PRINCIPLES OF

MANAGEMENT

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 INDEX

SR. NO. TOPIC PAGE NO

1. NATURE OF MANAGEMENT 3

2. DEVELOPMENT OF MANGEMENT THOUGHT 15

3. PLANNING 30

4. FORECASTING 36

5. OBJECTIVES AND MBO 42

6. DECISION MAKING 56

7. ORGANIZATION 51

8. DELEGATION OF AUTHORITY AND 60

DECENTRALIZATION
9. DEPARTMENTATION 66

10. SPAN OF MANGEMRNT 72

11. TYPES OF ORGANIZATION 75

12. ORGANIZATION CHARTS AND MANUALS 83

13. STAFFING 88

14. DIRECTION 91

15. LEADERSHIP 118

16. SUPERVISION 124

17. CONTROLLING 127

18. CO-ORDINATING 134

19. 14 PRINCIPLES OF MANGEMENT 139

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 1 NATURE OF
MANAGEMENT

Introduction

A business develops in course of time with complexities. Management is not only essential
to business concerns but also essential to Banks, business concerns but also essential to Banks,
Schools, Colleges, Hospitals, Hotels, Religious bodies etc. Every business unit has objectives of its
won. These objectives can be achieved with the co-operative efforts of several personnel. As E.
Demock has rightly said the management is not a matter of pressing a button, pulling a lever,
issuing orders, scanning P & L statement, promulgating rules and regulations. Rather it is the power
to determine what shall happen to the personalities and happiness of entire people, the power to
shape the destiny of a nation and of all the nations which make up the world

A team is not made only of individuals.

A team is made of a common goal and
a common ideal. A common cause,
and a motivating force is
the spirit of the team.

Meaning of Management

Management is the art of getting things done by a group of people with the effective
utilization of available resources. There are various definitions given by various management gurus
but simply management is the process consisting of the functions of planning, organizing, staffing,
directing and controlling the operations to achieve specified objectives

Features or Characteristics of Management

1. Art as well as science

2. Management is an activity
3. Management is a continuous process
4. Management achieving pre-determined objectives:

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 5. Organized Activities
6. Management is a factor of production
7. Management as a system of activity
8. Management is a discipline
9. Management is a purposeful activity
10. Management is a distinct entity
11. Management aims at maximizing profit
12. Decision making
13. Management is a profession
14. Universal application
15. Management is getting things done
16. Management as a class or a team
17. Management as a career
18. Direction and control
19. Dynamic
20. Management is needed at all levels
21. Leadership quality

Characteristics of Management

1. Art as well as science: Management is both an art of possessing of managing skill by a

person and a science because of developing certain principles or laws applicable in a place
where a group of activities are co-coordinated.
2. Management is an activity: It is a process of activity relating to the effective utilization of
available resources.
3. Management is a continuous process: The process of management mainly consists of
planning, organizing, directing and controlling the resources. The resources (men and money)
of an organization should be used to the best advantages of the organization to achieve the
objectives.
4. Management achieving pre-determined objectives: The objectives of an organization are
clearly laid down. Every managerial activity results in the achievement of objectives fixed
well in advance.
5. Organized Activities : Management is a group of organized activities. It can be in the form
of limited company or a small club. All the organizations have an objectives and these
objectives is achieved through systematic way of organized activities.
6. Management is a factor of production : The factors of production includes land, labor,
capital and entrepreneurs. Land means a place where production is carried on. Labour refers to
paid employees either skilled, unskilled, semi-skilled, manager, supervisor and the like.
Capital refers to the working capital in the form of cash, raw material and finished goods and
fixed capital as in the form of plant facilities and production facilities. These land, labour and
capital can not achieve the organizations goals. It can be achieved only by an organizations

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 goals. It can be achieved only by an entrepreneur in case of small organization and by
management in case of large organizations.
7. Management as a system of activity : Individuals are foundation of the management.
Management ensures the goal congruence between individuals and organization objectives.
8. Management is a discipline: The boundaries of management are not exact like other
physical science. It may be increased by continuous discovery of more aspects of business
enterprise.
9. Management is a purposeful activity: Management is concerned with objective
achievement through planning, organizing, staffing, directing, controlling and decision
making.
10. Management is a distinct entity: Management is a distinct from its functional activity. As
function is to do while management is to how to get things done
11. Management aims at maximizing profit: The available resources are properly utilized to
get desired results.
12. Decision making: Decision making arises because there is availability courses of actions.
The quality of decision taken determines the organization performance
13. Management is a profession: It posses the qualities of a profession.
14. Universal application: The same principles of management are applicable in every type of
industry only the practice differs from one to another.
15. Management is getting things done: Manager gets things done by others.
16. Management as a class or a team: Class means group of people having homogeneous
characteristics to achieve common objectives.
17. Management as a career: Now a days management is developed as a career focused on
specialization like Finance, Marketing, Systems, Personal etc and they are appointed in the
key posts of the management.
18. Direction and control: Manager directs his subordinates in the performance whenever
necessary. Direction & control deals with the activities of human effort.
19. Dynamic: The management is not static in the ever changing fast developing business world
as new techniques are developed and adopted by the management
20. Management is needed at all levels: The functions of planning, organizing, directing,
controlling and decision making is performed by all the level of organization.
21. Leadership quality: Leadership quality is developed in the persons who are working in the
top level management.

Functions of Management

The important functions of management are as below

1. Planning
2. Organizing

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 3. Staffing
4. Directing
5. Co-coordinating
6. Motivating or actuating
7. Controlling
8. Innovation
9. Representation
10. Decision Making
11. Communication

Importance of Management

1. Management meets the challenge of change

2. Accomplishment of group goals
3. Effective utilization of business
4. Effective functioning of business
5. Resource development
6. Sound organization structure
7. Management directs the organization
8. Integrates various interests
9. Stability
10. Innovation
11. Co-ordination and team spirit
12. Tackling problems
13. A tool for personality development

Luther Gullik classifies the functions of management as

POSDCORB: Planning, Organising, Staffing, , Directing, Co-ordinating, Reporting and

Budgeting.

Importance of Management

1. Management meets the challenge of change: In this ever changing business world,
an efficient management saves the business brought by the challenges.
2. Accomplishment of group goals: The achievement of objectives depends upon
proper planning of available resources and quality of decision taken and control
made by the unit.
3. Effective utilization of business: In eight Ms man, money, materials, machines,
methods, motivation, markets and management, management has control over
remaining Ms.
4. Effective functioning of business: Ability, experience, mutual understanding, co-
ordination, motivation and supervision are the factors for effective functioning of

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 business. Management utilizes the abilities of workers and fulfills their executions
through motivation techniques.
5. Resource development: Resources like men, material, money and machines are
identified and developed by the management.
6. Sound organization structure: Sound organization structure clearly defines the
authority and responsibility.
7. Management directs the organization: Management directs and controls the org.
8. Integrates various interests: Management takes steps to integrate various interests
to achieve the objectives of an organization.
9. Stability: The fluctuations caused by changing policy of the government, pressures
from competitors and changing preferences by customers in the business are
stabilized by the management.
10. Innovation: New ideas are developed by management and implemented in the
organization.
11. Co-ordination and team spirit: Management coordination the activities of different
departments and establishes team spirit to achieve the objectives.
12. Tackling problems: Good management acts as a friend of workers while tackling
problems.
13. A tool for personality development: Management gives direction and training to the
workers that help them to raise their efficiency and productivity

Administration and Management

There are various opinions of writers for the meaning of administration and
management. In general, administration is distinguished as a top level function while
management as a lower level functions

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MANAGEMENT LEVELS

Organizations often have 3 levels of managers:

First-line Managers: responsible for day-to-day operation. They supervise the

people performing the activities required to make the good or service.
Middle Managers: Supervise first-line managers. They are also responsible to find
the best way to use departmental resources to achieve goals
Top Managers: Responsible for the performance of all departments and have cross-
departmental responsibility. They establish organizational goals and monitor middle
managers

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ROLES OF MANAGERS (MINTZBERG)

Interpersonal role
Informational role
Decisional role

MANAGERIAL SKILLS

There are three skill sets that managers need to perform effectively. (Katz)

Conceptual skills: the ability to analyze and diagnose a situation and find the cause
and effect
Human skills: the ability to understand, alter, lead, and control peoples behavior and
dealing with people and how to get along with them
Technical skills: the job-specific knowledge required to perform a task.
- Proficiency in performing an activity in the correct manner with the right technique
- Common examples include marketing, accounting, and manufacturing.

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 ACCORDING TO SUMMER

Knowledge ideas, concepts, or principles that can be expressed and are accepted
Attitude beliefs, feelings, and values, Interest, confidence, responsibility, respect,
and desire
Ability art, skill, judgment, and wisdom

ORGANIZATION THEORIES

There are several theories which explain the organization and its structure .Classical
organization theory includes the scientific management approach, Weber's bureaucratic approach,
and administrative theory.

Organization theories

CLASSICAL ORGANIZATION THEORY

Scientific Management approach

Weber's Bureaucratic approach
Administrative theory.

NEOCLASSICAL THEORY

MODERN ORGANIZATION THEORY

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 Systems approach
Socio-technical approach
Contingency or Situational approach

The driving force behind the evolution of management theory is the search for better ways to
utilize organizational resources.

Evolution of modern management began in the late nineteenth century, after the industrial
revolution. Economic, technical and cultural changes

Mechanization changed systems like crafts production into large scale manufacturing, where
semi or unskilled workers operated machineries.

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 Job specialization and the Division of Labor

Famous economist, Adam Smith, journeyed around England in 1700s studying the effects of
industrial revolution.

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 With insights gained from Adam Smiths observations, other managers and researchers
began to investigate how to improve job specialization to increase performance.

They focused on how to organize and control the work process.

Modern theories are based on the concept that the organization is an adaptive system which
has to adjust to changes in its environment. Discuss the important characteristics of the modern
approach to organizations. Modern theories include the systems approach, the socio-technical
approach, and the contingency or situational approach.

Characteristics of modern approaches to the organization

Systems viewpoint
Dynamic process of interaction
Multilevelled and multidimensional
Multimotivated
Probabilistic
Multidisciplinary
Descriptive
Multivariable
Adaptive

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 The systems approach considers the organization as a system composed of a set of inter-
related - and thus mutually dependent - sub-systems. Thus the organization consists of
components, linking processes and goals .

Modern approaches to organization: The systems approach

COMPONENTS
The individual
The formal and informal organization
Patterns of behavior
Role perception
The physical environment
LINKING PROCESSES
Communication
Balance
Decision analysis
GOALS OF ORGANIZATION
Growth
Stability
Interaction

The socio-technical approach considers the organization as composed of a social

system, technical system and its environment. These interact among themselves and it is necessary
to balance them appropriately for effective functioning of the organization.

The contingency or situational approach recognizes that organizational systems are

inter-related with their environment and that different environments require different organizational
relationships for effective working of the organization.

2 DEVELOPMENT OF MANAGEMENT
THOUGHT

Introduction

Management has developed since the time when the world came into existence.
Whenever group efforts are necessary to achieve anything, there is a need for

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 management. Kautilyas artha Sastra and saint Thiruvalluvars state the principles
and concepts of management. These principles and concepts may be applied in our
modern world and in the future also.

An individual can not achieve single handed. Cooperation, group efforts, direction
and control are necessary to achieve the objective or goals of an individual. In our
modern world an individual cannot survive separately. He has to rely upon others.
So, managerial efficiency is an essential requisite to human being.

Does water flowing in a

distant mountain think
about its distance from
the ocean?
The distance between my
current position and my
desired goals is very big.
But I shall
reach my goals.

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Henry Fayol

Henry Fayol was a French industrialist. The principles of management

of Henry Fayol were known to the world only after 1949 later the
publication of his management thoughts in English.
Henry Fayol concentrated on top management. Management plays a
very important part in the government under kings, of all
undertakings, large or small, industrial, commercial, political religious
or any other.
The management functions and organizational functions are different.

The management functions include planning, organizing, staffing,

directing and controlling.
But organizational functional include purchase, sales, productions
and accounting.
Classification of business activities

Technical activities relating to production.

Commercial activities relating to purchase of basic raw materials and
other resources, selling of products and exchange.

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 Security activities relating to the steps taken to protect the property of
enterprise and persons.
Classification of business activities

Accounting activities relating to the recording and maintaining of

accounts, stock taking and preparation of cost sheets, balance sheets
and statistical data.
Managerial activities relating to planning, organizing, commanding,
coordinating and controlling.
Financial activities relating to identification and utilization of available
funds.
Elements of management

1. Planning
2. Organizing
3. Commanding
4. Co-ordination
5. Control
Qualities of a Manager

1. Physical (health, vigor and address)

2. Mental (Ability to understand and learn)
3. Moral (Energy, firmness, willingness to accept responsibility)
4. General education (general acquaintance with matters not belonging)
5. Special knowledge (particular to the function)
6. Experience

Frederick Winslow Taylor

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 F.W. Taylor had observed the work performance of managers and workers. According
to Taylor they follow the traditional method of work and do not have the concept of
systematic performances of task. Taylor found that greater output was possible through
systematization and stanrdization of method of doing work.

Scientific management

Scientific management consists of a certain philosophy of selection and training of

right workers for the right job, providing adequate working conditions, providing a system
of monetary incentives to efficient workers and assumption of responsibilities by managers
and supervisors.

Principles of scientific management

1. Science rot rule thumb

2. Harmony in group action
3. Co-operation
4. Maximum output
5. Improvement workers

Contributions of F. W. Taylor

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 He has applied the principles of scientific management to solve the
problems of management.
According to him, it was the duty of the management to tell the
employees about the expectation of management from employees.
Besides, the management should the way through which the job is to
be completed.
He was the first person who supported mental revolution both on the
part of the employee.
Peter F. Drucker

Peter F. Drucker was born in 1909 in Vienna. He had written many books on
management. The practice of management, the economic man, the future of industrial man,
Concept of corporation Americas next twenty years, landmarks of tomorrow. Managing for
results.

Contributions of Peter F. Drucker

1. Nature of management
2. Functions of management
3. Organization structure
4. Centralist control with a structure of decentralization
5. Management by objectives
6. Organizational changes
Frunk Bunkar Gilberth

Frank Bunker Gillbreths wrote several wrote several books which

incorporate his research findings. Concrete system, Bricklaying
system, and motion study for the handicapped. He gave importance to
time study and motion study. He stressed minimum motions and
avoidance of unnecessary motions to discover the best way of doing a
job.
He found out 18 basic elements. Search, fine, select, grasp, position,
assemble, disassemble, inspect, Transport loaded, Preposition, Release
load, Rest Wait unavoidable, delay Use, Plan.
Mrs. Lillian Moller Gillerth

Lillian Moller was Gilbreths wife. She and her husband recognized the human factor
which is very essential in management.

Max Weber

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 Max Weber was a germen social scientist. He emphasized the strict adherence of
rules and regulation in an organization. This type of organization can be termed as of
organization can be termed as Bureaucracy. This is the oldest form of organization.
Bureaucracy is based on the principles of logic, order and legitimate authority.

Bureaucracy

Max Weber analyzed the various points before finalizing an ideal form of
organization. Maximum benefits can be derived from a form of organization. In this
direction, Bureaucratic organization offers a lot of benefits to the public.

Characteristics or features

1. Functional specialization
2. Hierarchy of authority
3. Rules and regulations
4. Rights and duties
5. Technical competence
6. Fixation of procedure
7. Record-keeping
8. Impersonal relations
Advantages of bureaucracy

1. Specialization
2. Employee behavior
3. Structure
4. No conflict
5. Advance decision
6. Optimum utilization of human resources
7. Democracy
8. Perpetual succession

Disadvantages of bureaucracy

1. Rigidity
2. Red tapism
3. Displacement of goal
4. Impersonal nature of work
5. Failure of co-operation and coordination
6. No mutual understanding
7. Mechanical treatment
8. Empire building
Mary Parker Follett

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 Mary parker Follett wrote books to ventilate her views on management principles.
Her major books are; The speaker of the use of representatives, The new state, Creative
experience, business management as a profession, dynamic administration and freedom and
co-ordination, She published many papers on management. She has expressed her view on
different aspects of management.

Mary Parker Follett

Conflict
Authority
Group
Participation
Integration
Leadership
Co-ordination
Hawthorne Experiments
Illumination experiments

Relay assembly test room experiments

Mass interviewing programme

Bank wiring observation experiments

- Unemployment problem
- Unduly high standard
- Protection of slow workers
- Satisfaction of management
Findings of Hawthorne Experiments

1. Social factors
2. Group influence
3. Production level
4. Motivation
5. Conflicts
6. Leaderships
7. Cordial relationship
8. Behavior of workers
9. Supervision
10.Communication
11.Reaction of workers
Criticism of hawthorone experiments

1. Derecognization
2. Pro-management bias

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 3. No scientific enquiry
4. Clinical bias
5. Lack of universal application
6. Overlooking social factors
7. Limited scope of research
8. Treatment of workers
9. Undue importance to observation
10.Doubtful validity Undue importance to worker satisfaction
11.Highlighting only known facts
12.Evaluation

Behavioral Management Theory

The Work of Mary Parker Follet

The Hawthorn Studies and Human Relations
Theory X and Y
Behavioral Management

The study of how managers should behave to motivate employees and encourage
them to perform at high levels and be committed to the achievement of organizational
goals.

Mary Parker Follet

Mary Parker Follett advocated for a human relations emphasis.

Her work contrasted with the "scientific management" of Frederick W.
Taylor.
Mary Parker Follett stressed the interactions of management and
workers.
Follett was one of the first to integrate the idea of organizational
conflict into management theory, and is sometimes considered the
"mother of conflict resolution.
She coined the words "power-over" and "power-with" to differentiate
coercive power from participative decision-making.
She was of the view that authority should go with knowledge.
Advocated involvement of workers in job analysis and work
development process.
Managers of different departments should communicate with each
other directly.
Cross-functioning

Management Science Theory

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 An approach to management that uses rigorous quantitative techniques to help
managers make maximum use of organizational resources.

Quantitative Techniques
Operations Management
Total Quality Management
Management Information Systems
Contingency Theories

According to the contingency approach of leadership, a single

leadership style is not applicable to all situations.
Every leader is to carefully analyze the situation before adopting a
style that best suits the requirements of the situations. Below are the
5 contingency models of leadership styles.
1. Fiedlers Contingency Model
2. Hersey and Blanchards situational theory
3. Path Goal Theory Robert J.Houses Model
4. Leader-member exchange theory

Fiedlers Contingency Theory

The Fiedler contingency model is a leadership theory of industrial and organizational

psychology developed by Fred Fiedler

Fiedler's model assumes that group performance depends on: Leadership style,
described in terms of task motivation and relationship motivation.

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Situational favourableness, determined by three factors:

1. Leader-member relations - Degree to which a leader is accepted and supported by

the group members.

2. Task structure - Extent to which the task is structured and defined, with clear goals
and procedures.

3. Position power or the leaders position - The ability of a leader to control

subordinates through reward and punishment.

High levels of these three factors give the most favourable situation, low levels,
the least favourable. Relationship-motivated leaders are most effective in
moderately favourable situations or unfavorable situations. Task-motivated
leaders are most effective at either end of the scale.
Fiedler suggests that it may be easier for leaders to change their situation to
achieve effectiveness, rather than change their leadership style

FIEDLERS CONTINGENCY THEORY

Situational leadership

Hersey and Blanchards situational theory

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 The situational leadership model focuses on the fit of leadership style and followers
maturity .

In contrast to Fiedlers contingency leadership model and its underlying assumption

that leadership style is hard to change, the Hersey-Blanchard situational leadership
model suggests that successful leaders do adjust their styles.

The situational leadership model views leaders as varying their emphasis on task and
relationship behaviors to best deal with different levels of follower maturity.

HERSEY AND BLANCHARD SITUATIONAL LEADERSHIP THEORY

The two-by-two matrix shown in the figure indicates that four leadership styles are
possible.

Telling Style giving specific task directions and closely supervising work; this is
a high-task, low-relationship style.

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 Selling Style explaining task directions in a supportive and persuasive way; this is
a high-task, high-relationship style.

Participating Style emphasizing shared ideas and participative decisions on task

directions; this is a low-task, high-relationship style.

Delegating Style allowing the group to take responsibility for task decisions; this
is a low-task, low-relationship style.

Leader-member exchange theory

According to this theory, leaders often behave differently with different subordinates.
They establish close relationships with a small group of subordinates early in their
interactions.

In Group :Good relation with leaders and high frequency of interactions.

Out-Group: Formal relation with leader and less frequency of interaction compared to
in-group.

The theory suggests that the leaders give promotions to the in-group employees quickly
and also that employee turnover rate in such groups is low.

Path Goal Theory

This theory was developed by Robert House.

Here the leader provides the necessary support and guidance to his
followers and help them achieve organizational goals.
Leader defines the individual (or groups) goals and help them achieve
them.
As per the theory Leaders are accepted by the subordinates when:
- They find that the satisfaction of their needs depend upon their
effective performance.
- They are provided with guidance ,support, and rewards needed for
effective performance.

SYSTEMS THEORY

Organizations are open systems in active exchange with their environment

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 SOCIOTECHNICAL SYSTEMS THEORY (STS)

All organizations comprised of two interdependent systems:

1. Social system

2. Technical system

To achieve high productivity and employee satisfaction, organizations

must optimize both systems.
Changes in one system affect the other system.
Modern Approaches

Systems View

The organization is seen as a collection of interrelated parts that function together

to achieve a common purpose.

An Open System interacts with its environment and a Closed one does not.

Quantitative Approach

The Quantitative approach evolved from mathematical and statistical

solutions developed for military problems during word war II.
After the war was over , many of these techniques used for military
problems were applied to business

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 One group of military officers ,nicknamed the whiz kids joined Ford
Motor Company in the mid -1940s and immediately began using
statistical methods and Quantitative models to improve decision
making
Quantitative Viewpoints: Management Science & Operations Research

Management science

Stresses the use of rational, science-based techniques and mathematical

models to improve decision making and strategic planning

The tyranny of chasing numbers

War fighting

Stats from Iraq and Afghanistan

Law enforcement

New York Comstat

Quantitative Viewpoints: Management Science & Operations Research

Operations management

focuses on managing the production and delivery of an organizations

products or services more effectively

work scheduling, production planning, facilities location and design

3PLANNING

Introduction

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 Planning is essential in every walk of life. Each and every person has to frame a plan
to recede in his activities. The plan period may be short or long. Planning is the first
and foremost function of management.

Effective planning facilitates early achievement of objectives, which depends upon

the efficiency of the planner. A planner can develop his efficiency by preparing
himself to face the functional developments.

Does water flowing in a

distant mountain think
about its distance from
the ocean?
The distance between my
current position and my
desired goals is very big.
But I shall reach my goals.

Meaning of Planning

Planning is an intellectual process of thinking resorted to deicide a course of action

which helps achieve the predetermined objectives of the organization future. Separate
plans are prepared for various departments, and then the top executives of the
organization take steps to co ordinate the various departmental plans.

Definition

There are various definitions by various eminent writers in the field of management.
But in nut shell Terry has rightly said that Planning is the selecting and relating of
facts and the making and using of assumptions regarding the future in the
visualization and formulations of proposed activities believed necessary to achieve
desired results

Characteristics of Planning

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1. Following are the characteristics of planning.

2. Planning is looking into the future.

3. Involves pre determined line of action.

4. It discovers the best alternative out of available many alternatives.

5. It requires considerable time form implementation.

6. It is a continuous process.

7. Its object is to achieve pre determined objectives in a better way.

8. It integrates various activities of organization.

9. It is done for a specific period.

10. It not only selects the objectives but also develops policies, programs and procedures
to achieve the objectives.

11. It is required at all levels of management.

12. It is an interdependent process which co ordinates the various business activities.

13. It directs the members of the organization.

14. Growth and prosperity of any organization depends upon planning.

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Nature of Planning

1. Economy and certainty are considered while selecting the best alternative among the
available ones.

2. The nature of planning is as below that is self explanatory.

3. Primary Function

4. Planning contributes to objectives

5. Planning is an intellectual activity

6. Planning results in higher efficiency

7. Planning is a continuous process

8. Planning is flexible

9. unity and consistency

10. Planning is common to all

11. Basis for all managerial functions

12. Getting coordination

13. Considering limiting factors

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Planning Vs. Forecasting

Remember planning is not forecasting. Forecasting is guessing of the future course of

events correctly, whereas planning is a wider term that includes forecasting and it is
part of planning and is based on the past experience.

Importance of Planning

Through planning objectives are achieved and anticipates the achieved well in
advance. Defective planning leads to failure of the organization. Effective planning
can anticipate the uncertain events and help prepare the workforce to meet the
situation to survive. Planning helps the business man get early success.

Advantages of Planning

1. Better utilization of resources

2. Helps in achieving objectives

3. Economy in operation

4. Minimizes future uncertainties

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5. Improves competitive strength

6. Effective control

7. Motivation

8. Cooperation

9. Promote growth and improvement

10. Develops rationality among management executives

11. Prevents hasty judgment

12. Reduces redtapism

13. Encourages innovative thought

14. Improves ability to cope with change

15. Creates forward looking attitude in management

16. Development of efficient methods

17. Delegation of authority facilitated

18. Anticipation of crisis

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Methods of Planning

1. Objective plans: Objectives are treated as basic a plan that is necessary for all types
of planning operations. Objective also play role in organizing, directing and
controlling.
2. Standing plans: It includes policies and procedures and is liable repetitive actions.
Actions can be repetitive and non repetitive. It helps ready guidelines for solving
recurring problems. Recurring problems are solved in different way
3. Master plans: Master plan covers the complete course of action along with
consideration of time and strategy. Plans may be either broad or detailed in character

Limitations of Planning

1. Inflexibility
2. Limitation of forecasts
3. Unsuitability
4. Time consuming
5. Costly
6. Mental ability
7. False sense of security
8. Delay during emergency period
9. Capital Investment
10. Political climate
11. Trade unions
12. Technological changes

Obstacles of Planning

1. Unreliability of forecasts

2. Recurrence of same type of problems

3. Expensive

4. Loss of initiative

4 FORECASTING
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Introduction

Forecasting is the technique of estimating the relevant future events and problems on
the basis of past and present behavior or happenings.

It involves detailed analysis of the past and present events to get a clear cut idea
about probable events in the future. So, forecasting may require the use of various
statistical techniques though it is not necessary.

Meaning of Forecasting

It is a systematic guessing of the future course of events with the help of analysis of
past and present events. It provides basis for a planning.

Definition

Neter and Wasserman state Business forecasting refers to the statistical analysis of
the past and current movement in the given time series so as to obtain clues about the
future pattern of those movements

Characteristics

1. Forecasting is concerned with future events.

2. It is necessary for planning process. Planning is not possible without forecasting.

3. The impact of future events has to be considered in the planning process.

4. It is a guessing of future events. So, the future events that might happen could be
guessed only to some extent.

5. Inference or conclusions are drawn form past and present relevant events under
scientific forecasting.

6. It considers all the factors which affect organizational functions.

7. The analysis of various factors may require the use of scientific, mathematical and
statistical techniques.

8. Personal observation also helps forecasting

35
 9. The application of scientific, mathematical and statistical techniques is much more
reliable than the use of ordinary tools for obtaining conclusions.

Importance of Forecasting

The need and importance of forecasting can be found out with the help of key role
played for forecasting in the management process especially in planning process.

36
Forecasting Techniques or Type or Methods

Various techniques of forecasting are used in the field of business. An accurate forecasting
may reduce the degree of uncertainty. In practice, more than one technique can be combined
for making the forecasting effective.

METHODS

1. Similarity events method: Forecasts is made on the basis of events happened in the
past that are similar to current events.
2. Jury of executive option: The opinion of experts like Sales, Finance, purchase and
the like is sought under this method and the meritorious one is accepted.
3. Survey method: Quantitative and qualitative information is collected from field
survey and from this forecasting is done.
4. Sales persons opinion: Sales persons are closer toe the consumers and their
opinions are taken into consideration for correct sales trend.
5. Business Barometers: Index numbers indicate the direction of the business and can
give advance signals for likely changes in the future.
6. Expectations of consumer: A survey is conducted in order to know the future needs
of consumers and an overall forecast is made. This is also known as Marketing
research Method

37
 7. Time series analysis: In this method, future activities are the extension of the past.
Forecasts are based on the assumptions that the business conditions affecting its
steady growth or decline are reasonably expected to remain unchanged in the future.
8. Delphi method: It is developed by Rand Corporation to forecast the military events.
It is used when past data are not available. Opinions are taken from experts through
questionnaire and then summarized and again given to experts for expected future
evaluations.
9. Extrapolation: Estimation of future behavior from the known data. Careful study of
the past behavior is essential for correct forecasting.
10. Regression analysis: It is use to find the effect of changes of relative movements of
two or more inter- related variables.
11. Input and output analysis: In this method forecast can be made if the relationship
between input and output is known.
12. Econometric models: Various cause variables are responsible for effect on one
variable. The best example is Gross National Product.

Advantages of Forecasting

1. The anticipation of future problems and events will make it imperative to accelerate
early achievements of objectives. Some of the advantages or merits are briefly
discussed below.

2. Facilitates Planning

3. Ensures Co-ordination

4. Easy Controlling

Limitation of Forecasting

1. Forecasting is to be made on the basis of certain assumptions and human judgments.

Faulty assumptions and human judgments will yield wrong results.

38
 2. It can not be considered as a scientific method for guessing future events, as it does
not specify any concrete relationship between past and future events.

3. Too much of expectation will cause disappointment and impair the initiative of the
executives.

4. It requires high degree of skill and the process must be undertaken by specialists.
This is difficult in practice.

5. Proper forecasting needs adequate reliable information and it is very difficult to

collect reliable information. Hence, correct forecast is impossible.

6. There is no certainty of occurrence of future events predicted by forecasting.

7. The more number of days constituting the period of forecasting higher will be the
degree of error. Forecasting can not be applied to a long period.

8. Heavy cost and time involved in forecasting but, benefit derived from them will not
be worthy. Collection of data requires lot of time and money. So, smaller
organization, cannot afford the cost and time required for forecasting.

Differences between Forecasting & Planning

39
 5 OBJECTIVES AND
MBO
Introduction

Every institution or organization is established for the purpose of achieving some objectives.
It may differ from organization to organization.

Belief can change our fate.

Belief is miraculous.

40
 Belief can achieve the impossible.

Definition

Objectives may be defined as the expectation of end result for which an organization is
established and which it tries to achieve.

Features of Objectives

1. Each individual objective is collected by the group to achieve the group objectives.

2. The objectives may be short term or long term and broad objectives or specific
objectives.

3. The objectives should be clearly defined.

4. At top level, the organization has broad objectives.

5. The objectives of the organization must conform to the general needs of the public.

6. All organization has several objectives at a time.

7. The objectives of the organization may be changed in due course.

8. The objectives are expressed in numerical terms.

9. The framed objectives should be achievable.

Advantages of Objectives

1. Unified planning

2. Individual motivation

3. Coordination

4. Control

5. Basis for decentralization

Management by Objectives

MBO means the establishment of effective standards for managerial positions and the
periodic conversion of those into measurable time bound objectives linked vertically and
horizontally and with future planning

Features of MBO

41
 1. An attempt is made to integrate the goals of organization and individuals that leads to
effective management.

2. It tries to combine long range goals with short range goals.

3. Management relates the organization goals with society goals.

4. MBOs emphasis is not only on goals but also on effective performance.

5. Encourages a climate of trust, goodwill and will to perform.

6. It pays constant attention to refining, modifying and improving the goals.

7. It increases the organizational capability of achieving goals at all levels.

8. High degree of motivation and satisfaction is available.

9. Recognizes the participation of employees in goal setting process.

10. Aims at replacing the exercise of authority with consultations.

Benefit of MBO

1. Managers are involved in objectives setting at various levels management under

MBO and this commitment ensures hard work to achieve them.

2. MBO process helps the managers to understand their role in the total organization.

42
 3. Manager recognizes the need for planning and appreciates the planning..

4. It provides a foundation for participative management as every one is involved in

goal setting.

5. Each department objectives are consistent with the objectives of the whole
organization.

6. Systematic evaluation of performance is made with the help of MBO.

7. It helps to take corrective action.

8. Delegation of authority is easily done.

9. It helps the manager attend to job enrichment.

10. It makes the job meaningful.

11. The responsibility of a worker is fixed.

12. Decision is taken by the management very quickly.

Problems and Limitation of MBO

1. MBO fails to explain the philosophy; most of the executives do not know how MBO
works, what is MBO and why is MBO necessary and how participants can benefit by
MBO.

2. It is time consuming process and leads to heavy expenditure and requires heavy
paper work.

3. MBO emphasis only on short term objectives and does not consider the long term
objectives.

4. The status of subordinates is necessary for proper objectives setting which is not
possible in the process of MBO.

5. MBO is rigid one. Objectives should be changed according to the circumstances. If

not done, planned results can not be obtained.

6. Objectives are set without considering the available resources.

Guidelines for setting Effective Objectives

1. Objectives are framed only by the participants who are responsible for implementing
them.

2. All the objectives should support the overall objectives of the organization.

3. Objectives should be attainable ones.

43
 4. It should result in the motivation of workers.

5. A periodical review of objective sis necessary for proper implementation.

6. Objectives should have the characteristics of innovation.

7. The number of objectives for each management member should be a reasonable one.
(4 or 5)

8. It should be ranked on the basis of their importance.

9. It should be in balance withi9n a given organization.

10. It should be simple and clearly defined.

11. It should be specific and time bound.

6DECISION-MAKING
Introduction

Decision-making is also one of the functions of the management. The success of

management depends upon the quality of decision. If the manager fails to take correct
decision, he may not extract any work from his sub-ordinates and may not find a way to
finish his work also. Some of the decisions are taken emotionally. This should be taken with
great care. Emotional decision leads to a lot of confusion. So, the decision-making is a work
of the superiors.

Definition

Decision making is a process involving information, choice of alternative actions,

implementations and evaluation that is directed to the achievement of certain stated goals.

Characteristics of Decision-Making

Decision-making is selection process. The best alternative is selected out of available

alternatives. If there is only one alternatives, there is no decision-making.

44
 Decision-making is the end process. Decision-making is presented by detailed
discussion and selection of alternatives.

Decision-making is the application of intellectual abilities to a great extend. An

intelligent man alone can take a good decision.

Decision gives happiness to an endeavor who takes various steps to collect the
information which is likely to affect a decision.

Decision-making is situational. An individual takes decision according to the

situations prevailing.

It is a dynamic process. It is taken to achieve the objectives of an organisation.

Decision-making involves the evaluation of available alternatives throughcritical

appraisal methods.

A decision may be both negative and positive. A decision may direct others to do or
not to do.

Decisionmaker has the evaluation of decision which involves the using of

resources in specified ways.

Elements of decision-making

A problem is fully analyzed and the available alternatives are considered before
taking a decision.

The best decision-making requires intelligence, experience and insight into a

problem.

A decision is taken according to the environment of business.

Centralization and decentralization of authority affect the decision indirectly.

The psychology of an individual is involved in decision-making.

Decisions are taken when they are needed.

Employees are also involved in decision-making process

45
Political and social environment of business affect the decision-making if the management
takes a decision after consulting the employees, the following advantages may accrue:

Better relations with employees

Loyalty to the management.

There is no hindrance in the implementation of a decision.

Efficiency of the employees is increased.

Principles of decision-making

Marginal theory of decision-making:

It is based on principle of diminishing returns

Applied for sales, advertisement, promotion, training

Mathematical theory:

Venture analysis, game theory, probability theory and waiting theory are
examples

It give scientific approach to manager

46
 Psychological theory

Decision taken on basis of aspirations, technological skill, personality, social

status and organisation status.

Principle of limiting factors

Fundamental of a problem are studied.

An inference or a conclusion is drawn

Principle of participation:

Principle is based on human behavior and human relationship.

Subordinate should be consulted.

Principle of alternatives:

All alternatives are evaluated and screened and best alternative is taken for
decision making.

Characteristics of good decision or effective decision

Decision is taken after passing various stages. The basic objective of passing through
all the stages is to solve the problems. The solution of the problem depends on how
effectively the decision has been made or implemented.

Action orientation:

Goal direction:

Efficiency in implementation:

Administrative problems in decision-making

Accuracy:

Environment for decision:

Timely decision:

47
 Communication of decision:

Participative decision-making:

implementation:

Types of decision

Programmed decision :

Non-programmed decision:

Major decision

Minor decision

Operative decision

Organizational decision

Personal decision

Individual decision

Group decision

Departmental decision

Non-economic decision

Crises decision

Research decision

Personal phase of decision-making

There are some differences in decision-making .These are due to personal characteristics due
to

Intelligence

Education

48
 Experience

Courage

Motivation

Forecasting ability

Self-confidence

7 ORGANIZATION
Introduction

Organization is a mechanism or structure which helps the activities to be performed

effectively. The Organization is established for the purpose of achieving the business
objectives. Wherever may be the business objectives, there is a need of an
organization.

The word organization is derived the word organism which means an organized
body with connected interdependent parts sharing common life.

TRANSLATION

He who does not make people anxious and does not himself become anxious easily either;
and he who is eithout joy, anger, fear or anxiety is my loved one.

INTERPRETATION

A good manager must be calm and level-headed in all the situations. He should not be easily
irritated or frustrated; not should he irritate or frustrate others.

Meaning

49
 Organization can be compared to a human body. The human body consists of hands,
feet, eyes, ears, nose, fingers, mouth, etc. These parts are performing their work
independently and at the same time, one part cannot be a substitute to another. The
same principles can be identified in the organization also.

Each department performs its work independently and be a substitute to another.

Definition

Organization is a harmonious adjustment of specialized parts for the accomplishment

of some common purpose.

Organization is that process of identifying and grouping the work to be performed,

defining and delegating responsibility and authority and establishing relationships for
the purpose of enabling people to work most effectively together in accomplishing
objectives.

Functions of organization

1. Determination of activities

2. Grouping of activities

3. Allotment of duties to specified persons

4. Delegation of authority

5. Defining relationship

6. Co-ordination of various activities

Principles of organization

1. Principles of definition

2. Principle of objective

3. Principle of specialization or division of work

4. Principle of coordination

5. Principle of efficiency

50
6. Principle of efficiency

7. Principle of uniformity

8. Principle of correspondence

9. Principle of unity of command

10. Principle of balance

11. Principle for responsibility

12. Principle of explanation

13. Principle of authority

14. Principle of leadership facilitation

15. Principle of equilibrium balance

16. Principle of continuity

17. Principle of span of control

18. Principle of exception

19. Principle of flexibility

20. Principle of principle

21. Principle of simplicity and homogeneity

22. Principle of unity of direction

23. Principle of joint decision

51
Importance of Organization or Advantages of Organization

1. Facilitate administration

2. Increases the efficiency of management

3. Facilitates growth and diversification Ensures optimum utilization of material

resources and human efforts

4. Adoption of new technology

5. Places proportionate importance to the various activities of the enterprise

6. Encourage creativity and initiative

7. Facilitate coordination

8. Facilitate training and development of managerial personnel

9. Prevents the growth of secret, influence and corruption

Classification of organization

A. Formal

B. Informal

FORMAL ORGANIZATION

52
The formal organization represents the classification of activities within the enterprise.
Indicates who reports to whom and explains the vertical journal of communication which
connects the chief executive to the ordinary and workers.

Characteristics of formal organization

1. Properly planned, based on delegated authority, deliberately impersonal,

responsibility and accountability at all levels of organization should be clearly
defined.

2. Organizational charts are usually drawn.

3. Unity of command is normally maintained.

4. It provides of division of labour.

Advantages of formal organization

1. The definite boundaries of each worker is clearly fixed. It automatically reduces

conflict among the worked.

2. Overlapping of responsibility is easily avoided.

3. Buck passing is very difficult.

4. A Sense of security arises for from classification of the task.

5. There is no chance for favoritism in evaluation and placement of the employee.

6. It makes the organization less dependent on the task.

Arguments against formal organization

1. In certain cases, the formal organization may reduce the spirit initiative.

2. Authority is for the sake of convenience of the employee without considering the
need for using the authority.

3. It does not consider the sentiments and values of the employees in the social
organization.

4. The formal organization may reduce the speed of informal communication.

53
 5. It creates the problems of coordination.

INFORMAL ORGANIZATION

Informal organization is an organizational structure which establishes the relationship on the

basis of the likes and dislikes of officers without considering the rules, regulations and
procedures. The informal organization relationship exists under the formal organization the
informal organization relationship or informal relation give a greeter job satisfaction and
result in maximum production.

Characteristics of informal organization

1. Informal organization arises without any external cause. i.e. Voluntarily.

2. it is social structure formed to meet personal needs.

3. Informal organization has in the organization chart.

4. It acts as an agency of social control.

5. Informal organization can be found all levels of organization within the

managerial hierarchy.

6. Informal organization develops from habits, conduct, customs and behavior of

social groups

7. There is no structure and definiteness to the informal organization

Advantages of informal organization

1. It fills the gaps and deficiency if the formal organization.

2. Informal organization gives satisfaction to the workers and maintains the stability of
the work.

3. It is useful channel of communication.

4. The presence of informal organization encourages the executives to plan the work
correctly and act accordingly

Disadvantages of informal organization

54
1. It has the nature upsetting the morality of the workers.

2. It acts according to mob psychology.

3. Informal organization indirectly reduces the efforts of management to promote

greater productivity.

4. It spreads rumor among the workers regarding the functioning of the organization
unnecessarily.

55
Difference between formal and informal organization

Theories of organization

1. Classical theory

2. Neo-classical theory

3. Modern theory

4. Motivation theory

5. Decision theory

56
CLASSICAL THEORY

Division of labour:

Scalar of functional processes:

Structure;

Span of control

Characteristics of classical theory

It is based on division of labour, objectives and tasks of organization, Co-ordination

of efforts.

It is concerned with formal organization.

it believes in human behavior of the employees.

It fixes a responsibility and accountability for work completion.

Criticism of classical theory

This theory is based on authoritarian approach.

It does not give two easy communications.

It ignores the influences factures on individual behavior.

The generalizations of the classical theories have not been tested by strict scientific
methods.

NEO-CLASSICAL THEORY

Contributions of neo-classical theory

Person should be the basis of an organization

Organization should be viewed as a total unity.

Individual goals and organization goals should be integrated.

Communication should be moved from to top and from top to bottom.

57
 Members usually belong to formal and informal groups and interact with others
within each group or sub-group.

MOTIVATION THEORY: It is concerned with the study motivation of employees.

DECISION THEORY: Decision theory is on the bases that at all the levels the decisions
are taken.

8 DELEGATION OF AUTHORITY &

DECENTRALISATION
Introduction

Authority is the power to make decisions which guide the actions of others.
Delegation of authority contributes to the creation of an organization.
It is Right of decision and command
OPPORTUNITY
There is an island of opportunity in the middle of every difficulty.

Characteristics of Authority

Basis of getting things done

Legitimacy
Decision-making
Implementation

Sources of Authority

There are three theories regarding the sources of authority.

The formal authority theory

The acceptance of authority theory
The competence theory

1. The formal authority theory: Authority flows from top to bottom through the
structure of an organization.

Board of Directors

58
 General Manager

Sales Manager

Sales Representative

Workers

2. The acceptance of authority theory

Authority flows from the superior to the subordinates whenever there is an
acceptance on the part of the subordinates.
Zone of acceptance depends upon various factors like rewards, subordinate
behavior pattern, dismissal or non acceptance results, special knowledge,
confidence etc.
3. The competence theory

This type of authority is invested with the persons by virtue of the office held by them.

DELEGATION

Meaning:

Delegation is a process which enables a person to assign a work to others and delegate
them with adequate authority to do it.

Importance of Delegation:

It is the most important methods of training subordinates and building morals. This helps
to concentrate on planning, organizing and controlling.

Elements of Delegation

Assignment of duties or responsibilities

Delegation of authority
Accountability

Principles of Delegation

Delegation to go by results expected

Delegation of authority but Non-delegation of responsibility
Authority and responsibility should commensurate with each other

59
 Unity of command
Definition of limitations of authority

Types of Delegation

General delegation
Specific delegation
Writing delegation
Unwritten delegation
Formal delegation
Informal delegation
Downward delegation
Accrued delegation
Sideward delegation

Problems of Delegation

Hesitation on the part of Superior

Reasons

Perfectionism

60
 Autocratic attitude
Directions
Confidence
Control
Avoidance of risk
Competition
Inability of the subordinate
Inability of the superior

Hesitation on the part of Subordinates

Reasons

Love of spoon feeding

Easier to ask
Fear of criticism
Lack of Information or resources
Lack of self confidence
Other work
Inadequate incentives
Fear of failure

Prerequisite for Effective Delegation of Authority

Superior must understand the authority and responsibility of their own.

Superior must decide the portion of his authority that is to be delegated.

61
 Superior should have knowledge of abilities and inabilities of subordinates
He must ensure the subordinates have understood the delegated work.
He should delegate only the routine functions to subordinate
He must understand the need, importance and value of delegation

Prerequisite for Effective Delegation of Authority

He should delegate the work which can be performed independently

He must dissuade the subordinate from taking decision by themselves
He must release the decision making powers to his subordinate
Adequate communication network
Clear definition of standard of accountability
Delegation must be done in accordance with overall plan.
Delegation of authority should be confined to organizational structure

Common faults in Delegation

Close supervision
Lack of direction
Lack of accountability

DECENTRALIZATION: Decentralization means each section has its own workers to

perform activities with the department.

Advantages of Decentralization

Saving of time
Greater efficiency and output
Maintenance of secrecy
Departmental loyalty

Disadvantages of decentralization

No proper division of work

Duplicate of work
Heavy expenditure
No standardization

RESPONSIBILITY

Meaning: It is the obligation to perform the tasks, functions or assignments.

Definition: Responsibility is an obligation to perform certain functions and achieve certain

results.

62
Elements of responsibility

It arises from superiorsubordinate relationship.

It ensures from contractual agreement.
The responsibility cannot be transferred to anybody.
It is created by acceptance of authority
There is an essence of obligation
The responsibility may be general or specific
Responsibility is a continuing process by nature.

9DEPARTMENTATION
Introduction

Departmentation is a part of the organization process. It involves the grouping of

common activities on the basis of a function of the organization under a single persons
control.

Does water flowing in a

distant mountain think

about its distance from

the ocean?

The distance between my

current position and my

desired goals is very big.

But I shall

reach my goals.

Meaning: Departmentation means the process by which similar activities of the business are
grouped into units for the purpose of facilitation smooth administration at all levels.

Definition: Departmentation refers to the classification of activities on operations of an

undertaking into functionalized categories. It is created in product wise, process-wise or area
wise. It ensures proper direction to and control on them.

63
Need and Importance of Departmentation

It increases the operating efficiency of the employees.

It makes the executive to be alert and efficient in his duties.
It increases the prestige and skill of the departmental heads.
It makes the departmental heads efficient.
Further expansion of the organization is possible.
It gives advantages like facilitating budget preparation, effective control of
expenditure, attaining specialization, better coordination etc.

64
Basis pattern types of Departmentation

1. Departmentation by Function
2. Departmentation by Product or Service
3. Departmentation by region or area
4. Departmentation by Customers
5. Departmentation by Process
6. Departmentation by Time
7. Departmentation by Numbers
8. Departmentation by Marketing Channels

1.DEPARMENTATION BY FUNCTION

Advantages:

1. It is scientific and time tested method.

2. It follows the principles of specialization and division of labour
3. Ensures performance control
4. Preserves the importance of each of activities.
5. Due weightage and prestige are given to managers and respected
6. Facilitates coordination activity within departments
7. Economical, simple and easy to understand
8. Helps utilization of manpower and other natural resources

Disadvantages:

1. It makes management control work more difficult

65
 2. Increases work load and responsibility of managers
3. Does not offer scope for training for overall development of managers
4. Managers may be experts but may not understand the problems of other
departments

2.DEPARTMENTATION BY PRODUCT OR SERVICE

Advantages:

1. Maximum utilization of personnel efficiency of workers.

2. Gaining economy in manufacturing and marketing of products
3. Better services to customers
4. Profitability of each product is known.
5. Proper attention is given
6. New line of product can be introduced without difficulty

Disadvantages:

1. Danger of duplication of work

2. Increases number of personnel that leads to heavy cost
3. Additional cost for maintaining a sales force for each product
4. Control becomes more difficult
5. Machines and equipment may not be used fully.
6. Only for large scale diversified groups

3.DEPARTMENTATION BY REGION OR AREA

Advantages:

1. Effective span of control.

2. Reduces the cost of operation and gains saving in time.
3. Intimate knowledge about the taste and preference of customers Win the
confidence of customers and reduce the competition
4. Profitability of each area can be known.
5. Gives opportunities to managers to improve their skills
6. More suitable for large scale business unit
7. Control process very easy to manager

Disadvantages:

1. Increases number of personnel and heavy cost of operation

2. Control of head office is less effective one
3. Involves duplication of work
4. Small business cant manage the high cost.

4.DEPARTMENTATION BY CUSTOMERS

66
Advantages:

1. It fulfills the expectations and needs of customers

2. It develops specialization among the organizational staff.
3. Out of fashion products can be dispensed with
4. Each section of customers gets better services.

Disadvantages:

1. Duplication of activities.
2. Achievement of coordination is very difficult
3. Wastage of available of resources and facilities.
4. Production activities cant be done under this method due to heavy cost

5.DEPARTMENTATION BY PROCESS

Advantages:

1. Costlier machines can be used effectively.

2. Economy of operation
3. No duplication of activities
4. Principle of specialization and division of labour is followed
5. It helps top management to have effective performance control
6. This is more suitable for a product manufacturing passes through more processes.

Disadvantages:

1. Heavy cost of operation

2. More specialist are essential to each process
3. Lack of overall development of managerial talents

6.DEPARTMENTATION BY TIME

The business activities are grouped together on the basis of the time of the performance

7.DEPARTMENTATION BY NUMBERS

Similar type of duties performed by small groups and each group is controlled by a
supervisor or an executive. The principles of span of management span of control or span of
supervision is used under this type. E.g. Squads, battalions, companies, brigades and
regiments in Army

8.DEPARTMENTATION BY MARKETING CHANNELS

67
 This type of departmentation is adopted on the basis of the channel of distribution
chosen by the particular business unit. This method of departmentation has grown in
importance as business has become increasingly market oriented

10 SPAN OF
MANAGEMENT
Introduction

Span of management is also known as Span of control, Span of supervision, Span

of authority and Span of responsibility. It indicates the number for people directly
managed effectively by a single person.
A sound organization depends upon the effective performance of work by the
executives. So, the executives should neither be overloaded nor be idle

Meaning

Span of management means the number of people managed effectively by a

single officer in an organization. In an average firm, an executive can efficiently
control up to five or six subordinates.
Normally, the members exercising span of control are decreased at the top level
management and increased at the bottom level management. Ideal number of
subordinates is four in case of higher level management and eight to twelve in
case of bottom level management

68
Graicunas theory of span of management

A management expert named V.A. Graicunas contributed much to the Span of Management
Theory. His theory identifies the relationship prevailing between the superior and the
subordinates.

The relationships are classified into three categories. They are given below:

Direct single relationship

Direct group relationship
Cross relationship

1. Direct single relationship: Direct single relationship is one in which a supervisor

has direct relationship with his subordinates individually.

General Manager (Finance and Business Control)

Manger (Finance) Manager (Business Control)

2. Direct group relationship: In this case a supervisor has direct relationship with his
subordinates jointly.

General Manager (Finance and Accounts)

69
 Consultation Consultation

Manger (Finance) Manager (Accounts)

3. Cross Relationship: In cross relationship, a subordinate has relationship with

another subordinate mutually.

Vice President (Operations)

Relationship

GM-Production GM-Maintenance

FORMULAE

Number of

relationships = n (2n /2+n-1)

(n refers to the number for subordinates)

CONCLUSION

70
 The number of relationship increases in geometrical progression.
The effective supervision depends upon the efficiency of the supervisor and the
number of subordinates to be supervised. The effectiveness of the supervision
decreases if the number of relationship is increased.

11TYPES OF ORGANISATION
Introduction

Organisation is designed on the basic of principles of labour and span of management.

The success of the organisation depends upon the experience and competence of the officers
of the organisation. Nature, scale and size of the business are the normal factors which
determine forms of internal organisation. The following common types of organisation find a
place in the structure of internal organisation.

1. Line, Military or scalar organisation

2. Functional organisation
3. Line and staff organisation
4. Committee organisation
5. Project organisation
6. Matrix organisation
7. Freeform organisation

1. LINE ORGANISATION
Line organisation is the simple and oldest type of organisation followed in an
organisation. Under line organisation, each department is generally a complete
self-contained unit.
A separate person will look after the activities of the department and he has full
control over the department.
The same level executives do not give or receive orders amongst themselves. But
they receive orders from their immediate boss and give orders to their
subordinates. Hence, all the heads are responsible to the general manager, the
general manager, in turn, is responsible to the shareholders who are the owners.

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 This type of organisation is followed in the army on the same pattern. So, it is
called military organisation. Under type of organisation, the line of authority
flows from the top to bottom vertically. So it is called line organisation.

Characteristics of line organisation

It consists of direct vertical relationships.

Authority flows from top-level to level to bottom level.
Departmental heads are given full freedom to control their departments.
Each member knows from whom he would get orders and to whom he should give
his orders.
A senior member has direst command over his subordinates.
Operation of this system is very easy.
Existence of direct relationship between superiors and subordinates.
The superior takes decisions within the scope of his authority

Advantages and Disadvantages of Line Organisation

Suitability

This type of organisation is suitable to small size business units.

Where the activities are of routine nature or machine based.
If the business activities are service mined.
Where the number of persons working is small
The business operation is simple in nature.

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 A business unit which has straight methods of operations.

2. FUNCTIONAL ORGANISATION
Under line organisation, a single person is in charge of all the activities of the
concerned department. The person in charge finds it difficult to supervise all the
activities efficiently.
The reason is that the person does not have enough capacity and required
training. Under functional organisation, various specialists are for various
functions performed in an organisation. These specialists will attend to the work
which is common to different functions of various departments. Workers, under
functional organisation, receive instructions from various specialists.
The need for functional organisation arises out of:
The complexity of modern and large-scale organisation
A desire to use the specialization in full and;
To avoid the work-load of line managers with complex problems and
decision-making

Characteristics of functional organisation

The work is divided according to specified functions.

Authority is given to a specialist to give orders and instructions in relation to
specific function.
Functional authority has right and power to give command throughout the line
with reference to his specified area.
The decision is taken only after making consultations with the functional
authority relating to his specialized area.
The executives and supervisors discharge the responsibility of functional
authority.
Route clerk
instruction card clerk
time and cost clerk
Gang boss
Speed boss
Inspector
Repair boss
Disciplinarian

Advantages and Disadvantages of Functional Organisation

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 3. LINE AND STAFF ORGANISATION
The line officers have authority to take decisions and implement them to
achieve the objectives of the organisation.
The line officers may be assisted by the staff officers while framing the
policies and plans and taking decisions organisation.
The authority flows from top level to the lower level of the organisation
through the line officers while the staff officers attached to the various
departments advise the departments. The staff officers are not in a position to
compel the line officers to follow the advice by them. Each department is
headed by a line officer who exercises full authority regarding the planning.

Types of staff

Personal staff
Specialized staff
General staff assistant

Functions of staff officers

The staff officers assist the line officers in the planning of business activity.
The board of directors frames the policies of the business on the basis of
recommendations given by the staff officers.
The managers can get the advice from the staff officers regarding the selection.
training placement and remuneration fixation the personnel

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 The staff officers give regarding the method of improving the product, the
technique of reducing the cost of production, increasing the profits of the
concern.
The staff officers prescribe the procedures to be followed by the line officers in
the execution of policies and programs.
Staff officers of a department help the manager in the preparation of budget of the
department.
the staff officers may be called to solve the administrative problems encountered
by the line officers in general.

Arguments of staff officers against line officers

The staff officers have only theoretical academic knowledge but not practical
knowledge.
The staff officers go beyond their sphere of activity and assume that they have
line officers authority.
Much of the advice given by the staff officers is impractical
Since the staff officers unnecessary increases the paperwork of the line officers.
The staffs give advice without considering the nature of business as a whole.
Staff officers are very much interested in becoming line officers of the
organisation rather than impairing advice to them.

Solution to the conflict between line officers and staff officers

Both line officers and staff officers should clearly understand the nature of
relationship prevailing between them.
A separate staff member should be appointed to bring about co-operation between
the line officers and staff officers.
The line officers should be encouraged to use the advice of staff officers.
Only qualified persons should be selected and placed as staff officers.
The staff officers should be convinced by the line officers if their advice is not
accepted
The responsibility for results could be fixed on both line officers and staff
officers
Only experienced persons alone should be promoted as line executives..
Remove the fear of the line officers and staff officers whether the new ideas of
advice would be properly put into use or not.

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 4. COMMITTEE ORGANISATION

A Committee as a group of persons either appointed or elected who are to meet for the
purpose of considering matters assigned it

Types of committee

Advisory committee problem solving committees

Fast-finding committee
Action committee

Functions of a Committee

Collect the necessary information from different sources and arrange the
information orderly.
The collected information is critically analyzed.
Draft a detailed report containing the recommendations for the purpose of
implementation.
Formulate the standard of performance for the purpose of evolution of actual
performance in future.

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 5. PROJECT ORGANISATION
The project organisation idea was developed after the second war.
A project organisation can also be the beginning of an organisation cycle. The
project may become a long term or permanent effort that eventually becomes a
program or branch organisation

Features of project organisation

The Success of the project organisation depends upon the co-ordination of

activities
There is a grouping of a activities for each project. It leads to the introduction of a
new line of a authority.

Drawbacks of Project Organisation

The professionals are deputed for the project. But there is an assurance of
continuous work for the professional in a project organisation.
The decision is taken in the project organisation under pressure of the top
controls the staff in an organisation.
The top management does not extend its full co-operation for the effective
functioning of the project organisation. Some hindrance may be caused by the top
management.
6. MATRIX ORGANISATION

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Any organisation that employs a multiple command structure but also related support
mechanisms and an associated organizational culture and behavior pattern The matrix
organisation may be followed where a large of small projects have to be managed.

Conditions for effective matrix organisation

The principle of chain of command is not followed in the matrix organisation. A

project manager should give his report to more than one superior.
There should be an agreement among the managers regarding the authority of
utilizing the available resources. The term resources include physical resources,
financial resources and human resources.

7. FREE FORM ORGANISATION

This type of organisation is formed whenever a need arises to form an organisation, for
achieving a particular object. it will be dissolved after achieving the object of the
organisation. The free form organisation resembles the project and matrix organisation. It
otherwise called organic or ratio organisation.

12 ORGANIZATION CHARTS
AND MANUALS

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Introduction

Organisation charts and manuals are prepared for the purpose of describing the
organisation structure. These are used as tools management control. They give full
information on a particular organisation. An executive finds out his exact place in the
organisation structure from the chart and manuals. It shows the responsibility and authority
of executive. He knows his superior for whom he is responsible and his subordinates whom
he has to supervise.

TRANSLATION

An action which is ordained, which is free from attachment, which is done without love
or hatred, by one who is not desirours of the fruit, that action is declared to be SATTWIC
(pure); the one done with egoism and with a longing for desire is RAJASIC (passionate); the
one done without regard for the consequences, loss, injury and ability, is TAMASIC (dull).

INTERPRETATION

A good executive always undertakes a task simply as his duty, fully understanding its
impact, and with no wicked intentions. An ordinary executive undertakes tasks for personal
gains and with a false pride. A bad executive undertakes any task out of sheer lust and
ignorance; with no thought for capacity, limitations, destruction and consequences.

Meaning

Organisation charts and manuals are devices showing the organizational relationships
and within an organisation.

Definition

An organisation chart is diagrammatical form which shows the important aspects of

organisation including the major functions and their respective relationship, the channels of
supervision and the relative authority of each employee who is in charge of each respective
function.

Content of organisation chart

Basic organisation structure and flow of authority.

Authority and responsibilities of various executives.

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 The relationships between the line and staff officers.
Names of the components of organisation Positions of the various officer
personnel.
Number of persons working in an organisation.
The present and proposed organisation structure.
Ways of promotion.
The requirements of management development.
Salary particulars.

Types of organisation chart

Vertical chart
Horizontal chart
Circular chart
Master supplementary chart

Chart revision

Chart revision means keeping the chart up-to-date on the organisation structure. It
should be noted that the chart must reflect the organizational structure correctly.
Management can place the responsibility on an individual to maintain the charts up-to date.
He is responsible for maintaining and revision of the organisation charts.

Principles of organisation chart

1. Observation of line of by top executives

2. Observation of line authority by subordinates
3. Defining of position
4. Non-assignment of same duty twice
5. Avoid unique concentration of duty
6. Organisation charts should be above personalities
7. Simple and flexible

Advantages of organisation chart

1. They give a clear picture organisation charts

2. They show the levels of authority of relationships prevailing among employees at
a glance.
3. Instructing work is simplified
4. Organisation chart is a starting point for planning organisation changes.
5. The strengths and weakness of an organisation are evaluated with the help
organisation charts.
6. Organisation charts act as authoritative sources of information.

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 7. The lines of authority and responsibility given in the organisation chart are
definite and formal.
8. The lines of the primary function of the management. Organisation charts help
planning.
9. The outsiders of the organisation can have a quick understanding of each
department in an organisation.
10. Organizational disputes can be solved with the help of organisation charts.

Limitations of organisation charts

1. Most of the organisation charts are just like photos taken instant
2. The organisation charts create more rigidity or relationships prevailing among the
employees of the organisation.
3. It is very difficult to maintain and ensure that the organisation charts are up-to-
date.
4. The organisation charts do not show the informal relationship existing among the
organisation staff members.
5. There is no differentiation between line officers and staff officers in an
organisation
6. The organisation charts produce a psychological complex such as superiors,
inferiors
7. The relationship shown in an organisation chart does not actually prevail among
organisation the employees.
8. The word and lines used in an organisation charts give different meaning to
different persons.

Organisation manuals

This type of organisation manual is prepared for the purpose of evolving for the
organisation and providing guidance to control the development of the organisation structure

Meaning of organisation manual

A small book which contains the information regarding the organisation structure,
duties and responsibilities of each position, job, description, salaries, prevailing relationships
among members including organisation procedures and methods is called organization
manual.

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Advantage of organisation manual

1. The employee of the organisation can get a clear picture of the organisation.
2. The blueprint rules and regulations are followed by the employees and the
controlling work is minimized.
3. The decisions taken by the management are given in an elaborate manner.
Organisation manual contains the demanded method and procedures to be
followed in nag organisation. Then the organisation goals are easily achieved.
4. Organisation manual helps the personnel to know their duties, responsibilities and
relationship with others within a short period

Disadvantages of organisation manual

1. Organisation manual will has some become outdated very soon. It is due to
continuous changes of the business, behavior of the employees and the like.
2. The human relationships are defined and describes in the organisation manual but
they could not be practically followed in an organisation.
3. The organisation manuals are not reviewed periodically. So the relevant changes are
not incorporated in the organisation manual.
4. The preparation of organisation manual increases the administrative expenses of the
organisation.

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 5. Much time is necessary to keep the organisation manual up-to-date.

13 DIRECTING

Introduction

Direction is a management function performed by the top level officers of management.

Direction is necessary in order to achieve proper implementation of direction.

Definition

Direction consists of the process and techniques utilized in issuing instructions and making
certain that operations are carried on as originally planned.

Issuing orders or instructions

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An order is used by the management as a tool for direction. As a directional technique, an
instruction is understood to be a charge by a superior requiring a subordinate to act or refrain
from acting in a given circumstance

Characteristics of a Good Order

1. An order should be reasonable and enforceable over subordinates

2. A clearly defined order should be easily understandable
3. An order should be such a one as to facilitate the achievement of the objectives of
an organization
4. An order should be complete in all respects
5. An order should exhort willingness and acceptance from the subordinates
6. A written order is preferable to an oral order
7. Appropriate tone is used by the superior while issuing an order
8. An order should specify the time within which a job should be completed
9. An order should be Intelligible

Techniques of Direction

There are three directions.

1. Consultative direction
2. Free rein direction
3. Autocratic direction

1.Consultative direction

The superior has consultation with his subordinates before issuing a direction.
The consultation is made to find out the feasibility, enforceability and nature of
problem.
Ultimately, the superior has the right to take any decision and give the directions

2.Free rein direction

The subordinate is encouraged to solve the problem independently under this

direction technique.
Only highly educated, efficient and sincere subordinate are required to apply
there direction techniques.

3.Autocratic direction

This is opposite to free rein direction techniques.

Supervisor commands his subordinates and has close supervision.
Now way left to the subordinates to show their initiatives.

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Characteristics of Direction

Performed by all levels of executives.

Management initiates action through direction
It is continuous throughout the life of the organization
Initially, direction is started at the top level management.
Subordinates do the things as per the original plan.
Direction creates link between preparatory functions and the control functions of
management that includes planning, organizing and staffing.

14 STAFFING
Meaning

Staffing is the process of filling positions/posts in the organization with adequate and
qualified personnel .Staffing is the process of acquiring, deploying, and retaining a
workforce of sufficient quantity and quality to create positive impacts on the organization's
effectiveness

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Definitions

According to McFarland,

Staffing is the function by which managers build an organization through the recruitment,
selection, and development of individuals as capable employees.

According to Koontz, ODonnell and Heinz Weihrich:

The management function of staffing is defined as filling position in the organization

structure through identifying workforce requirements, inventorying the people available,
recruitment, selection, placement, promotion, appraisal, compensation, and training of
needed people.

Features of staffing function

1. All pervasive function of management.

2. Dynamic function.
3. Vast scope.

Main Objective Of Staffing

1. To understand all function of in an organization.

2. To understand manpower planning so that people are available at right time and
at a right place.
3. To understand issues related to job analysis and to overcome the problem.

Importance Of Staffing Function

1. Training and Development.

2. Effective Co-ordination.
3. Effective Recruitment & Placement.
4. Building effective human resource.
5. Optimum Use of Resource.
6. Enhances Corporate Image.
7. Job Satisfaction.

Elements of staffing

1. Manpower planning
2. Job analysis
3. Recruitment and selection
4. Training and Development
5. Performance appraisal

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Scope of Staffing

1. Hiring
2. Motivation
3. Employee maintenance
4. Human relations

FACTORS AFFECTING STAFFING

External Factors Affecting Staffing

1. Nature of rivalry for Human Resources

India has ample supply of unskilled workers then highly qualified people.
Companies start to change their staffing policy and prefer less talented people.
2. Legal factors
Child labour is prohibited.
Provision are there relating to reservations for physically handicapped people.
Legal provision affects the staffing policy of an organization.
3. Socio-cultural factors
Employment of women for job involving physical exertion is usually avoided
Women are not offered jobs involving continuous travelling.
4. External Influences
Employers have to face pressures from political parties or politicians as new
recruitment.
Concept of Employment to Sons of the soil is getting popular in all countries.
External Influences affect the staffing policy of business unit.

Internal Factors Affecting Staffing

Organizational Image
Past Practices
Size of the Organization
Organizational Business Plan

RECRUITMENT

Process of locating, identifying, and attracting capable candidates

Can be for current or future needs
Critical activity for some corporations.
What sources do we use for recruitment

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Meaning:-

Recruitment means to estimate the available vacancies in the organization and to

make arrangements for their selection and appointment.
Recruitment is a positive function in which publicity is given to the jobs available
in the organization and interested candidates are encouraged to submit
applications for the selection.
In the recruitment, a pool of eligible and interested candidates is created for the
selection of most suitable candidates.

Definitions

According to Edwin Flippo,

Recruitment is the process of searching for prospective employees and stimulating them to
apply for jobs in the organization.

Need of Recruitment

Vacancies due to promotions, transfers, retirement, termination, permanent

disability, death and labour turnover.
Creation of new vacancies due to growth, expansion and diversification of
business activities of an enterprise. New vacancies are also possible due to job
specification.

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Internal Sources of Recruitment

1. Promotions
2. Transfers
3. Internal Notifications(Advertisement)
4. Former Employees

External Sources of Recruitment

1. Campus Recruitment (Interview).

2. Press Advertisement.
3. Recruitment through Management Consultants and Private Employment Exchanges.
4. Deputation of Personnel.
5. Management Training Schemes.
6. Walk-ins, Write-ins and talk-ins.

SELECTION

A series of steps from initial applicant screening to final hiring of the new employee.

Selection process.

Step 1: Completing application materials.

Step 2: Conducting an interview.

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Step 3: Completing any necessary tests.

Step 4: Doing a background investigation.

Step 5: Socialization

Step 6: Deciding to hire or not to hire.

Recruitment & selection

Recruitment is the process of finding and attracting capable applicants for employment.
The process begins when new recruits are sought and ends when their applications are
submitted. The result is a pool of applicants from which new employees are selected.

Selection is the process of differentiating between applicants in order to identify and hire
those with a greater likelihood of success in a job.

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TRAINING & DEVELOPMENT

Training is a short term process utilizing a systematic and organized procedure by

which non managerial personnel learn technical knowledge and skills for a definite
purpose.

Development is a long term educational process utilizing a systematic and organized

procedure by which managerial personnel learn conceptual and theoretical knowledge for
general purpose.

Importance of training & development

Increase In Efficiency
Increase In Morale Of Employees
Better Human Relations
Reduced Supervision
Increased Organizational Viability & Flexibility

HUMAN RESOURCE MANAGEMENT

The integration of all processes, programs, and systems in an organization that ensure staff
are acquired and used in an effective way

HR is multidisciplinary: It applies the disciplines of

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 Economics (wages, markets, resources),
Psychology (motivation, satisfaction),
Sociology (organization structure, culture) and
Law (min. wage, labor contracts)

What HR Professionals Do?

HR planning
Recruitment & Selection
Training and development
Compensation & Performance review
Labor relations

HUMAN RESOURCE PLANNING

The process of systematically reviewing HR requirements to ensure that the required number
of employees, with the required skills, are available when they are needed

HR Planning

We have found the gap, how do we fill this void?

Internal Labour Supply

Skill Inventory

Succession Planning

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 Replacement Planning

Inventory Chart

Present & Future staffing situations

Helps in retention & expulsion strategy

External Labour Supply

Definitions

Job - Consists of a group of tasks that must be performed for an organization to

achieve its goals

Position - Collection of tasks and responsibilities performed by one person; there

is a position for every individual in an organization

Job analysis - Systematic process of determining the skills, duties, and

knowledge required for performing jobs in an organization (functional job
analysis , position analysis questionnaire)

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 Job description document providing information regarding tasks, duties, and
responsibilities of job

Job specification minimum qualifications to perform a particular job

PERFORMANCE APPRAISAL

The identification, measurement, and management of human performance in organizations.

Why Conduct Performance Appraisals?

Make decisions about that person's future with the organization
Identify training requirements
Employee improvement
Pay, promotion, and other personnel decisions
Research
Validation of selection techniques and criteria

Techniques for Evaluating Managers

Evaluation by superiors
Evaluation by colleagues
o Peer ratings tend to be more favorable for career development than for
promotion decisions
Self-evaluation
o Self-ratings suffer from leniency
Subordinate evaluation

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 o Effective in developing leadership
o Leads to improved performance
360 degree feedback (multi-source)

Transfers and Promotions

Definition of Transfer:

According to Dale Yorder, A transfer involve shifting of an employee from one job to
another without special reference to change in responsibility or compensation

Why to Transfer Employees?

1. To meet the organizational requirements

2. To ensure respect for human beings.
3. To identify and satisfy the needs of individuals.
4. To provide the organization with well-trained and well-motivated employees.
5. To inculcate the sense of team spirit, team work and inter-team collaboration.
6. Better utilization of employees .
7. Making employees versatile.
8. To correct inter-personal conflicts.
9. Avoidance of overstaffing.
10. Disciplinary action
11. Relief

Types of transfer:

Employee transfer may be classified into 3 types based on purpose:

1. Transfer that are effected for the training & development of the employees.
2. Transfer made for adjustment of varying volumes within the organization.
3. Transfers designed to correct the problem of poor employees placement.

The common types of transfer are as follows:

1. Production Transfers
2. Replacement Transfers
3. Rotation Transfers ( Versatility Transfer)
4. Shift Transfers
5. Remedial Transfers
6. Penal Transfers

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 TRANSFER POLICY

A good transfer policy should satisfy following condition:

1. It should state the type of transfer.

2. Authority to order transfer.
3. Effect on pay and seniority.
4. Facility available to transferred employee.
5. Personal request.
6. Transfer decision should communicated to employee in writing.
7. Opportunity to appeal for employee.
8. Override all other benefits while making a transfer.

Definition of Promotion:

In the opinion of Wendell French, A promotion is a type of transfer involving the

reassignment of an employee to a position that is likely to offer higher pay and greater
responsibilities, privileges and potential opportunities.

Why to promote employees?

1. Serves as an incentive to employees.

2. Recognition of the efficiency of an employee and his performance.
3. Boosts employee morale.
4. Enhances employee commitment and loyalty.

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 5. Job satisfaction.
6. Helps to retain skilled and talented employees.
7. Develops a competent internal source of employees for higher level jobs.
8. Instills a competitive spirit among the employees.
9. Effective use of knowledge and skills of an employee.
10. Attract competent and suitable employees to join the organization.
11. Organizations are able to minimize the discontent and unrest among the
employees.

Bases of Promotion

Promotion can be based on following:

1. Promotion Based on Seniority

2. Promotion Based on Merit
3. Promotion Based on Seniority-Cum-Merit

1. Promotion Based on Seniority:

Relative length of service.

Preference in various aspects of employment.

Merits of using seniority as the bases of promotion:

Simplicity
Objectivity
Reward
Reduces employee turnover.
Union approval.
In line with Indian culture.

Promotion based on seniority has been criticized on the following:

Faulty assumption.
Ignores performance.
Efficiency suffers.
Demotivates.

2. Promotion Based on Merit:

Stresses on the ability

Best performing employees is promoted.

Merits of using this system:

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 Enhances efficiency.
Motivates.

Limitations of a promotion system based on merit are as follows:

Subjective.
Favoritism.
Opposition of unions.
Insecurity.

3. Promotion Based on Seniority-Cum-Merit:

Combination.
Before using this system, it is essential that the Management clearly state the
following details:
Minimum length of service.
Relative weightage assigned.
Minimum performance & qualifications.

TYPES OF PROMOTION

Vertical Promotion.
Horizontal Promotion.

PROMOTION POLICIES:

1. Policy Statement

2. Basis of Promotion

3. Communication of Policy

4. Career Planning

5. Detailed Records

6. Employee Training

7. Consistency

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 8. Fair and Impartial

9. Decision Making Authority

10. Appeal Mechanism

Difference between transfers and promotions:

1. Meaning
2. Objects
3. Policy

JOB ROTATION

Job rotation refers to a management tool in which an individual, usually a trainee, is

taken from one department to another over a period of years. This allows the individual
to train on different aspects of the job.

Introduction
Job rotation involves an employee changing positions within the same
organization and eventually returning to the original position
Job rotation is the best way to keep the employees away from boredom
Job rotation helps trainees to apply their:
- knowledge
- abilities
- Interests

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 : A job design technique in which employees are moved between two or more jobs in
a planned manner
Job rotation is a management technique that assigns trainees to various jobs and
departments over a period of few years

TASK ROTATION
It takes place in jobs that involve a high degree of physical demands on the body
or extremely tedious job
Employees are periodically removed from these mentally stressful or physically
demanding tasks to a less demanding task for a while to give them a break.
Eg; A spot welder on a production line working 10 hrs. shift for 4days a week is
shifted to the maintenance or tool shop
PROCESS ROTATION
It is the process of laterally moving an employee to different geographical
location
The purpose behind this type of rotation is to personally professionally
developing the employee by exposing her to new knowledge, skills and
perspectives.
Eg; a junior executive at a multinational consulting firm sent as the company's
advance executive training program to different geographical location

Objectives
1. Reducing Monotony of the job
2. Succession Planning
3. Creating right-Employee Job Fit
4. Exposing Workers to All Verticals of the Company
5. Testing Employee Skills and Competencies
6. Developing a Wider Range of Work Experience

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 Individual Learning Strategies
1. To broaden an individual's knowledge of other functions and departments
2. To prepare an individual for career advancement
3. To motivate and challenge an individual
4. To cross-train members of a team.
5. To maximize an individual's exposure to customers

Advantages

1. Provides an opportunity to broaden ones knowledge

2. Avoiding fraudulent practice
3. Increases Satisfaction and Decreases Attrition Rate
4. Helps Individuals Explore Their Interests
5. Helps Managers Explore the Hidden Talent
6. Identifies Knowledge, Skills and Attitudes
7. Helps Align Competencies with Requirements

Disadvantage

1. Reduces uniformity in quality

2. Frequent interruption
3. Misunderstanding with the union member
4. Staff members have fear of performing different tasks effectively

Potential Barriers to Job Rotation

1. Not all jobs and departments are a good fit for job rotation
2. Short-term productivity losses and product quality issues
3. Workers not qualified for some jobs due to restrictions or ability
4. Union or other workplace policies related to job bidding and compensation
5. Supervisors are not convinced that the benefits are worth the perceived costs

Keys to Successful Job Rotation

1. Job Rotation must start with an end goal

2. Employees are able to assess whether the job rotation is achieving the goals
3. Both the employee and the organization need to benefit from the job rotation
4. A mentor/trainer is provided at each step of the job rotation plan
5. Written documentation
6. Job rotation must be carefully planned

Process of job rotation

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 1. Plan everything in advance.
2. The employees going in for job rotation should be mentally and physically
prepared or otherwise they will not work in newer condition.
3. Check the performance as well as qualification of worker so that the new
environment suits him.
4. Non performers or poor and constant performers should be given extensive
training before considered for job rotation.
5. Employees should be given training from time to time so that they can give good
performance and the real purpose is fulfilled.
6. Employees should possess knowledge, skills and right attitude

Management Development Program

Management Development Programmes are the training methods for enhancing

organizational performance through experiential learning.
Human Resources Development can be defined simply as developing the most
important section of any business its human resource by, attaining or upgrading
the skills and attitudes of employees at all levels in order to maximise the
effectiveness of the enterprise (Kelly 2001)
Human Resources Development is not a defined object, but a series of organized
processes, with a specific learning objective (Nadler,1984)
Human Resources Development is the structure that allows for individual
development, potentially satisfying the organization's goals.

Objective

A key feature of future top organizations will be to know how to boost the
motivation and learning potential on all levels of the organization
Its primary focus is on growth and employee developmentit emphasizes
developing individual potential and skills (Elwood, olton and Trott 1996)

PURPOSE OF MDPS :

MDPs provide considerable intellectual stimulation.

Secondly, we acquire a nodding acquaintance with new concepts and new
developments in the area of managerial techniques..
The third benefits one derive from an MDP is the embellishment of ones
vocabulary-and this is good thing if the jargon is used circumspectly, and with the
fact and understanding

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 The program is designed to drive and support the individual development of these
talents along the following core disciplines:

Personal Mastery,

Mental Models,

Building shared Vision,

Team Learning,

Systems Thinking.

1. Personal Mastery
Openness to ongoing individual development in order to be ready for the
continuously changing challenges in a learning organization,
to create a context for oneself that - as a creative network - stimulates
learning and growth.

2. Mental Models

The reflection on the inner maps and the deeply ingrained assumptions that
influence how we understand the world and how we take action. Above all,
this means,
to comprehend the strong interconnections between our thinking and our
actions.

3.Building a shared Vision

Creating identification by building a shared picture of the future and translating

it into a set of principles and guiding practices.

4. Team Learning

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 Ability for effective communication, conflict solving and consensus building in
work groups and teams, in order to make optimal use of existing resources and
capacities.

5, Systems Thinking

Thinking in complex interconnections

Evaluating organizational challenges in terms of interdependencies and effecting
cycles
and developing effective ways to design systems

MANPOWER PLANNING

Manpower planning is a very important part of the overall planning of a business

organization. It is obvious that a business cannot prosper unless the right number of
employees, having required skills, talents & qualifications is available at right time.

Manpower planning is done to fulfill the two main objectives, namely:

To utilize the present employees fully.

To fill up future manpower requirements.

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Definition

The scientific process of allocating the right quantity of right men to be required in future at
right time on the right job.

According to James J. Lynch Manpower planning is the integration of manpower policies,

practices & procedures so as to achieve the right people in the right jobs at the right time.

According to Vetter, manpower planning is: The process by which management

determines how the organization should move from its current manpower position to its
desired manpower position. Through manpower planning management strives to have right
number of & the right kind of people at the right place at right time, doing things which
result in both the organization & the individual receiving maximum long term benefits.

Types of Manpower planning

Types of manpower planning can be distinguished:

On the basis of the level at which it is done.

On the basis of the period for which it is done.

Manpower Planning

In developing country like India, manpower planning is absolutely essential. Manpower

planning is done on the national level as a part of the planning for overall economical
development of the country. The objective is to provide more & more opportunities of
employment, while utilizing the human resource of the nation most efficient. In India

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manpower planning is a part of overall planning & so its responsibilities lie with planning
commission.

Manpower planning at the organizational level is also important, because it decides the
various measures to be taken such as recruitment, selection, promotion, transfer etc. by an
industrial unit. Depending upon the size of the industry manpower planning may be done at
three levels:

At the departmental level.

If there are number of branches of the industry planning can be done at the level
of each individual branch of the factory.
At the top level, i.e. by the board of directors of the company.

Short term plans are prepared for the period of one year. Short term plans are made as a part
of five year plans at national level. These plans are very much useful at company level.

Medium term plans are those which are made for 2 to 5 years. At national level, medium
terms plan are essentially prepared as a financial planning. These plan gives special attention
towards employment opportunities & training & development of employees.

Long term manpower planning is prepared for a longer period such as 10 to 15 years. This is
done at national level. It is important to estimate man power needs of a nation and
accordingly to raise educational and training facilities keeping in view long term interest of
the nation.

Factors affecting Manpower Planning

1. Working Hours
2. Number of shifts
3. Nature of Production
4. Product mix
5. Performance rate
6. Hours lost

Factors affecting Manpower Planning

1. Working Hours :- Manpower requirement is directly related to the working hours

per day by the employees. If number of working hours is more, then less man power

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 is required and vice versa, for e.g. due to complexity in process & working condition
in a chemical plant, instead of eight hours per shift worker may be required to work
for six hours in a shift, so man power planning basis will be different in a chemical
industry to any other industry.

2. Number of shifts :- If the factory is running in shifts, it should be remembered that

production falls in night shift.

3. Nature of Production:- Ideal time, setting time, cycle time etc all varies greatly with
the nature of production and hence the manpower requirement also. In mass
production & continuous production automatic machines are used because of
automation less manpower will be required as compared to job order and batch
production system industries.

4. Product mix :- It means a production program based optimum productive capacity

and sales forecast, this is based optimum utilization of human and material resources
and also for balancing the production line.

5. Performance rate :- Performance rate depends upon the working conditions, bonus
schemes, suitable incentive plan, training program, motivation etc. If the employees
are motivated to do their best, their performance rate will be quite more & less
number of workers will be needed.

6. Hours lost:- If productive man hours lost are less, there available productive hours
will be more and less manpower will be needed.

Advantage of Manpower Planning'

1. Basis of recruitment & selection of employees: Manpower planning provides a

basis for recruiting new employees considering the future manpower needs. As a
result, the production & any other related work does not stop for lack of employees
of desired skills & abilities .

2. To plan the development of employees :- The present employees can be trained for
some higher position this gives encouragement to the exiting employees & intern
creates psychological climate for motivation

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 3. Through performance appraisal :- Manpower planning enables through
performance appraisals, identification of gaps of existing manpower so that
corrective training could be imparted. Thus the training program becomes more
effective.

4. Reduction in personnel costs :- It reduces personnels cost because the

managements ability to anticipate shortage or surpluses of manpower and correct
these imbalances before they become unmanageable and expensive.

5. Manpower Inventory :- Personnel or manpower inventory can provide information

to management for the internal succession of managerial personnel if there is a
turnover which is not anticipated.( expected)

6. Greater awareness among employee :- It is the importance of sound manpower

management throughout at all levels of organization.

7. Better industrial relations :- Information on surpluses manpower would facilitate

the introduction of an exit plan or scheme for surplus labour. A systematic approach
to deal with surplus manpower would check the problem of industrial relation.

8. Improvement in business planning process :- It leads to improvement of business

planning process.

9. Employment opportunities :- It provides better employment opportunities and

identifies the specific development & training program needed today to make
specific skills available tomorrow

What is Recognition

Rewards, awards, recognition.

Acknowledgement of some achievement
Predetermined or unplanned
It promotes behavior you want repeated
Individual or teams

Benefits of well designed Recognition

Reinforces the strategies/goals of the organization

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 Promotes repeatable behaviors
Improves morale
Can promote teaming, communities, etc.
Can be positioned as a part of a total compensation package

Types of Recognition

Organization wide programs

Anniversaries

Suggestion programs

Top achievers

Management discretion/ nominated

Employee of Month

Best when at discretion of manager

Peer to peer

Usually many restrictions

Key Components

Targeted
Timely
Public
Appropriate

Targeted

Support strategies and goals

Specific behaviors
Clearly communicated

Framing of Recognition

Who
o Individuals
o Teams

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 o Various organizational subsets
When
o Daily, monthly, quarterly, annually
o As behavior occurs
o Specific events
How Always Public

Timely and Public

Appropriate

fast decision to make when designing a reward process

Review all other forms of recognition within organization
Determine least method for most gain
Cash or Non-monetary?

Role of Management

1. Not to be immobilized out of fairness

2. Ensure timeliness
3. Fully utilize management programs
4. Be guardian of process
5. Constantly seek prospects and opportunities
6. Promote peer programs
7. Seek assistance in presentation skills as needed

Pitfalls to Avoid

1. Rewarding wrong behavior

2. Too little
3. Too late
4. Too much
5. Out of sync with other reward structures

Team Awards

Divided equally among team members

Divided proportionally to contribution determined by management
Divided proportionally to contribution determined by the team

Conclusion

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Staffing is the most vital asset with an organization, without which it cannot move ahead
in the competitive world. It can be equated with HR management as both have same sort
of objectives. Staffing is an open system approach. It is carried out within the enterprise
but is also linked to external environment.

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15LEADERSHIP

Introduction

Success of a business concern is dependent upon the ability of its leadership. Whenever and
in whatever situation if someone tries to influence the behavior of another individual, there is
a leadership. It helps to attain the business goals of an organization.

Definition

Leadership is the ability to awaken in others the desire to follow a common objective.

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Approaches or Theories of Leadership

According to this theory, leadership behaviouris is influenced by certain qualities of a

person. A successful leader has the following qualities.

1. Good Personality
2. Tirelessness
3. Ability to take quick decision
4. Courage to face competitors
5. Persuasion
6. Lesson out of experience
7. Intelligence
8. Different thinking
9. Reliability
10. Physical fitness

Behavioral approach or theory

This theory had popularity during 1950s. It assumes that people are lazy and
irresponsible by nature. So there is need of an instrument to give motivation to
workers.

Autocratic, democratic or supervisory styles are some of the leadership styles.

Behavioral approach developed these leadership styles which produce different and
conflicting results.

Situationalist approach or theory

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 During 1970s this theory was developed where some traits and behaviours are
effective in a particular situation and ineffective in another situation. Situation helps
persons to develop their leadership qualities and emerge as leaders

Followers theory or acceptance theory

Here, only followers decide whether a person is a leader or not. Followers take
decision on the quality of the leader who fulfills their needs. Traits and behavior are
not considered as essential element of leadership. This is mainly applied in politics.

System theory or a path goal theory

This is focused on a persons act rather than his traits or behavior. A leader
coordinates the efforts of his followers. This considers all variables like leader,
followers, situation, leadership traits, environment goals and groups nature,
characteristics and needs, role behavior of leader. It is also termed as modern theory
of leadership.

Qualities of Leadership

1. Physical appearance and strength

2. mental vigour
3. emotional stability
4. sense of judgment
5. goodwill
6. motivation
7. communication skill

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 8. guiding ability
9. sociability
10. technical knowledge

Types of Leadership

1. Autocratic leader
2. Intellectual leader
3. Liberal leader
4. Democratic leader
5. Institutional leader
6. Inducing leader
7. Paternal leader
8. Creative leader

Techniques of Leadership

1. Securing cooperation
2. the use of power
3. coordination
4. discipline
5. morale

Characteristics of Leadership

1. There must be followers

2. working relationship between leader and followers
3. personal quality
4. reciprocal relationship
5. community of interests
6. guidance
7. related to a particular situation
8. hard function
9. power relationship

LEADERSHIP STYLES

1.Positive style

A leader motivates followers to work hard by offering them rewards like bonus and
incentives

2.Negative style

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 Leader foresees his followers to work hard and penalize them if the work is not up to
the standard. This has high human cost. Here everyone tries to shift responsibility
over to others.

3.Autocratic or authoritarian style

Advantages:

Leadership style provides strong motivation to followers.

Quick decision is possible.

less talented followers can perform job effectively

Followers do not take any decision

Decision making planning need no initiative

Disadvantages

Most dislike this style as it takes negative motivation approach.

frustration, low morale and conflict develop easily

New ideas and creative ideas have no scope for application

followers have no opportunity for development

Suitability: It is suitable to where followers are uneducated and unskilled.

4.Democratic style

Advantages

Consultation give satisfaction to the followers

due reorganization is given to the followers

followers are aware of the activities

leader can improve decision making ability

followers get opportunity to show their ability

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Disadvantages

Taking decision and implementation require more time.

Followers can dominate the leader

leader can easily shift the responsibility to his followers for failure

it requires communicating skill on part of leaders otherwise it may ruin the

organization

5.Free-rein style

Advantages

Morale and job satisfied of the followers are increased to some extent.

The talent of the followers is properly utilized.

The followers get full opportunity to develop their talents.

Disadvantage

The leader does not care to motivate his followers.

The contribution of a leader is nothing.

The leader does not support the follower and no guidance is available to the fanner.

16SUPERVISION
Introduction

Good managers oversee the performance of workers. IT is necessary to oversee

the performance to achieve early objectives.
Top management oversees the performance of management members and
management members oversee the performance of non management members.
They are also called as First line managers. Supervisors have different names like

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 foreman, department head, head clerk, charge man, chief clerk, head assistant,
inspector, superintendent or section officer etc.

Functions of Supervisor

1. Provides technical knowledge

2. Gives orders, instructions and implements the rules
3. Converts the goals, programs, policies and resources into products and services
4. Creates proper climate
5. Arranges work assignments, determines procedures.
6. Arranges tools and materials
7. motivates workers
8. becomes an example
9. hears complaints and helps to solve them
10. communicates the feelings or problems to the top management
11. controls the performance
12. Recommends promotions, transfers and pay increase.

Responsibility of Supervisor

1. Responsibilities towards workers or subordinates

2. Responsibilities towards management
3. Responsibilities towards his own functions.
4. Responsibilities towards his colleagues

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Principles of Supervision

1. The effective utilization of supervision ensures the achievement of the objectives

of organization
2. Effective supervision is a function of the supervisor
3. Definition of the role of the supervisor and the acceptance of the organization are
responsible for the efficiency of the supervisor
4. Supervisor should analyze his group and decide which course of action helps to
achieve the objectives of organization.
5. The success of any supervisor depends upon the effective fulfilling of groups
needs
6. Groups survival and its progress towards its objectives are the parameters to
judge the efficiency of the supervisor

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Kinds of Supervisor

Bureaucratic regulative
Autocratic directive
Idiocratic manipulative
Democratic Integrative

SUPERVISORY TECHNIQUES

1.Consulting or democratic technique

A supervisor takes decision regarding methods or procedures to be adopted only

after consulting his subordinates.
All the democratic principles are adopted under this technique.

2. Authoritarian or dictatorial technique

Whatever the methods or procedures are fixed by the management, they should
be strictly adhered to by the subordinates.
This technique is suitable where the labour is not properly organized.

3. Non interfering or free rein technique

The subordinates are allowed to select methods or procedures available within the
organization. Hidden talents are exposed by the subordinates under this technique

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17CONTROLLING
Introduction

Control is the last function of management. The controlling function will be unnecessary to
the management if other functions of management are performed properly. Planning
identifies the activities and controlling regulates the activities. Success or failure of planning
depends upon the results of success or failure of controlling.

Definition

Control is any process that guides activity towards some pre-determined goal. The essence
of the concept is in determining whether the activity is the achieving desire results

Areas or scope ff control

Control over the policies of the concern, organization, the personnel employed in an
organization, capital available to the concern, capital expenditure, production, wages and
salaries paid to the employed, the cost of production, public relation, research and
development, tools and equipment and overall control.

Steps in Control process

Establishing standards Measuring performance

Taking Corrective action

Comparison of actual with standards

Requirements of effective control system

1. Feedback
2. Objective
3. Suitability
4. Prompt reporting
5. Pointing out exceptions
6. Flexible
7. Economy
8. Indelible

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 9. Suggest remedial action
10. Motivation

PERT/CPM

Advantages of pert/cpm

1. Ensure planning:
2. identification of favorable factors:
3. Savings of cost and time:
4. Taking preventive or corrective actions:
5. Attention on critical activities:
6. Everything at right:

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 Need of control
1. Judging the accuracy of standards:
2. Minimize dishonest behavior:
3. Better performance:

Advantages of control
1. Adjustments in operation
2. verification of policy
3. managerial accountability
4. Psychological pressure
5. Maintaining morality
6. Co-ordination
7. Efficiency
Limitations of control
1. Absence of perfect standards
2. Uncontrollable factors
3. Difficulty in fixing responsibility
4. Expensive process
Types of managerial control
1. Standardizing control
2. preserving control
3. Delegation of authority control
4. Measurement control
5. Motivating control

BUDGET & DEFINITION OF BUDGET

Budget is derived from the French word Budgette which means small leather bag.
Budget is a financial and quantitative statement.

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 Budget is a plan for income or outgo or both, of money, personal, purchased items,
sales items, or any other entity about which the manager believes that determining
the future course of action will assist in the managerial efforts

Budgetary control & Definition of budgetary control

The term budgetary control is applied to a system of management and according control by
which all operations and output are forecast as far ahead as possible and the actual results
when known are compared with the budge t estimates.

Characteristics of budgetary control

1. The activities the organizations are presented department-wise or section-wise.

2. Budgets give the extent of expenditure though which cost control is achieved.
3. The co-ordination of various departmental activates helps to prepare the determined
standards.
4. Clear-cut and specific requirement of the organization are expressed in quantitative
terms.

5. Determines the deviations by comparisons and causes of such deviations.

6. Recommends and implements the corrective actions when ever necessary.

7. The future is planned on the basis of past experience.

8. Recording the present performance for comparing purpose with the pre-determined
standards.

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Disadvantages, Limitations or problems of budgetary control

1. Inaccuracy
2. personal bias
3. Non-availability of Co-operation
4. Rigidity
5. Results are not attainable
6. Consistency
7. Time Consuming process
8. Ineffective budgetary control
9. Discourage the initiative
10. More paperwork

Essentials of Effective budgeting system

1. Efficient organization
2. Preparing master budget
3. Quick reporting
4. Flexible
5. Support of top management
6. Based on reasonable assumption
7. Reward and punishment
8. Appropriate authority

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Budget can also be classified as

1. Fixed budget

2. Flexible budgets

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 Preparation of a budget

1. Sound forecasting

2. Developed accounting system

3. Fixation of responsibility centers

4. Formation of budget committees

Preparation of a budget

1. Clear definition of business policies

2. Statistical information

3. Support of top management

4. Budget period

18 CO-ORDINATION

Introduction

Co-ordination is the process which ensures smooth interplay of the functions of

management. Common objectives are achieved without much wastage of time, efforts and
money with the help of co-ordination.

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Definition

Co-ordination is balancing and keeping the teams together by ensuring a suitable allocation
of working activities to the various members and seeing that these are performed with due
harmony among the members themselves.

Features or Characteristics

1. Not separate functions of management.

2. Managerial responsibility
3. Provides unity of action
4. Co-ordination is necessary to all levels of organization
5. Relevant of group efforts.
6. Continuous and dynamic process
7. System concept

Need and importance of co-ordination

1. Unity in diversity
2. Term work or unity of directions
3. Functional differentiation
4. Specialization
5. Reconciliation of goals
6. Large number of employees
7. Congruity of flows or congruent flows
8. Empire building
9. Differential and integration

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Techniques of Co-ordination

1. Clearly Defined Objectives

2. Effectives chain of command
3. Coordination through group meetings
4. Harmonious policies and procedures
5. Effective communication
6. Sound organizational structure
7. Coordination through a liaison officer
8. Co-operation
9. Self coordination
10. Coordination by leadership
11. Incentives

TYPES OF COORDINATION

1. Internal coordination: It is the establishment of relationship of the managers, executives,

divisions, subdivisions, and other workers.

Vertical coordination: Superior coordinates his work with his sub coordinates
and vice versa. Sales manager coordinates his work with the activities of the
sales supervisor.

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 Horizontal coordination: Horizontal Coordination refers between the persons
of the same status. Coordination between the departmental heads, supervisors,
co-workers

2. External coordination: It is the establishment of relationship of the managers,

executives, divisions, subdivisions, and other workers.

Problems of Co-ordination

In practice coordination faces certain problems listed below.

1. Natural hindrance
2. Lack of administrative talent
3. lack of techniques of coordination
4. Ideas and objectives
5. Misunderstanding

Steps of effective Co-ordination

1. proper delegation of authority and responsibility

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2. Whole or entire activates of the organization should be divided department wise or
section-wise according to the organization

3. Preparing and adherence to rigid rules and regulations, procedures, policies, etc.

4. Establishment of an effective communication system

5. Establishment of employees grievances cell.

6. There should be a proper system for reporting.

7. Skilled workers are to be rewarded adequately.

8. The management should induce the employees to take active part in meeting,
committees, encourage the employees to have friendly relationship with others.

9. The management should encourage the employees to have friendly relationship with
others.

10. Managers should have opportunities to get training to get training in the area of
leadership, coordination, planning staffing and the like.

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132
14 PRINCIPLES OF MANAGEMENT -
HENRI FAYOL
INTRODUCTION

A principle refers to a fundamental truth.

It establishes cause and effect relationship between two or more variables
under given situation.
They serve as a guide to thought & actions.

These principles are derived: -

On the basis of observation and analysis

By conducting experimental studies

14 PRINCIPLES OF MANAGEMENT DESCRIBED BY HENRI FAYOL

1. Division of Labor

2. Party of Authority & Responsibility

3. Principle of One Boss

4. Unity of Direction

5. Equity

6. Order

7. Discipline

8. Division of Labor

9. Party of Authority & Responsibility

10. Principle of One Boss

11. Unity of Direction

12. Equity

13. Order

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14. Discipline

15. Initiative

16. Fair Remuneration

17. Stability of Tenure

18. Scalar Chain

19. Sub-Ordination of Individual Interest to General Interest

20. Espirit De Corps

21. Centralization & De-Centralization

1. DIVISION OF LABOUR
stressed on the specialization of jobs
work of all kinds must be divided and allotted to various persons
simpler and results in efficiency
helps the individual in acquiring speed, accuracy in his performance
Specialization leads to efficiency & economy in spheres of business
2. PARTY OF AUTHORITY & RESPONSIBILITY
co-existing
Authority is given to a person; he should also be made responsible.
He should also have concerned authority, if anyone is made responsible.
Authority refers to the right of superiors. Responsibility means obligation for
the performance of the job assigned.
Should be a balanced.
Authority- Responsibility = Irresponsible Behavior
Responsibility- Authority= Ineffective
3. PRINCIPLE OF ONE BOSS
A sub-ordinate should receive orders and be accountable to only boss at a
time.
a sub-ordinate should not receive instructions from more than one person
Dual sub-ordination should be avoided
The enterprise a disciplined, stable & orderly existence
Harmonious relationship between superiors and sub-ordinates
a sub-ordinate should not receive instructions from more than one person
4. UNITY OF DIRECTION
One head one plan
Related activities should be grouped together

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 Efforts of all the members of the organization should be directed towards
common goal
Without unity of direction, unity of action cannot be achieved.
Unity of command is not possible without unity of direction.
5. ORDER
Concerned with proper & systematic arrangement of
things and people.
Arrangement of things is called material order
Placement of people is called social order.
Material order-should be safe, appropriate and specific place for every
article
Social order-Selection and appointment of most suitable person on the
suitable job
6. DISCIPLINE
Sincerity, Obedience, Respect of Authority & Observance of Rules and
Regulations of the Enterprise.
subordinate should respect their superiors and obey their order.
smooth running of the enterprise
subordinates but also on the part of management.
Discipline can be enforced if -

-Good superiors
- Clear & fair agreements with workers
- Sanctions are judiciously applied

7. INITIATIVE
Encouraged to take initiative in the work assigned to them
Initiate actions without being asked to do
Management should provide opportunity to its employees
Helps in developing an atmosphere of trust
Enjoy working in the organization because it adds to their zeal and energy
Suggest improvement in formulation & implementation of place
8. FAIR REMUNERATION
Paid to the workers should be fair of the efforts
Satisfaction to both employer and the employees
Determined on the basis of cost of living, work assigned etc,
Provision of other benefits such as free education, medical & residential
facilities to workers
Management creates harmonious relationship and pleasing atmosphere of
work.
9. STABILITY OF TENURE

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 Employees should not be moved frequently from one job position to another
Once they are appointed their services should be served
Time is required for an employee to get used to a new work fayol
Money spent on training the worker will go waste
Stability of job creates team spirit& a sense of belongingness among workers
ultimately increase the quality as well as quantity of work
10. SCALAR CHAIN
The chain of superiors ranging from the ultimate authority to the lowest
Every orders, instructions etc. has to pass through Scalar chain.
For the sake of convenience & urgency, this path can be cut this short cut
-Gang Plank
Temporary arrangement between two different points to facilitate quick &
easy communication
Modified as per the requirements of situations.
11. SUB-ORDINATION OF INDIVIDUAL INTEREST TO GENERAL INTEREST
An organization is much bigger than the individual
As far as possible, reconciliation should be achieved between individual and
group interests.
Case of conflict, individual must sacrifice for bigger interests
In order to achieve this attitude
Employees should be honest & sincere.
Proper & regular supervision of work.
Reconciliation of mutual differences
12. ESPIRIT DE CORPS
It refers to team spirit
Inspires workers to work harder
Interest of the undertaking in the long run.
The managers should infuse team spirit & belongingness
Espirit De Corps following steps should be undertaken
proper co-ordination
should be encouraged to develop informal relations among themselves.
create enthusiasm and keenness among subordinates
employees should be rewarded

13. CENTRALIZATION & DE-CENTRALIZATION

Centralization-concentration of authority at the top level
De-centralization-disposal of decision making authority to all the levels of the
organization
Increases the role of subordinate is decentralization & Decreases the role of
subordinate is centralization

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 It is not feasible, organization should strike to achieve a lot between the two.

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