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Principles of-management-lecture-notes-for-mba

1. 1.OUTLINE 1: INTRODUCTION Define Management? Function of Managers Evolution of


Management  Scientific Management o Fredrick Taylor o Henry L. Gantt o Frank & Lillian Gilberth 
Operational Management o Henri Fayol  Behavioral Science o Munster berg  System theory o
Chester Barnard Modern Management/Recent contribution to management though o Peter F. Drucker
1974 o Edwards o Thomas Peters & Robert Waterman 1982 -2-
2. 3. Management definedPerceptive of Managers:There are many definitions of management but most
perceptive managers areconvinced that it is an organized effort of people whose purpose is to achieve
theobjectives and goals of an organization. Of course, it is not that simple. To gain abetter understanding
of management, let’s review the ideas and views expressed byacademicians and
practitioners.Management as a “Process”:McFardland defines management as “A process by which
managers create, direct,maintain and operate purposive organization through systematic, coordinated,
co-operative human efforts”.An important tern in this definition is “Process”. This term emphasis the
dynamic oron going nature of management, an activity over varying span of time. The dynamicnature
implies that change is reality of organizational life.In managing organizations, managers create changes
adopt organizations to changesand implement changes successfully in their organizations. Businesses
fail andbecome bankrupt because managers fail in their attempt to cope with the change.Management
as“coordination”:Donally, Gibson and Ivancevich also support the view of management as a processbut
their stress in more on co-ordination. According to them, “Management is aprocess by which individual
and group effort is coordinated towards group goals”.In order to achieve goals, coordination is essential
and management involves securingand maintaining this coordination.This coordination effort is also
stressed in the definition of Koontz and O’Donnell.According to them, “Management is a process of
designing and maintaining anenvironment in which, individuals, working together in groups efficiently
andeffectively accomplish group goals”. -3-
3. 4. Management as a “Function”:There are those who view management as a function rather than a
process. Dunn,Stephens and Kelly contend that “Management is a role which includes a set ofduties,
responsibilities, and relationships-involved in work organizations”.These duties and responsibilities
constitute the function a manager performs. Theduties and responsibilities a manager performs are quite
different from thoseperformed by managerial employees.Management is getting things done through
other people:A simple definition of management that is often quoted and it sounds very simple.According
to this definition, managers do not do things they get other people to dothings. If managing is an
individual ability to get things done, then it is not a problem.We can plan and perform things according to
our own convince and interests. Whensomebody else is involved and wants to get things done through
them, there is adifficulty. All sorts of problems arise; personalities come into contact and
conflict.Interpersonal problems crop up. We have to understand the behavior of other peopleand must
have knowledge as to how to motivate them in order to get things donethrough them. We have to
consider the conveniences and interest of others also inplanning and implementing things.In getting
things done through others, people have to be coaxed, they have to beshown, they have to inspired,
they have to be motivated and this is what managementmeans. These activities are performed not only
by the people at the top but from thechairman of the board to the front line supervisors and foremen.
They use the abovementioned methods to get things done through other people.A comprehensive
definition of Management:In mid 1940s, academic people from various business schools in the United
Statesgathered together with the sole purpose of deciding whether a definition ofmanagement could be
written that businessmen would accept and practice and -4-
4. 5. academicians would teach. Ultimately they came up with the fallowing definition. Noindividual is
identified with this definition.The definition reads;“Management is guiding human and physical resources
into a dynamic organizationunits that attain their objectives to the satisfaction of those served and with
the highdegree of moral and sense of attainment on the part of those rendering the services”.What is
Management?Introduction:Management is a vital aspect of the economic life of man, which is an
organizedgroup activity. A central directing and controlling agency is indispensable for abusiness
concern. The productive resources – material, labour, capital etc. areentrusted to the organizing skill,
administrative ability and enterprising initiative ofthe management. Thus, management provides
leadership to a business enterprise.Without able managers and effective managerial leadership the
resources ofproduction remain merely resources and never become production. Under
competitiveeconomy and ever-changing environment the quality and performance of
managersdetermine both the survival as well as success of any business enterprise.Management
occupies such an important place in the modern world that the welfareof the people and the destiny of
the country are very much influenced by it.Definition:“Management is the process of getting things done
through the efforts of other peoplein order to achieve the predetermined objectives of
organization”.Management may also be define as:“The process by which execution of given purpose put
into operation and supervise”.A concise statement:“The function of executive leadership
anywhere”.Another statement:Management may be defined as “A technique by which the purpose and
objectives ofparticular human group are determined, defined, clarified and completed” -5-
5. 6. From business Pont of view:“Management is the art of securing maximum results with the minimum of
efforts soas to get maximum prosperity and happiness for both employer and employee andgive public
the best possible service”.Complete definition of management:“Management is a distinct process
consisting of planning, organizing, staffing,leading and controlling utilizing both in each science and art
and followed in order toaccomplish predetermined objectives of the organization”. Entity identity
Management is a distinct process consisting of Planning Organizing Staffing Leading Controlling Applied
to Efforts of a group of people to utilize effective available recourses Man Money Material Method
Machine In order to achieve predetermined objectives of an organizationNecessity of Management:(1)
Management is an essential activity of all organizational level (Low, middle, and upper level)(2)
Management applies to: (i) Small and large Organizations. (ii) Profit and non profit Organization. (iii)
Manufacturing Organization. (iv) Service rendering Organization. -6-
6. 7. Manager:Manager is also known as leader and administrative, Manager is a person who undertake
the tasks and function of managing at any level, in any kind of enterprise.Managerial Skills:There are
four skills of managers are expected to have ability of: (1)Technical skills: Technical skills that reflect
both an understanding of and a proficiency in a specialized field. For example, a manager may have
technical skills in accounting, finance, engineering, manufacturing, or computer science. Human Skills:
Human skills are skills associated with manager’s ability to work well with others, both as a member of a
group and as a leader who gets things done through other. Concept Skills: Conceptual skills related to
the ability to visualize the organization as a whole, discern interrelationships among organizational parts,
and understand how the organization fits into the wider context of the industry, community, and world.
Conceptual skills, coupled with technical skills, human skills and knowledge base, are important
ingredients in organizational performance. Design Skills: It is the ability to solve the problems in ways
that will benefit the enterprise. Managers must be able to solve the problems.The Skills vary at different
levels:Top management Concept and design Skills.Middle Human Skills.Supervisor’s Technical skills.
Skills of management at different levels. -7-
7. 8. The Function of Managers:There are five functions of managers:Planning, Organizing, Staffing,
Leading, and Controlling.The functions of managers provide a useful structure for organizing
managementknowledge.(1)Planning:Planning involves selecting missions and objectives and the action
to achieve them itrequires decision making, that choosing future courses of action from
amongalternatives. There are five types of planning: 1. Missions and objectives. 2. Strategies and
polices. 3. Procedures and rules. 4. Programs. 5. Budgets.(2)OrganizingOrganizing is the part of
managing that involves establishing an intentional structureof roles for people to fill in an organization.
The purpose of an organization structureis to creating an environment helpful for human performance. It
is then managementtools and not an end. Although the structure must define the task to be done, the
rulesso established must also be designed in the light of the abilities and motivations of thepeople
available designing an effective organization structure is not an easymanagerial task.Many problems
arises in making structures fit situations.(3)StaffingStaffing involves filling and keeping filled, the
positions in the organization. This isdone by identifying the work force requirement inventorying the
people available andrecruiting, selecting, placing, promoting, appraising, planning the
careers,compensating and training.(4)LeadingLeading is influence people so that they will contribute to
organization and groupgoals. All managers would agree that most problems arises from peoples desires
and -8-
8. 9. problems , their behavior as individuals and in groups and that effective managersalso need to be
effective leaders.Leading involves motivation, leadership styles and approaches and
communications.(5)Controlling:Controlling is measuring and correcting individuals and organizational
performance.It involves measuring performance against goals and plans, showing where thedeviations
from standards exit and helping to correct them. In short controllingfacilitates the accomplishment of
plans.Controll activity generally relate to themeasurement of achievement. Some means of controlling
like the budget forexpenses, inspection, record of labors-hours lost, are generally familiar. Each
showswhether plans are working out.THE EVOLVATION OF MANAGEMENTThe origin of management
can be traced back to the days when man started living ingroups. History reveals that strong men
organized the masses into groups accordingto their intelligence, physical and mental capabilities.
Evidence of the use of the wellrecognized principles of management is to be found in the organization of
public lifein ancient Greece, the organization of the Roman Catholic Church and theorganization of
military forces. Thus management in some form or the other has beenpracticed in the various parts of
the world since the dawn of civilization. With the onset of Industrial Revolution, however, the position
underwent a radical change. Thestructure of industry became extremely complex. At this stage, the
development of aformal theory of management became absolutely necessary. It was against
thisbackground that the pioneers of modern management thought laid the foundations ofmodern
management theory and practice.Different Author says that history of management is different Author
contribute inmanagement. There are so many theories of management that why also called Jungleof
management. -9-
9. 10. Different period of management:1. Scientific Management: (i)Fredrick Taylor. (ii)Henry L.Gantt.
(iii)Frank and Lillian Gilberth.2. Operational Management (i) Henri Fayol.3. Behavioral Science: (i)
Munster berg.4. System Theory. (i) Chester Barnard5. Modern Management /Recent contribution to
management thoughts. (i) Peter F.Drucker 1974. (ii) Edwards. (iii) Thomas Peter & Robert
Waterman.19821. Scientific Management:F.W. Taylor and Henry Fayol are generally regarded as the
founders of scientificmanagement and administrative management and both provided the bases for
scienceand art of management.Features of Scientific Management:1. It was closely associated with the
industrial revolution and the rise of large-scaleenterprise.2. Classical organization and management
theory is based on contributions from anumber of sources. They are scientific management,
Administrative managementtheory, bureaucratic model, and micro-economics and public
administration.3. Management thought focused on job content division of labour,
standardization,simplification and specialization and scientific approach towards organization. - 10 -
10. 11. Taylors Scientific Management (USA 1856-1915):Started as an apprentice machinist in Philadelphia,
USA. He rose to be the chief engineer at the Midvale Engineering Works and later on served with the
Bethlehem Works where he experimented with his ideas and made the contribution to the management
theory for which he is so well known. Frederick Winslow Taylor well-known as the founder of scientific
management was the first to recognize and emphasis theneed for adopting a scientific approach to the
task of managing an enterprise. He triedto diagnose the causes of low efficiency in industry and came to
the conclusion thatmuch of waste and inefficiency is due to the lack of order and system in the
methodsof management. He found that the management was usually ignorant of the amount ofwork that
could be done by a worker in a day as also the best method of doing the job.As a result, it remained
largely at the mercy of the workers who deliberately shirkedwork. He therefore, suggested that those
responsible for management should adopt ascientific approach in their work, and make use of "scientific
method" for achievinghigher efficiency. The scientific method consists essentially of(a) Observation(b)
Measurement(c) Experimentation and(d) Inference.He advocated a thorough planning of the job by the
management and emphasized thenecessity of perfect understanding and co-operation between the
management and theworkers both for the enlargement of profits and the use of scientific investigation
andknowledge in industrial work. He summed up his approach in these words: Science, not rule of
thumb Harmony, not discord Co-operation, not individualism Maximum output, in place of restricted
output The development of each man to his greatest efficiency and prosperity.Elements of Scientific
Management: The techniques which Taylor regarded as itsessential elements or features may be
classified as under: - 11 -
11. 12. 1. Scientific Task and Rate-setting, work improvement, etc.2. Planning the Task.3. Vocational
Selection and Training4. Standardization (of working conditions, material equipment etc.)5.
Specialization6. Mental Revolution.1. Scientific Task and Rate-Setting (work study): Work study may be
defined as thesystematic, objective and critical examination of all the factors governing theoperational
efficiency of any specified activity in order to effect improvement .Work study includes. (a) Methods
Study: The management should try to ensure that the plant is laid out in the best manner and is
equipped with the best tools and machinery. The possibilities of eliminating or combining certain
operations may be studied. (b) Motion Study: It is a study of the movement, of an operator (or even of a
machine) in performing an operation with the purpose of eliminating useless motions. (c) Time Study
(work measurement): The basic purpose of time study is to determine the proper time for performing the
operation. Such study may be conducted after the motion study. Both time study and motion study help
in determining the best method of doing a job and the standard time allowed for it. (d) Fatigue Study: If, a
standard task is set without providing for measures to eliminate fatigue, it may either be beyond the
workers or the workers may over strain themselves to attain it. It is necessary, therefore, to regulate the
working hours and provide for rest pauses at scientifically determined intervals. (e) Rate-setting: Taylor
recommended the differential piece wage system, under which workers performing the standard task
within prescribed time are paid a much higher rate per unit than inefficient workers who are not able to
come up to the standard set.2. Planning the Task: Having set the task which an average worker must
strive to perform to get wages at the higher piece-rate, necessary steps have to be taken to - 12 -
12. 13. plan the production thoroughly so that there is no bottle neck and the work goes on systematically.3.
Selection and Training: Scientific Management requires a radical change in the methods and procedures
of selecting workers. It is therefore necessary to entrust the task of selection to a central personnel
department. The procedure of selection will also have to be systematized. Proper attention has also to
be devoted to the training of the workers in the correct methods of work.4. Standardization:
Standardization may be introduced in respect of the following. (a) Tools and equipment: By
standardization is meant the process of bringing about uniformity. The management must select and
store standard tools and implements which will be nearly the best or the best of their kind. (b) Speed:
There is usually an optimum speed for every machine. If it is exceeded, it is likely to result in damage to
machinery. (c) Conditions of Work: To attain standard performance, the maintenance of standard
conditions of ventilation, heating, cooling, humidity, floor space, safety etc., is very essential. (d)
Materials: The efficiency of a worker depends on the quality of materials and the method of handling
materials.5. Specialization: Scientific management will not be complete without the introduction of
specialization. Under this plan, the two functions of planning and doing are separated in the organization
of the plant. The `functional foremen are specialists who join their heads to give thought to the planning
of the performance of operations in the workshop. Taylor suggested eight functional foremen under his
scheme of functional foremanship. (a) The Route Clerk: To lay down the sequence of operations and
instruct the workers concerned about it. (b) The Instruction Card Clerk: To prepare detailed instructions
regarding different aspects of work. (c) The Time and Cost Clerk: To send all information relating to their
pay to the workers and to secure proper returns of work from them. - 13 -
13. 14. (d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism. (e) The
Gang Boss: To assemble and set up tools and machines and to teach the workers to make all their
personal motions in the quickest and best way. (f) The Speed Boss: To ensure that machines are run at
their best speeds and proper tools are used by the workers. (g) The Repair Boss: To ensure that each
worker keeps his machine in good order and maintains cleanliness around him and his machines. (h)
The Inspector: To show to the worker how to do the work.6. Mental Revolution: At present, industry is
divided into two groups – managementand labour. The major problem between these two groups is the
division of surplus.The management wants the maximum possible share of the surplus as profit;
theworkers want, as large share in the form of wages. Taylor has in mind the enormousgain that arises
from higher productivity. Such gains can be shared both by themanagement and workers in the form of
increased profits and increased wages.Benefits of Scientific Management:Taylors ideas, research and
recommendations brought into focus technological,human and organizational issues in industrial
management.Benefits of Taylors scientific management included wider scope for specialization,accurate
planning, timely delivery, standardized methods, better quality, lesser costs,minimum wastage of
materials, time and energy and cordial relations betweenmanagement and workers. According to
Gilbreths, the main benefits of scientificmanagement are "conservation and savings, making an
adequate use of every onesenergy of any type that is expended". The benefits of scientific management
are:- 1. Replacement of traditional rule of thumb method by scientific techniques. 2. Proper selection and
training of workers. 3. Incentive wages to the workers for higher production. 4. Elimination of wastes and
rationalization of system of control. 5. Standardization of tools, equipment, materials and work methods.
6. Detailed instructions and constant guidance of the workers. - 14 -
14. 15. 7. Establishment of harmonious relationship between the workers. 8. Better utilization of various
resources. 9. Satisfaction of the needs of the customers by providing higher quality products at lower
prices.Criticism:1. Workers Criticism: (a) Speeding up of workers: Scientific Management is only a device
to speed up the workers without much regard for their health and well-being. (b) Loss of individual
workers initiative: Scientific Management reduces workers to automatic machine by taking away from
them the function of thinking. (c) Problem of monotony: By separating the function of planning and
thinking from that of doing, Scientific Management reduces work to mere routine. (d) Reduction of
Employment: Scientific Management creates unemployment and hits the workers hard. (e) Weakening of
Trade Unions: Under Scientific Management, the important issues of wages and working conditions are
decided by the management through scientific investigation and the trade unions may have little say in
the matter. (f) Exploitation of workers: Scientific Management improves productivity through the agency
of workers and yet they are given a very small share of the benefit of such improvement.2. Employers
Criticism: (a) Heavy Investment: It requires too heavy an investment. The employer has to meet the extra
cost of the planning department though the foreman in this department do not work in the workshop and
directly contribute towards higher production. (b) Loss due to re-organization: The introduction of
Scientific Management requires a virtual reorganization of the whole set-up of the industrial unit. Work
may have to be suspended to complete such re-organization. (c) Unsuitable for small scale firms:
various measures like the establishment of a separate personnel department and the conducting of time
and motion studies are too expensive for a small or modest size industrial unit. - 15 -
15. 16. Henry Lawrence Gantt (USA, 1861 - 1819): H.L Gantt was born in 1861. He graduated from John
Hopkins College. For some time, he worked as a draftsman in an iron foundry. In 1884, he qualified as a
mechanical engineer at Stevens Institute. In 1887, he joined the Midvale Steel Company. Soon, he
became anassistant to F.W Taylor. He worked with Taylor from 1887 - 1919 at Midvale SteelCompany.
He did much consulting work on scientific selection of workers and thedevelopment of incentive bonus
systems. He emphasized the need for developing amutuality of interest between management and
labour. Gantt made four importantcontributions to the concepts of management:1. Gantt chart to
compare actual to planned performance. Gantt chart was a daily chart which graphically presented the
process of work by showing machine operations, man hour performance, deliveries, effected and the
work in arrears. This chart was intended to facilitate day-to-day production planning.2. Task-and-bonus
plan for remunerating workers indicating a more humanitarian approach. This plan was aimed at
providing extra wages for extra work besides guarantee of minimum wages. Under this system of wage
payment, if a worker completes the work laid out for him, he is paid a definite bonus in addition to his
daily minimum wages. On the other hand, if a worker does not complete his work, he is paid only his
daily minimum wages. There was a provision for giving bonus to supervisors, if workers under him were
able to earn such bonus by extra work.3. Psychology of employee relations indicating management
responsibility to teach and train workers. In his paper "Training Workmen in Habits of Industry
andCooperation", Gantt pleaded for a policy of preaching and teaching workmen to do their work in the
process evolved through pre-thinking of management.4. Gantt laid great emphasis on leadership. He
considered management as leadership function. He laid stress on the importance of acceptable
leadership as the primary element in the success of any business. - 16 -
16. 17. Gantts contributions were more in the nature of refinements rather than fundamental concepts. They
made scientific management more humanized and meaningful to devotees of Taylor.Frank (USA, 1867 -
1924) and Lillian (U.S.A, 1878 - 1912):The ideas of Taylor were also strongly supported and developed
by the famous husband and wife team of Frank and Lillian Gilbreth. They became interested in wasted
motions in work. After meeting Taylor, they combined their ideas with Taylors to put scientific
management into effect. They made pioneering effort in thefield of motion study and laid the entire
foundation of our modern applications of jobsimplification, meaningful work standards and incentive
wage plans. Mrs. Gilbrethhad a unique background in psychology and management and the couple
couldembark on a quest for better work methods. FrankGilbreth is regarded as the father of motion
study. He is responsible for inculcating inthe minds of managers the questioning frame of mind and the
search for a better wayof doing things.Gilbreths contributions to management thought are quite
considerable. His maincontributions are:(a) The one best way of doing a job is the way which involves
the fewest motions performed in an accessible area and in the most comfortable position. The best way
can be found out by the elimination of inefficient and wasteful motions involved in the work.(b) He
emphasized that training should be given to workers from the very beginning so that they may achieve
competence as early as possible.(c) He suggested that each worker should be considered to occupy
three positions - (i) the job he held before promotion to his present position, (ii) his present position, and
(iii) The next higher position. The part of a workers time should be spent in teaching the man below him
and learning from the man above him. This would help him qualify for promotion and help to provide a
successor to his current job.(d) Frank and Lillian Gilberth also gave a thought to the welfare of the
individuals who work for the organization. - 17 -
17. 18. (e) Gilbreth also devised methods for avoiding wasteful and unproductive movements.He laid down
how workers should stand, how his hands should move and so on.(2) Operational ManagementHenri
Fayol: The Father of modern operational theory.Perhaps the real father of modern management theory is
the (French industrialist) Henri Fayol. His acute observations on the Principles of general management
first appeared in 1916 in French, under the little “admistration industrielte in generale “. This monograph,
reprinted in French several times, was not translatedinto English until 1929. No English translation was
made or published in the US until1949.Industrial Activities:Fayol found that industrial activates could be
divided into six groups as shown infigure. 1. Technical (Production) 2. Commercial (buying, Selling and
exchanging). 3. Financial (Search for, and optimum use of capital). 4. Security (Protection of property
and persons). 5. Accounting (including Statistics). 6. Managerial (Planning, organization, command,
contribution and control).Henri Fayol pointed out that these activities exist in every size of business.
Fayolobserved that first five were well known and he devoted most of his book to ananalysis of the sixth.
Financial Commercial Security Managers Activities Technical Accounting Managerial - 18 -
18. 19. Managerial  Planning, Organization, Staffing, Leading, Control.Fayol’s activities in industrial
undertaking:General Principles of Management: Fayol listed Fourteen Principles based on experience.
He noting thatPrinciples of management are flexible, not absolute and must be usable regard less
ofchanging and special conditions. Some kinds of Principles appeared to beindispensable in every
undertaking. 1. Division of Work :- Fayol applies the principle to all kind of work, management as well as
technical. 2. Authority and responsibility : Henri Fayol finds authority and responsibility to be related with
the latter arising from the former. He sees authority as a combination of official factors, manager’s
position and personal factors, “Compounded of intelligence, experience, moral worth, past services etc.
3. Discipline : Fayol declares that discipline requires good superiors at all levels. 4. Unity of Command:
This means that employees should receive order from one superior only. 5. Unity Of Direction: According
to this principal, each group of activities with same objective must have one head and one plan. 6.
Subordination of individuals to general interest: When the two are found to differ, management must
reconcile them. 7. Remuneration: Remuneration and method of payment should b fair and have
maximum possible satisfaction to employees and employer. 8. Centralization: Without using the term
centralization of authority ‘’Fayol refers authority dispersed or concentrated. - 19 -
19. 20. 9. Scalar Chain: Fayol thinks of this as “Chain of Superior” from beigest to low ranks should be short
circuited. 10. Order: Fayol classify this into “material” and “social” order. This is essential principle in
arrangement of things and people in an organization. 11. Equity: Loyalty and devotion should be elected
from personnel on biases of kindliness and justice, when dealing with subordinate. 12. Stability of tenure:
In bad management, Fayol points out id dangers and costs. 13. Initiative: Initiative is execution of a plan.
14. Esprit decrops: This is the principle that in the union there is strength. This principle emphasis on
work, Unity of communication. In order to accomplishment of objective. Element of Management: Fayol
said the element of management is its functions. Planning, Organizing, Staffing, Leading, and controlling.
He point out that the principles of management can apply not only to business but also to practical,
religious, military and other understanding.3. Behavioral Science / Behavioral management theory:The
behavioral management theory is often called the human relations movement becauseit addresses the
human dimension of work. Behavioral theorists believed that a betterunderstanding of human behavior at
work, such as motivation, conflict, expectations, andgroup dynamics, improved productivity.The theorists
who contributed to this school viewed employees as individuals, resources, andassets to be developed
and worked with — not as machines, as in the past. Severalindividuals and experiments contributed to
this theory. - 20 -
20. 21. George Elton Mayo (Australia, 1880 - 1949):Elton Mayo was born in Australia. He was educated in
Logic and Philosophy at St. Peters College, Adelaide. He led a team of researchers from Harvard
University, which carried out investigation in human problems. Elton Mayo’s contributions came as part
of the Hawthorne studies, a series of experiments that rigorously applied classical managementtheory
only to reveal its shortcomings. The Hawthorne experiments consisted of twostudies conducted at the
Hawthorne Works of the Western Electric Company inChicago from 1924 to 1932. The first study was
conducted by a group of engineersseeking to determine the relationship of lighting levels to worker
productivity.Surprisingly enough, they discovered that worker productivity increased as thelighting levels
decreased — that is, until the employees were unable to see what theywere doing, after which
performance naturally declined.A few years later, a second group of experiments began. Harvard
researchers Mayoand F. J. Roethlisberger supervised a group of five women in a bank wiring room.They
gave the women special privileges, such as the right to leave their workstationswithout permission, take
rest periods, enjoy free lunches, and have variations in paylevels and workdays. This experiment also
resulted in significantly increased rates ofproductivity.In this case, Mayo and Roethlisberger concluded
that the increase in productivityresulted from the supervisory arrangement rather than the changes in
lighting or otherassociated worker benefits. Because the experimenters became the primarysupervisors
of the employees, the intense interest they displayed for the workers wasthe basis for the increased
motivation and resulting productivity. Essentially, theexperimenters became a part of the study and
influenced its outcome. This is theorigin of the term Hawthorne effect, which describes the special
attention researchersgive to a study’s subjects and the impact that attention has on the study’s
findings.The general conclusion from the Hawthorne studies was that human relations and thesocial
needs of workers are crucial aspects of business management. This principle ofhuman motivation
helped revolutionize theories and practices of management. - 21 -
21. 22. Max Weber Theory of bureaucracy:He disliked that many European organizations were managed on
a “personal” family- like basis and that employees were loyal to individual supervisors rather than to the
organization. He believed that organizations should be managed impersonally and that a formal
organizational structure, where specific rules were followed, was important. In other words, he didn’t
think that authority should be based on a person’s personality.He thought authority should be something
that was part of a person’s job and passedfrom individual to individual as one person left and another
took over. This nopersonal, objective form of organization was called a bureaucracy.Weber believed that
all bureaucracies have the following characteristics: A well-defined hierarchy. All positions within a
bureaucracy are structured in a way that permits the higher positions to supervise and control the lower
positions. This clear chain of command facilitates control and order throughout the organization.
Division of labor and specialization. All responsibilities in an organization are specialized so that each
employee has the necessary expertise to do a particular task. Rules and regulations. Standard
operating procedures govern all organizational activities to provide certainty and facilitate coordination.
Impersonal relationships between managers and employees. Managers should maintain an impersonal
relationship with employees so that favoritism and personal prejudice do not influence decisions.
Competence. Competence, not “who you know,” should be the basis for all decisions made in hiring, job
assignments, and promotions in order to foster ability and merit as the primary characteristics of a
bureaucratic organization. Records. A bureaucracy needs to maintain complete files regarding all its
activities. - 22 -
22. 23. 4. System Approach:The systems approach to management indicates the fourth major theory
ofmanagement thought called modern theory. Modern theory considers an organizationas an adaptive
system which has to adjust to changes in its environment. Anorganization is now defined as a structured
process in which individuals interact forattaining objectives.Meaning of "System": The word system is
derived from the Greek word meaning tobring together or to combine. A system is a set of
interconnected and inter-relatedelements or component parts to achieve certain goals. A system has
three significantparts:1. Every system is goal-oriented and it must have a purpose or objective to be
attained.2. In designing the system we must establish the necessary arrangement of components.3.
Inputs of information, material and energy are allocated for processing as per plan so that the outputs
can achieve the objective of the system. Fig. The Design of a basic system - 23 -
23. 24. Chester Barnard (1886 – 1961):He president of New Jersey Bell Telephone Company, introduced
the idea of the informal organization —cliques (exclusive groups of people) that naturally form within a
company. He felt that these informal organizations provided necessary and vital communication
functions for the overall organization and that they could help the organizationaccomplish its goals.
Barnard felt that it was particularly important for managers todevelop a sense of common purpose where
a willingness to cooperate is stronglyencouraged. He is credited with developing the acceptance theory
of management,which emphasizes the willingness of employees to accept that mangers havelegitimate
authority to act. Barnard felt that four factors affected the willingness ofemployees to accept authority:
The employees must understand the communication. The employees accept the communication as
being consistent with the organization’s purposes. The employees feel that their actions will be
consistent with the needs and desires of the other employees. The employees feel that they are
mentally and physically able to carry out the order. Barnard’s sympathy for and understanding of
employee needs positioned him as a bridge to the behavioral school of management, the next school of
thought to emerge. - 24 -
24. 25. 5. Modern Management /Recent contribution to managementthoughts:Peter Ferdinand Drucker
(November 19, 1909–November 11, 2005):He was a writer, management consultant, and self-described
“social ecologist.” Widely considered to be "the father of modern management,” his 39 books and
countless scholarly and popular articles explored how humans are organized across all sectors of
society—in business, government and the nonprofit world.His writings have predicted many of the major
developments of the late twentiethcentury, including privatization and decentralization; the rise of Japan
to economicworld power; the decisive importance of marketing; and the emergence of theinformation
society with its necessity of lifelong learning. In 1959, Drucker coinedthe term “knowledge worker" and
later in his life considered knowledge workproductivity to be the next frontier of management.Basic
ideas: Decentralization and simplification: Drucker discounted the command and control model and
asserted that companies work best when they are decentralized. According to Drucker, corporations
tend to produce too many products, hire employees they dont need (when a better solution would be
outsourcing), and expand into economic sectors that they should avoid. Respect of the worker: Drucker
believed that employees are assets and not liabilities. He taught that knowledge workers are the
essential ingredients of the modern economy. Central to this philosophy is the view that people are an
organizations most valuable resource and that a managers job is to prepare and free people to perform.
The need to manage business by balancing a variety of needs and goals, rather than subordinating an
institution to a single value. This concept of management by objectives forms the keynote of his 1954
landmark "The Practice of Management". - 25 -
25. 26.  A companys primary responsibility is to serve its customers. Profit is not the primary goal, but
rather an essential condition for the companys continued existence. An Organization should have a
proper way of executing all its business processes. A belief in the notion that great companies could
stand among humankinds noblest inventions.William Edwards Deming (October 14, 1900 – December
20, 1993):He was an American statistician, professor, author, lecturer, and consultant. Deming is widely
credited with improving production in the United States during World War II, although he is perhaps best
known for his work in Japan. There, from 1950 onward he taught top management how to improve
design (and thus service), product quality, testing and sales (the last through global markets) through
various methods, including the application of statistical methods.Deming made a significant contribution
to Japans later-renown-for innovative high-quality products and its economic power. He is regarded as
having had more impactupon Japanese manufacturing and business than any other individual not of
Japaneseheritage. Despite being considered something of a hero in Japan, he was onlybeginning to win
widespread recognition in the U.S. at the time of his death.Deming philosophy synopsis:The philosophy
of W. Edwards Deming has been summarized as follows: "Dr. W. Edwards Deming taught that by
adopting appropriate principles of management, organizations can increase quality and simultaneously
reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty).
The key is to practice continual improvement and think of manufacturing as a system, not as bits and
pieces."In the 1970s, Dr. Demings philosophy was summarized by some of his Japaneseproponents with
the following a-versus-b comparison: - 26 -
26. 27. (a) When people and organizations focus primarily on quality, defined by thefollowing ratio, Results
of work efforts Quality = Total CostQuality tends to increase and costs fall over time.(b) However, when
people and organizations focus primarily on costs, costs tend torise and quality declines over
time.Demings 14 points:Deming offered fourteen key principles for management for transforming
businesseffectiveness. The points were first presented in his book Out of the Crisis. 1. Create constancy
of purpose toward improvement of product and service, with the aim to become competitive and stay in
business, and to provide jobs. 2. Adopt the new philosophy. We are in a new economic age. Western
management must awaken to the challenge, must learn their responsibilities, and take on leadership for
change. 3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a
mass basis by building quality into the product in the first place. 4. End the practice of awarding business
on the basis of price tag. Instead, minimize total cost. Move towards a single supplier for any one item,
on a long-term relationship of loyalty and trust. 5. Improve constantly and forever the system of
production and service, to improve quality and productivity, and thus constantly decrease cost. 6.
Institute training on the job. 7. Institute leadership. The aim of supervision should be to help people and
machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as
supervision of production workers. 8. Drive out fear, so that everyone may work effectively for the
company. - 27 -
27. 28. 9. Break down barriers between departments. People in research, design, sales, and production
must work as a team, to foresee problems of production and in use that may be encountered with the
product or service. 10. Eliminate slogans, exhortations, and targets for the work force asking for zero
defects and new levels of productivity. Such exhortations only create adversarial relationships, as the
bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power
of the work force. 11. (a) Eliminate work standards (quotas) on the factory floor. Substitute leadership.
(b) Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute
workmanship. 12. (a) Remove barriers that rob the hourly worker of his right to pride of workmanship.
The responsibility of supervisors must be changed from sheer numbers to quality. (b) Remove barriers
that rob people in management and in engineering of their right to pride of workmanship. This means,
inter alia, abolishment of the annual or merit rating and of management by objective. 13. Institute a
vigorous program of education and self-improvement. 14. Put everyone in the company to work to
accomplish the transformation. The transformation is everyones work. "Massive training is required to
instill the courage to break with tradition. Every activity and every job is a part of the process."In Search
of Excellence Thomas Peters & Robert Waterman 1982:“In Search of Excellence” is an international
bestselling book written by Tom Petersand Robert H. Waterman, Jr. First published in 1982 it is one of
the biggest sellingand most widely read business books ever, selling 3 million copies in its first fouryears,
and being the most widely held library book in the United States from 1989 to2006 (WorldCat data). The
book explores the art and science of management used by - 28 -
28. 29. leading 1980s companies with records of long-term profitability and continuinginnovation.Peters and
Waterman found eight common themes which they argued wereresponsible for the success of the
chosen corporations. The book devotes one chapterto each theme. 1. A bias for action, active decision
making - getting on with it. 2. Close to the customer - learning from the people served by the business. 3.
Autonomy and entrepreneurship - fostering innovation and nurturing champions. 4. Productivity through
people- treating rank and file employees as a source of quality. 5. Hands-on, value-driven - management
philosophy that guides everyday practice - management showing its commitment. 6. Stick to the knitting
- stay with the business that you know. 7. Simple form, lean staff - some of the best companies have
minimal HQ staff. 8. Simultaneous loose-tight properties - autonomy in shop-floor activities plus
centralized values. - 29 -
29. 30. OUT LINE NO: 02 PLANNINGPlanningThe Nature and purpose of planning o The contribution of
planning to purpose and objectives o The primacy of planning o The pervasiveness of planning o The
efficiency of plansTypes of planning o Purpose, mission and objectives o Strategies and policies o
Procedures and rules o Programs o BudgetSteps in planning o Awareness op opportunities o Setting
objectives o Developing performance o Identifying alternative courses of action o Evaluating alternative
courses o Selecting a course o Formulating derivative plan o Numbrising plans by making budgetsThe
Planning processManagement by objectives (MBO) o Benefits of MBO o Weaknesses of MBODecision
making o Rational decision making o Steps in decision makingQuantitative & qualitative
factorsManagerial analysis - 30 -
30. 31. PLANNING:What is planning?There are many definitions of planning. Planning may define
as:According to Fayol - "The plan of action is, at one and the same time, the resultenvisaged, the line of
action to be followed, the stages to go through, and the methodsto use. It is a kind of future picture
wherein proximate events are outlined with somedistinctness...."Planning is deciding in advance what is
to be done. It involves the selection ofobjectives, policies, procedures and programmes from among
alternatives. A plan is apredetermined course of action to achieve a specified goal. It is a statement
ofobjectives to be achieved by certain means in the future. In short, it is a blueprint foraction.According to
Louis A Allen - "Management planning involves the development offorecasts, objectives, policies,
programmes, procedures, schedules and budgets".According to Theo Haimann - "Planning is deciding in
advance what is to be done.When a manager plans, he projects a course of action, for the future,
attempting toachieve a consistent, co-ordinated structure of operations aimed at the
desiredresults".According to Koontz O’Donnell - "Planning is an intellectual process, the
consciousdetermination of courses of action, the basing of decisions on purpose, acts andconsidered
estimates". 1. PLANNING IS THE PRE-SELECTION:Planning is the pre-selection of objectives and
outlines the action before starting anybusiness. 2. ANOTHER WORDSPlanning is selection of mission,
objectives and true strategies, polices programs andprocedure to achieve them. 3. SIMPLEST
DIFINATION OF PLANNING:Planning is decision making in advance. - 31 -
31. 32. 4. ANOTHER DEFINATION:Choosing the alternatives and making the decision is called
planning.THE NUTURE & PURPOS OF PLANNING:The essential nature of planning can be defined by
dividing it into four Major aspects. 1. THE CONTRIBUTION OF PLANNING TO PURPOSE AND
OBJECTIVE:Every plan and all its supporting plans should contribute accomplishment of thepurpose
and objectives of the enterprise. This concept an use in organized enterprisewhich try to
accomplishment of group purpose through deliberate cooperation. 2. THE PRAMACY OF
PLANNING:Since managerial functions like organizing, Staffing, Leading and controlling supportto the
accomplishment of enterprise objectives, planning logically precedes or helpthe accomplishment of all
other managerial functions. Because Manager must plan onorder to know what kinds f organization
relationship and personal qualifications areneeded, which method should be fild by subordinates and
what kind of control is toapplied. All the other Managerial functions must be planned if they are to
beeffective. 3. THE PERVASIVENESS OF PLANNING:Planning is the function of all Managers, although
the character and breadth ofplanning will vary with each Managers authority and with nature of polices
and plansoutlined by superiors. If Managers are not allowed a certain degree of discretion andplanning
responsibility they are not truly Managers.If we recognize the pervasiveness of planning, we can more
easily understand whysome people distinguish between the “manager” and the “administrator”
or“supervisor” one manager, because of his or her authority or position in theorganization, may do more
important planning than another, or the planning of onemay be more basic than that of another and
applicable to a large portion of theenterprise. However, all managers from presidents to first level
supervisors plan.Even the head of a road gang or a factory crew plans in a limited area under fairly - 32 -
32. 33. strict rules and procedures. A principal factor in a success of supervisors at the lowestorganization
level is their ability to plan. 4. THE EFFIENCY OF PLANSPlans are efficient, if they achieve their
purpose at a reasonable cost, when cost ismeasured not only in terms of times or money or production
but also in degree ofindividual and group satisfaction.Many managers have followed plans whose costs
were greater than the revenue thatcould be obtained. For example, one airline acquired certain aircraft
with costsexceeding revenues. Companies have also tried to sell products that wereunacceptable to the
market. Plan can even make it impossible to achieve objects ifthey make enough people in an
organization this satisfied or unhappy.TYPES OF PLANNINGThe failure of some managers is inability to
recognize the several types of plans. Thismakes difficulty in making planning effective. Plans are
classified as:- 1. PURPOSE AND MISSIONS & OBJECTIVESThis mission identifies the basic functions
or tasks of an enterprise. However, anobjective is the end toward which an activity is aimed. Objectives
in other words. Areends toward which organizational and individual activities or directed. Objectives
arethe end point toward which all managerial functions, (Planning, Organizing, Leading,Staffing, and
Controlling) are aimed. Objectives form a hierarchy ranging fromindividual objectives to broad aims. 2.
STRATEGIES & POLICIESStrategies and policies are the basis of operational plans and framework for
plans.Both gives direction and are closely related. The word strategy is derived from aGreek word
“STRATEGOS” meaning General. Strategies is the determination of thebasic long term objectives of an
enterprise and the adoption of courses of action andallocation of resources necessary to achieve these
goals policies are generalstatements or understandings that guide manager’s thinking and decision
making. - 33 -
33. 34. 3. PROCEDURE & RULESProcedures are plans that establish a required method of handling future
activities.Briefly, procedures guide actions. Rules are those required actions or non-actionsallowing no
discretion. Rules are simply called simple plans. 4. PROGRAMMSPrograms are a complex of goals,
policies, procedures, rules, tasks and steps to betaken, resources to be employed and other elements
necessary to carryout a givencourse of action and normally supported by capital and operating budgets.
5. BUDGETA budget is a numerized program. It is a statement of plans and expected resultsexpressed
in numerical terms or forms. The budget of an enterprise represents thesum total of income and
expenses with profit or surplus.STEPS IN PLANNINGThere are eight applicable steps in planning which
should be followed by managers inconnection with major programs and in any other through planning. 1.
AWARENESS OF OPPERTUNITIESAn awareness of opportunities in the external environment as well
as within theorganization is the real starting point for planning. All managers should take look atfuture
opportunities and see them clearly and completely. They should know wherethey stand in light of their
strengths and weakness, understand what problems theywish to solve and why, and know what they
expect to gain. Setting realistic objectivesdepends on this awareness.(i) About market (ii) About
expected competition (ii) What customers wants (iv)Awareness about their qualities and weakness 2.
SETTING OBJECTIVESThe second step in planning is to establish or set objectives for the entire
enterpriseand then for each subordinate work unit. Objectives specify the expected results andindicate
the end points of (i) What is to be done (ii) Where the primary emphasis is tobe placed (iii) What is to be
accomplished by the network of strategies, policies,procedures, rules, budgets and programs. - 34 -
34. 35. 3. DEVELOPING PREMISESThe third logical step in planning is to establish planning premises.
Such as forecasts,applicable basic policies and existing company plan. The are assumptions about
theenvironment in which the plan is to be the carried out. It is important for all themanagers involved in
planning to agree on the premises.Forecasting is important in premising: What kind of markets will be
there? Whatvolume of sales? What prices? What products? What technical developments? Whatcost?
Etc 4. INDENTIFYING ALTERNATIVE COURSES OF ACTIONThe forth step in planning is to search
and examined alternative courses of actions.The planner must usually make preliminary examination
alternative courses toaccomplish the goal. 5. EVALUATING ALTERNATIVE COURSESAfter determining
alternative courses and examining their strong and weak points, thenext step is to evaluate the
alternatives. That which alternative will give the best ofmeeting goals at the lowest cost and highest profit
in a given period. 6. SELECTING A COURSESelecting an alternative is the real point of decision
making. This is the point atwhich the plan is adopted. After identifying and evaluating alternative the
managerhas to decide one best alternative or several alternative courses of action. 7. FORMULATING
DERIVATIVE PLANSThe seventh step in planning is formulating derivative plans. When a decision is
madenext step is to formulate a supporting plan, such as to buy equipment, materials, hireand train
workers and develop a new product. 8. NUBERISING PLANS BY MAKING BUDGETSAfter decision
making and formulating plans the final step in planning is tonumberise decision and plan by converting
them into budgets. The overall budgets ofan enterprise represent the sum total of income and expenses
with resulting profit.Budgets are important thing in planning process. - 35 -
35. 36. STEPS IN PLANNINGBing aware of opportunity Comparing alternatives inin the light of the market
light of goals whichcompetition what costumer alternative will give as thewant our strength our best of
meeting our goals atweakness. the lowest at highest profit.Settings objectives we Choosing and
alternativewant to be and what we selecting the course of actionwant to accomplished and we will
pursue.when.Considering planning Formulating supporting planspremises in what such as plans to
buyenvironment external or equipment, buy materials, hireinternal will our plan and train workers develop
aoperates. new product. Numberising plans by makingIdentifying alternatives budgets develops such
budgetswhat are the most as; volume and price of sales.promising alternatives to Operating
expensesaccomplishing to our expenditures for capitalobjectives. equipment. - 36 -
36. 37. THE PLANNING PROCESSA rational approach to goal achievement planning is a rational approach
toaccomplishing objectives. The process can be shown by figure. XFigure Y Various critical premises X
Various critical premises n.x T-n to Progress, time, critical planning, premisesIn this diagram, progress
(toward more sales, higher profits, lower costs, and so forth)is on the vertical axis, and time is on the
horizontal axis. Here x indicates where weare (at to or time zero) and y where we want to be at future
time (at tn). In short, weare at ax and want to go to y. often we do not have all the data, but we start
planninganywhere. We may even have to start our planning study at x (at t-n). the line x y isthe decision
path.If the future work completely certain, the line x y would be relatively easy to draw.Because we
cannot forecast or consider everything, we try to develop our path x to yin light of the most critical
premises.The essential logic of planning applies regardless of time interval between TO andTN, weather
it is five minutes or twenty years. If the time span is long, premises maybe unclear, goals may be more
difficult to achieve and other planning complexitiesmay be great. - 37 -
37. 38. MANAGEMENT BY OBJECT (MBO)Management by objectives (MBO) is now practiced all over the
world. Yet, despiteits wide applications, it is not always clear what is meant by MBO. Some says that itis
an appraisal tool; other sees it is a motivational technique; still others considerMBO a planning and
control device. In other words, definitions and applications ofMBO differ widely. MBO process consists of
setting goals at the highest level of theorganization, clarifying the rules of responsible persons for
achieving the goals. Somestill define MBO in a very narrow, limited way.BENEFITS OF MBOThere are
four benefits of MBO. 1. MBO IMPRVOES MANAGEMENT:All the objectives of management by
objective can be summarized by saying that itresults in greatly improved Management. objective can not
be establish withoutplanning.MBO force Managers to think about planning for results.MBO also
requiresthat Managers think about the way from which they will accomplish results. Theywill think about
need of assistance to achieve the objectives. 2. MBO CLASSIFY ORGANIZATIONMBO classify the
organizational roles and structure. It force managers to delegateauthority according to the results they
expect. 3. MBO INCOURAGE PERSONAL COMMITMENTS;One of the great advantages of
management by objective is that it encourages peopleto commit themselves to their goals. Because of
MBO people can understand theirarea of discretion, there authority, the part in setting their objectives. 4.
MBO DEVLOPES EFFECTVE CONTROLMBO help people to develop effective control. As MBO guides
in setting resultoriented planning. It is also guides people to develop effective control towards
theaccomplishment of the goals. - 38 -
38. 39. WEAKNESSES OF MANAGEMENT BY OBJECTIVESWith all its advantages, MBO has a number of
weaknesses. There are severalweakness of MBO. 1. MBO FALIURE TO EXPLIAN PHILOSPHY MBOAs
MBO emphasis self-control and self direction therefore sometimes managers failto explain the
philosophy of MBO to their subordinates. Managers often fail toexplain about MBO that it is? How it
works? Why it is being done? What part inperformance appraisal? How participants can benefits? 2.
MBO FAILURE TO GIVE GUIDE LINES FOR GOAL SETTINGOne of the weaknesses of MBO is that it
fails to give guide line for goal setting tomanagers. Managers need planning premises and knowledge of
major companypolices. People must have some assumptions about future. They should have
someunderstanding about objectives affecting their areas of operations. They should knowabout
objectives and programes.MBO fails to give guideline to Managers. 3. DIFFICULTY OF SETING
GOALSTruly verifiable are difficult to set. MBO difficult and verifiable goals. 4. EMPHASIS ON SHORT
TIMES GOALSIn most MBO programs, managers set goals for the short term for yearly or
quarterly.Emphasis on short term goals lead to danger more expensiveness as of the longerrange. 5.
DANGER OF INFLAXIBILITYIn MBO program managers often hesitate to change objectives. Change in
objectivecan affect results. So in MBO managers often hesitate to know flexibility.OTHER
WEAKNESSESThere are some other dangers and difficulties in MBO. 1- There may be a danger of
overuse of quantitative goals or low gradation of important goals. 2- Difficulty in applying goal oriented
planning. 3- Difficulty of converting broad objective into subordinate objectives. 4- Difficulty in measuring
performance. 5- Difficulty in providing feedback. - 39 -
39. 40. 6- Difficulty in setting long-range objectives and planning. 7- Difficulty in adjusting to the fast
changing environmentDECISSION MAKINGDecision making is defined as the selection of course of
action from amongalternative. It is the core of planning. A plan cannot be said to exist unless a
decisionhas been made.Managers sometimes see decision making as their central job because they
mustconstantly choose what is to be done, who is to do it and when, where and how it willbe done.
Decision making is the part of planning and everyone’s daily living.RATIONAL DECISION MAKING;It is
the rational decision making that goals cannot be attain without action.People acting or deciding
rationally are attempting to reach some goal that cannot beattained without action. They must have a
clear understanding of alternatives. Thymust have ability and information to analyze and evaluate
alternatives in order toachieve goals. Finally they must have desire to come the best solution by
selectingalternative.STEPS IN DECISION MAKINGThere are three steps in decision making. 1- THE
SEARCH FOR ALTERNATIVES.The first steps of decision making are to develop alternatives. There are
almostalways alternatives to any course of action. If we think of only one course of action,clearly we
have not thought hard enough.The ability to develop alternatives is often as important as being able to
selectcorrectly from among them. One of the other hand ingenuity research and commonsense will often
unearth so many choices that all of them cannot be evaluated. Themanager needs help in this situation,
and this help can be solved by decision making. - 40 -
40. 41. 2- EVALUATION OF ALTERNATIVES.When an appropriate alternative has been found, the next
steps in planning one bestalternative to achieve the goals. There are three ways of evaluated decision
making. 1- QUANTITIVE AND QUALITIVE FACTORQuantitative factor can be measured in numerical
terms. This factor is vary importantbut the success of the venture would be endangered qualitative
factors were ignored.Qualitative factor are those that are difficult to measure numerically such as
thequality of labor relations, the risk of technological change etc. 2- MANAGERIAL ANALYSISIn
evaluating alternatives managerial analysis is very important. Marginal analysiscan be used in
comparing factors other then costs and revenue. For example to findthe best output of a machine, inputs
could be varied against outputs until theadditional input equals the additional output. 3- COST
EFFECTIVENESS ANALYSISCost effectiveness analysis seeks the best ratio of benefits and costs. For
examplefinding the least costly way of reaching objectiveness is a technique for choosing thebest
plan.SELECTING AN ALTERNATIVEDuring the selection among the alternatives, managers can use
three basic approaches(1) Experience (2) Experimentations (3) research and analysis. Experimentation
Reliance on past How to select from Choice made among alternatives. Research and analysis Bases for
selecting from among alternatives - 41 -
41. 42. EXPERIENCEReliance on past experience plays a larger part in decision making to some
extent,experience is the best teacher. The very fact that managers have reached thereposition appears
to justify their past decisions. Moreover, the process of thinkingproblems through making decisions and
seeing programs succeed or fail.EXPERIMENTATIONOne way of deciding among alternatives is to try
one of them and see what happens.Experimentation is often used in scientific theory. The experimental
technique can bemost expensive, especially if a program requires heavy expenditures firm cannotafford
to attempt several alternatives.RESEARCH AND ANALYSISOne of the most effective techniques for
selecting from alternatives is research andanalysis of decisions. This approach means solving problems
by first comparing it. Itis pencil and paper approach to decision making - 42 -
42. 43. OUTLINE NO.03 ORGANIZATIONSpan of control o Factors determining an effective
spanDepartmentalizationTypes of departmentalization o Departmentalization by numbers o
Departmentalization By time o Departmentalization By function o Departmentalization By geography o
Departmentalization By customer o Departmentalization By process o Departmentalization By
productFormal & Informal organizationAuthority & powerLine and staff concepts o Line authority o Staff
conceptLine and staff organization of a typical manufacturing company o Nature of line & staff concepts
o Benefits of staff o Weaknesses of staffDelegation of authority o Splintered authority o Recovery of
delegated authority o The art of delegation of authorityPersonal attitude toward delegationGuidelines for
overcoming weak delegation - 43 -
43. 44. ORGANIZATIONINTRODUCTIONOrganization involves division of work among people whose
efforts must be co-ordinate To achieve specific objectives and to implement pre-determined
strategies.Organization is the foundation upon which the whole structure of management isbuilt? It is the
backbone of management. After the objectives of an enterprise aredetermined and the plan is Prepared,
the next step in the management process is toorganize the activities of the Enterprise to execute the
plan and to attain the objectivesof the enterprise. The term Organization is given a variety of
interpretations. In anycase, there are two broad ways in which the term is used. In the first
sense,organization is understood as a dynamic process and a managerial activity which isnecessary for
bringing people together and tying them together in the pursuit ofcommon objectives. When used in the
other sense, Organization refers to the structureof relationships among positions and jobs which is Built
up for the realizations ofcommon objectives. Without organizing managers cannot function as
managers.Organization is concerned with the building, developing and maintaining of astructure of
working relationships in order to accomplish the objectives of theenterprise. Organization means the
determination and assignment of duties to People,and also the establishment and the maintenance of
authority relationships amongthese grouped activities. It is the structural framework within which the
variousefforts are coordinated and related to each other. Sound organization contributesgreatly to the
Continuity and success of the enterprise. The distinguished industrialistof America, Andrew Carnegie
has shown his confidence in organization by statingthat: "Take away our factories, take away our trade,
our avenues of transportation, ourmoney, leave nothing but our organization, and in four years we shall
have re-established ourselves." That shows the significance of managerial skills andorganization.
However, good organization structure does not by itself produce goodperformance. But a poor
organization structure makes good performance impossible,no matter how good the individual may
be.The term Organization connotes different things to different people. Many writershave attempted to
state the nature, characteristics and principles of organization in - 44 -
44. 45. their own way. It can be used as a group of persons working together or as a structureof
relationships or as a process of management. Now, let us analyze some of theimportant definition of
organizing or organization, and understand the meaning oforganization.ACCORDING TO
SHELDON"Organization is the process of so combining the work which individuals or groupshave to
perform with facilities necessary for its execution, that the duties soperformed provide the best channels
for efficient, systematic, positive andcoordinated application of available effort."In the words of Chester I
Bernard, "Organization is a system of co-operative activitiesof two or more persons."MC FERLAND HAS
DEFINEDOrganisation as, "an identifiable group of people contributing their efforts towards
theattainment of goals".ACCORDING TO LOUIS A ALLEN,"Organisation is the process of identifying
and grouping the work to be performed,defining and delegating responsibility and authority, and
establishing Relationshipsfor the purpose of enabling people to work most effectively together in
accomplishingobjectives.ACCORDING TO NORTH WHITEHEADOrganisation is the adjustment of
diverse elements, so that their mutual relationshipmay exhibit more pre-determined quality.IN THE
WORDS OF THEO HAIMANNOrganizing is the process of defining and grouping the activities of the
enterprise andestablishing the authority relationships among them. In performing the organizingfunction,
the manager defines, departmentalizes and assigns activities so that they canbe most effectively
executed.IN THE WORDS OF MOONEY AND RAILEY,"Organisation is the form of every human
association for the attainment of a commonpurpose.” - 45 -
45. 46. ACCORDING TO JOHN M PFIFFNER AND FRANK P SHERWOOD,"Organisation is the pattern of
ways in which large number of people, too many tohave intimate face-to-face contact with all others, and
engaged in a complexity oftasks, relate themselves to each other in the conscious, systematic
establishment andaccomplishment of mutually agreed purposes.”SPAN OF CONTROL(1) Span of
control refers to the number of immediate subordinate who report amanager.(2) Different level of
organization level is also called span of control.FACTORS DETERMINING AN EFFECTIVE SPANThere
are several factors which influence the span of management. 1- TRAINING OF SUBORDINATESThe
better training of subordinates increases the necessary superior subordinate’srelationship. Well trained
subordinates require less time of their managers also theyhave less contact with their managers.
Training programs increase in new and morecomplex industries. 2-CLARITY OF DELEGATION OF
AUTHORITYAlthough training enables managers to reduce the frequency of time consumingcontact but
delegation of authority should be clear. If a manager clearly delegatesauthority to task with a minimum of
the managers time and attention. But if amanager delegate’s authority unclearly than subordinate give
his maximum. 3-CLARITY OF PLANSIf plans are well defined if they are workable, if the delegation of
authority towardplan is clear, if the subordinate understands what expected than little of a supervisortime
will be required on the other hand if plan cannot be drawn accurately andsubordinates do much of their
own planning, they may require considerable guidance. 4- USE OF OBJECTIVE STANDARDA manager
must find out, either by personal observation or through the use ofobjective standards, whether
subordinates are following plans. Obviously, goodobjective standards enable managers to avoid many
time consuming contact. - 46 -
46. 47. 5- RATE OF CHANGECertain enter rises change much more rapidly than others. The rate of change
is veryimportant in formulating and maintaining policies. It may explain the organizationstructure of
company’s railroad, banking and public utility companies. 6- COMMUNICATION
TECNIQUESCommunication techniques also influence the span of management. If every
plan,instruction, order or direction has to be communicated by personal contact thanmanagers time will
be heavily burdened. An ability to communicate plans andinstructions clearly and concisely also tends to
increase a managers span. 7- AMOUNT OF PERSONAL CONTACT NEEDEDMany instances, face to
face meetings are necessary. Many situations cannot becompletely policy statements planning
documents or other communications that donot involves personal contact. An executive may and
valuable information’s bymeeting to subordinates and by discuss problems with them. Some problems
can behandled only in face to face meeting so the best way of communicating problems,instructor, and
subordinates is to spend time in personal contact. 8- VARIATION BY ORGANIZATION LEVELSeveral
research projects have found that the size of the most effective span differs byorganizational level. For
example, it was studied that when a greater number ofspecialties were supervised, effective spans were
narrower at lower and middle levelsof organization but were increased at upper levels. 9-
COMPETENCY OF MANAGERSA manager who is competent and well trained can effectively supervise
more peoplethan who is not. 10- MATURITY AND MOTIVATION OF SUBORDINATESThe more mature
subordinates may delegate more authority, thus widening the span. - 47 -
47. 48. TABLE: - FACTORS INFLUCING THE SPAN OF CONTROLNARRO SPAN RELATED TO: WIDE
SPAN RELATED TO:1-little or no training. 1-through training of subordinate.2-unclear authority,
delegation. 2-Clear delegation of authority.3-nonverefiyable objectives & standard. 3-Will define plans.4-
fast changes in external and internal environment. 4-Slow changes in external and eternal5-use of
communication techniques. Environment6-ineffectiv interrogation of superior and subordinate.5-use of
appropriate techniques such as written,7-greater number of specialization at lower and oral
communication. Middle level. 6effetive interaction between superior & superiors.8-Infactive meetings. 7-
Number of specialist at upper levels.9-Incompletent & untrained managers. 8-Effective meetings.10-
Complex task. 9-Competent & train managers.11-Imature subordinate. 10-Simple task. 11-mature
subordinates. DEPARTEMENTATION: Departmentation is process of grouping activities and people
onto department make it possible to expend organization. After reviewing the plan, usually the first step
in the organization process is departmentalization. Once job have been classified through work
specialization, they are grouped so those common tasks can be coordinated.Departmentlization is the
biases on which work or individuals are grouped into manageable units. There are five traditional
methods for grouping work activities. Thus workflow analysis can be used tighten the connection
between employees’ work and customers needs. Also it can help to make major performance
breakthroughs throughout business process reengineering (BPR).A functional rethinking and radical
redesign of business process to achieve dramatic improvements in costs, quality, service, and
speed.BPR use workflow analysis to identify jobs that can be eliminated or recombined to improve
company. TYPE OF DEPARTMENTATION: 1-DEPARTMENTATION BY NUMBERS: Dpartmentation by
number is telling off persons who are to perform the same duties and putting them under the superior of
a manager the essential fact is not what these people do, where they work? Or what they work with, it is
that the success of the - 48 -
48. 49. understanding depends only on the number of persons include in it. This method israpidly applying in
army.DISADVANTAGES OR DECLINES REASONS;There are many reason of decline of
departmentation by numbers.1-It has declined due to advance technology and demand of specialized
and differentskills.2-A second reason is groups composed of specialized personnel are more
efficientthen those based on number.3-Departmentation by number is useful only at the lowest level of
the organization.4-Departation by number fails to produce good results 2-DEPARTMENTATION BY
TIMEIt is grouping activities on the basis of time. It is oldest form of departmentation andit is generally
used in low level of departmentation. It is particularly applied inhospitals and steel manufacturing
enterprise where continue process of service andmanufacturing is used.ADVANTAGES 1- It is process
of working and services throughout 24 hours. 2- It is continuing service process. 3- Expensive machinery
is used in shifts. 4- Students can work evening or at night.DISADVANTAGES 1- There is lacking
supervision at night. 2- Exhaustion factor. 3- DEPARTMENTATION BY FUNCTIONIt is grouping
activities on the basis on function of an enterprise. The basic enterprisefunctions are production, selling,
and financing functional departmentation is basesfor organizing activities and in organizational structure.
It organizes by function to beperformed. The function reflects the nature of the business. The advantage
of thistype of grouping is obtaining efficiencies from consoliding similar specialties andpeople with
common skills, knowledge and orientations together in common units. - 49 -
49. 50. ADVANTAGES 1- It is logical reflection of function. 2- Maintains power of major functions. 3-
Simplifies training.DISADVANTAGES 1- De-emphasis of overall company objectives. 2- Reduces
coordination between function. 3- Slow adoption to change in environment. 4- DEPARTMENTATION BY
GEOGRAPHYDepartmentation by geography is followed where geographic marked appear to
offeradvantages. Geographic department most often use in sales and production, it is notuse in finance.
Departmentalization by geographical regions groups jobs on the basisof territory or geography. For
example merek, a major pharmaceutical company, haveits domestic sales departmentalized by regions
such as Northeast, Southeast, &Northwest ORGANIZING CHART PresidentManager southern region
Manager central region Manager northregionADVANTAGES 1- It emphasis on local markets and
problems. 2- Improves coordination in a region. 3- Better face to face communication.DISADVANTAGES
1- Increases problem of top management control. 2- Requires more persons with general manager
abilities. 5. DEPARTMENTATION BY CUSTOMERDepartmentalization by customer groups jobs on the
basis of a common set of needsor problems of specific customers. For instance, a plumbing firm may
group its workaccording to whether it is serving private sector, public sector, government, or not- - 50 -
50. 51. for-profit organizations. A current departmentalization trend is to structure workaccording to
customer, using cross-functional teams. This group is chosen fromdifferent functions to work together
across various departments to interdependentlycreate new products or services. For example, a cross-
functional team consisting ofmanagers from accounting, finance and marketing is created to prepare a
technologyplan. ORGANIZING CHART Executive MangerManager Manager Manager ManagerBusiness
loans students loans Personal loans Army loansThere is different difficult decision to be made in
separating some type of customerdepartments from product departments. Business owners and
managers arrangeactivities on the basis of customer requirements. Departmentation by customer can
bedefined by figureADVANTAGES 1- Departmentation by customer emphasis on customer needs. 2- It
develops experience in customer area.DISADVANTAGES 1- It may be difficult to analysis customer
demands. 2- It requires managers and staff expert in customer problems. 3- Customer groups may not
always be clearly defined. 6- DEPARTMENTATION BY PROCESSThis type of departmentation is found
in production and operative levels. Such type ofdepartmentation can be found in paint or electroplating
process. Departmentalizationby process groups jobs on the basis of product or customer flow. Each
processrequires particular skills and offers a basis for homogeneous categorizing of workactivities. A
patient preparing for an operation would first engage in preliminary - 51 -
51. 52. diagnostic tests, and then go through the admitting process, undergo a procedure insurgery, receiver
post operative care, be discharged and perhaps receive out-patientattention. These services are each
administered by different departments. PRESIDENTManager Purchases Manager Finance Manager
Production ManagerSalesDept by process Heat treatment welding section Assembling section
finishingsectionADVANTAGES 1- It simplifies training. 2- Achieve economic advantage. 3- Uses
specialized technology.DISADVANTAGES 1- Coordination of departments is difficult. 2- Responsibility
for profit is at the top. 7- DEPARTMENTATION BY PRODUCTThis type of departmentation used in
organization where more than one product isproducing. In this department all the sources and authority
are placed under thecontrol of one manager.Departmentlization by product assembles all functions
neededto make and market a particular product are placed under one executive. For instance,major
department stores are structured around product groups such as homeaccessories, appliances woman’s
clothing, men’s clothing and children clothing. - 52 -
52. 53. PRESIDENTMarketing Personnel Finance PurchasesInstrument Indicator Industrial
Electronicdivision light division tool division meter divisionEngineering Accounting Engineering
AccountingProduction Sales Production Sales ADVANDTAGES 1- Places attention on production. 2-
Increase growth of product. 3- Places responsibility for profit at division level. DISADVANTAGES 1-
Requires more persons with general manager abilities. 2- Presents problems of top management
control. - 53 -
53. 54. Functional PresidentDepartmentalization Marketing Finance ProductionProductDepartmentalization
President Cosmetics Clothing AppliancesGeographicalDepartmentalization President Central Northeast
SouthwestProcessDepartmentalization President Receiving Sewing
ShippingCustomerDepartmentalization President Governement Industrial consumer Formal and Informal
Organization FORMAL ORGANIZATION Formal organization means the intentional structure of rods
informally organized enterprise. Formal organization must be flexible. Formal organization does not
mean that there is anything inflexible. If a manager is to organize well, the structure must furnish an
environment in which individual performance, both present and future contributes most effectively to
group goals. - 54 -
54. 55. Formal President organization Voice presidentDecisionmanagersDepartmentmanagers Informal
organization Informal Informal :morning Coffee organization: organization: regular bowling team chess
groupINFORMAL ORGANIZATIONInformal organizational is define by different authors one says,
Informal organizationis any joint personal activity without conscious joint purpose, even
thoughcontributing to joint results. Thus informal relation ships established in the group ofpeople playing
chess during lunch time may aid in the achievement of organizationgoals. It is much easier to ask for
help on an organization problem from someone youknow personally, even if he or she may be in
different departments than from someone you know only as a name on an organization chart. Another
author describesinformal organization as a network of personal and social relationships not requiredby
the formal organization but arising spontaneously as people but associate with oneanother.AUTHORITY
& POWERPower is much broader concept than authority power is the ability of individuals orgroups to
informal the actions of other persons or groups. - 55 -
55. 56. AUTHORITYAuthority is the legal right to command actions by others and to enforce
compliance.Authority may also be defined as the degree of discretion in organizational positionconferring
on persons occupying these positions the right to use their judgment indecision making. TOP TO DOWN
AUTHORITY Share holder Board of director Chief Executive Managers Supervisors
WorkerPOWERPower is border concept then authority. I may be defined as a strong influence
ondirection on individuals is behaviors power may also define as the ability ofindividuals or groups to
influence the action of other persons. There are five bases /sources or kind of power. 1- LEGITIMATE
POWEThe official position of a person is an organization is known as legitimate power . forexample, a
major in army has power over Captain and subordinate. 2- COERCIVE POWERA person’s ability to
create fear in other individuals and is based on subordinatesexpectation that punishment will be received
for not completing work. It is closelyrelated to reward power and normally arising from legitimate. - 56 -

PRINCIPLES OF MANAGEMENT lecture notes


1. 1. UNIT I OVERVIEW OF MANAGEMENT Definition - Management - Role of managers - Evolution of
Management thought - Organization and the environmental factors – Trends and Challenges of
Management in Global Scenario. 1
2. 2. Management - as how the mind controls the human body and its function similar management (mind)
controls the various activities ( human body) in the Organisation - Collection of physical equipments, 4
M’s in Organisation – Men, Machine, Materials, Money, and leads to nothing. For efficient and profitable
functioning it is necessary that all these factors are put to work in a co- ordinated manner. Management
Definition Management is the art of getting things done through others. Harold Koontz Def as “
Management is the process of designing and maintaining an environment in which individuals, working
together in groups efficiently to accomplish selected aims” • Managers carry out their managerial function
• Applies to any kind of Organisation •Applies to managers at all Organisational levels •Aim is to create a
surplus •Concerned with productivity, implies effectiveness and efficiency •Mgt of 4 M’s in the Orgn –
Men, Machine, Materials & money Characteristics of Management • Mgt is Universal • Mgt is dynamic •
Mgt is a group of managers • Mgt is Purposeful • Mgt is goal oriented • Mgt is integrative Function • Mgt
is a Social process • Mgt is a Multi-faceted discipline • Mgt is a continuous process • Mgt is a system of
authority • Mgt is a resource • Mgt is intangible 2
3. 3. • Mgt is profession, an art as well as a science ADMINISTRATION VS MANAGEMENT Basis of
Distinction Administration Management Policy and objectives Determination of objectives & policies
Implementation of Policies Main Functions Legislative & determination function Executive Function
Planning, Organising staffing Directing, Motivating, Coordinating Controlling Provides a sketch of the
enterprise Provides the entire body Influence Influenced mainly by public opinion & other outside force
Influenced mainly by administrative function Levels of Management Mainly top level function involves
thinking & planning Mainly middle level function involves doing and acting Level of Executives Owners/
Board of Directors MD, GM & Managers Position Acts as a principal Acts as an agency Knowledge
Requires more admin ability than technical ability Requires more technical ability than admin ability 3
4. 4. Management as an Art The main elements of an art are – • Personal Skills • Practical know-how •
Application of knowledge • Result orientation • Creativity • Constant practice aimed at perfection
Management is basically an art because of the following reasons – • A manager applies his knowledge
and skills to coordinate the efforts of his people • Mgt seeks to achieve concrete practical results • Mgt is
creative. It brings out new situation and converts into output • Effective Mgt lead to realization of
Organizational and other goals. Mastery in Mgt requires a sufficiently long period of experience in,
managing. Management as Science The essential elements of Science • Systematised body of
Knowledge • Underlying principles and theories developed through continuous observation, inquiry,
experimentation and research. • Universal truth and applicability. • Organised body of knowledge can be
taught and learnt in class room and outside. • Mgt is a social science. It contains all the essentials of
science. It is an inexact science. • PERT, CPM, Cost A/C, Finance, MBO etc Thus, the theory (Science)
and practice (art) of Mgt go side by side for the efficient functioning of an organisation. 4
5. 5. Management as a Profession The essential attribute of a profession • A well-defined and organised
body of knowledge • Learning and Experience • Entry restricted by qualification • Recognised national
body • Ethical code of conduct • Dominance of service motive Mgt is not a full fledged profession now
due to the following shortcomings • Skills not fully developed • No uniform method of entry •Objective is
monetary rather than service •Ethical code is not strict •Associations are not statutory bodies But in India
it is developing into a profession and it will be achieved in due course. Managerial Skills • Conceptual
skills • Human Skills • Technical Skills • Design Skills – Decision making Need for Management 1. To
increase efficiency 2. To crystallize the nature of Mgt job 3. To improve research in Mgt 4. To attain
social goals 5
6. 6. Levels of Management 1. Top Level Mgt – Board of Directors, MD, Owners, Chief Executives • To
analyse, evaluate and deal with th environmental forces • To establish overall long term goals and broad
policies of the company including the master budget • To appoint departmental and other key executives
• To represent the company to the outside world • To coordinate the activities and efforts of different
department 2. Middle Level Mgt – Sales Executives, Production Executives, Production executives etc. •
To interpret and explain the policies framed by top management • To compile and issue detailed
instruction regarding operations • To Cooperate among themselves so as to integrate various parts of
the division or a department • To motivate supervisory personnel to work for Orgn goals • To develop
and train supervisory and operative personnel. 3. Supervisory / Operating / Lower Level Mgt –
Superintendents, Branch managers, General Foremen • To plan day to day production within the goals
lay down by higher authority • To assign jobs to workers and to make arrangement for their training and
development • To supervise and control workers and to maintain personal contact with them. 6
7. 7. Roles of a manager ( Mintzberg) 1. Interpersonal Role - Interacting with people inside and outside the
Orgn • Figurehead – as a symbolic head of an organisation, the manager performs routine duties of a
legal nature •Leader – Hiring, Training, motivating and guiding subordinates •Liason - Interacting with
other managers outside the orgn to obtain favours and information 2. Informational Role – Serving as a
focal point for exchange of Information •Monitor – Seeks and receive information concerning internal and
external events so as to gain understanding of the Orgn and its environment. •Disseminator – Transmits
information to subordinates, peers and superiors within the Organisation • Spokesperson – Speaking on
behalf of the Orgn and transmitting information on Orgn plans, policies and actions to outsiders. 3.
Decisional Role – Makes important decision •Entrepreneur – Initiating changes or improvements in the
activities of the Orgn •Disturbance handler- Taking charge and corrective action when Orgn faces
unexpected crises •Resource allocator – Distributing Orgn’s resources like money, time, equipment and
labour •Negotiator – Representing the Orgn in bargaining and negotiations with outsiders and insiders
Importance of Management Management is the dynamic life –giving element in every business. Without
it the resources of production remain resources and never become production. Sound Management
provides the following benefits . • Achievement of group goals • Optimum utilization of resources •
Fulfillment of social obligations • Economic growth 7
8. 8. • Stability • Human Development • Meets the challenge of change Classification of managerial
Functions Functions Sub Functions Planning Forecasting, decision making, strategy formulation, policy
making, programming, scheduling, budgeting, problem-solving, innovation, investigation and research.
Organising Grouping of Functions, Departmentation, delegation, decentralisation, activity analysis, task
allocation Staffing Manpower planning, job analysis, Recruitment, Selection, Training, Placement,
Compensation, Promotion, appraisal, etc. Directing Supervision, Motivation, communication, Leadership,
etc Controlling Fixation of standard, recording, measurement, reporting corrective action. Evolution of
Management Father of Management – Henry Fayol (1841 – 1925) Henry Fayol contributed 14 principles
to Mgt which is widely applied in all the Orgn 1. Division of Work 2. Authority and Responsibility 3.
Discipline 4. Unity of Command 5. Unity of Direction 8
9. 9. 6. Subordination of individual interest to general interest 7. Remuneration of personnel 8.
Centralisation 9. Scalar Chain 10.Order 11.Equity 12.Stability of Tenure of Personnel 13.Initiative
14.Esprit-de-corps Critical Evaluation • Too formal • Not pay adequate attention to workers • Vagueness
• His principle hinted but did not elaborate that mgt can and should be taught. - Despite these limitations,
Fayol made a unique and outstanding contribution to Mgt theory. Scientific Management Father of
Scientific Management F.W. Taylor (1856 –1915) “The art of knowing exactly what you want men to do
and see that they do it in the best and cheapest way.” Mgt a Science based upon certain clearly defined
principles Principles of Scientific Management ♦Science not rule of thumb ♦Harmony not discord ♦Co-
operation not individualism ♦Maximum output in place of restricted output ♦Development of each
individual to his greatest efficiency and prosperity 9
10. 10. ♦Mental Revolution – Workers and Management, Workmen towards their work, their fellowmen and
towards their employees. Mental attitude of the two parties. Techniques of Scientific Management 1.
Time Study 2. Motion Study 3. Scientific task Planning 4. Standardization and simplification 5.
Differential piece rate system 6. Functional foremanship – According to Taylor, one supervisor cannot be
an expert in all aspects of work supervision. In system of Functional Foremanship in which eight
supervisors supervise a workers job. i. Route Clerk ii. Instruction card clerk iii. Time and cost clerk iv.
Shop disciplinarian v. Gang boss vi. Speed boss vii. Repair boss viii. Inspector Critical Evaluation •
Mechanistic Approach • Unrealistic Assumptions • Narrow View • Impracticable • Exploitation of Labour
George Elton Mayo (1880 – 1949) Hawthrone Experiments 1. Illumination Experiments ( illumination
affected Productivity) 2. Relay assembly Test room Experiments ( Working conditions and Productivity),
piece work, rest pauses, shorter working hours, 3. Mass interviewing Programme ( Direct Questions),
Grievances, deep rooted disturbance, satifactory level 10
11. 11. Outcomes • Workers working in a group develop bond of relationships • Behaviour at workplace
depens on their mental state, emotions and prejudices • Emotional factors play an important role in
determining • Human and liberal attitude of supervisor helps in improving performance • Managerial skills
and technical skills are not necessary to be a successful leader. HENRY LAURENCE GANTT (1861 -
1919) • Contribution was famous, Gantt Chart, used for scheduling and control of work. • Task and
Bonus plan ( Minimum wages is guaranteed to all workers irrespective of output, Extra wages are paid
for extra work) FRANK BUNKER GILBRETH (1868 – 1924) • Motion study, time study • Fatigue Study •
Work Simplification – 3 positional promotion plan ( present position, the position to be held before
promotion to his present position and the next higher position) APPROACHES TO MANAGEMENT
Modern management has developed through several stages or approaches. These approaches to the
study of management may be classified as under: 1. Classical Approach 2. Behavioral Approach 11
12. 12. 3. Management Science Approach 4. System Approach 5. Contingency Approach ENVIRONMENT
INPUTS TRANSFORMATION OUTPUTS Money Manpower Goods & services Machinery Employment
Material Taxes Method Others Systems approach is an improvement over classical and neoclassical
theories as it is closer to reality. The traditional theorists viewed organization as a closed system while
modern theorists treat it as open system. The system approach highlights the multidimensional and
multidisciplinary nature of management. It takes much wider and overall perspective of organizational
functioning. SOCIAL RESPONSIBILITY AND ETHICS SOCIAL RESPONSIVENESS – The ability of a
corporation to elate its operations and policies to the social environment in ways that are mutually
beneficial to the company and to society. - Reaction or proaction - The role of government - The
influence of values and performance - Criteria on behaviour 12 FEEDBACK
13. 13. Def . Peter Drucker “ Social Responsibility requires managers to consider whether their action is
likely to promote the public good, to advance the basic beliefs of our society, to contribute to its stability,
strength and harmony.” The Social Audit The Social audit has been defined as “ a commitment to
systematic assessment of and reporting on some meaningful;, definable domain of company’s activities
that have social impact.” Society has become increasingly aware of the interdependence between the
business and its environment. As business grow in size and power, society expects more from them
several forces have led to the development of the concept of social Responsibility. Some of the forces
are - • Consumerism • Trade Union • Public Opinion • Enlightened Self Interest • Professionalisation •
Trusteeship Responsibility of business to perform its basic economic function of producing and supplying
products and services in the most efficient manner so as to maximize profits. 13
14. 14. Social Responsibility of Business Ethics in Managing - Ethics is defined as the discipline dealing with
what is good and bad, with moral duty and obligation. - Personal Ethics has been referred to as “ the
rules by which an individual lives his or her personal life. 14
15. 15. - Accounting ethics pertains to the code that guides the Professional conduct of accountants.
Business Ethics is concerned with truth and justice and has a variety of aspects such as expectations of
society, fair competition, advertising, public relations, Social responsibilities, Consumer autonomy and
Corporate behaviour in the home country as well as abroad. Ethical Theories - Utilitarian Theory
suggests that plans and actions should be evaluated by their consequences. - Theory based on rights
holds that all people have basic rights. - Theory of justice demands that decision makers be guided by
fairness and equity, as well as impartiality. Institutionalizing Ethics This means applying and integrating
ethical concepts into daily action. This can be accomplished in 3 ways- 1. By establishing appropriate
company policy or a code of Ethics 2. By using a formally appointed ethics committee 3. By teaching
ethics in Management development programs A code is a statement of Policies, principles, or rules that
guide behaviour. The functions of Ethics Committee includes- 1. holding regular meeting to discuss
ethical issues 2. dealing with gray areas 3. Communicating the code to all members of the Organization
4. Checking for possible violations of the Code 5. Enforcing the Code 6. Rewarding compliance and
punishing violations 7. Reviewing and updating the code 8. reporting activities of the committee to the
board of directors Factors that raise Ethical Standards 1. Public disclosure and publicity 2. The increased
concern of a well informed public. 15
16. 16. Globalisation Globalization means covering or affecting the whole world. It means integration of the
domestic economy of a country with the international economy. Recent developments in information and
communication technology have accelerated the pace of globalization. • Globalisation means the
internationalization of trade. Particularly product transaction and the integrating of economic and capital
markets throughout the world. • The integration takes place when trade exists freely among the different
countries, thus the world economy becomes a single market or single economy. • In globalization there is
no restriction of quota, license, tariff and other administrative barrier for trade. The term globalization has
four parameters: • Reduction of trade barriers, so as to permit free flow of goods across national
frontiers. • Free flow of capital among nations. • Free flow of technology among nations. • Free
movement of labour among different countries of the world. Benefits of Globalisation • Improves
efficiency • Improves factor Income • Improves finance • Gains from Migrations Drawbacks of
Globalisation • Globalisation increases the problems of unemployment • Domestic Industries finds
difficulty in survival. 16
17. 17. • Only group of people who participate in the process of Globalization will be benefited, this creates
income inequality within the country • Control on domestic economy becomes more difficult • Developing
country suffers from the problem of brain-drain International Business - Involves commercial activities
that cross national frontiers - It is a process of Entrepreneur conducting business activities across
national boundaries - It consist of Exporting, Importing, licensing, opening of Sales office - The activities
necessary for ascertaining the need and want of target consumer often takes place in more than one
country. When an Entrepreneur executes his or her business model in more than one country
International Business Occurring. Entry into International Business The method of entering or engaging
in International Business can be divided into three categories 1. Exporting • Indirect Exporting • Direct
Exporting 2. Non Equity arrangement – Doing international business through an arrangement that does
not involve any investments. - Licensing - allowing someone else to use something of the company’s in
return for the payment of royalty - Turn key Projects – A foreign Entrepreneur build a factory or other
facility, training the workers, train the management and then turn it over to the local owners once the
operation is completed, hence the name turn key operation - Management Contracts – Contracting
management techniques and skills. The management contracts allow the purchasing country to gain
foreign expertise without giving ownership of its resources to a foreigner. 3. Direct Foreign Investments –
preferred mode of ownership - Minority Interest – Having less than 50% Ownership Position - Joint
Ventures – Merger of two companies. 17
18. 18. Globalization in India Some major aspects of the policy of globalization in India are: i)Liberalisation of
imports: Most imports has been put under open general licence (OGL) where automatic permission is
granted to import goods.Export oriented units (EOUs) have been allowed to import freely all types of
goods require by the unit for manufacturing, production or processing. The Government in it’s trade
policy announced on 31st August 2004 has permitted import of second hand capital goods without any
age restrictions. ii) Export promotion through rationalization of tariff structure: Tariff structure refers to the
pattern of custom duties levied on the imports of various commodity groups. The government initiated
the process of tariff reduction in 1991, to bring our tariff rates in line with the other developing countries:
making Indian goods competitive in the world market. High quality and low cost goods can offer
competition in the world market and improve India’s exports. iii) Foreign direct investment: iv) Foreign
technology: 18
19. 19. UNIT II PLANNING Nature and purpose of planning - Planning process - Types of plans – Objectives
- - Managing by objective (MBO) Strategies - Types of strategies - Policies - Decision Making - Types of
decision - Decision Making Process - Rational Decision Making Process - Decision Making under
different conditions. 19
20. 20. PLANNING - Deciding in advance what to do, how to do, when to do and who is to do it. - Bridges
the gap between where we are to where we want to go. - Thinking before doing. - Intellectual demanding
process. Nature of Planning 1. It’s contribution to purpose and objectives. 2. Primacy of functions –
Planning & control are inseparable 3. Pervasiveness of planning – it is a function of all managers. Varies
from level to level 4. Efficiency of plans – Pans are efficient if they achieve their purpose at a reasonable
cost Types (scope) of plans I Purposes or missions: - Meaningful existence – special task - Elements are
primary market, profitability, management philosophy and corporate image Eg. 1. Distribution of goods &
services - ITC “ Satisfaction” - Dupont “better things through chemistry” - Hallmark “The social
expression business” - GEC / USH “We are in energy business” II Objectives: - Ends towards which all
activities are directed - They are the most basic plan and all other plans are based on the objectives -
They are multiple in nature. - MBO - Objectives and goals are interchangeable - They have hierarchy. -
They are verifiable - They form a network. - They differ in time span. Some are long term and short term.
20
21. 21. - Objectives may be general or specific. - Classified into External institutional objectives (to develop
high degree of corporate image – TATA) Internal Objectives (profit/maximum rate of return) III Strategies:
- General program of action and deployment of resources to attain Comprehensive objectives. - SWOT
analysis Eg 1. rural marketing 2. Extension of Distribution width & Length 3. Pester power strategy,
social marketing, co-branding, co-marketing. - Contingent plan to meet the demands of a difficult
situation. - Mainly the job of the top management. IV Policies: - General statements or understandings
which guide or channel thinking and take actions in decision making. - Guidelines for decision making -
All policies are statements, sometimes it is only practices (implied) - Allows for some discretion otherwise
it becomes rules - It is a means of encouraging discretion and initiative, but within limits. - Policies are
developed with the active participation of the entire top level executives. - Policy is in writing. They take
concrete shape when they are put in writing. This will ensure uniformity in application, continuity and
greater conformity. 21
22. 22. Advantages: i. Top management provides guidelines to lower level managers. ii. Gives managers to
act at all levels without the need to consult the superiors every time. iii. Better Administrative control.
Provides rational basis for evaluating the results. iv. By setting up of policies, the management ensures
that the decisions made will be in tune with the objectives and interests of the organization. v. They save
time and effort by pre-deciding problems in repetitive situations. They save the management from the
botheration of repeating the expensive analysis required to take the policy decision every time.
Limitations: - Policy is formulated under particular preset conditions which do not remain the same for all
problems. - Requires constant review and revision. - No formula for all problems - Serve as guides for
thinking and action and do not provide solutions to problems. - They are not substitute for human
judgment. They only point out the limits within which the judgment is to be taken. - They may stifle
individual initiative and creativity. Types of Policies: a) Organizational and functional policies. b)
Originated, Appealed and Imposed policies c) General and Specific policies. d) Written and Implied
policies. 22
23. 23. V Procedures: - It establishes a required method of handling future activities. - They are guides to
action, rather than to thinking. - Provides details of certain activity, the exact manner in which it must be
achieved. - Chronological order. (stated in steps) - Found in every level of an organization. Advantages: -
Minimizes the burden of decision making - Leads to simplification of work flow - Elimination of
unnecessary steps. - Developed after careful analysis of various operations which are necessary to bring
co-ordination in organization. - Uniformity and conformity of action - Aid to communication – steps to be
followed to complete a particular work. - Medium of control to evaluate the performance of the
subordinate Limitations - Rigidity- discourages improvement - Fixed way of doing a particular job - Need
to be reviewed and updated constantly VI Rules: - Rules spell out specific required action or non action,
allowing no scope for discretion. - Rules Vs Procedures Vs Policies - Rules – no time sequence – “No
smoking” - Sequence of rules. - Detailed recorded instructions - Uniform handling of events - To avoid
repeated approval from higher levels for routine matters. - Offers definite direction to planning process
23
24. 24. VII Programs: - Combination of goals, policies, procedures, task assignments, steps to be taken
resources to be employed to carry out a given course of action. - Time element is introduced - Planning
for future events and establishing a sequence of required actions. - Supported by budgets. - Primary
program & supporting programs. VIII Budgets: - Statement of expected results expressed in quantitative
terms. - Expected income and expenditure under different heads. - Gives clarity, direction and purpose in
an organization. - Control device. - Fixed or variable (flexible) budget. - Functional budgets. Steps in
Planning: 1. Being aware of opportunities. - SWOT analysis 2. Establishing objectives. 3. Developing
premises - Planning premises are forecasts, applicable basic policies, and existing company plans. -
They are assumptions about the environment in which plan is to be carried out. - Forecasting is
important for premising. - Premises should be make practical what volume of sales? What price? 4.
Determining alternative courses of action 5. Evaluating alternative course of action - Operation Research
– Decision tree 6. Selecting a course of action - Decision making 7. Formulating Derivative plans -
Supporting plans for basic plan 8. Numerating plans by budgeting - Income and expenses 24
25. 25. Kinds of planning 1. Short term and long term planning 2. Financial & non financial planning 3.
Formal &informal planning 4. Specific or Routine planning 5. Corporate planning and strategic planning
Objectives / Importance / Advantages of Planning 1. Focuses attention on objectives & results 2.
Reduces uncertainity and risk 3. Provides sense of direction 4. Encourages innovation & creativity 5.
Helps in coordination 6. Guides decision making 7. Provides a basis for decentralization 8. Provides
efficiency in operation 9. Facilitates control Features of a good plan 1. Based on clearly defined
objectives 2. Simple, easily understandable 3. Flexible or adaptable to changing conditions 4. must be
balanced in all respects 5. must provide standards for the evaluation of performance and actions 6. It
should be economical 7. It should be practicable 8. Prepared with the consultation of concerned persons
9. Should be clear, specific and logical 10.Should be capable of being controlled 25
26. 26. Types of Planning (Time limit) 1. Long term plans (Above 5 yrs) 2. Medium term plans (Between 2 to
5 Yrs) 3. Short term plans ( Less than 2 yrs) Planning can be classified as – 1. Corporate Planning 2.
Divisional Planning 3. Strategic Planning S.No Strategic Planning Operational Planning 1 Lays down
major goals and Policies of the Organisation Decides the use of resources in day to day operations 2
Done at higher levels of Management Done at lower level of Management 3 Long term in nature Short
term in nature 4 Broad and general Detailed and specific 5 Based on long term forecast and appraisal of
Environment Based on past experience Obstacles of Effective Planning 1. Inadequate inputs 2. Lack of
ability 3. Sudden emergencies 4. Need for creativity 5. Resistance to Change Ways to Overcome the
Obstacles 1. Clear cut Objectives 2. Develop a sound Management Information System 3. Create
carefully planning premises 4. Develop a dynamic outlook away manages 5. keep plans flexible 6.
provide required resources 7. Undertake a cost benefit analysis of all plans 26
27. 27. Management by Objectives (MBO) “ MBO is a comprehensive managerial system that integrates
many key managerial activities in a systematic manner and that is consciously directed towards the
effective and efficient achievement of Organisation and individual Objectives.” - Where superiors and
subordinates jointly identify the goals of the Organisation Process of MBO 1. Setting preliminary
Objectives 2. Clarifying Organisational roles 3. Setting subordinates Objectives 4. Recycling Objectives
How to set Objectives 1. Quantitative & Qualitative 2. Setting Objectives in Govt 3. Guidelines for setting
Objectives Benefits of MBO  Improvement of managing  Clarification of Organisation 
Encouragement of Personal commitment  Development of Effective control Weakness of MBO 
Failure to teach the philosophy of MBO  Failure to give guidelines to goal setters  Difficulty of setting
goals  Emphasis on short run goals  Danger of Inflexibility 27
28. 28. Planning Premises - A plan is based on certain assumptions called premises - Assumptions or
premises are for a future setting or happenings - Assumptions based upon certain intuition or scientific
forecasting - The assumptions about future derived from forecasting and used in Planning are known as
planning premises Def – Koontz O’Donnell “Planning premises are the anticipated environment in which
plans are expected to operate. They include assumptions or forecast of the future and known conditions
tht will affect the operations of plans. Eg as prevailing policies and existing company plans that control
the basic nature of supporting plans. - Purpose of premises is to facilitate the planning process by
guiding, directing, simplifying and reducing the degree of uncertainty in it. Premises guide planning.
Planning Premises Classification 1. External & Internal EXTERNAL Economic Environment • Includes
the type of economic system that exist in the economy • The nature and structure of the economy, the
business cycle,the fiscal, monetary and financial policies of the govt, foreign trade and foreign
investment policies of the govt. • The type of economic system, that is socialist, capitalist or mixed
provides institutional framework with in which business firm have to work. 28
29. 29. SOCIAL AND CULTURAL ENVIRONMENT - Members of a society wields important influence over
business firms. - Activities of business firm may harm the physical environment and impose heavy social
costs. - Business should consider the social implication of their decisions. - Social responsiveness ‘the
ability of a corporate firm to relate its operations and policies to social environment in way that are
mutually beneficial to the company and society at large.. - Social responsibility / social responsiveness
related to ethics. POLITICAL AND LEGAL ENVIRONMENT • Closely related to government. • Political
philosophy of the govt yields a great influences over business policies. TECHNOLOGICAL
ENVIRONMENT • The nature of technology used for production of goods and services in an important
factor responsible for the success of a business firm. • The improvements in technology raises total
factor productivity of a firm and reduces unit cost of output. • Technological environment affects the
success of firms and the need for technological advancement cannot be ignored. DEMOGRAPHIC
ENVIRONMENT • Includes the size and growth of population, life expectancy of the people rural urban
distribution of population the technological skills and educational levels of labour force. • Since new
workers are recruited from outside the firm, demographic factors are considered as parts of external
environment. • The skills and ability of a firms workers determine to a large extent how well the orgn can
achieve its mission. 29
30. 30. NATURAL ENVIRONMENT • In the ultimate source of many inputs such as raw materials, energy
which business firms use in their productive activity. • Availability of natural resources in a region a
country is a basic factor in determining business activity in it. • It includes geographical and ecological
factors such as minerals and oil reserves, water and forest resources wealth and climatic conditions, port
facilities are all highly significant for various business activities. • Not the availability of natural resources
alone but also the technology and ability to being them in use that determines the growth of business
and the economy. INTERNAL ENVIRONMENT • Internal factors are to a good extent controllable factors
because the firm can change or modify these factors to improve its efficiency. VALUE SYSTEMS •
Means the ethical beliefs that guides the organization in achieving its mission and objective. • The value
system of a business orgn makes an important contribution to its success and its prestige in the world of
business. • Value system of a business firm has an important bearing on its corporate culture and
determines its behavior towards its employees, shareholders and society at large. • Infosys “Our
corporate culture is to achieve our objectives in environment of fairness, honesty, transparency and
courtesy towards our customers employees, vendors and society at large” 30
31. 31. MISSION AND OBJECTIVES • The objectives of all firms are assured to be maximisation of long –
run profits. • Mission is def as the overall purpose or reason for its existence which guide and influences
its business decision and economic activities. • The choice of business domain, direction of its
development, choice of business strategy and policies are all guided by the overall mission of the
company. • Reliance Industries Mission “To become a world class company and to achieve global
dominance. Ranbaxy laboratories – to become a research based international pharma company.
ORGANISATION STRUCTURE Means such things as composition of board of directors, the number of
independent directors, the extent of professional management and share holding pattern.Significant
influence over decision making process in an organization. QUALITY OF HUMAN RESOURCES •
Quality of employees of a firm in an important factor of internal environment of a firm • The Success of a
business organization depends to a great extent on the skills, capabilities, attitudes and commitment of
its employees. 31
32. 32. • Due to importance of HR for the success of a company these days there is a special course for
managers how to select and manage efficiently HR of a company. LABOUR UNIONS • Unions
collectively bargain with top managers regarding wages, working conditions of different categories of
employees. • Smooth working of a business organization requires that there should be good relations
between mgt & labour union. PHYSICAL RESOURCES AND TECHNOLOGY CAPABILITIES • Physical
resources such as plant and equipment and technological capabilities of a firm determine its competitive
strength which is an important factor determining its efficiency and unit cost of production. • R& D
capabilities of a company determine its ability to introduce innovation which enhances productivity of
works. 2. Tangible and Intangible premises Tangible – those which can be quantified. Eg – Money, Units
of Production, etc Intangible Premises – refers to the qualitative factors like Public relations, company
reputation, Employee morale, etc. 3. Controllable and Uncontrollable Factors Controllable – entirely
within the control and realm of management Eg- Policies, programmes, rules of the enterprises 32
33. 33. Uncontrollable Factors – Enterprises has absolutely no control are uncontrollable premises. Eg –
War, natural calamities, new invention, population trends. Effective premises 1. Selection of premises
which bear materially on the programs 2. Development of alternative premises for contingency planning
3. Verification of the consistency of premises 4. Communication of the premises. SWOT Analysis or /
TOWS Matrix Internal Factors External Factors Internal Strengths (S) Eg. Strength in mgt, operation,
Finance, Marketing, R&D Engineering Internal Weaknesses(W) Eg. Weaknesses in areas shown in the
box of strength. External Opportunities (O) Consider risk also. Eg Current and future Economic
condition, political and social changes, New product services and Technology SO strategy Maxi – Maxi.
Potentially the most successful strategy, utilizing the Organisation strength to take advantage of
opportunities WO Strategy Mini – Maxi Eg. Developmental strategy to overcome weakness in order to
take advantage of oppirtunities External Threats (T) Eg Lack of energy, competition and areas similar to
those shown ST Strategy Maxi – Mini Eg. Use of strengths to cope with threats to avoid threats WT
strategy Mini Mini Eg. Retrenchment, Liquidation , Joint venture. 33
34. 34. in Opportunity box Forecasting - Process of predicting future conditions, that will influence and guide
the activities, behaviour and performance of the Organisation. Def – “ Forecasting is the formal process
of predicting future events that will significantly affect the functioning of the enterprises. Features 
Involvement of Future events  Depends upon past and present events  Happening of future events 
Make use of forecasting techniques Process  Developing the ground work  Estimating the future
trends  Comparing actual with estimated results  Refining the forecast Importance  Key to planning
 Means of coordination  Basis for control  Executive development  Facing Environmental
challenges Forecasting Techniques - Qualitative ( use of Statistical tools) and Quantitative ( employ
human judgments to predict future) 34
35. 35. 1. Time series Analysis – involves decomposition of historical series into its various components. Viz
– trend, seasonal variations, cyclical variations and random variations. A trend can be known over the
period of time and projections can be made about future. 2. Historical Analogy – past history records 3.
Correlation – to find the relationship between two variables. Eg. Between advertising expenditure and
sales volume, Future sales estimated on basis of change in adv expenditure 4. Regression – To
measure the relationship between two variables. To find the relative movements of two or more
interrelated series. 5. Delphi Technique – the minds of the experts in the concerned areas are probed
systematically. 6. Input output analysis Types of Forecast - Demand forecast / sales forecast - Economic
Forecast - Technological Forecast Comparison of Planning and Forecasting S.No Planning Forecasting
1 Planning is more comprehensive, it involves many sub processes and elements in order to arrive at
decision Forecasting is the estimate of future events and provides parameters to the planning 2 Requires
several decision making Forecasting does not involve decision making 3 For planning top management
level is involved Forecasting is usually carried by middle or lower level management 4 Commitment of
action is the basic motive of planning Forecasting does not require any commitment but helps planning
for future actions 35
36. 36. Decision Making - is the process of choosing a course of action from available alternatives - Def .
Haynes & Massie “ Decision making is a process of selection from a set of alternative courses of action
which is thought to fulfills the objective of the decision – problem more satisfactorily than others.” Types
of Managerial Decisions 1. Organizational and Personal Decisions 2. Routine and Strategic Decisions 3.
Programmed and Non programmed Decision 4. Policy and Operating Decision 5. Individual and Group
decision Decision making Process 1. Defining the problem 2. Analysing the problem 3. Developing
alternative solutions 4. Evaluating the Alternatives 5. Selecting the best alternatives 6. Implementing the
decision Factors involved in Decision Making 1. Tangible Factors - things which can be measured, Fixed
cost, operating cost, profits, machine, etc 2. Intangible factors – Unmeasurable elements. Eg. Employee
morale, quality of labour relations, Consumer behaviour, etc. – Personal values & Orgn Culture, Group
decision making, Creative and innovation Problems of Decision Making 1. Indecisiveness 2. Time
pressure 3. Lack of Information 36
37. 37. 4. confusing symptoms with causes 5. Failure to evaluate correctly 6. Lack of follow through Key to
success in Decision Making 1. Be problem oriented not just solution oriented 2. Set decision making
goals 3. Always check the accuracy of the information 4. Don’t be afraid to develop innovative
alternatives 5. Be flexible 6. Gain commitment for decision at an early stage 7. Evaluate and follow up
the decision 37
38. 38. UNIT III ORGANIZING Nature and purpose of organizing - Organization structure - Formal and
informal groups I organization - Line and Staff authority - Departmentation - Span of control -
Centralization and Decentralization - Delegation of authority - Staffing - Selection and Recruitment -
Orientation - Career Development - Career stages – Training - - Performance Appraisal. 38
39. 39. ORGANIZING Definitions Allen defines Organising as “ the process of identifying and grouping of 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 their objectives.”
Koontz and O’Donnell defines as “ Organisation is the establishment of authority and relationships with
provision for coordination between them, both vertically and horizontally in the enterprise structure. -
Organising is the task of mobilizing resources - A structure involving a large number of people engaging
themselves in multiplicity of tasks, a systematic and rational relationship with authority and responsibility
between individuals and groups. Process of organizing - the manager differentiates and intergrates the
activities of his Organisation - Differentiation - the process of departmentalization or segmentation of
activities on the basis of some similarity - Integration – Process of achieving unity of effort among the
various departments 1. Establishing Enterprise Objectives 2. Formulating Supporting objectives, policies
and Plans 3. Identifying and classifying the necessary to accomplish 4. Grouping the activities in the light
of human and material resources available 5. Delegating to the head of each group the activity
necessary to perform 6. Tying the groups together horizontally and vertically through authority
relationship and information flows. Principles of Organising 1. Objectives 2. Specialisation 3. Span of
Control 4. Exception – the higher level have limited time, only exceptionally complex problem should be
referred to them and routine matters be dealt by the subordinates at the lower levels 5. Scalar Principle /
Chain of command – line of authority 39
40. 40. 6. Unity of Command 7. Delegation 8. Responsibility 9. Authority 10.Efficiency 11.Simplicity
12.Flexibility 13.Unity of Direction 14.Personal ability Span of Management Factors governing Span of
Management - Appropriate span of Management must be determined by the specific of the manager
particular situation. 1. Ability of the manager 2. Ability of the Employees 3. Type of work 4. Well defined
authority & Responsibility 5. Geographic locations 6. Level of Management 7. Economic Consideration
Orgn with Narrow span – superior with less number of subordinate to monitor Advatages - Close
supervision - Close control - Fast Communication, between communication between subordinates &
superiors Disadvantages - Superiors tend to get too involved in subordinate work - Many levels of
Management - High cost due to many levels - Excessive distance between lowest level and top level
Orgn with wide span - superior with more number of subordinate to monitor 40
41. 41. Advantages - Superiors are forced to delegate - Clear policies must be made - Subordinates must be
carefully selected Disadvantages - Tendency of overloaded superiors to become decision bottlenecks -
Danger of superiors loss of control - Requires exceptional quality of managers Organisation Chart “ An
Organisation chart is a graphic of the various positions in the enter[prise and the formal relationships
among them”. - It is a blueprint of the company organization structure. - George Terry “ An
Organisational Chart is a diagrammatical form, which shows important aspects of an Organisation
including the major functions and the respective relationships, the channels of supervision and the
relative authority of each employee who is in change of each respective function. Characteristics 1. a
diagrammatical presentation 2. represent the formal Organisation structure 3. it shows the main lines of
authority in the Organisation 4. indicates inter-play of various functions & relationships 5. indicates the
channel of communication Types of organization Chart 1. Vertical Chart – lines of command proceeding
from top to bottom in vertical lines 2. Horizontal Chart – Highest position shown in left 3. Concentric or
Circular Chart 41
42. 42. Contents of Organisation Chart 1. Basic Organisation structure & flow of authority 2. Authority &
Responsibility of various executives 3. Name of components of Organisation 4. Positions of various
office personnel 5. Total number of person working in an Organisation 6. Ways of Promotions and salary
particulars Pfiffner and Sherwood classifies into 3 categories 1. Skeleton – a graphical presentation of
the framework - arranged in levels connected by various lines representing different types of authority 2.
Functional – consists of subunits wherin boxes represent divisions and sections 3. Personal Chart –
some process of functional chart is used  but the boxes here contain personnel information  Eg- Job
title, name of the position holder Organisation Manual An Organisation Manual is a small handbook or
booklet contained detailed information about the Objectives, Policies, Procedures, rules, etc of the
enterprise - It often includes Job descriptions which are factual statements of job contents in terms of
duties and responsibilities. Contents of organizational Manual 1. Introductory  Name of the
Organisation  Nature of the Organisation  Objectives of the Organisation  Location of the
Organisation  Purpose of the manual 2. Administrative  Organisation Structure – major diision,
departments, chain of command  Job descriptions  Organisation Chart  Policies of the Management
42
43. 43.  Rules & regulations 3. Procedural  Office procedures and practices  Specimen form to be used
 Standard instructions regarding the performance of different jobs  Methods relating to accounting,
budgeting, etc. Types of Organisation Manual 1. Policy Manual 2. Company Organisation Manual –
describes the duties and responsibilities of various departments - Outlines the formal chain of command
and lines of promotion in the company 3. Operation Manual – describes the established standards,
procedures and methods for various jobs. 4. Department Practice Manual – detailed information about
the Organisation 5. Rules & Regulation Manual – prescribes rules regarding hours of work, timing, leave
cafeteria, library, recreation, etc. Departmentation - As the process of grouping individual jobs in
department. It involves grouping of activities and employees into departments so as to facilitate the
accomplishment of Organisation Objectives. Need & Importance of Department 1. Specialisation 2.
Expansion 3. Autonomy 4. Fixation of responsibility 5. Appraisal 6. Management development 7.
Administrative control Choosing a basis for Departmentation 1. Specialisation 2. Coordination 3. Control
4. Economy 5. Attention 43
44. 44. 6. Human Consideration Basis of Departmentation 1. Departmentation by Functional Basis –
Grouping of activities in accordance with the function of an enterprise. Each major function of the
enterprise is grouped into a department. Merits o It is a logical and time proven method o It follows the
principles of specialization o Authority and responsibility can be clearly defined and fixed o Since the top
managers are responsible for the end results control shall become effective Demerits  This type of
departmentation shall develop a loyalty towards the functions and not towards the enterprise as whole. 
Co-ordination of different function shall become difficult  Only the departmental heads are held
responsible for defective work 2. Departmentation by Territorial basis – A company may have separate
departments to serve the southern region, northern region etc. It has the advantage of the intimate
knowledge of local conditions. Merits  It motivates each regional head to achieve high performance 
Provides each regional head an opportunity to adapt to his local situation and customer need with speed
and accuracy.  It affords valuable top-management training and experience to middle level
executives]enables the organization to take advantage of locational factors, such as availability of raw
materials, labour, market, etc.  Enables the Organisation to compare regional performances and invest
more resources in profitable regions and withdraw resources from unprofitable ones. Demerits  May
give rise to duplication of various activities. Many routine and service functions performed by all the
regional units can be performed centrally b the head office very economically 44
45. 45.  Various regional units may become so engrossed in short run competition among themselves that
they may forget the overall interest of the total organization. 3. Departmentation by Process basis – is
done on the basis of several discrete stages in the process or technologies involved in the manufacture
of a product. A cotton textile mill have separate departments for ginning, spinning, weaving, dyeing and
printing and packing and sales. Merits  Facilitates the use of heavy and costly equipment in an efficient
manner.  It follows the priniciple of specialization – each dept is engaged in doing a special type of
work. This increases efficiency.  It is suitable for Organisation which are engaged in the manufacture of
those product which involve a number of processes. Demerits  Difficult to compare the performance of
different process based departments 4. Departmentation by Product basis – suited for a large
organization manufacturing a variety of products. For each major product a semi- autonomous
department is created and is put under the charge of a manager who may also be made responsible for
producing a profit of a given magnitude. Product dept is the logical pattern to follow when each product
requires raw materials, manufacturing, technology and marketing methods and that are markedly
different from those used by other products in the Organisation. Eg HLL manufacturing detergents,
toiletries, Clearasil cream and soap. Merits  Relieves top management of operating task responsibility.
It can therefore better concentrate on such centralized activities like finance, R& D and control  Enables
the top management to compare the performance of different products and invest more resources in
profitable products and withdraw resources from unprofitable ones.  Those who work within a
department derive greater satisfaction from identification with a recognizable goal. Demerits 45
46. 46.  Results in duplication of staff and facilities  Employment of large number of managerial personnel
is required.  Equipment in each product department may not be fully used 5. Departmentation by
Customer basis – An enterprise may be divided into a number of departments on the basis of the
customers that it services. For Eg. An educational institution may have separate departments for day,
evening and correspondence course to impart education to full time students, locally employed students
and autstation students respectively. Merits  It ensures full attention to major customer groups and
helps the company to earn goodwill. Demerits  It may result in under utilization of resources and
facilities in some department.  There may be duplication of facilities Authority - Power to take decision -
Right to get orders and obey orders - Power – Ability of individual to influence the action of other person
- Authority – right in a position to exercise discretion in making decision affecting others. Bases of Power
1. Legitimate 2. Expertness 3. Referrant 4. Reward 5. Coercive Def “ Authority may be defined as
legitimate right to give orders and to get orders obeyed. It denotes certain rights to take decision and get
them executed by their subordinates. 3 types of Authority Line authority – are those that have direct
impact on the accomplishment of the objectives of the enterprises 46
47. 47. - is the direct authority which a superior exercises over his subordinates to carry out orders and
instructions. - The flow of line authority is always downward, that is from a superior to a subordinate -
Creates a direct relationship between a superior and his subordinate - Line authority is the direct
authority which a superior exercises over his subordinates to carry out orders and inspections such
authority delegated top those positions or elements of the organization which have direct responsibility
for accomplishing the primary objectives. - Line relationship performs the following roles a. as a chain of
command b. as a carrier of accountability (subordinate is answerable to his superior) c. as a channel of
communication Staff authority – Staff refers to those elements of the Organisation which help the line to
work most effectively in accomplishing the primary objectives of the enterprises. - are those that help the
line person work most effectively in accomplishing the objectives. Difference between Line and Staff
Authority S.No Line Authority Staff Authority 1 Right to decide and command Right to provide advice,
assistance and information 2 Contributes directly to the accomplishment of Organisational objectives
Assist line in the effective accomplishment of Organisation objectives 3 Relatively unlimited and general
Relatively restricted to a particular function 4 Flow downward from a superior to subordinate May flow in
any direction depending upon the need of advice 5 Creates superior and subordinate relation Extension
of line and support line 6 Exercise control Investigates and reports 7 Makes operating decision Provides
idea for decision 8 Bears final responsibility for Does not bear final responsibility 47
48. 48. results 9 Doing functions Thinking function 10 Provides channel of communication No channel of
communication is created Functional authority - is the right which an individual or department has
delegated to it over specialized processes, practices, policies or other matters relating to activities
undertaken by personnel in department other than its own. - generally relates to laying down systems
and procedures. For Eg. The personnel manager may lay down the grievances procedure to be followed
in all departments - granted to a staff specialist to issue instruction to line executives directly in a specific
and limited area of operation. Delegation of authority - To delegate means to entrust authority to a
subordinate - Assigns some part of his work to his subordinate and also gives the necessary authority to
make decision within the area of their assigned duties Def . Koontz and O’Donnel, “ The entire process
of delegation involves the determination of results expected, the assignment of tasks, the delegation of
authority for accomplishment of these tasks, and the exaction of responsibility for their
accomplishments.” Types of delegation 1. General or Specific 2. Formal or Informal 3. Written or oral 4.
Downward and sideward Process of Delegation 1. Determination of results expected 2. Assignment of
duties 3. Granting of authority 4. creating accountability for performance 48
49. 49. Accountability – is the obligation to carry out responsibility and exercise authority in terms of
performance standard established by the superior - Once a subordinate is assigned a duty and given the
necessary authority to complete it, he becomes answerable for the results. Thus accountability is a
derivative of responsibility. Principles of Delegation 1. Delegation to conform to desired objectives 2.
Responsibility not delegatable 3. Authority to match duties 4. Unity of command 5. Limits to authority to
well-defined Merits 1. Basis of effective functioning 2. Reduction in managerial load 3. Benefits of
specialized service 4. Efficient running of branches 5. Aid to employee development 6. Aid to expansion
and diversification of business Effective Delegation 1. Define assignments and delegate authority in the
light of results expected 2. Select the person in the light of the job 3. Maintain open lines communication
4. Establish proper control 5. Reward effective and successful assumption of authority Staffing - Filling
and keeping filled, positions in the Organisation structure. - Def – Koontz and O’Donnell “ The
managerial functions of staffing involves manning the Organisational structure through proper and
effective selection, appraisal and development of personnel to fill the roles designed into structure.
Functions of Staffing 1. Procurement – Job analysis 49
50. 50. – Man power planning – Recruitment – Selection – Placement 2. Development - Performance
appraisal - Training - Management Development - Career Planning & Development - Promotion 3.
Compensation – Job evaluation – Wage and Salary administration – Incentives – Fringe Benefits –
Social security measures 4. Human Relations - is an area of management in integrating people into work
situation in a way that motivates them to work together productively, co-operatively and with economic,
psychological and social satisfaction. Sequence of activity in Staffing Preemployment activities -
Requisitioning, Recruiting & Selecting Post employment activities - Training, appraising, Promoting and
Compensating, Providing miscellaneous services. Purpose and Importance 1. Increasing size of
Organisation 2. Advancement of technology 3. Long range needs of manpower 4. High wage bill 5.
Trade unionism 6. Human relations movement 50
51. 51. Recruitment & Selection - 1st Stage, continues with selection and stops with the placement of the
candidate - +ve it stimulates people to apply for jobs to increase the hiring ration. i.e. the number of
applicants for a job - Goal of Recruitment is to create a large pool of persons available and wiling to
work. - Selecting the person overall - Def.- Edwin & Flippo – “ Recruitment is the process of searching for
prospective employees and stimulating them to apply for jobs in the Orgn. Sources of Recruitment 1.
Internal sources – It includes personnel already on the payroll of an Organisation, presenting working
force. Merits - Less expense - Builds loyalty - Ensures stability - Sense of security - Lower level to look
forward to rising to higher levels - Morale of the employees (Shows more Enthusiasm) Demerits -
Promotion based on seniority, inefficient people may also be promoted this will ultimately ruin the
prospects of the firm. - There will not be any any creativity - Lack of Technical skills 2. External Sources
– Fresh flood should be injected so as to make it more dyanamic - freshers from college - unemployed
with a wide range of skills and abilities - retired experienced person Merits - required skills 51
52. 52. - Do objective selections (since people are recruited from a large market, the best selection can be
made without any distinctions of caste, colour, gender) - May b economical in the long run (training is not
required) Demerits -Brain Drain – Experienced persons or raided or hunted by other concerns Methods
or Techniques of Recruitment 1. Direct Method – campus recruitment 2. Indirect Method – use
advertisements for recruitment in newspaper, journal, etc - Blind advertisement – without company name
the advertisement been made 3. Third Party method a. Private Employment agency b. Public
Employment agency c. Head hunters (Professional Recruiting agencies) d. Employee Referrals
(Recommendations) e. Trade Unions f. Applicant at the gate g. Voluntary Organisation h. Computer data
bank Recruitment Policy 5 Elements 1. Identification of Recruitment needs 2. Preferred sources of
Recruitment 3. Criteria of selection and selection techniques 4. Cost of Recruitment 5. Role, if any
assigned to the union in the formulation and implementation of recruitment and selection policies.
Selection - Process of discovering the most suitable and promising candidates to fll up the vacancies -
The goal of selection is to sort out or eliminate those judged unqualified to meet the job and
organizational requirements - -ve action, after receiving the application select a particular person 52
53. 53. - Recruitment is a method while selection is a procedure. - Successive hurdles techniques Steps in
Selection - A process of rejecting the unwanted applicant 1. Receiving application 2. Preliminary
screening / Interview 3. Application blank 4. Psychological test 5. Interview 6. Reference check 7.
Physical Examination 8. Final Interview Interview The Interview is the most frequent method of selection.
The Interview is a face to face conversation between an applicant and the employer. The purpose of
Interview is to collect information on behaviour, attitudes, opinions, maturity, emotional stability,
enthusiasm, confidence, response and other commercial behaviour. Factors considered in Interview 
Initiative  Response  Behaviour  Work Experience  Opinion  Attitude  Maturity  Emotional
Stability  Enthusiasm  Confidence 53
54. 54. Types of Interview 1. Structured Interview – is also called as patterned interview. The interviewers
are trained in the process to be used. A list of questions on analysis of the job specification is prepared.
The Interviewing process attempts to predict how candidates will perform in the work situations. 2. Group
or Discussion Interview – The interviewees are given certain problems and are asked to reach a specific
decision within a particular time limit. The applicants enter into group discussion, knowing that the
interview is a test, but do not know which qualities are being measured or tested. The object is to see
how individuals perform on a particular task or in a particular situations 3. Panel or Board Interview –
Candidate is interviewed by a number of interviewers. Questions may be asked in turn or asked in
random order as they arise on any topic. 4. Stress Interview – The Interview assumes a hostile role
toward the applicant. He deliberately puts him on the defensive by trying to any, embarrass or frustrate
him. The purpose is to find out how a candidate behaves in a stress situation whether he loses his
temper, gets confused or frightened. PLACEMENT The Placement of the individual on the new job and
orienting him to the Organisation. Placement may be defined as the determination of the job to which an
accepted candidate is to be assigned to that job. A proper placement of a worker reduces Employee
turnover, absenteeism and accident rates and improve morale. After the selection, the employee is
generally put on a probationary period ranging from one to two years after his employment to
regularized, provided that during this period, his work has been found to be satisfactory.  Orientation 
Training  Executive Development 54
55. 55. Orientation / Induction / Indoctrination Induction is a technique by which a new employee is
rehabilitated into the changed surroundings and introduced to the practices, policies and purposes of the
Organisation The Main Objects of Orientation 1. Clarifying the job 2. Developing realistic expectation
about the Organisation 3. Reducing the amount of stress of new employee 4. Reducing startup costs 5.
Strengthening the relationships between new employee, his superiors and peers A formal orientation
programme generally provides information regarding the following : 1. The history of the Organisation 2.
Products and services of the Company 3. Organisation structure of the enterprise 4. Location of
departments and Units 5. Personnel policies and practices 6. Employees facilities and services 7. Rules
and Regulations 8. Grievance procedures 9. Safety Measures TRAINING & DEVELOPMENT Training -
Training is an organized process for increasing the knowledge and skills of people for definite purpose.
Training & Education - Training and Education is concerned with imparting specific skills for particular
purpose - Purpose of Training is to bring about improvement in the Performance of work 55
56. 56. - Includes the learning of such skills as are required to do a specific job in a better way Training &
Development - Development involves the growth of the individual in all respects - Training is job
centered whereas development is career bound - Aims at increasing the capacity for further tasks of
greater difficulty - Contents and techniques of employee training may differ from those of Management
Development. Training & Development Process 1. Determining Training Needs a. Organizational
analysis – ( analyzing the present and future needs of the total Organization) b. Operational analysis –
(need of a specific group of jobs) c. Individual analysis – (analyzing the need of the specific Employee) 2.
Deciding the purpose of Training 3. Choosing Training method 4. Evaluating Training Effectiveness
Need for Training arises on the account of following reasons – 1. New Environment 2. Lack of Trained
Personnel 3. Advancement in Technology 4. Faculty Methods 5. Prevention of accidents 6. Career
Development. Need for Training 1. To improve job related skills 2. To update Knowledge and skills 3. To
prepare for higher responsibilities and task 4. To develop proper job related attitudes 5. To inject
motivation and morale 6. To mould personnel to adapt and adjust to Organizational change Advantages
of Training 56
57. 57. 1. Increased productivity 2. Job Satisfaction 3. Reduction in accidents 4. Better use of Resources 5.
Reduced Supervision 6. Greater Flexibility 7. Management by Exception 8. Stability and Growth 57
58. 58. Essential of a good Training Programme A good training programme must satisfy the following
conditions 1. Clear Purpose 2. Training Needs 3. Relevance 4. Individual Differences 5. Appropriate
incentives 6. Management Support 7. Balance between theory and practice. Training Procedure 1.
Preparing the Instructor - know the job or subject he is attempting to teach - Have the aptitude and ability
to teach - Have willingness towards the profession - Pleasing Personality and capacity for leadership -
Knowledge of teaching Principles and methods 2. Preparing the Trainee 3. Getting ready to teach 4.
Presenting the Operation 5. Try out the Trainee’s performance 6. Follow - up Methods and Techniques
of Training 1. On the Job Training a. Coaching b. Understudy c. Job Rotation 2. Vestibule Training – (
Dummy Machine set up ) 3. Apprenticeship Training 4. Classroom Training Executive Development /
Management Development “ Developing a manager is a progressive process in the same sense that
educating a person it. Neither development nor Education should be thought of as something that can
ever be completed, for there are no known limits to the degree to which one may be developed or
educated” 58
59. 59. Methods of Executive Development 1. On the Job Method a. Coaching and Understudy b. Position
rotation c. Special projects and task forces d. Committee assignments e. Multiple Management 2. Off the
Job Method a. Special courses b. Conferences and Seminars c. Case study d. Selective Readings e.
Brain Storming f. Simulation , role Playing and Management Games g. Sensitivity Training 59
60. 60. UNIT IV DIRECTING Creativity and Innovation - Motivation and Satisfaction - Motivation Theories -
Leadership Styles - Leadership theories - Communication - Barriers to effective communication -
Organization Culture - Elements and types of culture - Managing cultural diversity. 60
61. 61. DIRECTING Directing concerns the total manner in which a manager influences the actions of
subordinates. It is the final action of a manager in getting others to act after all preparations have been
completed. It consist of the following elements: 1. issuing orders and instructions 2. continuing guidance
and supervision of subordinates 3. motivating subordinates to work hard for meeting the expectation of
management. 4. maintaining discipline and rewarding those who perform well 5. providing leadership to
subordinates CHARACTERISTICS 1. Elements of Management 2. Continuing Function 3. Pervasive
Function 4. Creative Function 5. Linking function 6. Management of Human Factor SIGNIFICANCE OF
DIRECTING 1. Initiates action 2. Ensures coordination 3. Improves efficiency 4. Facilitates change 5.
Assists stability and growth PRINCIPLES 1. Harmony of objectives 2. Maximum individual contribution 3.
Unity of command 4. Appropriate techniques 5. Direct Supervision 6. Strategic use of Informal
Organization 7. Managerial Communication 8. Effective Leadership 9. Principle of Follow up through 61
62. 62. TECHNIQUES OF DIRECTING 1. Delegation 2. Supervision 3. Orders and instructions 4. Motivation
5. Leadership 6. Communication SUPERVISION Supervision implies exert overseeing of people at work
in order to ensure compliance with established plans and procedures. Every executive has to supervise
the work of his subordinates. At the operating level, supervision is the most significant part of the
manager job. The supervisor is in direct touch with the workers. He teaches proper work methods,
maintains discipline and work standards and solve workers grievances or problems. RESPONSIBILITIES
OF A SUPERVISOR 1. To schedule work so as to ensure an even and steady flow. 2. To assign work to
different individuals 3. To provide proper working conditions 4. To issue orders and instructions 5. To
prescribe work methods and procedures 6. To guide, train and inspire workers in the efficient
performance of work. QUALITIES OF A GOOD SUPERVISOR 1. Knowledge of Work 2. Knowledge of
the Organization 3. Communication Skill 4. Human Relation of Skill 5. Decisiveness FUNCTIONS 1.
Planning the work 2. Organising the Resources 3. Staffing the units 4. Maintaining discipline 5. Enforcing
safety measures 6. Handling Grievances 7. Appraising performance 62
63. 63. FUNDAMENTALS OF EFFECTIVE SUPERVISION 1. Planning the work 2. Time management and
delegation 3. Organising the resources 4. Staffing the Units 5. Trianing and development of Employees
6. Disciplining the Workers 7. Appraising the performance of Employees 8. Controlling the results 9.
Labour relations and Grievance procedures LEADERSHIP Definition Leadership is defined as influence,
the art or process of influencing people so that they will strive willingly and enthusiastically toward the
achievement of group goals. - Leaders act to help a group attain objectives through the maximum
application of its capabilities. - Leaders must instill values – whether it be concern for quality, honesty
and calculated risk taking or for employees and customers. SKILLS 1. The ability to use power
effectively and in a responsible manner 2. The ability to comprehend that human beings have different
motivation forces at different times and in different situations 3. The ability to inspire 4. The ability to act
in a manner that will develop a climate conductive to responding to and arousing motivations. 5.
Fundamental understanding of People 6. ability to inspire followers to apply their full capabilities to a
project 63
64. 64. Leadership Styles 1. Autocratic Leader –Commands and expects compliance, is dogmatic and
positive, and leads by the ability to withhold or give rewards and punishment. 2. Democratic or
Participative – consults with subordinates on proposed actions and decision and encourage participation
from there 3. Free-rein leader / laissez-faire Leadership – uses his or her power very little, giving a high
degree of Interdepence in their operations. Leaders depend largely on subordinates to set their own
goals and the means of achieving them, and they see their role as one of aiding the operation of
followers by furnishing them with information and acting primarily as a contact with the groups external
Environment. 4. Paternalistic Leadership – Serves as the head of the family and treats his followers like
his family members. He assumes a paternal or fatherly role to help, guide and protect the followers.
Functions 1. Goal Determination 2. Motivating Followers 3. Direction 4. Coordination 5. Representation
Importance of Leadership 1. Aid to authority 2. Motive power to group efforts 3. Basis for co operation 4.
Integration of Formal and Informal Organization. Theories 1. Trait Theory – A Leader is a one who has
got a enthusiastic look, courageous look – describes the external qualities of a person 2. Behavioral
Theory – A person who intend to be leader, they do not have any qualities like Trait Theory 3.
Contigency Theory – a. Fiedler Model b. Likert Model c. Managerial Grid Theory 64
65. 65. Fiedler Model - Leaders can be classified as two - a. Relationship Oriented b. Task Oriented 3
Situations been given to find the performance of two types of Leader- – Leader member Relationships -
Task Structure - Position Power Employees under Relationship oriented Leader seems to achieve more
performance than the other. Likerts Model System 1 – Exploitive Autocratic Leader (oriented towards
task alone) System 2 – Benevolent Autocratic Leader (task oriented but has the quality of opposing if
things are good) System 3 – Participative Leader (concerns the employees for a particular kind of work,
though he concern decision will be taken only by him. System 4 – Democratic Leader 3 Situations 1.
Confidence / Trust in Employees 2. Subordinates feeling of freedom 3. Managers seeking involvement
with Subordinates Ratings of the Leaders by their employees at different situations Managerial Grid
Theory Proposed by Blake and Mounton 2 Kinds of Leader 1. Leaders concerned for People 2. Leader
concerned for production / Task Leader styles 1. Task Manager Eg Defence , Concerned only on task 2.
Team Builders – leaders high concern for production as well as people 3. Impoverished Style – Unfit for
Leadership qualities, less concern for people as well as production 4. Country club Manager Eg – Trade
union, high concern for people than production. 65
66. 66. COMMUNICATION Communication is derived from the Latin word Communis which implies
common. Communication is the interchange of thoughts and information. ELEMENTS 1. Sender 2.
Message – The Subject matter of Communication 3. Encoding – act of translating he msg into words,
pictures, symbols 4. Channel – Media used 5. Receiver – 6. Decoding – interprets the msg to draw
meaning from it. He converts symbols, signs or pictures into meaning 7. Feedback – Sound
Communication provides the following advantage 1. Improves Mangerial Performance 2. Facilitates
Leadership 3. Increases job Satisfaction 4. Reduces time and efforts 5. Enhances coordination 6. Help
public relations CHANNELS OF COMMUNICATION 1. Formal Communication – follows the route
formally laid down in the organization structure a. Downward Communication – flow of communication
from superior to subordinate b. Upward Communication - flow of communication from subordinate to
superior c. Horizontal Communication – transmission of information among the positions at the same
level of he Organization. 2. Informal Communication or Grapevine – Communication among people
through informal contacts or relations. 66
67. 67. Distinguish between Downward and Upward Communication Down ward Upward From higher to
lower levels From lower to higher levels Flow is downward Flow is upward Directive in nature Non-
directive Purpose is to get plans implemented Purpose is to provide feedback on results Travels fast
Travels slowly Orders, instructions, lectures, manuals, handbooks, etc are the main examples Reports,
suggestions, grievances, protests, surveys are the main examples. Distinction between Formal and
Informal Communication Formal Communication Informal Communication Official Channel Unofficial
Channel Deliberately Planned and Systematic Unplanned and Spontaneous Part of Organization
Structure Cuts across formal relationships Oriented towards goals and task of the enterprises Directed
towards goals and need satisfaction of individuals Impersonal Personal and social Stable and rigid
Flexible and instable Slow and Structured Fast and Unstructured Grapevine Merits and Demerits Merits
Demerits Useful for developing group cohesiveness Based on rumors Serves as an emotional safety
value Misleads People Effective source of knowledge feelings and attitudes of Employees May breed
against particular executives Supplements the channels of official communication May lead to more talk
and less work Tells mgt when to be firm and when to yield May distort official channels of communication
67
68. 68. MEDIA OR METHODS OF COMMUNICATION 1. Oral Communication 2. Written Communication 3.
Gestural Communication ORAL COMMUNICATION Oral Communication involves exchange of
messages through spoken words. It may take place. i) by face- to face contacts ii) through mechanical
devices like telephone. Merits Oral or Verbal communication offers the following advantages: 1.
Economical 2. Personal touch 3. Speed 4. Flexibility 5. Quick response Demerits Oral Communication
suffers from the following weaknesses- 1. Lack of record 2. Time Consuming 3. Lengthy message 4.
Physical distance 5. Misunderstanding WRITTEN COMMUNICATION Written Communication is
transmitted through written words in the form of letter, circular, memos, bulletins, instruction cards,
manuals, handbooks, reports, returns, Merits 1. Effectiveness 2. Lengthy messages 3. Economical 4.
Repetition 5. Permanent record 6. Better response 68
69. 69. Demerits 1. Time Consuming 2. Expensive 3. Inflexibility 4. Little secrecy 5. Lack of personal touch
6. Misunderstanding COMMUNICATION NETWORKS 1. Circle Network 2. Chain Network 3. Wheel
Network 4. All Channel Network BARRIERS TO COMMUNICATION a. Organisational Barriers 1.
Ambiguous policies, rules and procedures 2. Status patterns 3. Long chain of Command 4. Inadequate
Facilities b.Mechanical Barriers 1. Overloading 2. Semantic barriers 3. Noise c.Personal Barriers 1. Lack
of attention or interest 2. Failure to Communicate 3. Hasty Conclusion 4. Distrust of communicator 5.
Improper state of mind. 69
70. 70. MAKING COMMUNICATION EFFECTIVE 1. Sound Organization Structure 2. Clear messages 3.
Two-way Communication 4. Multiple Channels 5. Good Listening 6. Effective Control 7. Modern
Instrument 8. Human Relations attitude ESSENTIALS OF GOOD COMMUNICATION SYSTEM 1. Clarity
of messages 2. Completeness of message 3. Consistency of message 4. proper timing 5. Credibility 6.
Empathy 7. Follow-up 8. Economy 70
71. 71. UNIT V CONTROLLING Process of controlling - Types of control - Budgetary and non-budgetary
control techniques - Managing Productivity - Cost Control - Purchase Control - Maintenance Control -
Quality Control - Planning operations. 71
72. 72. Controlling Definition - as the process of analyzing actual operations and seeing that actual
performance is guided towards expected performance. - Comparing operating results with plans and
taking corrective actin when results deviate from plans - Def. Koontz and O’Donnell “ The managerial
function of controlling is the measurement and correction of the performance of activities of subordinates
in order to make sure that enterprise objectives and the plans devised to attain them are being
accomplished. Nature & Purpose of Control 1. Control is an essential function of management 2. Control
is an ongoing process 3. Control is forward – working because pas cannot be controlled 4. Control
involves measurement 5. The essence of control is action 6. Control is an integrated system Elements of
Control 1. Planning 2. Information Feedback 3. Delegation of Authority 4. Remedial action Control
Process 1. Fixation of Standard 2. Measurement of Performance 3. Comparing performance with
standards 4. Correction of Deviations Problems in the Control Process  Magnitude of Change  Time
rate of Change  Erroneous standard ( Mistakes in setting standard)  Workers Resistance 
Communication Problems 72
73. 73. Characteristic of an ideal Control system  Suitable  Flexible  Economical  Simple  Objective 
Prompt  Forward looking  Suggestive  Strategic point control  Motivational Techniques of
Managerial Control Traditional Techniques 1. Personal Observation ( For Eg. A Factory manager goes
around the plant, observes the performance of Employees and Machines) 2. Good Organisation
Structure 3. Unity of Plans 4. Statistical Control Reports 5. Budgetary control – Statement expressed in
financial terms a. Master budget b. Functional Budget - Sales budget, Production budget, Material
budget, Labour budget, Cash budget, Administrative Overhead budget, c. Capital & Revenue budget d.
Fixed and Flexible Budget e. Zero base budgeting ( the budget proposals are considered from the
ground up ( zero base) or from scratch Objectives of Budgetary Control a. Planning b. Coordination c.
Control d. Motivation e. Efficiency 73
74. 74. Merits  Optimum use of resources  Fixation of Responsibility  Effective coordination  Planned
approach 6. Profit & loss control 7. External audit Control 8. Overall Control criteria ( BEP Analysis) 9.
Return on Investment Control 10.Management Audit  Organisation Structure  Executive appraisal 
Functioning of the management board  Soundness of Earning  Economic Functioning  Service to
stock holders  R & D  Fiscal Policy  Production Efficiency 11.Responsibility accounting  Cost
centre  Profit centre  Investment centre Techniques of Management  MBO  MBE  MBP –
Management by Participation implies the mental and emotional involvement of employees, share
holders, investors, consumers and other stake holders in the decision making process. Forms 1. Work
Committee 2. Joint Management Councils 74
75. 75. 3. Worker Directors 4. Co-partnership Productivity & Operations Management  Productivity which
accounts for profitable operations of an enterprises and provides opportunities to an enterprise for
remaining competitive and successful in an area of global competition  Output – input ratio, within a
given time period & with due consideration for quality of Performance Problems in Measuring
Productivity of Knowledge workers - Measurement of the productivity of skill workers is easier but it
becomes more difficult to measure the productivity of knowledge workers - Greatest scope for increasing
productivity lies in the work performed by knowledge workers Eg. Managers, Engineers, Cost
accountant, etc. Operation Management - is the design and operation of systems. Working of Operation
Management. Input Transformation / Output Conversion process Information Technology Raw Materials
Main Power Planning, operating & Product Management Controlling production Services Physical
Factors ( like land, System Building, Machines, etc) Feedback External Environment 75
76. 76. Developing Excellent Managers – The key to preventive control a. Efforts required on the part of
managers themselves  Willingness to learn  Planning for Innovation & Inventions  Tailoring
Information b. Efforts required on the part of the Organisation  Acceleration of Managerial Development
programmes  Measuring Managerial programmes and rewarding it  Need for management R & D 
Need for Intellectual Leadership Globalisation  Globalisation means the internationalization of trade.
Particularly product transaction and the integrating of economic and capital markets throughout the
world.  The integration takes place when trade exists freely among the different countries, thus the
world economy becomes a single market or single economy.  In globalization there is no restriction of
quota, license, tariff and other administrative barrier for trade. Benefits of Globalisation  Improves
efficiency  Improves factor Income  Improves finance  Gains from Migrations Drawbacks of
Globalisation Globalisation increases the problems of unemployment 1. Domestic Industries finds
difficulty in survival 76
77. 77. Only group of people who participate in the process of Globalization will be benifitted, this creates
income inequality within the country 2. Control on domestic economy becomes more difficult 3.
Developing country suffers from the problem of brain-drain International Business - Involves commercial
activities that cross national frontiers - It is a process of Entrepreneur conducting business activities
across national boundaries - It consist of Exporting, Importing, lIcensing, opening of Sales office - The
activities necessary for ascertaining the need and want of target consumer often takes place in more
than one country. When an Entrepreneur executes his or her business model in more than one country
International Business Occuring. Entry into International Business The method of entering or engaging in
International Business can be divided into three categories Exporting o Indirect Exporting o Direct
Exporting Non Equity arrangement – Doing international business through an arrangement that does not
involve any investments. - Licensing - allowing someone else to use something of the company’s in
return for the payment of royalty - Turn key Projects – A foreign Entrepreneur build a factory or other
facility, training the workers, train the management and then turn it over to the local owners once the
operation is completed, hence the name turn key operation - Management Contracts – Contracting
management techniques and skills. The management contracts allows the purchasing country to gain
foreign expertise without giving ownership of its resources to a foreigner. Direct Foreign Investments –
preferred mode of ownership a. Minority Interest – Having less than 50% Ownership Position b. Joint
Ventures – Merger of two companies 77