National Institute of Business Management

Chennai - 020

FIRST SEMESTER EMBA/ MBA

Subject : Principles and Practices of Management

Attend any 4 questions. Each question carries 25 marks

(Each answer should be of minimum 2 pages / of 300 words)

1. Explain the principles of Scientific Management by Taylor.

2. Explain the major steps in planning.
3. Explain the limitations of Planning.
4. Examine the objectives of manpower Planning.
5. A selection process involves a number of steps.What are
they. Explain the steps.
6. Describe the methods of performance appraisal.

25 x 4=100 marks
 ANSWER
1. Explain the principles of Scientific Management by Taylor.

Fundamentals of Scientific Management

THE principal object of management should be to

secure the maximum prosperity for the employer,
coupled with the maximum prosperity for each
employee.

The words maximum prosperity are used, in their

broad sense, to mean not only large dividends for the
company or owner, but the development of every
branch of the business to its highest state of
excellence, so that the prosperity may be permanent.

In the same way maximum prosperity for each

employee means not only higher wages than are
usually received by men of his class, but, of more
importance still, it also means the development of each
man to his state of maximum efficiency, so that he may
be able to do, generally speaking, the highest grade of
work for which his natural abilities fit him, and it further
means giving him, when possible, this class of work to
do.

It would seem to be so self-evident that maximum

prosperity for the employer, coupled with maximum
prosperity for the employee, ought to be the two
leading objects of management, that even to state this
fact should be unnecessary. And yet there is no
question that, throughout the industrial world, a large
part of the organization of employers, as well as
employeee, is for war rather than for peace, and that
perhaps the majority on either side do not believe that
it is possible so to arrange their mutual relations that
their interests become identical.

The majority of these men believe that the

fundamental interests of employeee and employers are
necessarily antagonistic. Scientific management, on the
contrary, has for its very foundation the firm conviction
that the true interests of the two are one and the same;
that prosperity for the employer cannot exist through a
long term of years unless it is accompanied by
prosperity for the employee, and vice versa; and that it
is possible to give the workman what he most wants--
high wages--and the employer what he wants--a low
labor cost--for his manufactures.

It is hoped that some at least of those who do not

sympathize with each of these objects may be led to
modify their views; that some employers, whose
attitude toward their workmen has been that of trying
to get the largest amount of work out of them for the
smallest possible wages, may be led to see that a more
liberal policy toward their men will pay them better;
and that some of those workmen who begrudge a fair
and even a large profit to their employers, and who feel
that all of the fruits of their labor should belong to
them, and that those for whom they work and the
capital invested in the business are entitled to little or
nothing, may be led to modify these views.

No one can be found who will deny that in the case of

any single individual the greatest prosperity can exist
only when that individual has reached his highest state
of efficiency; that is, when he is turning out his largest
daily output.

The truth of this fact is also perfectly clear in the case

of two men working together. To illustrate: if you and
your workman have become so skilful that you and he
together are making two pairs of shoes in a day, while
your competitor and his workman are making only one
pair, it is clear that after selling your two pairs of shoes
you can pay your workman much higher wages than
your competitor who produces only one pair of shoes is
able to pay his man, and that there will still be enough
money left over for you to have a larger profit than your
competitor.
 In the case of a more complicated manufacturing
establishment, it should also be perfectly clear that the
greatest permanent prosperity for the workman,
coupled with the greatest prosperity for the employer,
can be brought about only when the work of the
establishment is done with the smallest combined
expenditure of human effort, plus natures resources,
plus the cost for the use of capital in the shape of
machines, buildings, etc. Or, to state the same thing in
a different way: that the greatest prosperity can exist
only as the result of the greatest possible productivity
of the men and machines of the establishment--that is,
when each man and each machine are turning out the
largest possible output; because unless your men and
your machines are daily turning out more work than
others around you, it is clear that competition will
prevent your paying higher wages to your workmen
than are paid to those of your competitor. And what is
true as to the possibility of paying high wages in the
case of two companies competing close beside one
another is also true as to whole districts of the country
and even as to nations which are in competition. In a
word, that maximum prosperity can exist only as the
result of maximum productivity. Later in this paper
illustrations will be given of several companies which
are earning large dividends and at the same time
paying from 30 per cent. to 100 per cent. higher wages
to their men than are paid to similar ,men immediately
around them, and with whose employers they are in
competition. These illustrations will cover different
types of work, from the most elementary to the most
complicated.

If the above reasoning is correct, it follows that the

most important object of both the workmen and the
management should be the training and development
of each individual in the establishment, so that he can
do (at his fastest pace and with the maximum of
efficiency) the highest class of work for which his
natural abilities fit him.

These principles appear to be so self-evident that

many men may think it almost childish to state them.
Let us, however, turn to the facts, as they actually exist
in this country and in England. The English and
American peoples are the greatest sportsmen in the
world. Whenever an American workman plays baseball,
or an English workman plays cricket, it is safe to say
that he strains every nerve to secure victory for his
side. He does his very best to make the largest possible
number of runs. The universal sentiment is so strong
that any man who fails to give out all there is in him in
sport is branded as a quitter, and treated with
contempt by those who are around him.

When the same workman returns to work on the

following day, instead of using every effort to turn out
the largest possible amount of work, in a majority of
the cases this man deliberately plans to do as little as
he safely can--to turn out far less work than he is well
able to do--in many instances to do not more than one-
third to one-half of a proper days work. And in fact if
he were to do his best to turn out his largest possible
days work, he would be abused by his fellow-workers
for so doing, even more than if he had proved himself a
quitter in sport. Underworking, that is, deliberately
working slowly so as to avoid doing a full days work,
soldiering, as it is called in this country, hanging it
out, as it is called in England, ca canae, as it is
called in Scotland, is almost universal in industrial
establishments, and prevails also to a large extent in
the building trades; and the writer asserts without fear
of contradiction that this constitutes the greatest evil
with which the working-people of both England and
America are now afflicted.

It will be shown later in this paper that doing away

with slow working and soldiering in all its forms and
so arranging the relations between employer and
employee that each workman will work to his very best
advantage and at his best speed, accompanied by the
intimate cooperation with the management and the
help (which the workman should receive) from the
management, would result on the average in nearly
doubling the output of each man and each machine.
What other reforms, among those which are being
discussed by these two nations, could do as much
toward promoting prosperity, toward the diminution of
poverty, and the alleviation of suffering? America and
England have been recently agitated over such
subjects as the tariff, the control of the large
corporations on the one hand, and of hereditary power
on the other hand, and over various more or less
socialistic proposals for taxation, etc. On these subjects
both peoples have been profoundly stirred, and yet
hardly a voice has been raised to call attention to this
vastly greater and more important subject of
soldiering, which directly and powerfully affects the
wages, the prosperity, and the life of almost every
working-man, and also quite as much the prosperity of
every industrial establishment in the nation.

The elimination of soldiering and of the several

causes of slow working would so lower the cost of
production that both our home and foreign markets
would be greatly enlarged, and we could compete on
more than even terms with our rivals. It would remove
one of the fundamental causes for dull times, for lack of
employment, and for poverty, and therefore would
have a more permanent and far-reaching effect upon
these misfortunes than any of the curative remedies
that are now being used to soften their consequences.
It would insure higher wages and make shorter working
hours and better working and home conditions
possible.
 02. Explain the major steps in planning.
Planning Process in Management (8 Steps)
Following steps are taken in planning process:

1. Recognizing Need for Action:

The first step in planning process is the awareness of business

opportunity and the need for taking action. Present and future
opportunities must be found so that planning may be undertaken
for them. The trend of economic situation should also be
visualized. For example, if thinking of the government is to
develop rural areas as industrial centres, a farsighted
businessman will think of setting up units suitable to that
environment and will avail the facilities offered for this purpose.
Before venturing into new areas the pros and cons of such
projects should be evaluated. A beginning should be made only
after going through a detailed analysis of the new opportunity.

2. Gathering Necessary Information:

Before actual planning is initiated relevant facts and figures are

collected. All information relating to operations of the business
should be collected detail. The type of customers to be dealt with,
the circumstances under which goods are to be provided, value of
products to the customers, etc. should be studied in detail. The
facts and figures collected will help in framing realistic plans.

3. Laying Down Objectives:

Objectives are the goals which the management tries to achieve.

The objectives are the end products and all energies are diverted
to achieve these goals. Goals are a thread which bind the whole
company. Planning starts with the determination of objectives.
The tie between planning and objectives helps employees to
understand their duties. Objectives are the guides of employees.
It is essential that objectives should be properly formulated and
communicated to all members of the organization.

4. Determining Planning Premises:

Planning is always for uncertain future. Though nothing may be

certain in the coming period but still certain assumptions will
have to be made for formulating plans. Forecasts are essential for
planning even if all may not prove correct. A forecast means the
assumption of future events. The behaviour of certain variables is
forecasted for Constituting planning premises.

Forecasts will generally be made for the following:

(a) The expectation of demand for the products.
(b) The likely volume of production.
(c) The anticipation of costs and the likely prices at which
products will be marketed.
(d) The supply of labour raw materials etc.
(e) The economic policies of the government.
(f) The changing pattern of consumer preferences.
(g) The impact of technological changes on production processes.
(h) The sources for supply of funds.

It is on the basis of these forecasts that planning is undertaken.

The success or failure of planning will depend upon the forecasts
for various factors mentioned above. If the forecasts are accurate
then planning will also be reliable. The effect of various factors
should be carefully weighed.

5. Examining Alternative Course of Action:

The next step in planning will be choosing the best course of

action. There are a number of ways of doing a thing. The planner
should study all the alternatives and then a final selection should
be made. Best results will be achieved only when best way of
doing a work is selected. According to Koontz and ODonnell,
There is seldom a plan made for which reasonable alternatives
do not exist. All the pros and cons of methods should be weighed
before a final selection.

6. Evaluation of Action Patterns:

After choosing a course of action, the next step will be to make an

evaluation of those courses of actions. Evaluation will involve the
study of performance of various actions. Various factors will be
weighed against each other. A course of action may be suitable
but it may involve huge investments and the other may involve
less amount but it may not be very profitable. The evaluation of
various action patterns is essential for proper planning.

7. Determining Secondary Plans:

 Once a main plan is formulated then a number of supportive plans
are required. In fact secondary plans are meant for the
implementation of principal plan. For example, once production
plan is decided then a number of plans for procurement of raw
materials, purchase of plant and equipment, recruitment of
personnel will be required. All secondary plans will be a part of
the main plan.

8. Implementation of Plans:

The last step in planning process is the implementation part. The

planning should be put into action so that business objectives
may be achieved. The implementation will require establishment
of policies, procedures, standards and budgets. These tools will
enable a better implementation of plans

04. Examine the objectives of manpower Planning?

Objectives of Manpower Planning:

Proper utilization of your workforce can help you save money

now, and as you plan for your company's future. Manpower
planning requires the interaction of departmental managers with
your human resources professionals to maintain current staff
levels and plan for future workforce needs. Use manpower
planning to provide a framework by which your company can
prepare for and monitor future growth

Staffing Levels

Staffing levels can change based on company growth,

losses due to layoff or temporary and seasonal employment
needs. The objective of manpower planning is to forecast
 staffing level needs and work with company managers to
make sure each department is properly staffed. The human
resources group plans for seasonal rises in employment
needs to insure that production levels and customer service
quality are not affected. This includes working with
temporary agencies to supply seasonal staff and running
employment advertisements that bring in part-time
candidates.

Future Needs

One of the functions of manpower planning is to anticipate

the future skill set needs of the company and begin the
process of finding qualified candidates. The human
resources department needs to be involved in all aspects of
business planning to prepare for recruiting in job duties that
the company has not dealt with in the past. For example, a
toy manufacturer decides to get into the radio-controlled toy
market and needs to hire technicians and engineers to
design and make the toys that the company has never
made in the past.

Skill Matching

It is less expensive to utilize existing personnel than to

hire new employees to fulfill job needs within the
organization. Hiring new employees requires recruiting
costs, training expenses and the cost of low productivity as
the new employee settles into his job. Manpower planning
 involves tracking each employee's skill set, which allows the
company to move employees around within the company to
prevent having to look outside the company. For example,
an accounts payable employee who has payroll skills can be
moved into the payroll department with a high level of
competence.

Efficiency

A company needs to efficiently utilize its workforce to

maintain productivity and also keep employee morale high.
Developing part-time positions, creating different work
shifts, offering overtime to compensate for increased
production needs and maintaining a pertinent training
program are ways that manpower planning maximizes
workforce efficiency. Shift options and offering employees
the tools they need to do their job, such as training, help to
maintain employee morale.

The objectives or importance of manpower planning are given

below:

1. Optimum Productivity:

Skilled and qualified workers are recruited or they become so

through the training programme provided by the organization,
through the manpower planning. Hence, an organization can
achieve the effective optimum utilization of human potential,
which will result in optimum productivity and thereby, the
production is carried out on uninterrupted.

2. Reduction in Labour cost:

Effective use of manpower, and optimum productivity will reduce
the wastage. It will reduce the labour cost.

3. Effective Recruitment and Selection:

Right person can be placed at the right job and at right time
through manpower planning. Because future need can be
predicted by manpower planning. Therefore, effective recruitment
and selection can be achieved so that no need to spend much
amount on the training and labour turnover can be reduced.

4. Group Satisfaction:

By establishing mutually satisfying work relationship between all

the members of the organization, group satisfaction & team spirit
can be achieved.

5. It helps in maximizing individual development.

6. Effective manpower planning may help the management in

developing the good employer-employee relationship. It leads to
improve industrial relations.

7. It maximizes the contributions & the satisfaction of the

employees of a business.

8. It gives due consideration to the capacities, interests,

opportunities and reactions of the workers.

9. To develop the future training and management development

needs.

10. To avoid the staff surplus and unnecessary dismissals in the

manpower planning.

11. To control the wages and salary costs.

06. Describe the methods of performance appraisal.

Individual Evaluation Methods

Under the individual evaluation methods of merit rating,
employees are evaluated one at a time without comparing them
with other employees in the organization.

(a) Confidential report: It is mostly used in government

organizations. It is a descriptive report prepared,
generally at the end of every year, by the employee's
immediate superior. The report highlights the strengths
and weaknesses of the subordinate. The report is not
databased. The impressions of the superior about the
subordinate are merely recorded there. It does not offer
any feedback to the appraisee.

The appraisee is not very sure about why his ratings have
fallen despite his best efforts, why others are rated high
when compared to him, how to rectify his mistakes, if any;
on what basis he is going to be evaluated next year, etc.
Since the report is generally not made public and hence
no feedback is available, the subjective analysis of the
superior is likely to be hotly contested. In recent years,
due to pressure from courts and trade unions, the details
of a negative confidential report are given to the
appraisee.

(b) Essay evaluation: Under this method, the rater is asked to

express the strong as well as weak points of the employee's
behavior. This technique is normally used with a combination of
the graphic rating scale because the rater can elaborately present
the scale by substantiating an explanation for his rating. While
preparing the essay on the employee, the rater considers the
following factors:

(i) Job knowledge and potential of the employee;

(ii) Employee's understanding of the company's

programmes, policies, objectives, etc.;

(iii) The employee's relations with co-workers and superiors;

 (iv) The employee's general planning, organizing and
controlling ability;

(v) The attitudes and perceptions of the employee, in

general.

Essay evaluation is a non-quantitative technique. This method is

advantageous in at least one sense, i.e., the essay provides a
good deal of information about the employee and also reveals
more about the evaluator. The essay evaluation method however,
suffers from the following limitations:

It is highly subjective; the supervisor may write a biased

essay. The employees who are sycophants will be evaluated
more favorably then other employees.
Some evaluators may be poor in writing essays on employee
performance. Others may be superficial in explanation and use
flowery language which may not reflect the actual performance
of the employee. It is very difficult to find effective writers
nowadays.
The appraiser is required to find time to prepare the essay. A
busy appraiser may write the essay hurriedly without properly
assessing the actual performance of the worker. On the other
hand, appraiser takes a long time, this becomes uneconomical
from the view point of the firm, because the time of the
evaluator (supervisor) is costly.

(c) Critical incident technique: Under this method, the manager

prepares lists of statements of very effective and ineffective
behavior of an employee. These critical incidents or events
represent the outstanding or poor behavior of employees on the
job. The manager maintains logs on each employee, whereby he
periodically records critical incidents of the workers behavior. At
the end of the rating period, these recorded critical incidents are
used in the evaluation of the workers' performance

(d) Checklists and weighted checklists: Another simple type of

individual evaluation method is the checklist. A checklist
represents, in its simplest form, a set of objectives or descriptive
statements about the employee and his behavior. If the rater
believes strongly that the employee possesses a particular listed
trait, he checks the item; otherwise, he leaves the item blank. A
more recent variation of the checklist method is the weighted list.
Under this, the value of each question may be weighted equally
or certain questions may be weighted more heavily than others.

(e) Graphic rating scale: Perhaps the most commonly used

method of performance evaluation is the graphic rating scale. Of
course, it is also one of the oldest methods of evaluation in use.
Under this method, a printed form, as shown below, is used to
evaluate the performance of an employee. A variety of traits may
be used in these types of rating devices, the most common being
the quantity and quality of work. The rating scales can also be
adapted by including traits that the company considers important
for effectiveness on the job

(f) Behaviorally anchored rating scales: Also known as the

behavioral expectations scale, this method represents the latest
innovation in performance appraisal. It is a combination of the
rating scale and critical incident techniques of employee
performance evaluation. The critical incidents serve as anchor
statements on a scale and the rating form usually contains six to
eight specifically defined performance dimensions.

(g) Forced choice method: This method was developed to

eliminate bias and the preponderance of high ratings that might
occur in some organizations. The primary purpose of the forced
choice method is to correct the tendency of a rater to give
consistently high or low ratings to all the employees. This method
makes use of several sets of pair phrases, two of which may be
positive and two negative and the rater is asked to indicate which
of the four phrases is the most and least descriptive of a
particular worker. Actually, the statement items are grounded in
such a way that the rater cannot easily judge which statements
apply to the most effective employee.

(h) Management by Objectives (MBO): MBO represents a modern

method of evaluating the performance of personnel. Thoughtful
managers have become increasingly aware that the traditional
performance evaluation systems are characterized by somewhat
antagonistic judgments on the part of the rater. There is a
growing feeling nowadays that it is better to make the superior
work with subordinates in fixing goals. This would inevitably
enable subordinates to exercise self-control over their
performance behaviors.