clearly defined. In such organisation, authority is delegated from higher to lower levels, and the whole structure, is designed to accompl ish the objectives, of the organisation. Thus formal organisation is more or less an arbitrary structure to which the individual must adjust. It tells him to do certain things in a specified manner, to obey orders from designated inividuals and to co-operate with others. A formal organisation is bound by rules, systems, procedures and methods as laid down by the top management from time to time. Co-ordination also proceeds according to a prescribed pattern in the formal organisation structure. According to George R. Terry, there are four basic comonents of a formal organisation. i) The work which is divisionalised. ii) persons who are assigned to and perform the divisionalised Jobs. iii) The evironment under which the work is to be done. iv) The relationship among persons or work units. According to Barnard Chester, formal organisation is a system of consciously co-ordinated act ivities or forces of two or more persons. Thus formal organisati on is creat ed through the coordinat ion of efforts of various individuals. The formal organisation facilities the determination of objectives and policies. The degree of success of these objectives, is determined on the basis of the capacities and attitudes of the people within the organisation. According to J. A. C. Brown formal organisation possesses the following characteristics : i) It is deliberatery Impersonal ii) It is based on ideal relationship and iii) It is based on Rabble hypothesis of the nature of man.

Formal organisation is the official hierarchy as it appears on paper. It is the basis and official version of the organisation. The above ment ioned characteristi cs have al so been the main points of criticism of formal orgnaisation. Firstly as it is deliberatery impersonal, emotions and sentiments of individuals are ignored in determining the interacti ions, communication and accountability. But human beings can not live without social interactions and that is why they develop informal relations. Secondly it is base on ideal relationships. Human beings are thought to be rational and economic beings. It is assumed that there should be no unofficial channel of communication. But it is very difficult to find such ideal relationships in actual life. Lastly it is based on the rabble hypothesis of the nature of man It is assumed that there will be the same kind of reaction if human beings are punished or rewarded. But the individuals are not always motivated by the rewards and punishments in the same manner. Formal organisation is deliberately constructed to acheive some goals. They are not changeable with the passage of time. This is another point of criticism put forward by the critics. The rules and regulations of the organisation may be too rigid that it becomes difficult to achieve the goals. Moreover formal organisation does not consider the goals of the individuals. Because of these reasons, formal organisation usually gives birth to infromal organisation which cannot be separated from it. As a matter of fact, there is a close relationship between the formal and informal organisation. Thus formal organisation is systematically planned and is based on the principle of delegation of authority and the principle of responsibility. It makes use of organisation charts and attempts to maintain a balance among the various type of work to be done, each being given the importance that it true value deserves. The merits and demerits of formal organisation include :-

Merits :
1) Avoidance of role conflict. 2) Avoidance of over-lapping of authority and responsibility. 3) Advantages of specialisation. 4) Defining and standardising systems, rules, policies and procedures of the enterprise etc.,

Demerits or limitations
1) It does not recognise informal relationship 2) It creates problem of communication. 3) It emphasises structure rather than people. Informal organisation : An informal organisation always exists together with a formal organisation in every enterprise. In such organisation people evolve informal groups among themselves which are bound together by common social or technological work or other interests. Such groups make an informal organisation. Informal organisation refers to the relationship between people in the ogranisaiton, based on personal attitudes, emoti ons, prejudices, likes dislikes etc., Their relations are not developed according to procedures and regulations laid down i n the formal organisation structure. Generally, large formal groups give rise to small informal or any such other factor. These groups are not preplanned but they developed automatically within the organisation. Informal organisations are small groups and these groups can overlap because a person may be member of more than one group. A manager can not eliminate the informal organisations because he

does not create them. many times informal organisations comes into being to support and supplement the formal organisation. For instance informal communication is very fast and it can break the barriers. Informal organisations may also create problems for t he management by spreading rumours and resisting the introduction of change. That is why some people do not favour the recognition of informal groups by the management. According to Davis, an informal organisation is that network of personal and social relations which is not established by formal organisation. It is an accepted fact that wherever people work together, social relationships and groupings are bound to arise on account of their frequent contracts with each ot her which gives rise to informal orgnisations. Such organisations are not needed by formal organisations and therefore they find no place in organisation charts or manuals. They establish their own unwritten rules which are usually follwed by individuals in the informal group. Informal organisations are never defined and have no structure like that of a formal organisation but they form an integral part of formal organisation.

Merits of informal organisation :

1) It provides a useful channel of communication. 2) It covers the deficiencies of formal organisation. 3) It influences the formal oranisation to work carefully. 4) It brings about mutuality among group members who derive job satisfaction by exchange of ideas and views etc.

Demerits or limitations of informal organisation :

1) It may tend to act on the basis of mob psychology. 2) It may become a source of rumours or wastae of time. 3) It may tend to oppose change. The informal organisation is a reality in every enterprise and every office manager should accept this fact. He should utilise it as a part of the total organisation, as an effective channel of communication, as a forum for exchange of ideas and as an instrument for obtaining support from the informal groups. As a matter of fact informal organisations are complementary to formal organisations and are in no way less important. To select the right type of organisation is not an easy Selection of type of organisation structure : job. While deciding about the t ype of organisation the management should consider the following fa ct ors. Size of business is the most important factor. If a business is 1) Nature and size of business : small there are few management problems and therefore a simple type of organisation i.e. line organisation would be suitable. But in a large business which has a number of departments or sections and whose activities are varous and many, the complexity of management problems call for a more complex type of organisation e.g. a functional or a line and staff organisation. An old established business is in a better position to 2) Period of establishment standing : evolve and develop its own ki nd of organisation over the course of years than a newly established business for which a greater effort is required to set up even a simple type of organisation. 3) Continuity of work flow : An enterprise with a steady flow of business through out the

year needs a more complex and permanent type of organisation than a fi rm whose business is of seasonal nature. In a seasonal type of business simple form of organisation is most suitable. When different units of an enterprise are located in the same 4) Geographical dispersion : premises or in close proximity to one another, a comprehensive and complex type of organisation is suitable. On the other hand, if different units are located at distant places, simple form of organisation at each of the units will have to be organised. The degree of mechanisation, total strength 5) Staff strength and degree of mechanisation : of the workforce and the ratio of unskilled workers to supervisory staff, span of control and the levels assigned to different functions must also be considered while selecting a particular type of organisation.

A good organisation actually achieves many more things than those outlined above. It is more than rewards to it s framers, leaders and members. In t he words of Claude S. George, Jr. a good organisation typically,1) Establishes for easier communication 2) Provides for easier communication 3) Eliminates jurisdictional disputes between individuals. 4) Helps, to develop executive ability. 5) Aids in equitable distribution of functions and/or personnel supervision. 6) Aids in equitable distribution of function and/or personnel supervision. 7) Aids in measuring a persons performance against his charge and responsibilities. 8) Affords movement in the direction of the ideal Organisation in times of change. 9) Makes for closer co-operation and higher morale. 10) Points out dead-end jobs. 11) Delineates avenues of promotion. 12) Prevents duplication of work. 13) Makes growth possible with adequate control and without literally killing top executives through overwork. 14) Aids in wage and salary administration through forced job analysis and description.

Effects of Bad Organisation :

Organisation is not an end in itself but means to an end. The end is better business performance and better achievement of goals. A good organisation does not necessarily mean peak performance just as a good constitution does not guarantee a good ministry or good laws, or a just and moral society. But organisation structure is an indispensable means and a necessary foundation. If it is bad, good management becomes an impossible proposition. As Drucker has put it, The wrong structure will seriously impair business performance and may even destroy it. The consequences of bad organisation structure or symptoms of malorganisation are serious 1) Decisions will be slow and poor in quality. There may be reasons for it, (a) Those who decide

may be overloaded with wrok. (b) The information required for decision making may not be readily available (c) Decisions may be made at the wrong place or level. 2) Bottlenecks will appear in the flow of work leading t o under-utilisation of resources and diseconomics of all kinds. There will remain a constant pressure for what Drucker calls Frictional overhead, for co-ordinators, expeditors or assistants with no other job than to help their superiors without much effect. 3) There will be lack of co-ordination, Functions will be performed haphazardly and loosely, causing anomalies and conflicts between departments. 4) None of the departments or sections will be able to perform its respective tasks and justify its costs. The net result will be shortfall in the realisation of overall objectives. The enterprises will be moving backward instead of forward.

Problems of Organisation :
The problems of organisation from its start to later stages of growth have been outlined by two authorities as follows :1) At the start, to create a new organisational system; 2) Thereafter to survive; 3) Then to stabilize ; 4) To earn a good reputation; 5) To achieve uniqueness; 6) To earn respect and appreciation.

Major problems in running an organisation are indicated below :

1) How to integrate personal needs with organisational goals? 2) How to distribute power and authority ? 3) How to develop mechanism capable of reducing intra-organisational conflicts ? 4) How to ensure effective adaptation to changes in the environment?and 5) How to assure vitality and growth and prevent delay ?


Organisation is an instrument for realising the objectives, goals 1) Realisation of objectives : and purposes of the enterprise as a whole. Therefore every division, branch, department and section as well as the entire organisation must be tuned to the objectives and must contribute to their realisation. For achieving the objectives and goals of a business 2) Harmonious grouping of functions : concern, the functions and tasks involved in the enterprise should be grouped in such a manner that active consultation and co-ordination can take place with a minimum of over lapping, delay or confusion. There should be a clear organisational 3) Clear allocation of duties and responsibilities : plan with well-defined duties, responsibilities and relationships. It is often achieved with the help of organisation charts. The number of sub-ordinates over whom control is to be 4) Re asonable span of control : exercised at each level of management should neither be so large as to be unwieldy nor too small for the effective performance of the work or fuller utilisation of the managers ability to control.

The most important element in organisation is human beings. 5) Promotion of satisfaction : For biological necessity they first seek t o achieve t heir own personal goals. The obj ectives of the enterprises are realised more easily where there are good chances of the achievement of such personal goals. Moreover, in an organisation men work in groups rather t han as individuals. Therefore the success of an organisation depends largely on how far it can promote the satisfaction of its members as individuals and as groups. Better results are achieved psychologicall y if, alongwi th a formal organisation structure, some informal relationships are build up within it during the day-to-day functioning of the organisation. This is very essential for smooth working of an organisation. 6) Effective communication : Top management must explain the policies and programmes of the ent erprise to the rank and file workers. The later must also be given the opportunity to convey their feelings, reaction and grievances to the former. The fl ow of information must be quick, easy and two-way. It removes uncertainty, ambiguities, misunderstanding and friction. It provides co- ordination. Information is to organisation is what headlights are to a driver and lighthouse to a sailor. While an organisation ought to be fairly stable over a long period, it 7) Provision for growth : must contain within itself, the elements of growth and expansion. The mechanism must be such that it can adapt itself, to changing circumstances. A business organisation has to be dynamic in character in this changing work environment. Formal organisation 1. Formal organisation is based on the formal relationship of superior and subordinator 2. It is designed deliberately and consciously and its activities are co-ordinated for the achievement of the common goals. 3. It is created for achieving common goals. Informal organisation 1. An informal organisation is based on personal and social relat ions among the me mbers of the organisation. 2. It i s an emergent of social and personal needs which are spontaneous and natural. 3. It i s basica ll y aimed at serving group inte rest a nd provi ding social satisfaction to the members. 4. In informal orga ni sa t ion peopl e are infl uenced i n their co- operative efforts by recognition of desires, friendship, racial ori gins, senti ment s a nd soci al customs. 5. The motivating force is fulfilment of social and personal needs.

4. In formal organisat ion ther e is emphasis on work specialisation through utilisation of individuals talent and abilities.

5. The motivating force in a formal organisation is economic incentive i n t he form of promot ion, increments etc.

6. F orma l or ga ni sat ion may be considered as de-jure structure, having formal and legal sanction. 7. Formal structure is marked by a high degree of rationality. 8. A formal orga nisat ion has a hi era rchy of jobs, authorit y, r ela ti onship and rul es for c ompl ia nce and codes for punishment in case of deviations from rules. 9. In a for mal orga ni sa t ion communication taks place through authority relationship of superior and subordinate which is lengthy, indirect and formal in nature. 10. Lea dership of the forma l organisation is mainly authority based. 11. In a formal organisation standard of performance and behaviour are prescribed for the member. They have to use pr esc ribe d methods, policies, norms, system for performing the assigned job. 12. The forma l organi sa ti on i s idealistic and normative in nature, prescri bed met hods, poli cies, nor ms, system for performing the assigned job. 13. The forma l organi sa ti on i s idealistic and normative in nature, pre scri bing how orga nisat ion should be formed a nd how i t should be operate.

6. Informal organisation de-facto str uc ture which refl ect s re al pat te rn of functi oni ng of t he organisation. 7. Informal groups are influenced by socia l , persona l and huma n factors. 8. Informa l organisat i on ha s a l eadershi p st ruc ture, rule s, sta nda rds, norms, wa y of rewa rding, compl iance but a ll neither prescribed nor followed by any mandetory procedures for execution. 9. In an i nformal or ga ni sat ion informa tion is passed from one member t o a nother t hrough personnel and social relations. 10. In an i nformal or ga ni sat ion l eader shi p i s backed by compete nce of the leader and acceptance by the member. 11. In an i nformal or ga ni sat ion members jointly frame their norms of behaviour, procedure, rules and regulations.

12. An informa l or ga ni sat ion i s realistic in nature and it represents how orga ni sa t ion ope rat es i n practice.

Que stions
1. What do you mean by organising? 2. Explain the characteristics of Organisation 3. Explain in detail the scope of organisation. 4. State the principles of organisation. 5. Describe the importance of organisation. 6. What are the benefits of efficient organisation ? 7. Explain the steps in organisation process. 8. State the factors influencing organisation. 9. Describes the various types and forms of organisation. 10. State the demerits of the Organisation. 11. State the merits of functional organisation. 12. State the demerits of functional organisation. 13. What are merits of line and staff of organisation. 14. State the demerits of line and functional organisation. 15. State the causes of Conflict between line and Staff organisation. 16. State the remedial measures for improving line staff relationship. 17. Explain the term committee organisation. 18. Explain the reasons for the wide spread use of committee organisation. 19. How many types of committees can be formed in committee organisation. 20. Write the merits of Committee Organisation. 21. Write disadvantages and misuse of committees. 22. Can you suggest some measures to avoid misuse and eliminate disadvantages of committees ? 23. Define formal and informal organisation. 24. State the factors influencing the selection of type organisation structure. 25. What are the effects of good organisation ? 26. State the effects of bad organisation. 27. Describe the problems of the organisation. 28. State the elements of sound organisation. 29. Difference between formal and informal organisation.

Meaning :


The process of organising involves identification of activities necessary to attain in objectives of the enterprises and grouping of similar activities on some logical basis. The process of dividing and grouping related act iviti es int o units and sub-unit s for the purpose of a dministration is ca lled departmentation. The units are designated as divisions, units, branches, sections jobs etc. Such units are managed as relatively independent administrative units and accountable for their own objectives. The enterprise has to perform various tasks. These tasks can, at times, be in a chain of jobs. But generally they can be divided in number of jobs. If so, personnel to undertake such jobs are also to be grouped. Each such job alongwith a group of workers can be taken as a unit. If such a unit is efficiently manageble by supervisor for administrative purpose, it can be identified as either a section, or a unit. Similar such units are grouped together to form a depart ment. There can be number of departments in an organisation. Thus Departmentation can be the process of analysing dividing and arranging work or activities into manageable portions for individuals. Thus departmentation is the organisation wide division of work. Logical grouping of activities gives us (a) individual jobs (b) sections and (c) departments. Departmentation is a process of grouping various activities into separate units. The process of departmentation of any enterprise consists of defining and enumerating individual tasks, grouping and classification of tasks, delegation of authority for their accomplishment and specification of authority relationships between managers. The term department refers to a distinct area, sphere, division or branch of an enterprise over which a manager has authority for the performance of a specific group of activities entrusted to him. Departments are various parts of divisions of an enterprise. Departmentation is used to group various business functions and also personnel who will perform these funcitons. In other words departmentation is the process of division of enterprise into diffenent parts known as departments. Departmentation or divisionalisation of the total activity into various self contained units is an important thing in the developement of organisation. This grouping of similar activities into small units for the purpose of facilitating administration is ca lled departmentation. According to Koontz and ODonnell departmentation is a process of dividing the large monolithic functional organisation into smaller and flexible administrative units.Thus departmentation is an integral part of the over all process of organising. It involves the horizontal expansion of the organisation. It creates smaller administrable units called departments. A department is a distinct area of activities over which a manager is given authority and for which he has to accept responsibility. Thus it is functional divisionalisation of the organisation. These departments may be called sections, units, branches or divisions also.

Reasons for Departmentation :

At the outset it may be emphasised that creation of departments and organisational levels leads to more expendi ture, complications in the problem of communication, co-ordination and control . On many occasions it delays work performance and creates confusion and conflicts. Basically therefore creation of departments is not desirable. But departments exist primarily due to span of management,

the incapacity of a human being to effectively manage an infinite number of subordinates. So t he limitations of human ability and of time necessitate the departentation for effective control. Moreover, departmentation facilitates specilization, better planning, better control and better work performance.

Need and Importance of Departmentation :

Deparetmentation is a very useful arrangement. It increases the operating skill and efficiency of organisation. It contributes to the success of enterprise in a number of ways that are as follows : By grouping activities and employees into various departments, the 1) Increase in Efficiency : operation efficiency of the enterprise is increased considerably, It makes possible to expand organisations to an indefinite degree. Departmentation is basically the process of assigning specific 2) Fixation of Responsibilities : responsibility to an executive incharge of a particular department. It naturally increases his efficiency as well as prestige and skills. When a manager looks after the affairs of a small 3) Development of Managerial Talent : department and terms his own decisions within his authority his talent is developed resulting in more confidence. 4) Appraisal Facilitated : Departmentation offers an opportunity for managerial appraisal of the activities of various departments which can be evaluated either on performance basis, profitability basis or any other suitable criteria. The departmental budget can be easily prepared. Computation of 5) Budgeting Facilitated : departmental costs becomes easy. Control over the expenditure is increased. 6) Other Advantages : Departmentation offers distinct advantages of specialisation. Man power planning becomes effective and mangerial co-ordination becomes easy. It develops confident managerial cadre. Process of Departmentation : Departmentation involves grouping of all operating tasks into jobs, combining of jobs into effective work groups and combining all groups into divisions so often termed as departments. Grouping of activities into department is a part of the process of setting up organisations and of expanding them to any degree. the impact of departmentation is a delineation of executive responsibilities and grouping of operating activities. Every level in the hierarchy below the apex is departmentalised and each succeeding lower level involves further departmentalisation. Grouping of activities into manageable units is necessary at all levels in the enterprise. The chief executive groups activities into major divisions such as production, marketing, finance etc. These divisions are administered by senior executives who report directly to the chief executive. The senior executivi es further assign duties to thei r juniors, for example, the marketing manager may divide his activities on the basis of operations like advertising, marketing research, customer service and so on. At the lower level ther e may be sa les assist ants, sal es representatives etc. Thus in terms of the level of management at which departmentation is to be done, the process of departmentation may be divided into the following three stages : Initial break up of organisational functions into basic activities 1) Primary departmentations : such as production, finance, marketing etc. 2) Intermediate departmentation : Creating departments in the middle levels of the organisation.

3) Ultimate departmentation : sections and sub-sections.

Dividing activities into separate units at the lower level to create

4) Main purposes of Departmentation : i) To promote the attainment of overall organisational objectives. ii) To simplify co-ordination iii) To effect economics of scale and exploitation of special opportunities. iv) To assist in executive development.

Merits of Departmentation :
Departmentation helps in simplifying the task of top management. It also facilitates overall control of the functions of the enterprise. Other merits of departmentation are discussed below : 1) When jobs are well defined and responsibilities are clearly mentioned it is easier to fix accountability for the results. 2) The effici ency of mangement and enterpri ses because every one knows his duties and authority, Well defined jobs and limits of authority help the individuals better performance. 3) Departmental managers are given the opportunity to take initiative. Departmentation is a training device for them. They can learn managerial skills which helps them, going higher in the hierarchy of management. 4) Departmentation facilitates better control because objectives of various departments are well known. Budgets which are one of the control mechanisms can be prepared to control the income and expenditure of different departments. Departmentation also provides a basis on which top management can co-ordinate the activities.

Pattern or basis or ways of departmentation :

Most enterprises are involved in producing a product or a service to the benefit of others. The later aspects requires marketing or distribution so that the persons for whom the product or service is intended, accept them. These activities require money or sufficient capital or finance. Thus for every organisation or enterprises there are three fundamental activities or functions to be performed namely production, marketing and finance. Thus functional departmentation consists of grouping of common activities to form an organisational unit. In short, units are formed around common function. The term functional departmentation is often used at the higher organisational levels. In addition to the functional departmenta tion on t he basis of production, marketing a nd finance, it is possi ble to attempt department ati on in different ways such as by production by t erritory or region by customers by process and by task force etc. Top management is at liberty to use any means of departmentation while forming an organisation structure. Although the top executive has responsiblity for initiating,planning and accomplishing the objectives of the enterprise, he cannot personally supervise and control all affairs. So he divides the work and delegates to others the authority for accomplishing what he cannot do himself. There are certain basic methods on the basis of which he can divide responsibilities within his organisation structure. Although the top executive has responsibilities for initiating, planning and accomplishing the objectives of the enterprise, he cannot personally supervise and control all affairs. So he divides the work and delegates to others the authority for accomplishing what he cannot do himself.There are

certain basic methods on the basis of which he can divide responsibilities with his organisation structure. Thus basically departmentation can be done in the following ways namely : 1) Departmentation by Functions 2) Departmentation by product 3) Departmentation by territory, region or geographical area. 4) Departmentation by customer. 5) Departmentation by process. 6) Departmentation by task-force 7) Departmentation by time 8) Departmentation by numbers 9) Departmentation by marketing channels 10) Departmentation by appropriate combination of these types. 1) Departmetation by Functions : This basis is widely employed in medium size enterprises. The simplest and the commonest type of departmentation is the functional type of structure. Under this pattern of departmentation, all functions of similar type of purpose are separted and then grouped into four basic funct ional departmentsFinance, Sales, Productions and Accounting, Each department is headed by an executive who is directly responsible to the top executive. As the enterprise grows the management of a basic functional department is entrusted with more and more activities, so that the departments may be further divided into smaller divisions or sub-departments. This system of departmentation was suggested by Oliver Sheldon. George Terry opines The functions or activities are the pivot around which effective executives develop effective and efficient organisation. In short, departmentation by functions means to group the activities in accordance with the functions of the enterprise, This is a most common practice. Since all the industrial enterprises are engaged increating the utility in the form of some product or service for the use of others, the basic functions required to be performed for this are producing, selling and financing. Without these basic functions the enterprises cannot exist. Eventually production, sales and finance departments are invariably created in every business enterprise. Although the basic functions remain the same the terminology used for these functions and departments might differ in view of the differing nature of the undertakings. For instance, a railway company or an airlines corporation divides its functions as operations (production), traffic (sales) and finance, an insurance company groups them as underwriting and actuarian(production)general agencies (sales) and claims and investments(finance). These fundamental divisions on t he basi s of funct ions are essential for proper performance of t he functions. These three basic departments might be sufficient and convenient in small organisation but when the scale of operation increases, high degree of specialisation is intended to be practised and other complex problems have to be solved. These divisions might further be subdivided or additional units or departments might be created for the purpose. For instance the sales department might be subdivided as advertising, sales promotion and selling, the production department might be subdivided as planning, development a nd research, manufacturing, egineering and mai ntenance, stores and purchase etc.

Thus in this method, all similar activities of the enterprise are grouped into major departments on the basis of functions such as Production Marketing Personnel and Finance. Figure below, shows departmentation by functions. Share Holders Board of Directors Managing Director

Finance Department Cost Accounts S t at i s t i c s and data processing Budgets Financial Planning

Marketing Department Marketing Research Advertising (Sales Promotion) Sales Sales Adminstration

Production Department Planning

Personnel Department Salary Administration

Stores management Quality control Other departments based on nature of activity

Welfare Administration Training Promotions, transfers, Retirement Administration Personnel audit and research

Figure. Departmentation by Functions This type of departmentation is suitable for small and medium sized organisations. A high degree of centralisation is created by this type of structure.

Merits :
1) It is a logical reflection of functions in the enterprise. 2) It follows the principle of specialisation. 3) It maintains power and prestige of basic functions. 4) It facilitates the co-ordination at departmental level. 5) It facilitates effective utilisation of man-power and other resources. 6) It is good means of tight control at the top level. 7) It is a simple, economic and reasonable organisation pattern.

Demerits :
1) With the growth of enterprise it may lead to excessive centralisation of authority. 2) The control may slacken and be defective. 3) Due to lack of control and co-ordination, delay may be caused in decision making too. 4) It does not offer good training ground and opportunities to the departmental managers and their talents. 5) A proper and satisfactory handling of diversified product lines is not possible. 6) Its utility is limited. It is suitable only for small enterprises, manufacturing limited number of product s. 7) It provides little possibility of developing managers for promotion.

2) Departmentation by product :
If an enterprise produces a large number of products then the internal organisation may be developed on a product basis. In short multi-product enterprises having extensive market can follow this type of departmentation. All functions related to a particular product are brought together under the direction of a production manager. Each product or group of closely related products in a product line can be organised under a product department and an executive can be assigned all the responsibilitlies relating to that gorup of product. Thus in such departmentation all the activities, relating to a product group, from mananufacturing to sales are controlled by only one departmental head. He enjoys extensive authority over the manufacture, sales, service, accounting and other functions, which relate to t he particular group of product. The main advantage of product departmentation is that each product division could be considered as a viable centre for the purpose of accountability. It becomes easier to assess the performance of indi vidual product and dist inguish between profitable and unprofita ble products. This type of departmentations permits decentralisation of decision making authority to the lowest level within an organisation. The top level management can concentrate on centralised activities like planning, financing, research and development, public relations etc. Departmentation by product should be resorted to when the maximum emphasis is to be placed on product expansion and diversification.

Merits :
1) It permits to make maximum use of specialisation in technical skills, managerial knowledge and producion equipments. 2) It assists in co-ordination and control. 3) It provides an opportunity for the managers to show their allround ability. 4) It concentrat es on products, hence helps in expansion, improvement and product diversification etc. 5) It places definite responsibility on the particular mangerial personnel for profit in respect of particular product. It simplifies the determination of profitability of each product line, as well. 6) It is easier to evaluate and compare the performances of various product divisions.

7) It often results in good customer relationship. Board of directors Chief Executive Production director

Asstt. Manager (Product A) Production supdt. Sales officer Accountant

Asstt. Manager (Product B) 1Production supdt. Sales officer Accountant Figure. Departmentation by product

Asstt. Manager (Product C) Production supdt. Sales officer Accountant

Demerits :
1) It involves duplication of service functions at each departmental level and hence efforts and equipments are not utilized fully. 2) It results in increased managerial and operating costs due to duplication of routine work in respect of each product or product group. 3) Problem of control at the top executive level is increased. If it is not tight, whole organisation may disintegrate. 4) Hi gh cost of opera tion prevent s the small companies from adopting this type of departmentation. It is suitable only for fairly large organisations having multiproduct lines and which can appoint top managerial personnel to handle semi-autonomous product divisions.

3. Departmentation by region. territory or geographical area :

Departmentation by region may be called as territorial or geographical departmentation also. This type of departmentation is followed by many organisations. This type of departmentation means grouping of the primary activities of the business in terms of the geographical regions to be served by t he concern. Thus departments, organised on region-wise basis become complete administrative unit in themselves and can concentrate on the needs of local customers and local market. Regional departmental manager, can take care of local problems and circumstances in a nice manner and can provide ready service for his region. For instance, Railways and Life insurance business in India are organised on this basis. This type of departmentation is beneficial to influence, adapt and respond to local situation and needs with speed and accuracy. The geographic division becomes a relatively complete administrative unit and is capable of catering to the needs of the region which constitutes its boundaries. This type of departmentation is suitable for large scale firms whose activities are geographically spread over a large area. It encourages local participation in decision making to gain advantage of certain economics of localised operation.

Managing Directors

Personnel Deptt. Marketing Deptt. Finance Production Deptt. Deptt.

Western region Central region Southern region Eastern region

Merits :

Figure. Departmentation by territory 1) It enables the concern to exploit the local market effectively. 2) The department can concentrat e on the local needs, circumstances of local market and other like problems

3) It can encourages local participation in decision making and to take advantages of economics of localised operations like economy in transport costs, cheap raw-material, low distribution cost etc. 4) This departmentation delegates equal authority and responsibi lity to zonal departmental managers. Thus it improves co-ordination on geographical basis. 5) It provides better face to face communication with local customers. 6) It provides numerous chances to improve the managerial skills in various fields. 7) This is very suitable system for large size enterprises providing individual services like insurances, telephones, rail roads and diary business etc. 8) It facilitates the expansion of business in various regions. 9) It provides a good training ground for the salesmen to become sales supervisors.

Demerits :
1) It leads to duplication of many routine and service functions at regional level, which if performed centrally, are very economical. 2) It requires more persons with general managerial abilities at regional levels. 3) It is a costly system. Small organisations can not afford it. 4) There may be problems of integration between various regional offices. They may compete with each other in certain areas. 5) There will also be problems in providing centralised service to various departments which are located in different regions. 6) Attempts to enforce uniform marketing and personnel policies in all the regional units may be contrary to the local needs of some units.

4. Departmentation by customers :
This type of departmentation is resorted to by big enterprises engaged in providing specialised services to different types of customers. For instance, an aut omobile company may organise its

departments in terms of car servicing, heavy vehicle servicing and scooter servicing as shown in diagram. From this it is clear that this type of departmentation seeks to give exploit organisational att ention to the major groups of customers and to exploit unique market opportunities. A business enterprises following this type of departmentation can give better services to the customers. In other words the grouping activities of enterprise on the customers basis is called departmentation by customers. This becomes necessity as customer s s atisfaction is main motive of such organisations. The customers may be from different age as well as income groups. Naturally their satisfaction targets will also be different. As such departmentation by customers is able to stand to their demands of satisfaction. It is found in a variety of enterprises. A marketing department is usually subdivided on the basis of customers. Such departmentation is useful in the case of companies which render specialised services. Chief Executive General M anager (Automobiles)

Heavy vehicles division Figure.

Light vehicles division division


Departmentation by Customers

Merits :
1) Through this system the wi dely varied needs of customers can be satisfied to a great extent. 2) It is very suitable for such large scale products who want to develop their own sales network besides producing. 3) It develops expertise in customer areas. 4) It focuses on the need to employ personnel with special abilities required for meeting different customer requirements.

Demerits :
1) Its utility is limited. All activities of the enterprise cannot be organised on this basis. For example, sales department can be organised on their basis but not the production department. 2) There may be difficulty of co-ordination. 3) There is possibility of under employment of facilities and man power specialized in terms of customer group. 4) Sometimes it is difficult to meet the competing demands of the customers. 5) It requires managers and staff well-versed in customer needs. 6) Some customer groups may disappear during times of recession and sales force may have to remain idle.

5) Departmentation by process : (Equipment departmentation) This form of departmentation may be used by manufacturing organisation. In a textile factory processes like spinning weaving dyeing etc. may be grouped as departments at a secondary level to enjoy benefits of specialised equipment or process. Under this type of departmentation, whole enterprise can be organised on the basis of processes to be performed in the manufacture of the products. For example an oil concern can be divided in crushing department refining department, and finishing department. Manufacturing enterprise very often adopt the grouping of their activities on the basis of processses involved in their work. Thus similar machines are located in one department to perform a distinct job. Such departmentation usually saves time. Under this type of departmentation skilled personnel are required to operate the equipment. Chi ef Executive General Manager (Textile)

Manager Ginning

Manager Spinning

Manager weaving printing

Manager dyeing and sales.

Manager packing

Merits :

Figure. Departmentation by process

1) It is a scientific method and makes possible the use of costly equipments in an efficient manner. 2) Main advantage of this departmentation is the economy in operation. For example a large computer requires heavy specialized capital and it can be utilized by installing it in separate department . 3) The maintenance of the department is facilitated. Repairs, renewals and replacements of machines or equipment can be easil y made with out interrupting the whole production process. 4) Due to rapid changes in technology, intensive and rapid use of machinery has become very necessary. This system provides such opportunity due to its peculiar nature. 5) Process departmentation facilitates co-ordination by grouping production facilities needed for the completion of each distinct phase of work. 6) It puts full responsibility for the completion of each stage in the production process on the head of the process department.

Demerits :
1) One of the important demerits of this method is its costly nature which can be afforded by only large size enterprises. 2) It requires more space and investment.

3) The chief limitation is that the volume of activity must be large enough to warrant a separate department . 4) There may be difficulty in the co-ordination of the departments based on different processes. 5) A break down in one process department may hinder the working of all the other process departments which follow the former in sequential work flow.

6) Departmentation by task- force :

Under this method the responsibility for the completion of work rests upon an entire task-team and normally one individually acts as the leader of the task-force. Every member of the task indentifies the objectivies and ful ly comprehence them. This type of departmentat ion is also termed Project organisation and is a refinement of advanced planning and controlling techniques such as PERT. This system helps in building an organisation unit aimed at completing a series of events utilizing the best available talent. After the project is completed the organisation is disbanded with the personnel and physical resources become available for reassignment. This system enables better utilization of personnel, since each member is objective minded and thinks allways of achieving the goal.

Merits :
1) There is possibility of developing managers who can use different types of resources and 2) The specialized complete team set up for performing the task results in greater concentration and more productive results.

Demerits :
1) Fosters the feeling of frustration caused by being a separate unit and not a part of t he whole organisation. 2) The sense of insecurity, endangered by the feeling of not being part of the whole team, with chances of promotion to the highest positions being less, starts growing.

7) Departmentation by Time :
One of the oldest forms of departmentation is to group activities on the time basis. It is normally used at lower levels of organisation. At the lower levels of organisations activities are grouped on the basis of time. When the normal work period is not adequate for economic and technological reasons, using of shifts if commonly adopted in many manufacturing units. In the same way the examinations of an university are organised on session basis to cope with the volume and rush of work. This type of departmentation is generally found in the production function of the enterprise. The only disadvantage of this system is the problem of co-ordinating among the work of various shifts as well as control on the executives of different shifts.

8) Departmentation by Numbers :
Departmentation by numbers was widely prevalent in the army and it was used among people who were performing similar duti es with advanced t echnology and specialisati on. Usefulness of this departmentation has declined over the decades. Moreover, it is useful only at the lowest level of the organisation structure. In other words, under this system the operating work-force is divided in small groups of 50 or 60 and then supervisors are appointed on t hem. This system is more suitable to the concerns where a large number of people are employed, for example in army, as mentioned above. In industrial world this system is not used.

9) Departmentation by Marketing channels :

One of the new forms of basic departmentation is to organise an enterprise around channels of marketing. It is just like customer-wise departmentation but its basis is the marketing channel. It may be popular in future due to increasing emphasis on marketing aspect of the business.

10) Departmentation by Matrix organisation :

It is a combination of functional and product form of departmentation in the same organisation structure. Diagram below shows the model of matrix organisation.

Director of Engineer ing

Chief Designer Project A Project B Project C Figure. Model of a Matrix organisation Chief Mechanical engineer Chief electrical engineer Chief Metallurgical engineer

Merits :
1) It provides flexibility to the organisation. 2) It stimulates interdisciplinary co-operation. 3) It creates involvement among the employees. 4) It allows experts to move to crucial areas as and when needed.

Demerits :
1) The success of the matrix organisation requires a high level of interpersonal skills. 2) At times, it is found to be costly. 3) It leads to more discussion and conflicts than action.

II. Departmentation by mixing the above types

(Mixed departmentation) According to nature of business and objectives of the organisation, it becomes difficult to adopt any one of the methods of departmentation. For example large production unit is located at one place and entire country has to be covered for sale, that t oo, by sales promotion like drug (medicine) industries, Since the quantity to be produced is very large, such organisations may adopt Departmentation by functions for production unit and departmentation by territories for sales and distribution. Thereby the organisation enjoys advantages of both. Thus departmentation by mixing can be defined as a combination of two or more methods of departmentation, providing flexible structure by grouping the activities in such a manner that may contribute to the realisation of organisational goals.

Best pattern of departmentation

There is no one best way of departmentation that can be made applicable to all situations and all organisations. While departmentation is undertaken, factors such as the kind of job to be done, the way the task is to be performed, the kind of people involved, the technology, the people being served and other internal as well as external considerations are taken into account. Thus, we see that there is a number of alternative methods of arranging activities to facilitate the accomplishment of enterprise objectives. They all possess certain merits and demerits of their own. So a careful evaluation should be made. Departmentation is not an end in it self. It is not even an unmixed good. So before taking any final decision in this respect, the top mangement must consider all product etc. It must balance the gai ns derived from one kind of depart mentat ion as against the disadvantages of another. In practice, therefore, a composite departmentation is used by most of the organisations.

Factors influencing the choice of departmentation

Following are important considerations or factors which should be considered by the management at the time of making basic departmentation. 1) Specialisation : Whatever may be the pattern of departmentation it should be such as to yield the advantages of specialisation. Benefits of specialisation can be secured by function and occupational specialisation together. It means a proper person must be matched with the post. The management should group the activities into various units in such a way which l eads to specialisation of work. Specialisation brings about many economies in the business. Therefore, it is an important consideration while choosing a particular method of departmentation but over specialisation should also be avoided becasue it will result in loss of motivation among the personnel. Co-ordination is necessary to ensure that different act ivities contribute 2) Co-ordination : maximum towards the achievement of common objectives. To facilitate co-ordination, different activities requiring different skills may be grouped together under a single executive incharge of a small department because they need to be co-ordinated for effective performance. They should be co-ordinated in such a manner that may not cause inconvenience in their performance. 3) Control : That departmentation is the best way which ensures the tight control. as a general rule, one activity intended to serve as a check on another, should be under a separate executive. Physical convenience of supervisi on shoul d also be kept in mind as an aspect of control while grouping the activities. An activity which is considered to be the basis for the success of 4) Significance of activities : an enterprise must be given proper attention. It sould be assigned to a separate department at significant level of mangement in the overall organisation. All the important areas of the business on which the success of 5) Appreciation of key areas : the business depends must be given proper weightage. That is why, in practice, function is taken at the top of t he organisat ion structure. Separate department s are created for important funct ions like production, financing, marketing etc. The management should take local condition also into 6) Full recognition of local conditions : consideration. They are the personalities of individuals, the nature of organisation, the pattern of informal relationships in the organisation, the attitude of management towards, the market to be served etc.

Jurisdiction of the departments should be clearly laid down and there 7) Minimum conflicts : should be no conflict among them. The authority of the managers of different departments should also be clearly specified. This factor influences to a great extent the number of departments to be created. 8) Economy : Creation of a new department increases various costs. This is because the new department requires additional personnel, space and equipments. Therefore management should see that the departments created make the best possible use of these factors and that maximum economy is achieved in creating the depa rtments. Monetary and non monetary costs that are involved in creation of number of departments for any special activity should also be considered. But efficiency of the organisation should not be at stake for costs only. Relative efficiency and costs should be compared. The mangement should not overvalue the techni cal aspects of 9) Human considerations : departmentation. Social aspects also have important impact on departmentation. The availability of competent managerial personnel at different levels, their attitude towards work and the managerial attitude towards personnel will also influence the way the activities are departmentalised in an organisation. Existence of informal groups, cultural patterns, value system etc., should not be lost sight of, at the time of grouping the personnel. In short, what ever may be the basi s, the departmentation should be directed to promote the attainment of organisational objectives economically and efficiently. Naturally mangers concerned with taking such a decision have to consider relative advantages and disadvantages of various types of departmentation in the light of the needs of t he organisation. In practice, in many cases, it is not feasible to follow a single basis in grouping the activities throughout the organisation. Most of the big organisations follow schemes of departmentation that are a composite of several bases. Thus we see that departmentation is not an easy task. It is a radical procedure which requires a careful consideration of various factors before proceeding to actual grouping of activities. If it is to be accomplished successfully, it should be treated as an important task. Otherwise it may create more problems than it solves. Thus there is no ideal pattern to suit all occasions and situations. It requires certain preparations on the part of management such as proper decentralisation of authority, enforcing adequate control, providing ground for management development and the communication network etc. Various factors of departmentation discussed above do not provide much guidance for deciding a method. The final decision will depend upon the foresight and initiative of the top management. Therefore, the management has to be very careful and use high degree of imagination at the time of choosing a pattern of departmentation. Once a pat tern is chosen, it is very difficult and costly to switch over to another pattern. DELEGATION Delegation is an act of vesting self authoity alongwith responsibility in some other with a specific object. It is common in case of vertical organisation that total authority of decision making is vested in the top executive. Naturally he is overburdened. Eventually he can not pay sufficient attention to all the responsibilities. Thus he requires help of others in order to relieve him of some of the burdens. Thus he requires help of others in order to relieve him of some of the burdens. He therefore assigns some of his jobs to others. If the assigned work is required to be performed correcly, the person to whom it is assigned must have authority to perform or get performed. Naturally responsibility follows in opposite

way. Thus F.G. Moore has correctly said Delegation means assigning work to other and giving them authority to do it. AUTHORITY AND RESPONSIBILITY

Authority :
Authority is one of the important considerations in the process of management. Managerial action in a formal organisation needs authority. Without authority, the executive can not secure compliance of his orders from his subordinates. It is always considered to be the key to a successful Managerial job. It is the power of the superior to make decisions which guides the actions of his subordinates. Getting things done by people is not possible without compliance on the part of subordinates and the authority which ensures compliance. Authority is the only cohensi ve force that sets in motion the integrated activities of sub-ordinates in an enterprise. It is the means through which co-operative activity becomes a success and common objectives are achieved. Securing compliance or obedience is the main objective behind t he whole concept of authority. It can be acquired through persuation, sanction, coercion, constra ints or force. The managerial authority is a rightful permission to act for the enterprise instruct the subordinates, impose penalty for wrong doings, use company property or to speak or act as a representatives of the enterprise. The whole organisational structure is based on the concept of authority Without use of authority, anarchy and utter confusi on will prevail all around the enterprise Authority is usually respected, recognised and followed in the organisation as a matter of course. Authority is generally adopted with power to secure obedience. This customary acceptance of authority is a part of our culture and dayto-day behaviour. But compliance of actions and carrying out of instructions by subordinates can not always be assured merely because the authority is customarily accepted. Delegation of authority establishes relationships. Vertical delegation of authority determines relationship between a boss and his subordinate and the horizontal division of authority determines the degree of decentralisation. A few definitions of the term authority are given below : 1) Authority is the right to give orders and the power to obedience. -Henry Fayol 2) Authority i s the official and the legal right to command action by others and to enforce compliance. Compliance is obtained in a number of ways trough persuation, sanctions, request, coercion, constraint or force. -George R. Terry 3) Authority means the Power to command others- to act or not to act in a manner deemed fit by the possessor of the authority and is exercised in furtherence of the enterprise or departmental purpose. Koontz and ODonnell From the above definitions, two points become clear that the possessor of authority influences the activity and behaviour of other individuals or groups and t hat he has the right to issue orders and ensure their compliance by subordinates. Authority Vs power : Authority may not mean the same thing as power A person many have the power to influence the activity and behaviour of other persons but he may not have the official or legal right of command and thus enforce compliance by others. Such a person would have power but no

authority. It may, therefore, be said that authority includes power but power may or may not be supported by authority. Also, all authority is formal.

Types of Authority :Authority is of five types.

According to some writers all authority is formal. It stems from the top 1) Formal Authority : and is transmitted downwards through the line by the process of delegation. The authority which a manager possesses, because of his organisational position, is known as formal authority. Under the acceptance theory, it is believed that authority comes to 2) Acceptance Authority : the manager by the acceptance of power to make and enforce decisions through his subordinates. Accordingl y manager has no authority until it is conferred upon him by his sub-ordinates. A subordinates may accept t he authority of the manager because - (a) he wants to contribute to the accomplishment of organisational objective (b) he wants to obtain some reward by accepting it. (c) he wants to avoid disciplinary action. (d) he regards the maturity, age or experience of superior (e) he wants to avoid responsibility. (f) he believes that the authority is legitimate and should be followed. But the acceptance theory has been criticised on the grounds that i) It is unrealistic. ii) It assumes that a subordinate has the option to accept or reject authority and iii) It ignores the organisational situation of the possessor of the authority. 3) Authority of the situation : G. R. Terry observes In almost every enterprise, emergency and unusual events accur which are not provided for in the organisational set-up. When such an event occurs, the person assuming authority to meet the particular circumstances is said to have derived the authority of the situation. Such an authority exists only till emergency lasts. It is the authority a person enjoys by virtue of his superior position in 4) Position Authority : the organisation. Normally subordinates recognize authority of those occupying higher hierarchical positions. Since 1950 the term technical authority or computer authority has 5) Technical Authority : come into use. Such authority stems the decision making power granted to the processed data by a computer. But since authority is a human possession, such authority may be described as that authority which is possessed by the person who either interprets computer processed results and data or underlines their significant managerial meanings for others. Limits of authority Unlimited authority always tends to be an instrumnent of corruption, It should therefore, have and generally does have some limitations, which may be express and implied. Some of these limitations are: 1) Authority is subject to the physical and mental capacity of the subordinate who has to exercise it. 2) Authority may be subjected to the bye-laws, standing orders, rules and regulation of the company (as per articles and memorandum of the company) 3) Authority may be subject to the social beliefs, codes, creeds and habits of the group over which it has to be exercised. 4) Laws, trade practices etc, may also impose certain limitations on the use of authority. Thus, as a matter of fact, there should be blending of power and influence to make the authority

really effective. The other means, that it can help in making authority more effective and may include the backing and support to lower executives, from the top executives, due attention to their advice, usually confirming their decisions, permitting command to flow through proper channels and supplying adequate information and materials to them.

Other General Limits of Authority :

There are any limitations to the concept of authority. Authorty is never absolute like responsibility. It changes with time, position and group behaviour of the subordinates etc. While exercising authority, the manager must keep the following limitations in his mind. It will help him in successful utilzation of his authority. They are as follows : Authority when used commands 1) Re gard for the Mores and Folk ways of the group : reaction from individual as well as groups. It may be favourable or unfavourable. So a manager while using authority, must keep in his mind, the reaction of his orders on employees, shareholders and customers etc. 2) Legal limitations : A managers authority is restricted by the enterprise goals, objectives, politics, programmes and procedures etc. These are governed by the articl es and memorandum of association which are governed themselves by the commercial and industrial laws of the country. Every manager at any level in the organisation, must respect the laws, traditions and restrictions etc. No subordinate can be ordered to do a job which is 3) Natural or biological limitations : impossible to be performed due to biological limitations. For example, one can hardly order a person to walk up to side of a building or do such impossible things. Physical limitations such as climate, geography, chemical elements 4) Physical limitations : and so on, have their limiting effect on authority. For example an order to make gold from copper. There are technological limits on authority t oo. Until and 5) Technological Limitations : unless any performance is technically possible an order to do any such work would be unworthy. Sometimes a manager may not get the work done from the 6) Economi c Limitations : subordinates if the wages are not according to their expectation. The competition i n prices of t he product and other economic factors also affect the authority.

Board of director General managers scope of authority Departmental managers Asstt. managers First line supervisors

Figure: Limitation of authority

The extent of delegation of aut horit y also rest ricts the 7) Authority delegation limitations : authority of a manager. Generally the authority to make decisions or the right to command decreases as it proceeds from the highest to lowest level of an organisation. It will be clear from the following figures.

Responsibility :
Responsibility is the most misunderstood term in the literature of management. It is common to hear about delegating responsibilities, holding a person responsible, discharging responsibilities and carrying out a responsibility. The term Responsibility is, most of the times, used to mean duty, activity, liability, accountability or even authority. According to Koontz and ODonnell, Viewed internally with respect to the enterprise, responsibility may be defined as the obligation of a subordinate, to whom a superior has assigned a duty to perform a service required. The essence of responsibility is then, obligation. Responsibility is also an important concept and has been defined as follows : 1) Responsibility is an obligation of the individual to perform assigned duties to the best of his ability under the direction of his executive leader. -Keith Davis 2) Responsibility is the obligation of a subordinate to perform his duty as required by his superior -Theo Haiman Responsibility results from a superior subordinate relatiohship. It may continue or cease with the accomplishment of the desired objective. It involves i) Compliance ii) Obedience and iii) Dependability. Failure to observe these elements may call for a penalty, punishment or disciplinary action against the erring subordinate. Responsibility Relates to human beings only. A building, a machine or an animal cannot be held responsible. Responsibility arises from the superior subordinate relationship, from the fact that a superior has the authority to get specific services from his subordinate. The relationship between a president and his sales managers is typical of the continuing type of obligation. On the other hand, when the president hires some lowyer for seeking legal advice and advocating a particular case in the court of law, his obligation comes to an end when the assignment is completed. In an enterprise responsibility is accepted by a subordinate due to contractual relationship and in turn, he gets monetary or other rewards. While the authority flows from a superior to a subordinate when assignment of duty is made, the responsibili ty fl ows from a subordinate to his superior when former undertakes the obligation of accomplishing the duties assigned to him. Thus, responsibility is an obligation to carry out certain tasks. In an organisation responsibility is the obligation of a subordinate to perform his duty as required by his superior. Responsibility is closely related to authority. It is exacted upwards whereas authority flows downwards. A manager is responsible ultimately for the performance of his duties even though he has delegated i t to his subordinates. Therefore responsibility cannot be delegated.

Authoirty : Responsibility Relationship :

Authority and responsibility of a manager should be co-equal i.e. authority should be commensurate with responsibility. According to George R. Terry, responsibility is inseparable, there is every danger

that it ma y be mi sused by the possessor. Similarly, if responsibility is greater than authority, the tendency of the management becomes difficult and even ineffective. In order to ensure that authority and responsibility are co-equal, a corelative action may be resorted to.

Ac countability :
Accountability means to be responsible for explanation to any superior. When a subordinate works under a boss and he is assigned some duties to be performed, he becomes accountable for doing or not doing that work. The concept of accountability operates as a condition in which one person is bound to report or render an account to another. When a subordinate accepts authority as well as responsibility, he, at the same time, accepts an obligation to account for an report upon the discharge of his responsibility or the use of authoity in terms of the performance standards which have been established. Thus to be accountable means to be answerable for the fulfilment or non-fulfilment of the authority or responsibility assigned. In simple words, accountability refers to the liability of a sub-ordinate for proper discharge of his functions. It includes responsibility which arises from it. But accountability can not be delegated. Accountability refers to an individual and the concept of single accountability flows from the principle of the unity of command. Generally, both these words accountability and responsibility, are used interchangingly. In military science the term accountability is more popular while in business management, both these terms are used. The public accountability of public sector enterprises has become very important t opic of discussion in India.

Difference between Authority, Responsibility and Accountability

Though authority, responsibility and accountability all are inter-related terms there are some significant differences too. Authority can be delegated to others but responsibility can not be delegated. Any superior can delegate his authority to his subordinates in respect of any problem but his responsibility will be intact even then. He will be accountable himself for the performance of that work. As a matter of fact authoirty and responsibility are two sides of the same coin. the manager can delegate a part of the authoirty received, but both the persons are not relieved of their responsibility. Responsibility of superiors for the acts of subordinates is absolute. Responsibility is always upward i.e. from bottom to the top levels of the organisation structure while the flow of authority is from top to the bottom. On the other hand accountability comes into being because the manager has to keep a record of the authority delegated and tasks assigned to the subordinate. The subordinate must answer to his boss about his performance. As McFarland has put it : Accountability refers to the fact that each person who is given authority must recognize that the executive above him will judge the quality of his performance. Davis and Filley also agree with it. Each (organisation) member is obliged to report to his superior how well he has exercised his responsibility and the use of the authority delegated to him. Thus, we see that as a man can not reduce his responsibilities by delegating he also can not reduce his accountability to higher authority through delegation. A man will still be accountable directly to his superior for authority he has delegated and for tasks he has assigned to his subordinates. DELEGATION Meaning : Top executive, because of limitations, can not do whole work of the organisation himself and hence he takes assistance from others to accomplish the objectives. He divides the whole work into a

number of activities and groups them on the basis of their similarity and thus creates a number of departments. These departments are separate bundles of activities. Delegation is the process through which they are tied together by establishing relationships between them for co-operative and integrated action. The element that holds a formal organisation together, is made up of delegation and the resulting relationship between the members of organisation, Delegation is essential in a formal organisation. With the growth of enterprise, the task of management increases enormously. In such case a manager has to delegate some of his authority so that the entire work may be performed efficiently. However, the overall authority and responsibility always remain with the manager who delegates the authority. A manager cannot without any purpose, just delegate authority. He delegates it to get a certain job done. By means of delegation, an executive extends his area of operations for, without delegation, his actions are confined to what he himself can perfrom. Delegation means to send a representative, to entrust another, to act on ones behalf The later meaning is adopted with reference to authority. When an organisation grows, all its activities cannot be performed by a single individual. The individual may however, extend his personal capaci ty by delegating some of his authority to other. Delegation is a way of dong work by sharing some of it with other. Delegation has been defined as follows : 1) Delegation is the transference to other of the responsibility for the performance of a specific task and /or for the making of decisions in a general or specific area of management activity. 2) Delegation means the passing on the other a share in the essential elements of the management process-a share, that is to say, in the judgements/decision for determining specific objectives plans and targets for directing given operations, and in the command/ control of the activities of the persons performaning those operations. -E. F. L.Brech 3) To delegate means to grant or confer and delegation means conferring authority from one executive of organisational unit to another in order to accomplish particular assignments. -G.R. Terry in simple words, it may be stated that delegation is the task of assgining authority and responsibility to others for carrying out the operations for which such authority and responsibility is delegated.

Nature of D elegation :
The process of delegation of authority is a continuous and downwards process. It takes place constantly in a large formal organisation. Without it, formal organisations can not exist. There is a natural human tendency in managers to resist delegation of adequate authority. A manager may fear that subordinates can possibly do undesirable things with the delegated authority for which the managers may be held responsible. Consequently, many managers tend to delegate as little authority as possible. The authority and extent of delegation of of authority both are subjection factors like the attitude of the superior, his ethical and moral consideration etc.

Importance of delegation :
Delegation is essential in a formal organisation. The importance of delegation of authority in effective management is fai rly obvious, Wherever a persons job grows beyond his capacity, his success lies in his ability to multiply himself through other personnel. Delegation is necessary for expanding the personal capacity of Individual manager. It is a very effective tool for effective

organisation. Different authority relationships that bind the specialised parts and position, of the organisation structure are established through the process of delegation of authority. Delegation enables the managers to distribute their load of work to others, thus leaving them free to concentrate on the higher functions of management . That is why delegation has been said the key of organisation. Importance of delegation may be summarised as follows : Delegation is fundamental tool of organisation for achieving a) It is a fundamental tool : objectives in time. Whole concept of organisation is based on delegation. b) Assistance for Management : themselves for the most significant tasks. Managers and supervisors at all levels are able to free

The workload is spread over the available personnel, so c) Even/Equal distribution of work : that none is cal led upon to do more than he can reasonably accomplish. Work is thus done more quickly and more efficiently and bottle-necks are avoided. Sub-ordinates are given encouragement, and because they are d) De velopment of ability : given a share in themanagment, a feeling of responsibility is created among them and their ability is developed. As delegation permits the applicati on of one of t he most e) Avoidance of reference back : important principles of good organisation i.e. that decisions should be taken at the lowest possible level a reference back to higher authority for decision is avoided. Each senior, who delegates work to his subordinates, is in fact f) Subordinates are trained : training someone to replace him when the need arises. Basic Principles of Delegation The following well-recognised principles govern the effective delegation of authority. The phrase Delegation by the 1) Assignment of duties in terms of expected results : expected results implies that before assigning any duty to anybody, individual motives and organisational objectives should all be clarified. The plans should be made, communicated to and understood by the subordinates. Duties are always related to objectives. So, before, delegating authority, the duties should be clearly explained. In simple words the duties which have been assigned to a subordinate in the process of delegation must be specifically stated in terms of the results of object ives which are expected to be realised through the delegation process. A balance between authority and 2) Authority should be co-extensive with responsibility : responsibility should be maintained. If sub-ordinates are assigned duties, they must be delegated requisite authority to carry out those duties well. The equality of authority and responsibility is the basic principle of a sound organisational relationship. The authority and responsibility in delegations should go hand in hand. When subordinate is assigned certain duties it is obligatory on his part to perform them properly. Otherwise he is liable to be held responsible for negligence or misleagance. But unless he is given adequate authority it will not be possible for him to discharge his duties effectively. But in practice, it is diffi cult to suggest any mathematical equality for the party of authority and responsibility. The nature and concept of duties assigned can suggest to a great extent, the type and extent of authority required to perform them. 3) Accountability cannot be delegated : (Absoluteness of responsibility) The responsibility of

a subordinate to his superior is absolute and no delegator can escape responsibility by transferring it to his subordinate although he might have delegated authority and assigned duties to his subordinate. Even after the delegation of authority and responsibility, the overall authority and responsibility continues to be vested in the superior. The delegator continues to be accountable to his superior. Thus it becomes clear that accountability can not be delegated. This principle states that one subordinates should own his allegiance to 4) Unity of command : one superior only who has delegated him authoirty and assigned duties. The superior should have full command over his subordinates. All orders, instructions and directions should go to a subordinate from one boss only and all his demands, requests, replies, problems explanations and suggestions should go through this boss. The unity in command enhances the respect for his superior, maintains his position and brings certainty. When subordinate gets command from several bosses t here are chances of confusion, evading duties and escaping responsibility. It is a very important concept in the area of delegation. 5) Clarification of limits of authority : By clarification of limits of authority we mean that while delegating authorities to the subordinates they should be made to understand all the limits of authority. It will help them in knowing their area of operation and extent of freedom of action. It will also be helpful in developing their personal capacity and personality. Several organisational conflicts, confusions, overlaps and buck passing take place in the absence of clear limits of authority and area of operation. These limits can expressly be clarified by written statements, manuals and standing plans. Sometimes they are implied and have to be understood from prevailing conventions, traditional practices, habits and executives praise and blame. Authority should be delegated to the 6) Authority should be delegated to the posts only : positions in the organisations and not to the individuals. Though theoretically it is done so, but in practical life what happens is that the authorities are vested in individuals because they use them. So it is generally said that such and such man was empowered to do so. Accountability flows upward while the delegation of authority 7) Accountability flows upward : normally flows downward. Accountability can never flow downward because an executive is always accountable to his superior who has delegated the authority to him. While determining the extent of delegation the following points should be borne in mind : 1) As far as possible the operative part of authority should be delegated. 2) While delegating, the abilities of subordinates should be an important consideration. 3) Work of a routine nature, which does not call for the exercise of much skill or intelligence on the part of the executive, should be delegated. 4) Some part of the authority cannot and must not be delegated, This includes matters like taking policy decisions, planning controlling etc. 5) The executive should not delegate all his authority and responsibility 6) The authority delegated should be sufficient to enable the subordinate to do his job well. It should be no less and no more. 7) Only those functions should be delegated which can be performed independently by the subordinates. 8) The delegated part of the authority must be within the effective control of the delegator executive.

Effective Delegation : A manager has t o use the tool of delegation as an effect ive measure for achievement of the organisational objectives. Effective delegation is a fine art. The delegating executive has to make a number of subjective decisions before delegating. He must achieve a close relationship between responsibility and authority. There are certain basic guidelines which should be followed both in letters as well as in spirit if delegation is to be made effective. They are as follows : Delegation of authority and responsibility must be adopted 1) Clear and Definite objectives : to achieve clear and definite objectives of an enterprise. The goals may be established in terms of results or objectives. The standard of an executive peformance should also be pre-determined. The next step is that the manager should know what his authority 2) The extent of delegation : and responsibility are and how much of them he can delegate to his subordinate. The authority which is capable of being delegated must be clearly defined and communicated to the subordinate. While defining the extent of delegation, the abilities and limitations of the subordinates should be kept in mind. For effective delegation it is of paramount importance that 3) Follow principles of delegation : the principles of delegation should be strictly followed. For effective delegation, it is essential that two way open 4) Proper communication network : lines of communication i.e. from superior to subordinate and vice versa should be maintained. This will not only help the delegator to appraise the subordinates of job, but also make it possible for the subordinate to receive proper advice and guidance for further improvement. The manager should create facilities for the training of the 5) Provision for training facilities : executives to whom authority and responsibility are being delegated. The manager must attempt to motivate his subordinates 6) Subordinates should be motivated : through incentives, monetary as well as non- monetary, to accept, undertake and act according to the requirements of the delegated authority. Establishment of adequate means of control is essential or an effective 7) Adequate control : delegation of authority because, with it, the delegator receives information whether the authority is being properly used or not. There must be a programme of evaluation of 8) Assignment of functioning of delegation : working of the delegation of authority. If it is not satisfactory, appropriate measures on delegation must be evolved and followed.

The Delegation Process :

The process of delegation involves three steps as under : The process of delegation starts with dividing 1) Assignment of duties or responsibilities : the work into suitable parts. The manager has to decide what part of work be performed by him and what part be transferred to his subordinates. He then, can assign the duties to subordinates indicating what he wants the subordinates to do. Duties to be assigned should be determined in advance and should be clearly identified with the functions or tasks to be performed by the subordinates under delegated authority. Only such duties should be assigned as are within the physical or mental competence of the delegate 2) Granting of Authority : While assigning duties the delegator grants authority to make use of

men, materials, machines and money so that the assigned duties may be performed effectively. Duties cannot be performed without grant of the necessary authority. So the subordinates should be given requisite authority such as use of resources, taking necessary action etc. to perform the given job. Accountability is the obligation to carry out 3) Creation of Accountability or an obligation : the responsibility with the help of authoirity in relation to the job entrusted and to report. The subordinate to whom authority is delegated is also made accountable for the proper performance of the job entrusted to him. Delegation creates an obligation or responsibility on the part of the subordinate so that he is made accountable to the delegator -executive for the satisfactory performance of the duties assigned to him.

Be nefits of Delegation :
Delegation increases the job satisfaction of employess and encourages 1) Provides Motivation : them to look forward to promotions in the future. So it serves as a motivational device. Delegation relieves the managers from performing duties of 2) It reduces managers burden : routing nature. They are able to concentrate on important responsibilities. Thus delegation reduces a managers burden. Subordinates are adequately developed through delegation to take over 3) Fosters expansions : the superior positions. The organisation can, thus, be expanded through diversification. Delegation of authority is a very important step in the development 4) Develops subordinates : of subordinates. The benefits of participation in various executive training programmes, seminars and workshops may not be substantial enough if delegation of authority is neglected. Delegation develops subordinates by broading their understanding and capacity.Subordinates assume responsibilities, make important decisions and perform varied tasks. Thus subordinates develop their executive talents. Granting of freedom to subordinates is an indication of 5) Improves Behavioural climate : confidence in them. Naturally, the subordnates also respond by developing a positive sense of responsibility. This improves the behavioural climate in the organisation and paves way for improved productivity. 6) Provides continuity : Delegation enables managers at lower level to acquire experience in decision making and gain competence to fill higher positions in the organisation. Thus, delegation ensures continuity in business. The enterprise needs organisation depth. Many times the mangers go away from the organisation, because of illness, leave, business tours etc. At times they may leave the organisation. It is, therefore, required to develop the subordinates so that they become capable of occupying the position and carry on the duties of manager. Such a development in subordinates can be made by deletation of authority and responsibility.

Obstacles or problems of delegation :

An authority is not self acting. In practice several obstacles come in the way of effective delegation. Although the boss and subordinate agree on the desirability of transferring certain duties and authority, yet for certain reasons the transfer does not actually take place. For certain reasons the boss is not

willing to transfer authority to a subordinate and for certain other reasons the subordinate shrinks from accepting it, even though the boss is prepared to turn over authority. Deposite the benefits of delegation. in practice there are many problems. Usually a person entrusted with certain specific activities desires to perform all the activities by himself. Promotions to higher posts are made partly as a results of the executives willingness to make decisions as demonstrated in the past. After getting promotion, such an executive naturally continues to be decision maker and refrains from delegating, After promotion,such a person finds it difficult to train others also to excel in their own performance. Ma ny managers want to be remembered for their outsta nding ability in their respective work. Such managers hinder their own growth and full managerial development, through their failure to appreciate that others also can do things well. Some executives want to take part in almost every decision and make their presence felt at every company meeting. The desire to dominate presents another problem area. The extent of delegation of authority is also restricted by the unwillingness of the manager to accept even calculated risks. It is always necessary to accept the risk that a subordinate may make wrong decisions. Wi thout such acceptance, an executive can not delegate authorit y successfully. The delegators attitude towards subordinates is also important as well. Some executives think that subordinates cannot use the authority properly. Following are some of the obstacles or problems in delegation. An executive who expects very high 1) De sire for outstanding performance standard : standards of performance is naturally tempted to perform himself any activity that he can do better than his subordinates. Delegation revolves around the unconscious acceptance of the indispensable man theory. In many cases the delegation of authority is not practised as the manager feels that he is an indispensable person in the organisation. Desire to dominate, which is very strong in certain executives, 2) The dominance desire : unconsciously restricts such executives from delegating. Some executives want to take part in almost every decision and make their presence felt on every occasion. Such executives want to work under pressure and keep themselves busy with appointments and insist on subordinates approaching them with matters for approval. They wish to make their presence felt everywhere in the organisation and they feel satisfied when they participate almost in every decision. This tendency results in overwork on the part of such executives. Power centralizes around them and others hardly get any opportunity for their development. The subconscious fear that 3) Fear of sub ordinates potential growth/incompetency : subordinate will prove superior to the executive himself prevents such an executive from delegating. The fear of potential growth of subordina te acts against the delegation, for reasons, the delegator thinks if the subordinate is promoted he will lose one of his competent assistants and he thinks that the subordinate may occupy his own position or even may become his boss. Even buy withholding the authority and assignment of important duties the boss limits the possibility of his subordinates potential growth. But this is unjustified and against the interest of the organisation. This fear can be removed if the position of the boss is made more influential and secure. The next important reason is lack of confidence in the 4) Lack of confidence in subordinates : subordinate which may be subjective and almost unconscious. If the delegator thinks that the subordinates are incompetent and unexperienced, he should arrange a training and systematic coaching

programme to enable them to learn the techniques of performance. Feeling of non-confidence is baseless Therefore, he must releases some authority and assign duty to the subordinate. Del egation implies trustful attitude on the part of 5) Lack of trust towards subordinates : superiors and subordinates. Quite often the superiors do not wish to delegate wisely, because they do not trust the subordinates. A manager who knows how to delegate must be able to welcome 6) Lack of receptiveness : others ideas and compliment the ingenuity of his subordinates. A manager who effectively delegates authority should release 7) Lack of willingness to let go : the right to make decisions to subordinates. It is quite common among managers to make decisions for posts which they have already left. Some executives do not part with authority as 8) Unwillingness to accept calculated risk : they are not willing to accept calculated risk. They avoid any chance of taking risk of mistakes. Wrong judgement by subordinates is possible and the boss is likely to be held responsible for the acts of his subordinates. This limi ts the scope of delegation. The executives should view t he delegation as a means of developing his subordinates, to liberate their energies and build up a real management team. He must be prepared to accept all such calculated risks and encourage and guide his subordinates to take independent decisions, and to exercise their initiative and judgement. 9) Inability to direct : Executi ves lack of abilit y to direct is another barrier to successful delegation. The executive who wishes to delegate must think ahead and visualize the work situation, formulate objectives and general plans of action and then communicate them to his subordinates. 10) Absence of adequate control system : Another obstacle in delegation is the absence of selective control which provides warning of impending difficulties. Since a good executive is always sensitive to his continuing obligation, even though the work is delegated, he obviously wants to be sure that he will know serious troubles in advance so that he may take necessary steps to overcome them. If he finds control system is not adequate and the atmosphere is not congenial and does not keep him informed, he restricts the scope of delegation to avoid risk. The desirability of a sensitive system of control for effective delegation in the organisation is therefore very obvious. Thus most of the obstacles or problems in effective delegation generally arise out of the executives psychological attitudes.

The obstacles in a subordinates accepting delegation or avoiding responsibilities :

Delegation is a two sided relationship. Even when an executive is ready to turn authority or willing to delegate authority a subordinate may shri nk or may be reluctant to accept it, for the foll owing possible reasons. 1) De pendence on the superior : Making a wise decision involves hard mental work and careful judgement. But many times the sub-ordiante does not want to bother to analyse a problem and use his mind to take a decision himself. On the other hand he finds it easier to easier to ask his boss and depend upon him. he invariably seeks his advice before doing. 2) Fear of criticism : Another important factor which restricts an individual from accepting greater responsibility is of criticism for mistakes. Lack of self confidence and initiative on the part of subordinate 3) Lack of self confidence : restricts the scope of delegation. This may be partly because the subordinates are not well qualified

and competent enough and partly because they do not have adequate resources and information at their disposal. Therefore it is necessary to select only competent subordiantes, train them porperly and provide them with necessary power, information and resources for taking independednt decisions. However, the delegator should also create an atmosphere free from fear and frustration. This will build up t he confidence among subordinates so that they will take initiative and interest in taking independent decisions, exercise their judgement and will get opportunity to develop themselves to use their skills. Building of self confidence is very essential for the enlargement and effective delegation. Accepting new responsibility involves mental work, emotional 4) Lack of positive incentives : pressure, extra risk and consuming more time and energy. No subordinate would like to take more responsibility without any additional tangible or intagible incentives. Therefore, additional payment, promotion, acknowledged status, recognition in the organisation or some other tangible or intangible or incentives must follow the delegation, in order to enable them to accept the new responsibility enthusiastically. Another obstacle in accepting responsibility may be that the subordinate 5) Excessive work load : may be overloaded with work. Most men hesitate to accept responsibility when they 6) Feeling of inadequacy of resources : believe that they lack in the necessary informatin and resources to do a good job. Thus, there is a variety of possible reasons why a subordinate may hesitate to accept further responsibilities. Therefore, there is a need to analyse objectively the specific individuals involved and the factors that are likely to affect their reactions to a change in the delegation of authority. If the delegation is required to be made really effective, the manager should not only give due attention to the principles of delegation but recognize the obstacles in practical delegation also. He should try to create an atmosphere wherein both the boss and the subordinate are prepared to give and accept the authority and responsibility enthusiastically.

Types of D elegation :
In every organisation small or large there is a number of different levels of executives performing various functions. Main managerial function is concerned with the responsibility of decision making. Centralisation and decentralisation describe the manner in which decision making responsibilities are divided among executives at different hierarchial levels. Highly important concept in organising which is related to the question of delegation is the extent of centralisation or decentralisation of authority prevailing in a particular organisational structure. Centalisation, in this context, refers to concentration of authority whilst decentralisat ion expresses greater dispersion of authority. In actual practice, there is some decntralisation of authority in every organisation as otherwise there cannot be a structure with management hierarchial levels. In such an event all the authority would remain with the top executive of the organisation. Hence the extremes of centralisation and decentralisation are not generally found in actual practice. Normally, absolute authority is given to the chief execution and therefore, it assumes the situation complete centralisation of authority. The extent of delegation of authority determines the degree of decentralisation. Some decentralisation is absolutely essential in the organisation, without it, the organisation can not exist. Theoretically, there may be absolute centralisation of authority in one person, but when it so happens, there are no subordinate managers and hence no organisati on exists. Therefore, some decentralisation is a characteristic of all organisations on the other hand there can not be complete decentralisation also,

for, if a manager delegates all of his authority, his status as manager would cease to exist and his position in the organisational structure would be eliminated. In this case, again, there will be no organisation. Centralisation and decentralisation are therefore, tendencies. They are qualities like hot and cold. The central isation and decentralisati on, therefore, are judged from the proportion between reservation decentralisation, therefore, are judged from the proportion between of authority and the delegation of authority by the top management . Someti mes the words cent ralisation and decentralisation are also used with reference to performance. In this sense, it is a problem of geography of activities, rather than of dispersal of authority. If greater number of decisions, strategic as well as important alongwith the functions affected by them are made at lower level, the extent of supervision as well as checking by top management will be narrowed. Eventually consultation with and information from top management will also be less. Such a situation in organisation indicates greater degree of decentralisation. And if lower executives are given little power in decision making, and they are required to consult and seek permission of top management, off and on, it is a case of greater centralisation. Centralisation is possible when a business is characterised by centralised performance in which all the activities are carried on at a single location or under a single roof and decentralisation may be possible when performance is spread over many branches situated at different places and divided among different departments on the basis of their functions or products.

CENTRALISATION OF AUTHORITY Meaning of Centralisation :

Cent ralisation means concentration. When authori ty is concentrated, there is centralisation. An organisation is said to be centralised when most of the decision making power is reserved by one or a few persons at the higher level. In a centralised organisation there is not much delegation of authority and responsibility. According to Allen, Centralisation is the systematic and consistent reservation of authority at central points within an organisation Centralisation reduces the importance of subordinates and increases the importance of central authority in the organisation. It implies the following : a) Centralisation and reservation of the decision making power with regard to various managerial functions, such as planning organisation, direction and control. b) Operating function to be performed by middle and low levels of management. c ) Lower levels of management to operate under the direct command, direction and control of the top level management. Power is concentrated at the top level. Many organisations at the initial stage prefer centralisation of authority for two reasons : 1) Manager can be in touch with all operations (ii) It facilitates timely decisions. As the organisation grows in size, the need for decentralisation arises due to the complexity of work. Centralisation may also refer to the concentration of employees or of physical faciliteis. For example, centralisation of sales may mean the grouping of employees performing the sales function and their tables chairs and files are kept in one organisational unit. With the modern approach to business organisation, the presence of large scale business houses and the increasing complexities of business, centralisation of authority is some what rare. Centralisation denotes that a majority of the decisions related with the work being performed are not made by those doing the work but by a point higher in the organisation. Everything that gives to

increase the importance of the subordinates role is decentralisation everything which goes to reduce it, is centralisation. In short, centralisation means the decision making prerogatives are retained by higher management levels. It implies that decisions regarding the work are made not by those doing the work but at a higher point in the organisation. Every manager must reserve certain authority for overall planning, organising, controlling and motivating.

Need and importance centralisation :

The following factors indicate the need and importance of centralised structure of the organisation. Only the top managment having central authority to make decisions 1) Uniformity of action : can bring uniformity of procedures by the operative units. Where a business concern wishes all its operative units to do the same thing in the same way there must be centrali sation of appropriate decision making. This will result in quick decisions and enterprising and 2) For improving personal leadership : imaginative action which is essential for the success of the business. Improved personal leadership is important for the success of small enterprises. It is also important during the early st ages of the enterprises. In both the cases, the operations are relatively on small scale and the top executive can concentrate entire authority with himself. Centralisation will help in taking rational decisions from 3) Well handling of emergencies : both short as well as long-term perspectives to meet uncertainties. Centralisation of decision making is essential when the business conditions are uncertain and there are chances that emergency conditions may develop to endangner the very existence of the enterprise. Centralised organisation structure permits greater flexibility in the utilisation of 4) Flexibility : existing personnel and facilities, and in handling fluctuating volumes of work. Centralised control is needed to keep all the parts of the enterprise moving 5) Integration : harmoniously towards a common objective. Centralised organisation structure permits better and optimum 6) Utilisation of personnel : utilisati on of highly qualified and t alented personnel, particularly in administrative and technical capacities. Areas where centralisation is desirable : 1) Management planning and control. 2) Determination of objectives of the organisation. 3) Capital requirements and modes of procuring it. 4) Diversification, modernisation, expansion or contration of business activities. 5) Personnel or staffing function. 6) Legal and governmental relationships.

Merits of Centralisation :
Centralisation has certain merits as under : Complete freedom and autonomy at all levels can be dangerous. A certain amount of centralised control is therefore essential.

1) Power and prestige symbol : It provides power and prestige to the central authority. The chief executive gets more power, prestige and feeling of importance. Centralised organisation structure results in greater uniformity of policy 2) Greater uniformity : making, practices and decisions. Centralisation binds all parts of the organisation together to attain 3) Attainment of objectives : the common goals of the business organisation. For some matters, all units have to act in the same way e.g. advertising, 4) Uniformity of Action : personnel policy etc. In such matters, centralised authority ensures uniformity of action. 5) Less expensive : It permits the use of cost saving or mechanical devices, better training methods of personnel and closer supervision and control. Under centralised structure of organisation, a smaller number of specialists would be required. Besides, physical facilities requirement, would be less than those required in decentralisation. It is possible to utilise highly 6) Use of specialist (Standardisation and specialisation) : qualified specialist since the quantum of their work and scope are adequate to support such executive. It promotes greater standardisation and specialisation. 7) Effective control : A tight and effective control is induced without having to maintain extensive and expensive controlling machinery. 8) Quick decisions, imaginative action and flexibility are possible under centralisation. It permits flexibility and rapidity of adjustment to changing business conditions. 9) Centralisation is ideal to meet emergencies such as change in government policy, declining sales, competition and the like. 10) Duplication of activities, functions can be minimised. 11) It helps in the development of strong and co-ordinated management team. Demerits : Following are the disadvantages of centralisation. Centralised structure of organisation increases the burden on 1) Over burdened executive : the top executives and hampers the worth and development of managers and executives. Centralised authority does not offer any scope 2) No scope for subordinates participation : for subordinates participation in management. Thereby excellent and ideal suggestions from subordinates are restricted. It lowers the morale, interest, initiative and enthusiasm at 3) No motivation for subordinates : the lower levels. Work-spirit can not be developed among the subordinates. It may raise the problems of communication of 4) Increases problems of communication : the decisions made by the top managment, which may impair or adversely affect the subordinates ability for prompt action. Decentralisation of Authority : The term Decentralisation is open to a number of interpretations. It may sometimes refer to departmentation of all activities, divisions of responsibility or dispersal of the centres of authority etc. It is generally the third meaning of decentralisation which is popular with management experts. In

simple words decentrali sation is simply a matter of dividing the managerial work and specific duties to the various executive levels.


Decentralisation refers to the systematic efforts to delegate authority to the lower levels. It implies that the decision making authoirty is spread throughout the organisation. Decentralisation is associated with democratic management where an individuals worth is respected.

Decentralisation is defined by various experts as follows :

Decentralisation is the systematic effort to delegate to lowest levels all authority 1) Allen : except that which can only be exercised at central points. Decentralisation means the division of a group of function and activities 2) Earl P. Strong : into relatively autonomous units with overall authority and responsibility for their operation delegated to the head of each unit. 3) Fayol : Everything that goes to increase the subordinates role is decentralisation, whereas everything which goes to reduce it, is centralisation. 4) Koontz views that the degree of decentralisation is greater when : a) More number of decisions are made at lower levels. b) More important decisions are made at lower levels. c) More functions are affected by the decisions made at lower levels d) Minimum checking on the decisions made at lower levels. Therefore, decentralisation actually refers to the degree in which authority is delegat ed to the lower levels. Decent ralisation is an extension of the concept of delegation of authority. Absolute centralisation or decentralisation is not possible in practice. Thus we see that decentralisation is concerned with t he dispersion of the power of decision making to lower levels in the managerial hierarchy. Actually centralisation and decentralisation both should be viewed in relative rather than absolute terms. Complete centralisation is the concentration of all decision making at the apex of the management hierarchy. If this were possible there would be no need for a management hierarchy. In the same way, complete decentralisation or the delegation of all decision making funcitons to the lowest level of the hierarchy is equally absurd. In decentralisation managment delegates the power of management coupled with the span of responsibility. In short, centralisation is one extreme, and decentralisation is the other. Decentralisation refers to the dispersal of authority or the delegation of authority to subordinates, George Terry says When authority is dispersed, decentralisation is present.

Decentralisation Versus Dele gation :

Decentralisation is not the same thing as delegation. It is something more than delegation. Delegation means entrusting some part of his work by the superior to his subordinates. Decentralisation refers to the dispersal of centres of authority (decision making) throughout the organisation. It leads to scattered authority throughout the organisation, Decentralisation has been said to be an extension of delegation.

Need of decentralisation :
There are certain circumstances that necessarily bring about decentralisation of authority in an organisation. These are as follows : The larger the size of an enterprise, the more urgent is the 1) Size of the business enterprises :

need for decentralisation, as the growth of an organisation, increases the number of decisions and the difficulty in arriving at them on the part of the top management. These factors bring about decentralisation, in an 2) Growth and Diversification of Activities : organisation because growth and diversitification make organisation cumbersome and effective direction becomes difficult, The top management becomes surrounded by commit tees and is overburdened with work and difficulties. 3) Training of executives : When management desires to train executives to handle hi gher positions in the organisation, it resorts to decentralisation. On the other hand an autocratic management does not resort to decentralisation and retains authority with itself. The nature of a companys product and the extent of competition it 4) Nature of competitors : encounters, influence the extent and degree of decentralisation. In a competitive market, decentralisation may be practised to ensure special emphasis on a particular product line or to concentrate attention on a particular market. Certain internal as well as external factors influence the 5) Surroundings and atmosphere : extent of decentralisation. These include technical developments, political factors, cost of decisions, availability of managers, the need for decentralisation of performance, personality of executives and so on.

Merits of decentralisation :
The merits of decentralisation are listed below : Decentralisation stresses the importance of the 1) Top executives are relieved from burden : delegation of authority at all levels of management so that the top management may devote its entire attention to decision making. It relieves top management of much workload. Actuall y centralisation places heavy burden on the top executive who alone is responsible for planning and decision making. In a decentralisat ion set up, the subordinates share the burden of decision making and leaves the top executives enough time to control the strategic things. Under decentral isation the diversification of products, 2) Possibilities of diversification : activities and markets etc. is faciliated. This enables the concern to make up any losses in certain lines by gains in other lines and thus reduces the risks of business. With the diversification and expansion of activities, an organisation tends to grow. Complex decentralisation helps it to meet the challenges of the complexities of big business. Decentrali sation is a unique step towards the 3) Improved moral e and job satisfaction : motivation. Since, local managers are given a large degree of authoirty and autonomy their morale goes high. Decentralisation encourages initiative and personal ties among the various levels of management, which results in a greater job satisfaction and motivation for the employees. Decentrali sation gives power, initiative and responsibility to a 4) Executive development : number of executives. This provides an opportunity for the development of executives in the organisation. It provides training for future managers and develops management personnel. It promotes speed in decision making and avoids confusion. Quick 5) Quick decision making : implementation of decisions is made possible. In an decentralised structure, operations can be coordinated at the unit or divisional level, which is not possible under a centralised structure.

6) Other merits :
a) New ideas and techniques can more easily be implemented by lower level executives. b) Effective control can be exercised by fixing standards of performance and comparison of performance. c ) Flexibility at all levels of management can more easily be achieved. d) Management by objectives can be practised more effectively. e) Better management-employee relationship can be achieved.

Demerits :
Decentralisation of authority may suffer from the following limitations or draw-backs. 1) Expensive : It increases the administrative cost due to duplication of specialist service and the appointment of capable executives at lower levels. It entails heavy expenditure and duplication of effort at junior levels. It becomes difficult for top management to exercise control 2) Difficult control at lower level : over what people at lower levels are doing or event to know what decisions they are taking. Since every executive at a decentralised level exercises authority in his own way. Uniformity in policies and practices may not be achieved. A wide dispersal of authority under a 3) Lack of co-ordination in different departments : decentralised set up may create problems of co-ordination among the various sections and departments of the business. 4) Lack of uniformity in decision making : consistency of procedures. It hampers uniformity in decision making and

Emergency situations can not be tackled properly 5) Emergencies can not be tackled properly : in a decentralised structure. Adjustment to changing conditions may be difficult. As well as flexibility and adjustment to changing condition may become difficult in a decentralised set up. A decentralised set-up may not permit full 6) Specialised services not utilised effectively : and effective utilisation of the services of specialised and technical personnel. 7) In absence of adequate number of competent managerial personnel, decentralisation may not be practised effectively. There are certain areas which ought to be centralised, These 8) Some centralised areas : include product pricing, managerial planning etc.

Factors leading to decentralisation

The following factors cause decentralisation :a) Decentralisation of authority is useful. When quick and appropriate decisions regarding the situation and/or problem at lower level are required to be taken in order to facilitate utilisation of situation and opportunities that have defined at the lower level. b) When the top management wants to reduce communication work decentalisation of authority is preferred. c ) The nature of companys products or markets may require decentrali sation of decision making to provide special emphasis on a product line or a market. Technological changes may also create conditions favourable to decentralisation.

d) Growth and diversification of activities of the company may make decentralisation necessary to introduce flexibility in operation, to faci litate proper direction and to relieve the top executive of the burden of extra work. e) Physical dispersion of activities of the organisation may require decentralisation of authority for better results.

Factor s determining the degree of decentralisation :

The degree of decentralisation depends upon several factors : The top management is normally better trained and in possession of more 1) Costly decisions : facts and is likely to take better decisions and commit fewer mistakes, but it does not necessarily mean that they are not opt to commit mistakes. The controlling factor behind withholding decision making authority in such situations is the weight of responsibility. Since the responsibility can not be delegated to a subordinate, the top executive does not delegate such authority are strategically vital and will prove more costly to a company, are normally taken by top management to avoid and will prove more costly to a company, are normally taken by top management to avoid risk of mistakes. The cost may be either in the monetary terms or in some intangible values such as companys reputation, its competitive position or the effect on employee morale. So in actual practice, the risk of committing mistakes by lower executives, and the cost of delay in decision on the part of top management, should properly be compared and the degree of decentralisaton be determined. The desire and need of uniformity in policies and practices determine 2) Uniformity of policy : the degree of decentralisation. If the top management wants to take advantage of dissimilar situations with respect to labour, customers, sources of supply, trade practices or local conditions, it may desire to have more decentralisation for better treatment of different situations and to encourage individual initiative. The path of uniformity leads the organisation towards centralisation and the need of individual treatment towards more decentralisation. The problem of co-ordination and control are more complex when the 3) Economic size : business unit is la rge having various departments and a large number of employees. Complete centralisation is neither possible nor desirable. Centralisation of decision-making will result in delay, unnecessary increase in amount of paper work, overburden on top executives and poor quality decision. The decentralisation of decision making in a large concern, therefore, is essential but it must be done so as to facilitate co-ordination and control. In large concerns divided into many a utonomous groups, efficiency of management can be considerably improved. As it makes speedy decisions possible, saving time and energy of top executives. It reduces the amount of paper work and tends to improve the quality of decision by reducing its magnitude to manageable proportions. It is, therefore, necessary that the major questions of policy must be decided at the top management level and the rest be decided at unit levels. For decentralisation to be management level and the rest be decided at unit levels. For decentralisation to be effective, the unit must possess a certain economic and managerial self sufficiency. Centralisation or decentralisation of performance is a 4) Decentralisation of performances : technical matter depending upon such factors as the economics of division of labour, the opportunities for utilizing machines, the nature of service to be performed, location of markets for raw materials, labour and consurmers. Although the centralisation may be geographical or physical in nature, its extent has a major influence on the concentration of authoirty. Aut hority tends to be decentrali sed when performance is decentralised. But i t does not mean that a busi ness whose performance is

centralised will have authority centralised as well. It is true that authority can more easily be centralised if the operations of the organisation are in one building or location. But there are several other factors in centralisation of authority that give geographical concentration (decentralisation). 5) Business dynami cs : The dynamic chara cter of a business will also affect the degree of decentralisation. If the business is growing fast the facing complex problems of expansion, the manager is forced to take major responsibility of taking decisions. This dynamic condition may force him to delegate authority to subordinates and take a calculated risk of their errors. The new discoveries, inventions, vigorous competition, political changes, new government regulations, liberation, globalisation, major labour troubles are some of the factors that might introduce dynamic conditions and when this occurs in an enterprise, the centrally managed firm may not be able to meet a situation requiring decentralised decision making. If the authority in the initial stage of an enterprise was completely 6) History of the enterprise : centralised in the few executive or owner, the delegation process is normally slow even in the expansion stage and the enterprise remains mostly centralised even after expansion. On the other hand when an enterprise is a result of amalgamation, consolidation of various units or companies, at least in the initial stages, it will be a case of a greater decentralisation. The subordinate managers and individuals amy resent when they 7) Desire for independence : have no freedom and the decisions are taken by absent management. They may be frustrated by the delay in getting the decision, long lines of communication and by the greater business game of passing the buck. This frustration may lead to dangerous loss of good men. Moreover every individual has a desire for recognition of status and for autonomy. This desire of self assertion, power and status requires that some delegati on of authority be made to subordinates to satisfy their desire of sel f assertion. More decentralisation leads to democratic way of doing and provides more freedom and power to subordinates. If there is a shortage of competent, honest and trained managerial 8) Availability of Mangers : personnel, it often leads to centralisation. But if the organisation has a good system of management training and development there will be no difficulty in having trained personnel. The decentralisation itself is the best key to training. Due to decentralisation the lower level managers get opportunity to take actual decision Effective control system is a pre-requistite of delegation of authority. 9) Control techniques : No good manager can be expected to delegate his authority unless he has some means to control for assuring himsel f that the authority will be used as he intended. As well as the managers need for understanding and utilizing appropriate control techniques, the state the development of these techniques are also limiting factors of decentralisation. 10) Nature of top management : When the top management does not want any interference from the subordinates the organisation tends to become centralised. And when the management wishes to have a democratic organisation, where people enjoy freedom, status, power and may make positvie contribution by exercising their initiative, the organisation becomes decentralised. 11) Environmental changes : Even some external factors which tend to mould the extent of decentralisation may include government controls, tax policies labour unionism etc. For example if the labour union enters into a collective bargaining with the management on wage scales, bonus etc. the terms of the collective agreement will have to be uniformly applied irrespective of the fact where the workers of company are working. so the government controls and regulations have to be uniformly

applied and regulated. This calls for centralisation as the top mangement cannot delegate authority to its subordinates for their individual interpretation and application of the rules and regulations. Thus the only way is to properly divide the work among several people of the organisation and yet maintain control, co-ordination and unity of direction and commonness of purpose.

Q uestions
1. What do you mean by departmentation ? Write its need and important 2. State the stages in the process of departmentation. 3. Write the merits of departmentation. 4. Explain the basis of departmentation and its merits and demerits. 5. Explain the factors influencing the choice of departmentation. 6. What do you mean by delegation ? 7. Define authority and responsibility. 8. What are the types of authority ? 9. What are the limits of authority ? 10. Describe the relationship between authoirty and responsibility and accountability 11. Define delegation and Explain its nature. 12. Describe the importance of delegation. 13. What are the basic principles of delegation. 14. How much should be delegated ? 15. How a delegation can be made effective ? 16. Explain the steps in delegation process. 17. What are the benefits/merits of delegation ? 18. State the obstacles or problems of delegation. 19. What are the obstacles in a subordinates accepting delegation or avoiding responsibilities? 20. Describe the types of delegation. 21. Define the term Centralisation. 22. Describe the need and importance centralisation. 23. What are merits of centralisation ? 24. Define the term decentralisation. 25. Explain the need of decentralisaiton. 26. State the Merits of decentralisation. 27. State the demerits of decentralisation. 28. Which factors causes decentralisation ? 29. State the factors determining the degree of decentralisation.

Meaning and scope of direction :


Management is essentially the art and process of getting things done through and with the people. The managers have, the responsibility not only of planning and organising the operations but also of guiding and directing the subordinates. Directing is the function that initiates organised action. Merely by formulating good objectives, aims or goals and policies, providing well designed, effective, efficient organisation structure, taking accurate decision, keeping effective control, the common objectives of business organisation cannot be realised unless proper direction is given to the subordinates. Main objective of directing is converting the managerial plans and decisions into effective actions. Directing is a powerful step in management process and is aimed at encouraging subordinates through adequate leadership to direct their exertions towards departmental and ultimately organisational objective or goals. Directing is the connecting link between managerial decisions and operating actions. Direction is acutally a continuing function of managers. It is a managerial function performed by all the managers at all the levels of the organisation. Direction also implies the creati on of an appropriate work environment which woul d release the creati ve powers of the subordi nates. It presupposes an understanding of human behaviour. Application of human nature is the basis of effective directing.

Definitions :
According to Haimann : Directing consists of t he process and echniques utilized in issuing instructions and making certain that operations are carried on as originally planned. Directing is the process around which all performances revolve It is the essence of operations and co-ordination is a necessary by-product of goods managerial directing. According to Knootz , Direction is the execution of guidance and overseeing subordinates. According to William Newman , Directing (activating) deals with the steps a manager takes to get subordinates and others to carry out plans. According to Dale, Directing is telling people what to do and seeing that they do it to the best of their ability. According to Theo Hain , Direction consists of the process and techniques utilised in issuing instructions and making certain that the operations are carried out as originally planned. According to S. Chatterjee , Direction is the sum total of managerial efforts that are applied for guiding and inspiring the working teams to make better accomplishments in the organisation. Thus direction in simple words is, guiding subordinates in doing work. In managerial field, direction is a complex function that includes all those activities which are designed to encourage the subordinates to work effectively and efficiently in both short and long run. Following are the essential components of direction. Henry Fayol has identified direction as the function (i) Issue of instructions and orders : of command. While a manager issues orders, he should keep in his mind that he is dealing with people.

(ii) Guiding the people : Mangement is the process of getting things done. It is, therefore, necessary for the manager to guide and teach right methods, to his subordinates. (iii) Supervising the people : Management has to supervise the subordinates to ensure that their performance confirms to the plans. That is why Koontz and O Donnell has defined direction as an executive function of guiding and observing subordinates. Thus the scope of directing becomes very wide. It consists of commandi ng, supervi sion, communication, leadership and motivation. The terms, order, inst ructi on, command and di rective have been used interchangeably by the managements scholars. These are basic tools of dirction by which activities are started, terminated, guided and altered. It is implied that an order or instruction can be issued by a superior only. Anot her implicati on of direction is that the order is enforceable because the superior has t he authority for that purpose. He can use either rewards or punishments to get his order implemented. The orders or instructions may be issued either orally or in writing depending upon the relations between the superior and subordinates. Supervision means observing the subordinates at work to see that they re working according to the plans and policies of the business organisation. The mangers at all levels are generally engaged in direct contact with the subordinates, but the lowest level managers have, as their primary duty, to supervise the workers in basic operations. That is why the managers at the lowest level are known as supervisors. A supervisor is also known by different designations such as foreman, chargeman, overseer, superintendent, section officer etc. He gives orders and instructions to the workers and is responsible to the departmental manager for the performance of the workers under his change. In a broader sense, directing is providing all guidance and inspiration to people at work in order to carry out their assigned duties and responsibilities. Order, instruction supervision, motivation, leadership, guidance etc. directly come under the scope of direction. Direction needs motivation, leadership as well as supervision. Directing deals exclusively with people. It must be centred around the people. Hence, it is also called leading or actuating.

Nature of direction :
Directing plays a vital role in an organisation. Direction is a complex function that includes all those activities which are designed to encourage subordinates to work efficiently and effectively. The scope of direciton is wide. Modern management thinkers recognise directions an independent function of the management. process. Direction has four elements viz., supervision, motivation, leadership, communication.

Importance of direction :
Direction as an indispensable managerial function, since it is mainly concerned with human relations. Direction plays a very important role in management. Planning, organising and staffing are not enough. The management must stimulate action by giving orders to the subordinates and by supervising them as they proceed with their work. Direction is the heart of administration. It is the direction to subordinates only that secures greater or less efforts from employees and make. The performance satisfactory or unsatisfactory. Managements ability is to put to test by its capability of direction. Planning and organising are only preparations for works whereas performance and the real work begins with the directing function of management. Directi on motivates, direction commands and direction cont rols the organisation. Direction provides necessary leadership in the business. It is a process of integration

also. It is concerned with securing the fullest co-operation of poeople for the realisation of objectives. This co- operation can be achi eved only by good organisational communication, people oriented supervision and motivation. Favourable and healthy conditions must exist both within and outside the enterprise for enabling employees to develop their attitude to work. Directing play an important role in this process. It stimulates the plans and enlightens the organisation. It keeps the activies continued. As a matter of fact, without the issuance of directions or orders as well as without guiding and supervising the subordinates, nothing would be accomplished. Direction does not get only the workdone, but it develops future managers also.

Principles of Direction :
Direction is the sum total of managerial efforts that are a pplied for guiding and inspiring the subordinates to make better accomplishment in the organisation. It is concerned with the motivating, leadership, supervision and commanding of subordinates and securing their best co-operation. It is an art which is learnt from a long experience. But there are certain principles also whi ch should be observed by management in direction to its subordinates. All these principles can be divided into the following sections.

Principles of direction

Principles relating to the purpose of organisation i) Principle of maximum individual contribution ii) Principle of harmony of objectives. iii) Principle of efficiency of direction

Principles relating to the process of organisation i) Principle of unity of command ii) Principle of direct supervision iii) Appropriateness of direction techniques. iv) Principles of managerial communication v) Principle of effective leadership vi) Principle of motivation vii) Principle of group dynamics viii)Principle of flow of information ix) Principle of strategic use of information x) Principle of follow through

Principles relating to the purpose of organisation :

The success of an organisation (i ) Principle of maximum individual contribution or efforts : depends on the contribution made by people working in it. Every business organisation has a common objective, the accomplishment of which requires hard labour and sustained efforts of the employees engaged in different operations of the business. Therefore the managment should adopt such a technique of direction as will make a useful contribution in inspiring the employees to the achievement of the common goal and for that they must be ready to contribute their maximum efforts. (ii) Principle of harmony of objectives : The function of direction must try to remove the

conflict between individual goals and organisational goals. A manger must try to bring a bout coordination of individual motives of the personnel working in the organisation, with the enterprise goals. Henry Fayol laid stress on the fact that common interest must prevail over individual interest. Harmony of objectives makes the task of direction easy. When both the interests are harmonised through proper direction, the management will get better results from the work force. (iii) Principle of efficiency of direction : This principle calls for the use of appropriate techniques of direction, effective system of transmission, efficient and effective leadership and effective supervision. These guidelines are helpful to the management for efficient and effective direction to the employees.

Principles relating to the process of organisation :

This principle requires that all employees should get (i) Principle of unity of command : orders and instructions from one boss or superior only. The employees should know clearly to whom they are accountable. If this principle is not followed strictly it may create dual command, mutual conflict, mismanagement, indiscipline in the organisation. Therefore it is essential that one subordinate should report to one boss only. According to this principle; the superior should himself (ii) Principle of direct supervising : supervise the work of those working under him in order to ensure prompt and timely action. Every superior must maintain direct contact with his subordinates. It also helps to motivate and enhance the morale of employees. (iii) Appropriateness of direction techniques : There are various techniques of direction. Manager has to use the right technique in right situation. There are three common techniques in the hands of ma nagement : (a) consultative (b) Free rein and (c) a utocratic. They should be used according to circumstances. If the management wants to be successful in (iv) Principle of Managerial communication : direction, it requires an efficient and effective system of communication between the executive or boss and his subordinates. Effective communication or two way communicat ion ensures effective directi on. Misunderstanding between t he boss and subordinate can, thus be removed; mutual understanding and co-operation can be developed. (v) Principle of effective leadership : Leadership is the process of influencing individuals to achieve the goals of the organisation. If the boss possesses good leadership qualities and provides perfect leadership to his subordinates, they feel very happy and satisfied. A good leader is one who solves not only the work problems of the employees but also their personal problems. This attitude will win the help in easily changing the behaviour of the employees. (vi) Principle of motivation : Every manager has to provide such direction, which would inspire the employees to contribute fully towards the well-being of the organisation. Basically employees do not want to work to fullest honesty. Therefore, to get the co-operation and honest contribution from the employees, managers must inspire the employees by providing both financial and non-financial incentives for better performances. (vii) Principle of group dynamics : Basically there are two types of organisation, formal and informal. For getting the things done through and with people, managers must permit informal groups to supplement and upport the organisation. Managers can increase the effectiveness of direction by securing the co-operation of informal leader and groups. (vii) Pri nciple of fl ow of information : The use of both formal and informal channel s of

communication will prove to be extremely useful to the management in the accomplishment of this principle. This principle signifies that the efficency of direction is largely dependent upon the flow of information and the efficiency with which it is disseminated among those for whom it is meant. Though the existence of informal groups is not (i x) Principle of strategic use of information : good for the basic policy of the management, the management should identify such groups, recognise the dignity of such groups and make their use constructively in the attainment of enterprise goals. (x) Principle of follow through : Direction is a continuous process. Besides issuing directions, the managment should get feed back from the work force. Feed back makes direction effective by adjusting the wheel of mana gement in action. The task of management does not end with the formulation of policies. In addition, it is the prime responsibility of the management to see how far and to what extent the policies laid down by it, are being followed by the subordinates. Hence the significance of this principle can not be ignored.

Elements of direction :
Every manager has to issue orders and instructions to the employees, inspire them and guide them through the process of directing. According to Haimann, Direction consists of the process of techiniques utilised in issuing instructions and making certain that operations are carried out as originally planned.

The elements of dierction are as follows :

(1) Issue of instructions and orders must be in simple and understandable language. They should be very clear and complete. Orders and instructions may be communicated orally or in writing. They should be such that they are in the capability of the subordinates to accomplish. (2) Better mutual understanding and team spirit can be acheived by proper communication with the subordinates. Speedy and proper communication, therefore, becomes an important element of direction. (3) Proper leadership has to be provided for influencing subordinates behaviour towards the attainment of companys objectives. (4) Adequate supervision on subordinates has to be made to ensure that they use organisational resources effectively and efficiently. (5) Inspiring and motivating the subordinates is another element of direction because that only can assure the management about the fulfilment of its expectations. (6) Mainta in discipline by punishing t hose whose performance is not good and rewarding those employees whose performance is good.

Techniques of direction :
Effective direction can be achieved by adopting one or more of the ollowing techniques. The manager can utilise them according to the need of the situation. There are basically three broad techniques of direction namely consultative or participative, free rein and autocratic. The essential feature of this technique is that the 1) Consultative or participative technique : executive should consul t his subordinates regarding the feasibility, workability and the extent and content of a problem before taking a decision and issue a directive. Under this techniques manager can get best suggestions, ideas, opinions, from the subordinates. As well as he gets the knowledge of reactions of the subordinates in order to extract new ideas and help from them. But then the manger

must have sincere desire of securing suggestions from his subordinates. Many times a manager with no desire may simply pretend tobe consultative. But this attitude is dangerous and may cause conflicts leading to non accomplishment of task. Under this technique there is actually no danger to managers authority and powers, because ultimately decision is to be taken by him only. Right to take decisions ultimately lies in his own hands. The quantum of subordinates participation depends upon a number of factors such as the attitude, interest, liking, past experience of the subordinates, the nature and type of the problem, availability of time for olving the problem and so on. If the subordintes trust the managers, and believe that the boss knows the best regarding making decisions and giving directives, there is no need for consultative direction. But if the subordinates feel the superior to be incompetent, the boss should provide ample opportunity for consultation with the subordinates. It is always better if the subordinates are informed and supplied with necessary materials well in advance so as to enable them to think over it and give concrete suggestions. If managers or executives adopt this technique of direction they would be successful in securing great er co-operati on, enthusia sm, motivat ion and hi gher morale of t he subordinates. This ultimately would result in formation of better plans and better decisions because of pooling of experience, better communication, closer contacts and training, growth and experiences of the subordinates. All these merits can be enjoyed by the manager by extensive and careful application of consultative techniques. The technique suffers from the following shortcomings also. 1) If the subordinates form an opi nion that the manager is incompetent and incapable of taking decisions, they may undermine his authority and prestige. 2) Sometimes the discussion may lead to confusion and the ubordinates may not have any clear-cut directives from managers. 3) Sometimes the subordinates think consultation to be their right. Under this situation, if a manager takes some decision, even on important occasi ons, without consulting the subordinates, it may lead to disputes, frustration, confusion, misunderstanding etc. among the subordinates. 4) If this technique is not used properly, it may lead to unnecessary discussions, unhealthy and out-of the way criticism of the boss and even to insubordination. Under the free reign technique, the superiors motivate the 2) Free rein direction Techniques : subordinates to contribute their ideas, thoughts etc. for solving a problem. This technique is widely accepted by many managements. It shows the best and quick results, if the subordinates are highly educated. The free rein technique encourages and enables the subordinates to contribute their own initiative, independent thought, drive and ingenuity to the solution of the problem. This does not mean that this technique gives full freedom to the subordinates. The superior who adopts free rein technique must be sure that the subordinates know the overall objectives, their duties, responsibilities, policies, plans of the organisation and their role as well as jurisdiction. Then only he should assign the work to his subordinate and allow him to decide, the manner in which he has to proceed. But the superior must ensure that the subordinates are trust worthy, willing and capable of assuming responsibility. This technique would be followed by the superior when the sub-ordinates possess high intelligence, strong drive, high sense of responsibility etc. This type of directing gives pride to the capable men in their work. It develops their self confidence, motivates them to give independent thought. It develops their managerial ability and experience. In this type of direction technique there may be chances of difference

in the point of view of the manager and the subordinate. mistakes and continue to provide opportunity to the superior should not criticise and should not discourage great amount of patience and forfearance on the part of

Then the manager has to take risk of such subordinates to learn by their mistakes. The the subordinates. This technique requires a managers.

This technique is just the opposite of the free rein direction 3) Autocratic Direction Techniques : technique. Under this technique, the superior gives direct, clear and precise orders to his subordinates with detailed instructions as to how and what is to be done, The role of subordinates with detailed instructions as to how and what is to be done. The role of sub-ordinates is simple to implement. This technique is used in military organisation. Such superiors believe in minimum delegation of authority to sub-ordinates are expected to follow the instructions only. The manager has to perform both the functions namely planning and taking decisions. The manager strongly believes that, without detailed instructions from him, his subordinates would not properly carry out directives. Under his type of direction technique the subordinates depend totally upon their superiors. They do not think, and do not have any interest, and motivation in taking decisions. They stop thinking and taking initiative. They become Yes Men and bedient employees.Such subordinates become frustrated. They lack in self confidence. They are less motivated and less inspired. Naturally, they hardly acquire managerial ability. This technique obstructs subordinates from becoming future executives. Merits of this techniques are that managers can take quick decisions, quick implementation of such decision, quick problem solving. This also helps in maintaining peace and discipline. Employees are more obedient and can be effectively utilized.

Characteristics of good direction :

Following are the inherent characteristics of direction : Direction is concerned primarily with the 1) It is an important function of management : people who put the plans into action. It is one of the important functions of managers, in that they give proper, adequate direction, guidance to the subordinates. This function is not related with lower level of managment who directly deal with operative employees, engaged in achieving the organisational goals. At every level of management, manager has to perform the function of direction to his subordinates. In the absence of proper direction, assigned work can not be performed effectively and efficiently by the subordinates. One can plan, organise and staff, but nothing is accomplished until subordinates are taught what and how to do. Direction is ultimately concerned with getting things done. Direction is an executive 2) It is an executive function and extends from top to the bottom : function of high rank management. It involves determining the scope, giving orders and instructions and providing the dynamic leadership. Instructions are given by the manager to subordinates. Direction is not concerned only with the orders and 3) Direction has wide dimensions : instructions to work. It consists of supervision, communication and motivation too. It includes the study of motives to work and to see that how a man can contribute his maxi mum effort for the attainment of common objectives to his maximum capacity. Here the direction is related to the direction of subordinates. 4) Direct contact with the people : So it requires a direct contact with them. The manager or superior must have direct contact with their subordinates, then only he will be able to issue orders, instructions and full guidance to his subordinates. 5) It is a continuous activity : Direction is a continuous activity. Directions, once given, will not be useful and enough for future assignments. As such continuous flow of directions becomes

necessary, specially when new techniques are introduced, new assignment is given and so on. No relaxation can be given to management in the function of direction , as it is the very basis of future activities.

Q uestions
1. What do you mean by direction ? Define direction and Explain the scope of direction. 2. Describe the nature and importance of direction. 3. What are the principles of direction. 4. State the elements of direction. 5. Explain the techniques of direction. 6. What are the characteristics of good / ideal direction ?

Concept of Communication :


Effective and efficient working of an organisation depends upon effective communication system. It is possible for a manager to frame good plans, take good decisions, follow excellent organisation structure only with the help of proper link or communication with the working force. Communication is one of the most important functions of management like planning, organising, directing, control etc. Managements responsibility to get the things done by and through the people is just possible by communication. All the working instructions, orders reach the required destination i.e. the implementors through effective communication. Similarly all the suggestions, ideas, problems, difficulties, necessities, demands of the employees also go to the management through the communication system only. Therefore there must be a sound and effective communication network established by the top level of management. In the absence of communication in different levels of management nothing can be achieved. Someone has rightly said that effective directing involves effective communication. Communication system keeps the members informed about the things happening within and outside the business organisation. Planning, organising, decisions instructions, feed backs etc., on paper are otherwise static unless that achieve dynami sm and momentum. This dynamism and momentum is preached in these through communication. Entire organisation is activated and is put on wheels by the power and energy of communication. Communication system plays a vital role in an organisation like a nervous system in a human body. Therefore skill of communicating becomes an essential quality for every executive. The word communication has its root in the Latin word Communis i.e. common. It denotes imparting a common idea or it refers to the sharing of ideas, facts, opinions, information and understanding. The term communication refers to transmission of some information and understanding from one person to another.

Definations of communication :
Different authors and management thinkers defined the term communication differently. According to Willim Scott, Communication is a process which involves the tranmission and accurate application of ideas, ensured by feed back for the purpose of eliciting actions which will accomplish organisational goals. According to Prof. Das Gupta, To communica te is to inform, to tell, to show or to spread information. Whatever its etymological meaning from the managerial point of view, communication is the means by which a management gets its job done. it can affect both the morale and efficiency of employees.... Communication is a skill of management. According to McFarland , communication is a process of meaningful interaction among human beings. More specifically it is the process by which meanings are perceived and understandings are

reached among human beings. According to Ordway Tead , No business can exist without communication. Luthan defines communication as the transmission of commonly meaningful information. It is a personal process that involves the exchange of behaviours. Theo Haimann defines, communication fundamental and vi tal to all managerial action is the process of imparting ideals and making oneself understood by others. Allen defines, Communication is the sum of all the things one person does when he wants to create understanding in the minds of another. It is a bridge of meaning. It involves a systematic and continuous process of telling, listening and understanding. M. W. Cumming defines Communication is a process of conveying messages (facts, ideas, attitudes and opinions from one person to another so that they are understood.) According to Kelly it is a field of knowledge dealing with systematic application of symbols to acquire common information regarding an object or event. Sigbond views communication as the transmission and reception of ideas, feelings and attitudes both verbally and non-verbally eliciting a response. It is a dynamic concept underlying all kinds of living systems. Thus communication can be finally defined as a process of transmitting information, ideas, facts,opinions, attitudes, feedbacks, problems, difficulties etc. from top level to bottom level and from bottom level to top level as well as from person to person i.e. intrascaler with a view to meaningfully understanding them by others so that activation and interaction can be acheived and ensured in proper direction.

Characteristics of Communication :
After carefully study of all the above definitions we can enumerate the following characteristics of communication. 1) Communication is the tranfer or transmission of some information and understanding from one person to another. It i s t he process by which meanings are perceived and understandings are reached among human beings. 2) It is essentially a link or bridge of meaning between people. 3) Communication works as a feedback mechanism. 4) Communication aims at achieving organisational objectives by facilitating human interaction. 5) In the absence of communication system nothing can be achieved by given concern. 6) Communication is the part and parcel of an organisation.

Key elements of communication :

After studying the various definitions of communication the following key elements of communication become clear:

It is called as a process, because it consists of a series of 1) Communication is a process : steps. It is not an independent event. The steps in the process are emergence of ideas, placing them in some logical sequence and transmitting them through some media, received by some one at the other end, and the reaction of that person after receiving information or message and again reversing the journey, communication is thus, called a process. 3) Transmission --------------------- > 2) Working the idea (decision) 1) Emergence of idea Manager (communicator) Figure : A Simple communication process 1) Know


2) Understand 3) Feed back Subordinate (Receiver)

2) Communication involves tranmitti ng information and understanding : the information should not only be transmitted and received but also understood.

It means that

The concept 3) Information sender and receiver may be human or non-human objects : of communication is quite borader. It is wider field of human interchange of facts and opinions and not the media like telephone, telex, telegraph, radio and others. Communication i.e. transmission 4) Communication requires some channel or medium : can be made orally or in writing. Thus the words and paper assumes the nature of transmission media. But these are not the only mediums of communication. Even a silence can communicate some message. Radios, Televisions, Telexes, Telephones, letters etc. are general media of communi cation. Apart from this, atti tudes, behaviours, acti ons, gestures, and si lence ar e a lso effecti ve medi ums of communications. Communication can be made directly , consciously or unconcsiously. Transmitting information. (1) Upwards 5) Communication has three interlocking circuits : (2) Downwards and (3) Intra scaler, Upward circuit is aimed at knowing the idea, comments, actions, reactions, attitudes, reports, complains and grieva nces from the lower level. Such a circuit flows upwards. Downward circuit is meant for transmitting flow of instructions, directions, clarifications, interpretations of rules, orders, plicies and procedures, to lower level who has to implement them. Such a circuit has a downward flow. Intra scaler or cross contact circuit is for exchange of information between departmental heads, members, executives or between workers all of equal rank

Redfierd has given the following elements of communication :

1) A communicator : 2) Transmission : 3) Stimuli : 5) Response : 4) A communicate : A person who passes on the information. It is actual issuing of orders, instructions, directions or information. A receiver of the information.

It is a message, order, report or information A feedback or reaction of the receiver.

A manager should understand above basic key elements in order to make communication effective.

Objectives of communication :
Predetermined objectives of the business organisation can be achieved through communication network only. Companys objectives, plans, policies, procedures, rules regulations, budgets, orders, instructions, directions, programes, top managements expectations etc. pass through communication only. The following are the objectives of the communication. 1) To transmit information and develop understanding among working group, which is a must for group effort. 2) To develop positive attitude which is necessary for motivating the employees and gaining their co-operation and job satisfaction. 3) To strictly prohibit the misinformation, rumours gossip. This helps in reducing the emotional tensions of employees. 4) Workers can be made mentally prepared for changes by communicating such information in advance. 5) Another very important objective of communication is to motivate the employees for new ideas, suggestions, creative thinking, new methods of working, improvement in the product, working conditions, encouraging new methods, and there by reducing time, wastages in production activity. 6) Communication develops, maintains and improves better worker and management relations. 7) Communication ensures free exchange of information and ideas so that all the employees understand and accept them by responding to the status and authority of every one in the organisation. 8) Communicati on hel ps to satisfy employees basi c needs such as sel f-respect, status, recognition, attachment, sense of belonging, and identity etc. 9) Communication helps to entertain and maintain social relations among the employees. 10) Communication ensures security and conformity of plans, policies and objectives of The business organisation.

Importance of Communication :
The following factors indicate the importance of communication. Informed 1) Communication helps in keeping the employees informed and knowledge : and knowledged about the companys problems, aims and objectives, policies, plans, targets etc. The company as well gets knowledge about the employees problems, difficulties, demands, likes, dislikes, interest, attitudes etc. This enables management to manage them properly. Business enterprise 2) Smooth, stable and efficient functioning of the business organisation : can run smoothly, be stable and efficient with the help of communication network only. Every employee knows his role very well, The employees become informed of the expectations of the organisation from them. This motivates them to give better performance towards it.

It is through personal contacts or good 3) Communication works as a tool of supervision : communication that supervision of the subordinates is made. Next to personal observation is the communication system by which supervisors get report. Communication helps executives to take quick 4) Quick decision and its implementation : decisions and implementation of the same can be done without any delay. The decisions, are based on factual and continuous flow of information through communication. It is posssible to take correct and timely decision only in the event of continuous flow of factual information. The employees, also, are not hesitant in implementing such decisions. Because of communication sysem 5) Communication develops better industrial relations : all the disputes conflicts grievances of employees can be avoided and even if they crop up, they can be solved as early as possible. By communication system all types of 6) Communication develops better understanding : misunderstandings can be removed and better understanding among the employees and management is developed. Communication facilitates executives to acquire 7) Communication develops Managerial skill : more knowledge and share it with their subordinates. Communication itself is a learning process. All these ultimately results in developing managerial skill in all employees. Thus every member of the organisation accomplishes the assignment skilfully. One can find that the functioning of the organisation is going on scientifically and systematically. Communication is essentially a flux 8) Communication binds together the working group : that binds the concerned individuals together in group activities. Communication seeks 9) Communication ensures unity, co-ordination, co-operation etc. : to unify, coordinate and combine all the problems of the organisation. After solving the problems of the organisation, the attainment of predetermined objectives is possible only by coordination & cooperation. 10) Communication is a tool of motivation : which enhances morale of the employees. Communication is a fundamental tool of motivation

Through communi cation, 11) Communication ensures high productivity at a lower c ost : executives get new ideas, views, suggestions, from the workers, which ultimately are converted into higher production, the workers know their role very well by better understanding. Thus it helps in reducing the cost of production. With the help of planned communication 12) Communication facilitates sound management : net work, management succeeds in establishing link between different management functions, for example planning, organising, co-ordinating, direction and control. That is why Peter has rightly said, good communication is the foundation of sound managment. Communication makes available all 13) Communication takes the employees in confidence : the information to all concern. The employees, therefore can share it. this gives rise to the feeling of loyalty in employees. This is the way by which management takes the employees in confidence with the result that the targets are safely achieved.

Thus it becomes clear that communication is a management skill and it is an indispensable part of any management.

Functions fo Communication :
Actually importance and functions can not easily be separated from each other. Importance of anything is derived and assessed on the basis of functions provided and how they are used for the benefit of management. We have seen the importance of communication in the previous paragraphs. This importance is further strengthened by the following functions which Thayer - a management thinker, has told. about the needs of the employees individually, specially 1) Communication provides information in respect of guidance in their performance. Along with this, the management is able to collect information about the desires of the employees and can just assess their effect on employee morale and ultimately on performance. Naturally communication enables the management to take full care of the employee. It is the communication network that conveys the commands 2) Command and instructions : and instructions to the employees and gets a feed back. Their obligations, duties and responsibilities are made known to the employees by communication. All these help in easy and effective attainment of the objectives. This function is also known as influence and pursuation function. 3) The motivational function : It motivates the employees towards better perfromance and to exhibit a certain behaviour. Through communication management can convince the employees that their working actions should be organisationally beneficial. This function facilitates to integrate the efforts and activities of 4) The integrative functions : the employees in such a way, that business orgaisations objectives can be achieved ultimately. This function is possible only through the effective communication.

Types of communication :
Basically the whole communication system is of two types (i) Formal communication (ii) Informal communication. It is official and well set communication channel. it facilitat es 1) Formal communication : authoritative communication. The information, instruction, message dealing with technical or functional specialisation can also be conveyed more effectively by formal communication system. This type of communication is based on formal organisation structure where formal relationship exists. It takes place through official channels. For instance, departmental meetings, conferences, companys news bulletins, journals, publications, some special publications etc. This formal communication is generally rigid as well as slow. However a good control system is possible through formal communication. Generally groups of like minded and like ideological persons are 2) Informal communication : formed in any organisation. They have their own contentions and interpretations of the things (right or wrong). Whatsoever they discuss informally is spread throughout. Such a spreading may be called informal communication. Secondally the management may convey some information and guidelines to the employees throughs its supervisors. Conveying of information is such a way which is not the part

of formal cmmuni cation channel i s a lso informal communi ca tion. Both for ma l and infor ma l communication channels do exist in organisations. As far as informal organisation structure is concerned, there, necessarily, exists informal communi cation. Informa l communication has its acceptance in social groups. Such a communi cati on is like a grapevine which spreads al l through. Informal communication, though it is within the organisation, is not restricted only to official information. At times such a communication system gives rise to spreading of false and distorted information, gossips etc. as a result men in organisation are misinformed and misled. As a matter of fact informal communication should be supplementary to formal communication and should be carefully used for the benefit of all including the organisation itself. Both these channels provide opportunity to interaction among the members. Carefully and conscious use of informal channel may provide such information which the formal channel is not capable to. In other cases one should not totally rely upon the informal communication.

Other types of communication :

Both the above channels are based on the service they provide. Communication is further divided on the basis of ways of communication and how is it operated. They are : 1) Oral or written communication 2) Downward and upward communication 3) Vertical communication 4) Horizontal communication 5) Extra organisationa communication Generally informal communication is done 1) Oral or Silent and Written Communication : orally. But oral communication is resorted to when the communicatee is illiterate and uneducated as written communication is of no use to him. Such a communication is made with educated people also specially through speeches before elite audience. Seminars, Conferences, Meetings etc. are the places where oral communication is made. though it is an easy method it is not useful for conveying technical instructions or messages. This type of communication does not leave any proof behind. Naturally one may deny the things which he might have spoken. Secondly rules and regulations should necessarily be in written form. Oral communication should not always be relied upon. When messages and instructions are brought on papers in black and white and the papers provided, it is a written communication. This type of communication may be in the form of letters, memos, orders, booklets, standing orders, bulletins etc. It is an authentic form of communication. It is valid everywhere. It can be used as evidence in the court of law. It is a formal and official type of communication. The only draw-back in this is that it is time consuming and costly. Such a communication can be made with illiterates also as, such persons can get it explained from educated people. Downward communication flows from the top 2) Downward and upward communication : level to lowest level of management. Such a communication may pass through several point e.g. from General Manager-Asst.. General manager - Asst.. General Manager - Departmental manager -

shop boss-and so on. This type of communication is generally a written communication. If oral communication is resorted to in downward communication there is every fear that at every point there may be some addition or subtraction or distortion, as it is very difficult to reproduce the same words and sequence. Downward communication relates to issue of orders, i nstructions, general information, punishments, rewards, rules, regulations etc. Upward communication flows from lowest level to the top level. It is generally in the form of reporting to bosses regarding performance, accomplishments, difficulties, grievances and so on. It is a type of feedback to top level. Upward communication helps the management to know as to what is actually going on, on the floor and what are the opinions of the actual implementers. This may be oral or written. This type of communication flows from top to bottom as well 3) Vertical communication : as from the rank and file workers towards the management. It consist of downward and upward communication. It is also known as inter-scaler communication. Official top-to-bottom communication channels flow down with great force and reach many people but official bottom-to-top channels flow up with difficulty and reach to few people only. It is also known as crosswise or lateral or diagonal 4) Horizontal or lateral communication : communication. It takes place between managers or supervisors of the same status or of the same rank. It refers to flow of information between departmental managers i.e., people on the same level in an organisation. Horizontal communication is based on the concept of gang plank advocated by management thinker Henry Fayol. It allows two employees for example E and Z to deal at one sitting and in few hours, with some question or other, which via the Scaler chain would pass through twenty transmissions, inconvenience many people, involve masses of paper, spend lot of time to get a conclusion that is less satisfactory generally than the one which would have been obtained in direct contact as between E and Z. Though all the points (from A to Z) are in the same level, any communication from starting point will pass through all the points in between origin and destination and consume much more time i.e. information from E to Z will flow like from E D C ....... X YZ and in return again same number of points i.e. Z Y Z ... C DE which measures to be so.

Henry Fayols Gang-Plank concept

Horizontal communication is essential because activities of different departments need co-ordination for achieving organisational goal. This type of communication takes place between 5) Extra organisational communication : different agencies outside the organisation and the people within it. This communication is done through letters, annual reports to the creditors, bankers, the governement and trade organisations.

Scope, Media, Essentials of effective communication :

Scope of communication : Communication is as necessary to an organisation as the blood-stream is to a person. It is a basic tool for motivation and an increase in the morale of the employees which largely depends upon the effectiveness of communication. Supervision and leadership are impossible without communication. Communication is also a means of bringing about maximum production at the lowest cost by maintaining good human relations in the organisation, by encouraging suggestions and implementing them, whenever feasible. In fact it is impossible to have human rel ation withut communication. Many conflicts and misunderstandings can be resolved to a great extent by a good communication skill on the part of the management. It becomes clear that communication has a very wide scope. The scope of communication can be described as under. In olden days, that is before the industrial revolution, when the 1) One way Communication : size of business organisation was limited, the scope of communication was also limited. At that time, one way communication was in existance. It was considered as a powerful tool in the hands of the management to get the things done through employees. One way communication can be called as a downward communication, which usually provides no scope for the rank and file people to show their reaction or forward their opinions, point of views or suggessions to the top level poeple. In modern times one way communication has become outdated, obsolete, inefficient and ineffective. In one way communication there is a transmission of ideas or information from executives to the subordinates. it is generally directive in the sense that it causes action to be initiated by subordinates. In todays environment one way communication is not suitable at all. In the global business world two way communication is always 2) Two way Communication : wel comed. There is a wide scope for thi s type ofcommunication. Thi s upward and downward communication completes of circuit. In this circuit communication goes in upward and as well as in downdard direction. The communicator and the receiver get an opporunity to intereact wit h each other and exchange their ideas, opinions, viewpoints, suggestions and emotions etc. Whenever the orders regarding work are issued by the top level to the bottom level of organisation under tow way communication the employees/workers get an opportuity to express and convey to the top level people, their reactions, feelings, opinion, ideas, suggestions etc. freely. It is the duty and responsibility of the supervisor to know, how and what to communicate to the higher executives. Two way communication helps in building the mutual trust, co-operation, better understanding, mutual respect, between the management and employees which ultimately helps in improving industrial relations and peace. Last but not least, a good communication system should be like a two way traffic, and both the transmitter and the receiver have a joint role in making this communication effective. In modern business organisation there 3) Intra-organisational (Internal) communication : are a number of departments established to perform the specialised business activities. Therefore it is

necessary to integrate and co-ordinate the activities of these different departments for achieving the common objectives of the organisation. It is necessswary to establish intra-organisationsal /Internal/ interdepartment /commuication which helps in developing a link between various departments and brings in mutuality of interest, team spiri t, team work, co-operative att itude among t he personnel working in the organisation. This can be done either through formal or informal communication. Intra-orga nisational communication may be called as i ntra-scal are communi ca tion. It is a communication from persons at one level in an organisation to others at the same level. It provides a means by which managers at the same level of an organisation co-ordinate their activities without refering all the matters to their superior. the main idea behind this is, that a lot of matters can be handle at the same level of an organi sation which relieves superiors of necessary problems and they can devote their precious time to other important matters. In the global business worl d, intra 4) Extra-organisational (external) communication : organisational communication is not sufficient and adequate. Every business organisation comes into conta ct wi th different segments of the society such as bankers, fina ncial i nsti tutes, creditors, underwriters, shareholders, customers, solicitors, auditors, chartered accountants, traders, government authorities, suppliers, investors, community at large etc. Therefore it becomes necessary to interact and communicate with these parties regularly to establish good rapport and relationship with them and thereby winning their trust and confidence. A Good extra organisational communication helps in enhancing the image and goodwi ll of the company. In simpl e words thi s extra-organisat ional communication is the communication between agencies outside the organisation and the people within it.

Media of communication :
Due to the development in science and technology a number of communicati on medias are available, and one has to choose the appropriate one. generally it depends upon a variety of factors such as parties, their relationship with each other,place, distance, nature and importance of the message, time, money etc., Basically medium of communication is classified into two categories. 1) Through channel of command 2) Miscellaneous There exist different levels of management 1) Communication through channel of command : in an organisational framework. It is through the chain of command the instructions and orders of top level executive pass on to the lower level of managment. The plans, policies, rules and procedures targets, objectives, schemes, programmes etc., of the organisation are communicated by the top level executive personnel through chain of command to the lower level of management. For instance from chief executive to departmental managers, supervisors, foreman and then workers. It is a fundamental media of communication. Miscellaneous : Due to the large size business organisat ions, large number of employees, complexities etc. communication t hrough channel of command is not proved to be convenient and feasible in all situations and in all times. Delay, avoidance of responsibility, red-tapism, bureaucratic attitude etc. are the main hurdles in this communication. These obstacles can be removed in a better way by the miscellaneous medium of communication as follows :

The employee handbook is aimed to help in the induction of newcomers i) Employee handbook : and to provide all the employees of the organisation, a cl ear-cut understanding of policies, plans, objectives of business organisation as well as the nature of the business, its sources of supplies, its customers, its products and benefit and services available ito its employees. Such handbook creates an interest in the employee and he begins to feel that the firm takes interest in him and takes care of the employees. Thereby the newcomer tries to learn about the progress, development and growth of the organisation, right from his induction. Some business organisations publish empl oyees ii) House Magazines and Newspapers : magazines or journals, to acquaint the employees with the development in the business, the activities of the business, the personnel working in the organisation. It is a platform whereon top management can come together in an informal and direct terms with its employees. This ultimately develops team spirit and mutual understanding between them. Such magazines generally contain news, perosnal and social items such as sreferences to parties, marriage, birth, retirements, honours, awards, pictures of the plant, product and changes in it etc., stories of promotions, retirement s, homemaking activities, sport, suggestions and safety measures, which motivate the employees. iii) Employees paper : Employees paper is an important and excellant means of communication. Few pages of the paper are exclusively reserved for employees voice in the form of letters. It also includes safety news, suggestions, transfers, promotions, sports, recreation, description of progress and how every employees job fits in to the total plant operation, increased or decreased production, plant expansion, newplant, annual reports etc. The most commonly used media for communication of iv) Financial report to employe es : reports is speci al pamplhl et, employee magazine etc. The fact about the financial position of the business organisation is described in it, such as the expenses of the business, its profits, losses, its income and distribution, wages and investments etc. This report indicates the financial position and market standing of the business organisation and can create understanding between the managment and its employees. The published statements generally cover the personnel policies and v) Published statements : give clear picture of employer employee relations. It is in written form and in a very simple language. It is in a booklet form coverning the various subjects like provident fund, pension plans, production bonus, profit sharing, co-operat ive soci ety, sta nding orders, grat uity etc. These booklets are very useful in communicating the above mentioned subject matter. vi) Display stands : The di splay stands or information racks are placed at such places from where the employees frequently pass, for example, the front lobby, carridor, the shop floor, at factory gate, cafeterias, canteen etc. Pamphlets, booklets etc.,are either displayed on the display stands or kept in information racks, so that employees eyes fall on them every now an