MANAGEMENT CONCEPTS

MBA 1.1

#1

PAPER 1.1: MANAGEMENT CONCEPTS UNIT I Management: Definition - Nature - Scope and functions - Evolution of management thought - Relevance of management to different types of organizations like Insurance !ospitals "niversities !otels Social Service organizations etc# UNIT II $lanning: Nature importance and strategic considerations in planning# $lanning premises %omponents of planning as o&'ectives policies strategies procedures methods rules pro'ects and &udgets - Making plans effective $lanning and decision-making# UNIT III (rganizing Nature purpose and kinds of organization - Structure $rinciples and theories of organization Departmentation - Span of control --) *ine and staff functions - +uthority and responsi&ility - %entralisation and decentralisation - Delegation of authority - %ommittees - Informal, organisation# UNIT IV Staffing and Directing: -eneral principles importance and .echni/ues# UNIT V %ontrolling (&'ectives and process of control - Devices of control Integrated control - Special control techni/ues - %oordination - Need and techni/ues# UNIT VI Recent trends and ne0 perspectives in management - Strategic alliances %ore competence - 1usiness process reengineering - .otal /uality management - 1ench marking# REFERENCES: 2# Stoner et-al Management $rentice !all# 3# 4oontz and (5Donnell Management: + Systems +pproach .ata Mc-ra0 !ill# 6# 7eihrich and 4oontz 8iollagel9lent: + -lo&al $erspective Mc-ra0 !ill# :# 8ohn +rgenti Management .echni/ues: + $ractical -uide ;# -ene 1urton and Mana& .hakur Management .oday: $rinciples and $ractice .ata Mc-ra0 !ill# <# -riffin Management# %ourse Material, $repared &y = Dr. G. Jayabal Senior *ecturer in Management +lagappa "niversity 4araikudi#

#2

LESSON 1 NATURE AND PROCESS OF MANAGEMENT Intro !"t#on: Management is universal in the modern industrial 0orld# Modem societies arc often descri&ed as >Societies of organisations# In the modern day living each of us is the associated# 7ith Some kind of organisations like colleges hospitals &usiness enterprises religious and social organization &anks insurance corporations transport corporation etc# +ll these organisations affect our lives in many 0ays Despites the his difference in their functioning and approaches all the organisations are trying to achieve their o0n o&'ectives# (rganisations cannot achieve the o&'ectives effortlessly Several activities iave to &e performed in cogesive 0ay# (rganisations re/uire the making of decisions the co-ordinating of activities the handling of people and the evaluation of performance directed to0ard group o&'ectives# Numerous managerial activities have their o0n particular approach to specific types of pro&lems and arc discussed under different heading as &usiness management &ank management transport management tourism management# ?inancial management $roduction mill2ugcment Marketing management $ersonal and management etc# +ll have some common $rinciples or elements# .he management functions facilitate the performance of activities of organisation in a systematic fashion to accomplish the o&'ectives# M$an#n% an D$&#n#t#on o& Mana%$'$nt:

Management means many things to many people# Economist regards it as a factor of production# Socialist vie0 it as a class or group of persons# 7hile Management practioners treat it is a process# .he trade unionist consider Management as an e@ploiting set of people# In simple term# >Management is 0hat a manager does5 Mary $arker ?ollet says Management in its true sense a process &y 0hich an organisation realises its o&'ectives ill a planned 0ay# Management is a set of activities AIncluding planning and decision making organizing leading and controllingB directored at an organization-resources Ahuman financial physical and informationB0ith the aim of achieving organizational goals in efficient and effective manner#

Management is &asically concerned 0ith ideas things and people It is very difficult to define the term Management precisely# In fact there are various definitions on Management# 1ut none has &een universally accepted# Nor can anyone definition covers all the facet of Management given its dynamic nature# .he follo0ing are fe0 definitions of Management given &y eminent authors on the su&'ect# +ccording to 8ames +#?# Stoner CManagement is the process of planning organising leading and controlling efforts of organisation mem&ers and of using all other organisationsal resources to achieve stated organisational goalsD +ccording to Dr# 8arnes *undy DManagement is a task of planning coordinating motivating and controlling the efforts of others to0ards specific o&'ectivesD +ccording to !enry ?ayol to manage is to forecast and plan to organise command to coordinate and control# $eter ?# Drucker defines Management as Dan economic industrial societyD# ,t means taking action to making the desired results to pass# E#?#*# 1reach defines as# DManagement is concerned 0ith seeing that the 'o& gets done its tasks are centred on planning and guiding the operations that are going on the enterpriseD +ccording to -eorge R# .erry# Management is a distinct process consisting of planning organising

#3

actuating and controlling performed to determine and accomplish the o&'ectives &y the use of people and resources# +lmost all the a&ove definitions suggest the follo0ing Management is a process &ecause all managers irrespective of their levels in the organization engage in certain interrelated activities in Erder to achieve the desired goals# Managers use all the resources of the organisation &oth physical as 0ell as human# Management aims at achieving the organisation goals# .o achieve the o&'ectives every organisation uses certain inputs like materials machineryB money and the service of men# .hese inputs are dra0n from the environment in 0hich the organisation e@ists# 7hether an organisation is engaged in &usiness or not the various inputs are 'udiciously used to produce the outputs# .his process 0hich involve conversion of inputs into outputs is common to all organisations and it is sho0n in the follo0ing e@hi&it#

INPUT(OUTPUT MODEL

.his output of the firm may &e a physical product or service# Since a &usiness organization is an economic entity the 'ustification for its e@istence lies in producing goods and services that satisfy the needs of the people# !ere arises the /uestion of effectiveness in transforming the inputs into outputs# !o0 effectively the goods and services are produced is a matter of concern for any society given the scarcity of resources# Effective management plays a crucial rote in this conte@t# Nat!ral o& Mana%$'$nt: In spite of the gro0ing importance of management as an academic discipline immensely contri&uting to the /uality of human life the concept is still clouded &y certain misconceptions# No dou&t management as an academic &ody of kno0ledge has come a long 0ay in the last fe0 years# It has gro0n in saturate and gained acceptance all over the 0orld# Fet it is a parado@ that the term Management continues to &e the most misunderstood and misused# + study of the process of management reveals the follo0ing points a&out the nature of management# Mana%$'$nt #) a Un#*$r)al +ro"$)) 7here there is human activity 0hether individual or 'oint there is management# .he process of management can &e noticed in all spheres of life# .he &asic nature of management activity are the same 0hether the organisation to &e managed is a family a clu& a trade union a trust a municipality a &usiness concern or the government slight variations in approach and style may &e there from organisation to organisation &ut the management activity is &asically the same every 0here# Mana%$'$nt #) a &a"tor o& +ro !"t#on: Management is regarded as a factor of production# 8ust as land la&our and capital have to &e &rought together and put to effective use for the production and distri&ution of goods and services# Similarly managerial skills have also to &e ac/uired and effectively used for the purpose# In the modern industrial setup 0here the pattern of production has &ecome capital- intensive /ualified and efficient managers are essential to reap the fruits of huge investment in &usiness# In fact the more important 0ould &e the role of management# Mana%$'$nt #) %oal or#$nt$ : .he most important goals of all management activity is to accomplish the o&'ectives of an enterprise# .hese o&'ectives may &e economic socio-economic social and h"lllnl2 and management at different levels seeks to achieve these in different 0ays# 1ut at all times management has definite o&'ectives to pursue and it employs all the resource as it command - men money materials machines and methods in the pursuit of the o&'ectives#

#4

Mana%$'$nt #) )!+r$'$ #n t,o!%,t an

a"t#on:

Determination of the o&'ectives of an enterprise tests the collective 0isdom and sense of imagination of its management# .he o&'ectives should &e neither too high sounding or difficult to achieve nor too lo0-pitched to ro& 0orkers of their sense of achievement# 1ut mere setting of o&'ectives 0ill &e of no avail of there is no vigorous action to achieve them# Management scores over other activities the respect# It sets realisa&le o&'ectives and then masterminds action on all fronts to accomplish the Managers &elong to that rare &reed of men 0ho are not only a0are If 0hat to &e achieved and ho0 hut also possess the capa&ility and courage to accept the challenges of doing it# Mana%$'$nt #) a %ro!+ a"t#*#ty: .he &asic re/uirement of successful management is replacement of 0ith D0eD# +n enterprise 0ill not &e a&le to achieve its o&'ectives if only one or a fe0 individuals or departments thereof are efficient the rest &eing indifferent# ?or e@ample even the &est performance &y the production department 0ill &ecome meaningless if the sales department does not make efforts to sell the products or if finance department does not ensure ade/uate availa&ility of funds# ?or the success of an enterprise it is necessary that all the human and physical resources at its disposal men money materials machines etc# - are efficiently coordinated to attain the ma@imum levels of productivity# It is 0ell kno0n that the com&ined productivity of different resources 0ill al0ays &e much higher than the total of individual productivity of each resources# .he test of managerial a&ility lies in coordinating the various resources and to achieve ma@imum com&ined productivity# 7ith proper management one plus one does not mean t0o &ut eleven# .his is also called the multiplier effect of management activity# Mana%$'$nt #) a yna'#" &!n"t#on: Management is a dynamic function of a collective enterprise 0hich is constantly engaged in casting and recasting the enterprise in the 0orld of an ever-changing &usiness environment# Not only this t also sometimes initiates moves that reforms and alter the &usiness environment# If an enterprise is 0ell-e/uipped to face the changes in &usiness environment &rought a&out &y economic social political technological or human factors it can soon adapt itself to a changed environment or make innovation to attune itself to it# ?or e@ampleG in the fact of fall in the demand for a particular product the enterprise can &e kept in readiness to e@plore ne0 markets or s0itch over to production of ne0 goods 0ith ready demand# Mana%$'$nt #) a )o"#al )"#$n"$ Management %onsists in getting things done &y others .his involves dealing 0ith individuals each one of 0ho has a different level of sensitivity understanding and dynamism# In fact no definite principles or rules can &e laid do0n in respect of human &ehavior .hese change from individual to individual and from situation to situation# No dou&t a manager may seek guidelines from the esta&lished principles >and rules &ut he cannot &ase his decisions on them# Mana%$'$nt #) an #'+ortant or%an o& )o"#$ty: Management as an activity has carved for itself and important place in society# In fact there is an interaction &et0een management and society# 7hile the society influences the managerial actions managerial actions influence the society# 1y their decisions management of large undertakings influence the economic social political religious moral and institutional &ehavior of the mem&ers of society# .his has created and impact on the social sand moral o&ligations of &usiness management 0hich cannot ;e easily ignored# Mana%$'$nt #) a )y)t$' o& a!t,or#ty: It is the o& of management to &ring a&out a harmonious arrangement and pattern among the different resources employed in an undertaking# In fact its role s a factor of production puts an o&ligation on it to &e methodical in plans and procedures and systematic and regular in their implementation# ?or this it is necessary that the authority vested in the management is to &e e@ercised properly and correctly# .his call for 0ell-defined lines of command delegation of suita&le authority and responsi&ility at all levels of decisionmaking# "nless there is proper &alance &et0een authority and responsi&ility at each level of decision making the organisation might not succeed in the task of accomplishment of its o&'ective# Mana%$'$nt #) a +ro&$))#on: Management makes a 'udicious use of availa&le means Avarious factors of productionB to accomplish certaii2 pre:etennined ends Aorganisational aims and o&'ectivesB# .o achieve this successfully managers need to possess managerial kno0ledge and training# Moreover they have to conform to a recognizes code conduct and remain conscious of their social and human o&ligations# +nd for this they are amply re0ards are 0ell paid and 0ell provided y theH organisation for 0hich they 0ork# Moreover they en'oy considera&le social prestige too# MANAGEMENT PROCESS Management is an activity conslstll2g of a distinct process the management process - 0hich is primarily concerned 0ith the important task of goal achievement# No &usiness enterprise can achieve its o&'ectives until and unless all the mem&ers of the unit make an integrated and planned effort under the directions of

#5

central coordination agency# In management terminology this central co-ordinating agency is technically kno0n as HM+N+-EMEN.D and the methodology of getting things done is kno0n as HManagement processH .he process in general is defined as a series of actions or operations conducting to an end# .he logic of the management process is that particular functions are performed in a se/uence through time# In other 0ords 0hatever functions are performed &y a manager and the se/uence ill 0hich they are performed is called HManagement processH# (rdinarily there are t0o main functions of each manager Iiz# iB Decisions making and iiB Implementation of the decisionsG and collectively these t0o fall under theH e@pression management process, $lanning (rganising +ctuating and involved in the achievement of &usiness goals are kno0n as HManagement process Plann#n%: .he first essential function to &e performed &y a manager is to determine 0hat must &e done &y the mem&er in order to accomplish the 0ork# .he &road aspects of the 0orkload must &e determined# In addition 0hen ho0 the 0ork 0ill &e done are indicative of the manager5s 0ork in the phase# $lanning involves the formulation of 0hat is to &e doneG ho0 0hen and 0here it is to &e done: 0ho is to do it and ho0 results are to &e evaluated# It is the most important step in the prop of getting results It ena&les the management to &e a step ahead of each activity# .ake initiative to make use of any opportunity and anticipate pro&lems &efore they actually arise# .he process of $lanning involves: 2# %rystallisation of determination of the corporate o&'ective = It means that first of all the target to &e achieved should &e 0ell defined# .he top management must lay do0n the o&'ectives of the company as far as possi&le in /uantified termsG 3# %ollection and classification of information = It means that relevant information relating to the o&'ectives should &e properly collected and classified# 6# Development of the alternative courses of actionG :# Evaluation of the alternatives of o&'ectives feasi&ility and conse/uences# ;# Selection of the optimum course of action = .he Manager is often faced 0ith alternative course of action# !e must adopt the one 0hich has the highest pro&a&ility of yielding the ma@imum &enefit or gain for himself and the company# .his selection from alternative courses of action is sometimes referred to as the principle of alternative planning# <# Esta&lishment of policies procedures methods schedules programmer5s systems standards and &udgets# It mean that the plans must &e detail fle@i&le so that they are capa&le of &eing re-ad'usted in case there is any change in the 0orking conditions andJor o&'ectives# $lanning is intellectual in nature it is a mental 0ork# It is looking ahead and preparing for the futures $lanning is of course decision-making since it involves selection among many choices# $lanning emphasises the fact that if 0e kno0n 0here 0e are going 0e are more likely to get there# -ood mangers al0ays to draft plan 0hich 0ill make things happen in the desired 0ay# .his is also stressed &y the saying# C-ood managers make things happen#K Or%an#)#n%: .he course and make-up of action having &een determined the ne@t step in order to accomplish the 0ork is to distri&ute or allocate the necessary component activities among the mem&ers of the group# .his distri&ution e@ecuted &y the manager is guided considerations of such things as the nature of the component the people of the group and the physical facilities availa&le# Normally these component activities arc grouped and assigned so that accomplishment 0ith minimum efforts time and cost 0ill &e realised# -rouping activities and resources in a logical fashion is kno0n as organizing# It involves determining ho0 activities and resources are to &e grouped# a. Division of 0ork into component activitiesG b. +ssigning people to task c. Defining responsi&ilitiesG d. Delegation of authorityG and e. Esta&lishment of structural relationships to secure coordination# +uthority is the key to the managerial 'o& and the delegation of authority is the key to the organisation# 7e cannot speak of manager unless he hasL authority and 0e cannot speak of creating an organisation unless authority is delegated# A"t!at#n% .o carryout physically the activities from the planning and organizing it is necessary for the manager to take initiatives to start and continue the action as long as they are needed in order to accomplish the task &y the mem&ers of the group# .his process of actuating involves: 2# $roviding effective leadershipG 2. Integrating people and task and convincing them to assist in the achievement of the overall o&'ectivesG 3. Effective communicationG and 4. $roviding climate for su&ordinatesH development#

#6

.his function is kno0n as >+ctuating5 .he 0ord actuate means literally move to action and its use is thus appropriate for this managerial function that deals 0ith the supplying of simulative po0er of the group# CONTROLLING Managers have al0ays found It desira&le to check up or follo0 up 0hat is &eing done in order to make sure that the 0rk delegated to other is progressing satisfactory to0ard the predetermined o&'ectives# .he esta&lishing of a sound plan the allotting of component activities re/uired &y this plan and the successful actuating of each mem&er do not assure that the undertaking 0ill &e a success# Discrepancies impondera&les misunderstanding and une@pected hindrances may arise# Such contingencies must &e kno0n /uickly to the manager so that corrective action may &e this function &y the %ontrolling involves a series activities# .hey are# 2# %ontinuous o&servation and study of periodic results performance in order to identify potential pro&lems# 3# $inpointing significant deviations# 6# +scertain their e@cat causes and :# Initiation and implementation of the corrective action# %ontrolling thus tends to complete the full cycle of the process of management through 0hich managers accomplish results# NEED FOR MANAGEMENT: Management is an essential accompaniment of all social organisations and it is to &e fund every0here as a distinct separate and dominant activity the importance of management cannot &e over emphasized# .he significance of Management5 may &ut outlined in the follo0ing paragraphs# .o Meet the challenges of change# In recent years the challenge of change has &ecome intense and critical the comple@ities of modern &usiness can &e overcome only &y scientific management# For $&&$"t#*$ !t#l#-at#on o& t,$ S$*$n M.): .here are seven MHs in &usiness viz# men materials money machines methods markets and management# Management stands at top of all these Ms: It determines and controls all other factors of &usiness# For t,$ D$*$lo+'$nt o& r$)o!r"$): -ood management procures good &usiness &y creating vital dynamic and life- giving force in the organisation# Mana%$'$nt D#r$"t) t,$ Or%an#)at#on: 8ust as the mind directs and controls the &ody to fulfill its desire similarly management directs andH control the organisations to achieve the desired goal# Int$%rat$ *ar#o!) #nt$r$)t): In the group efforts there are various interest group and they put pressure over other groups for ma@imum share in the total output# Management &alances this pressure and integrates the various interests# Mana%$'$nt +ro*# $) )tab#l#ty: In the modern society the management provides sta&ility &y changing and modifying the resources in accordance 0ith the changing environment of the society# Mana%$'$nt Pro*# $) Inno*at#on: Management provides ne0 ideas imaginations and Iisions to the organization and necessary life for &etter and greater performance: Mana%$'$nt Pro*# $ "o(or #nat#on an $)tabl#), t$a'()+#r#t: Management co-ordinates the activities of the different departments in an enterprise and esta&lishes team-sprit amongst the personnel# To ta"/l$ b!)#n$)) Probl$'): -oods management serves as a friend philosopher and guide in tackling &usiness pro&lems# It provides a tool for the &est 0ay of doing a task# A tool o& P$r)onal#ty D$*$lo+'$nt: Management is necessary not only for direct things &ut also for the development of men# It makes the personality of the people and attempts to raise their efficiency and productivity# MANAGERIAL FUNCTIONS Management is 0idely regarded as a process# + manager irrespective of his level in the organisation performs a series of functions# Surprisingly there: is# no consensus among the management thinkers on the classification or managerial functions# .he num&er of functions and all the terminology used to descri&e them or not alike !enry ?ayol identifies five functions Iiz# planning organising commanding coordinating and controlling# ?or instance Ne0man and summer recognize only four functions namely organising planning leading and controlling# *uther -ulickHs popular catch 0ord $(SD%(R1 suggests seven functions planning organising staffing directing coordinating reporting and

#7

&udgeting and 4oontz and EH Donel classify the functions in to planning organising staffing directing and controlling# In general managerial functions may &e divided into t0o categories# .hey are a# Main functioning and &# Su&sidiary ?unctions# Ma#n F!n"t#on): Plann#n%. $lanning is the process of thinking &efore doing# It determines 0hat is to &e done ho0 and 0here it is to &e done 0ho is to do it and ho0 results are to &e evaluated# It is important for the attainment of &usiness o&'ectives 0ith limited use of resources# It helps in critical appraisal of the relative merits and demerits of alternative policies# It provides the 0ay to select the &est methods for achieving predetermined targets# Or%an#)#n%: It is the process of dividing 0ork into convenient tasks of duties or grouping of such duties in the form of posts delegating authority to each so that 0ork is carried cut as planned# (rganisation contri&utes to the efficiency E2H the enterprise# .hrough this process the activities necessary for goal achievement are perforn2ed and repetitions duplication of activities are avoided there&y reducing the operating cost in the organisation# Sta&&#n%: It means manning the position created &y organisation process# .his process includes the selection of the: candidates for position fi@ing financial compensation training and development promotion transfer etc# Staffing assists in the section of the right man for the right 'o&# .he manager can conveniently perform the duties of the analysis 'o& description appraisal of efficiency etc# 0hich come under staffing function# D#r$"t#on: (nce su&ordinates arc oriented the superior has a continuous responsi&ility of guiding and leading them for &etter 0ork performance and motivating them to 0ork 0ith zeal confidence and enthusiasm Direction assists in this tasks# Direction is the key to the achievement of desired result# Co(or #nat#on: %oordination means integration# It ensures a proper tempo Hfor all activities and avoids duplication of effEl2s# It provides for an optimum use of resources# It leads to completion of production# It develops team spirit and atmosphere of cooperation among staff Mot#*at#on: It is the act of stimulating a person to get a desired course of action# It is concerned 0ith the 0ill to 0ork# It seeks to kno0 the incentives for 0ork and tries to find out the means 0here&y the realization can &e helped an encouraged# It is a constructive force in management &y o&'ectives and direction# Control: %ontrol means revie0ing of the employees in the light of target of the plan# It is e@ercised &y agreeing upon a time and ?ollo0ing up to ensure that the timing is o&served# It is also esta&lished &y setting target and &y comparing results 0ith 0hat is e@pected# It assists the management in making the necessary changes in the policies 0hen there are deviations# SU0SIDIAR1 FUNCTIONS Co''!n#"at#on: %ommunication can &e vie0ed as a transfer of message from one individual to another# If communication is to &e effective the message transferred should &e understood &y the receiver properly communication stands for sharing of ideas in common# It refers to the various means of transmitting information from one individual to another and from one place to another# D$"#)#on Ma/#n%: Decision making is a process of arriving at the &est possi&le choice for a solution 0ithin a reasona&le period of time# It is an important function of management# Management 0ithout decision is like a man 0ithout &ack&one# It helps to set definite o&'ectives prepare personnel and introduce innovations# Inno*at#on: .his function relates to research and development 0hich is essential in this age of competition# +ll &ig &usiness houses have started Research arid Development AR M DB department to keep pace 0ith modem techni/ues and up to date demand# R$l$*an"$ o& Mana%$'$nt Management is a universal activity practiced &y all# It is as common as 0alking reading or playing# .he &asic characteristics of efficient management are common 0hether the unit to &e managed is as small asL a family or large enough as a &usiness social political or religious organization# Irrespective of the nature size and the type management has its relevance to all type of organizations like insurance hospitals educational institutions like schools colleges and universities hostels hotels social service organization like service clu&s etc# Mana%$'$nt #n +ro&#t ( )$$/#n% or%an#-at#on:(

#8

Most of 0hat 0e kno0 a&out management comes from large profit seeking organization &ecause their survival has long depended on efficiency and effectiveness# E@amples of large &usiness include industrial firms commercial &ank insurance companies retailers transport companiesG pu&lic utilizes communication companies and service organizations# +ll though many people associate management primarily &usinesses effective management is also essential for small &usiness 0hich an important role n the countryHsL economy# In recent years the importance of international management has increased dramatically# International manage is not ho0ever confined to profit-seeking organizations# Mana%$'$nt #n non(+ro&#t or%an#-at#on: Intangi&le goals such as education social services pu&lic protection and recreation are often the primary aim of non profit organization# +lthough these organization may not have to &e profita&le to attract investors L they must still employ sound management principles and practices if they are to survive and 0ork to0ards their goals MANAGEMENT ( A SCIENCE OR AN ART: -enerally a controversy arises 0hether the management is #a science an art# It is said the management is the oldest of arts and the youngest scienceH# .his e@plains the changing nature of management: 1ut to have an e@act ans0er to the /uestion it is necessary to understandL theL meaning of the terms >science5 and art5 Mana%$'$nt a) a S"#$n"$: 1efore Ltrying to e@amine 0hether the management# is a science or not 0e have to understand the nature of science# Science may &e a descri&ed as a systematized &ody of kno0ledge pertaining to an act of study and contains some general truths e@plaining past events or phenomena# It is Systematized I the sense that relationships &et0een varia&les and limit have &een ascertained and underlying principal discovered# .hree important characteristics of science are# 1. It is a systematized &ody of kno0ledge and uses scientific methods for (&servationG 2. Its principles are evolved on the &asis of continued o&servation and e@perimentG and 3. Its principles are e@act and have universal applica&ility 0ithout any limitations ?urther science may &e classified into t0o groups# AaB positive science 0hich deals 0ith H0hat ought to &eH aspect# E@amples of scientific principles are that t0o atoms of hydrogen and one atom of o@ygen form one molecule of 0aterG anything is thro0n to0ards the sky according to the la0 of gravitation it 0ill come do0n to the earthG if 0ater is &oiled it turns into vapour and so on# 8udging from these criteria it may &e o&served that management too is a systematized## &ody of kno0ledge and its principles have evolved on the &asis of o&servation not necessarily through the use of scientific methods# !o0ever if 0e consider science a discipline in the sense of our natural science one is a&le to e@periment &y keeping all factors and varying one at a time# In the natural science it is not only possi&le to repeat the san2e conditions over and over again 0hich ena&les the scientist to e@periment and to o&tain a proof# .his kind of: e@perimentation-cannot &e accompanied in the art of management since 0e are iL2 dealing 0ith the human element# .his puts a limitation on management as a science# It may &e designated as Hine@actH or Hsoft science5 Mana%$'$nt a) an art: +rt refers to the kno0-ho0 to accomplish a desired result# .he focus is one 0ay of doing things +s the saying goes >practice5 makes a mean perfect constant practice of the theoretical concepts Akno0ledge &aseB contri&utes for the formation of skills# .he skills can &e ac/uired only through practice# In a 0ay the attri&utes of science and art are the t0o sides of a coin# Medicine engineering accountancy and the like re/uire skills on the part of the practitioners and can only &e ac/uired through practice# Management is no e@ception# +s a university gold medalist in surgery may not necessarily turn out to &e good surgeon similarly a management graduate from the &est of the institute may not &e very effective in practices# In &oth the case the application of kno0ledge ac/uired through formal education re/uired ingenuity correct "nderstanding of the varia&les in the situation pragmatism and creativity in finding solutions to pro&lems# Effective practice of any art re/uires a thorough understanding of the science underlying it# .hus science and art are not mutually e@clusive &ut are complementary# E@ecutives 0ho attempt to manage 0ithout the conceptual D"nderstanding of the management principles and techni/ues have to depend on luck and intuition# 7ith organized kno0ledge and the necessary skill to use such kno0ledge they have a &etter chance to succeed# .herefore it may &e concluded that management is &oth a science and an art# SUMMAR1 (rganizations engaged in &usiness or non-&usiness using the inputs to produce the output Amay &e products or serviceB# .he conversion of inputs into outputs depends on the effectiveness of management# Management is an activity consisting of a distinct process say management process# .his is primarily concerned 0ith the important task of goal achievement# Management as a discipline has &oth the elements of science components and the arts 0hile skills and talent re/uired for the use of the principles constitute the

#9

art# .he process of management is understood under the t0o groups of functions namely main functions and su&sidiary functions# .he main functions of management include planning organizing directing staffing coordinating motivating and controlling# .he su&sidiary functions include communication decision-making and innovation# LESSON ( 2 EVOLUTION OF MANAGEMENT T3OUG3T Intro !"t#on .he practice of management is as old as human civilization In fact much of the progress of mankind over the centuries may &e attri&uted to the effective management of resources# .he irrigation systems e@istence of pu&lic utilities the construction of various monuments like .a' Mahal and the Egyptian pyramids of the &ygone era amply demonstrate the practice of management in the olden days# .he ancient civilizationsL of Mesopotomia -reece Rome and Indus-valley displayed the marvelous results of good management practices# !o0ever the study of management in a systematic 0ay as a distinct &ody of kno0ledge is only of recent origin# .hat is 0hy management is often descri&ed as Holdest of an arts and youngest of the sciencesH# .hus the practice of management is not ne0# It has &een practiced for thousands of years# 1ut the science part of it Hthe systematic &ody of kno0ledgeH is no dou&t a phenomenon of the present century# .he traditional management practices remained /uite sta&le through the centuries until the &irth of Industrial revolution in the mid 2Nth century# .he industrial revolution &rought a&out the su&stitution of machine po0er for man po0er through several scientific inventions# +s a result 0ithin a fe0 decades the picture of industrial activity had undergone a metamorphic change# ManHs /uest for ne0 0ays of doing things coupled 0ith his ingenuity in adopting the scientific and technological inventions in the production of various goods and services resulted in: 2L Mass production in anticipation of demandG 2. +dvent of corporate form of organisation 0hich facilitated such large scale production 3. Spectacular improvements in the transport and communication facilitiesG 4. Increase in competition for markets ;# .he esta&lishment of the ne0 employer-employee relationship and so on# Industrial revolution 0hich so0ed the seeds of modem management# Early "ontr#b!t#on): .he development of a systematic management thought is attri&uted to the 3Eth century# 1ut this should not create the impression that it is the phenomenon of this century alone# +ttempts at solving management pro&lems date &ack to anti/uity# ?or e@ample the importance of organisation and administration in the &ureaucratic state of anti/uity is evident on the interpretation of the early Egyptian papyri dating &ack as early as 26EE 1#%# .he para&les of %onfucius gave practical suggestions for ade/uate pu&lic administration and advice to the selection of unselfish honest and capa&le officers# .here are many e@amples in -reek Roman and other civilizations 0hich used scientific principles of management and administration# .he military leaders also used many such principles# .he Roman %atholic %hurch had the most formal organisation in the history of 0estern civilization# Striking e@amples of these techni/ues are the development of the hierarchy of authority 0ith its scalar territorial organisation the specialization of activities along functional lines and the early intelligent use of the staff device# .he camera lists 0ere a group of -erman and +ustrian pu&lic administrators from 2<th to 2Nth century# T,$ S"#$nt#&#" 'ana%$'$nt )ta%$: .he first identifia&le stage of management thought in the "nited States 0as the scientific management 0hich started 0ith .aylor# 1ut there 0ere some precursors to .aylor 0ho made some significant contri&utions# 8ames 7att# 8r# and Mathe0 Ra&inson 1oulton sons of the pioneers 0ho invented and developed the steam engine 0ere the earliest users of scientific approach toH management# .hey managed the Soho Engineering ?oundry in -reat 1ritain from 2N9< and developed /uite a num&er of management systems# .hey developed market research and forecasting planning machine layout and standards of %omponents# .hey also developed some important casting systems training and development progran2mes 0elfare programs productivity &ased payments and so on# Ro&ert (0en 0as another pioneer of the early nineteenth century# !e concentrated on the personnel side and carried out many e@periments# !e is rightly referred to as Dthe father of modem personnel managementD# !e improved 0orking conditions and &enefits as he thought that these 0ould improve productivity# %harles 1a&&age H Dthe father of the computerD invented the mechanical calculator# !e 0rote a &ook entitled D(n the Economy of Machinery and ManufacturersD pu&lished in 2N63# !e 0as more interested in the economics 0t division of la&our and developed scientific principles regarding this#

#10

+nother important personality 0as !enry Iarnum $oor 0ho as the editor of the +merican Railroad 8ournel emphasised the need for a managerial HsystemH and clear organisation structure# It 0as only 0ith the advent of ?rederick 7# .aylor and his 0ork the principles of Scientific ManagementH pu&lished in 2O22 that greater attention hasD &een paid to scientific management as a separate discipline# Industrial pro&lems have &een increased due to the advent of large scale factory system mass production and mechanization# $eople needed some specific principles and methods for solving the pro&lems# .he initial impetus in the scientific management movement 0as .aylor# !e 0as more concerned 0ith engineering aspect and the pro&lems of 0orkers and productivity oriented 0ages#

.hereafter !enry ?ayol H?ather of Modern (peration Management .heoryH# !e 0as ?rench and developed management theory and principles and pu&lished his &ook in ?rench and it 0as translated in English later# 7hile some compare and contrast ?ayol .aylor M "0ick generously praises their contri&utions and places them in the prospective# .he 0ork of .aylor and ?ayol 0as of course essentially complementary# .hey &oth realized that the pro&lems of personnel and its management at all levels is the D4eyD to ' industrial success# 1oth applied scientific methods to this pro&lem: .hat 0orked primarily on the operative level from the industrial hierarchy up0ards 0hile ?ayol concentrated on the Managing Director and 0orked do0n0ards 0as merelyH a reflection of their very different careers# 1ut ?ayolHs capacity to see andH ackno0ledge this pu&licly 0as an e@ample of his intellectual integrity andH generosity of sprit .hey gave ?rance a unified management &ody more than t0enty years &efore the same ideal &egan to &e realized in -reat 1ritain D# .here 0ere also some important figures in the follo0ers of .aylor# Some of them 0ere %arl -eorge 1arth 0ho developed mathematical techni/ues# !enry *# -antt is &est kno0n for development of graphic methods of depicting plans and making possi&le &etter managerial control# ?rank and *illian -il&reth 0ho concentrated on lessening motions involved in doing 0ork and finally Ed0ard +# ?ilene 0ho hired -il&reth to help him apply scientific management methods to his familyHs 1oston department store# # Ma4or S",ool) o& Mana%$'$nt T,o!%,t: .he various approaches to the study of management as propounded &y specialists from different disciplines have come to &e called the Schools of# Management .houghtH# .he ma'or schools of management theory are: 1. Management process schoolsG 2. Empirical SchoolG 3. !uman 1ehaviors or !uman relations schoolG 4. Social SchoolG 5. Decisions .heory schoolG 6. Mathematical or Puantitative Management SchoolG 7. Systems Management schoolG 8. %ontingency School# Mana%$'$nt +ro"$)) )",ool or t,$ O+$rat#onal a++roa",: .his school regards management as a process of #gettingL things done through and 0ith people operating in organized groups# !enry ?ayol is kno0n as the H?ather of this schoolH# +ccording to this school management can &est &e studied in terms of the process that it involves: .hose su&scri&ing to this school are of the vie0 that management principles are of universal application# .his approachH is also designated as H.he .raditional +pproachH the "niversal +pproachH or the H%lassical +pproachH# .he contri&utors and thinkers &elongs school are 7illiam Ne0man Summers Mc?arland !enry 8#D# Mooney +#c# Railey *yndall "r0ick and !arold 4orntz# T,$ $'+#r#"al )",ool or t,$ 'ana%$'$nt by "!)to') )",ool: .his approach to management is taken &y scholars 0ho identify management as the study of e@perience follo0ed &y efforts to generalize from the e@perience and transfer the kno0ledge to practitioners and students# .ypically this is done through# a H%ase StudyH approach or through the study of HDecision MakingH .his school of thought &elieves that &y analyzing the e@perience of successful managers or the mistakes of poor managers 0e someho0 learn a&out applying the most effective management techni/ues# .he main contri&utors of this approach are Earnest Dale Mooney and Raliey "r0ick and many other management practitioners and +ssociation like the +merican Management +ssociation# .he main features of this approach are 1. Management is the study of managerial e@periences 2. .he managerial e@perience can &e passed over to the practitioner and students# 3. .he techni/ues used in successful cases can &e used &y future managers 4. .heoretical research can &e com&ined 0ith practical e@periences# T,$ ,!'an r$lat#on) a++roa", 5or6 t,$ ,!'an b$,a*#or) )",ool .his school takes particular note of psychological factors underlying the human &ehaviors in organized groups under the given situation# It is &ased upon the fact that managing involves getting things done 0ith and through peopleG therefore management must centred on inter-personal relations# .his approach has &een

#11

called the H!uman RelationsH H*eadershipH or H1ehavioral ScienceH approach# E@ponents of this school of thought seek to apply e@isting and ne0ly developed theories methods and techni/ues of the relevant social science to the study of intra and inter personal relations from Hpersonality dynamicsH to Hrelations of culturesH# .he stress is on the HpeopleH part of management and the HunderstandingH aspects of this the motivation of the individual and adherents of this school are heavily oriented to0ards psychology and sociology# .he range of thought in this school are AaB the human relations and ho0 manager can understand and use this relations A&B the manager as a leader and ho0 he should lead others AcB a study of group dynamics and inter-personal relationships# ?rom the early 2O6EHs and the !a0thorne e@periments there has &een a great interest in the human &ehaviors school# !uman &ehaviour must &e recognized as a key and certainly it is one of the most important factors in e@ecutive development# .here is great agreement on the point that human &eings have goals and value for certain need satisfying &ehaviors highly# 7e do find people e@ercising their material instincts valuing 'o& security striving for organisational and social acceptance and 0orking for monetary re0ards 0hich of course can &e used to satisfy many needs# .he human &ehaviour school of thought sometimes goes too far in insisting that people need to make happy so that organization can function effectively# Managers have to take a middle-of-the road position in their approach to the human &ehaviour aspects of management# If they do a poor 'o& they should &e ensured demoted or disciplined in some manner# 7ithout recognition and re0ard employees lack motivation to do a 'o&# T,$ )o"#al )y)t$') )",ool .his school of thought is closely related to the human &ehaviour or the human relations school of thought# It looks upon management as a social system i#e# as a system of cultural inter-relation .hese can &e formal organisational relationships or any kind of a system of human relationships# !eavily sociological in nature this approach to management does 0hat the study of sociology doesG it identifies the nature of the cultural relationships or various social groups and attempts to sho0 them as a related and usually integrated system# .he spiritual father of this school 0as the late %hester 1arnard 0ho developed a theory of cooperation# .he focus of this school of thought is on the study of the organisation as a co-operative or collaparative system# + social system is a unit or entity consisting of various social su&-systems called the groups# D$"#)#on t,$ory )",ool Decision theory approach concentrates on rational decisions - the selection of a suita&le course of action from various possi&le alternatives# .his approach may deal 0ith the decisions itself or 0ith the persons or organizational group 0ho make the decision or 0ith an analysis of the decision process# 1y e@panding the vie0-point 0ell &eyond the process of evaluating alternatives many use the theory to e@amine the nature of organisation structureG the psychological and social reactions of individuals and groups the development of &asic information for decisions and the analysis of value considerations 0ith respect to goals communication net0orks and incentives# .he scientific approach to decision-making involves some of these factors 1. Define the pro&lemG 2. %ollect all relevant informationG 3. Develop alternativesG 4. E@amine all the alternatives and the solutionsG 5. .est the solutions AIf you can make this possi&leB: 6. Select a course of action# 7. Implement the actionG 8. Evaluate the results of the action# T,$ Mat,$'at#"al )",ool In this group 0e have those theorists 0ho see management as a system or mathematical modelsH and process# 7e have the operations researchers or operations management or organisation or planning or decision-making is a logical processL It can &e e@pressed in terms of mathematical sym&ols and relationship# .his approach forces the analyst to define a pro&lem and allo0s for the insertion of sym&ols for unkno0n data through logical methodology 0hich provides a po0erful tool for solving comple@ phenomena# .he modem managers may normally face some of the follo0ing pro&lems# AaB Increase in the size and the comple@ity of organization structures A&B Increase in paper0ork 0hich stifle the a&ility to produce AcB %ommunication pro&lems created &y AaB and A&BG AdB .he need for instantaneous management response in the decision-making areas A0hich re/uires up-todate accurateG comprehensive informationB AeB Increase in demands on management 0ith less &udget and AfB Increase in sheer num&er of people to &e dealt 0ith &y government and &usiness structures particularly in India# In "nited States e@ecutives have turned increasingly to use computer applications to solve theseH pro&lems# SomeHL of these computer applications include airline reservation systems processing census reports compiling technical information into data &anks &anking operations machine processed accounting and addressing for magazine su&scriptions total systems approaches to organizational needs logistics applications issuance of payroll checks to large num&ers of employees Ai#e# .reasury department or large corporate applicationsB etc# 7here a volume of paper reports or data is involved computer applications can

#12

make the 0ork more managea&le# It is important for e@ecutives to think a&out certain very flat &asic statements that are made a&out automation# T,$ )y)t$') a++roa", )",ool .his school is or recent origin having developed in later 2O<E it is an integrated approach 0hich considers the management in its totality &ased on empirical data# +ccording to this approach attention must &e paid to the overall effectiveness of a su&-system in isolation from the su&-system# .he main emphasis is on the interdependence and inter-relatedness of the various su&-systems from the point of vie0 of the effectiveness of a large system# Its essential features are as follo0s: + system has a num&er of su&-systems parts and su&-parts o# +ll the su&-systems part and su&-parts arc mutually related to each other# .his relationship is in the conte@t of the 0hole and is very comple@# + change in one part 0ill effect changes in othersG .he systems approach emphasises the study of the various parts in their inter relationships rather than in isolation from each otherG .he systems approach to management &rings out the comple@ity of a real life management pro&lem much more sharply than any of the other approaches# It can &e utilised &y any other school of management thought# .he &oundary of a system may &e classified into t0o parts: %losed system that has no environment there is no outside systems 0hich impinge on it or for 0hich no outside systems are to &e considered and (pen system that has an environment that is it possesses systems 0ith 0hich it relates e@changes and communicates# .he main contri&utors to this school of thought are 4enneth 1oulding 8ohnson %ast Rosen Q0eig and %# 7# %hurchman# +nother important contri&utor Martin particularly in the area of management audit system#

T,$ "ont#n%$n"y a++roa", )",ool o& 'ana%$'$nt .he contingency approach to management emphasizes the fact that management is a highly practiceoriented and action-packed discipline# Managerial decisions andactiol2s initiatives are to &e matters of pragmatism and not of principles# .he environment of organisations and managers is very comple@ uncertain ever changing and diverse# It is the &asic function of managers to analyze and understand the environments in 0hich they function &efore adopting their techni/ues processes and practices# .he choice of approaches as also their effectiveness is contingent on the &ehavior and dynamics of situational varia&les there is no universally valid one &est 0ay of doing things# Management theory and principles tend to &e deterministic 0hile the pace pattern and &ehavior of events defy and deterministic or dogmatic approaches# 7hat is valid and good in a particular situation need not &e so in some other situation# %ontingent thinking helps managers in several 0ays in performing their function of planning organising direction and control# It 0idens their horizons &eyond the theory of management its concepts principles techni/ues and methods# It helps them to &road &ase their approach from mere techni/ue orientation to pro&lem- situation orientation# It leads them to &e sensitive alert and adaptive to situation &ehavioral varia&les 0hile tailoring their approaches H and styles# It guides them to adopt open system vie0 points to look at things and situations in an integrated and multi-dimensional manner and to get a0ay from s contingency thinking enlarges the art of freedom of operation of managers# .hey are not handicapped &y having to apply same methods practices and process to diverse situations they can think of innovating ne0 approaches or a &lend of kno0n approaches on the &asis of their compati&ility and conte@t# ?or e@ample different structural designs are valid for different strategic and tactical needs of organisations on the one hand and realities of the situations one the other# .his 0as demonstrated &y 8oan 7ood0ard in her research-studies# +nother e@ample close supervision and control may &e appropriate for some categories of employees and 0ork situations 0hile general supervision 0ill 0ork &etter in some other situations# Contr#b!t#on by F.7. Taylor ( S"#$nt#&#" 'ana%$'$nt ?rederic 7inslo0 .aylor gave up going and started his career shopfloor as a machinist in 2N9;# !e studied engineering in a evening college and rose to the position of chief engineer in his organisation# !e invented high speed steel cutting tools and spent most of his life as a consulting - engineer# .aylor is called Dthe father of scientific managementD# !is e@perience from the &ottom-most level in the organisation gave him an opportunity to kno0 at first pro&lems of the 0orkers# .aylorHs principal concern 0as that of increasing efficiency in production not only to lo0er costs and raise profits &ut al so to make possi&le increased pay for 0orkers through their higher productivity# .aylor sa0 productivity as the ans0er to &oth higher 0ages and higher profits and he &elieved that the application of scientific method instead of custom and rule of thum& could yield this productivity 0ithout the e@penditure of more human energy or effort#

#13

F.7. Taylor.) +r#n"#+l$) .aylor pu&lished a &ook entitled D.he principles of Scientific ManagementD in 2O22# 1ut his ideas a&out scientific management are &est e@pressed in his testimony &efore a committee of the house of Representatives in 2O23# !e said as follo0s: DScientific management is not any efficiency device not a device of any kind for securing efficiencyG nor is it may &unch or group of efficiency devices# It is not a ne0 system of figuring costsG it is not a ne0 scheme of paying menG it is not a piece 0ork systemG it is not a &onus systemG it is not a premium systemG it is no scheme for paying menG it is not holding a stop 0atch on a man and 0riting things do0n a&out himG it is not time studyG it is not motion study not an analysis of the movements of menG it is not the printing and loading M unloading of a ton or t0o of &lanks on a set of men and saying D!ereHs your systemG go and use itD# It is not divided foremanship or functional foremanshipG it is not any of the devices 0hich the average man calls to mind 0hen scientific management is spoken ofRK No0 in its essence Scientific management involves a complete mental revolution of the part of the 0orking man engaged in any particular esta&lishment or industry a complete mental revolution on the as to their duties to0ard their 0ork to0ard their fello0men and to0ard their employees and it involves the e/ually complete mental revolution on the part of those on the managementHs side - the foreman the superintendent the o0ner of the &usiness the &oard of directors - a complete mental revolution on their part as to their duties to0ards their fello0 0orkers in the management to0ard their 0orkmen and to0ard all of their daily pro&lems# .he great mental revolution that takes place in the mental attitude of the t0o parties under scientific management is that &oth sides take their eyes off the division of the surplus as the all important matter and together turn their +ttention to0ard increasing the size of the surplus 0hich &ecomes so large that it is unnecessary to /uarrel over ho0 it should &e divided# .hey come to see that 0hen they# Lstop pulling against one another and instead &oth turn and #push shoulder to shoulder in the same direction the size of the surplus created &y their 'oint efforts is truly apprecia&le# .hey &oth realize that 0hen they su&stitute friendly co-operation and mutual helpfulness of antagonism and strife they are together a&le to make this surplus so enormously greater than it 0as in the past that there is ample room for a large increase in 0ages for the 0orkmen and an e/ually great increase in profits for the manufacturerD# .he fundamental principles that .aylor sa0 underlying the scientific approach to management may &e summarized as follo0s: Replacing rules of thum& 0ith science Aorganized 4no0ledgeBG (&taining harn2Eny in group action rather than discordG +chieving co-operation of human &eings rather than chaotic individualismG 7orking for ma@imum output rather than restricted outputG Developing all 0orkers to the fullest e@tent possi&le for their o0n and their companyHs highest prosperity# .aylor concentrated more on productivity and productivity &ased 0ages !e stressed on time and motion study and other techni/ues for measuring 0ork# +part from this in .aylorHs 0ork there also runs a strongly humanistic theme# !e had an idealistHs notion that the interests of 0orkers managers and o0ners should &e harmonized Contr#b!t#on by 3$nry Fayol ( Pr#n"#+l$) o& Mana%$'$nt !enry ?ayol is claimed to &e the real Dfather of modern managementD# !e 0as a ?renchman &orn in 2N:2 and 0as an engineer 0ith a mining company# !e improved the company from a virtual &ankrupt condition to high success# ?rom his practical e@perience he developed some techni/ues# !e &rought out some &asic principles 0hich he felt could &e used in all management situations irrespective of the organisational frame0ork# !e 0rote a &ook entitled H-eneral and Industrial managementH in ?rench 0hich 0as later on translated into English# It is no0 considered as one of the classics &f management literature# .he &ook mainly covers the aspects of the immuta&le and repetitive character of the management process and the concept that management can &e taught in the class room or the 0ork place# !e also laid do0n the principles of management 0hich he deemed important for any organisation# .he principles are as follo0s# 2# D#*#)#on o& 7or/ .his is the principle of specialization 0hich is so 0ell e@pressed &y economists as &eing necessary to efficiency in the utilization of la&our# ?ayol goes &eyond shop la&our to apply the principles to all kinds of 0ork managerial as 0ell as technical# 2# A!t,or#ty an r$)+on)#b#l#ty In this principle ?ayol finds authority and responsi&ility to &e related 0ith the latter the corollary of the former and arising from the latter# !e conceives of authority as com&ination of official authority deriving from a managerHs official position and personal authority Dcompounded of intelligence e@perience moral 0orth past services etc#K 8. D#)"#+l#n$ !olding that discipline is Drespect for agreements 0hich arc directed as achieving o&edience

#14

application energy and the out0ard marks of respectD ?ayol declares that discipline re/uires good superiors at all levels clear and fair agreements and 'udicious application of penalties# 9. Un#t o& "o''an .his is the principle that an employee should receive orders from one superior only# :. Un#ty o& #r$"t#on +ccording to ?ayol unity of direction is the principle that each group of #2ctivities having She same o&'ective must have one hand and one plan# +s distinguished from the principle of unity of command ?ayol perceives unity of direction as related to the functioning of personnel# ;. S!bor #nat#on o& #n #*# !al #nt$r$)t to %$n$ral #nt$r$)t In any group the interest of the group should supersede that of the individualG 0hen these are around to differ it is the function of management to reconcile them# <. R$'!n$rat#on o& P$r)onn$l ?ayol perceives that remuneration and methods of payment should &e fair and afford the ma@imum satisfaction to employee and employer# =. C$ntral#-at#on +lthough ?ayol does not use the term H%entralization of +uthorityH his principle definitely refers to the e@tent to 0hich authority is concentrated orH dispersed in an enterprise# Individual circumstances 0ill determine the degree of centralization that 0ill give the &est over all yield# >. S"alar C,a#n ?ayol thinks of the scalar chain as a line of authority a Hchain of superiorsH from the highest to the lo0est ranks and held that 0hile it is an error of su&ordinate to depart HneedlesslyH from lines of authority the chain should &e short-circuited 0hen scrupulous follo0ing of it 0ould detrimental# 1?. Or $r 1reaking this principle into Hmaterial orderH and social orderH ?ayol thinks of it as the simple edge ofH a place for everything AeveryoneB and everything AeveryoneB in its AhisB placeD# .his is essentially a principle of organization in the arrangement of things and persons# 11. E@!#ty ?ayol perceives this principle Has one of eliciting loyalty and devotion from personnel &y a com&ination of kindliness and 'ustice in managers dealing 0ith su&ordinates# 12. Stab#l#ty o& t$n!r$ o& P$r)onn$l ?inding that such insta&ility is &oth the cause and effect of &ad management# ?ayol points out the dangers and costs of unnecessary turnover# 18. In#t#at#*$ Initiative is conceived as the thinking out and e@ecution of a plan# Since it is one of the Dkeenest satisfactions for an intelligent man to e@perience D ?ayol e@horts managers to Dsacrifice personal vanityD in order to permit su&ordinates# to e@ercise it# 19. E)+r#t $ "or+) .his is the principle that Hunion is strengthH an e@tension of the principle of unity of command# ?ayol here emphasizes the need for team-0ork and the importance of communication in o&taining it# Contr#b!t#on by P$t$r F. Dr!"/$r ( M0O Drucker is a highly respected management thinker# !e is a prolific 0riter and has pu&lished several &ooks and articles on the management practices# !e is so versatile that there is hardly any area in management 0hich is not touched &y him# !e has dra0n heavily from his consultancy e@perience spread over the last four to five decades# Drucker perhaps is the only 0estern management thinker 0ho is admired &y even the socialist &lack countries also# !is vie0s on management may &e summarised as follo0s 1. Mana%$'$nt a) a +ra"t#"$ +ccording to Drucker management has t0o important functionsG say innovation and Marketing# !e has treated management as a discipline as 0ell as a profession# ?or him management is more a practice# It is al0ays goal oriented !is comment on the purpose of &usiness as the creation of customer if understood and in the right 0ay helps any organisation to achieve success# DruckerHs vie0 on innovation is e/ually important for the emphasis they place on ne0 product development# !e argues that Dne0 products should drive out the e@isting productsD rather than the other 0ay round# +s such he is against &ureaucratic management for it stifles the innovative spirit and the initiative among the people in the organisation# !e contents that modem organisations are kno0ledge &ased organisation and descri&es the modem 0orkers as kno0ledge 0orkers considering their skills and innovative a&ilities# 2. F!n"t#on) o& 'ana%$'$nt

#15

Drucker points out three &asic functions of management# .he actions of management should contri&ute to: I# .he achievement of purpose and mission of the institutionG 2. Make the 0ork productive and the 0orker achievingG and 3. Effective management of social responsi&ilities# 8. Ob4$"t#*$ )$tt#n% Drucker has attached great importance to o&'ective setting# !e has specified that o&'ectives should &e set for all the key result areas of &usiness# .o make the o&'ective setting and their achievement more meaningful he has given a ne0 tool 0hat is popularly kno0n as HManagement &y (&'ectives AM!(BH# M1( is regarded as one of his most important contri&utions to the discipline of management# !e has discussed the concept in great detail in his &ook DH.he practice of ManagementD A2O;:B# M1( is a process 0here&y superiors and su&ordinates 'ointly identify the common o&'ective set the results that should &e achieved &y su&ordinates and assess the contri&ution of each individual# It is vie0ed more as a philosophy than as a tool or techni/ue to achieve the o&'ectives# 9. Or#$ntat#on toAar ) 4!)t#"$ Drucker is a great visionary and futurologist# !e 0as ahead of others in visualising the future trends that affect the society# !e visualised the concept of modern organisation and its impact on the society several years ago# !is vie0s on the many facets of the modem corporations have almost all &ecome reality no0# .o put is in his o0n 0ords he descri&es the present age as the Hage of discontinuity5# :. F$ $ral#)' Drucker has advocated the concept of federalism ?ederalism according to him involves centralized control in a decentralized structure# ?ederalism has certain positive values over other methods of organising# .hese are as follo0s: It sets the top management free to devote itself to ma'or policy formulation and strategy development It defines the functions and responsi&ilities of the operating people It creates yardsticks to measure t0in success and effectiveness in operating 'o&sG and It helps to resolve the pro&lem of continuity through giving education to the managers of various units 0hile in all operating position# Ducker5s realistic 0ay of looking at the organisations and society has earned him the status of Ha management guruH# !is contri&utions have made tremendous impact on the management practices all over the 0orld# !e is one of the fe0 contemporary management thinkers 0ho is highly admired in 8apan# Similarly the contri&utions of $eterHs and 7aterman 0ho e@tensively studied a fe0 +merican companies kno0n for their e@cellence in modem management practices in so less significant# Mckingsly consultancy firmHs contri&ution of the D9SD model for the management of the firm and Ed0ard DemingHs preachings on HPuality %ontrolH created tremendous impact on modem management all over the 0orld in the recent past# Michael $orterHs 0ork on competitive strategy turned a ne0 leaf in the strategic management area# !is &ook on competitive strategy suggests the 0ays and means that help organisations and nations to gain competitive edge# S!''ary .hough management has &een in practice in some form or other since time immemorial the development of a systematic &ody of kno0ledge dates &ack to the last fe0 decades# Industrial revolution has immensely contri&uted for the development of management thought# (ver the years it has dra0n heavily from various disciplines like economics psychology sociology operations research and so on# .he contri&utions of prominent thinkers 0ho have created an everlasting impact on management have &een discussed in this lesson in detail# +n attempt is made to e@pose the learner to the historical development of management over the years# B!$)t#on) 1. 7hat do you think their recommendations 0ould &eT 2. %an you think of any ne0 pro&lems that acceptance of Heither solution or of &oth solutions might causeT 3. 7hat 0ould you yourself doT

#16

*ESS(N - 6 RE*EI+N%E (? M+N+-EMEN. INTRODUCTION Management s the integrating force or agency consisting of some &asic functions for accomplishing the o&'ectives of an organisation# Ever since his creation man has &een a0are that in most endeavors he can accomplish relatively little alone# It is due to this reason that he has found it e@pedient and even necessary to 'oin hands 0ith others in order to attain his goals# .he coordination of human effort is an essential part of all group action# 7herever and 0henever o&'ectives are to &e achieved through organized and co-operative endeavor management &ecomes essential for directing and unifying the group efforts to0ards a common purpose# M+N+-EMEN.H is like a pipeline the inputs are feeded at the one end and they are processed through managementH functions like planning organising directing and controlling and ultimately 0e get the end results or outputs in the form of goods and services productivity satisfaction information etc#

F#%. Mana%$'$ntC #) t,$ #nt$%rat#n% &or"$ #n all or%an#-$

a"t#*#ty.

In essence management is a social functionG it can take us from some condition 0e do not 0ant to one that 0e 0ant = &y proper planning organising directing and controlling the human and material resources to achieve the desired goals# *et us first discuss the different concepts of this essential distinct and leading social institution Management# T3E 3AlMANN.S CONCEPT OF MANAGEMENT .heo !a&nann in his popular &ook H$rofessional Management-.heory and $ractice has used the 0ord HManagementH in three different senses: AiB as noun AiiB as a process and AiiiB asH a discipline# Mana%$'$nt a) a No!n ?irstly as n noun HManagementH is often used in ref to the group c managerial personnel of an enterprise# .he managerial group includes all those 0hich have supervisory responsi&ility over others and the chief e@ecutives of the enterprise# .hus all persons in an industrial enterprise from the Managing Director the -eneral Manager to the first line of supervisor fall under the category HManagementH# Mana%$'$nt a) a Pro"$)) Secondly the term HManagementH is also used as 0ay of referring to the process of managingG the process of planning organising staffing guiding supervising and controlling# -eorge R# .erry too has descri&ed management as distinct process consisting of planning organizing actuating and controlling applied to0ards the efforts of the mem&ers of the group to utilize efficiently the groupHs human efforts materials machines methods and money in order to achieve the

predetermined o&'ective# .he figure illustrates in ela&oration of this definition is diagrammatic form#

#17

Starting at the top and reading do0n0ard the entity of management canHt &e identified as a distinct process consisting of the fundamental functions of planning organizing actuating and controlling# .hese functions are applied to the efforts of the mem&ers of the groups in order to utilize efficiently availa&le resources or the group human efforts materials machines methods and money for the pose achieving predetermined o&'ectives# Mana%$'$nt a) a D#)"#+l#n$ .hirdly sometimes the 0ord HManagementH is used to connote neither activity nor the personnel 0ho e@ercise it out as a su&stantive descri&ing the su&'ect the &ody of kno0ledge and practice as a 0hole the discipline# Strictly speaking management is a functional concept and does not include the persons 0ho practice management# $ersons assuming management functions are usually designated a HMangersH HE@ecutivesH or +dministratorsH# MANAGEMENT IS 73AT MANAGEMENT DOES 8ust as an authority on HMoneyH has defined it &y saying thatH 0hat money doesH and that HMoney is a matter of functions four measure # Standard and storeGH on the same lines it may &e HManagementH is the sum of the three different steps involved 2B ?ormation of policy and its translation into plans 3B E@ecution and implementation of plans and 6B E@ercising administrative control over the plans# .hese three tasks of management may &e titled as $lanning >Implementing5 and %ontrolling#

Dr# 8ames *undyH in the opening of his famous &ook Effective Industrial Management has o&served that: DManagement is principally a task of planningG coordinating motivating and controlling the efforts of others to0ards a specific o&'ective# It involves the com&ining of the traditional factors of production Aland la&our and capitalB in an optimum manner paying due attention of course to the particular goals of the organizationD# .his definition &roadens the scope of management and includes 0ithin its or&it three ma'or management activities viz# AaB $lanning A&B Implementing and AcB %ontrolling# $lanning is the determination of the course or o&'ectives of a &usiness division or department to achieve ma@imum profit effectiveness the esta&lishment of policies and the continuous seeking and finding of ne0 and &etter 0ays to do things# Implementing applies to the HdoingH phases# +fter plans have &een prepared personnel must &e selected and assigned to their 'o&sG they must &e trained and motivated to perform properly# +ctivities must &e implemented in terms of the plans initially developedG su&ordinates must &e supervised and directed and the efforts of groups doing different kinds of 0ork must &e co-ordinated# .his may include AiB selecting personnel AiiB training personnel AiiiB motivating personnel AivB delegation AvB direction and AviB co-ordinating# %ontrolling refers to the evaluation of the performance of those 0ho are responsi&le for e@ecuting the plans agreed upon# .his may include: AiB controlling adherence to plans and AiiB appraising performance# +ccording to a 0ell-kno0n authority on management !enry ?ayol D.o manage is to forecast and to plan to organise to command to co-ordinate and to control# .o foresee and provide means e@amining the future and dra0ing up the plan of action# .o organise means &uilding up the dual structure material and human of the undertaking# .o command means maintaining activity among the personnel# .o co-ordinate means &inding together unifying and harnessing all activity and effort# .o control means seeing that everything occurs in conformity 0ith esta&lished rules and e@pressed command#D +ccording to $eter Drucker the primary 'o& of management is HeconomicH# Management must al0ays in every decision and action put economic pcr8ormal2ce is first# It can only 'ustify its e@istence and its authority &y the economic results it produces# .here may &e great non-economic resultsG the happiness of the mem&ers of the enterprise the contri&ution to the 0elfare or culture of the community etc# Fet management has failed lilt fails to produce economic results# It has failed if it does not supply goods and services desired &y the consumer at a price the consumer is producing capacity of the e resources entrusted to it# .he first definition of management is therefore that it is an economic organ indeed the specifically economic organ clan industrial society# Every act every decision every deli&eration of management has its dimension as an economic dimension#

#18

MANAGEMENT IS T3E ART OF GETTING T3INGS DONE T3ROUG3 AND 7IT3 PEOPLE .his definition of management emphasizes the accomplishment of tasks through the efforts of people# It also distinguishes &et0een management and non- managers# .he former category consists of those 0ho have to guide direct and coordinate the efforts of others to0ards certain specific o&'ectives and the later comprises of 0orkers operatives or non-managers 0ho actually perform the different tasks# In short management is getting things done through others ApeopleB# It may &e inducted from this statement that nonmanagers have responsi&ility for their o0n 0ork 0hile the managers arc responsi&le for their o0n 0ork as also for the 0ork of their su&ordinates# -etting things done means to get tasks and activities carried out# It implies that management is not a mere philosophy &ut a highly performance oriented- function# Management gets things done through people viz# mem&ers of the organisation comprising of &oth managers and non-managers# + manager 0hatever &e his level in the organisation has to get things done through his su&ordinates# +t higher levels the su&ordinates are themselves mostly managers# It means Hmanagement of managersH# +t supervisory levels su&ordinates are non-managerial H0hite collarH or H&lue collarH 0orkers# (rganisations arc man-made units G management is the chief organ entrusted 0ith the task of making them purposeful and productive entities &y securing the co-operation of people 0ho occupy various positions and are assigned different roles Management getS things done through people &oth as individuals and as mem&ers of 0ork groups# -etting things done through the people is really an art 0hich consists of a range of skills ac/uired and refined in the course of practice# .he skills 0hich artG re/uired to get things done through people include conceptual skills technical skills administrative skills social skills and so on# In order to get things done through people management has to plan the things 0hich are to &e done# .his HplanningH entails formulation of o&'ectives strategies policies and prograrammes at the higher level of management# .hese are all to &e operationalised into concrete action plans# .he tasks to &e carried out to achieve the goals arc to &e determined and assigned to individuals and 0ork units# It is called HorganisationH# .hen the roles of various 'o&- holders and their interrelationships are to &e designed and defined# .hus the management has to get things done in an organized and disciplined manner# 1esides planning and organising tasks management of people involves creation of appropriate 0ork climate of good0ill trust and challenge of people to do the assigned tasks and to comply 0ith the re/uirements of organisational performance Management has thus to devise the techni/ues and methods of getting things done# It has to &e a0are of and sensitive to the needs aspirations feelings goals and values of people at 0ork# Management has to provide effective leadership foster team spirit activate &ilateral and multilateral communication channels enlist peoplesH participation commitment and contri&ution through an appropriate system of cash and non-cash incentives# ?urther the o&stacles pro&lems and distortions in the 0ork environment are to &e removed or minimised# .here should &e a proper system to monitor the performance of people to detect deficiencies and deviations and n feed &ack information them for rectification of deficiencies and so on# .his art of management is increasingly to &e &ased on the science of management# Management researchers and students are engaged in systematic and scientific studies on ho0 to effectively get things done through people so that the 'o& rises a&ove the level of mere art# $rofessor !arold 4oontz agrees 0ith this concept of management# !e has defamed it as D.he art of getting things done through and 0ith people in formally organized groups# It is the art of creating an environment in 0hich people an perform as individuals and yet cooperate to0ards attainment of groupHs goals# It is the art of removing &locks to such performance a 0ay of optimising efficiency in reaching goals#D !o0ever there is a danger in defining management in terms of getting things done through people# .his gives the misleading impression that the only purpose of management is the accomplishment of tasks and that management consists in getting people to perform the tasks &y hook or &y crook &y threat or &y persuation and so forth# In yester years management 0as regarded as getting things done &y others 1ut today such a notion is strongly condemned as it is against the canons of humanity# Management is not slavedriving nor is it a set of clever tricks 0here&y you can get people to do you 'o&# .hese techni/ues of getting things done through and &y the people may 0ork for sometime &ut you cannot oppress or &efool people all the time# !ence according to the modem concept of management it is the art of getting things done through and 0ith the people in formally organized groups# MANAGEMENT IS PRIMARIL1 DIRECTION +n important concept a&out HManagementH is that it is primarily DIRE%.I(N# 8ust as in cinematograph it is o&served that on the screen the lips are moved &y HUH song is actually given &y HF and direction &y HQH# (ut of al these persons the most important is Mr# HQH the Director &ecause all the three persons act according to the 0ire-pulling done and signals given &y him# In an orchestra too the Director is the most important person &ecause each mem&er of the group of instrumentalists acts as per his signals and indications# Similarly in each industry the important departments are finance purchase production and sales# +ll these departments play their respective role &ut the force that coordinates these departments is the ManagementH# Management is primarily an e@ecutive function to determine 0hat you 0ant people to accomplish check periodically on ho0 0ell they are accomplishing it and to develop methods &y 0hich they 0ill perform more effectively# Mo&ilizing the physical human and financial resources and planning their utilization for &usiness operations in such a manner as to reach the defined goals can &e referred to as HmanagementH#

#19

MANAGEMENT IS T3E DEVELOPMENT OF PEOPLE It is cent percent correct that &usiness is not the management of things# It is in the 0ords of +pplev *a0rence D.he development of people and not the direction of things#D It is the selection the training the supervision and the development of people .he follo0ing 0ords from the statement of a head of an +merican %orporation are /uite Illuminating in this connection D7e do not &uild automo&iles refrigerators shoestrings# 7e &uild men# .he men &uild products#D DManagement is the attainment of pre-esta&lished goal &y the direction of human performance along pre-esta&lished lines# Managers do not 0ait for the future they make the futureK .ruly speaking the &asic o&'ective of HmanagementH is to assist the entire organisation from top to &ottom in &ringing a&out an improvement in kno0ledge skill ha&its and attitudes that 0ill ultimately e@press itself productively in 0ork and constructively in human relations: Man-management involves the instituting of an improvement in &ehaviour or potential &ehaviour# +ccording to this definition it can &e said truthfully that management is nothing &ut the development of AiB people and AiiB the over-all tone under 0hich they 0ork# Management is the development of people and not the direction of things .he follo0ing discussion is /uite illuminating in this connection 7ell there are t0o important elements 0hich make up the Hart of management5 AiB !uman and AiiB $hysical resources# .he term hi resources includes personnel administration training development of the natural talents of the people development of !uman personality etc# similarly the term physical resources includes finance or money ra0 materials &uilding plant machinery and other e/uipments# .he task of Management is to manage administer &oth these resourcesG &ut the management of !uman resources is comparatively more important# Most of the under-developed and developing countries of the 0orld are rich in physical resources &ut due to poor human element# .hey could not proposer for e@ample India is popularly kno0n as >+ rich country inha&ited &y the poor#

.he follo0ing chart also indicates that >M+N+-EMEN.5 directs the !uman Resources and the men or the human resources make the &est and intensive utilization of the physical resources 0hich ultimately accelerate the H$roductivityH in this age of science and electronics tu&e computers too arc fed and operated &y human &eings they do not minimize the importance of human factor# If the people are efficient the computers too 0ill 0ork precisely and accuracy the personality of a man is 'ust like flo0er-in-a &uddingstageG 0hich can &e improved &y HManagementH# 8ust as the gardener &y providing light manure and 0ater protects the plants 0hich ultimately provide flo0ers and fruits similarly in the garden like industry the HManagement--ardenerH develops and improves the human resources and its personality that ultimately

#20

results in improved productivity In short the development of any factory or industry depends upon the development of its people 0ho handle the physical resources# It shall not &e out of place tAH give the e@ample of "#S#+# to cement this concept# .he +mericans have made the &est utilization of the availa&le physical r and &y increasing productivity they have made their life richer and happier#

SCOPE OF MANAGEMENT +lthough it is difficult to precisely define the scope of management yet the follo0ing may &e included in it: 2# Su&'ect-matter of Management# $lanning (rganisation Direction %o ordination and %ontrol form the su&'ect-matter of management# 3# ?unctional +reas of Management# ?unctional areas of management include AiB ?inancial ManagementG 0hich includes forecasting control management accounting &udgetary control statistics control financial planning and# management of earnings# AiiB $ersonal ManagementG 0hich includes recruitment training transfer promotion demotion retirement termination la&our-0elfare and social security industrial relations etc# AiiiB $urchasing ManagementG 0hich includes inviting tenders for ra0 materials placing orders entering into contracts materials control etc# AivB $roduction Management: 0hich includes production planning production control techni/ues /uality control and inspection time and motion studies etc# AvB Maintenance ManagementG 0hich relates to the proper care and Maintenance of the &uildings plant and machinery etc# AviB .ransport ManagementG 0hich includes packing 0arehousing .ransportation &y railD road air etc# AviiB Distri&ution ManagementG 0hich includes marketing market-research price-determination market-risk and their avoidance advertisement pu&licity sales promotion etc# AviiiB (ffice ManagementG 0hich includes the proper layout staffing and e/uipment of the office# Ai@B Development ManagementG 0hich relates to e@perimentation research etc# 6# Management is an inter-disciplinary approach# ?or the correct application of the management principles study of commerce economics sociology psychology and mathematics is very essential# :# ; .he principles of management are of universal application# . .hree essentials of management are: AiB Scientific method AiiB !uman relations and AiiiB Puantitative techni/ue#

< Modem management is an agent of change# .he techni/ues of management can &e improved &y proper research and development T3E MANAGER AND 3IS JO0 More often than not it is said that a particular person is a HManagerH if he has an independent 0ellfurnished room in the &usiness esta&lishment num&er of telephone on his &ig aristocratic ta&le a tip-top female secretary and so or %ertain (il In persons go to the e@tent of saying that a Manager is a person 0ho does not do anything himself# .hese notions are false and &aseless# +s a matter of fact a Manager is a person

#21

0ho gets things done through and 0ith the people in fotl22ally organized groups# .he Manager is the keyman in the organisation pyramid# .he manager essentially dea2s 0ith the people and resources# !is 'o&s are to co-ordinate activities or people and optimise the use of resources so as to reach the defined goals# +ccording to !aimann a manager plans organizes staffs directs and controls# "sually the chief e@ecutive in an organisation is designated as Managing Director if he is a mem&er of the 1oard of Directors or a -eneral Manager 0hen he is not mem&er of that &ody# 1ut in &oth the cases the primary responsi&ility is to implement the policies and the decisions of the &oard and to carry to it the matters 0hich are necessary# +s o&served &y $eter Drucker the Manager performs three types of 0ork simultaneously: AiB managing a &usinessG AiiB on %o- managing managersG and AiiiB managing 0orkers and 0ork# .he dual role of the Manager is apparent from the figure given &elo0# !e occupies a prominent place in &et0een the 1oard of Directors and the Su&ordinate Managers# Since the Manager is a mem&er of the group ne@t a&ove and at the same time the leader of the group reporting to him he is &est placed to &ring to his group interpretation of the goals decisions attitude and actions or the higher group# .he Manager thus &ecomes the interlocking tie &et0een higher and lo0er levels of the organisatior and the natural and most effective channel for communication# .he duties of the Manager can &e defined in a nut-shell as Dto decide 0hat has to &e done to tell some&ody to do it to listen to reasons and get the 0ork done#D

(rdinarily he is responsi&le for: A2B %arrying on to effect the policy laid do0n &y the 1oard of DirectorsG A3B %ommunication and interpretation of policy for information and instructions of su&ordinate e@ecutivesG A6B 4eeping the - operations of the company under constant revie0 and presenting to the &oard periodically the accounts and statistics sho0ing the progress and current position SBf companyHs affairsG A:B Maintaining definitions and structure of responsi&ilities of e@ecutive and supervisory positions in the organisation upto date in re/uirements: A;B +pproving the manufacturing distri&uting development plans su&mitted &y the senior e@ecutives concernedG A<B -iving decisions and interpretation of policies 0hen for good reasons a departure from agreed policy arisesG A9B Ensuring ade/uate arrangements to safe guard the continuity of supplies to the customers: ANB !aving periodical meetings 0ith the senior e@ecutives to revie0 performances against &udget standard: AOB Ensuring ade/uate coordination of activities throughout the organisationG and A2EB Ensuring ade/uate facilities for development of e@ecutive and supervisory staff# .he special duties of a Manager may &e as follo0s : A2B .o consider suggestions from su&ordinate e@ecutives in regard to companyHs policy and su&mit them o&'ectively to the 1oard of DirectorsG A3B to revie0 the reports received from specialist e@ecutives in relation to their o0n fieldsG A6B .o ensure that all e@ecutives understand the nature and importance of &udgetary control principles and application of such principles to the activities carried out 0ithin their o0n 'urisdictionG A:B .o give ade/uate attention and promoting high level of morale among the e@ecutive staff and throughout the organisation# ?rom a revie0 of the a&ove duties and responsi&ilities it may &e included that the 'o& of a Manager re/uires an inter-disciplinary approach--an approach 0hich is &ased on many su&'ects like psychology sociology economics and mathematics# !e has to deal 0ith a variety of persons 0ith varyingH temperaments and levels of intelligence# !ence he should &e an e@pert of human relations# + %hartered +ccountant ho0soever 0ell-up he may &e in his su&'ectG may not &e a success as a Manager if he does not kno0 ho0 people &ehave individually and in groups in different situations# It sha22 not &e out of place to mention that accountant is also a Manager as he produces information for the use of otherH Managers through his department# !e should kno0 to create an environment 0here people are motivated to 0ork hare# !e must kno0 ho0 to make the optimum use of scarce resources# .his purpose can &e achieved &y using /uantitative techni/ues kno0n as Hoperational researchH# !e should also &e conversant 0ith the &asic concepts of the decision- making theory and decision models# 1esides he should also &e a&le to /uickly grasp the significance of all i#e# happening in the organisation and around it in the industry in the country and the 0orld over#

#22

MANAGEMENT AND ADMINISTRATION .he t0o teams HmanagementH and HadministrationH are often used synonymously# In this title 0e shall focus on management &ut most of 0hat is said is also applica&le to administration# .he distinction &et0een management and administration is also related to the level of organization# +s Dalton E# Mc?arland put it DIn &usiness firms administration refers to higher policy-determining level# (ne seldom regardsG the first - line supervisor as an administratorG he is a manager# In the health careH fields and in many service organization pro&lems Asuch as individualHs chronic diseaseB are managed &ut programs Asuch as flu vaccine distri&utionB are administeredD# +dministration may &e defined as Dthe guidance leadership and control of the efforts of a group of individuals to0ards some common goalsD# (ther often prefer the synthetic term Hadministrative managementH A0hich nization to distinguish it from Hoperative managementH 0hich as the name implies is concerned 0ith the operational aspects of the &usiness# Some e@perts like (liver Sheldon dra0 a distinction &et0een administration and management &y suggesting definition of their o0n# T,$ D$&#n#t#on .he former is defined as that function in the industry 0hich is concerned 0ith policy - determination the co-ordination of finance production distri&ution as also the esta&lishment of organization and ultimate control of the e@ecutives# %ontrarily the latter is the process concerned 0ith e@ecution of the policies 0ithin certain limits set &y the administration and employment of the organization for the purpose of accomplishing o&'ectives laid do0n &y the former# T,$ E))$n"$ o& A '#n#)trat#on In fact it 0as (rd0ay .ead 0ho has made an interesting analysis of the essence of administration# !e in fact analysed the process of administration (nto ten distinct elements concerned 0ith esta&lishment of o&'ectives of the organization laying do0n of &road policies for structuring and stimulation of the organization evaluation of the total outcome and a&ove all looking ahead# %ontrarily management endeavors to attain aims and o&'ectives as laid do0n &y administration and 0ithin the organization# It is therefore clear that administration is more important at higher levels 0hereas management is more important at lo0er levels in the firmHs organizational pyramid# .his is sho0n in the figure &elo0:

.hus administration is a top-level function 0hile management is a &ottom level one# .he fundamental point of distinction &et0een these t0o aspects is that 0hereas the former is the process of laying clo0n &road policies and goals of the organization the latter directs and guides the operational or functional aspects of the organization to0ard:G realizing the o&'ectives set forth &y the former# + closer look reveals that the scope of management is &roader than that of administration# In so far as management comprises &oth the process of planning and policy-making as also their e@ecution management em&races &oth administrative management of administration and operative management# !o0ever the cardinal point is that the distinction dra0n a&ove &et0een the t0o aspects of organization serves no real purpose# In fact the process of management is the same in all enterprises and at all levels in the organization# In truth management is as much responsi&le for planning of personnel are supposed to discharge &oth the a&ove functions# (f course it is true that planning is more important and &roader at higher levels of organization# Fet it is e/ually valid that every management irrespective of its hierarchy in the organizational set up has to do some sort of planning and the process of planning is essentially the same at all levels# T,$ I'+ortan"$ o& Mana%$'$nt Earlier in this chapter 0e noted that Hmanagement is effective utilisationH of human and material resources to achieve the enterprise o&'ectives# .he implication of this statement Aor definitionB is simple enough# In general management tasks include 0hatever is necessary to make the &est possi&le utilization vV an enterpriseHs resource# Mary $arker ?ollett defined management as Hgetting thing done through peopleH# H.he implication is that managers do not do the same things as other employees - at least not regularly# .he

#23

managerHs task includes Hmaking good use of the enterpriseHs employees# .hus managers communicate help motivate and develop the potential of employees# .he other managerial tasks are HAhose designed to make the most of effective use of the enterpriseHs financial material and human resourcesD# .hese tasks as 0e have already noted include Dplanning and decision making &uilding and developing the organization and creating and monitoring control systemsH# In order to survive &usiness enterprises must achieve their o&'ectives# +ll enterprises are responsi&le to certain groups such as shareholders for their performance# .he managerHs role is to take correct decisions in times of crisis and guide the enterprise in times of trou&le# In truth good management makes all the difference &et0een the success and failure of enterprises# Some financial analysts attri&ute differences n share prices to shareholderHs evaluation of managers# J.A. Schumpeter the great economist referred to management and entrepreneurship as Hthe management says that Hmanagement is the life giving organ of the enterpriseHs t0eet success and failure &y performing four key tasks: achieving economic performance creating productive 0ork discharging the social responsi&ilities of a &usiness and managing the time dimension# ?inally "#S# multinationals have over0helmed European &ecause of the superior skills of +merican management# .o conclude 0ith 7#?# -lues H0ithout managers it is difficult to get management tasks performed effectively# Management contri&utes to the: success of an enterprise in a crucial 0ayH# Soon 1oeing developed the 939 and then the 969 to fill other market niches# 222e 9:9 9;9 and 9<9 e@panded seating and flight range even more# 1eing 0orked 0ith a single customer $an +merican 7orld +ir0ays# to develop the 9:9 as a large-capacity plane that 0ould fly higher and faster and carry less fuel per passenger than any e@isting plane# 1y carefully meeting the needs of one customer 1oeing developed a product that 0as attractive to several customersG the 9:9 0as a resounding success# 1oeingHs domination of the commercial airline manufacturing market 0as challenged in the late 2 ONEs and early 2 OOEs &y +ir&us a manufacturing consortium formed in ?rance 0ith 1ritish -erman and Spanish partners and associate mem&ers from 1elgium and the Netherlands# +ir&us has &ecome the second-largest manufacturer of commercial 'ets in the 0orld# 1ut 1oeing appears to have 0ithstood the attack so far still controlling <E percent of the 0orld 0ide market for commercial planes# Repeating and recycling its history of customer responsiveness then has ena&led 1oeing to maintain its num&er-one position in commercial aircraft manufacturing and to point out 0ith pride that 1oeing has &uilt more than half the 'ets ever flo0n#

#24

LESSON ( 9 PLANNING M$an#n%D Nat!r$ an I'+ortan"$ o& Plann#n%

$lanning is Htask num&er oneH of management# It is the determination of a course of action to achieve a desired result# $lanning concentrates on setting and achieving o&'ectives of an organisation# It is deciding in advance 0hat to do ho0 to do it 0hen to do it and 0ho is to do it# $lanning &ridges the gap from 0here 0e are to 0here 0e 0ant to go# $lanning makes it possi&le to occur 0hich 0ould not other0ise happen# It is an intellectual processG it is characterized as the process of thinking &efore doing# It is cent per cent mental 0ork# It re/uires a mental predisposition to - think &efore acting to act in the light of facts rather than of guesses and generally speaking to do things in an orderly 0ay# $lanning function of management precedes all other managerial functions# 7ithout setting the goals to &e reached-and line of actions to &e follo0ed there is nothing to organise to direct or to control in the organisation# (nly after having made his plans can the Manager organise staff direct and control# $lanning actually is the foundation of management# .he vital supporting columns ofH organisingH HactuatingH and HcontrollingH upon HplanningH G and all these com&ined together make up the &ridge or $rocess of ManagementH#

$lanning -overns the survival progress and prosperity of any organisation in a competitive and everchanging environment# ?urther the planning function is performed &y managers at every level of management# !o0ever one should not induct from this vie0 that planning is an isolated activity re/uired in the &eginning only# It is really a continuous and unending process to keep the organisation as a going concern and other functions are also performed simultaneously# DEFINITIONS: $lanning is deciding in advance 0hat is to &e done# It involves the selection of o&'ective policies procedures and programmes from among alternatives# + plan is a pre-determined course of action to achieve a specified goal# It is a statement of o&'ectives to &e achieved &y certain means in the future# In short it is a &lue-print for action# .he follo0ing definitions of planning are /uite illuminating David %leland and 7illiam 4ing: D$lanning is the process of thinking through and making e@plicit the strategy actions and relationships necessary to accomplish an overall o&'ective or purpose#D -eorge R# .erry: D$lanning is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualization and formulation of proposed activities &elieved necessary to achieve desired results#D *ouis +# +llen : DManagement planning involves the development of forecasts o&'ectives policies programmes procedures schedules and &udgets#D 1illy E# -oetz : D$lanning is fundamentally choosing and a planning pro&lem arises only 0hen an alternative course of action is discovered#D .heo !aimann: D$lanning is deciding in advance 0hat is to &e done# 7hen a manager plans he pro'ects a course of action for the future attempting to achieve a consistent coordinated structure of operations aimed at the desired results#D 4oontz EH Donnell : D$lanning is an intellectual process the conscious determination of courses of action the &asing of decisions on purpose acts and considered estimates#D

#25

 -eorge 1# -allo0ay: D$lanning is the opposite of improvising# In simple 0ords it is organized foresight plus corrective hindsight %onceived as a process planning em&races a series of steps: AiB the determination of o&'ectives to &e sought AiiB research to understand the pro&lem AiiiB the discovery of alternative solutions AivB policy-making choosing &et0een alternatives including the fre/uent choice of doing nothing AvB the detailed e@ecution of the chosen alternative kno0n in physical planning as layout or design#D 2 Aford and 1ealty: D$lanning is the thinking process the organized foresight the vision &ased on fact and e@perience that is re/uired for intelligent action#D C3ARACTERSTICS OF PLANNING (n the &asis of the a&ove definitions the follo0ing characteristics of planning can easily &e identified: $lanning is very closely associated 0ith the goals or o&'ectives of the organisation# .he goals may &e e@press or implied G ho0ever 0ell defined goals lead to efficiency in planning# $lanning is mainly concerned 0ith looking ahead in the future# ?orecasting provides the necessary ra0 material for correct planning# $lanning involves the selection of the &est alternative# $lanning is re/uired at all levels of management# !o0ever its scope and importance increase at successively higher levels# $lanning is an inter-dependent processG it co-ordinates the activities of various departments sections and su&-sections# W $lanning is fle@i&le as it is &ased on future conditions 0hich too are dynamic# $lanning is a continuous and unending process# $lanning governs the survival gro0th and prosperity of any organisation# NATURE OF PLANNING %ertain important elements 0hich descri&e the nature of planning may &e enumerated as &elo0: W $lanning is goal-oriented# Every plan must contri&ute in some positive 0ay to0ards the accomplishment of group o&'ectives# $lanning has no meaning 0ithout &eing related to goalsG it &ecomes an empty mental e@ercise if it does not keep the o&'ectives of the organisation in vie0# $rimacy of $lanning# $lanning pervades all managerial activityG it is the function of every manager# It facilitates organising staffing directing motivating and controlling# $ervasiveness of $lanning: $lanning has &een descri&ed as the most &asic of all managerial functions# It is found at all levels of management--top management looks after strategic planning G middle management is in charge of administrative planning and lo0er management has to concentrate on operation planning# $lanning is directed to0ards efficient economy and accuracy# In planning the manager evaluates the alternatives on the &asis of efficiency economy and accuracy# + good plan should not only attain optimal relationship &et0een out put &ut should also &ring the greatest deal of satisfaction to those implementing it# $lanning aims at %o-ordination# $lanning co-ordinates the 0hat 0ho ho0 0here and 0hy of planningG 0ithout the co-ordination of different activities one cannot have united and synchronized efforts# W + planner cannot overlook the critical factors like money manpo0er materials machinery and management# .hese limiting factors must &e taken into account 0hile formulating a plan# Elasticity in planning# .he process of planning should &e adapta&le to changing environmental conditions# W $lanning is an intellectual process and the /uality of planning 0ill vary according to the /uality of the mind of the manager# $lanning involves continuous collection evaluation and selection of data it involves scientific investigation and analysis of the possi&le alternative courses of action and the &est alternative &ecomes theH planH# $lanning is looking ahead and control is looking &ack &ut &oth are insepara&leL--the Siamese t0ins of management# "nplanned action cannot &e controlled# +ny attempt to control 0ithout plans 0ould &e meaningless#

W $ro&lems of planning# .he &asic /uestions that are to &e ans0ered in framing a plan are seven# AiB 7hy is the particular action necessaryT It relates to the purpose of choosing a particular course of action# AiiB 7hat is to &e doneHT It indicates the different stages of the activity their detailed analysis the se/uential arrangements and so on# AiiiB 7here 0ill it &e doneT AivB 7hen 0ill it &e doneT AvB 7ho 0ill do itT AviB 7ith 0hich 0ill it &e doneT and AviiB !o0 0ill it &e doneT

#26

IMPORTANCE OF PLANNING $lanning is an orderly approach to the task of management# In the a&sence of planning &usiness decisions 0ould &ecome random ad hoc choices like a pilot 0ho has started 0ithout kno0ing 0hether he 0ished to fly to 1om&ay %alcutta Madras or Delhi# +s a managerial function planning is important due to the follo0ing reasons .o manage &y o&'ectives# +ll the activities of an organisation are designed to achieve certain specified o&'ectives# !o0ever planning makes these o&'ectives more concrete and tangi&le &y focusing attention on them# .o offset uncertainty and change# ?uture is al0ays full of uncertainties and changes !o0ever some of the uncertainties tend changes can &e predicted on the &asis of forecast# .hus planning foresees the future and makes the necessary provision for it# Even 0here the future is certain for sometime planning is necessary to evaluate the alternate courses of action and determine the ones leading to the continuous gro0th and prosperity of the organisation: .o secure economy in operation# $lanning involves the selection of most profita&le course of action that 0ould lead to the &est result at the minimum costs# .o help in co-ordination# %o-ordination is indeed the essence of management the planning is the &ase for it# 7ithout planning it is not possi&le to co-ordinate the different activities of an organisation# .o make control effective# .he controlling function of management relates to the comparison of the planned performance 0ith the actual performance# In the a&sence of plans a manager 0ill have no standards for controlling otherHs performance# In short planning 0ithout control 0ould &e a fruitless e@ercise and control 0ithout planning is impossi&ility# .o increase organisational effectiveness# Mere efficiency in the organisation is not importantG it should also lead to productivity and effectiveness# $lanning ena&les the manager to measure the organisational effectiveness in the conte@t of the stated o&'ectives and take further actions in this direction# FEATURES OF A GOOD PLAN +ccording to *#?# "r0ick H-ood $lanH is that 0hich AiB is &ased on a clearly defined (&'ective AiiB is simple AiiiB provides for a proper analysis and classification of actions i#e# 0hich esta&lishes standards AvB is fle@i&le AvB is &alanced and AviB uses availa&le resources to the utmost &efore creating ne0 authorities and ne0 resources# .he &est test of effective planning is its realistic and via&le nature# + good plan must &e pragmatic and must lead the organisation for0ard on the path of progress and prosperity# + good plan open up ne0 avenues ne0 0ays of doing things and reveals specific opportunities previously unkno0n to the planner# ADVANTAGES OF PLANNING .he advantages of planning may &e summarised &elo0: 2# .he &usiness o&'ectives can &e easily secured through plans &ecause planning ena&les a purposeful and orderly set of activities instead of random action it provides co-ordinated efforts and reduces risks and uncertainties# 2. $lanning facilitates the process of decision-making# 3. $lanning helps the management to implement future programmes in a systematic manner so that the management may get the ma@imum &enefit out of the programmes chalked out# it ena&les all the activities to &e conducted in an orderly and coordinated manner to achieve the common goals of the organisation# 4. 7ith the rapid gro0th of technological development it is essential for a manager to keep a&reast of the latest technology other0ise the products are likely to get o&solete# $lanning helps in this process# 5. $lanning indirectly leads to large-scale economies &y avoiding 0aste of men money materials and machinery# 6. $lanning leads to &udgeting and &udgeting leads to &udgetary controlG thus the success of &udgetary control depends considera&ly on effective planning# It is at the planning stage that the future prospects of an undertaking are taken care of# 7. $lanning encourages the sense of involvement and team spirit# $lanl2ed targets provide a &asis upon 0hich good performances can &e re0arded arid poor performances can &e taken care of# 8. $lanning is the essence of all management activities: once planning is done 0ell other activities automatically follo0# 9. + greater utilization of the resources and availa&le facilities can &e made &ecause of planning# .his reduces costs and results in higher profita&ility#

#27

.he managerial process 0ill go through many cycles &efore the desired o&'ectives are realized# !ence it is advisa&le to look at the plan function as a continuous function of the manager#

l. UTILIEATIONS OF PLANNING Some of the limitations of &usiness planning are as follo0ing: A2B it has can consider as a time consuming and e@pensive deface# ?urther the framing If plans involves money energy and also risk 0ithout saving any guarantee as to the realization of assured goals# A3B due to the heavy cost of planning and the risk involved in it similar &usiness concerns 0hich are short of capital and 0hich e@pect /uick results cannot afford to have a planning programme# A6B $lanning makes the entire organizational setup e@tremely rigid# A:B $lanning leads to pro&a&ie results and not assured goals# A;B *ast &ut not the least machinery of planning cannot &e free from &ias forecasting methods statistical data supplied etc# are all inaccurate and the results of operation research cannot &e applied to all cases that-come under planning# A<B In the planning process the /uality of the output is only as good as the /uality of input# A9B .endency to0ards infle@i&ility or reluctance to change once the plans are framed is another limitation of planning# ANB $lanning encourages a false sense of security against risk or uncertainty# AOB Emergencies demand onthe-spot decision &ut planning delays it# A2EB Standing plans demand repetitive operations &ut in the a&sence of such operations plans lose their significance# In order to avoid the failure of planning the follo0ing suggestions should &e kept in mind: A2B avoid serial planning if possi&le: A3B do not 0ait to start the second range of planning until the first stage is finishedG A6B try to have parallel planning 0ith lots of cross-checkingG and A:B see that all plans move for0ard at the same time# PLANNING IS ECONOMIC $lanning is economic in the sense that it minimizes costs# $lanning leads to systematic orderly and purposeful 0orking of an enterprise# +ll efforts are directed to0ards a desired result haphazard approaches are minimized activities are coordinated and duplications are avoided# Minimum time is necessary for the completion of all planned activities &ecause only the necessary 0ork is done# ?acilities are used to their &est advantage and guess0ork is eliminated# In this connection it shall not &e out of place to /uote ?# -# Moore 0ho said:D ### 7hen 0e say planning is economic 0e do not mean to overlook its costs# .oo much and too detailed planning is 0asteful# Fou canHt afford to put every minor detail do0n on paper# 7hen you plan your vocation you pro&a&ly decide 0here you 0ill go and 0hen you 0ill &e at certain places &ut you donHt plan 0hat you 0ill eat for &reakfast every day# +nd so it is 0ith &usiness plans# .hey need to cover the H&ig specificsH &ut every minor detail# Nor can you afford to have middle and lo0er level men spending all their time in planning# .hey 0ould never get their dayHs 0ork done# +nd even top men never have enough time to plans as thoroughly as they 0ould like# Fou have to get on 0ith less than perfect plans and less than complete plans#D It should also &e noted that a manager should plan in good times as 0ell as in &ad times More often than not managers do not pay any heed to0ards planning during periods of prosperity Due to their successful operations in good times they are lulled into the &elief that they have a si@th sense and intuitive perception 0ith 0hich they can al0ays succeed# +nd 0hen the &usiness falls on &ad times they attri&ute their poor results to circumstances &eyond their control +ccording to !aimannn DRealistically speaking it is true that under such circumstances &oth success and failure are the result of conditions &eyond the managers control# !o0ever these conse/uences could &e mitigated if the manager had developed plans ena&ling the enterprise to capitalize fully on good times and to minimize the efforts of &ad times#D Moreover it is also essential that &oth long-range and short-range planning should &e Integrated and coordinated# PLANNING LEVELS .he planning function has to &e performed at all the three levels of management right from ape@ or top management do0n to the first line managers viz# foremen or supervisors# In participative management even the operatives take keen interest in planning their 0ork# (f course the higher one goes in the management structure the more time 0ill &e spent on the planning functions# .he planning functions of the different managers in the hierarchy of management may &e outlined as &elo0: TOP MANAGEMENT +pe@ or top management has to devote much more time to planning and policy making# It normally undertakes strategic planning covering a time span of one to five or even ten years# Strategic planning mostly relates 2E resource mo&ilization It is also concerned 0ith the strategies or courses of action programmes policies procedures and standards that 0ill determine the procurement use and disposition of these resources In short top management is concerned 0ith strategic plans 0hich are long-range plans# MIDDLE MANAGEMENT Middle management has to formulate short-term andJor tactical plans and devotes relatively less time to planning and more time to co-ordination and communication# It is concerned 0ith administrative or tactical planning that supports the strategic planning# Specific plans for the different areas of management discipline

#28

such as personnel production and marketing are implemented &y middle management# E@amples of administrative or tactical planning are: Research and Development Marketing Manufacturing ?inance etc# +dministrative plans are mostly medium- range plans#

LO7ER MANAGEMENT *o0er management is directly concerned 0ith operational planning# +t this level the first-line managers such as the heads of departments and sections concentrate on planning of daily 0eekly and monthly operations# In short it relates to short-range plans# .ypical e@amples of operational planning are: plans for finished goods inventories to meet current market demands plans to# +ccelerate research pro'ect 0hich are &ehind schedule plans of routing scheduling and dispatch in production cash - flo0 &udget etc# +ll operational plans are concerned 0ith the planning structures and repetitive activities in the H different department of the organization# +merican %olonial period the lamp makes an impressive addition to 0indo0 mantelpiece and end ta&le displays# It has &een 0ell received &y the pu&lic and provided a steady relia&le income for Modern Medallion# "p until 2O9< the lamp 0as sold through specialty and gift shops at a price of X3;#O; 0hich meant a siza&le profit for the retailers# .hen the company decided to offer the lamp as a 1icentennial item and sell it throughout the country through department stores hard0are stores and furniture stores as 0ell as through the gift shops and specialty outlets# In keeping 0ith the 1icentennial theme it set a retail price of X29#9< and planned magazine and .I e@posure of the product stressing the 1icen tennial theme# +ny retailer 0ho attempted to sell the lamp for a higher or lo0er price 0ould lose the &enefit of this advertising since the price 0as directly connected to the 1icentennial cele&ration# .he lamp 0as only one of hundreds of items manufactured &y Medallion# (ther ma'or categories included &ronze statuaryG commemorative coinsH and medalsG metal &askets and containers for homes and officesG door latchesG dra0er handlesG and miscellaneous functional and decorative hard0are#

#29

LESSON : COMPONENTS OF PLANNING CLASSIFICATIONS OF PLANS In the process of planning several specific plans are prepared 0hich may &roadly &e classified into t0o categories: Standing and single-"se $lans# E@amples of HStanding $lansH are Mission (&'ectives $olicies $rocedures and Rules Strategic etc# .he Standing or Repeated-"se $lans are formulated &y the Managers at different levels and are meant for repeated use as and 0hen the occasion demands# $rogrammers $ro'ects Schedules 1udgets and Standards are e@amples of HSingle-"se $lansH# .he &asic difference &et0een Standing and Single-"se plans lies in the fact that Standing $lans are used over a long period of time 0hereas the Single-"se plans are used only for specific periods# .he components of &oth these types of plans are e@plained in the follo0ing paragraphs# STANDING OR REPEATED(USE PLANS these include the follo0ing 1. M#))#on Every organisation must have a missionG then only it &ecomes meaningful or purposive# .he HmissionH of a &usiness organisation may &e t0o- fold: AiB production and distri&ution of goods and services in order to satisfy the &asic needs or the consumers and AiiB provision of employment and a source of income to the people 0here&y they might &e in a position to purchase their desired goods and servicesG .he mission is the central guiding concept descri&ing the fundamental reason for the e@istence of an organisation It indicates the line of &usiness and reflects upon philosophy of management# Iii short the mission gives a clear-cut idea a&out &asic long-run commitment of an organization# 2. Ob4$"t#*$) Definition (&'ectives may &e defined as the goals 0hich an organisation tries to achieve# (&'ectivesH are also descri&ed as the end-points of planning# In the 0ords of 4oontz and EH Donnell H(&'ective is a term commonly used to indicate thee- t AiB ii point of a management programme#D +ccording to Dalton E Mc?arland DE&'ectives are the goals aims or purposes that organisations 0ish to achieve over varying periods of timesD H(&'ectivesH is a 0ider term and HMissionH is part a and the parcel of it (&'ectives decide 0here 0e 0ant to go 0hat 0e 0ant to achieve and ne@t 0hat is our destination# (&'ectives constitute the purpose of the enterprise and ends re 0ithout them no intelligent planning can take place# C,ara"t$r#)t#"): Important characteristics or features of o&'ectives are as &elo0: AiB .he o&'ectives must &e pre-determined# AiiB .he o&'ectives must &e reduced to &lack and 0hite + clearly defined o&'ective provides the clear direction for managerial efforts AiiiB (&'ectives must &e realistic i#e# they must &e 0ithin the reach of the organisation# AivB (&'ectives must &e measura&le# AvB (&'ectives must: have social sanction# Restrictions on organisational o&'ectives are put through social rules norms or customs# AviB (&'ectives are usually plural# +s Drucker puts it D.he search for one o&'ective is essentially a search for a magic formula that 0ill make 'udgment unnecessary# (&'ectives are needed in every area 0here performance and results directly and vitally affect the survival and prosperity of the &usiness#D $eter Drucker has recommended eight key areas in 0hich &usiness firms have to set their o&'ectives Market standing innovation physical and financial resources manager performance and development 0orker performance and attitude productivity profita&ility and pu&lic accounta&ility# AviiB +ll o&'ectives are interconnected and mutually supportive# AviiiB (&'ectives may &e short-range medium-range and long- range# Ai@B (&'ectives may &e constructed into a hierarchy e#g# overall ma'or divisional departmental etc# +dvantages# -ood management is management &y o&'ectives# +ccording to *#-ulick DIn administration -od helps those administrators 0ho have a clearly defined o&'ective#D +n organisation can gro0 and prosper in an orderly and progressive manner only if 0ell-defined goals have &een esta&lished to guide its progress %ertain specific &enefits of sound and carefully chosen o&'ectives are as follo0s: A2B %lear definition of o&'ectives encourages unified planning# .he unifying effect arises 0hen the plans prepared &y different departmental heads are ad'usted to a common o&'ective# A3B (&'ectives provide motivation to people in the organisation# (&'ectives help in providing the sense of unity harmony and accomplishment to cooperative efforts# A6B 7hen the 0ork is gdal-oriented unproductive tasks can &e avoided# A:B (&'ectives provide standards 0hich aid in the control of human efforts the in an organisation# A;B (&'ectives serve to identify the organisation and to hem the groups upon 0hich its e@istence depends# A<B (&'ectives as a sound &asis far the developing administrative controls# A9B (&'ectives contri&ute to the management and processG they influence the purpose of the organisation policies personnel and leadership as 0ell as managerial control# ANB (&'ectives indicate the contri&ution to &e made &y each unit and thus it is the &asis for decentralisation# AOB M1 AManagement &y (&'ectivesB programme cent per cent depends upon clear cut o&'ectives# .ypes of (&'ectives Mere ma@imization of profit cannot &e the sole o&'ective of an enterprise# (&'ectives may &e e@ternal as 0ell as internal# HService of the customerH is the primary e@ternal E&'ective of an enterprise# %onsumerism may develop 0hen &usiness forgets its primary responsi&ility to0ards the consumers# +s asocial institution &usiness must maintain and develop the /uality of lifeG it should prevent all type of pollution# Moreover in addition to its social o&ligation to0ards the consumers &usiness must fulfill

#30

the e@pected responsi&ilities to0ards the society community and the government# .he internal o&'ectives of an organization relate to AiB ma@imum profita&ility AiiB ma@imum service and satisfaction to employees and AiiiB fair return on the shareholder5s investments# 3#$rar",y o& Ob4$"t#*$)# (&'ectives set up &y top management act as the ends and the middle managements plan to achieve those o&'ectives Aor endsB# .hus at the ne@t lo0er level the o&'ections act as the means# Each level of o&'ectives stands as ends relative to the level &elo0 it and as means relative to the level a&ove it# .his is kno0n as 0hat 0e call >Means-ends %hain of o&'ectives the follo0ing diagram &eautifully illuminates the point#

S$tt#n% o& ob4$"t#*$)# .he follo0ing considerations play an important role n theD setting of o&: A2B (rganisational o&'ectives are of multiple characterG hence pressing and dominant o&'ectives should &e given priority over others through the constant ad'ustment of short-run emphasis on such o&'ectives# A3B %oordination and &alance should &e maintained &et0een the overall o&'ectives of the organisation and the departmental goalsG A6B .ranslation of ma'or o&'ectives into operating o&'ectives should &e in tangi&le and meaningful terms# A:B (&'ectives should &e realist rather than idealistic# A;B (&'ectives may &e AaB ma'or or minor A&B short-term or long-term and AcB economic or social# Ma'or o&'ectives relate to the chief purpose of the (rganisation and minor o&'ectives are su&ordinate to &ut consistent 0ith the ma'or o&'ectives# In the short term an enterprise may concentrate more on satisfying customers 0ith good products at cheap price keeping in vie0 the long-tern o&'ective of ma@imum profit# Short-term o&'ectives should &e treated as steps to0ards long term o&'ectives# Economic o&'ectives are goals 0ith respect to the market place# Social o&'ectives refer to the companyHs intentions to0ards its employees shareholders and the pu&lic at large# A<B (&'ectives have to &e set up for each person and for each responsi&ility centre# ?or e@ample the foreman on the shop floor as 0ell as the departmental manager should kno0 0hat e@actly they live to achieve and ho0T Setting up detailed /uantitative o&'ectives is an essential task of planning# 2. Pol#"#$) M$an#n% an D$&#n#t#on. $olicy-making is another most important component of &usiness planning# $olicies are guides to action# .hey provide a&road guideline as to ho0 the o&'ectives of an organisation are to &e achieved# In the 0ords of 8oseph *# Massie D$olicies include that &ody of understanding Agenerally kno0n &y mem&ers of the groupB 0hich makes the action of each mem&er of the group in a given set of circumstances more pr to other mem&ers#D +ccording to 4oontz and PH Donnell D$olicies are general statements or understandings 0hich guide or channel thinking in decision-making of su&ordinates#D F$at!r$) o& )o!n +ol#"y # .he follo0ing features of a policy emerge from the a&ove definitions: AiB .he policy tries to contri&ute to the organisational o&'ectives# AiiB $olicy is formulated through the various steps in the decision-making process# AiiiB $olicy can &e interpreted from the &ehaviour of the top management# AivB $olicy provides guidelines to the mem&ers of the organisation for choosing a particular course of action# AvB $olicy-making is the task of all managers G ho0ever the higher manager is in the organisation the more important is his role in policy-making# AviB + sound policy must &e fle@i&le in its implementation# AviiB + policy should &e uniform in its applicationG it must &e fair to all offering e/uity and 'ustice to those 0ho are affected &y it# R$lat#on),#+ an #)t#n"t#on b$tA$$n Pol#"#$) an Ob4$"t#*$). (&'ectives are end-points of planning 0hile policies prescri&e the &road 0ays in 0hich the o&'ectives can &e realized# (&'ectives and policies may &e distinguished along the follo0ing lines: AiB (&'ectives are &asic to the e@istence and functioning of air organisation &ut policies are not# 0hile 0e cannot visualize an organisation 0ithout a miss

#31

oil or o&'ective it is possi&le for an organisation to function 0ithout policies AiiB (&'ectives are endsG policies are means to ends G they thro0 light on the /uestion of ho0 o&'ectives are to &e achieved# (&'ectives and policies are related to each other in an ends-means chain or hierarchy# AiiiB (&'ectives are stated in &road ideological terms and tend to take the shape of vague a&stract aspirations e@pectations and intents of an organisation# $olicies on the other hand give meaning and content to o&'ectives clarify the intents of top management and e@press its aims in more specific terms# AivB (&'ectives are often &randed as official or stated goals 0hich in many cases remain on paper# In contrast policies indicate the real intents of the organisationH and reflect its true character# AvB (&'ectives are meant to &e achieved out policies are meant to &e o&served &y managers# $olicies clarify the perspectives of managers for handling the managerial pro&lems in a disciplined manner# I'+ortan"$. .he importance of policies can &e 'udged from the follo0ing pointsYAiB $olicies lead to a uniform pattern of action in respect of various matters relating to an organisation# AiiB $olicies speed up decision-making since they provide a frame0ork 0ithin 0hich the decisions can &e taken# AiiiB $olicies help &oth men and &oss to 0ork for a &etter performance# AivB $olicies help in securing effective %o ordination of efforts and activities in the organisation# Cla))#&#"at#on o& Pol#"#$). +lford and 1eatty have classified the industrial policies as follo0s: 1. .op management policies are those derived from top management planning# .hey include policies concerned 0ith long-range product selection sales forecasting sizing the enterprise process selection machine selection determining plant needed and &udget# 2. "pper middle management policies are those 0hich are special to a function such as sales production research finance accounting and are made &y the vice-president or other e@ecutive responsi&le for these functions# .hey should he in harmony 0ith the ma'or policies of the enterprise# 3. Middle management policies are those 0hich gro0 out of the planning of 'unior e@ecutives superintendents of departments or divisions and others in like positions# .hese men are functional product or area specialists 0ithin the sales production research finance or accounting su&-division of the enterprise# 4. ?oremen policies are those directly related to the accomplishment of the set for his small su&-division or the 0hole enterprise# .hey include the policies concerned 0ith the assignment of the 'o&s to the &est suited men the provision for ade/uate tools &y 0hich to do the 'o& and so forth# 5. (perating force policies are those found in little note&ooks in the possession of each 0orker# .hese state his rule or code for doing each 'o& that he is called upon to do# ?rom it the 0orker kno0s ho0 long each 'o& should take # 0hat tricks of the trade arc re/uired and 0hat /uality features are emphasized# !e does not trust to his memory to complete a respective 'o& satisfactorily for he has an esta&lished policy to follo0 for this recurring situation# 6. Sales policies may &e concerned 0ith determining location of markets selecting channels of distri&ution dividing the total market Into &ranch or dealer areas pricing the product determining sales incentives esta&lishing advertising policies setting up sales control policies and esta&lishing sales volume and e@pense &udgets# 7. $roduction $olicies may &e concerned 0ith the making of a production &udget selection of 'unior e@ecutives the organization and co-ordination of their activities factory layout inventory control collective &argaining and la&our relations selection of system for /uality cost and production control and the like# 8. Research policies may &e concerned 0ith the selection of pro'ects for investigation the choice of personnel and mechanisms for carrying out these activities the determination of research &udgets the measurement of results and similar matters# 9. ?inancial $olicies# In the area of finance a num&er of policies 0ould &e re/uired such as: AiB .he method of raising funds and the ratio &et0een the various types of sources of funds# !o0 much risk the company can undertake T 7hat return does it e@pect on the funds procured and ho0 much of the control aspect management is 0illing to giveT AiiB $olicy for the use of the funds and the ratio &et0een different types of assets# AiiiB .he credit policy and the distri&ution policy to0ards customers# AivB .he dividend policy i#e# ho0 much dividends are to &e declared out of the profit earned# AvB $rovision for 0orking capital re/uirements and other matters of this type# 10. Co)t#n% Pol#"y: It may include the policy for selecting the method of costing the method of allocating apportioning re-apportioning and a&sor&ing overheads etc# 22#A""o!nt#n% Pol#"y: .his may include the follo0ing: AiB .he &asis of valuation of stock of finished goods# It is a matter of policy 0hether the finished goods arc valued at total cost or at direct cost or at 0orks costG AiiB .he issue price of ra0

#32

materials 0hether to follo0 ?I*( or *I?( or average cost or any other method of pricing AiiiB Depreciation policy# i#e# 0hich method of depreciation &e follo0ed: 12. .he treatment of deferred revenue e@penditure intangi&le assets fictitious assets and preliminary e@penses G AvB %apitalization of e@penditure during construction period G AviB $olicy for provision of dou&tful de&ts investment losses etc# 13. Mar/$t#n% Pol#"y: !ere a num&er of policies in market analysis &usiness la0 display and salesmanship may &e follo0ed# 14. Pro'ot#on Pol#"#$): .he o&'ectives of the promotion policy may &e: AiB to utilize fully the managerial resources of the organisationG AiiB to provide a fair opportunity to ail for advancement and promotionG and AiiiB to &ase the promotion on an o&'ective assessment of merit and not merely seniority# In order to achieve the a&ove o&'ectives the follo0ing policy guidelines may &e laid do0n : AaB $romotions 0ill &e &ased on merit# + vacancy can &e filled &y promotion 0here the individual concerned fulfils the re/uirements of the 'o& for its most effective performance in terms of education professional /ualifications e@perience kno0ledge of the 'o& &ackground personality and personal /ualities etc# ?actors like age health and effect on morale or other aspirants 0ill &e considered# A&B +ll appointments in senior management cadres 0ill &e made &y the 1oard of Directors as a 0hole through recruitment promotion or rotation# AcB In case of promotions to vacancies &elo0 the senior management level these 0ill &e recommended to the 1oard &y the line director in consultation 0ith the personnel director# AdB !igh-fliers 0ill &e identified through annual appraisal system at as early a stage as possi&le# + list of such persons is maintained &y the personnel director# Pro !"t Pol#"#$): .hese may include the follo0ing: AlB .he company 0ill deal in the 0hole range of engineering products for construction pro'ects# AiiB .he products of the company 0ill &e meant mainly fur government and industrial customers# AiiiB .he company 0ill purchase as many of theL components as possi&le from small-scale industrial units ant, 7ill concrete largely on assem&ling# AivB .he company 0ill try to differentiate its products from those of the rival manufacturing units in terms of shape design and other specifications# AvB .he company 0ill &ook orders and make its products availa&le according to the specifications provided &y the clients# $olicies are also classified according to their origin as or#%#nat$ D a++$al$ D #'+l#$ an #'+o)$ +ol#"y# +n (riginated $olicy is that 0hich is formulated &y the managers in the organisation for their su&ordinatesH action as 0ell as their o0n action# .he &road policy laid do0n &y the top management &ecomes a guide for the managers at the lo0er levels of the organisation 0ho formulate policies for the &enefit of their su&ordinates# +ppealed $olicy arises from the appeal made &y a su&ordinate to his superior for deciding an important case# +ppealed policy decisions are mostly to solve current pro&lems or issue# +n Implied $olicy is one that is inducted from the action and &ehaviour of the top management# +n Imposed $olicy is a policy that is imposed &y some e@ternal force like the government trade union or a trade association# *a&our policies formulated to comply 0ith la&our la0s or meet the terms of a collective agreement &elong to this category# E))$nt#al) o& t,$ Pol#"y For'at#on: +ccording to +lford and 1eatty formation may &e listed as &elo0 the essentials of policy

I# + policy should &e definite positive and clear# It should &e understood &y everyone in the organisation#L 3# + policy should &e translata&le into the practices and peculiarities of every department and division of the organisational# 6# + policy should &e fle@i&le and at the same time have a high degree of permanency :# + policy should &e formulated to cover all reasona&ly anticipata&le conditions# ;. + policy should &e founded upon facts and sound 'udgment# <# + policy should conform to economic principles statutes and regulations and should &e compati&le 0ith the pu&lic interest# 9# + policy should &e a general statement #of the esta&lished rule to follo0 in recurring situationsG rather than one prescri&ing detailed procedure# Pol#"y Man!al: 7hen the policies arc reduced to &lack and 0hite and compiled into a &ook or manual that may &e designated as a H$olicy ManualH# .he organization is considera&ly strengthened &y having a $olicy Manual &ecause the statement of policy then &ecomes readily availa&le for reference and guidance# Some of the advantages of a policy manual may &e enumerated as follo0s AIB *essen misinterpretation misunderstanding and resulting friction &ecause the policies are stated in 0riting# A3B $rovide a check list of current policies 0hich can &e used to determine 0hether or not they are &eing adhered to# A6B %onstitute useful instructional device for ac/uainting the personnel 0ith the principles and procedures re/uired to make the policies effective in operation of the enterprise# 9. Pro"$ !r$ M$an#n%: + H$rocedureH is a standing plan descri&ing a customary method of handling a future activity# .he term H$rocedureH refers to a specific administrative directive prescri&ing the se/uential manner in 0hich a repetitive activity is to &e initiated carried for0ard and completed in a goal-oriented manner# $rocedures are

#33

meant to standardize and routinise the pattern and of 0ork flo0 at the operational level# .hey provide the frame0ork for doing routine things in a rational and e@peditious fashion so that there is litH duplication of effort 0aste motion and confusion .hey help the process of stream ling and simplifying administrative activity# In the 0ords of -eorge R# I .erry H+ $rocedure is a series of related tasks that make up the chronological se/uence and the esta&lished 0ay of performing the 0ork to &e accomplished#D for e@ample# the procedure of scientific selection of employees may have the I follo0ing steps: AiB $reliminary intervie0 Ai'B +pplication &lank AiiiB Reference check AivB Employment tests AvB ?inal intervie0 AviB SupervisorHs approval I AviiB Medical checkup AviiiB +ppointment and Ai@B Induction or (rientation I'+ortan"$ an 0$n$&#t): $rocedures help to standardize and streamline the day-to-day activity in organisations# 7hether for procuring funds for manpo0er recruitment for receiving and inspecting materials and stores for sanctioning e@penditures or for granting leave certain standard operating procedures are laid do0n as a &asis for the operators to kno0 ho0 to process the matter in a systematic manner 0ithout leaving loose ends in Lthe &est interest of + the organisation as reflected from the managementHs approval of the procedures# + procedure has the follo0ing ad vantages : AiB It ensures uniformity of actionG AiiB It# Decreases the need for further decision making laying do0n a standard path to follo0 AiiiB it increase co-ordination among the personnel in the organisation and its departments : and AivB It provides a good standard for the manager to apprise his employees# $rocedures serve as tools E2D managerial direction co-ordination and control of specific activities 0ithin the organisation# Managers formulate procedures for o&servance &y people in 0ork situations so that HManagement &y SystemH takes holdG 0ell-laid do0n procedures tend to &ecome 0orking ha&its of people to the e@tent that they structure smoothen and simplify the patterns of their 0ork performance +ny intentional deviation from 0ell-esta&lished procedures 0ithout ade/uate reason is &ound to &e fro0ned Dupon &y those 0ho have laid them andJor 0ho are affected &y them# Pol#"#$) an Pro"$ !r$) #)t#n%!#),$ # AiB $rocedures are guides to action 0hile policies are guides to decision-making AiiB $olicies are determined &y top management in general after considering a 0ide range of important varia&lesG procedures are formulated at relatively lo0er managerial levels# AiiiB In the ends means chain policies occupy a higher position than proceduresG in fact the latter Me derived from the formerG policies form the &asis for determination of procedures AivB $olicies form part of the organisatioi2s strategic postures in com&ination 0ith o&'ectives and long range plans to enhance the capa&ility of the organisation to cope 0ith comple@ e@ternal environment# $rocedures are more tactical they are operational devices for the efficient guidance of routine or is steady stateH organisational activity# .heir scope is limited# AvB $olicies are relatively fle@i&le and they allo0 managers a measure of discretion and latitude in deciding upon relevant issues# $rocedures are more deterministic and are meant to &e o&served as faithfully as possi&le AviB $olicies serve as &ridges &et0een organisational purpose and predominance 0hile procedures serve as &ridges &et0een activities and outcomes# AviiB + policy-centred thinking on the part of managers is considered a healthy sign and is encouraged in organisations &ut in the case of procedures a single minded focus all them is regarded as inimical to organisational goals# S$tt#n% a Pro"$ !r$# .he follo0ing points should &e kept in vie0 0hile setting a procedure: A2B .he &asic principles of procedures is that they should &e kept to the minimum possi&le# AiiB $rocedures should &e &ased on ade/uate facts of the particular situation not guesses or 0ishes AiiiB $rocedures to &e effective must &e recognized as a system of interrelated activities in a net0ork# AivB 7hile designing a procedure proper &alance should &e kept &et0een sta&ility and fle@i&ility AvB $rocedures should &e revie0ed at intervals and necessary changes should &e made as per research and development programmes# 2. Rules and Methods are standing $lans in a formal organisation in association 0ith policies and procedures# .he are meant for repeated reference ready guidance and strict f 3. Rules ho0ever a rule mayor may not &e a part of a procedure# ?or e@ample HSmoking is prohi&itedH is unrelated to any procedure &ut if some&ody violate it he may &e penalized according to a certain set of procedures# Rule does not prescri&e a time se/uence for an action 0hereas procedure does so# # M$an#n% o& M$t,o . + MethodH is a prescri&ed process in 0hich a particular operation of a task is to &e performed# It specifies the Hone &est 0ayH of performing each step in a task# It defines the technology of individual operations in a 0ork situation# +s compared to procedure# HMethodH descri&es ho0 one particular step of a procedure is to L&e performed# Method involved only on department and one person 0hile a procedure may involve many departments and many persons in an organisation# + method is meant to &e a complete guidance to individuals in their performance of tasks# .he most important advantage of .aylorHs scientific management movement 0as the determination of standardized simplified and efficient methods of performing physical task &y operatives# In the modem E M M A(rganisation and MethodsB area of activity much attention is devoted to develop and refine methods of carrying out clerical administrative and managerial tasks# In modern computer systems also standard methods are generated to instruct the computer 0hat operations it has to perform in processing data# Methods and Rules Distinguished# It is clear from the a&ove discussion that there are important differences &et0een methods and rules# .he main points of #&&$r$n"$ may &e outlined as &elo0: A2B Methods are meant for efficient and %onsistent performance of tasksG they link inputs and outputs in operational situations# Rules on the other hand are in the nature of cautions ta&oos and norms# .hey state in c2r-clr terms 0hat must and must not &e done# .hey have very little to do 0ith efficiency of

#34

performance# A3B Standardization of methods also calls for standardization of the related 0orking conditions 0ithin 0hich tasks are performedG other0ise o&servance and application of methods &ecome difficult on the part of individuals# In case of rules# no such standardization of conditions is needed# A6B Much research and analysis goes into formulation of methods# It is not a simple or routine task# 1ut rules are formulated &y management on the &asis of its common -sense applica&le legal re/uirement and 'udgment and the light of personal values and corporate o&'ectives# A:B# In general violation of or deviation from methods though rare &y individual employees does not attract penalty 0hereas the violation or &ypassing of rules is vie0ed seriously &y management and some penalty is attached to such lapses# A;B Rules are often regarded as official formal authoritative and &ureaucratic# .hey are also associated 0ith control order coercion and conformism# Methods are generally free from such associations# .hey are more vie0ed as scientific o&'ective rational logical mean:: of ensuring standardization simplification and systematization or 0ork# Rules are enforced &y management 0hereas there is little appearance or enforcement in case of methods# A<B Methods relate to physical and other tasks and define the 0ay ho0 they# to &e performed# Rules relate to individuals and groups and define the 0ay# ho0 they have to &ehave in particular situations# ;. Strat$%#$) *iterally speaking the term StrategyH stands for the 0ar-art of the militaryH general compelling the enemy to fight as per our chosen terms and conditions# + strategy is a special kind of plan formulated in order to meet the challenge of the policies of the competitors# In another 0ay Edmund $# *earned has definedLL HstrategyH as Dthe pattern of o&'ectives purposes or goals and ma'or policies and plans for achieving these goals stated in such a 0ay as to define 0hat &usiness the company is in or is to &e and the kind of company it is or is to &e#D 4oontz and EH Donnell have called the former as H%ompetitive StrategyH and the latter# as H-rand StrategyH# .he purpose of grand strategy is to determine and communicate through a system of ma'or o&'ectives and policies the pro&a&le shape 0hich the organization is likely to take in future# David 2# %leland andL 7illiam R# 4ing in their popular 0ork H+ System +pproachH have &eautifully pointed out that DStrategy is the comple@ plans for &ringing the organisation from a given postZ to a desired position in a further period of time#D .he principal purpose of H%ompetitive StrategyH is to encounter the forces of competitors so that competition is faced &oldly and scientifically# 4eeping this i purpose in vie0 !aynes and Massier have defined strategy as Dthe planning for predicta&le contingencies a&out 0hich fragmentary information is availa&le# +ccording to %# .# !ard0ick and 1#?# *anduyt D.he 0ord strategy is used to signify the general concept and salient aspect of gamesmanship as an administrative course designed to &ring success#D Strategy may also &e designed &y the general forces operating in an industry and the economy# ?or e@ample if the management anticipates an economic recession it may decide upon a strategy of reduced stocks fe0er staff reduced e@penses etc# +ccording to force haimann DStrategy is an interpretative policy# It is a policy that has &een terminated &y the top management for the purpose of interpreting and shaping the meaning of either policies# C,ara"t$r#)t#") o& Strat$%y. .he follo0ing characteristics emerge from the a&ove definitions of >Strategy: A2B It IS the right com&ination of different factors# A3B It relates the &usiness organisation to its environment# A6B It is an 2Nction to meet a particular challenge to solve particular pro&lems or to a desired o&'ective# A:B Strategy may need contradictory action# ?or e@ample today a manager may adopt a particular course of action &ut tomorro0 he may revise the same due to changes in situations# A;B Strategy is for0ard looking# A<B it is a means to an end and not an end in itself# A9B It is a means of coping I 0ith or managing the events and changes in the e@ternal environment# ANB It is formulated at the top management level# AOB It is generally long-range in nature &ut short range moves are also In It# A2EB It IS and fle@i&le and dynamic# A22B It involves assumption of certain calculated risks# A23B It is action - oriented and more specific than o&'ective# A26B It is generally meant to cope 0ith aH competitive setting in 0hich the &ehaviour of competitors and other I adversaries of the enterprise affects its o0n functioning and performance# Strat$%y an Pol#"y D#)t#n%!#),$ . $olicy is a guide to the thinking and action of those 0ho make decisions 0hile Strategy relates to the direction in 0hich human and physical resources are to &e used in order to ma@imise the change of achieving a selected mission in the face of competition and other hurdles# Secondly policy is a contingent decision 0hereas strategy is a rule for making decision# .hirdly the implementation of policy can &e delegated do0n0ard in the organisation 0hereas the strategy cannot since it re/uires a last-minute e@ecutive decision# Strat$%y For'!lat#on# + perfect strategy can &e &uilt only on perfect kno0ledge of the plans of others in the industry .his may &e done &y the management putting itself in the position of a rival and then trying to estimate their plans# .here are three phases in strategy formation viz# Determination of o&'ectives AH3B +scertaining the specific areas of strengths and 0eaknesses ill the total environment and A6B $reparing the +ction $lan to achieve the o&'ectives in the light of environmental forces# .he follo0ing factors 0ill determine the right strategic decisions AiB It must &e appropriate in the light of availa&le resourcesG AiiB It

#35

must &e 0orka&leG AiiiB It must involve accepta&leH risksG AivB .he timing of the action plan must &e appropriateG AvB .he action plan must &e 2:-8ased on relia&le anticipations of AviB future trends and conditionsG AviB .here should &e a perfect co-ordination &et0een and the o&'ectives and strategiesG and AviiB Strategy must fulfil ethical and social responsi&ilities# A++ro+r#at$n$)) o& a b!)#n$)) )trat$%y an #t) $*al!at#on. Since a &usiness strategy is a pragmatic plan of action to achieve desired goals there isH an ever- present need to measure its appropriateness# Seymour .iles offers si@ H criteria for evaluating the appropriateness of a &usiness strategy i I# Int$rnal Con)#)t$n"y# .he strategy of an organisation must &e: consistent 0ith its other strategies and also its goals policies and plans# Serious internal inconsistency in &usiness strategy is &ound to give &irth to pro&lems in r the course of its implementation# 3# Con)#)t$n"y A#t, t,$ $n*#ron'$nt. .ile strategy must &e consistent 0ith the e@ternal environment# It has &oth static and dynamic aspects# In a static# sense it implies 'udging the strategy 0ith its suita&ility to the e@istingH environment# in a dynamic sense it implies 'udging the efficacy of strategy 0ith the changing environment# .he strategy selected should enhance the confidence and capa&ility of the enterprise to manage and adapt 0ith or gain command overD the environmental forces# 6# A++ro+r#at#on #n t,$ l#%,t o& a*a#labl$ r$)o!r"$). Strategy needs a realistic assessment of the resources of the enterprise-men money and materials- &oth e@isting resources as also the resources the enterprise can#D command# .he resources of an enterprise also include the skills of management and other manpo0er command over sources of scarce ra0 materials productionH:S facilities technology marketing capa&ilities and image and so on# It is# advisa&le that the individual enterprise formulates its strategy 0ithin the imitations imposed &y its resources# .he o&'ective is to ensure that the enterpriseHs resources are not over stretched or over-strained on the one hand and# to utilise the e@istingJcommenda&le resources in the &est possi&le manner on the other :# A""$+tabl$ $%r$$ o& r#)/. +ny ma'or strategy carries 0ith it certain elements of risk and# uncertainty &ecause it covers a relatively longer future horizon and &ecause It seeks to cope 7ith a comple@ environment# .he amount of risk inherent in a strategy should &e 0ithin the &eara&le capa&ility of the enterprise# Resources should not &e committed irrevoca&ly nor should they &e concentrated on a single or narro0 range of ventures# +lso there should &e much &et0een risk and returns financial and other0ise# ;# A++ro+r#at$ t#'$ ,or#-on. .ime is the essence of any strategy# + good strategy not only pro vides 0hat o&'ectives 0ould &e achieved it also indicates 0hen those o&'ectives 0ould &e achieved in selecting an appropriate time horizon the organisation must pay careful attention to the goals &eing pursued# +n optimal time span cannot &e mathematically determined it is a matter of environmental conditions the o&'ectives to &e sought and the 'udgment of management# <# 7or/ab#l#ty. *ast &ut not the least the strategy must have enough degree of 0orka&ility# It must &e feasi&le and should produce the desired results 0ithin the constraints and parameters kno0n to management# It must &e realistic and relatively simple and intelligi&le at the level of interpretation fuH2d implementation# ADVANTAGES OF STANDING PLANS AiB .he advantages of standing plans may &riefly &e summarized aHB &elo0: Managerial effort and time can &e minimized# AiiB It facilitates the delegation of authority# AiiiB Effective control can &e enforced# AivB Standard operating procedures and methods evolve considera&le use of the Hone &est 0ayH under scientific management# AvB It helps in co-ordinating the different activities of an organisation# AviB Standing plans ena&le the performance of 0ork &y persons 0ith less e@perience and a&ility# AviiB It is easy to train people under recognized policies and procedures# 8o& rotation is also feasi&le# .he only disadvantage is that the managerHs discretion is reduced# It is apparent from the follo0ing diagram#

SINGLE ( USE PLANS Single-use plans are devised to meet the demands of a particular situation and are not meant to serve as standing guides to thinking and action# .hese include the follo0ing# M$an#n%: + H$rogrammeH may &e defined as single-use comprehensive plan designed to implement the policies and accomplish the o&'ectives# It gives a Hstep &y- step approach to guide the action necessary to reach a pre-determined goal# It is really a com&ination of policies procedures rules &udgets task

#36

assignments etc# for the specific purpose of carrying out a particular course of action# It is designated as Hsingle-use planH &ecause a programme cannot &e used in the same form again once its o&'ective is achieved# .he e@pansion programme of a cotton mill is a case in point# + programme may &e a ma'or or a minor one along-term medium-term or a short- term one# -enerally a programme is supported &y the re/uired capital and operating &udgets# E))$nt#al &$at!r$) o& a +ro%ra''$# A2B It is a single-use &ut comprehensive plan# A3B It lays do0n the principal steps for accomplishing a mission# A6B It gives aL step-&y-step approach to guide the action plan# A:B It is guided &y the o&'ectives and strategies and covers many other types of plans# A;B It is a time-ta&le of the future action# A<B It ensures smooth efficient and integrated functioning of an organisation# A9B $rogrammes involve an integrated and coordinated planning approach# 0a)#" )t$+) #n +ro%ra''#n% AiB .he various activities needed to achieve the o&'ective are first to &e divided into clear-cut steps# AiiB .he steps are then to &e arranged in a proper se/uence# AiiiB .hen the programme teart2 should ire decided i#e# 0ho 0ill do 0hat 0here 0hen and ho0T AivB Determine the various resources re/uired for each step# AvB .he time re/uired for each step should also &e ascertained# AviB +ssign definite dates for each part of a programme# AviiB (verall or-Master Schedule for the $rogramme should also &e prepared 2. Pro4$"t) M$an#n%. + single step in a programme is kno0n as a H$ro'ectH# + pro'ectH is a single-use plan 0hich is part of a general programme# It may &e defined as any scheme or a part of a scheme for investing resources 0hich can &e analyzed and evaluated as an independent unit# It is actually a proposal of investment 0hich can &e separately appraised through cost-&enefit analysis# E))$nt#al &$at!r$)H# AiB It is a non-recurring plan# AiiB .he activity is defina&le in terms of specific o&'ective# AiiiB It involves time-&ound activities# AivB $ro'ect approach is needed 0hen AaB the 0ork to &e done is special re/uiring e@pertise from different departmentsG A&B the 0ork is very comple@G AcB high cost is involvedG AdB errors and omissions are to &e minimisedG and AeB Hone-shotH and time-&ound activities are needed# It is a one-time crash programme# + pro'ect has a distinct mission and a clear termination point +dvantages# 7hen the Drogranm2e is set up in pro'ects the task of management &ecomes easier# .here is a precise allocation of duties 0ith a clear sense of responsi&ility and due to easy control the implementation of the plan too &ecomes easier# 8. S",$ !l$) :Scheduling is a process of esta&lishing a time se/uence for the 0ork to &e done# It is an essential part of an action plan# It prescri&es the e@act time 0hen each step 0ould &egin and 0hen it 0ould terminate# 7hen the tasks to &e done and the persons 0ho must do them are ascertained the only important thing attracting the attention of the management is HschedulingH# 9. 0! %$t) M$an#n%. + &udget is a single-use plan e@pressed in /uantitative terms# It is al0ays e@pressed in numerical terms G hence it is so kno0n as 0hat 0e call HNumerised $lanH# +ccording to 4oontz and (HDonnell D+ &udget as a plan is a statement of e@pected results e@pressed in numerical terms#D 1udgets may &e prepared in terms of time money materials or other units re/uired to perform 0ork and accomplish specified results# Since most values are ultimately converti&le to monetary units money &udgets are commonly used# .heL preparation of &udget is planning It calls for the compilation of all relevant factsL and figures like any other plan# E))$nt#al &$at!r$) o& a 0! %$t A2B 1udget plays a dual roleG it is aL planning instrument on the one hand and a control device on the other 1udgeting actually provides a means for controlling operations# A3B "sually there is a separate &udget for each unit and a master &udget for the entireD organisation# A6B "sually &udgets are prepared for the financial year &ut there may &e monthly or /uarterly &udgets also# A:B 1udgets can set standards of performance so very necessary for the control process# .he &udgets may &e prepared for various groups of activities E@amples of certain important &udgets are: AiB Materials &udget AiiB $roduction &udgets AiiiB $ersonal &udget AivB Sales &udget AvB %ash flo0 &udget and AvB $rofit &udget# 1udgets are most 0idely used instruments for planning and control# +s a H type of plan &udget has the advantage that the departmental and organisational goals are e@pressed in e@act numerical terms# .his makes the co-ordination or H departmental plans easier# :. Stan ar ) -enerally speaking all plans are considered as standards# from a specific point of vie0 a HStandardH is a norm or criteria against 0hich performance is compared and evaluated# In short a HStandardH is a guide for performance evaluation# + company may set up a variety of standards e@pressing the anticipated results of the plans# Pualitative and /uantitative standards are esta&lished in each D area of &usiness e#g# physical standards /uality standards personnel standards performance standards standards of service and conduct H etc# ?inancial ratiosH Asuch as li/uidity ratios current ratio etc#B are very popular in financial management as standards ofH economic performance# FINDS OF ENTERPRISE PLANS +n enterprise may have the follo0ing types of plans:

#37

 0!)#n$)) or D#*#)#onal Plan)# If an enterprise has separate divisions for different products like radios# .elevision sets electric computers and spareH partsG divisional plans can &e prepared for each one of these divisions separately# F!n"t#onal Plan). .hese relate to the various functions of the enterprise# ?or e@ample a marketing plan may &e prepared for the enterprise as a 0hole as also for each of the divisions of the enterprise# G$o%ra+,#" or R$%#onal Plan)# If an organisation has got regional divisions it may have plans for each division or zone# .hey are also 4no0n as territorial plans# Cor+orat$ Plan# It relates to the complete plan for the entire organisation# *ong medium and short-range plans# *ong-range plans e@tend to 2E or 3E years medium-range plans e@tend to ; years and short-range plans generally e@tend to one year # LESSON ( ; PLANNING PROCESS It is very difficult to prescri&e a fi@ed process of planning for the organisations for all types of plans G ho0ever the ma'or steps involved in planning may &e lines of enumerated as &elo0: STEPS IN PLANNING .PROCESS 2#+nalysis of E@ternal Environment 2. +nalysis of Internal Environment 3. Define the Enterprise Mission 4. Determination of (&'ectives 5. ?orecasting $lanning $remises 6. Determining +lternative %ourse of +ction 7. Evaluating +lternative %ourses 8. Selecting the 1est %ourse (R Developing Strategies 9. Esta&lishing the Se/uence of +ctivities 10. ?ormulation of Strategic or *ong-Range $lan 11. ?ormulation of?unctiol2al or .actical $lan 12. ?ormulation of +ction $rogramme# 13. Revie0ing and Re-cycling the $lanning $rocess# St$+ No.1 ANAL1SIS OF EGTERNAL ENVIRONMENT 1efore doing the actual planning the management must carefully analyse the e@ternal environment prevailing in the regionJcountry# .he term He@ternal environmentH covers a 0ide field# Socio-economiccuinLpolitical conditions prevailing in the country can &e included in it e#g# social and economic status of the different classes of the society Asuch as upper class middle class and lo0er classB social aspirations and e@pectations of the people prevailing 0age rate development of science and technology psychology of the customers market conditions nature of competition r trade-cycle political conditions etc# +lthough these factors are uncontrolla&le end unpredicta&le yet the enterprise has to adapt its plans polisies strategies and programmes according to changing trends in the e@ternal environment# It is actually a preceding process of actual planning and therefore it cannot strictly &e called as a part of the planning process# !o0ever a0areness of such factors is very important for su&se/uent planning process# St$+ NO.2 ANAL1SIS OF INTERNAL ENVIRONMENT Searching and o&'ective self-analysis of the resources of the organisation is also an important precondition &efore actual planning# it is technically kno0n as HRe source +uditH# $lans policies strategies &udgets etc# are to &e ad'usted according to the internal resources of the organisation relating to men machines materials kno0- ho0 finance etc# .he follo0ing /uestions may &e asked 0hile analyzing the internal environment: AiB Do 0e have enough resources of men money materials machines managerial man-po0er etc#T AiiB Do 0e have aggressive or defensive competitionT AiiiB Do 0e have upto date plant e/uipment and 0ork environmentT AivBDo 0e have effective system of communicationT AvB Is the employee morale highT AviB Is our profita&ility (# 4ayT AviiB Is our managerial leadership effective and so on# Such an analysis 0ill give an e@act idea a&out the strengths and 0eaknesses of the enterprise# Resource audit is the real starting point of planning# St$+ No. 8. DEFINE T3E ENTERPRISE MISSION +fter analyzing the e@ternal and the internal environment the top management should define the corporate mission# .he statement relating to the >MissionH should descri&e the fundamental reason for the e@istence of an (rganisation# It may cover up ans0ers to the follo0ing &asic /uestions: AiB 7hat is our &usinessT AiiB 7hat 0ill our &usiness &eT AiiiB 7hat should our &usiness &eT AivB 7ho are our customersT 7hat do they &uy and 0hyT AviB 7hat are our social o&ligationsT +nd so Statement of the HmissionH provides the &est climate for successful &usiness planning#

#38

St$+ NO.9 DE.ERMIN+.I(N (? (18E%.IIES .he ne@t step in planning is a statement of the o&'ectives to &e achieved &y enterprise# .he organisational o&'ectives must &e spelled out in key areas a# operations and should &e divided according to various departments and section# .he o&'ectives must &e clearly specified and measura&le as far as possi&le# Every mem&er of the organisation should &e familiar 0ith its o&'ectives indicate 0hat &asically is to &e done 0here the primary emphasis is to &e placed and 0hat is to &e accomplished &y the net0ork of policies procedures rules &udget programmes and strategies St$+ No.: FORECASTING PLANNING PREMISES In preparing plans for the future the management has to make some prediction a&out the future shape of things# +ccording to !enri ?ayol the entireD plan of enterprise is made up of a series of separate plans called H?orecastsH# +lthough management has to prepare forecasts for each of the ma'or areas of its operation there are three forecasts 0hich 0ould &e of fundamental importance to the viz# AiB -eneral &usiness forecasts AiiB Sales forecast AiiiB %apital 7henever the management plans its &usiness operations and its organisational set up for the years ahead it has to take into account the past the present and prevailing socio-economic-cum-political environment# ?orecasting is a systems attempt to pro&e into the future &y inference from kno0n facts relating to the r the present# Intelligent forecasting is essential for varia&le planning premises assumptions# $lanning premises are actually assumptions and predictions a&out future# .hey act as environment of plans in operation and are thus the &asis of planning# D.he management should have no stone unturned in reducing the element of guess0ork in preparing forecasts &y collecting relevant data using the Dscientific techni/ues of analysis and inference# .he process of forecasting generally involves the follo0ing steps AiB Developing the &asis through systematic investigation of the economy products andD industry G AiiB Estimation of future &usiness operations G AiiiB RegulationD of forecasts i#e# comparing the actual operations 0ith the forecasts prepared in order to find out the reasons for any deviations from the forecastsG ivB Revie0 of the forecasting process# S"ra+ No.; DETERMINING ALTERNATIVE COURSE OF ACTION It is a common e@perience of all thinkers that an action can &e performed in several 0ays &ut there is a particular 0ay 0hich is the most suita&le for the organisation# .he management should try to find out these alternatives and drained them Hcarefully in the light of planning premises# St$+ NO.< EVALUATING ALTERNATIVE COURSES !avingH sought out alternative courses and e@amined their strong and 0eakL points the ne@t step is to evaluate them &y 0eighing the various factors in the light of planning premises and goals# + num&er of methods in (perations Research have &een developed to evaluate the various alternatives# # St$+ N?.= ELECTING T3E 0EST COURSE OR DEVELOPING STRATEGIES .he ne@t stepL-selecting the course of action-is the point at 0hich the plan is adopted# It is the real point of decision-making# +fter evaluating the various alternatives the &est and the fittest alternative is selected# ?inding the &est 0ay to go there 0here 0e 0ant to &e is called HStrategy Deve2opment sometimes the evaluation discloses that more than one alternative is e/ually good# In such a case the manager should select several rather than one and com&ine them in action# Strategy determination adopts the rational decision making process AiB +lternative opportunities to achieve the o&'ectives are listed AiiB .hese are compared and evaluated on the &asis of marginal analysis andJor on the &asis of cost-&enefit analysisG #AiiiB .op management then picks up t0o# or three strategies in order of priority# .his is ho0 the corporate strategies can &e developed# Step No#O ESTA0LIS3ING T3E SEBUENCE OF ACTIVITIES +fter the &est programmed is decided upon the ne@t task is to 0ork out its derails formulate the steps in full se/uence to &reak it do0n for each section or department for each product and component of product and for each month /uarter 0eek etc# "ltimately the manager 0ill get the final plan action in concrete terms# St$+ No( 1? FORMULATION OF STRATEGIC OR LONG(RANGE PLAN +ccording to Steiner CStrategic planning is the process of determining the fundamental or central concept of the corporation descri&ing the mission for creed ma'or corporate o&'ectives policies and strategies that 0ill govern the ac/uisition use and disposition of resources Ahuman and non-human &othB to achieve the over all corporate o&'ectives and goals# (&'ective includes mission or purposes as 0ell as specific o&'ective and each level of management desired &y an organisation# $olicies are &oard guidelines to

#39

action and strategies are the preferred means to allocate resources to achieve the desired o&'ectives# In strategic or long-range planning 0e cover all important areas of &usiness activities such as profits capital e@penditure for gro0th or diversification organisation structure managerial philosophy pricing leadership in the market finance personnel advertising industrial relations kno0 ho0 capa&ilities product planning and development research and development management development social responsi&ilities and similar other topics# St$+ No. 11 FORMULATION OF FUNCTIONAL OR TACTICAL PLAN .actical plans relate to each area of operations e#g# purchase production finance personnel marketing research and development etc# .hese departments 0ill formulate their goals in conformity 0ith the ma'or corporate o&'ectives# St$+ No. 12 FORMULATION OF ACTION PROGRAMMES .here are three important constituents of an action plan: A2B the time-limit of performance AiiB the allocation of tasks to individual employees and AiiiB the time ta&le or schedule of 0ork so that the functional o&'ectives are achieved 0ithin the pre-determined period# St$+ No ( 18 REVIE7ING AND REC1CLING T3E PLANNING PROCESS H$lanningH ADeciding 0hat to doB H+ction HADoing itB and H%ontrol the actual 0ith the plannedB are closely related managerial functions# .hese phases of the management process cannot &e completely separated in practice# .he systems approach emphasizes that through control mechanism these phases should &e properly intergraded# .hrough feed&ack mechanism an attempt is made to secure that 0hich 0as originally planned# .o do this 0e have to compare the actual performance 0ith the perfom2ance predicted from the plan and then 0e have to take necessary corrective actions to ensure that actual performance as per planned goals#

G$or%$ R. T$rry ,a)

#)"!))$

t,$ &olloA#n% $#%,t 'a4or )t$+) #n +lann#n%:

%larify the pro&lem# +ccording to .erry the follo0ing /uestions 0ill help in this step: AiB 7hat is the real aim or purpose of the plan to &e formulatedT AiiB Does this aim or purpose re/uire a &rand ne0 plan or 0ill a modified e@istent plan sufficeT AiiiB 7hat 0ill the accomplishment of this aim mean to the enterpriseT AivB Is the contemplated aim in conflict 0ith any e@istent goals of the enterprise so that ad'ustments or eliminations of any present plans 0ill &e in orderT 3# (&tain complete information a&out the activities involved# .o assist in this step the follo0ing /uestions may &e asked: AiB !ave all pertinent data &een collectedT AiiB +re the data sufficiently &road to cover all activities 0hich may &e affectedT AiiiB !ave any possi&le sources of data &een overlookedT AivB !ave operating personnel &een solicited for suggestionsT 6# +nalyse and classify the information# +s a guide ill this step A2B# apparent relationships among data real and confirmed &y key operating personnelT AiiB !as information &een ta&ulated or charted to facilitate analysis AiiiB +re all usa&le data &eing includedT AivB 7ith further study can any step i the present flo0 0ork pro&a&ly &e eliminatedT :# Esta&lish planning premises# !elpful in this step are the follo0ing /uestions AiB 7hat important assumptions regarding the future are &eing made in her order to evolve the plan: AiiB +re the premises inclusive and do they cover a important contingenciesT AiiiB !as all reasona&ly availa&le infom2ation concerning the planning premises &een o&tained and evaluatedT AivB 7hat premises must &e carefully 0atched ill order to detect changes 0hich &ring a&out a serious effect upon any plan &ased upon these premisesT

#40

;# Determine alternate plans# !ere the follo0ing /uestions may &e considered AiB +re these possi&le plans ill keeping 0ith top-management mem&ersH &asis o&'ectives and methods of operationT AiiB 7ill mechanization e@pedite the 0orkS AiiiB ?or each plan ho0 much ad'ustment 0ill &e needed in the event it ii adoptedT AivB +re cost speed and /uality re/uirements satisfiedT <# %hoose proposed plan# +t this stage considerations contri&uting to the propel solution include: AiB Is the proposed plan simple or comple@T AiiB 7ill it &e readily accepted &y the operating personnelT AiiiB Does it process fle@i&ility to ad'ust to varying conditionsT AivB 7hat ne0 e/uipment space personnel training and supervising 0ill &e neededT 9# +rrange detailed se/uence and timing of proposed plan# .he translation of the plan and its relation to all activities affected &y it are no0 0orked out# !ere these /uestions might &e asked : AiB !as a carefully 0orked out time schedule &een esta&lishedT AiiB +re detailed instructions 0ritten to cover the planT AiiiB +re all persons concerned ade/uately informed of the plan and given the ma'or reasons for itT AivB +re the re/uired paper forms and supplies availa&leT N# $rovide progress checkup to proposed plan# ?or this step ask: A2B +re record and reports included to keep operating personnel hands advised of progressT AiiB 7ill sufficient data over a reasona&le period lie collected to measure the resultsT AiiiB In 0hat range or 0ithin 0hat limits 0ill results &e considered satisfactoryT AivB7hat remedial action is proposed if results indicate 0eaknessesT EFFECTIVE COMMUNICATION OF PLANS It is essential that the plans are properly and effectively communicated to all the managers concerned# .his of course is not necessary if they have participated planning# 1ut 0herever such participation in planning is not possi&le it is the duty of top management to have the plans properly communicated to all the manager# +n uniformed manager is an ineffective manager# .he &etter informed a manager is a to the plans the &etter 0ill he &e askG to do his 'o& and the more he 0ill contri&ute to the o&'ectives of the enterprise# ESTA0LIS3ING A CLIMATE FOR PLANNING .he follo0ing points should &e &orne in mind for esta&lishing a proper climate for planning I# $lanning should not &e left to chance# Every senior manager should remove the o&stacles to planning and try to esta&lish a climate in 0hich his su&ordinates may plan# 3# $lanning must start at the top# 6# $lanning must &e organized# + good organisation structure through appropriate grouping of activities and clear delegation of authority esta&lishes Vm environment for planned performance# + *ong-range planning must &e integrated 0ith short range# ;# 7elcome the changes: It must &e an o&'ective of the manager to &uild in his organisation an a0areness of change and an a&ility to forecast it and also construct an attitude of 0elcoming change# EGECUTION OF PLANS .he &asic step involved in the e@ecution of plans may &e summarized as &elo0: I. Divide the total operations necessary to achieve the o&'ective into parts: the kind of 0ork the /uality should the /uantity should also &e indicated# 2. Note the necessary and the relationship &et0een each of these parts# 3. Decide 0ho is to &e responsi&le for doing each part# 4. Estimate the time re/uired for each part# 5. +ssign definite date 0hen each part is to take place#

#41

LESSON (< DECISION MAFING .he life of a manager is a perpetual choice-making activity# E@ecutive all levels 0ork on decisions constantly# !undreds of decisions are consciously unconsciously made in a company every day# D7hatever a manager does D 7I $eter ?# Drucker Dhe does through making decisions#D .he &usiness e@ecutive o&served 8ohn McDonald Dis &y profession a decision-maker# "ncertainty is opponent overcoming it is his mission# 7hether the outcome is a conse/uence of luck or of 0isdom the moment of decision is 0ithout dou&t the most creat event in the life of the e@ecutive Decision-thanking permeates all management activitiesG hence it is sometimes descri&ed as HS.he total task of ManagerH H.he !eart of ManagingH# 73AT IS DECISION(MAFINGH .o come to a decision means to cut off deli&erations and to come to conclusion# Decision-making is a process of selection and the aim Is to select &est alternative# + decision is an act of choice 0herein an e@ecutive forms conclusion a&out 0hat must and must not &e done in a given situationS It is conclusion that the manager has reached as to 0hat he or others should do some later time# It is a solution selected after e@amining several alternative Iarious authors have defined decision-making as follo0s 1. D#E# Mc?arland# D+ decision is an act of choice 0herein e@ecutive forms a conclusion a&out 0hat must &e done In a given situation# a decision represents a course of &ehaviour chosen from a num&er of possi&le alternatives# D 2. -eorge R# .erry# DDecision-making is the selection &ased on some criteria from t0o or more possi&le alternative#D 3. R#S# Davar# DDecision-making m &e defined as the selection &ased on some criteria of one &ehavior alternative from t0o or more possi&le alternatives# .o decide means Hto cut off or in practical content# Hto come to S conclusion#D Decision-making involves t0o or more alternatives &ecause if there is only one alternative there is no decision to &e made# ?re/uently not more than t0o alternatives are present as e@emplified &y the HyesH or HnoH type or the HdoH# or Hnot to doH type of situation# .he follo0ing figure sho0s a situation for 0hich there are five possi&le &ehavior alternatives +2 +3 +6 +: and +; Moving# to the right on the figure of these five alternatives three are availa&le for choice# + for e@ample is outside the sphere of discretion #and hence is eliminated the i decision-maker is una0are of +# .he possi&le outcomes for each availa&le alternative are +B E2 +B (3 and +B: EB %omparing the outcomes of the various availa&le alternatives +B (8 +B ( 3 and +B EB are considered most favora&le and hence +B is the decision follo0ed# .he decision is &ased on the criterion or &asis &elieved important in the particular situation#

C,ara"t$r#)t#") o& a D$"#)#on .he definition of decision involves follo0ing %haracteristics 2 Decision is the choice of the &est course among alternatives# 3 Decision is the end process preceded &y deli&eration and reasoning# 6 Decision-making is a metal process &ecause the final selection is made after thoughtful consideration# : Decision involves rationality &ecause through decisions an endeavor is made to &etter one5s happiness# ; Decision is aimed at achieving the o&'ectives of the organisation# < It also involves the evaluation of the availa&le alternatives &ecause only through critical appraisal one can kno0 the &est alternative# 9 It may also &e negative and may 'ust Se a decision not to decide# N Decision making involves a certain commitment# .his commitment ma &e for short run or long run

#42

depending upon the type of decision# O Decision relates the means to the ends IMPORTANCE OF DECISION(MAFING .he importance of decision making cannot &e over-emphasized +ccording to Melvin .# %opeland D+dministration essentially is a decision making process and authority is responsi&ility for making decisions and for ascertaining that the decisions made are carried out# In &usiness 0hether the enterprise &e large or small changes in condition occur shifts in personnel take place unforeseen contingencies arise# Moreover 'ust to get 0heels started and to keep them turning decisions must &e made#D +t the heart of planning is decision-making-the selection of a suita&le course of action# It is an important function of management# Management 0ithout decisions is like a man 0ithout &ack&one# Nothing can &e performed 0ithout taking decisions# Every aspect o functions such as planning organization motivation and control is determined &y decisions the result of 0hich is the performance in the organization# .he days of Hhit-and-missH methods in management are over and have &een replaced &y ne0 concepts and scientific techni/ues# Decision making is therefore vital to all management activities# It helps set definite o&'ectives prepare plans of action determine organizational structure motivate personnel and introduce innovations# T1PES OF DECISIONS Decisions may &e of different typesG some of the important types of managerial decisions are as &elo0: 1. Pro%ra''$ an Non(+ro%ra''$ D$"#)#on) Simon has classified all decisions into t0o classes: AiB $rogrammed decisions and AiiB Non-programmed decisions# Such classification of decisions is made on the &asis of the use of operations research# 1. $rogrammed decisions are normally of repetitive nature and are taken 0ithin the &road policy structure# +n organisation can develop specific processes for handling these decisions e#g# L standing operating procedures and policies# $rogrammed decisions have short-run impact and are taken &y lo0er level managers such as # granting leave to an employee purchase of materials in normal routine etc# ?or e@ample if there is a ha&itual a&sentee in a&sentee have a set procedure to deal 0ith him and you need not refer the pro&lem to the $ersonnel Manager or to the 1oard of Directors in order to arrive at a solution# If a manager spends applica&le time in dealing 0ith programmed decision he is 0asting time 0hich he could more profita&ly spend in dealing 0ith non-programmed decisions# 2. Non-programmed decisions are of non-repetitive nature# .heir need arises &ecause of some specific circumstances such as opening of a ne0 &ranch introducing a ne0t product in the market etc# .hey involve 'udgment intuition and creativity# Such decisions are taken &y top management# ?or e@ample if a large num&er of employees suddenly started a&senting themselves 0ithout information it 0ould constitute a pro&lem involving the non-programmed decision# No routine decision can &e taken in such a case merely &y issuing a charge-sheet to all the 0orkers and taking disciplinary action against each one of them# .he management should thoroughly pro&e into the causes and conse/uences of such a pr&lem# 2. Ma4or an M#nor D$"#)#on) Decisions may &e classified as Ma'or and Minor# ?or e@ample if it relates to the purchase of a &ig machine 0orth say a lakh of rupees it is a ma'or decision# (n the other hand purchase of fountain pen ink orL a fe0 reams of paper are minor matters and may &e decided &y the (ffice Superintendent# 8. Ro!t#n$ an Strat$%#" D$"#)#on)I Routine decisions are also kno0n as tactical decisions# .hey are taken in the conte@t of day-to-day operations of the organisation# .hey are not very important# Mostly they are of repetitive nature and do not re/uire much analysis and evaluation and can &e made /uickly# +uthority for taking such decisions is generally delegated to middle and first-line managers# .hey #do not involve any high risk or uncertainty# ?or instance sending sample of a product to the -overnment investigation centre is a routine decision# Strategic or 1asic decisions relate to policy matters and usually involve large investments or e@penditure of funds# .hese decisions are mostly non repetitive in nature# .hese decisions are taken &y higher level of management after careful analysis and evaluation of various alternatives# + slight mistake in these decisions is &ound to in'ure the entire organisation# E@amples of strategic decisions are: ma'or capital e@penditure decisions all decisions affecting organisation productivity pricing location and size of the &usiness change in product line etc# 9. Pol#"y an O+$rat#*$ $"#)#on) $olicy decisions are taken &y top management and they mostly relate to &asic policies# Such decisions are very important and they have a long-term impact# 1igH concerns generally pu&lish their policy decisions in the form of a H$olicy ManualH 0hich &ecomes the &asis for other operative decisions# (perative decisions relate to the day-to-day operations of the enterprise# .hey are generally taken &y middle and lo0er level management 0ho are more closely related 0ith the supervision of actual operations# 7hether to give profit &onus to employeesL or not is a matter of policy to &e decided &y top managementG &ut calculating the &onus in respect of each employee is an operating decision 0hich can &e taken at a much lover level#

#43

:. Or%an#)at#onal an

P$r)onal

$"#)#on).

.he e@ecutive makes organisational decisions 0hen he acts formally as a company officer# Such decisions reflect the &asic policy of the company# .hey can &e delegated to others# $ersonal decisions relate to the e@ecutive as an individual and not as mem&er of an organisation# Such decisions cannot &e delegated# ;. In #*# !al an Gro!+ $"#)#on) +s is apparent individual decisions are taken &y a single individual in the conte@t of routine or programmed decisions 0here the analysis of varia&les is simple arid for 0hich &road policies already provided# -roup decisions are taken &y group or a standing committee constituted for this specific purpose# Such decisions are very important for the organisation &ecause the involve the participation of a large num&er of persons# <. Lon%(t$r'D D$+art'$ntal an Non($"ono'#" $"#)#on)

Decisions may also &e classified as long-term departmental and non economic# In the case of longterm decisions the period covered is long and the risk involved is more# Departmental decisions are taken &y the departmental heads and relate to the department only# Decisions relating to non-economic factors Asuch as technical values moral &ehavior etc#B may &e termed as noneconomic decisions# 7hile taking decisions on these factors care should &e Htaken to see that 'ustice is done to all and as a result of this decision no ne0 pro&lem is created for the organization# T3EORIES OF DECISION(MAFING .hree ma'or theories of decision-making are A2B .he Intuition or the .raditional .heory AiiB .he H%lassical .heory and AiiiB .he +dministrative Man or the &ehavioral .heory# More-often-than-not decisions are taken &y intuition i#e# 0ithout really Hconsidering carefully all the alternatives# +ctually many of the decisions taken & most of us are on HintuitionH or hunch in other 0ords a person 'ust decides upon course of action &ecause he feels that the particular course is the &est one# .his traditional or the Intuition .heory# Scientifically speaking this kind of feeling has no rationale &ehind it nor can any&ody e@plain 0hy he is feeling that 0ay# .he person 0hoH makes decision on the &asis of intuition or feeling represents one e@treme form of decision-making process# (n the other e@treme is the totally rational man 0ho takes all his decisions after a careful pro&ing into all the alternatives# .he %lassical .heory implies that decisions are made rationally and are goal-directed# It is essentially a theory of decision-making under conditions of certainty# .his theory is su&'ect to the follo0ing criticism AIB It is a normative rather than a descriptive theory A3B It is &ased on the assumptions of a rationaleconomic man A6-B It is &ased on conditions of certainty 0hich is a rare phenomenon# A:B It implies that managerial goals are sta&le &ut in actual practice theory are su&'ect to revision due to environmental changes# A;B (rganisations have plural goals and these goals are often conflicting 0ith one another# +ccording to the +dministrative Man or 1ehavioral theory decisions are made on the &asis of a limited appro@imate model of the real situation# !er&ert +# Simon designates it as the H$rinciple of 1ounded Rationality +ccording to Simon a person makes decisions not only on an a&solutely logical analysis of facts &ut also on his intuition ha&it 0ay of thinking and value system# + decision involves &oth /uestions of fact and of valueG /uestions or fact relate to H0hat isH and /uestions value relate to H0hat ought to &eH# In short usually a person takes decision &ased on this thinking of H0hat out to &eH# It is &ecause AiB .he man does not have full kno0ledge of alternatives nor does he have full kno0ledge of the conse/uences of each alternative# AiiB .he future uncertain and one has to necessarily imagine it# In doing so he is mostly affected# &y his value system i#e# ho0 he looks at things# AiiiB + decision-maker 'ust takes up a course of action 0hich satisfies and meets his re/uirements# RATIONAL TEC3NIBUE OF DECISION(MAFING In making a decision the manager should o&serve certain steps and follo0 them in the proper se/uence# .he decision-making process can &e divided in to the follo0ing important stages 1. D#a%no)#n% t,$ +robl$' or $&#n#n% #t Sound diagnosis is the crucial first phase of decision-making# + manager should proceed 'ust like a doctor 0ho first takes into account all the symptoms &efore prescri&ing the medicine# It is not an easy task# +s $eter Drucker points out the &ooks and articles on leadership are full of advice on ho0 to make far forceful and useful decisions &ut there is no more foolish and n more time 0asting advice than to decide /uickly 0hat a pro&lem really is# Defining the pro&lem in most instances is a time-consuming task &ut it is time 0ell spent# I defining the pro&lem the manager should find the critical or strategic factor or factors and he 0ould &e 0ise to restrict himself to these# +s %hester 8# 1arnardH has pointed out the theory of the strategic factor is necessary to an appreciation of the process of decision-makingG .here are three &asic elements of sound diagnosis AiB Identify the gap &et0een the results desired and the e@isting or predicted state of affairs AiiB ?ind out the direct root cause of the gap &et0een the actual situation and the desired situationG and AiiiB +nalyse

#44

the over-all situation and see 0hether it places any limits 0ithin 0hich a satisfactory solution may &e found out# 2. S$"!r$ an analy-$ +$rt#n$nt &a"t) +fter defining the pro&lem the manager can then set a&out to analyze it# .he first step in analysis of the pro&lem is to assem&le the facts# .here are three important principles of analysis and classification AiB the futurity of the decision Ai#e# to 0hat length of the time does the decision commit the &usiness to a course of actionBG AiiB the impact of the decision on other areas and functionsG AiiiB the /ualitative considerations 0hich come into the picture# .he purpose of classification is to ensure that the decision made takes a comprehensive vie0 of the &usiness as a 0hole rather than the immediate or the local pro&lem# 8. D$*$lo+ alt$rnat#*$ )ol!t#on) or "o!r)$) o& a"t#on .he ne@t step for the manager after having defined and analyzed the pro&lem is to develop alternative solutions# .he purpose of finding alternative solutions is to make the &est decision after a careful consideration of the most desira&le courses of action in the circumstances of the case# +ccording to $eter ?# Drucker D(f course searching for and considering alternatives does not provide a man 0ith an imagination he lackHB# 1ut most of us have infinitely more imagination than 0e ever use# + &lind man to &e sure cannot learn to see# 1ut it is amazing ho0 much a #person 0ith normal eyesight does not see and ho0 much he can perceive through systematic training of the vision# Similarly the mindHs vision can &e trained disciplined and developed# +nd the method for this is the systematic development of the alternative solutions to a pro&lem#D T,$ Cr$at#*$ Pro"$))# .he more a person can think of the alternative solutions the &etter is the chance of choosing the &est solution after 0eighing the pros and cons of each alternative# .he capacity to think in a creative manner is a great asset to decision-maker# .he organisation should try to stimulate an atmosphere of creativity# .he follo0ing guidelines provided &y ?rederic D# Randall may &e of some use to the decision-maker 1. %reative thinking demands a genuinely free e@change or infoll20tion among men at different levels of authority# ?ormal communication programmes are not enough# 2. .he HcrashH or emergency approach discourages creativity and should not &e applied any more than necessary to pro&lems in need of solution especially those of a vital and long-run effect# 3. In planning and control the conditions that stimulate imagination should &e taken into account# 4. + groupHs understanding a&out the conse/uences of failure is an e@ceedingly po0erful force in determining creative potential# 5. %onditioned thinking such as may stem from a strict policy of promotion from 0ithin &locks the creative process unless management takes counter measures# .here are five principal stages of the creative processG 1. Sat!rat#on# It means that familiarizing one self thoroughly 0ith a pro&lem together 0ith its conte@t is an important process of creativityG unless Pile thoroughly ac/uaints himself 0ith the pro&lem and its setting no creative result is likely to emerge# 2. D$l#b$rat#on# Second# a perfect kno0ledge a&out the pro&lem and assem&ling of the relevant data is an essential clement of creativity# 3. In"!bat#on# .his term refers to the su&-conscious activity 0hich precedes hitting up a fresh and proper solution# It is a simple psychological phenomenon that a creative mind spends a great deal of time in &ecoming familiar 0ith the pro&lem in gathering the relevant data and in co-relating the various elements and pattern them into possi&le com&inations# .he conscious mind gets tired and frustrated in this e@ercise !ence it is advisa&le that at this stage the conscious n2ind &e s0itched off from the $ro&lem and the su&-conscious mind &e allo0ed to take over# It may &e noted that the conscious mind is the centre of logical thinking and the L :2 su&-conscious mind directs itself to pro&lems 0hich are of interest to the D occlusions mind# 7hen the conscious mind is rela@ed the su&conscious 0orks and often gives &irth to e@cellent ideas# 4. Illumination .his is the stage 0hen an idea actually springs in the mind of the decision maker# More often than-not ideas illuminate 0hile taking a 0alk driving home from 0ork or during some other period of mental rela@ation# ; A""o''o at#on# .his stage consists of modifying the original idea remaining or polishing it and making it practical for use# !o0 to increase creativity in groupsT 7ell the simple ans0er to this /uestion is a opportunities he provided to the mem&ers of the group for some of e@change of ideas# .he schemes of management-gettogether and &rain may help in making a group more creative# 1rain-storming encourages the group mem&ers to give all sorts of Ideas 0ithout &othering 0hether the particular idea is 0orka&le or aot# It has &een e@perienced that an hour or so of &rain-storming produces a large num&er of ideas 0hich could &e scrutinized and com&ined produce a 0orka&le original solution#

#45

9. D$"# $D !+on t,$ 0$)t Sol!t#on or O+t#'!' Co!r)$ o& A"t#on +fter developing the alternatives the manager should test each of them &y imaging that he has already put each into effect# !e should try to foresee the pro&a&le desira&le and under conse/uences of adopting each alternative# It 0ould &e useful to list do0el all the advantages and disadvantages of all possi&le courses of action In clarifying the alterative and in acting the advantages of each alternative dissection &et0een tangi&le factors and intangi&le tractors must &e mane# It is al0ays good to try to measure all the tangi&le advantages and disadvantages in terms of a cannon denominator i#e# money# (nce the merits and demerits of various alternatives have &een listed the ne@t stage 0ould &e to concrete only on differences &ecause then only it 0ould &e possi&le for person to take an immediate decision# :. Con*$rt t,$ D$"#)#on #nto E&&$"t#*$ A"t#on +fter having defined the pro&lem analysed the pro&lem and having developed and evaluated alternative solutions the manager can select from these alternatives the &est possi&le solution# .he kno0ledge gained &y past e@perience is generally a helpful guide in arriving at the final decision# 1ut it must al0ay &e vie0ed 0ith the future in mind and the underlying circumstances of the past and present must &e considered# (nce the final choice is made the ne@t stage is to implement the decision# .his is not a part of choice activity &ut is a post choice activity clustering around implementation of the selected course action# ;. I'+l$'$nt#n% an V$r#&y#n% t,$ D$"#)#on Effectiveness of decision in achieving the desired goals depends on its implementation# 1est decisions are futile if they are not effectively implemented It is 'ust possi&le that a good decision may &e hurt &y poor implementation# Ir# this sense implementation is more important than the actual activity of choosing the alternative# ?urther follo0-up system is essential to modify decisions necessary In management cycle 0e have planning - action = control replanning - action = control .his is an on-going process Such a follo0-up system 0ill ensure the achievement of o&'ectives# It is e@ercised through effective control# S#'on.) A++roa", to D$"#)#on('a/#n% (rdinarily there are three different stages inH the process of decision making 7hat is the pro&lemT 7hat are the alternativesT 7hich alternatives &est T!er&ert Simon has presented them into: AiB Intelligence +ctivity: .his is a &asic or foundation stage during 0hich pro&lems are discovered or diagnosed and o&'ectives are clearly defined# AiiB Decision +ctivity: In this stage specific authority and responsi&ility to pursue the ne0 idea further is entrusted to either particular manager or a team of managers 0ho possess the necessary skill and aptitude in this regard# AiiiB %hoice +ctivity: En this stage the team has to appraise #and evaluate the alternative ideas 0ithin the frame0ork of the decision criteria# It is a common e@perience of all top management people that every ma'or &usiness decision involves several su&-decisions at every stageG several pro&lems crop up during the ma'or decision-making process# %ertain pro&lems load to solutions 0hile others create more pro&lems# H.hus decision-making process is less a neat streamlined and smooth activity and more a comple@ alternative and heuristic venture re/uiring patience perseverance creativity and 'udgmentH ADMINISTRATIVE PRO0LEMS IN DECISION (MAFING SP% in administration for decision-making# In modern industrial (rganisations there are variety of managerial and administrative pro&lems some of 0hich are /uite comple@ and are re/uired to &e tackled properly and 'udiciously if an organization has to thrive efficiently# + good num&er of higher managerial control techni/ues are therefore no0 availa&le to management for smooth and efficient operation of ar2 organization viz# (perations Research Amodern /uantitative approach to pro&lemsBG Management +ccounting including Inter-firm %omparison Ratio +nalysis and 1reakeven +nalysisG %ost +ralysis and %ost %ontrol G Industrial Engineering G Market Research G MS,82agerial Economics 1ehavioral Science to Management pro&lems etc# .o the modern managerial tools and techni/ues statistical methodology and techni/ue ASP%B is a must since it is vital aid to &usiness managers to make systematic analysis and interpretation of data for /uick and effective decisions in different functional areas of m6Ilagement and administration# 7hether SP% is applied in administration or production or in any other technical &ranches of an organization it is an important aid to management for its decision making process for it indicates the facts and figures to management 0hich ena&le it to arrive at some kind of decisions in different pro&lem areas of administration# Moreover

#46

maintenance and presentation of the re/uired information and data in he forms of charts graphs and diagrams help management to a considera&le degree for general information of decision# +lthough there are various NIeas even in the administrative &ranches of an organization on 0hich decisions are re/uired to &e taken &y management here Ire a fe0 administrative areas specifically related to the personnel element 0hich SP% is of immense help in study and analysisL of pro&lems and in H: according relevant data and facts 0ith logical conclusions for management decisions : AaB E@ecutivesH .ime- spent analysisG A&B .raining for improving personnel efficiencyG AcB %ontrol of electrical operationsG AdB %ontrol of employees a&senteeismG AeB %ontrol of overtime 0ork for employeesG and A2B Scientific merit-rating of employees etc# Corr$"tn$)) o& $"#)#on)# %orrectness of decisions is a very important pro&lem of management# ?or arriving at correct decisions the e@ecutive should analyse the situation and must have confidence a&out his capacity to solve the pro&lem# If an analysis or the in formation is correct and systematic the decisions too are &ound to &e accurate# D$"#)#on $n*#ron'$nt. .he effectiveness of a decision very much depends upon the organizational and physical environments# If the general environment is satisfactory there 0ill &e mutual cooperation prongL understanding and it 0ill provide &etter scope of research analysis and thinking# T#'#n% o& $"#)#on). .iming too plays an important role in the decision making# Decisions 0ithout any purpose timing and event are not &usiness decisions# Decisions 0ould &e vain if they are not taken at the right time# E&&$"t#*$ "o''!n#"at#on o& $"#)#on). 1esides timing effective communication of the decisions is also an important administrative pro&lem of management# Decisions taken must &e communicated to those for 0hom they are meant and in the language that might &e understood &y all# .he decisions to &e communicated must &e clear simple logical and free from any am&iguity# Part#"#+at#on #n $"#)#on('a/#n%. .he philosophy &ehind participation in decision-making is that all the mem&ers of an enterprise should &e encouraged take an active part in arriving at definite conclusions# .he e@tent of participation should depend upon the 0illingness of the top e@ecutive More often than not the top e@ecutives feel that decision-making is their monopoly and it is &elo0 their dignity to invite suggestions from the su&ordinates# (rganization in 0hich participation is at a minimum are said to &e H+uthoritarianH in nature 0here there is great participation are called HDemocraticH organisation# In %ase of authoritarian organization direction and control are lodged at the top and decisions are taken &y one or a fe0 at the top level# (n the other hand in the case of democratic organization people at the lo0est rung of the ladder 0ill have a greater say in decision-making# I'+l$'$ntat#on o& $"#)#on). (nce the decision is- finally made it is the primary duty of the manager and his su&ordinates to carry it out 0ith all energy and zeal at their command# In the course of making the decision the manager may have consulted hired specialists or intra-organizational agencies &ut the final decision is his and he has to accept full responsi&ility for the choice# .he higher up the ladder he clim&s the lonelier is he in respect of his decisions# .he kudos may not so readily &e ackno0ledged &ut any set&ack 0ill have accusing fingers pointing at him# !e may lose of his so-called friends for in the 'ungle of management politics the friend is a friend fat acts of favour# !e demands his pound 0hen it comes to the plums# If he does not get it he 0ill conspire and make any unholy alliance 0ith the 0here o&'ect of topping the one 0ith 0hom he has never lost favour# .his often temps every manager ho0soeverG efficient and forthright he may &e into taking decisions H0ith a su&'ective slant and 0ith a vie0 of favoring an individual rather than #&enefiting the enterprise# .he higher lip this happens the greater is the danger to the enterprise# +nd if it happens once too often neither the manager nor the management can survive in this fast developing industrial area# GUIDELINES FOR EFFECTIVE DECISION MAFING .he follo0ing guidelines may &e suggested as an a# to $&&$"t#*$ $"#)#on 'a/#n%: AlB Define the goals A3B Ensure that the decision contri&ute to the goal# A6B +dopt a diagnostic approach to decisionmaking A:B Involve su&ordinates in decision-making process A;B Ensure successful implementation of the decision A<B Evaluate the results and A9B 1e fle@i&le and revise the decision 0hich do not yield the desired results# DECISION TREE :M$an#n% 7here a series of decision reaching some 0ay into the future have to &e made it is possi&le to dra0 a Hdecision treeH sho0ing he decision to &e reached# 7here choices of decisions have to &e made at various stages the possi&le outcome of each choice is sho0n s H&ranchH there&y aiding management in

#47

making the choice# Decision tree is actually a graphic method &y 0hich a decision "an )$$ alt$rnat#*$ )ol!t#on) to ,#'D their r$)+$"t#*$ o!t"o'$ a) pro&a&ilities associated 0ith each of them and evaluate the comparative outcome to find out the optimum one# U)$) o& D$"#)#on Tr$$ + manager may make use of decision tree for making decisions 0hich other0ise are not easy to make# +# &asic value of decision tree lies in e@pressing all outcomes or events in /uantitative forms 0hich provide precision in decision making# Since a large num&er of techni/ues have #&een developed to take into account the impact of large num&er of varia&les the use of decision tree even increased# L#'#tat#on) o& D$"#)#on Tr$$ +lthough decision tree is simple in essence yet it may get comple@ in application# .he main difficulty in analyzing decision tree is that even 0ith simple t0o or three &ranch forks the tree can &e /uite comple@G it may turn into a &ush# Secondly there is often inconsistency in assigning pro&a&ilities for different events# Not0ithstanding these limitations a decision tree offers a solution of the decision situation &etter than any other techni/ue#

#48

LESSON ( = MANAGERIAL DECISION ( MAFING INTRODUCTION Decision-making is an integral part of most of the top managersH duties# Not even a single day passes 0ithout taking decisions particularly in modem organisations# !ence management and decision-making are considered as insepara&le# In fact 0hatever a manager does he can do it only &y taking some decisions# +ll matters relating to planning organisation staffing directing and controlling are engrossed in decision-making process# .hat is 0hy it is aptly pointed out that management is essentially a decision-making process# .he survival and future success of any enterprise in directly related to the a&ility to take timely and appropriate decisions &y the e@ecutives# .hus decision-making is said to &e the heart of management# *ot of planning e@ercise is to &e initiated &y the manager &efore taking any via&le decision# Puestions like 0hat to do 0hen to do and ho0 to do are to &e e@amined clearly &efore allocating resources on different mananagerial activities# "nfortunately these resources are scarce# So the manager has to carefully plan and decide 0hat to do or 0hat not to do# 7rong decisions /uite often are proved to &e either costly or futile e@ercise# .o prevent such losses decision-making process remains to &e the core area in all planned activities of the modern corporations# M$an#n% 4oontz and 7eihrich have defined this concept are Dthe selection from among alternatives of a course of action#D +ccording to this definition picking one course of action among alternatives availa&le is termed as decision-making# In the 0ords of -eorge .erry Ddecision-making is the selection of a particular course of action &ased on some criteria from t0o or more possi&le alternatives#D 7e may define this concept as Dthe process of choosing &et0een various alternatives for achieving a specified goal# Every decision must take into consideration needs and future uncertainties# .he famous decision theorist !er&ert Simon has identified three ma'or steps in the decision-making process# .he first step involves the recognition and understanding of the real pro&lem# In the second phase various alternatives may &e developed# .he third step involves careful assessment of alternatives availa&le for taking a &etter decision# C,ara"t$r#)t#") Decision-making is a continuous process# .he /uestion of decision-making comes into picture only 0hen there are alternatives# + decision-making process must al0ays &e rational and $urposeful# Decision-making is an Intellectual process supported &y good reasoning and sound 'udgment# Decision-making is all pervasive in the sense that all levels of managers need to take decisions of varied nature# Decision-making is al0ays related to future only# Ty+$) o& D$"#)#on) Managerial decisions may &e &roadly classified under t0o categories- the first category includes the typical routine and unimportant decisions and the second category covers most Important vital and strategic decisions# +part from this classification decisions are taken at different levels for meeting different pro&lems# .he follo0ing paragraphs present a &irdHs eye vie0 of different type of decisions taken &y the e@ecutives from time to time# 5#6 Or%an#)at#onal V) P$r)onal D$"#)#on) %hester# I 1ernad has e@plained a&out this classification of decisions# Decisions taken &y the manager in his official capacity are termed as organisational decisions# .hese decisions have a direct &earing on the functioning of the firm# +lso the authority for taking such decisions can &e delegated to the su&ordinates# ?or instance decisions relating to re0ard systems or transfer of 0orkers can &e cited as e@amples under this category# In contrast to this sometimes decisions may &e taken &y the manager in his Individual capacity# Such decisions are termed as personal decisions# .I2ey may partly affect the personal life and partly affect the organisation# ?or instance decision to /uit the organisation comes under this category# 5##6 Ro!t#n$ V) Strat$%#" D$"#)#on Routine decisions Involve little risk and uncertainty# !ence they do not call for e@traordinary# 8udgment and thinking# .hey are mostly related to day-to-day con Hduct of the &usiness# Most of the routine decisions are taken repetitively# .hat is 0hy they are normally taken at lo0er levels of management# (n the other hand strategic decisions are taken &y the top-level management# Either they are concerned 0ith policy matters or 0ith Iong-term commitments of the organisation# .hey re/uire thorough understanding analyses and &est 'udgment pertaining to location of the plant type of technology and channel of distri&ution are the &est e@amples of this type#

#49

5###6 Pol#"y V) O+$rat#n% D$"#)#on) $olicies act as guidelines for future action# !ence decisions pertaining to policies are usually taken &y the top management# .hey are considered to &e very important since they affect the total organisation# 7hile operating decisions are administrative in character they help in translating policies into action# ?or Instance decision relatingH to a ne0 incentive scheme may &e termed as a policy decision# Decisions relating to the methodology of implementation of such incentive scheme are termed as operating decisions# 5#*6 Pro%ra''$ V) J Non(+ro%ra''$ D$"#)#on

$rogrammed decisions usually deal 0ith routine and repetitive pro&lems# ?or dealing such pro&lems systematic policies procedures and rules arc esta&lished# $rogrammed decisions can &e taken 0ith little ease as everything goes according to some set of rules# +s against this non-programmed decisions cover mainly une@pected events and challenges# Each of such pro&lems is a special one# In other 0ords each pro&lem is uni/ue in nature# ?or dealing 0ith such special pro&lems e@ecutives usually refer them to the top management# ?or tackling such situations the manager needs e@pertise intuition and creative thinking# 5*6 In #*# !al V) Gro!+ D$"#)#on) Decisions taken &y the Individual in his personal capacity are kno0n as individual decisions# (rganisations 0hich are small in size can accommodate this type of decision-making process# 7hen organisations gro0 in size and stature comple@ pro&lems do come into picture# -roup decisions are considered to &e the &est under such situations# -roup decisions represent the thinking of more than one e@ecutive# .he commonly held &elief is that 0ho &rains can certainly think in a &etter 0ay than one#D !aving discussed some of the important types of decisions in the earlier paragraphs a &rief attempt is made to identify some common elements in the decision making process# .hese elements form as important steps for carrying out decision making process systematically# .he various .ips Involved in the decisionmaking process are e@plained 0ith the help of the follo0ing figure#

St$+ 516 D$&#n#n% t,$ +robl$' .he first step is to determine 0hat the real pro&lem is# + pro&lem is half-solved 0hen it is correctly diagnosed# Money and effort are going to &e 0asted it pro&lem is not determined correctly# .hat is 0hy accurate diagnosis of the real pro&lem is necessary to find out right solution# (ne should look at the real causes and for the remedial measures &y touching the inner details of the pro&lem# .ouching only the outer surface of the pro&lem and arriving at decisions may lead to fallacious conclusions St$+ 526 Analy-#n% t,$ Probl$' (nce the pro&lem is dearly defined men it must &e analyzed in the light of data pertaining to various factors that the surmount the decision# Every situation may have some advantages and limitations# Necessary emphasis should &e laid on locating the limitations and o&stacles in achieving a desired result# Necessary care should &e e@ercised in +voiding personalized &ias in 'udging certain factor +nalysis of crucial factors provides a sound &asis for making effective decisions St$+ 586 D$*$lo+#n% Alt$rnat#*$) .he analysis off Hthe pro&lem &ecomes complete-once it thro0s light on several alternatives solutions# In fact the success of decision- making process much depends upon the a&ility to an e@ecutive in developing alternative solutions to a given pro&lem# .his re/uires lot of imagination e@perience and 'udgment e@ploring

#50

the positive or negative impact of such alternatives forms as a solid &asis for sound decisions St$+ 596 E*al!at#n% Alt$rnat#*$) (nce the alternatives are developed the ne@t step is to evaluate them in terms of their cause time impact o&'ectives etc# Many a time either marginal cost or cost &enefit analysis is used to &ring out the tangi&le &enefits of each of such alternatives# Each alternative solution may have its o0n merits and demerits# H.hey should &e compared 0ith other alternatives for the purpose appraising the real impact# $eter ? Drucker has identified risk economy time and limitations as important criteria for evaluating the conse/uences of different alternatives# St$+ 5:6 S$l$"t#n% t,$ b$at +o))#bl$ )ol!t#on Selection usually involves choice Lmaking# It is the last step in decision-making process# .he manager has m select such an alternative course of action 0hich can make the ma@imum contri&ution to the goal# It is not al0ays possi&le to select the &est alternative for a given pro&lem# .hat is 0hy the manager has to rely upon such course of action 0hich can yield good results under a given set of circumstances and limitations# St$+ 5;6 I'+l$'$nt#n% t,$ $"#)#on

(nce the &est alternative is selected it must &e implemented# .his step mainly 0ith tile e@ecution of the decision taken It involves development of step &y step plans selling the idea to su&ordinates and seeking co-operation from the needy people# +t this stage the decision is converted into action# .he decision must &e implemented in the light time and that too in a proper 0ay# St$+ 5<6 E*al!at#on o& D$"#)#on) .he final step in decision-making process is evaluation# .he actual results of the decision should &e compared 0ith the e@pected results in order to locate the reasons for deviations# .his revie0 is a continuous process and it generates information for necessary feed&ack for further improving the decision-making process in future# Rat#onal#ty In D$"#)#on('a/#n% .he term rationalityH refers to o&'ective and intelligent action decision is said Hk &e rational if appropriate means are chosen to accomplish desired o&'ectives# It implies that decision-maker tries to ma@imize the values in a given situation &y choosing the most suita&le course of action# + good decision depends on the makerHs &eing consciously a0are of the factors that set the stage for the decision# (&taining complete rationality is no# al0ays possi&le# .hat is the reason 0hy people prefer to take satisfactory decisions instead of ideal or optimum decisions# Managers are not al0ays confronted &y the pro&lem of rationality in decisionmaking# In practice they confidence themselves to fe0 important alternatives 0hich have limited risks com&ined 0ith favora&le conse/uences# L#'#t) o& Rat#onal D$"#)#on('a/#n% Managers are not al0ays rational in their decision-making# .hey cannot al0ays a&ide &y the demands of rationality in decision- making process# .here are some limitations 0hich are &riefly e@plained in the follo0ing lines# AaB Since decisions are related to future Managers cannot foresee all the conse/uences accurately# Moreover lack of complete kno0ledge a&out the pro&lem also makes it impossi&le to choose a good decision# A&B 1ecause of time and cost constraints all comple@ varia&le that have a &earing on decision cannot &e e@amined fully# !ence the decision maker is forced to strike a &alance &et0een complete rationality and hard realities on the ground# .he impact of all the varia&les cannot &e ascertained &ecause some of them may &e intangi&le# AcB .he conse/uences of various alternatives cannot &e accurately !ence decisions taken under uncertainly cannot guarantee the success of decision making process# AdB !uman factors like value systems perceptions Social factors Institution etc# are the main limits on rational decision making Managers &eing-!uman &eing are greatly influenced &y their personal &eliefs attitudes and &asis# 1ecause of this the capa&ility of a decision = making process varies from individual to individual and from situation to situation#

Every manager is vitally concerned 0ith the a&ove limitations in his approach to rational decision-

#51

making# !e has to collect all the relevant Information and try to overcome the a&ove limits on rationality and choose the most rational decision for solving any given pro&lem# 0arr#$r) to $&&$"t#*$ D$"#)#on('a/#n% :+part from the a&ove limitations decision-making process remains to &e ineffective &ecause of the e@istence of various &arriers in organisation structure# .hese H&arriers impede the process of identification of pro&lems its analysis and the development of the solutions# E&&ing has identified some of the important &arriers that can &lock managerial effectiveness in choosing the most suita&le decision# Some of them are listed &elo0# .he tendency of a human &eing to evaluate a given pro&lem 0ith pre - conceived notions acts as a stum&ling &lock in understanding the real situation# .hough it is dangerous managers feel safer if they do not change 0hat is familiar# Eventually the infective decision of a familiar 0ay &ecomes accepted rather than considering ne0 and innovative means# Many managers fall to demarcate the symptoms from the main pro&lem# Many managers have a tendency to respond to the pro&lem instantaneously 0ithout proper information and thinking# If they gather more Information they &ecome more a0are of their options# Similarly the tendency to e/uate a ne0 challenge 0ith that of old e@perience is common 0ith many managers# .his often causes managers to look for 0hat is familiar rather than 0hat is uni/ue in ne0 pro&lem# .he a&ove pro&lems are mainly responsi&le for either indecision or for half decisions in the modem organisations# 4no0ledge of the a&ove pro&lems 0ill surely help the managers in arriving at pragmatic decisions# .he follo0ing suggestions can &e offered to overcome the a&ove &arriers so as to make the managers more effective in decision making process +void premature evaluation Initiate impartial &y avoiding personal &iases on the out come# Develop a sound system that can supply ade/uate information making decision Encourage group leaders to response to a given situation and compare the pros and cons of the solutions offered &y the t0o groups for making an effective decision Encourage innovative thinking among the# su&- ordinates so as to identify the cru@ of +c pro&lem 0ithout 0aste of time and money# 7hen decisions of critical and pivotal inH nature are to &e taken encourage group thinking# ?or this the pro&lem is to &e presented to the su&ordinates first and they are asked to develop as many solutions as possi&le in a free environment

TEC3NIBUES OF DECISION MAFING 1rainstorming is the oldest and 0idely follo0ed techni/ue for encouraging creative thinking# It 0as originally developed &y +.# (s&orn# It involves the use of a group# .his is an approach to improve pro&lem discovery and solving &y encouraging su&ordinates to give their ideas and solutions in a free environment- It starts on the premise that 0hen people interact in environment they 0ill generate creative ideas# %ontinuous interaction through free discussions may result in spontaneous and creative thinking# .he larger the num&er of solutions the fairer are the chances in locating anH accepta&le solution# Esta&lished research proves that one hour &rainstorming system Is likely to generate ;E-IS( ideas# It is interesting to note that 0hile most of them are proved to &e impractica&le at least some of them merit serious consideration# 222is group process is not 0ithout limitations# It consumes lot of time and therefore# Is an e@pensive e@ercise# Secondly it emphasizes only /uantity of solutions 0hich more often than not proved to &e superficial# 1y overcoming the a&ove limitations a modern manager can use this as an effective tool 526 Syn$"t#") 7hen compared to 1rainstorming# synaptics is a ne0 concept developed &y 7illiam& 8#8# -ordon .he term HsynopticH is derived from a -reek 0ord 0hich refers to Dfitting together of diverse elementsD# ItH starts on the premise that this concept Encourages novel thinking for the development of alternatives through putting together different ideas 0hich are distinct from each other# + given pro&lem is presented to a group of people 0ith different &ackgrounds and varied e@periences# It is the responsi&ility of the group leader to present the pro&lem and lead the discussion in order to stimulate creative solutions# .his approach ensures on the spot evaluation of mem&ers suggestions# .he leader 0ho is a technical e@pert is al0ays assisting the group in

#52

evaluating the facility of their ideas# E@perience sho0s that systemic has &een less 0idely used than C1rainstormingK 0hen the pro&lem is real through are challenging this approach is used for effective decision =making# *ike 1rainstorming it also suffers from the same range of limitations# A6B (perations Research .he origin and development of operations research is attri&uted to military operation and applications in "nd 7orld 7ar# .he 0ar put tremendous pressure on the use of availa&le scarce resources for various strategic and tactical operations the success of operations research in developing options of effective and efficient nature 0as instrumental in making this approach rather depriva&le in decision-making process# No0a-days greater emphasis has &een laid on the use of mathematical models to reflect different options and constraints in a situation and their effect on a selected goal# .his /uantitative approach to decision-making is usually referred as (perations ResearchD# (f la e it has &ecome an invalua&le tool in the kit of a decisionmaker# (perations Research employs optimizing models like *inear# $rogramming $ro'ect Management Inventory %ontrol Decision .heory and 7aiting *ine .heory (perations Research is the systematic method of studying the &asic structure functions and relationships of an organisation as an open system# It al0ays adopts a Hsystems approach to management in getting things done# It is constantly interested in developing optimal solution 0ith limited resources in a given situation# It covers si@ steps in its approach to pro&lem solving# .hey are:AaB Identification of a pro&lemG A&B construction of a mathematical model to investigate the pro&lemGAcB developing a good solution:AdB testing of the model in the light the data availa&leG AeB identifying and setting up of control points AfB Implementation of the option as a solution to a critical Hpro&lem A$utting a solution to 0orkB# In essence (perations Research attempts to develop the &est solution that 0ill contri&ute to organisational goals# I'#tat#onal o& O+$rat#on R$)$ar", (perations Research techni/ue is not a panacea to all the pro&lems of Hmodem management# In other 0ords it is not the end# AiiB Since (perations Research dogs not take intangi&le aspects into consideration su&'ective 'udgment &ecomes difficult under this model#AiiiB +s the (perations Research techni/ue directly depends upon the use of mathematical and statistical tools it is increasingly &ecoming comple@ and costly e@ercise # AivB Since decision making is a human process it cannot & predicted properly# +t the same time the impact of such factors cannot &e measura&le# 596 D$l+,# T$",n#@!$ It is a techni/ue normally used for forecasting future events# It is a group decision-making techni/ue# "nder this method independent opinions are sought froS the mem&ers repeatedly so as to develop a &est solution to a given pro&lem# .he success of Delphi techni/ue depends upon a simple techni/ue of understanding the pro&lem from the other manHs perspective# .his ensures success# .hough it is a useful techni/ue since it Involves time and cost it can not &e tried in all situations#

#53

LESSON ( > ORGANISATION INTRODUCTION (rganization is a mechanism or structure 0hich helps the activities to &e performed effectively# .he organisation is esta&lished for the purpose of achieving the &usiness o&'ectives# .he &usiness o&'ectives may differ from one &usiness to another 0hatever may &e the &usiness o&'ectives there is a need of an organisation# .he 0ord D(rganisationD is derived from the 0ord D(rganismD 0hich means an organized &ody 0ith connected interdependent parts sharing common life# 7hen a group of persons 0orking together to achieve a common goal the pro&lems such as 0ho decides 0hat issues 0ho does 0hat 0orks and 0hat action should &e taken on the &asis of certainH conditions may arise# M$an#n% (rganisation is the detailed arrangement of 0ork and 0ork conditions in order to perform the assigned activities in an effective manner# (rganisation can &e compared to a human &ody# .he human &ody consists of hands feet eyes ears nose fingers mouth etc# .hese parts are performing their 0ork independently and at the same time one part cannot &e a su&stitute to another# .he same principles can &e identified in the organisation also# .he organisation consists of different departments# Each department performs 0ork independently and cannot &e a su&stitute to another# D$&#n#t#on :!aney D(rganisation is a harmonious ad'ustment of specialized parts for the accomplishment of some common purpose or purposes#D Mc?arland D+n identified group of people contri&uting their efforts to0ards the attainment of goals is called organisation#D +lien D.he process of identifying and grouping the 0ork is to &e preformed defining and delegating responsi&ility and authority and esta&lishing relationships for the purpose of ena&ling people to 0ork most effectively together in accomplishing o&'ectives#D Mooney and Reily D(rganisation is the form of every human association for the attainment of a common purpose#D %hester 1ernard D+ system of co-operative activities of t0o or more persons is 2 called organisation#D R#%# Davis D+ny group of people large or small 0hich has &een implemented ade/uately and is cooperating 0illingly under the direction of competent e@ecutive Hleadership in an effective economical accomplishment of certain common o&'ective#D G.R. .erry D(rganising is the esta&lishing of effective &ehavioral relationships among persons so that they may 0ork together effectively and gain Apersonal satisfaction in doing selected tasks under given environmental conditions for the purpose of achieving some goal or o&'ective#D 4oontz (H Donnel D(rganising involves the esta&lishment of an international structure of roles through determination and enumeration Ef the activities re/uired to Aachieve the goals of an enterprise and each part of itG the grouping of these activities the assignment of such groups of activities to the manager the delegation of authority to carry them out and provision for co-ordination of authority and information relationship horizontally and vertically in the organisation structure#D *ouis +l +lien D(rganisation is that process of identifying and grouping the 0ork to &e performed defining and delegating responsi&ility and authority and esta&lishing relationships for the purpose of ena&ling people to 0ork most effectively together in accomplishing o&'ectives#D (liver Sheldon D(rganisation is the process of so com&ining the 0ork 0hich individual or groups have to perform 0ith the facilities necessary for its creation that the duties so performed provide the &est channels for the efficient systematic positive and co-ordinate application of the availa&le efforts#D Spriegel DIn its &roadest sense organisation refers to the relationship &et0een Hthe various factors present in a given Endeavour ?actory organisation concerns itself primarily 0ith the internal relationships 0ithin the factory such as responsi&ilities of personnel arrangement and grouping of machines and material control# ?rom the stand point of the enterprise as a 0hole organisation is the structural relationship &et0een the various factors in an enterprise#D 7heeler HInternal organisation is the structural frame0ork of duties and responsi&ilities re/uired to personnel in performing various functions 0ithin the company #### It is essentially a &lue print for action resulting in a mechanism for carrying out function to achieve the goals set up &y company management#D

#54

FUNCTIONS OF ORGANISATION ?rom the a&ove definitions it is understood that the functions of organisationG include determination of activities grouping of activities allotment of duties toL specified persons delegation of authority defining relationships and co-ordination ofL various activities# D$t$r'#nat#on o& a"t#*#t#$) It includes the deciding and division of various activities re/uired to achieve the o&'ectives of the organisation# .he entire 0ork is divided into various parts and again each part is su&-divided into various su&-parts# ?or e@ample the purchase 0ork may &e divided into re/uisition of items placing of an order storage and so on# Gro!+#n% o& a"t#*#t#$) .he ne@t function of organisation is that the identical activities are grouped under one individual or a department# .he activities of sales such as canvassing advertisements and de&t collection activities are grouped under one department i#e# sales department# Allot'$nt o& !t#$) to )+$"#&#$ +$r)on) In order to ensure effective performance the grouped activities are allotted to specified persons# In other 0ords the purchasing activities are assigned to the $urchase ManagerG the production activities are assigned to $roduction ManagerG the sales activities are assigned to Sales Manager and the like# 1esides ade/uate staff mem&ers are appointed under the specified persons# .he specified persons are specialized in their respective fields# If there is any need appropriate training 0ould &e provided to such persons# D$l$%at#on o& a!t,or#ty +ssignment of duties or allotment of duties to specified persons is follo0ed &y delegation of authority# 2t 0ill &e very difficult to a person to perform the duties effectively if there is no authority to do it# 7hile delegating a authority responsi&ilities are also fi@ed# .hus the $roduction Manager may &e delegated 0ith the authority to produce the goods and fi@ed 0ith the responsi&ility of producing /uality goods# K D$&#n#n% r$lat#on),#+ 7hen a group of persons is 0orking together for a common goal it &ecomes necessary to define the relationship among them in clear terms# If it is done each person 0ill kno0 0ho is his &oss from 0hom he has to receive orders and to 0hom he is ans0era&le# In another sense each &oss should kno0 0hat authority he has and over 0hich persons# L Co(or #nat#on o& *ar#o!) a"t#*#t#$) .he delegated authority and responsi&ility should &e co-ordinate &y %hief Managerial Staff# .he reason is that there must &e a separate and responsi&le person to see 0hether all the activities are going on to accomplish the o&'ectives of organisation or not# .PRINCIPLES OF ORGANISATION .he 0ork can &e completed in time 0henever a techni/ue or a principle is adopted# So the success or failure of an organisation depends upon the principles to &e Hfollo0ed in the organisation# .he principles of organisation may &e termed as a tool used &y the organisation# Some e@perts like .aylor ?ayol and "r0ick have given theH principles of organisation# .hey are &riefly discussed &elo0# Pr#n"#+l$ o& $&#n#t#on

It is necessary to define and fi@ the duties responsi&ilities and authority of each 0orker# In addition to that the organisational relationship of each 0orker 0ith others should &e clearly defined in the organisational set up# Pr#n"#+l$ o& ob4$"t#*$ .he activities at all levels of organisation structure should &e geared to achieve the main o&'ectives of the organisation# .he activities of the different departments sections may &e different in nature and in approach &ut these should &e concentrating only for achieving the main o&'ectives#

#55

Pr#n"#+l$ o& )+$"#al#-at#on or

#*#)#on o& Aor/

Division of 0ork means that the entire activities of the organisation art: suita&le grouped into departments or sections# .he departments or sections may &e further divided into several such units so as to ensure ma@imum efficiently# .his 0ill help to fi@ up the right man to the right 'o& and reduce the 0aste of time and the resources# D.he 0ork is assigned to each person according to his educational /ualification e@perience skill and interest# !e should &e mentally and physically fit for performing the 0ork assigned to him# .he re/uired training may &e provided to the needy person It 0ill result in attaining specialization in a particular 0ork or area# Pr#n"#+l$ o& "o(or #nat#on .he o&'ectives of the organisation may &e achieved /uickly 0henever cOH ordination e@ists among the 0orkers# +t the same time each 0ork can &e don effectively &y having the co-ordination# .he final o&'ective of all organisations is to get smooth and effective co-ordination# Pr#n"#+l$ o& a!t,or#ty 7hen many persons are 0orking together in one place there 0ill &e a difference of po0er and authority# (f these persons some 0ill rule and others 0ill &e ruled# Normally ma@imum po0ers are vested 0ith the top e@ecutives of the organisation# .hese senior mem&ers should delegate their authorities to their su&ordinates on the &asis of their a&ility# In certain cases the su&ordinates a motivated through the delegation of authority and they perform the 0ork efficiently 0ith responsi&ility# Pr#n"#+l$ o& r$)+on)#b#l#ty Each person is responsi&le for the 0ork completed &y him# +uthority is delegated from the top level to the &ottom level of organisation# 1ut the responsi&ility canH &e delegated to some e@tent# 7hile delegating the authority there is no need of delegation of responsi&ility# So the responsi&ility of the 8unior staff mem&ers should &e dearly denned# Pr#n"#+l$ o& $M+lanat#on 7hile allocating the duties to the persons the e@tent of lia&ilities of the person 0ould &e clearly e@plained to concerned person# It 0ill ena&le the person to accept the authority and discharge his duties# Pr#n"#+l$ o& $&&#"#$n"y Each 0ork can &e completed efficiently 0herever the climate or the organisational structure facilitates the completion of 0ork# .he 0ork should &e completed 0ith minimum mem&ers in less time 0ith minimum resources and 0ithin the right time# Pr#n"#+l$ o& !n#&or'#ty .he organisation should make the 0ork distri&ution in such a manner that there should &e m e/ual status and e/ual authority and po0ers among the same line officers# It 0ill avoid the pro&lems of dual su&ordination or conflictD in the organisational set up# 1esides it increases co-ordination among the officers# Pr#n"#+l$ o& "orr$)+on $n"$ +uthority and responsi&ility should &e on parity 0ith each other# If it is not so the 0ork cannot &e effectively discharged &y any officers 0hatever his a&ility may &e# +t the same time if authority alone is delegated 0ithout responsi&ility the authority may &e misused# In another sense if responsi&ility is delegated 0ithout the authority it is a dangerous one# Pr#n"#+l$ o& !n#ty o& "o''an .his is also sometimes called the principle of responsi&ility# .he organisational set up should &e arranged in such a 0ay that a su&ordinate should receive the instruction or direction from one authority or &oss# If there is no unity of command in any organisational see up the su&ordinate may neglect his duties# It 0ill result in the non-completion of any 0ork# In the a&sence of unity of command there is no guidance availa&le to the su&ordinates and there is no controlling po0er for the top e@ecutives of the organisation# ?urther some su&ordinates 0ill have to do more 0ork and soG others 0ill not do any 0ork at all# Pr#n"#+l$ o& balan"$ .here are several units functioning separately under one organisational set .he 0ork of one unit might have &een commenced after the completion of the 0ork another unit# So it is essential that the se/uence of 0ork should &e a arrange scientifically Pr#n"#+l$ o& $@!#l#br#!' balan"$ .he e@pansion of &usiness activities re/uires some changes in the organisation In certain periods some sections or departments are overloaded and some department are under loaded# During this period

#56

due 0eight age should &e given on the &asis of ne0 0ork load# .he overloaded sections or departments can &e further divided into su& sections or su&-departments# It 0ould entail in the effective control over all organisational activities# Pr#n"#+l$ o& "ont#n!#ty It is essential that there should &e a re-operation of o&'ectives re-ad'ustment plants and provision of opportunities for the development of future management# .his process is taken over &y every organisation periodically# Pr#n"#+l$ o& )+an o& "ontrol .his is also called span of management or span of supervision or levels organisation# .his principle is &ased on the principle of relationship# Span of control refers to the ma@imum num&er of mem&ers effective supervised &y a single individual# .he num&er of mem&ers may &e increasedH decreased according to the nature of 0ork done &y the su&ordinate or a&ility of supervisor# In the administration area under one e@ecutive nearly four or f su&ordinates may 0ork# In the lo0er level or the factory level under one supervision the t0enty or t0enty five num&er of 0orkers may 0ork# H.he span of control ena&les smooth functioning of the organisation# Pr#n"#+l$ o& l$a $r),#+ &a"#l#tat#on .he generational set up may &e arranged in such a 0ay that the persons 0ith leadership /ualities are appointed in key positions# .he leadership /ualities are honesty devotion enthusiasm and inspiration# Pr#n"#+l$ o& $M"$+t#on .he 'unior officers are distur&ed &y the seniors only 0hen the 0ork is not done according to the plans laid do0n# It automatically reduces HtheH 0ork of middle level officers and top level officers# So the top level officers may use the time gained &y education in 0orkload for framing the policies and chalking out the plans of organisation# Pr#n"#+l$ o& &l$M#b#l#ty .he organisational set up should &e fle@i&le to ad'ust to the changing environment of &usiness# .he organisation should avoid the complicated procedures and permit an e@pansion or contraction of &usiness activities# T,$ )"alar +r#n"#+l$ .his is also called chain of command or line of authority# Normally the line of authority flo0s from top level to &ottom level# It also esta&lishes the line of communication# Each and every person should kno0 0ho is his superior and to 0hom *e is ans0era&le# Pr#n"#+l$ o& )#'+l#"#ty an ,o'o%$n$#ty .he organisation structure should &e simple# It is necessary to understand a person 0ho is 0orking in the same organisation# If the organisation structure &ecomes a comple@ one 'unior officers do not understand the level and the e@tent of responsi&ility for a particular activity# .he simplicity of the organisational structure ena&les the staff mem&ers to maintain e/uality and homogeneity# If e/uality and homogeneity are maintained in one organisation it is possi&le to determine 0hether the staff mem&ers discharge their duties to realize the o&'ective of organisation# Pr#n"#+l$ o& Un#ty o& D#r$"t#on) .his is also called the principle of co-ordination# .he ma'or plan is divided into the su& plans in a good organisational set up# Each su& plan is taken up &y a particular group or department# +ll the groups or departments are re/uested to co-operate to attain the main o&'ectives or in implementing ma'or plan of the organisation# Pr#n"#+l$ o& 4o#nt $"#)#on)

In the &usiness organisation there are num&er of decisions taken &y the officers to run the &usiness# If a complicated pro&lem arises more than one mem&er e@amines the pro&lems and takes the decisions# 7henever the decision is taken 'ointly the decision gives the &enefit for a long period and the decision is &ased on various aspects of the organisational set up# SPECIAL FEATURES OF ORGANISATION (rganisation is the pioneer step of the management# .he functions of manageli2ent are sitting over the strong organisational set up# + $alace may &e constructed only 0hen a very strong foundation is laid#

#57

.he same principle is follo0ed here# (rganisation is the foundation of management# 7ithout organisation the functions of management such as planning organising staffing directing coordinating and controlling cannot succeed# (rganisation supplied the human and material resources and helps to achieve the o&'ectives of &usiness# .he organisation provides the means or techni/ues 0ith strong efforts for more production and effective completion of the 0ork# (rganisation increases the certainty and promptness in the completion of 0ork &y assigning fi@ed duties to every person# 7henever the duties are fi@ed it automatically develops team spirit to0ards the realization of common goals# Initially the total 0ork of the enterprise can &e divided into various parts and then linked 0ith all the parts as and 0hen the need arises to achieve main o&'ectives# .he connection of various parts of the organisation is given &y the authority relationship of organisational structure# .he relationship my open the up0ard do0n0ard and side0ise of the organisation# D#*#)#on o& labo!r .he total 0ork can &e divided into many parts for effective performance of the 0ork# Each part of 0ork may &e completed &y one person or a group of persons# 1ut all the parts of the 0ork are done 0ith the aim to achieve main o&'ective of the organisational# .he 0ork is assigned to a person 0ho is specialized in that particular 0ork# If there is a paper division of la&our no person 0ill &e allo0ed to do anything according to his o0n 0ay unless and other0ise he is not 0ell e/uipped# .he division of I la&our results in the creation of specialized persons &ecause a person docs the same 0ork again and again# No 0aste of time energy and resources are some or the advantages of division of la&our In addition to this the division of la&our results in the increase of /uality output and /uantity of product 0ithout any additional capital# Co(or #nat#on Different persons are assigned different 0orks in one organisation# 1ut all the 0orks are performed to achieve the o&'ectives# It implies that there is a need of coordination among the 0orkers in an organisation# Each and every department or section of the organisation should have relationship 0ith each other to get mutual co operation# Ob4$"t#*$) .he o&'ectives of the organisation should &e denned clearly# .he o&'ectives cannot &e achieved 0ithout the e@istence of a good organisation structure# In turn the organisation cannot e@ist 0ithout o&'ectives for a long period# A!t,or#ty(r$)+on)#b#l#ty )tr!"t!r$ +n organisation means an arrangement of position of e@ecutives &y adopting a rank system# In other 0ords a su&ordinate has one &oss and a superior has control over su&ordinate specifically# .he position of each of the e@ecutives is defined 0ith regard to the e@tent of authority and responsi&ility vested in him to discharge the duties# Co''!n#"at#on Every organisation has its o0n communication system and the methods# .he success of management depends upon the effective system of communication# .he reason is that each and every person 0orking in an organisation should kno0 the ll2i/ues and the importance of communication# .he channels of communication may livider into formal informal do0n0ard and up0ard or horizontal# IMPORTANCE OF ORGANISATION (rganisation creates the relationship &et0een top level e@ecutives and lo0er level Staff mem&ers# .he top level e@ecutives perform the functions like planning organising staffing directing controlling the lo0er level people# .he actual 0ork is completed lo0er level of the organisation# In this 0ay the organisation maintains the relationship 0ith each other in an enterprise# &a"#l#t#$) A '#n#)trat#on +dministration aims at earning the highest profit &y utilizing the availa&le resources properly# .here is a planning policy making direction and co-ordination inH the administration level to achieve the o&'ectives# 1esides the administration classifies the activities or the &usinessL department-0ise and appoints the officers assistant supervisors e@ecutives to facilitate the achievement of o&'ectives# .here should &e an effective administration to achieve the o&'ectives of theD &usiness# Duplication of 0ork 0rong planning inefficient personnel lack of motivation improper allocation of duties and responsi&ilities a&sence of co-ordination communication gap improper instructions are the ingredients of ineffective administration# .his ineffective administration can &e removed &y having a sound organisation#

#58

+lien o&serves D+ properly designed and &alanced organisation facilitates &oth management and operation of the enterprise# Inade/uate organisation may not only discourage &ut also actually preclude effective administration# In"r$a)$ t,$ $&&#"#$n"y o& 'ana%$'$nt "nder good organisation there is a chance of e@hausting the 0orkersH a&ility in full and utilization of resources effectively# %onfusion delays and duplication of 0ork are avoided in good organisation# It automatically motives the employees 0ho are 0orking in an organisation and increases the efficiency of management# Fa"#l#tat$) %roAt, an #*$r)#&#"at#on

.he structure of the company depends upon the structure of the organisation# .he structure of the company can &e changed 0henever the gro0th and e@pansion activities are earned out# .he gro0th of &usiness means an increase in the scale of operation and diversification means starting of production of a ne0 type of production %hanges in the organisation may result in the appointment of additional staff mem&er5s de-centralization of authority and responsi&ility raising of additional capital# Identification of the consumer5s satisfaction and preferences e@pansion of sale: promotion activities and the like# En)!r$) o+t#'!' !t#l#-at#on o& 'at$r#al r$)o!r"$) an ,!'an $&&ort)

Division of 0ork and specialization are the tools used to achieve the o&'ective of optimum utilization of material# Resources and human efforts# Right man right time and the right 'o& can also &e applied to them# -ood organisation increases the efforts of the employees and the 0orking facilities# A o+t#on o& n$A t$",nolo%y .he effectiveness of an enterprise is measured &y the reaction of staff mem&ers to the adopting of a ne0 technology# In the scientific 0orld there is a lot of innovations and invention identified in the area of production distri&ution and personnel management# If the ne0 technology is adopted &y the enterprise the ma@imum 1enefit can &e o&tained in any field or activity# + fle@i&le organisational structure is needed to adopt a ne0 technology# Pla"$) +ro+ort#onat$ #'+ortan"$ to t,$ *ar#o!) a"t#*#t#$) o& t,$ $nt$r+r#)$ (rganisation classifies the entire &usiness activities into departments# Each department is receiving attention according to its importance it has in the achievement of &usiness o&'ectives# Money and efforts are spent in proportion to the contri&utionH made &y each and every department# It does not mean that less important department activities are neglected# It means that due importance is given to each department according to its contri&ution to0ards the achievement of the o&'ectives# En"o!ra%$) "r$at#*#ty an #n#t#at#*$

+ sound organisational structure 0ill give an opportunity for the staff to sho0 their hidden 0hich 0ill help the enterprise to achieve the &usiness goals and earn higher profit# %lear distri&ution of authority and responsi&ility incentives offered for specialized 0ork am I freedom given to personal 0ork increases the spirit of constructive and creative approach in management# Fa"#l#tat$) "o(or #nat#on .he activities of different department5s are grouped together to achieved &usiness o&'ectives# Each department performs its o0n function in a closely manner and not as competitors# Fa"#l#tat$) tra#n#n% an $*$lo+'$nt o& 'ana%$r#al +$r)onn$l

+ sound organisation provides training to ne0 stall mem&ers &efore placement and gives refresher training to the e@isting staff mem&ers to improve their efficiency# .he training may &e given 0ithin the company or outside the company according training facilities availa&le# No0adays training institute give training to the persons 0ith the help of the different e@perts from various fields# .hese trN institutes arc collecting data directly from the field used in the training# Pr$*$nt) t,$ %roAt, o& )$"r$tD #nl1!"n"$ an "orr!+t#on

Sound organisation develops the morale honesty devotion to duty and 2E of &usiness organisation# Normally these help remove the corruption secret influence# (nly the unsound organisation develops the secret influence and corruption CLASSIFICATION OF ORGANISATION: .he organisation can &e classified on the &asis of authority and responsi&ility assigned to the personnel and the relationship 0ith each other# In this 0ay organisation can &e either formal organisation or informal organisation#

#59

FORMAL ORGANISATION .he formal organisation represents the classification of activities 0ithin enterprise indicates 0ho reports to 0hom and e@plains the vertical 'ournal communication 0hich connects the chief e@ecutive to the ordinary 0orkers# In other 0ords an organisational structure clearly defines the duties responsi&ilities authority and relationships as prescri&ed &y the top management# In an organisation each and every person is assigned the duties and givenG re/uired amount of authority and responsi&ility to carry out this 'o&# It creates the coordination of activities of every person to achieve the common o&'ectives# It indirectly induces the 0orker to 0ork most efficiently# .he inter relationship of staff mem&er can &e sho0n the organisation chart and manuals under formal organisation# C3ARACTERSTICS OF FORMAL ORGANISATION .he important characteristics of a formal organisation are given &elo0: 1. 2. 3. 4. 5. 6. 7. It is properly planned# It is &ased on delegated authority# It is deli&erately impersonal# .he responsi&ility and accounta&ility at all levels of organisation should &e clearly defined# (rganisational charts are usually dra0n# "nity of command is normally maintained# It improves division of la&our#

ADVANTAGES OF FORMAL ORGANISATION 2# .he definite &oundaries of each 0orker is clearly fi@ed# It automatically reduces conflict among the 0orkers# .he entire &uilding is kept under control# 3# overlapping of responsi&ility is easily avoided# .he gaps &et0een the responsi&ilities of the employees are filled up# 6# 1uck passing is very difficult under the formal organisation# Normally e@alt standards of performance are esta&lished under formal organisation# It results in the motivating of the employees# 4. + sense of security arises from classification of the task# 5. .here is no chance for favoritism in evaluation and placement of the employee# 6. It makes the organisation less dependent on one man# 4eith Davis o&serves that formal organisation is and should &e our paramount organisation type- as a general rule# It is tl2e pinnacle of manHs achievement in a disorganized society# It is manHs orderly conscious and intelligent creation for human &enefit# ARGUMENTS AGAINST FORMAL ORGANISATION I# In certain cases the formal organisation may reduce the spirit of initiative# 2. Sometimes authority is used for the sake of convenience of the employee 0ithout considering the need for using the authority# 3. It does not consider the sentiments and values of the employees in the social organisation# 4. .he formal organisation may reduce the speed of informal communication# 5. It creates the pro&lems of co-ordination# INFORMAL ORGANISATION Informal organisation is an organisational structure 0hich esta&lishes relationship on the &asis of the likes and dislikes of officers 0ithout considering the regulations and procedures# .hese types of relationship are not recognized officers &ut only felt# .he friendship mutual understanding and confidence are some the reasons for e@isting informal organisation# ?or e@ample a salesman receives orders or instructions directly from the sales manager instead of his supervisors# .he informal organisation relationship e@ists under the formal organisational also the informal organisation relationship or informal relations give a greater satisfaction and result in ma@imum production# +ccording to %#8# 1ernard DInformal organisation &rings cohesivenessL formal organisation# It &rings to the mem&ers of a formal organisation a feeling &elonging status of self respect and gregarious satisfaction# Informal organisations are important means of maintaining the personality of the individual against certain effects of formal organisation 0hich tend to disintegrate personality# C3ARACTEIUSTICS OF INFORMAL ORGANISATION I# Informal organisation arises 0ithout any e@ternal cause i#e# voluntarily# 2. It is a social structure formed to meet personal needs# 3. Informal organisation has no place in the organisation chart#

#60

4. It acts as agency of social control# 5. Informal organisation can &e found on all levels of organisation 0ithin the managerial hierarchy# 6. .he rules and traditions of informal organisation are not 0ritten &ut are commonly follo0ed# 7. Informal organisation develops from ha&its conduct customs and &ehavior of social group 8. Informal organisation is one of the parts of total organisation# 9. .here is no structure and definiteness to the informal organisation# ADVANTAGES OF INFORMAL ORGANISATION. .he advantages of informal organization are &riefly e@plained &elo0# 2# It fills up the gaps and deficiency of the formal organisation 3# Informal organisation gives satisfaction to the 0orkers and maintenance sta&ility of 0orks# 6 It is a useful channel of communication# :# .he process of informal organisation encourages the e@ecutives to plan the 0ork correctly and act accordingly# ;# .he informal organis:2tion also fills up the gaps among the a&ilities of the managers# ADVANTAGES OF INFORMAL ORGANISATION .he disadvantages of Informal (rganisation are summarized &elo0: I# It has the nature of upsetting the morality of the 0orkers# 2. It acts according to mo& psychology# 3. Informal organisation indirectly reduces the efforts of management to promote greater productivity# 4. It reads rumor among the 0orkers regarding the functioning of the organisation unnecessarily# DIFFRENCES 0ET7EEN FORMAL ORGANISATION AND INFORMAL Some of the differences &et0een ?ormal (rganisation and Informal organisation are discussed &elo0: ?ormal (rganisation 2 3# 6# :# ;# <# It arises due to delegation of authority# It gives importance to terms of authority and functions It is created deli&erately .he formal authority is attached to a position Rules duties and responsi&ilities of 0orkers and given in 0riting ?ormal organisation comes from outsides 0ho are superior in the line of organisation# ?ormal authority flo0s up0ards to do0nloads from Informal (rganisation It arises due to social interaction of people# It gives importance to people and their relationships It is spontaneous and natural .he informal authority is attached to a person# No such 0ritten rules and duties follo0ed in informal organisation# Informal (rganisation comes from those persons 0ho are o&'ects of its control# Informal authority flo0s from up0ards to do0n0ards or horizontally Informal organisation tends to remain smaller It arises from man5s /uest for social satisfaction# .here is no such permanent nature and sta&ility

9# N# O# 2E #

?ormal organisation may gro0 to ma@imum size It is carried purposes# for technological

?ormal (rganisation is permanent and sta&le#

T3EORIES OF ORGANISATION (rganisation theory means the study of the structure functioning and performance of organisation and the &ehavior of individual and group 0ithin it# .he Iarious theories of organisation are given &elo0# 2# %lassical theory 3# Neo- classical theory 6# Modern theory :# Motivation .heory ;# Decision theory .he e@planation of the a&ove theories is given &elo0# 1. CLASSICAL T3EOR1 .he classical theory mainly deals 0ith each every part of a formal organisation# .he classical theory 0as found &y the father of scientific management ?redrick# 7# .aylor ne@t a systemic approach to the organisation 0as made &y Money and Reicey#

#61

.he classical theory is &ased on the follo0ing four principles# division of la&our Scalar and functional process Structure and Span of control

D#*#)#on o& Labo!r .his theory fully depends upon the principle# of division of la&our# "nder the division of la&our the production of it commodity is divided into the ma@imum num&er different divisions# .he 0ork of each division is looked after &y different persons# Each persons specialized in a particular 0ork# In other 0ords the 0ork is assigned to person according to his specialization and the interest he has in the 0ork# .he division la&our results in the ma@imum production or output 0ith minimum e@penses incurred and minimum capital employed# S"alar an &!n"t#onal +ro"$))$) .he Scalar process deals 0ith gro0th of organisation vertically# .he functional process deals 0ith the gro0th of organisation horizontally# .he scalar principles refer the e@istence of relationship &et0eenH superior and su&ordinate# In this 0ay the superior gives# Instructions or orders to the su&ordinates Avarious levels of managementB andH gets &ack the information from the su&ordinate regarding the operation carried do0n at different levels or stages# .his information is used for the purpose of taking decision or remedial action to achieve the main o&'ectives of the &usiness# .he Scalar chain means the success of domination &y the superior oil su&ordinate from the top to the &ottom of organisation# .he line of authority is &ased on the principle of unity of command 0hich means that each su&ordinate does 0ork under one superior only# Str!"t!r$ .he organisational structure may &e denned as the prescri&ed patterns of 0ork related &ehavior of 0orkers 0hich result in the accomplishment ofH organisational o&'ectives# .he organisational structure is used as a tool for creating a relationship among the various functions 0hich make up the organisation# Specialization and co-ordination are the main issues in the design of organizational structure# .he term specialization includes the division of la&our and the sage of special machines tools and e/uipmentsSpecialization is o&tained 0hen a person is re/uested to do a single 0ork and it results in the increase in productivity# .he facilities or advantages of suita&le training easy allocation of 0ork 'o& scheduling and effective control are also o&tained from specialization# %o-ordination means i2n orderly performance in operations to achieve organisational o&'ectives# Normally the units are organized on a functional &asis# .he functions are performed &y different persons of different nature# It also necessary to co-ordinate the various function to achieve the main o&'ectives and at the same time of function does not conflict 0ith any other functions# S+an o& "ontrol :Span of control means an effective supervision of ma@imum num&er of persons &y a supervisor# +ccording to 1rech DSpan refers to the num&er of persons themselves carrying managerial and supervisory responsi&ilities for 0hom the senior manager retains his over-em&racing responsi&ility of direction and planning co-ordination motivation and control#D ?rom the a&ove discussion 0e can kno0 that the classical theory emphasized unity of command and principle of co-ordination# Most of the managersH time is 0asted in the co-ordination and control of the su&ordinates# In many organisations a single supervisor supervises the 0ork of 2;-3E 0orkers and does not follo0 the principle of span of control# Some of the e@perts hold that a manager can supervise :-N mem&ers at higher levels and &et0een N-3E mem&ers at the lo0er levels of the organisation# 1ut according to *yndall "r0ick a ma@imum of : mem&ers at higher levels and &et0eenG N-23 mem&ers at lo0er levels can &e supervised &y the superior to constitute an ideal span of control# C3ARACTERISTICS OF CLASSICAL T3EOR1 I# It is &ased on division of la&our# 2. It is &ased on o&'ectives and tasks of organisation# 3. It is concerned 0ith formal organisation# 4. It &elieves in human &ehavior of the employees# # ;# It is &ased on co-ordination of efforts# 6. Division of la&our has to &e &alanced &y unity of command# 7. It fi@es a responsi&ility and accounta&ility for 0ork completion# 8. It is centralized# CRITICISM OF CLASSICAL T3EOR1 1. .his theory is &ased on authoritarian approach# 2. It does not care a&out the human element in an organisation#

#62

3. 4. 5. 6. 7. 8. 9.

It does not give t0o 0ay communications# It underestimates the influence of outside factors on individual &ehavior# .his theory neglected the importance of informal groups# .he individual is getting importance at the e@pense of the group# It also ignores the influence of outside factors on individual &ehavior# .he generalization of the classical theories has not &een tested *y strict scientific methods# .he motivational assumptions underlying the theories are incomplete and conse/uently inaccurate#

2. NEO(CLASSICAL T3EOR1 .his theory is developed to fill up the gaps and deficiencies in the classical theory# It is concerned 0ith human relations movement# In this 0ay the study of organisation is .eased on human &ehavior such as ho0 people &ehave and 0hy they do so 2n a particular situation# .he Neo-classical scholars used classical theory as the &asis for their study and modified some of the principles for the study# .he Neoclassical have only given ne0 insights rather than ne0 techni/ues# .he scholars also pointed out the practical difficulties of the 0orking of scalar and functional processes# .he main contri&ution of this theory highlights the importance of the committee management and &etter communication# 1esides this theory emphasized that the 0orkers should &e encouraged and motivated to evince active participation in the production process# .he feelings and sentiments of the 0orkers should &e taken into account and respected &efore any change is introduced in the organisation# .he classical theory 0as production-oriented 0hile Neo-classical theory 0as people-oriented# CONTRI0UTIONS OF NEO(CLASSICAL T3EOR1 2# $erson should &e the &asis of an organisation# 2. (rganisation should &e vie0ed as a total unity# 3. Individual goals and organisation goals should &e integrated# 4. %ommunication should &e moved from &ottom to top and from top to &ottom# 5. $eople should &e allo0ed to participate in fi@ing 0ork standards and decision-making# 6. .he employee should &e given more po0er responsi&ility authority and control 7. Mem&ers usually &elong to formal and informal groups and interact 0ith others 0ithin each group or su&-group# 8. .he management should recognize the e@istence of informal organisation# 9. .he mem&ers of su&-groups are attached 0ith common o&'ectives# CRTICISM OF NEO(CLASSICAL T3EOR1 + survey conducted &y +merican Management +ssociation indicates that most of the companies reported found little or nothing useful in &ehavioral theory# +ccording to Ernest Dale neither classical theory nor neo-classical theory provides clear guidelines for the actual structuring of 'o&s and provision for coordination# 8. MODEM T3EOR1 .he other name of Modern .heory is Modem (rganisation .heory# +ccording to one authority it 0as organized in the early 2O;E# .his theory composed of the ideas of different approaches to the management development# .he approach is fully &ased on the empirical research data and has integrating nature# .he approach reflects the formal and informal structures of the organisation and due 0eight age is given to the status and roles of personnel in an organisation# *ike the general system theory modem organisation theory studies: I. .he parts AindividualB in aggregates and the movement of individuals and out ofL the system# 2. .he interaction of individual 0ith the environment found in the system# 3. .he interaction among individual in the system# ESSENTIALS OF MODERN T3EOR1 .he follo0ing are some of the essentials of Modem .heory# I# 2. 3. 4. 5. 6. It vie0s the organisations as a 0hole# It is &ased on systems analysis# .he findings of this theory are &ased on empirical research# It is integrating in nature# It gives importance to inter-disciplinary approach to organisational analysis# It concretes on &oth /uantitative and &ehavioral science#

#63

CRITICSM OF MODERN T3EOR1 .he Modem .heory has the follo0ing criticism: 1. .his theory puts old 0ine into a ne0 pot# 3# It does not represent a unified &ody of kno0ledge# .here is nothing ne0 in this theory &ecause it is &ased on past empirical studies# 6# .his theory forms only the /uestions and not the ans0ers# :# It is &ased on &ehavioral social and mathematical theories# these are management theories in: themselves# 9. MOTIVATION T3EOR1 It is concerned 0ith the study or 0ork motivation of employees of the organisation# .he 0orks are performed effectively if proper motivation is given to employees# .he motivation may &e in monetary and non-monetary terms# .he inner talents of any person can &e identified after giving ade/uate motivation to employees# Maslo0Hs hierarchy of needs theory and !ertz&ergHs t0o factor theory are some of the e@amples of motivation theory# :. DECISION T3EOR1 .he other name of decision theory is decision-making theory# .his theory 0as given &y !er&ert +# Simon# !e 0as a0arded No&el $rize in the year 2O9N for this theory# !e regarded organisation as a structure of decision-makers# .he decisions 0ere taken at all levels of organisation and important decisions Apolicy decisionsB are taken at higher levels of organisation# Simon suggested that the organisational structure &e designed through an e@amination of the points at 0hich decisions must &e made and the persons from 0hom information is re/uired if decisions should &e satisfactory#

#64

*ESS(N = 2E DE$+R.MEN.+.I(N (ne of the key factors in designing an organization structure is allocation of duties on the principle of specialization# 1ut the criterion of specialization can &e adopted in the narro0 range of functions# ?or this the 0orking of an undertaking has to &e split into different units for the purpose of smoothly conducting the affairs 0ith an eye on efficiency economy and profita&ility# .he splitting of the 0orking of an undertaking into various units is called as Departmentation# Departmentation refers to the organizational device of classifying the activities or operation of an undertaking into functionalized categories# Modem enterprises tend to &e larger in size and comple@ technological operations# +ll the activities cannot &e managed &y a single individual or the 1oard in a common s0eep .herefore departments or sections are created for all ma'or activities of the undertaking to &ring the administrative and operational functions 0ithin compact compass of specialization and the range of managerial convenience# .he size-of an undertaking may &e large &ut departmentalizing the &ig sized undertaking into managea&le units &ased on functions area product or process# !ence the Departmentation ena&les large firms also to dra0 the &enefits of small functional organization and at the same time softening the disadvantages that normally arise due to increasing size and diversity# Departmentation limits the num&er of persons to &e managed &y inducting them into different Departmentation# .hus it ensures suita&le span of control# It makes direction and control effective &y confining the managerial focus to 0ell-knit and functionally conceived units product-0ise process-0ise or area-0ise# %osts and revenues can &e determined only if the enterprise is parceled out into departments for administrative convenience# +llocation of duties selection of specialized staff fi@ation of responsi&ility 0ill have decisive character under departmentalized organizational set up# Sharing of authority and spreading of responsi&ility are the underlying factors of departmentation su&'ect to coordinating authority of top management# Pro"$)) o& D$+art'$ntat#on 2# Departmentation is done through the follo0ing process: 2. Identification of tasks or dutiesG 3. +nalysis of details of each taskG 4. Description of the functionsG 5. Entrusting the groups of functions to separate specialist heads and providing them 0ith suita&le stafi 6. Delineation of scope of authority and responsi&ility of departmental heads# Ty+$) o& D$+art'$ntat#on 7ork of an undertaking is divided into departments in the follo0ing five 0ays 1. 1y functionsG 2. 1y processG 3. 1yproductsG 4. 1y location or area or territoryG and 5. 1y customers# .his is perhaps the most logical and &asic form of Departmentation# ?unctional Departmentation is the process of dividing the organization into units on the &asis of the firmHs ma'or activities# It involves grouping employees according to &road tasks they perform# Normally separate departments are created for all the key activities of the &usiness# ?or e@ample in a manufacturing company the activities essential to the e@istence of the company are production marketing and finance# !o0ever in non-manufacturing concern these functions differ# In a transport company the key areas may &e operations sales and finance# .hus pu&lic utility concerns like electricity transport &anking insurance and hospitals have their o0n distinct key functional areas: In all these cases under functional Departmentation ma'or or primary departments are created along the key functional areas of the respective &usinesses# If the organization or given department is large or in other 0ords as the organization gro0s ma'or departments can &e su&divided# .hese su&divisions are called derivative departments# .he essential idea is to make increased use of specialization# + typical functional organization 0ith ma'or functions and derivative functions arc sho0n in the follo0ing figure#

#65

F!n"t#onal D$+art'$ntat#on .he follo0ing are the advantages and disadvantages of functional departmentation# +dvantages 1. It is the most logical and simple form of departmentationG 2. It makes supervision easier since each manager has to &e an e@pert in only his functional area of operation# 3. It makes efficient use of specialized resources and skills# 4. It fosters development of e@pertise in specialize D#)a *anta%$) 2# ?unctional departmentation is often found to &e inade/uate to meet the gro0ing needs of the &usiness particularly as the organization e@pands or diversifies activitiesG 3# ?urther decision-making &ecomes slo0 as the functional managers have to get the approval of the head/uartersG 3. It is also difficult to determine accounta&ility in a functional structure# If a product fails the /uestion as to 0ho is responsi&le cannot &e easily ans0eredG and 4. ?unctional managers tend to develop narro0 perspective and loose sight of the &igger picture Mem&ers of each department feel isolated from those in other departments# ?or e@ample manufacturing department may &e o&sessed 0ith cost reduction and meeting the delivery dates neglecting the /uality control# +: a result marketing department may &e flooded 0ith complaints# 2. Pro"$)) D$+art'$ntat#on .he manufacturing activities may &e su&-divided on the &asis of their process of production# Similar machines are grouped into separate sections that are utilized for a distinct operation of the 'o&# ?or e@ample lathe machines drill machines grinding machines and so on are placed in each distinct unit# %ost and H economy considerations urge the use of electronic office e/uipments add other costly machines on the &asic of this su&-division# It is ho0ever not a suita&le method to &e utilized in any mass production arrangement# 8. Pro !"t) D$+art'$ntat#on (ne of the most common 0ays in 0hich &usinesses gro0 is &y increasing the num&er of products they make and sell# If the organization is successful several product lines may attain such high sales that they re/uire a separate division *arge organizations like Sha0 7allace 4irloskar Ioltas# l.% !industan lever have coped 0ith the e@pansion of their product lines &y creating separate departments or divisions for the various products they make# "nder product Departmentation a single manager often referred to as the &rand or product manager is a delegated authority over all activities re/uired to produce and market that product# +s against the functions in the functional departmentation &asic products or services &ecome the primary or ma'or departments in the product departmentation as sho0n ill the follo0ing figure#

#66

A *anta%$) 1. $roduct departmentation paces attention and effort on the &asic products the success of 0hich is critical to the survival of the organization# 2. Since the revenues and costs are assigned to a particular product cost centers can &e esta&lished high profit areas can &e encouraged and unprofita&le product lines can &e dropped# .hus responsi&ilities for cost reduction and profits can &e esta&lished at the division level 3. $roper coordination of ail functional areas can &e achieved as all the functional managers 0ork as a team under close supervision of the product manager# Since the department or division is multi-functional it often operates like a complete company# 4. Ena&les /uick response to changes in environment as compared 0ith functionally organized firm# 5. $rovides managers a training ground in general management 0hich is useful in overcoming narro0ness of interestG and 6. E@pansion and diversification of activities is made easy &y creating ne0 departments for the ne0 products that are added to the e@isting oneHs# D#)a *anta%$) 2# Re/uires more persons 0ith general management a&ilities as more and more departments are for the various products# 3# .he product departments may try to &ecome too antonomous there&y presenting top management 0ith a control pro&lem# 3. It is alsoH common to find product departments engaged in the duplication of efforts# Each product units has its o0n functional departments# .hey may nOt &e sufficiently large to make ma@imum use of facilities# .hus product Departmentation &ecomes an e@pensive organizational form# 9. T$rr#tor#al D$+art'$ntat#on 7hen an organization operates in different geographical areas each 0ith distinct needs it is desira&le to create the departments along geographical lines the process of creating departments along the geographical lines is termed territorial departmentation .his type of organization makes it easier for the organization to cope 0ith variations #n la0s local customs and customer needs# pu&lic utilities like transport companies insurance companies etc# adopt territorial Departmentation# Similarly a large scale organization operating &oth in domestic and international markets may have separate departments or divisions lay &e created for different region of the 0orld# Many multinational companies recognize their glo&al activities 0ith regional head/uarters in different regions of the 0orld#

#67

A *anta%$) 1. .erritorial departmentation makes possi&le concentration on markets and marketing channels in different geographical areas# 2. Develops opportunities for more efficient marketing activities &ecause of &etter face-to-face communication 0ith local interestsG and 3. Makes possi&le effective utilization of locally availa&le resources &eing a&le to cater to the regionspecific variations in terms of preferences and sentiments of the people# D#)a *anta%$) 1. In this type of departmentation there are pro&lems in training people 2 think in tem2S of markets rather than products# 2. Re/uires more persons 0ith general management a&ilitiesG and 3. Increases pro&lem of top management control &ecause of the distance &et0een the corporate head/uarters and the regional offices :. C!)to'$r D"+art'$ntat#on Some organizations sell a 0ide variety of goods or services that appeal to different groups of customers each of 0hich has distinguished needs# In suchD case departments are created around customer groups# %ustomers are the key,H the 0ay activities are grouped# ?or e@ample commercial &anks (rganize their activities around customer groups to cater to their specific needs# +s such there are separate departments or divisions for agricultural industrial and merchant &anking operation# Similarly 0e find 1lue Star %ompany organizing its air conditioning &usiness around domestic and industrial air-conditioning units# A *anta%$) 1. %ustomer departmentation facilitates concentration on customer needs# .his is almost in line 0ithH the customer orientation professed &y any organizations these days# 2. %ustomers feel that they have an understanding supplier# ?or e@ample the manufactures may sell to 0holesalers and industrial &uyers# 7holesalers re/uire a product of dependa&le /uality plus a service that includes installation and repair of the product and the specific training of employees# 3. !elps the organization to set the correct feel of the market dynamics In terms of preferences of the customers competitorsH strategies etc# D#)a *anta%$) 1. Difficult to coordinate operations &et0een competing customersH demandsG 2. Re/uires considera&le e@pertise on the part of managers in understanding customersH pro&lems and specific needsG 3. .here is a possi&ility of under utilization of facilities and employees specialized in terms of customer groups# Small organizations particularly can not afford the e@penditure involved &ecause some amount of duplication of the facilities is inevita&le# Con"l!)#on Span of management is one of the important principle of organizing has &een analyzed in detail# It refers to the num&er of su&ordinates that a superior can effectively manage the principle suggests that there is a limit on the num&er of su&ordinates that can &e managed &y superior this limitation gives rise to the levels in the organization# if the span is 0ide it 0ould result in a flat structure# If it is a narro0 the result 0ould &e tall structure# 1oth types have merits and demerits .he process of a %reation of departmentsH 0ithin the organization it kno0n as departmentation# It results in the design of a structure in organization# Different patterns of departmentation are used &y organizations depending on their specific re/uirements say functional product process territorial and customer .hese method of DepartmentationT +nalyzed 0ith the merits and demerits of each type#

#68

L$))on ( 11 SPAN OF CONTROL .he term Hspan of controlH is also kno0n as Hspan of authorityH Hspan of supervisionH and Hspan of managementH# In modem organisation the term Dspan of managementD is gaining currency &ecause span is related moreD of management than of control and supervision# Modem e@ecutive &elieves that control and supervision nearly constitute an integral part of management process# No single e@ecutive can control and supervise all the activities of a large sized company# Every e@ecutive needs the assistance of several su&ordinates in sharing the 0ork# .he top e@ecutive irrespective of his education and e@perience takes the support of others since his incapacities &y human limitations# .his gives rise to the need for others assistance in controlling theL activities# M$an#n% Span of control implies the limitation on the num&er of su&ordinates that one manager can effectively supervise at a particular time# .he /uality of supervision &ecomes poor and coordination &ecomes 0eak 0hen large num&er of su&ordinates 0ork under a single e@ecutive (n the other hand# If the num&er of su&ordinates la too small the a&ilities of the e@ecutives may not &e used fully# + &alance &et0een these t0o e@tremes must &e maintained in order to use fully potentialities of the e@ecutive# .he pro&lem of span of control arises &ecause an e@ecutive has limited time kno0ledge and capacity# No one can effectivelyH supervise an infinite num&er of su&ordinates# + manager can pay attention only on a limited num&er of su&ordinates# Deciding the optimum num&er of su&ordinates that a manager can effectively supervise at a particular time is no an easy 'o&# May &e it is varying from manager to manager# !ence span of control is a person to person concept# +ccording to $eter ?# Drucker span of control refers to the limit of num&er of su&ordinates reporting directly to a superior# 4oontz and a Donnel used this term to represent the limit on the num&er of persons that anH Individual can effectively manage# (pinions are divided on 0hat should &e the appropriate# *imit J span# Different authorities have suggest different levels far effective supervision# ?or e@ample *yndal ?#"r0ick suggested that no e@ecutive can effectively supervise the 0ork af mare than five su&ordinates# 8#%# 7orthy suggested the num&er of 3E# .hese suggestions given &y various e@perts reveal the fact that there is no one Ideal num&er that can &e universally applied# In real life spans differ from situation to situation# In a research survey of hundred large companies conducted &y the +merica management +ssociation the num&er of e@ecutives reporting to the top e@ecutives varied from I to# 3:# 7hile H3< top e@ecutives had < or less than < su&ordinates# In respect of others it 0as O# + similar study conducted on :2 smaller companies reveals same interesting paints# .ap e@ecutives of 3; companies supervised 9 or more su&ordinates Smaller type of studies revealed compara&le results# Probl$') o& l$*$l) 5S+an6 1. E@istence of too many levels is e@pensive &ecause the organisation has to &are the &urden# 2. .oo many levels AspanB complicate the free flo0 of communication# (missions and mis-interpretations# Increase 0ith 0ide spans# .hat is 0hy it has &een rightly said that levels are DfiltersD of communications# 3. E@istence of too many levels and numerous departments create pro&lems even in planning and control process# + 0ell defined plan losses clarity and co-ordination as it passed on to the lo0er and lo0er levels# In a similar 0ay control &ecomes difficult 0ith too many managers#

4. !andling of superior - su&ordinate relationships on smooth lines is a must far the success of any enterprise# *arger spans and too# many managers may complicate the harmonious relationships &et0een 0orkers and management 5. Division of activities among various departments and creation of hierarchical levels are not completely desira&le as departmentalization is not an end for achieving effectiveness in organisation#

Gra#"!na) T,$ory I#+# -raicunas a ?rench management consultant e@plains 0ith the help of mathematical calculations that as the num&er of su&ordinates increased arithmetically the num&er of relationships among them increased geometrical -raicunas has identified three types of superior su&ordinate relationshipHs direct cross and group relationships# .he direct single relationship arises from the direct contacts of the superior 0ith his su&ordinates# .he cross relationships refer to the mutual relationships among su&ordinates 0orking under a common superior# .he direct group relationships arise &et0eenH the superior and su&ordinates in all possi&le com&inations# E@: - H1H is a supervisor and heD has t0o su&ordinates on the &asis of the a&ove formulaG the num&er of possi&le relationships 0ith different num&er of su&ordinates are summarized &elo0# No o& )!bor #nat$) 2 3 6 No. o& r$lat#on),#+) 2 < 2N

#69

: ; < 9 N O 2E 22

:: 2EE 333 :OE 2 ENE 3 69< ; 32E 2 E: N< 2;:

.he a&ove ta&le illustrates ho0 arithmetical increase in the num&er of su&ordinates results in increase in num&er of relationships in a geometric proportion# -raicunas has prescri&ed a ma@imum of si@ su&ordinates as the most desira&le span a control# 1ut in reality relation ships as per -raicunas formula do not occur dally# (ne thing is clear that it thro0s sufficient light on the fact that every su&ordinate adds pressure on the superiorHs 0ork of maintaining relationship at the spot# .o summarize the findings and principles of this theory: .here is a limit to the num&er of su&ordinates that an individual manage can effectively control# .he e@act num&er of such span depends upon the situation and its underlying varia&les like pressure of 0ork-load energy kno0ledge and attention of the superior degree of team-0ork# Cr#t#"#)' AiB .he span of control canS2Et &e rigid arid universal# .he actual span of control is determined &y a num&er of factors 0hich have not &een covered &y -raicunas .heory# AiiB .his theory ignores the fre/uency and severity of relationships that have not &een dealt 0ithin this theory# AiiiB .he -raicunasH theory has left out certain possi&le cross relationships like HEH to UI U to F1 and F to U1 etc# AivB .his theory only e@plains one side of the coin i#e# superior relationships 0ith su&ordinates# It grossly ignores the superiorHs side 0ays and up0ard relationships# S+an o& Control an L$*$l) o& or%an#)at#on (rganisation levels e@ist &ecause there is a limit to the num&er of persons a manager can supervise effectively# Ever gro0ing organisation must add ne0 levels to its structure# Determination of appropriate span of control to suit the levels of organisation is very important for t0o reasons# ?irstly the span of control effects the efficient use of superior and su&ordinate relationships for o&taining &etter performance# Narro0 span results in- under-utilization of managerHs services and over-controlling of su&ordinates# (n the other hand too 0ide span may lead to over-straining of manager and lack of effective control over su&ordinates# Secondly span of control has an important &earing on the shape of organisation structure# 7hile a narro0 span results in a DtallD organisation a #vide span leads to a HflatH structure# .his can &e effectively depicted through# diagrams A+ and 1B# =

#70

Diag. B 1 S+an): > Narro0 span refers to the e@istence of too many levels in the organisation# .he mainH advantage of narro0 span is that effective leadership and control can &e directly e@ercised on su&ordinates# Superior can easily communicate and effectively coordinate tile efforts E2 his su&ordinates since their num&er is small# Direct contact close supervision andH tight control can help improve the performance pattern# (rganisations 0ith narro0 spans suffer from several limitations# .oo may levels hinder t0o 0ay communication 0hen a message has to pass through different levels# Its effectiveness may&e reduced# *arge num&er of managers is re/uired 0hich results in additional salaries and high cost of management# .hirdly a tall structure may have its adverse impact over morale &ecause of the a&sence of close link &et0een top e@ecutive and &ottom 0orker# .o overcome these difficulties of narro0 Hspan Atall struuctureB some of the modem companies have adopted 0ide span structures# 7ide span prevails in flat (rganisations here one can find fe0er levels of authority# It indicates that the chain of command is short# 1ecause of this communication tends to &e /uicker and more effective# Employees also develop morale &ecause they feel that they are nearer to the top e@ecutive# .his system allo0s delegation of authority and development of su&ordinates# It is common that su&ordinates feel more autonon2#ous and independent in 0ide span organisational structures# Despite these advantages flat organisations are su&'ect to many disadvantages# ?irstly supervision and control tend to &e loose and less effective &ecause a single e@ecutive may not have enough time and energy to supervise all su&ordinates# Secondly the pro&lem of co-ordination gets magnified 0ith H0ide spans# Due to this the performance of su&ordinates is likely to &e pruned# ?lat structure 0ith 0ide span is not at all suita&le to large manufacturing organisations that have developed &usiness vertically# Decking the &est span is not that much easy# .he span of control must &e arrived at &y proper &alancing of t0o important factors such as organisational levels and supervisory load# Not only that this span of control is directly affected &y another t0o important varia&les such as capacity of the top e@ecutive to manage his 0ork and capacity of su&ordinates in carrying out the 0ork# +part from these factors there are many other factors 0hich help us in determining the actual size of span of control# .hey are e@plained &riefly in the follo0ing paragraphs: Mana%$'$nt Pol#"#$) .hey have a great &earing on span of control# If the policies are clear and comprehensive it results in Increase in span of control# %larity inL plans definiteness in fi@ing up responsi&ility and use of standing plans reduce the pressure of decision making &y the top e@ecutive# !ence span control 0ill increase# Nat!r$ o& Aor/ If the nature of 0ork is routine uniform typical and mundane it can &e effectively monitored and regulated through programmed decisions# It leads to increase in the span of control# In contrast to this volatile and comple@ 0ork together 0ith high risk-decisions are usually found at the top management# .hat is 0hy at top level one can find limited span of control# L#n$ an Sta&& r$lat#on),#+) If a line manager receives ade/uate staff help he can &ear high level of 0ork = load and can have a larger span of control# E@istence of good superior and su&ordinate relationships &ased on faith and mutual confidence is an essential pre-re/uisite to 0iden the span of control# (n the other hand if the superior is tactless in handling the relationship5s 0ith su&ordinates he 0ill have limited span of control# B!al#ty o& S!bor #nat$ If su&ordinate are e@perienced and 0ell-trained in challenges through self-confidence and control they

#71

0ill need minimum supervision from the &oss It 0ill certainly improve the span of control# Ot,$r &a"tor) .he span of control in practice is affected &y a good num&er of factors# ?or e#g# .ime availa&ility degree of decentralization control practices# .hey are &ound to have impact over the size of span# 7e may come across limited span 0hen the 0ork is to &e supervised through personal o&servation# Similarly 0ider span of control may prevail 0hen the 0ork of the su&ordinates can &e controlled through 0ritten reports# Con"l!)#on Span of control or supervision has assumed uni/ue at present .he Modern &usiness has gro0n in size comple@ity diversity and coverage $ro&lems of the top e@ecutives have increased considera&ly# .he &iggest task &efore the chief e@ecutive is ho0 to reduce the 0ork load of less important nature in order to keep close control over important and critical activities# .he modern managements are trying to o&tain &etter results through practicing different techni/ues# Span of control comes handy in easing out his 0ork = load#

#72

L$))on ( 12 DELEGATION OF AUT3ORIT1 AND DECENTRALIEATION INTRODUCTION +uthority is the po0er to make decisions 0hich guide the action of others# Delegation of authority contri&utes to the creation of (rganisation# No single person is in a position to discharge all the duties in an organisation# In order to finish the 0ork in time there is a need to delegate authority and follo0 the principle of division of la&our# Delegation permits a person to e@tend his influence &eyond the limits of his o0n personal time energy and kno0ledge# DEFINITION OF AUT3ORIT1 !enry ?ayol +uthority is the right to give orders and the po0er to e@act o&edience# 4oontz and (HDonnell D+uthority is the po0er to command others to act or not to act in a manner deemed &y the possessor of the authority to further enterprises or departmental purposes# .erry D+uthority is the po0er to e@act others to take actions considered appropriate for the achievement of a predetermined o&'ective#D +ccording to 1arnard D+uthority is the character of a communication AorderB in a formal organisation &y virtue of 0hich it is accepted &y a contri&utor to or mem&er of the organisation ::IS governing the action he contri&utes that is as governing or determining 0hat he does or is not to do so far as the organisation is concerned#D Daris defines authority as the right of decision and command# *ouis +lien D.he sum of the po0ers and right entrusted to make possi&le the performance of the 0ork delegated#D Simon D.he po0er to make decisions 0hich guide the actions of another it is a relationship &et0een t0o individuals =one superior the other: su&ordinates# .he superior frames and transmits decisions 0ith the e@pectation that they 0ill &e accepted &y the su&ordinates# .he su&ordinate e@pects such decisions and his conduct is determined &y them#D Dr# $aterson defines D.he right toH command and e@pect and enforce o&edience# Strong says D+uthority is the right to command#D Massie defines H.he formal right to e@ercise controlD .annen&au defines D.he concept authority descri&es an interpersonal relationshipH in-0hich one individual the su&ordinate accepts a decision made &y another individual the superior permitting that decision directly to affect his &ehavior# D C3ARACTERSTICS OF AUT3ORIT1 .he characteristics of authority are &riefly e@plained &elo0# 0a)#) o& %$tt#n% t,#n%) on$ +uthority gives a right to do things in an organisation and affect the &ehaviour of other 0orkers of the organisation# It leads to the performance of certain activities for the accomplishment of the deemed o&'ectives automatically L$%#t#'a"y +uthority implies a legal right A0ithin the organisation itselfB availa&le to superiors# .his type of right arises due to the tradition follo0ed in an organisation custom or accepted standards of authenticity# .he right of a manager to affect the &ehaviour of his-su&ordinates is given to him on the &asis of an organisational hierarchy D$"#)#on('a/#n% Decision-making is a pre-re/uisite of an authority# .he manager can demand his su&-ordinates to act or not to act# .his type of decision is taken &y the manager regarding the functioning of an office# I'+l$'$ntat#on Implementation influences the personality factors of the manager 0ho is po0ered to use authority# .he su&ordinates or group of su&ordinates should follo0 the instructions of the manager regarding the implementation of decision# .he personality factor of one manager may differ from another manager# SOURCES OF AUT3ORIT1 .here are &roadly three theories regarding the sources from 0hich authority originates# .hey are: .he formal authority theory .he acceptance of authority theory .he competence theory 1rief e@planations of the a&ove three theories are given &elo0:

#73

T3E FORMAL AUT3ORIT1 T3EOR1 : +ccording to this theory the authority flo0s from top to &ottom through the structure of an organisation In other 0ords the authority flo0s from the -eneral Manager to his departmental manager and in turn from the departmental manager to his superintendent and the like: .his is e@plained in the follo0ing diagram# [ 1oard (f Directors -eneral Manager Sales Manager Sales Representatives 7orkers .he ?ormal +uthority .heory is other0ise called .raditional +uthority# .heory and .op Do0n +uthority .heory# In the case of pu&lic limited company the authority is in the hands or shareholders and they delegate their authority to top management and in turn of part of this authority is delegated to the middle management# T3E ACCEPTANCE OF AUT3ORIT1 T3EOR1 %hester 1arnard gave this theory# +ccording to this theory the authority flo0s from the superior to the su&ordinates H0henever there is an acceptance on the part of the su&ordinates# .ile su&ordinates should accept the authority &ut there is no compulsion made &y the superior- If the su&ordinates do not accept the command of their superior then the superior cannot &e said to have any authority over them# +ccording to 1arnard D+n individual 0ill accept the e@ercise of authority if the advantages accruing to him from accepting plus the disadvantages accruing to him from not accepting e@ceed the advantages accruing to him from not accepting plus the disadvantages accruing to him for accepting and conversely he 0ill not accept the e@ercise of authority if the latter factors e@ceed the formerD# .he authority of a superior 0ill &e effective only 0hen there is 0illingness on the pan of the su&ordinate to accept authority and ineffective 0hen there is lack of readiness to accept the authority on the part of the su&ordinate# .he su&ordinate 0ill not analyze each and every order of the superior to accept it or lot# In fact certain orders of the superior are accepted &y the su&ordinate 0ithout a second thought# If an order of the superior is accepted &y the su&ordinate 0ithout any hesitation it is kno0n as zone of acceptance# Qone of acceptance 0ill &e determined &y a num&er of factors# 1. .he su&ordinate &elieves that re0ards 0ill &e given him in appreciation of his efforts and skills# 3# Sincere services of su&ordinate to the organisation 0ill &e re0arded# 6# + su&ordinate thinks that he has to accept the authority in a particular situation# :# .he non-acceptance of authority 0ill result in dismissal a the su&ordinate from organisation# ;# It is also accepted on account of special kno0ledge that man may possess# <# 9# It is accepted &ecause a su&ordinate is a0are of his status in the organisation# .here is no other 0ay availa&le than to accept authority#

N# It is the duty of the su&ordinate or it may &e the policy of the organisation# to impose the authority# O# $eople have confidence in the person giving orders# COMPETENCE T3EOR1 .his type of authority is invested 0ith the persons &y virtue of the office held &y them# .he personal po0er of this type of persons is &ased on the leadership /ualities of the person concerned# In an organisation only one person gets a higher position than others in course of time on the &asis of leadership /ualities possessed &y him# DELEGATION It is impossi&le for any person to e@ecute all the 0ork in an organisation to achieve the o&'ectives of the organisation# Similarly in a gro0ing concern also a single person could not &e vested 0ith entire decision-making authority# So the superior assigns duties or responsi&ilities to his su&ordinates and also delegates necessary authority to them# MEANING Delegation is a process 0hich ena&les a person to assign a 0ork to other and delegate them 0ith ade/uate authority to do it# DEFINITION *ouis +# +lien DDelegation is the dynamic of management it is the process a manager follo0s in dividing the 0ork assigned to him so that he performs that part 0hich only he &ecause of his uni/ue organisational placement can perform effectively and so that he can get other to help them 0ith 0hat

#74

remains#D Mc?arland DDelegation is# the primary formal mechanism &y 0hich the net 0ork of authority relationship is esta&lished#D E#?#*# 1rech DDelegation means in &rief the passing to others of a share in the four elements of the management process that is to say in the command of the activities other people and in the responsi&ility for the decision that 0ill determine the planning co-ordination and control of the activities of such other people#D .erry D%onferring authority from the e@ecutive or organisational unit to another in order to accomplish particular assignments#D !odge and 8ohnson D+ process 0here&y a superior divides his total 0ork assignment &et0een himself and su&ordinate managers or operative personnel in order to achieve &oth operative and management specialization# Dougcas %# 1asil DDelegation consists of granting authority or the right to decision-making in certain defined areas and charging the su&ordinate 0ith responsi&ility for carrying through an assigned task#D IMPORTANCE OF DELEGATION Delegation is considered to &e one of the most important methods of training su&ordinates-and &uilding morals# .he delegation of authority helps the manager to concentrate on the important 0ork of planning organising and controlling# Delegation is a universal process 0herever human &eings 0ork in groups one or the other form of delegation is practiced &y them# In our democratic India the people delegate their authority to the mem&ers of the legislatures# .he mem&ers of legislatures delegate their authority to anyone of the elected leaders 0ho in turn delegates some of his authority to the ca&inet ministers chosen &y him# +n individual can accomplish several simple and comple@ 0orks# Delegation ena&les a person not only to discharge his responsi&ility &ut also to discharge it effectively and economically# .o a &usiness unit 0hich has different &ranches situated at different places there is no alternative e@cept delegation It is ackno0ledged delegation or authority is one of the surest and the &est methods of getting &etter results# + very good superior can use the delegation of authority as a tool Vor motivating a:\d eliminating cum&ersome information system# ELEMENTS OR DELEGATION .he follo0ing are the three elements of delegation A))#%n'$nt o& !t#$) or r$)+on)#b#l#t#$) .his 0ork is &eing done only at the time 0hen superior has no time to accomplish all the 0ork# .he superior automatically assigns the 0ork of responsi&ility to his immediate su&ordinate# D$l$%at#on o& a!t,or#ty If the 0ork is assigned to any su&ordinate there 0ill &e a need for authority to accomplish it# +fter the delegation of authority the su&ordinate can get po0ers to accomplish the tasks in a specified time and in order# A""o!ntab#l#ty +ccounta&ility means that the su&ordinate is ans0era&le to his immediate senior# If there is any mistake or fault committed &y the su&ordinate the su&ordinate should accept responsi&ility for it# In certain cases the assignment may &e made to the su&ordinate if the 0ork is nor accomplished as per the instructions issued &y the superior# -:-i2c superior Aone 0ho delegates authorityB is ans0era&le to the management &ut not the su&ordinate Ato 0hom authority is delegatedB# PRINCIPLES OF DELEGATION D$l$%at#on to %o by r$)!lt) $M+$"t$ .he nature of duty has e/ual rank 0ith the e@tent of delegation of authority# It should &e noted that the o&'ectives of the organisation are to &e accomplished in time# .he superior should clearly kno0 0hat he e@pects from the su&ordinate &efore the delegation of authority# Non D$l$%at#on o& r$)+on)#b#l#ty + superior can delegate authority &ut not responsi&ility# +ssigning duties does not mean delegation of responsi&ility# .he superior should &e in touch 0ith the su&ordinates to kno0 0hether duties are performed and the authority e@ercised properly# .he ultimate responsi&ility for the performance of duties remains 0ith the superior# A!t,or#ty an r$)+on)#b#l#ty ),o!l "o''$n)!rat$ A#t, $a", ot,$r + su&ordinate can discharge his duties effectively and efficiently if there is proper delegation of authority other0ise a su&ordinate cannot succeed inG accomplishing the assigned tasks#

#75

+uthority 0ithout responsi&ility 0ill make the su&ordinate a careless person# *ike0ise responsi&ility 0ithout authority 0ill make the su&ordinate an inefficient person# So there should &e a proper &alance &et0een authority and responsi&ility# Un#ty o& "o''an .he principle of unity of command insists that a su&ordinate should get instruction from only one superior# In other 0ords a su&ordinate should &e assigned duties and responsi&ilities &y only one superior and he is accounta&le only to the concerned superior# If a su&ordinate gets orders instructions and directions from more than one superior it 0ill create uncertainty and confusion in the organisation# In such a situation the su&ordinate 0ill find it very difficult to determine 0hole instructions orders or directions he should carry out first# 7$ll $&#n#t#on o& l#'#tat#on) o& a!t,or#ty + person kno0s 0ell that an authority alone can delegate the authority properly# .here should &e #0ritten manuals 0hich help person to arider M tend the authority in right direction# .his 0ill avoid confusion regarding the delegation of authority and ena&le effective functioning of the concerned person# T1PES OF DELEGATION + &rief e@planation of the different types of delegation is given &elo0: -eneral Specific 7ritten W "n0ritten ?ormal W Informal Do0n0ard +ccrued Side0ard G$n$ral D$l$%at#on -eneral delegation means granting authority to the su&ordinate to perform various managerial functions and e@ercise control over his su&ordinates# +t the same time the same persons are regulated and supervised &y the top management# S+$"#&#" D$l$%at#on "nder specific delegation the orders instructions or directions are delegated to particular person specifically# ?or e@ample the $ersonnel manager may &e delegated authority for selection of personnel training of personnel placement of personnel and the like# 7r#tt$n D$l$%at#on .his type of delegation is made &y 0ritten orders instructions etc# .he proper usage of 0ords is essential to this type of delegation# UnAr#tt$n D$l$%at#on "n0ritten delegation means the authority is delegated on the &asis of custom conversion of usage# !ere there is no evidence availa&le for future reference# For'al D$l$%at#on .he duties and authority are sho0n in the organisational structure of the enterprise# ?or e@ample the production manager is assigned the responsi&ility and accompanying authority to maintain and increase the production# In&or'al D$l$%at#on In certain cases a person has to use the authority 0ithout getting it from top management# .he reason is that he can perform his assigned duties effectively in timeDoAnAar D$l$%at#on Do0n0ard delegation states 0hen a superior could delegate duties and authority to his immediate su&ordinate# .his type of delegation is follo0ed in most of the organisations# A""r!$ D$l$%at#on "nder this type of delegation a su&ordinate can delegate his authority to his immediate superiors# It occurs seldon in an organisation#

#76

S# $Aar

D$l$%at#on

+ person delegates authority to another person 0ho is also in the same rank as he is in the organisation# ADVANTAGES OF DELEGATION .he delegation of authority gives several advantages to the organisation# H.he important advantages of the delegation of the authority are given &elo0: 0a)#) o& $&&$"t#*$ &!n"t#on#n% Delegation lays the &asis for effective functioning of an organisation# It creates the relationship 0ith others and achieves various o&'ectives of the organisation# Sa*#n% o& t#'$ Delegation of authority ena&les the superior to allot more time to important matters like planning organising staffing directing co-ordinating controlling and decision-making# R$ !"t#on o& Aor/ Delegation relieves the superior from attending to the routine matters# Normally the routine matters are allocated to su&ordinates# It helps the superior to carry out more responsi&le 0ork alone# O++ort!n#ty &or D$*$lo+'$nt Delegation of authority gives a very good opportunity to the su&ordinate to gro0#:t helps in identifying the &est person among the various su&ordinates for development# 0$n$&#t o& )+$"#al#-$ )$r*#"$ Delegation helps the superior to get the &enefit of specialized kno0ledge or various persons at lo0er levels# ?or e@ample production is delegated to the production manager sales to the sales manager legal matters to the la0yer and the like# E&&#"#$nt r!nn#n% o& bran",$) If the &usiness has any &ranch the &ranch affairs or activities are looked after &y a separate person# !e is supposed to &e in charge of this &ranch# 7hen he can get ade/uate authority 0ith responsi&ility he could 0ork for the smooth and effective functioning of the particular &ranch# Int$r$)t an #n#t#at#*$

7henever the delegation of authority takes place the su&ordinate may do the 0ork 0ith interest# In certain cases the su&ordinate &y himself takes initiative to do the 0ork properly# Sat#)&a"t#on to )!bor #nat$) Delegation of authority 0ill satisfy the self-actualization need of the individuals# EM+an)#on an #*$r)#&#"at#on o& b!)#n$)) a"t#*#ty .he su&ordinates are fully trained in decision-making in various fields of the &usiness &y using the delegation of authority# .his type of talents of su&ordinates can &e used &y the top management in the e@pansion and diversification of the &usiness activities# PRO0LEMS OF DELEGATION Every superior is e@pected to delegate part of his duties and responsi&ility to his su&ordinates# + single person cannot perform all the 0ork# So delegation is a very important characteristic of the organisation# .he proper delegation of authority is made only at the time of a proper &alance &et0een feelings of superior and su&ordinates# 1. 3ESITATION ON T3E PART OF SUPERIOR .he follo0ing are the reasons for the lack of 0illingness on the pan of the superior to delegate authority# P$r&$"t#on#)' Many superiors think that he is &etter than others- .his is true to some e@tent# .he reason is that the superior may have had e@perience in doing and developed degree of skill# If such a practice is follo0ed &y a superior he is not a loyal employee of the organisation# !e should open the door to this su&ordinate to develop his a&ilities &y delegating authority# Some superiors prefer to retain the po0ers in their hands# .hese persons: denH &elief in the delegation of authority and they interfere 0ith the limited authority of their su&ordinates#

#77

D#r$"t#on) Many superiors have lack of a&ility to direct the su&ordinates# Su&ordinates may misinterpret the instructions 0hich the superior gives# .hen the superiors cannot get the e@pected efficiency from the su&ordinate# Con&# $n"$ Superiors have lack of confidence in su&ordinates# 7ithout confidence no&ody can delegate anything to others# In the society life cannot he lived 0ithout reposing in the a&ility of others so each superior is e@pected to delegate his po0ers to his su&ordinates# If the delegation is not made the superior has no chance to gain e@perience from delegation of authority# %onfidence is developed gradually on the &asis of the success of the delegation of authority# Control .he superior has control over his su&ordinates# !e 0ants to retain the control over his su&ordinates and keep up the importance of his role# !ence he hesitates to delegate his authority# 1esides the superior feels that he might &e dominated if he delegates his authority# A*o# an"$ o& r#)/ Risk may arise through the delegation of authority to a su&ordinate# 7hatever may &e the risk the superior 0ill have to take the responsi&ility for it# 1ut only fe0 managers are ready to run the risk# Co'+$t#t#on Su&ordinates learn much than the superior &y taking advantage of delegation of authority# .his results in the emergence of more talented persons than the superior# .his is not liked &y the superior and he avoids competition in future# Inab#l#ty o& t,$ )!bor #nat$ .he su&ordinates does not have any a&ility to accept any ne0 0ork# .he superior 0ho kno0s this fact hesitates to delegate po0ers# Inab#l#ty o& t,$ )!+$r#or If the superior is an inefficient person the 0ork method and procedures designed &y him are likely to &e faulty# So the superior 0ants to keep all the authority 0ith himself# 3ESITATION ON T3E PART OF SU0ORDINATES Sometimes the su&ordinates are not 0illing to accept delegation even though the superiors are very much interested in delegation# .he reasons for not accepting the authority &y the su&ordinates are given &elo0: Lo*$ o& )+oon(&$$ #n% If a su&ordinate has &een given a chance to take a decision he may not like to decide things himself# Ea)#$r to a)/ Su&ordinates often find it easy to ask their superiors for an ans0er than to find it out for themselves# Some superiors 0ill accept only one solution to a pro&lem and allo0 the su&ordinates to find out other solutions &y themselves# In such a situation a su&ordinate does the 0ork effectively and goes to his superior for an ans0er# F$ar o& "r#t#"#)' Sometimes a su&ordinate may fear that even for a silly mistake in a decision his superior may criticize his su&ordinate# .his suppresses the initiatives of the su&ordinate and destroys his self confidence# La"/ o& #n&or'at#on 5or6 r$)o!r"$) + su&ordinate may hesitate to-accept any ne0 0ork due to lack of information or resources to do the 0ork effectively# La"/ o& )$l& "on&# $n"$ *ack of self confidence in a su&ordinate is also one of the reasons for not accepting any authority# Ot,$r Aor/

#78

Su&ordinate may feel that they 0ill not &e a&le to finish any additional 0ork along 0ith the e@isting 0ork# Su&ordinates think that if they accept authority they may &e forced to accept more 0ork in the future# Ina $@!at$ #n"$nt#*$) + su&ordinate may not come for0ard to accept any authority if there is no personal gain in doing so# F$ar o& &a#l!r$ Some su&ordinates feel that they may fail and so they do not 0ant to accept additional responsi&ilities# EFFECTIVE DELEGATION .he superior has the aim to practice and encourage delegation for the efficient accomplishment of the organisational o&'ectives# !ence it is necessary that the nature and content of each 'o& should &e scientifically analysed to appoint the 'o& that can &e entrusted to su&ordinates# Normally minor and #routine types of 'o&s are entrusted to the su&ordinates# .he superior is not ready to perform even the ordinary routine 'o&s &ut at the same time there are certain 'o&s 0hich cannot entrusted thenG for e@ample the preparation of &udget formulation of policies and framing rules and regulations# STEPINVOLVED IN SUCCESSFUL DELEGATION .he follo0ing steps 0ill aid more successful delegations of authority# E)tabl#),'$nt o& $&#n#t$ %oal)

.heL purpose of delegation is to ena&le efficient accomplishment of organisational o&'ectives# 1ut delegations 0ill &e meaningless if the o&'ectives are not properly defined# Su&ordinates may hesitate to accept the authority if they do not kno0 e@actly 0hat is e@pected of them# D$*$lo+#n% +$r)onal #)"#+l#n$ &or )!+$r*#)#on Superior should have faith in the a&ility of his su&ordinates and tolerate the mistakesH committed &y them# .hen every Su&ordinate 0ill &e ready to acceptH the authority for efficient performance# E)tabl#),'$nt o& $&#n#t$ r$)+on)#b#l#ty .he authority and responsi&ility of each su&ordinate should &e m clear terms# .his 0ill avoid the duplication of delegation# Su&ordinate are ready to accept the responsi&ility if proper motivation is availa&le to them# Motivation may &e &y means of increased 0ages and the like# D$t$r'#n#n% A,at to $l$%at$

.his 0ill necessitate the appraisal of the capacity of the people and needs of the 'o&s# (nly delegata&le authority alone 0ill &e delegated# Tra#n#n% Su&ordinates should &e properly trained in handling delegated 0ork# .echnical and non-technical training should &e given to the su&ordinates# .he non-technical training includes the development of the morale self confidence and leadership /ualities of the su&ordinates# R$+ort +fter delegation of any authority the su&ordinate is e@pected to su&mit a report on it# (nly in this 0ay the superior 0ill &e freed from authority 'o&s to concentrate on other important functions# Control .he superior is held responsi&le to the top management even after the delegation of authority# So it is necessary to esta&lish a suita&le control system to keep a careful 0atch over the performance of su&ordinates# If the superior finds a deviation from the predetermined procedures he should take corrective action time# PRE(REBUISITES FOR EFFECTIVE DELEGATION OF AUT3OIUT1 + supervisor can delegate his authority after ac/uiring kno0ledge of the follo0ing pre-re/uisites of effective delegation: .he supervisor must understand the authority and responsi&ility of their o0n# of su&ordinates# .he supervisors must decide the portion of his authority that he 0ants to delegate to su&ordinates# .he supervisor should have thorough kno0ledge of the a&ilities and ina&ilities

#79

 .he supervisor must ensure that the su&ordinates have understood the delegated 0ork in right direction# .he supervisor should delegate only the routine functions to su&ordinate .he supervisor must understand the need importance and value of delegation# .he supervisor should delegate the 0ork 0hich can &e performed independently# .he supervisor must dissuade the su&ordinate from &eing tempted to take decision &y themselves# .he supervisor must release the decision-making po0ers to his su&ordinates# .here should &e ade/uate communication net0ork 0ithin the organisations .here should &e a clear definition of standard of accounta&ility# Delegation must &e done in accordance 0ith overall plan for the completion of the 0ork# .he delegation of authority should &e confined to the organisational structure# COMMON FAULTS IN DELEGATION : Clo)$ )!+$r*#)#on .he supervisor has to supervise his su&ordinates even after delegation of authority# .he advantages of delegation of authority 0ill not &e availa&le to the organisation if there is no close supervision and if the su&ordinates are not made to act independently# La"/ o& #r$"t#on .he supervisor fails to provide ade/uate direction to his su&ordinates# I: places the su&ordinates in a position in 0hich they do not kno0 0hat is e@pected of them# La"/ o& a""o!ntab#l#ty .he efficient use of delegated 0ork cannot &e checked &y a supervisor# .his is a great handicap to the superior# +s aL result of this a sense of irresponsi&ility infuses the su&ordinates# DECENTRALISATION Decentralisation means that each section has its o0n 0orkers to perform activities 0ithinL the department# .here 0ill &e no general office to provide these services# "nder the decentralisation separate staffs are allocated to each department for performing those activities 0hich cannot &e centralized# ADVANTAGES OF DECENTRALISATION + &rief e@planation of the advantages of decentralisation IS presented &elo0: Sa*#n%) o& t#'$ +ll paper 0ork relating to the &asic operations of the &usiness originates from the departmental officers# Decentralisation ena&les the department staff meI2S&ers to complete the 0ork early# Gr$at$r $&&#"#$n"y an o!t+!t

.he 0orkers of a particular department are 0ell versed in the technology follo0ed in that department# !ence there is a possi&ility of increasing their efficiency# .he greater efficiency leads to increase in output and minimizing the cost# Ma#nt$nan"$ o& )$"r$"y If the secrecy of the &usiness is disclosed it may make the organisation realize a loss# Ne@t if a separate department is put in charge of the maintenance of secrecy under decentralisation the loss may &e avoided and the secrecy maintained# D$+art'$ntal loyalty .he staff attached to a particular department for a num&er of years develops a sense of loyalty to the department# It results in the increase of au and improvement of the performance of the individual# DISADVANT AGES OF DECENTRALISATION .he disadvantages of decentralisation arc e@plained &elo0# No +ro+$r #*#)#on o& Aor/ .he 0ork load of the organisation cannot &e evenly divided to &e give each department# D!+l#"at#on o& Aor/

#80

If the same type of 0ork is performed in more than one department i#e# duplication of 0ork separate machines and e/uipments are used to perform the duplication of 0ork# No )tan ar #-at#on .here is no possi&ility of adopting a standard procedure to perform same type of 0ork in all departments# 1esides it &rings a&out difficulties selection and training in each department# 3$a*y $M+$n #t!r$ + large num&er of staff mem&ers and supervisors are re/uired under this arrangement# It leads to increase in the cost of operation#

RESPONSI0ILIT1 Responsi&ility al0ays arises from the superior-su&ordinate relationship .he essence of responsi&ilities is o&ligation# If a person is entrusted 0ith any 0ork he should &e held responsi&le for the 0ork that he completes# MEANING Responsi&ility is the o&ligation to do something# In other 0on responsi&ility is the o&ligation to perform the tasks functions or assignments the organisation# DEFINITION .heo !aimann DResponsi&ility is the o&ligation of a su&ordinate to form the duty as re/uired &y his superior#D Davis DResponsi&ility is an o&ligation of the individual to perform the assigned duties to the &est of his a&ility under the direction of his e@ecutive leader# Strong Responsi&ility is an o&ligation to perform certain functions and achieve certain results# Mc?arland CResponsi&ility is the duties and activities assigned toH a position or toH an e@ecutive# ELEMENTS OF RESPONSI0ILIT1 .he follo0ing are the &asic elements of responsi&ility: 1. It arises from superior-su&ordinates relationship# 2. It results from contractual agreement# 3. .he responsi&ility cannot &e transferred toH any&ody# 4. It is created &y acceptance of authority# 5. .here is an- essence of o&ligation# 6. .he responsi&ility-may &e general or specific# 7. Responsi&ility is a continuing process &y nature# Delegation of authority and responsi&ility is necessary far an effective functioning of an organisation# Responsi&ility 0ithout authority is an empty vessel# +uthority 0ithout responsi&ility is very dangerous one# 1ath authority and responsi&ility are necessary toH an individual#

#81

#82

LESSON ( 18 COMMITTEES Co''#tt$$ Or%an#)at#on %ommittees are very e@tensively used in the modem organisations at various levels# .he committees are also called variously as &oard commission ask force team etc# %ommittee is a group of persons to 0hom as a group some matter is committed: It is appointed &y an authority 0ith some delegated po0ers# 1rings into decision making the e@perience and e@pertise of t0o or more persons# Ty+$) o& "o''#tt$$) &e &roadly classified into advisory committees and e@ecutive committees# 7hen committees are entrusted 0ith staff authority they are kno0n as advisory formalities# .hey play only an advisory role and cannot enforce implementation of their advice or recommendation# 7orks committee ne0 product development committee finance committee marketing committees etc# are the some of the e@amples for advisory committees# (n the other hand 0henever committees are 0ith authority Apo0erB they are called e@ecutive committee# E@ecutive committees not only take decisions &ut also have the authority to implement hemH .he &oard of directors is an e@ample of e@ecutive committee %ommittees may &e either permanent or temporary AadhocB# .hey may also &e formal or informal# + formal committee #0hich finds a place in the organisation chart 0ith specific authority and responsi&ility# In general formal committees are permanent in nature 0hereas informal committees may &e temporary or permanent# .hey may also &e classified into adhoc committee and standing committees# .he former is constituted for a specific purpose and then dis&anded after it has performed the assigned task# .he latter is more permanent and deists as long as there is need for it in the organisation# R$a)on) &or t,$ !)$ o& "o''#tt$$ .he committees are 0idely used in modern organisation# .he follo0ing are some ma'or factors responsi&le for the popularly of committee form of organisation# Gro!+ +art#"#+at#on %ommittee facilitates the involvement and participation of more than one# .0o heads are &etter than one# Many of the inade/uacies or limitations of an individual are compensated &y collective 0isdom and thinking# .he %ommittee meetings &ecome the forum for cross-e@amination and fertilization of ideas# .he e@change of information vie0 points &eliefs and e@perience help in e@amining: the issues involved more thoroughly 0hich may not &e possi&le in an individual 'udgment D#&&!)#on o& a!t,or#ty .he fear of concentration of authority in one individual is another reason for the constitution of committees# No single mem&er of the committee can haveD a&solute authority 7hatever the decision of the committee it has to &e approved &y at least ma'ority mem&ers# Con)ol# at#on o& a!t,or#ty In committee form of organisations the authority of all the mem&ers 0ill &e pooled up the authority of different individuals 0hich is other0ise splintered is consolidated in the committee form .he collective authority thus pooled up# ena&les the committee to decide on matters 0hich are &eyond the scope authority#D R$+r$)$ntat#on o& #nt$r$)t$ %ro!+) + committee must &e appointed 0ith representation to all those 0ho are affected &y a particular decision# It provides not only an opportunity for participation &ut also satisfies the ego of individual mem&ers# .he mem&ers naturally feel that they are also a party to decision and therefore they tend to &ell loyal to the decision# Co(or #nat#on b$"o'$) $a)y In %ommittee facilitate inter-departmental coordination# .he interaction# 8ail that takes place among the mem&ers and the 0ay ho0 the information is shared in# &y them contri&ute for &etter co-ordination of the plans and there&y inter- departmental activities# + tool of Management development A tool o& Mana%$'$nt $*$lo+'$nt

%ommittee can also &e used as a tool of management development# It 0idens the managerHs perspective and kno0ledge a&out some important tasks in the organisation# !is participation in the committee meetings and the e@posure thus gained ena&le him to understand the larger picture# Ialua&le learning takes place 0here individuals can take an integrated vie0 to solve the pro&lems# A*o# an"$ o& a"t#on More often committees are used to avoid action on a pro&lem# +t times a manager may &e un0illing to take action &ut he cannot afford to avoid action also# .he &est option open to him is to refer the matter to a committee# + committee can &e used to smoothen the tempers and passions of people# It is also used as a

#83

mean to overcome resistance pressure or opposition from parties involved in an issue# L#'#tat#on) o& "o''#tt$$.) .he committee form of organisations is not free from certain limitations# %ommittees are su&'ect to mismanagement and misuse# .he follo0ing statements on committee reflects the darker side of the use of committees# a place 0here the loneliness of thought is replaced &y the togetherness of nothingnessD# Ha committee is made up of the unfit selected &y the un0illing to do the unnecessaryD .he follo0ing are the limitations of committees# 3#%, "o)t #n t!n$ an 'on$y .he constitution of a committee is an# e@pensive affair .he time and money involved are /uite considera&le# .he e@ecutive time has got opportunity cost# +fter a series of meetings if no decision is taken or the outcome is insignificant the e@penditure of resources and the e@ecutive time spent 0ill &ecome 0aste and the e@ercise is meaningless# It 0ill &e still ridiculous# If a committee is assigned a pro&lem that could &e solved &y a single individual# No +ro'+t $"#)#on)

%ommittee is not conducive for /uick decisions# +rriving decisions in a committee after follo0ing the necessary formalities is a time consuming process# In $"#)#on Puite often committee meeting end up in no decision# Meetings getH ad'ourned for 0ant of /uorum and time for thorough discussions# 1esides many decisions may &e taken on the &asis of compromise# M#nor#ty Tyranny %ommittees normally tend seek unanimous or near unanimous decisions# Minority mem&ers 0ho hold a different vie0 are therefore in a strong position# Similarly ma'ority can also put pressure on minority mem&ers to forceH them to arrive at the decision# S+l#tt#n% o& R$)+on)#b#l#ty Since many mem&ers are involved in the decision making process of the committee no individual is held responsi&le if the outcome of the decision in adverse so no mem&er feels the responsi&ility for group action# E&&$"t#*$ !)$ o& "o''#tt$$) +sH the emphasis on the group decision making and participation increases so also the use of committees in the companyHs affairs# If ade/uateH care is e@ercised in respect of the follo0ing factors the committees can &e: effectively used for &etter decision making# 1. +uthority and scope of the committee must &e clearly defined# 2. .he size of the committee must &e optimum# 6# "tmost care must &e e@ercised in selection of mem&ers for the committee# 4. %areful selection of the su&'ect matter to &e entrusted to the committee# 5. Effectiveness of the role played &y the chair person or leader of the committee must &e taken care of# S!''ary *ine position may &e defined as those directly responsi&le for achieving the organization5s goals# Staff positions provide e@pert advice and service to the line Staff authority ranges from &eing limited to advising on re/uest to compulsory consultation to concurrent authority to functional authority# H.he characteristics advantages and disadvantages of line and staff relationship have &een discussed in the first part# In the second part of the lesson functional authority its advantages and disadvantages committee form and ma'or issues-related to committees etc# have &een dealt 0ith#

#84

LESSON (19 STAFFING INTRODUCTION In the ne0 enterprise the staffing function follo0s the planning and# organising function# In the case of running an enterprise the staffing function is a continuous process# So the manager should perform the staffing function at all times# .he #staffing function includes the recruitment selection training development transfer promotion and compensation of personnel# It is o&vious that the management must ensure a constant availa&ility of sufficient num&er of efficient e@ecutives in an enterprise for the efficient functioning of the enterprise# .he selected personnel should &e physically mentally and temperamentally fit for the 'o&# DEFINITION +ccording to 4oontz and (HDonnell D.ile managerial function of staffing involves managing the Horganisation structure through proper and effective selection appraisal and development of personnel to fill the roles designed into the structure# S: 1en'amin has defined staffing as evaluating and directing individuals at 0ork#D D.he process involved in identifying assessing placing

+ccording to .heo !aimann# DStaffing function is concerned 0ithH the placement gro0th and development of all those mem&ers of the organisation 0hose function is to get things done through the efforts of other individuals# ELEMENTS OF STAFFING 7hile performing the staffing function the manager has to see that men are fit for 'o&s and 'o&s are not altered for men# .he ma'or elements of staffing are given &elo0: Effective recruitment arid selection $roper classification of personnel and pay fi@ed for them $roper placement +de/uate and appropriate training for development Satisfactory and fair transfer and promotion Sound relationship &et0een management and 0orkers +de/uate provision for retirement

FUNCTIONS OF STAFFING Man+oA$r +lann#n% Manpo0er may &e planned for short-tem and long-term# .he short-term manpo0er planning may achieve the o&'ectives of the company at present conditions# .he long-term manpo0er planning should &e concerned 0ith the estimation of staff mem&ers re/uired in future# D$*$lo+'$nt Development is concerned 0ith the development of staff mem&ers through ade/uate and appropriate training programme the training is given only to the needy persons# F#M#n% t,$ $'+loy'$nt )tan ar ) It involves the 'o& specification and 'o& description# .hese ena&le the management to select the personnel and train them scientifically# 8o& description is a systematic and organized 0ritten statement of the duties and responsi&ilities a specific 'o&# 8o& specification is a statement of personal /ualities that an individual must possess if he is to successfully perform the 'o&# So!r"$) It is concerned 0ith the method &y 0hich the staff mem&ers are selected The sources may &e internal and e@ternal sources# Internal source means that a vacancy is filled up &y the company out of the staff mem&er5s availa&le 0ithin the company# .he e@ternal source means that a vacancy is filled up &y the company from outside the company# .he person selected may &e unemployed or 0orking in any other company# S$l$"t#on an +la"$'$nt.: It includes the process of selection of the staff mem&ers# .he placement includes giving a 'o& to a person on the &asis of his a&ility education e@perience and the like# Tra#n#n% .he training may &e arranged &y the company itselfG In certain casesG the staff mem&ers may &e sent out &y the company to get the training# .he e@pense is &orne &y the company# .he training may &e re/uired

#85

not only &y the ne0 staff mem&ers &ut also &y the e@isting staff mem&ers# Ot,$r &!n"t#on) .he other functions of staffing includes co-ordination regarding employees rating of employees motivation etc# PROCESSING OF STAFFING .he selection and placement of personnel involves the follo0ing processes# .hey are &riefly discussed &elo0: Plann#n% .he term planning of staff mem&ers includes estimation of the num&er of staff mem&ers re/uired to the company in various grades# It is &ased upon the size of the company and the policy follo0ed &y the company and policy follo0ed &y the company R$@!#r$'$nt an )$l$"t#onN It deals 0ith the selection of /ualified applicants to fill the 'o&s in the organisation# + standard procedure may &e follo0ed 0hile selecting the Hstaff mem&ers# .he procedure may &e valid for different types of personnel# Tra#n#n% o& $*$lo+'$nt) It is concerned 0ith providing training to ne0 staff mem&ers as 0ell the e@isting staff mem&ers .he 0orking efficiency of the staff mem&ers may &e developed through the training programmers# P$r&or'an"$ o+$rat#on It deals 0ith assessment of the 0ork performed &y the staff mem&ers Hin an organisation# + standard may &e fi@ed in order to evaluate the efficiency of the staff mem&ers# PROPER STAFFING $roper staffing means providing ade/uate /ualified staff mem&ers for the purpose of effective functioning of office# .he chief e@ecutives or the general manager undertakes this function# Identifying appropriate staff mem&ers is a difficult task# So some of the staffing functions may &e assigned to a separate department in the large concern# ADVANTAGES OF PROPER STAFFING It helps in the recruitment of efficient staff mem&ers# It helps the proper placement of staff mem&ers according to their a&ility# $roper selection training and development of staff mem&ers 0ill result in the ma@imum production in an organisation# Increasing the efficiency of the 0orkers 0ill increase the .he earning capacity of the 0orkers# RECRUITMENT Recruitment is the process of finding the apt candidates and inducing to apply for the 'o& in an organisation# .he recruitment should &e a sound me# If it is not so the morale of the staff 0ill &e vary lo0 and the image of the company 0ill# &e tarnished# ].he success of any recruitment depends upon the procedure follo0ed &y the company 0hile recruiting the mem&ers# 8o&s 0ith lo0 salary or uninteresting 'o&s or difficult 'o&s cannot &e filled up &y the company very easily# Every company has to recruit its staff mem&ers &ut the /uantum of recruitment may carry from one company to another company# .he variation may &e due to the size of the company recruitment policy of the company nature of the 'o& and the like# MEANING Recruitment means the discovery of the staff mem&ers for the present and future 'o&s in an organisation# DEFINITION +ccording to DaltonH E# Mc?arland D.he term recruitment applies to the process of attracting potential employees of the company# Ed0in 1# ?lippo DRecruitment is the process of searching for prospective employees and stimulating them to apply for the 'o&s in the organisation#D SOURCES OF RECRUITMENT .he source of recruitment isH &ased on the policy follo0ed &y the company# .he 'o& can &e filled up out of the employees of the company or from outside the company# If the 'o& is filled up out of the present employees of the company it is said to &e the internal source of the company# If the same 'o& is filled up from out of the candidates availa&le in the society it is said to &e the promotion transfer record maintenance

#86

e@ternal source# + clear picture of the internal sources and the e@ternal sources is given &elo0#

INTERNAL SOURCES 7henever a 'o& falls vacant it can &e filled up &y giving a promotion to the present employee of the company# It is &ased on the promotion policy follo0ed &y the company# In certain cases a same cadre staff mem&er is deputed to the 'o& &y the company# .his is called a transfer# .his is also &ased on the transfer policy follo0ed &y the company# ADVANTAGES W It increases the morale among the staff mem&ers of the company# -iving promotion keeps the employee happy# It attracts efficient staff mem&ers# .he training e@penses may &e reduced to some e@tent# W + person 0ho has got a promotion inspires the staff mem&ers to ac/uire a thorough kno0ledge of his 'o& Internal promotion helps the staff mem&ers to derive 'o& satisfaction# + promoted staff-mem&er may make use of his past e@perience in the ne0 post# It increases the security of the 'o& of the staff mem&er# + ne0 responsi&ility can &e entrusted safely to the promoted staff mem&ers on the &asis of the contents of Service Register It ensures the continuity of 'o& to the staff mem&ers and sta&ility of the organisation# It induces the staff mem&ers to 0ork hard to get promotion# Such e@penses as on advertisement recruitment test a#H2d intervie0 are avoided# DISADVANTAGES If the higher post is filled internally the company 0ill not &e a&le to get fresh and original ideas and initiative from the staff mem&ers# .he outsiders do not have a scope to sho0 their a&ility in the performance of the 0ork# +n under /ualified person may &e appointed in the higher post# If-the promotion is a guarantee to the internal staff mem&ers after of e@piry of a specific period the concerned staff mem&er does not care of 0ork efficiently# EGTERNAL SOURCES .here are various e@ternal sources of recruitment# .hey are &riefly e@plained &elo0: A *$rt#)$'$nt 7hen a company 0ants to inform the pu&lic that it has a vacancy it puts up an advertisement# .he details of the 'o& and the /ualification of the candidates are &riefly given# .he company may receive the applications in response to the# +dvertisement after that an intervie0 0ill &e conducted# In certain cases 0alk-in-intervie0 method may &e adopted &y the company# In the 0alk in-intervie0 method the applications are not received from the candidates# .he date and time and place of the intervie0 are mentioned in the advertisement# In this 0ay a person can &e recruited through an advertisement# R$"o''$n at#on) !ere recommendation means appointment of a person on getting a recommendation letter from a person relia&le and 0ell kno0n to the company# In certain cases an employee of the company may &ring the

#87

candidates to the company for the purpose &eing appointed 0hen the company does not conduct an intervie0 for selection# Gat$ a++l#"ant) .he educated unemployed youth may contact the company to get employment# .hese candidates may not have any recommendations# Even the company might not have issued any advertisement for the $ost# .he candidate personally approaches the appointing authority of the company# If such candidate is found fit for anyone of the posts 0hich are vacant at that time the candidate is appointed# E'+loy'$nt $M",an%$ H.he 'o& seekers register their nan2es 0ith their /ualification 0ith the employment e@change# .he company can get a list of candidates 0ho have re/uisite /ualifications to fit in a 'o&# (ut of the listed candidates anyone of them can &e selected# .he employment e@change is of t0o kinds i#e# pu&lic employment e@change and private employment e@change# .he pu&lic employment He@change is run &y the government# .he private employment e@change is run &y a private party# .he private can get a commission &oth from the 'o& seekers and the company# 1ut the pu&lic employment e@change does not demand any such commission &oth from the 'o& seekers and the company# P$r)onn$l "on)!ltant) $rivate consultant is a separate specified agency doing the function of recruitment of the personnel on &ehalf of the company# In other 0ords the functions of personnel department of any company are performed &y the personal consultants# It receives the applications from the candidates verifies the applications conducts intervie0s and selects the candidates# .he $ersonnel consultant receives fees from the company for its service# E !"at#onal #n)t#t!t#on) "niversities colleges and institution are formed to offer specific courses .he education institutions make an arrangement for campus intervie0 &usiness concerns come to the campus of educational institutions to recruit students for various posts# .he selected students are re/uested to 'oin the post after completing the course# 7a#t#n% l#)t .he &usiness concern prepares a 0aiting list of candidates 0ho have already &een intervie0ed# 1ut they are not appointed for lack of vacant 0henever a vacancy arises the vacancy may &e filed up &y the company out the 0aiting list# Un)ol#"#t$ a++l#"ant)

"nsolicited application means the application received through mail fro the candidate# .he applications &rings the information regarding the name and address of the candidate his age educational /ualification e@perience area interest etc# If there is any vacancy at that time the candidate 0ill &e recruit for the specified post# Normally this type of applications is considered for tl posts at the lo0er level# Jobb$r) an "ontra"tor)

.he casual vacancy may &e filled up &y the company through the 'o&&er and contractors# Normally unskilled candidates are appointed in this 0ay# .he: are availa&le at short notice and for a small salary# .his type of candidates &rought &y the 'o&&ers and contractors to the place of 0ork and they receipt some 0ages from the company for this service# F#$l tr#+) + company may send a group of e@perts to the to0ns and the cities 0here the various kinds of candidates re/uired &y the company are availa&le# In this case a prior advertisement may &e issued in ne0spapers# .he advertisement contains information regarding the date venue and tin2e of the intervie0# .he intervie0 is conducted in different places# .his is the procedure follo0ed to recruit the candidates under field trips#

L$a)#n% .his type of source of recruitment is follo0ed &y the pu&lic sector organisation# .he reason is that the organisation 0ants to manage the pro&lems particularly at higher level# 1efore recruiting the staff mem&ers the period of service is fi@ed &y the company and it is conveyed to the staff mem&ers# MERITS

#88

.here are some advantages to the company if the appointment is made through e@ternal sources# .hese advantages or merits are discussed &elo0: C,o#"$ + company can recruit a person out of a large num&er of applicants# Each and every candidateHs plus points and minus points are taken into consideration for the purpose of recruitment# .hen the &est candidate can &e selected &y the company# N$A o!tloo/ If a ne0 person is recruited &y the company a ne0 0ay of approach may da0n to solve the pro&lem# + ne0 0ay of approach 0ill give ma@imum &enefits to the company# 7# $ $M+$r#$n"$ If the recruited ne0 candidate has e@perience in various fields the company can get the &enefit of the candidateHs e@perience# DEMERITS .he e@ternal sources also have some demerits# .hey are listed &elo0: Gr! %#n% o& ol $'+loy$$) If a candidate is recruited from e@ternal sources the e@isting staff may have a grudge against him# It results in demoralization of the staff mem&ers# K La"/ o& "o(o+$rat#on .he e@isting staff mem&ers don not e@tend their %o-operation to the person 0ho is selected from out of e@ternal sources# In addition to this the e@isting staff mem&ers make the ne0 man difficulties and try to cast slur on his name# EM+$n)#*$ Recruitment Hof a person from outside the company re/uires a lot of formalities .he formalitiesH include issuing advertisement receiving the applications screening the applications dispatching the intervie0 letters fi@ation of intervie0 date time and place formation of an intervie0 committee etc# %ompleting all the a&ove said procedures involves a lot of e@penditure# K Tra $ !n#on If the trade union of the company is very strong it is very difficult to convince the trade union and recruit a person outside a company# Dan%$r o& non(a 4!)t'$nt If a ne0ly recruited person fails to ad'ust himself to the 0orking conditions of the company it leads to more e@penditure in looking for his replacement# 1esides it causes to irritation and /uarrel &et0een the recruited person and the e@isting staff mem&ers# SELECTION Selection is the device used in an organisation to select a suita&le persNn 0ho has re/uired educational /ualifications skills a&ilities personality and the like# 7hen an organisation gets more num&er of applications than needed the application in e@cess are re'ected# In other 0ords a screening test may&e conducted through 0hich unsuita&le candidates may &e re'ected# Selection procedure starts 0ith the end of recruitment# MEANING Selection is the process adopted &y num&er of persons 0ho are fit for the 'o&# IMPORTANCE OF SELECTION Selection is a tough task at present# .he reason is that the availa&le candidates are more /ualified than 0hat is re/uired# .hey have higher education /ualifications and e@perience# So more care is needed in the selection of proper personnel# Manager is informed a&out Ahe comple@ities of selection and 0eakness and limitations of various selection techni/ues Managers kno0 the pro&a&ilities of error# .he high degrees of education and employment opportunities have made the *a&our market or &uyersH market# .he economic security has made it a sellersH market# .he ine@perienced candidates cannot meet the re/uirement of todayHs 'o& No0 education is developed in such a 0ay that training is given 0ithin the study# + person 0ith ade/uate and desired e@perience gets selected for the 'o&# Managers kno0 the techni/ues used to discover the deficiencies in candidates# o # .odayHs pu&lic policy has imposed many ne0 restrictions 0ith respect to those 0ho canH and should &e hired and 0hat kind of selections are accepta&le#

#89

 If the 'o& specifications are not clearly descri&ed it makes the selection procedure a difficult one# Selection re/uires high cost &ut results in a very high rate of return#

STAGES OF SELECTION PROCEDURE It may &e said that recruitment is a positive function of the management# 1ut selection is a negative function of management# .he reason is that eliminating applications is more difficult than selecting them# Normally the selection procedure has the follo0ing 1. R$"$#*#n% an )"r$$n#n% o& a++l#"at#on) $rospective employees are re/uested to su&mit the applications in 0hite paper or in a prescri&ed form# In &oth the cases full particulars of the employees should &e given# +ny omission may dis/ualify the particular candidate# .he information relates to the name of the candidate age educational /ualification date of &irth e@perience parentsH name and occupation address for communication and the like# .he same information is kept as a permanent record in the organisation# If the num&er of applicants e@ceeds the actual re/uirement the organisation may select more candidates than re/uired# 2. In#t#al #nt$r*#$A It is other0ise called preliminary intervie0# .he o&'ect of conducting this intervie0 is to kno0 0hether the applicant is physically and mentally fit for the 'o&# Puestions are put to the candidate for evaluation# .hese /uestions are relating to his /ualifications e@perience interest age nativity and the like# (nly a minimum time is spent for this intervie0# %andidates 0ho have passed in initial intervie0 are called for the ne@t selectionH procedure# 8. A++l#"at#on blan/ + specific format is follo0ed &y an organisation for this selection process# .he nature of the format varies for each 'o&# .he same form is not use Afor all 'o&s in an organisation# .he reason is that different /ualifications and skills are re/uired for different 'o&s# %are should &e taken to ensure that theD candidates provide &rief and pointed ans0ers for /ueries raised in the form# 1esides irrelevant ans0ers should &e avoided and all relevant information should &e given in the form# .he advantages of application &lank in the selection procedure are 2 e@plained &elo0: +cts as an "rgent test device.he applicants have to find precise ans0ers for the /ueries raised in the form# .his test is used to find the /uick understanding capacity and pro&lem solving capacity of the candidate# # S,y "an # at$ Some candidates may find it difficult to give ans0er in the face to face meeting 0ith the employer# .hey may give ans0ers through this form# Shy candidates and slo0 candidates may use this process# K A# to b!#l tr!)t a'on% a++l#"ant)

7henever the applications are issued to applicants for filling up there is a confidence among the applicants as they are for the 'o& in /uestion# 0a)#) &or &#nal #nt$r*#$A .he ans0ers given in application form are used as &asic things to frame /uestions for the final intervie0# A# to +r$+ar#n% Aa#t#n% l#)t

%andidates may &e found fit for the 'o& &ut they cannot &e a&sor&ed immediately# .hese candidates are placed under 0aiting list# .he information provided in the form is used for the preparation of 0aiting list# 9. T$)t .he test is conducted &y the organisation for the purpose of kno0ing more a&out the applic3#nts to select or re'ect# Normally many organisations ask the applicants /uestions to kno0 more a&out their aptitude interest general a0areness etc# .ests can &e classified into t0o kinds# .hey are $roficiency .est andD +ptitude .est# $roficiency .est refers to the testing of the skills and a&ilities possessed &y the candidate# +ptitude test refers to measuring of the skills and a&ilities 0hich may &e developed &y the applicant to perform the 'o& in future#

#90

AaB

.emperament tests are used to measure the likes dislikes and ha&its of an individual# It is helpful to find out 0eather a particular individual can put up himself in a society or not#

A&B +chievement test is used to measure the level of kno0ledge for performing the 0ork assigned to an individual# It is other0ise called performance test or trade test# Sometimes achievement test is conducted theoretically i#e# ans0ers are received &y putting /uestions to theH individual# ?or e@ample an accounting test may measure i#e# accounting perfom2ance of an +ccountant in terms of accuracy and neatness# AcB Efficiency test is used to kno0 ho0 /uickly and efficiently an individual uses his hands to accomplish the 0ork assigned to him# !is other0ise called de@terity test# AdB Interest test is used to discover the individualHs interest in doing the 0ork assigned to himJher# It is assumed that an individual 0ho is interested in one type of 0ork doe: &etter than the one 0ho is not interested# InterestD of an individual may &e relating to outdoor activities accounting clerical social service etc# It is other0ise called Iocational .est# AeB Intelligence .est is used to measure the mental a&ility capacity and general a0areness of the individual# .he most common intelligence tests used for management purposes are group tests individual tests selfG evaluation test self-administered tests performance tests ver&alH comprehension 0ord fluency memory inductive reasoning test of reasoning num&er facility speed of perception and the like# .he Intelligence .est is conducted age 0ise# If the management selects the highly intelligent people its training process is easy and training e@penses are lo0# AfB $ersonality .est is conducted to measure courage Initiative emotion confidence reaction a&ility to mi@ 0ith others #a&ility to motivate : general &ehavior of individual cheerfulness leadership patience and domination of character# AgB Situational .est is conducted to measure the reactions of applicants to a H particular situation# 1esides the applicantHs a&ility to succeed in his 'o& in this situation is also measured# AhB 8udgment .est is conducted to measure the a&ility of an individual in applying the kno0ledge intelligence and e@perience to solve theH pro&lems presented &efore him# ADVANTAGES OF TEST AaB .ests help the employer to find 0hether a candidate is fit for the 'o& or not# A.b) 1esides tests help in checking candidates claims in respect of his Pualification e@perience etc# AcB .ests avoid the scope for personal preference of a particular candidate# AdB Standards of 'o& performance can &e esta&lished 0ith the help of this test# A eB *a&our turnover can &e reduced# AfB +pplicant is also satisfied 0ith the method of selection even though he is not selected# AgB .ests reduce the cost of selection and placement# AhB .ests highlight the hidden talents and overlooking of these can &e avoided# AiB .est may &e conducted for transfer and promotion# U) +dministrative e@penses regarding training may &e reduced to some e@tent# AkB ?ailure in performing the 'o& is reduced:

#91

DISADVANTAGES OF TEST AaB !undred percent &est selection is not possi&le through test# So rest is used as a supplementary method of selection# A&B .est is more suita&le to an organisation to 0hich for limited num&er ofL 'o&s more num&er of candidates have applied# AcB If the num&er of applicants is small it is desira&le to adopt intervie0 rather than the test# AdB .est is not a&le to measure the com&ination of characteristics re/uired for various 'o&s# AeB Some candidates do not reveal their talents through test# AfB .he actual performance of a candidate cannot &e found out through the Atest# AgB .est does not provide any &asis for motivation# .est has some advantages and limitations or disadvaH2tages# 1ut it may &e stated that more accurate selection is possi&le through test# +ccording to ?eli@ M# *opez D7hen test are used properly they can help su&stantially in selection particularly and mostH# especially in selection for managerial positions# +ll tests provide# clues ) a&out an applicant 0hich 0hen confirmed &y other information ena&le the assessor to make fairly accurate predictions-of 'o& effectiveness# .hey suggest hypothesis a&out the applicantHs intellectual capacities aptitudes vocational attitudes or personality dynamics each of 0hich must &e confirmed or re'ected &y data dra0n from other areas of the applicantHs &ackground#D PRE(REBUISITES OF EFFECTIVE TEST .he limitations of the test can &e avoided if the management takes the follo0ing precautions 0hile conducting tests: AaB Val# #ty +n effective test has validity# H.he validity of the tests depends upon the degree of prediction of the 'o& performance successfully# .hus a test should accurately predict the criteria of 'o& success# A&B R$l#ab#l#ty Relia&ility of a test refers to getting the same result from any candidate tested for any num&er of times# So it is the duty of the management to &ear in mind the relia&ility of a test# 5"6 Nor') .he management should fi@ the norms for selection# Some companies prescri&e minimum marks for selection and some companies prescri&e cutoff marks for selection# 1ut these should &e pre-determined# 5 6 No +art#al#ty Management should ensure that tests have validity# $roper 0eight age should &e given to the scores o&tained in tests and personal &iases should &e avoided# 5$6 S+$"#al#-at#on .est administration scoring and interpretation re/uire technical competence and training in testing# .hese should &e handled &y properly trained and competent persons# If not results may &e horri&le# 5&6 S!++l$'$ntary + candidate cannot &e selected or re'ected on the &asis of performance in test# .he test should &e considered as a supplementary in the selection process# .he final selection of any candidate should &e &ased on the information given in application performance in intervie0 if any conducted in addition to the test performance# :. C,$"/#n% R$&$r$n"$) Sometimes the applicants are re/uested to furnish references# References are in a high status in society# +pplicants may include the name and address of parent educational institutions and present employer# .he information furnished in the applications are checked from these persons# If the referee is a present employer the applicantHs 'o& performance salary dra0n particulars reasons for leaving the 'o& etc# Hare checked# + letter of recommendation may also &e treated as a reference# .he prospective employer can collect information a&out the applicant regarding his character conduct a&ility Letc# from the referee# Some management do not take much interest in this regard# H.he verification of references might give correct information a&out the applicant# Some applicants may give incorrect information regarding e@perienceG past salary dra0nH and reasons for leaving the 'o&# 1ut these are identified 0ith the help of checking references Many managements 0hich do not hold good opinion a&out the applicant are not ready to give references# +t the same time some applicants have some 0ell-0ishers 0ho are referred as reference and no

#92

negative ans0er is received from those references#

;. Int$r*#$A Intervie0 is considered as a method oV personal appraisal through face to face conversation and o&servation# .he management selects a candidate through intervie0 &y one or more persons# .he intervie0ing persons are e@perts in the intervie0 techni/ue and they have a thorough kno0ledge in their respective fields# Intervie0 helps the employer to evaluate the candidate regarding the personality smartness intelligence attitude etc# In any intervie0 the intervie0er has dominant position over the intervie0ee# .he intervie0 is divided into t0o i#e# preliminary inter Iie0 and final intervie0# .he preliminary intervie0 has &een discussed already# !ere the final intervie0 is discussed# .he final intervie0 is conducted only for candidates 0ho succeed in the preliminary intervie0# .he candidate should succeed in t0o stages of final intervie0# In the first stage the personnel department make a thorough evaluation of a candidate# In the second Stage the successful candidates from the first stage are sent to the functional department 0here additional hands are re/uired# .he candidate 0ho has successfully passed the second stage is selected# FINDS OF INTERVIE7 .here are a num&er of kinds or types of intervie0s conducted &y the management# Some of the intervie0s are &riefly e@plained &elo0# 5a6 D#r$"t #nt$r*#$A "nder this type of intervie0 straight-a0ay /uestions are put &efore the applicant to get ans0ers for them# ?ace to face conversation is going on during the intervie0# .he in-depth kno0ledge of applicant is not o&served under this type of intervie0# 1ut the skills character area of interest and attitude of the applicant can &e identified to some e@tent# 5b6 In #r$"t #nt$r*#$A. Puestions are not raised directly &y the intervie0er &efore intervie0 the particular applicant is re/uested to e@press his vie0s on any topics as he likes# .he intervie0er carefully listens to 0hat the applicant e@presses# .he intervie0er does not interpret the applicantsH vie0sG the applicant has full freedom of e@pression# .he personality of the applicant is easily assessed &y the management# Patt$rn$ #nt$r*#$A + num&er of standard /uestions are framed 0e in advance 0hich are to &e put &efore the applicant# .he ans0ers for these /uestions are found 0hile framing the /uestions and ans0ers are 0ritten near the /uestions# .hese are used for verification purpose 0hen ans0ers are given &y the applicant during the intervie0# .his is the procedure adopted under this type of intervie0 to evaluate the suita&ility of the applicant# 5 6 Str$)) #nt$r*#$A Irritating /uestions are put &efore the applicant &y the intervie0er# If any applicant gets angry 0hen these type of /uestions are put to him the particular applicant is evaluated as unfit for the 'o&# ?or e@ample the Intervie0er may ask D!o0 many legs does an eight legged insect haveTD or DDear Mr# Ramesh 0hat is your nameTD .hese are some /uestions 0hich irritate any&ody in normal conditions# If an applicant gets angry over these /uestions heJshe is re'ected as unlit for the 'o&# 5$6 Sy)t$'at#" #n( $+t, #nt$r*#$A "nder this type of intervie0 the intervie0er asks anyone of the /uestions initially authority# .hen he proceeds step-&y-step to get an integrated vie0 of the skills and personality of the applicants# 5&6 0oar or +an$l #nt$r*#$A

+ group of persons called intervie0ers ask the applicant /uestions in the area of interest of the applicants# Immediately after the intervie0 they evaluate the performance of an applicant &ased on the ans0ers given &y the applicant# 5%6 Gro!+ #nt$r*#$A I may &e other0ise called group discussion or house party techni/ue# + common applicants are intervie0ed simultaneously# + common topic is presented &efore the group# (ne group consists of si@ to eight mem&ers# Each applicant is allotted a num&er# .hey may call other mem&ers of the group &y calling mem&er5s# .hey are restricted to use their names# .he applications are selected or re'ected on the &asis of performance in group discussion#

#93

PRINCIPLES OF INTERVIE7 .he intervie0 techni/ue should &e an effective one# .he follo0ing principles are adopted &y the management in order to make an intervie0 effective# .he management should define the specific o&'ectives of an intervie0# Ne@t the management has to prepare the procedure follo0ed to achieve the specified o&'ectives# .he Intervie0ers should ask the /uestions 0hich are related to the 'o& to &e filed# .he intervie0er must create a rapport 0ith the intervie0ers &efore starting the Intervie0# .he Intervie0ees are re/uested to e@press their opinions or vie0s freely 0ithout any hesitation# .he tension or nervousness of the applicants are removed &y their Intervie0er# .he Intervie0er should listen to the ans0ers given &y the applicants carefully# .he evaluation of the performance of the applicant is done immediately after the intervie0 is over# .he intervie0er may say CthanksK to the applicants 0hile closing the intervie0# .his carries much &etter impression a&out the intervie0 and intervie0er# PROCESS OF INTERVIE7. .he follo0ing procedure may &e adopted for an intervie0# R$*#$A o& ba"/%ro!n #n&or'at#on

.he intervie0er has to collect the information regarding the applicantHs &io-data and the 'o& for 0hich he has applied# .his process is kno0n as revie0 of &ackground information# Pr$+arat#on o& @!$)t#on) .he intervie0er has to prepare the /uestions in the area in 0hich the applicant is interested# .he /uestion is presented &y the intervie0er in an understanda&le 0ay# .he ans0ers arc received from the applicant one &y one# .he ne@t /uestion is raised only after getting full ans0er to the first /uestion# .he su&/uestions may &e raised &y the intervie0er during the intervie0 if need arises# P!tt#n% t,$ a++l#"ant at $a)$ .here is a mental and emotional strain to the applicants# .hese may &e removed &y the intervie0er# .hese are possi&le through proper understanding of applicants and sympathy 0ith the applicants &y the intervie0er during the intervie0# (utsiders e@cept intervie0ers and the applicants are not allo0ed to &e present in Hthe intervie0 room# +ll the necessary facilities and comforts are arranged &y the management in order to put the applicant at case# Some mannerism like causing interruptions through raising num&er of su&-/uestions unnecessarily or raising eye&ro0s or 'Bouting lips fre/uently are avoided &y the intervie0er# DraA#n% o!t .t,$ b$)t a++l#"ant Some set of /uestions are not asked in an interview. So it is a very difficult task to dra0 the &est applicant out of the intervie0 performance# .he intervie0er has to follo0 accepta&le norms to select an applicant for appointment# 1ut the norms should &e correct and they should provide a &asis to select a suita&le person# Con"l! #n% t,$ #nt$r*#$A .he #applicant has left the room after the intervie0 is over# .he intervie0er immediately assesses the applicantHs performance in the intervie0# Some intervie0ers have taken notes during the intervie0# .hese notes may &e used to assess the applicant# .he ne@t applicant is called for an intervie0 after the process is over# F#nal S$l$"t#on ?inally a suita&le applicant is selected on the &asis of performance in the a&ove-mentioned test and intervie0# (nly the re/uired num&er of applicants are: selected &y the management# .he competent authority has to approve the selection of the applicants# In the case of &ig organisations a separate department kno0n as personnel department is in-charge of selection# .he personnel department manager selects the applicant and approves it# .he appointment order 0ill &e sent to the applicant 0ithout delay# Normally the applicants arc selected provisionally# M$ #"al EMa'#nat#on

#94

It is other0ise called physical e@amination# .his is carried out for the purpose of finding physical fitness of the prospective employee# Many# organisations EE not follo0 the process of medical e@amination .he reason is that there is no need for medical e@amination to certain 'o&s# Medical certificate is received from the doctor after medical e@amination is over# .his certificate is attached to the 'oining report of the !e0 employee# Some applicants may &eH educationally /ualified for the 'o& &ut physically unfit for the 'o&# ?or certainG 'o&s minimum physical fitness is re/uired according to the nature of the 'o&# Pla"$'$nt .he applicants are placed pro&ation &asis only after completing all the: formalities# .he pro&ation period may vary from one 'o& H to another 'o& according to the nature of the 'o&# .he ma@imum pro&ation period for any 'o& is# t0o years# It may &e e@tended to three years in e@traordinary circumstances# .he ne0 employees are o&served keenly over the pro&ation period# .hese ne0 employees are regularized on the completion of pro&ation period successfully# Or#$ntat#on (rientation refers to providing the information regarding the organisation &riefly to ne0 employees# .he term Linformation includes co-0orkers of ne0# Employees superior su&-ordinates location of 0ork place duties authorities responsi&ilities canteen lavatory entrance e@it gate and the like# .he orientation program is carried out through lectures or films# .he ne0 employees are taken round the offices and plant and the ne0 employees are introduced to the e@isting employees# + printed literature may also &e used to the orientation programme# .he orientation programmer helps the ne0 employee to ac/uire a kno0ledge of the organisation functioning 0ithout any delay# It facilitates to effective performance ofD 'o& &y the ne0 employee# PROMOTION M$an#n% $romotion may &e defined as the placement of an employee to a &etter 'o& 0hich results in the increasing of prestige# salary po0ers# duties responsi&ilities and it re/uires more kno0ledge and skills to perform the 'o&# Every employee has the aspiration to get promotion and is ready for ac/uiring the additional /ualification and e@perience fit for the 'o&# !igher posts and filled up &y the management through promotion policy# .his promotion policy persuades the employees to &e loyal to the management# 0ASIS FOR PROMOTION .he promotion is given to any employee on a 0idely accepta&le &asis# .he &asis may &e seniority or competence# Seniority refers to the possession of more num&er of years of service in the same organisation than those of the other employees# %ompetence refers to the accomplishment of a particular 'o& effectively than the other employees# Senior employee prefers seniority to competence for promotion# Senior people argue that they have more e@perience in the 'o& than others# So they demand seniority as the &asis for promotion# .he 'uniors and management people are in favour of competence# 7henever the management fi@es competence as the &asis for promotion all the employees including senior people are ready to increase their kno0ledge and skills to get promotion# If promotion is denied to senior people they do not devote their full attention to perform the 'o&# .he younger ones may command the old people if the competence is the &asis for promotion# It 0ill &e 'ust like a son commanding his father# "nfit persons may also &e eligi&le to get promotion if the management prescri&es seniority as the &asis for promotion# 1esides senior people are not ready to ac/uire additional kno0ledge and skills 0hich are necessary for the 'o&s to 0hich they seek promotion# !ence it is concluded that the same management may follo0 &oth criteria for promotion# Seniority is the &asis for promotion to a 'o& 0hich does not re/uire much competence# %ompetence is the &asis for promotion to a 'o& 0hich re/uires much competence# BUALITIES OF GOOD PROMOTION POLIC1 + promotion policy follo0ed &y any management should have the follo0ing /ualities or characteristics: AaB 7hatever the promotion policy follo0ed &y the management that should &e 0idely pu&lished and strictly adhered to# A&B Each and every employee should 0ork in all 'o&s in an organisation to get thorough kno0ledge and e@perience# AcB + detailed and accurate 'o& description should &e prepared in each 'o&# .he employees can kno0 the /ualifications and e@periences re/uired for each 'o& through 'o& description# AdB .he promotion is given to any employee through 0idest pu&licity# AeB Employees are permitted to ac/uire /ualifications and e@perience through 'o& training vocational courses and the like# AfB Each and every promotion is recommended &y line officers andG approved &y the top e@ecutive of the management# AgB +n employee has a right to represent his vie0s and opinions regardingL promotion if promotion is denied to that employee#

#95

AhB .he promotion is given to an employee 0ho gives his consent for ### promotion#

#96

LESSON ( 1: T3EORIES OF MOTIVATION Several theories have &een propounded &y eminentL personalities e@plaining the reasons and process of motivation# "nderstanding these theories are as a foundation for understanding the 0ork &ehaviour of the people# Some of significant theories have &een e@plained in the follo0ing paragraphs# T3EOR1 .G. AND T3EOR1 .1. Douglas Mc-regor proposed t0o different theories namely .heory HUH and .heory FH in , O<E# 1asically these t0o theories e@plain a&out the human nature# 7hile theory HUH deals 0ith the negative aspect theory . dealing 0illB positive aspect of the human &ehaviour# .heory HUH involves traditional approach and &ased upon the follo0ing four assumptions #held &y the managers a&out the 0orkers# 7orkers dislike 0ork and are lazy# Since 0orkers dislike 0ork they must &e controlled 0ith punishment to achieve the goals# .hey donHt 0ant to take up responsi&ilities for themselves and seek formal direction from the &oss 0henever possi&le# 0orkers place security of their 'o& a&ove all other factors associated 0ith 0ork and display little am&ition# +s against these negative vie0s a&out the human &ehaviour and itsH nature Mc-regor listed out four different assumptions under theory F# .hey are 0orkers can vie0 the 0ork as natural as rest or playG 7orkers can e@ercise self - direction and self-control glven the proper environmentG +n average 0orker can accept responsi&ility and learn to gro0 7orkers are creative imaginative and resourceful# ?rankly speaking the a&ove t0o theories have nothing to do 0ith motivation# .hey e@plain a&out the nature of human &ehaviour under t0o sets of different assumptions.he assumption under theory HUH that 0orkers must &e coerced and regulated :or accomplishing o&'ectives is akin to the characteristic policy 0hich has &ecome o&solete method in managing people# !o0ever these theories ena&le us to understand ho0 the manager should his &ehaviour under t0o sets of situalio:2S for getting things done# NEED 3IERARC31 T3EOR1 .he most 0ell kno0n theory of motivation is #+&raham Maslo0Hs hierarchy of needs# !e proposed that in every human &eing there e@ists a hierarchy of five needs# .hey are: $hysiological or &asic needs Ae6# food# 0ater clothing shelter etc#BG Safety and Security needs Aeg# security of 8o& protection from harm etc#B *ove needs Ae#g# affection friendship# &elongingness etc#BG Esteem needs Ae#g# self respect statusG recognition achievement etc#BG Self-actualization needs Ae#g# gro0th fulfillment of am&ition# &ringing out the real potential etc#B#

#97

+ccording to Maslo0 if ho0ever need is satisfied the person moves up the ladder to the ne@t higher order need# It means that if &asic needs are satisfied 0orkers can &e motivated &y fulfilling the ne@t higher order needs i#e# safety needs# .his theory implies that 0orkers are motivated &y fulfilling unsatisfied# needs rather than &y satisfied need# Maslo0 separated the five needs into lo0 A&asic and safety needsB and higher Alove status and self actualizationB order needs# 7hile lo0er order needs are predominantly satisfied e@ternally higher order needs are satisfied internally# .his theory has received 0ide recognition among the practising managers &ecause of its logical link# .his does not mean that this theory is free from criticism# .he first criticism is that this theory has not specifically mentioned a&out 0ork related needs# # Secondly the strength of each need varies from Individual to individual# !ence strict ordering of human needs in the a&ove hierarchyH could not &e proved empirically# .hirdly it is criticized that it only deals 0ith the content of motivation rather than the process of motivation# TAo ( Fa"tor T,$ory ?rederik !erz&erg and his associates conducted a research study and have identified t0o sets of factors# +ccording to this study motivation depends upon satisfaction# .he t0o sets Hof factors affect satisfaction orH dissatisfaction of 0orkers# .he first set of factorsH are termed as# maintenance factors# .h<i are salary 'o& security 0orkingH conditions /uality of supervisionG interpersonal relationships companyHs policy and administration# .hese factors are r<Iatedto 'o& environment $resence of these factors necessary to ayoid dissatisfaction among 0orkers# .hese factors ought to &e maintained as a matter of compulsion in every 0ork situation# .he second set of factors are related to the %ontent of the 'o&D .hey include gro0th advancementD recognition achievement acceptingG increased responsi&ility etc# +ccording to !erz&erg these factors #are motivational factors 0hich stimulate the 0orker to &etter levels: of families L !ence these factors G are termed as satisfiers# .o sum up 0hile the first# set factors have# to maintained as a matter of compulsion in order to remove dissatisfaction the second set of factors alone are responsi&le for motivating people# .his theory is also not free from criticism# ?irstly thereD is too Hmuch &otheration a&out satisfaction dissatisfactionL and the point of no satisfaction# .here is no guarantee that satisfaction leads# to productivity -in all Lcases# Secondly the concept of satisfaction is influenced &y a good num&er of off the 'o& and on the 'o&D factors# .hirdly the impact of situational varia&les have &een ignored in this theory# ?ourthly like need hierarchy theory it is also concerned 0ith the content of motivation and not 0ith the process of motivation# Vroom's Expectanc theor : Iictor Iroom proposed this theory as an alternative to the content models e@plained in the earlier paragraphs# It is the most 0idely kno0n theory of motivation for the purpose of understanding the process of motivation# +ccording to this theory a personHs desire to 0ork at any time can &e conditioned &y t0o factors# # aB E@istence of one or more personal goals on the part of the employees and

#98

b) !is e@pectation as to the relative 0orth of his performance for the attainment of such goals# 7hen the 0orker &elieves that his performance 0ill lead to the fulfillment of personal goals he tends to &ecome a high producing 0orker and vice-versa# It has &een stated &y Iroom as given &elo0: !otivation " Va#ence x Expectanc !ere the term IalenceH stands for the strength of an individualHs inference for an outcome and e@pectancy to the pro&a&ility that a particular action 0ill lead to a desired outcome# .his theory esta&lishes four important links in the process of motivation# Efforts -$erformance =Re0ards =+0ards--oals# .his theory has three important Implications to managers# ?irstly It is necessary to provide appropriate re0ards to satisfy the individual needs# Secondly managers are re/uired to esta&lish a close link &et0een efforts and performance &et0een performance and re0ards and finally &et0een re0ards and personal goals# .hirdly this theory recognizes the fact that there is no universally accepta&le method for motivating people &ecause of the influence of contingency factors from time to time# A",#$*$'$nt T,$ory David Me %leland has identified three &asic motivating needs such as need for po0er need for affiliation and need for achievement .hough all these three needs are importantL to management in# understanding the process of motivation to Mc %lelland need for achievement is of paramount importance# It is concerned 0ith producing the &ehaviour of 0orkers 0ho have either high or lo0 needs for achievement# Need for po0er has great concern for e@ercising control and influence people 0ith this need tend to &e forceful outspoken and demanding in o&taining the 0ork $eople 0ith need for affiliation are likely to &e concerned 0ith containing pleasant relationships $eople 0ith a high need for achievement have a strong desire for success .hey love challenges# +chievement motivated people are &lessed 0ith some special characteristics# .hey are not gam&lers and they dislike succeeding &y chance they like 'o& situations# .hey like moderately challenging goals# .he can trend to &ecome task oriented people since they are vitally concerned 0ith their personal achievements .he findings of this theory proved that achievement motivated people mainly come from middle-class families# .his study further reveals that the need for achievement 0ould &e stimulated through class-room instructions and training programmers# .his theory urges people to act on the &asis of internally driven stimulus to improve their performance# .his theory has received 0ide recognition ERG T,$ory It is an improved model over Maslo0Hs and !erz&ergHs theory on motivation# %layton +lderfer identified three groups of &asic needs - E@istence Relentless and -ro0th# .he e@istence needs are concerned 0ith physical 0ell &eing and survival Afood clothing shelter good-0orking environment etcB# .he relatedness needs emphasize the Importance of interpersonal and group relationships# .he gro0th needs are concerned 0ith individualHs inner desire for his personal development# .his theory does not see the needs as a hierarchy as stated &y Maslo0# It does not contend that a lo0er level need has to &e fulfilled &efore satisfying a higher level need# "nder this theory a personHs &ackground may dictate that the relatedness needs 0ill take precedence over unfulfilled e@istence needs# It further assumes that the more the gro0th needs are satisfied the more they 0ill increase their intensity# In other 0ords this theory suggests that# one class of needs might remain strong Irrespective of the fact 0hether the other class of needs has &een satisfied or not# !aving discussed some of the important theories of motivation a &rief attempt is made to discuss the Management techni/ues that can &e tried to ii2crease motivation in 0ork situations# Management generally uses financial and non-financial techni/ues to motivate employees# F#nan"#al Mot#*ator) .he commonly accepted &elief is that Motivation is directly or indirectly connected 0ith money: It is true that money acts as a vehicle through 0hich most of the higher order needs can &e fulfilled# .hat is the reason 0hy most of the organisations use money incentive as a means of offering satisfaction among staff# $roductivity linked 0ages &onus profit-sharing leave 0ith pay medical reim&ursement leave travel concession are included under this type of motivation# E@perience proved that money is a most relia&le motivator# Money as a re0ard for accomplishment is no0 accepted as a &ase for designing compensation methods# 1esides money there are some other motivators 0hich deal either H0ith personal development or 0ith the environment of the employees# Date FoderH has identified that 0orkers 0ho set their o0n goals are capa&le of motivating# .herefore goal Identification and participative management also have a great role to play in motivating the people# Non(F#nan"#al Mot#*ator) +s the heading a&ove states they are not at all connected 0ith money# In turn they are connected #0ith the position 0ork- culture and psychological mood of the employees# Some of the most conul2mlly used measures under this !eading are# $raise and recognition

#99

Status and pride (& enlargement 8o& Security Puality of 0ork life#

Recognition of the services of one employee may &e sho0n in the form of praise# It may &e in the form of patting on the &ack of the employee recommending him for promotionH or for entrusting confidential 0ork etc# Similarly provision of costly furnitureG 0all decoration personal assistance 0ill certainly ena&le the employees to feel proud 0hich in turn 0ould stimulate them for &etter results# Enlarged 'o&s may &e entrusted to 0ork group so as to make them more responsive from planning phase to implementation stage# It makes the 8o& less monotonous# +nother method of motivating the people is 'o& enrichment# .hrough this 'o& is made more interesting and challenging# It provides an opportunity for psychological gro0th of an employee# 8o& security is e/ually important# It implies that the employee 0ill &e continued 0ith all economic and social security measures 0ithin the same plant# .his kind of arrangement no dou&t encourages the 0orker to deliver &etter performance# +nother concept gaining currency in modem organisations for motivating people is the /uality of 0ork life# .hough this concept connotes different meanings to different people it refers to all aspects of 0orkerHs life 0ith special reference to his personal and 0ork environment# It includes fair compensation good 0orking conditions security gro0th protection identity etc# S!''ary .he concept motivation cannot &e studied in isolation# Motivating the 0ork force is a comple@ and challenging assignment# + good num&er of factors Influence motivation in a variety of 0ays# !ence it should &e vie0ed from systems analysis# +fter all motivation is purely a psychological process# .he &asic process of motivation involves understanding a&out the needs drives action and satisfaction of the people at 0ork# .he a&ove theories propose different approaches to 0ork motivation# 7hile some of those theories are rigid some of them are dynamic# "nderstanding all these theories is important for effective management of human resource# It is the primary responsi&ility of every manager to create favora&le climate either &y offering financial or non financial Incentives for motivating the 0ork force in a desired 0ay#

LESSON ( 1; DIRECTING 7hile planning organising and staffing can &e considered as preparatory managerial functions controlling is intended for checking the things in a 0ay as 0e desire# .he connecting Aink &et0een these functions is directing# It is the live link that esta&lishes meaningful interaction among superiors and su&ordinates through proper directions and guidelines# It is HDirectingH 0hich initiates organized action 0ith the purpose of fulfilling the corporate o&'ectives# It thus creates appropriate 0ork environment that facilitates efficient discharge of dutiesH &y the human &eings# .hus it has &ecome one of the important functions of Management to achieve organisational goals through proper instructions and guidelines# In order to clearly understand the direction function of Management the follo0ing definitions are helpful: DEFINITION !aimann DDirecting consists of the process and techni/ues utilized in issuing instructions and making certain that operations are carried on asL originally planned#D 4oontz and E HDonnel DDirection is the interpersonal aspect of managing &y 0hich su&ordinates are led to understand and contri&ute effectively to the attainment of enterprise o&'ective#D "r0ick and 1reach DDirecting is the guidance the inspiration the leadership of those men and 0omen that constitute the real core of the responsi&ilities of management#D 8#*# Massie DDirecting concerns the total manner in 0hich a manager influences the actions of his su&ordinates# It is the final action of a manager to get others to act after all preparations have &een completed#D Earnest Dole DDirection is telling people 0hat to do and seeing that they do it the &est of their a&ility# It includes making assignments corresponding procedures seeing that mistakes are corrected provided onthe-'o& instruction and of course issuing orders#D + revie0 of the a&ove definitions reveal that the direction function consists of iss$in% instructions e@ercising supervision providing leadership and securing motivation from the 0orkers# Some of the Important features of Direction function to sum up have &een listed &elo0: W It indicates scalar chain# It means that the top management directs the middle management 0hich in turn influences the operations people# W 2t encourages the Supervisor to act as a guide interpreter teacher and coordinator# W .he direction function is not a static function &ut it is a 8iving function# In other 0ords it deals 0ith guiding training and motivating the su&ordinates in a desired manner

#100

W .he most Important characteristic of direction function is that it deals 0ith the human factor# W Direction function mainly deals 0ith use and development of human factor# ?ailing to understand the role of the human factor in the realization of organisational goals leads to inefficiency and closure of the organisation# !ence Direction function makes the e@ecutives to think in terms of AaB issuing instructions A&B proper supervision AcB motivation AdB leadership and AeB communication# It is a 0ell kno0n fact that 0ithout paying proper attention to the a&ove points no manager can succeed in o&taining the goals# PRINCIPLES OF DIRECTION -enerally the manager should understand the needs motives and attitudes of his su&ordinates# !e should change his strategies according to the people and situation# !o0ever the follo0ing principles of direction may &e useful to the manager# 1. 3ar'ony o& ob4$"t#*$) Individuals have their o0n o&'ectives# (rganisation has its o0n o&'ectives# .he management should coordinate the individual o&'ectives 0ith organisation o&'ectives# Direction should &e in such a 0ay that the individuals can integrate their o&'ectives 0ith organisation o&'ectives# 2. MaM#'!' #n #*# !al "ontr#b!t#on Every mem&erHs contri&ution is necessary for organisations development# !ence the management should adopt a techni/ue of direction 0hich ena&les ma@imum contri&ution &y mem&ers# 8. Un#ty o& #r$"t#on or "o''an +n employee should receive orders and instructions only from one superior# If not so there may &e indiscipline and confusion among su&ordinateD and disorder 0ill ensue# 9. E&&#"#$n"y Su&ordinates are re/uested to participate ill decision-making process# .hen they 0ould have a sense of commitment# .his 0ill ensure implementation of decisions# It 0ill increase the efficiency of su&ordinates# :. D#r$"t )!+$r*#)#on Managers should have direct relationship 0ith their su&-ordinates# ?ace to face communication and personal touch 0ith su&-ordinates 0ill ensure successful direction#

;. F$$ ba"/ #n&or'at#on Direction does not end 0ith issuing orders and instructions to the su&ordinates# Sometimes suggestions given &y the su&-ordinates are necessary for the development of the management# So the development of feed&ack system furnishes relia&le ideas to the management# <. E&&$"t#*$ "o''!n#"at#on .he superior must ensure that plans su&ordinates in right direction# policies and responsi&ilities are fully understood &y the

=. A++ro+r#at$n$)) o& #r$"t#on t$",n#@!$) .here are three direction techni/ues availa&le to the management# .hey are authoritarian consultative and free-rein# 1ut the direction techni/ues should &e selected according to the situation# >. E&&#"#$nt "ontrol .he management should monitor the &ehaviour and performance of su&-ordinates to e@ercise efficient control over the su&-ordinates# Effective control ensures effective direction# 1?. Co'+r$,$n)#on .he e@tent of understanding &y su&ordinates is more important than 0hat and ho0 orders are communicated to them# .his is very useful in proper direction of su&ordinates# 11. FolloA t,ro!%, Direction is a continuous process# Mere issuing orders or instruction is not an end itself# Direction is necessaryG so the management should 0atch 0hether the su&ordinates follo0 the orders and 0hether they face difficulties in carrying out the orders or instructions# ISSUING ORDERS OR INSTRUCTIONS +n order is used &y the management as a tool for direction# +n order can &e issued only &y a supervisor# .he supervisor has right to enforce his order over his su&ordinates# In the 0ords of 4oontz and (HDEnnel D+s a directional techni/ue an instruction is understood to &e a charge &y a superior re/uiring %t su&ordinate to act or refrain from acting in a given circumstance#D C3ARACTERISTICS OF A GOOD ORDER 1. +n order should &e reasona&le and enforcea&le over su&-ordinates# 2. + clearly defined order should &e easily understanda&le# 3. +n order should &e such a one as to facilitate the achievement of the o&'ectives of an organisation#

#101

+n order should &e complete in all respects# +n order should e@hort 0illingness and acceptance from the su&ordinates# + 0ritten order is prefera&le to S oral order# +ppropriate tone is used &y the superior 0hile issuing an order 8. +n order should specify the time 0ithin 0hich a 'o& should &e completed# 9. +n order should &e intelligi&le# TEC3NIBUES OF DIRECTION .here are three techni/ues of direction follo0ed &y the management# .hey are &riefly e@plained &elo0: 1. Con)!ltat#*$ #r$"t#on .he supervisor or superior has consultation 0ith his su&-ordinates &efore issuing a direction# .he consultation is made to find out the feasi&ility enforcea&ility and nature of pro&lem# It does not mean that superior is not capa&le of acting independently# "ltimately the superior has right to take any decision and give direction# .he co-operation of su&ordinates is necessary for successful implementation of any direction# 1etter motivation is availa&le to the su&-ordinates under this direction techni/ue# .he supervisor could instill high morale into tD\ su&ordinates# 4. 5. 6. 7. 2. Fr$$(R$#n #r$"t#on .he su&ordinate is encouraged to solve the pro&lem independently under this direction techni/ue# .he superior assigns the task generally# .he su&ordinates should take initiative to solve the pro&lem# (nly highly educated efficient and sincere su&ordinates are re/uired So apply these direction techni/ues# 8. A!to"rat#" #r$"t#onI .his direction is 'ust opposite to free-rein direction techni/ue# !ere the supervisor commands his su&ordinates and has close supervision# .he supervisor gives clear and precise orders to his su&-ordinates and acts accordingly# .here is no 0ay left to the su&- ordinates to sho0 their initiatives# IMPORTANCE OF DIRECTION Direction is also one of the important functions of the management# Direction is necessary to implement the administrative policies and decisions effectively# .he su&ordinates are properly motivated through direction# Direction provides a leadership in a &usiness# Direction is also concerned 0ith getting cooperation among su&ordinates# Direction is the essence of management and also regarded as a continuous function of management# Direction initiates action# Direction co-ordinates the group efforts# Direction ensures ma@imum individual contri&ution# Direction reduces the reluctance to put up 0ith changes 222 the organisation# Direction provides sta&ility and &alance in the organisation# Direction helps So achieve the o&'ectives of an organisation# C3ARACTERISTICS OF DIRECTION .he characteristics of direction are discussed &elo0: W Direction is also one of the managerial functions and so performed &y all levels of e@ecutives in an organisation# Management initiates action through direction# Direction is continuous throughout the life of the organisation# Initially direction is started at top level management# In other 0ords the su&ordinates are directed only &y superiors# Su&ordinates do the things as per the original plan# Direction creates link &et0een preparatory functions and control function of management# .he term preparatory function includes planning# (rganising and staffing# LEADERS3IP Management and *eadership are often confused as the same# No dou&t leading is an essential function of management# 1ut that does not mean that management is 'ust leading# It involves many things like planning organising staffing and controlling people# +ll these managerial functions &ecome stale if managers do not kno0 ho0 to lead people# $articularly in modern organisations some&ody should sho0 the 0ay to others for attaining the goals# .his characteristic feature is termed as HleadershipH# It is neither mere direction nor motivation# It is a live 0ire &et0een plan and action# +&ility to lead effectively is one of the keys for successful management# .he leader must &asically and clearly understand the attitudes the values the flo0 of authority and the purpose of organisation# It means that the essence of leadership is follo0er ship# 7ithout follo0ers there can not &e a leader# .he concept of leadership has &een defined &y many authors in different 0ays 4oontz and (HDonnell have defined this concept as Dthe art of influencing people so that they 0ill strive 0illingly and enthusiastically

#102

to0ards the achievement of group goals#D It emphasizes the fact that the leaders help the groups in understanding the o&'ectives of the organisation# .hus leadership is "II endless process of influencing people so that they 0ill strive 0illingly and enthusiastically to0ards the achievement of group goals# FUNCTIONS OF LEADERSIITP I) Every leader as a superior has to delegate a part of his authority to the su&ordinates# 2) (nce authority is delegated the leader must try to motivate the people to &etter levels of performance# 3) .he leader must try to create good climate for achieving ma@imum operational efficiency# 4) $romoting and protecting ne0 novel areas# 5) + leader must al0ays try to develop his o0n people from 0ithin# !ence leadership is not &ossing# .he functions of a leader includes apart from ordering Dteaching inspiring guiding interacting initiating and solving pro&lemsD# It is an endless personal process# .his personal a&ility to lead effectively is one of the keys to &ecome a successful manager# In other 0ords people- have to follo0 the manager in order to make him a leader# !ence the essence of leadership is follo0er ship# Motivation and leadership are-lO#Sely related 0ith each other as the leader tries to understand the reasons for 0hy people act as they do# In%r$ #$nt) o& L$a $r),#+ AiB $o0er AiiB AiiiB "nderstanding people Inspiring follo0ers : : + leader must kno0 the nature and source of po0er &esides its effective use in a responsi&le 0ay# : + leader must have the a&ility to comprehend the needs feelings &elief5s values of su&ordinates and different motivational forces# It is a rare a&ility# + leader must al0ays try to induce and inspire his su&ordinates# !e may have all personal /ualities like charm and appeal that may encourage the people to do 0hat the leader 0ants# .he manner in 0hich the leader adopts his capa&ilities to suit the situation conducive to goal realization#

AivB#

Style of leadership

*eadership is an important aspect of managing# .his a&ility varies from individual to Individual that all depends upon the leaderHs e@plicit and implicit pattern of &ehavior of influencing his su&ordinates# %onsidera&le amount of research has &een done on this aspect# It is difficult to surnmarise the 0hole /uantum of theory in this chapter# !o0ever a &rief attempt is made to identify some ma'or theories 0hich form the &ase for different leadership styles# TRAIT T3EOR1 .his theory derives this &elief from the philosophy of ancient -reeks and Romans that leaders are &orn and not made# 1ut the ackno0ledged leaders like Napolean !itler *incoln %easar 4ennedy Mahatma -andhi Martin *uther 4ing have no uniform intellectual# social physical and psychological characteristics# .o prove the concept of trait theory as valid one has to identify specific characteristics that all leaders possess# .o sum up Stogdil has identified some of the important traits as follo0s: a) $hysical traiHs Aappearance energy height etc#B b) Intelligence traits Aunderstanding comprehending decision making etc#B C) $ersonality traits Aad'usta&ility aggressiveness enthusiasm 0ill po0er self confidence etc#B d) .ask related traits Ainitiative perseverance achievement etc#B e) Social traits Aco-operation Interpersonal relationship group cohesion etc#B In addition to -the a&ove traits some more characteristics # like am&ition honesty creativity and charisma have &een identified as key traits# It is true that all lenders need not possess all the traits# and sometimes even non-leaders may possess either most or all of them# .he trait approach to leadership has &een &lessed 0ith the follo0ing limitations# IB It neglects the needs of the follo0ers# 2) It fails to recognize the relative importance of various traits under changing conditions# 3) It does not separate the cause and the effect A0hether leaders invaria&ly possess self-confidence or success makes the leaders to &uild confidenceB# Different authors have propounded different theories e@plaining the leadership &ehaviour and styles# .he follo0ing section details the various styles of leadership# ST1LES OF LEADERS3IP ?or the purpose of easy understanding leadership styles may &e %onveniently studied as follo0s: AaB Styles &ased on the use of authority A&B Styles &ased on &ehaviour

#103

AcB (ther miscellaneous styles Each of these styles is e@plained &elo0: Styl$) ba)$ on t,$ !)$ o& a!t,or#ty

Depending upon ho0 a leader uses his authority one can identify three &asic styles# AiB autocratic AiiB democraticJparticipative and AiiiB free-rein type# AiB +utocratic leader &elieves in po0er# !e passes orders unilaterally and e@pects ready compliance# !e &elieves that he is a&le to control people through re0ards and punishment# AiiB Democratic leader &elieves in sharing Ideas and opinions# !e consults su&ordinates In the process of decision making# !e encourages t0o 0ay communication and participation of su&ordinates in all types of decision^# AiiiB ?ree-rein leadership is no leadership at all# .he leader uses no or little po0er# !e gives complete freedom to su&ordinates# $eople are encouraged to set their goals and means of achieving them# .hey are given high degree of independence in manning their operations# Real time situations vary from company to company and from manager to manager# .here is no single uniform style of managing people in organisations# + manager may &e autocratic at one instance Aenforcing the rule regarding safety devicesB and democratic at the other Aconsulting the follo0ers regarding change of time at 0ork scheduleB# Styl$) baa$ on b$,a*#o!r %ircumstances change constantly creating ne0 situations and challenges# .he &ehaviour of the leader is moulded &y the changing patterns of group attitudes and e@periences# Different dimensions of a leaderHs &ehaviour have &een thoroughly pro&ed through (hio studies# +ccording to these studies a leaderHs &ehaviour is influenced &y t0o aspects initiating structure and consideration# 5#6 In#t#at#n% )tr!"t!r$ an "on)# $rat#on Initiating structure refers to the e@tent to 0hich a leader defines and organizes his o0n role as 0ell as the roles of his su&ordinates# It spel2s out the task &ehaviour of a leader# (n the other hand consideration refers to the degree &y 0hich the leaderHs &ehaviour is characterized &y mutual trust respect for su&ordinates and regard for their feeling It indicates relationship &ehaviour# +s initiating structure and consideration are t0o distinct features e@istence of one does notG mean the a&sence of the other# +ctual &ehaviour of a leader in Ha given situation may consist of com&ination of these t0o aspects# .he follo0ing diagram A+B gives the gist of the findings of the (hio state studies on leadership: .he a&ove four /uadrants have &een representing various com&ination of task and relationship &ehaviour that a leader can e@hi&it at a particular point of time# +ctual &ehaviour varies among Dthese four alternative com&inations depending upon the situation# 5##6 Mana%$r#al Gr# Ro&&ert R# 1lack and 8ames S# MoHuton have developed five different styles of leadership through this concept of Managerial -rid# .his concept has &een e@clusively used for training the managers through ena&ling them &y identifying the various skills of leadership styles# .his concept has &een mainly &ased upon t0o important factors - AaB concern for production A.ask orientationB and A&B concern for people ARelationship orientationB# .he essence of this theory is presented in the follo0ing diagram A1B# HIn the diagram concern for production is sho0n on the horizontal a@is and concern for people is identified on the vertical a@is# .he scale recorded varies from 2-O# It indicates that the concern for productionJpeople &ecomes more important to the leader as his ranking advances from 2-O gradually# .he five styles of leadership are &riefly e@plained in the follo0ing lines# 5a6 I'+o*$r#),$ 51(16

+s the rating indicates this styles involves little concern for &oth people and production# *eaders under this style have minimum Involvement in their 'o&s and mostly act as messengers passing information from supervisor to su&ordinates# 5b6 Co!ntry("l!b 51(>6 + sort of informal environment is created 0herein everyone can coordinate the effort and accomplish the o&'ectives in a rela@ed and friendly atmosphere 0hich is putting emphasis more on the needs of the people 1othering little a&out production#

#104

#105

5"6 Ta)/ It is another style of leadership commonly referred to as +utocratic style# !ere leaders are concerned only 0ith developing efficient operations &y arranging a tight structure and conditions of 0ork# .hey have little or no concern for people# 5 6 T$a' It is also an e@treme style of leadership# !ere the leaders display a rare /uality or a&ility inter-0ooven 0ith the production needs of the enterprise 0ith the needs of the Individuals# In other 0ords these leaders &elieve that the highest concern for production as 0ell as people alone can accomplish the organisational o&'ectives 5$6 M# l$ o& t,$ Roa 5:(:6 In reality a leader may fall under anyone of the a&ove four styles# Sometimes he may have a typical style 0hich can &e placed some0here on the grid# Some leaders may have ma@imum concern for production as 0ell as for people# .hey set the o&'ectives at moderate levels considering the feelings of the people# +de/uate level of production and satisfaction can &e reaped through this style# .he Managerial -rid is a useful tool for identifying different leadership styles# .he ans0er to the /uestion 0hat kind of leader he is depends upon the personality characteristics enterprising a&ility environment and other situations# 5###6 Tr#( #'$n)#onal 1$a $n,#+ )tyl$ 7hile the managerial grid and (hio State studies have &ased upon t0o factors - .ask oriented and relationship oriented for e@plaining the styles of leadership# $rof# N# 8# Reddy has suggested effectiveness as the third factor in deciding the style of leadership# .he term HeffectivenessH refers to ho0 the leaderHs personality interrelated 0ith the situation to 0hich he is su&'ected to operate his activities# In this .ridim-l2sional leadership style theory ho0 effective or ineffective are the leaders in a given situation can &e understood very easily# H7hen oneHs style is appropriate to a given situation he is tanned as effective and Dice-versa# .he &asic styles are integrated 0ith the concept of effectiveness andJor summarized &elo0: a) !igh task and lo0 relationship &ehavior is tanned as DdedicatedD style# b) !igh task ai2d high relationship is vie0ed as DIntegratedD style# c) *o0 task and high relationship &ehaviour Is considered as related style and d) *o0 task and lo0 relationship &ehaviour is kno0n as Dseparated styleD# Depending upon the effectiveness or ineffectiveness of the leader in a given situation 6-D style identifies the follo0ing real time challenging situations# 1asic Styles a & c d Dedicated Integrated Related Separated Effective Styles 1enevolent +utocrat E@ecutive Developer 1ureaucrat Ineffective Styles +utocrat %ompromiser Missionary Deserter

5C6 Ot,$r )tyl$) None can succeed in e@plaining the &est style of leadership &ecause it depends upon various factors# No leader can &e rigid or free all the time# !e has to adopt different &ehavior in different situations- Since all the e@isting theories have &een proved to &e inade/uate the situation is set for the development of contingency theories# Some of the important contingency theories have &een e@plained in the follo0ing paragraphs# 16 F#$l $r.) Cont#n%$n"y Mo $l ?red E# ?ielder and his associates of the "niversity of Illinois have suggested a contingency approach to leadership# +ccording to this approach people &ecome leaders not only &y virtue of their personality attri&utes &ut also &y virtue of various situational factors including leaderHs a&ility to interact 0ith group mem&ers# .his theory holds that three ma'or situational factors determineH the success or other0ise ness of a given leader# .hey are: 5a6 Po)#t#on PoA$r .his indicates the degree of po0er of a position 0hich permits a leader to secure group mem&ersH compliance 0ith his &irection. In other 0ords a leader 0ith clear position in po0er can o&tain good follo0ership more easily# 5b6. Ta)/ Str!"t!r$ !ere the leaders success depends upon ho0 clearly he sells and assigned tanks through his people so that su&ordinates are made more responsi&le and accounta&le for their performance# 5"6 L$a $r('$'b$r) r$lat#on),#+)

#106

.his is the most important dimension# 7hile the po0er of a position and task structure are largely under the control of an organisation developing effective relationships depends upon the liking and 0illingness on the part of su&ordinates to a given leader# .o sum up a particular situation appears to &e most favoura&le to the leader 0hen he is liked &y his follo0ers 0hen he gives clear-cut direction a&out the 'o& and 0hen he is &lessed 0ith appropriate position# (n the other hand the situation &ecomes unfavora&le to the leader 0hen he is disliked faces vague and un -structural 'o&s and has little po0er# ?ielderHs Vsearch has: proved that task-oriented leaders 0ould &e more effective under Dun favora&leD or Dfavora&leD situations# In contrast relationshipS oriented leaders tend to e@hi&it &etter performance under situations that are moderately suita&le to leaders# 526 Pat,(Goal theory of *eadership .his theory is &ased upon the findings of various motivational as 0ell as leadership theories already proposed &y various authors# Ro&&ert !ouse 0ho suggested the D$ath -oal HtheoryD &elieves that the main function of a leader is AaB clarify and set goalsG AhB help su&ordinates find the &est 0ay for achieving the setgoalsG and AcB remove o&stacles if any# .his theory is not suggesting any particular style# (n the other hand ft is fully suggesting the applica&ility of a relevant leadership style under different situations# .he Success of a leader depends upon ho0 0ell M can set the goals for his su&ordinates and help them in attaining the same 0ith minimum difficulty# 7ell esta&lished $ath--oal relationship leads to high rate of success through greater satisfaction among su&ordinates# 7hen 'o&s are unclear and difficult to 0e su&ordinates are frustrated# .hey look for0ard for directions from the leader# .he key to this approach is that the leader can influence the paths via &ehaviour in goals# 586 L$a $r),#+ Cont#n!!' Real time leadership styles vary &et0een the t0o e@treme varieties +uthoritarianL and Democratic# Evolving different styles suita&le to different situations has &een 0ell e@plained &y Ro&&ert .annen&aum and 7arren !#Schmidt through D*eadership %ontinuum ModelD# .his model suggests a range of stylesG that can &e adopted to different situations# +ccording to this theory leadership effectiveness is the function of the leader the follo0er are the situational varia&les# +s per this theory the follo0ing are the most important elements that may influence a leaderHs style# a) ?orces operating in the leaderHs personality such as confidence 'udgment value systems feeling of security preference to a particular style etc# b) ?orces operating in su&ordinates including their kno0 ledge e@perience tolerance 0illingness to accept responsi&ility etc# c) ?orces of a given situation: .he 0ork situation is made up of a num&er ofH forces like team spirit pressure of time &ehavior of 0orkers duringD emergency situations# .hey also e@ert lot of pressures on leaders# d) ?orces of the organisational, environment: Elements like planning organizing directing and controlling have a definite influence on the organisational environment# .hey also influence the su&ordinate5s motives e@pectations re0ards and relationships# e) Influence of the social environment via *a&our "nions# -overnment Regulations %onsumer %ourts and other outside parties may significantly affect the leaderHs &ehavior# F!n"t#on o& L$a $r),#+ Styl$ 7herever might &e the style every leader has to perform some functions# Since lesdml2ip is the process of Influencing people it has to perform multi- dimensional functions in o&taining the 0illing contri&utions of the su&ordinates# Some of the significant functions of leadership are &riefly e@plained &elo0: IB $lanning and organizing the organizational activities In a desired manner# 2) Influencing the su&ordinates to accomplish the goals through re0ard and punishment# 3) Motivating and directing the su&ordinates to &etter levels of performance through proper guidance from time to time# 4) "nderstanding the su&ordinatesH e@pectations and aspirations and o&taining their 0illing cooperation in the realization of organizational goals# 5) Remove am&iguities and issue clarifications In order to make them more responsi&le on the 'o&# 6) %reating a favora&le organisational climate so as to retain and develop human resource# 7) "nderstanding the macro economic influence over the organisation and steer the %ompany on the path of success# CONCLUSION .here is no one &est 0ay of leading the people# Iarious theories propounded &y eminent authors have only suggested the varieties of 0ays that are availa&le for leaders in different situations# (ne has to grasp the kno0ledge to understand the total theory on the su&'ect# Every leader has to adopt his# o0n style depending

#107

upon the situation# !o0 the leader Influences the people Is not important# 7hat Is Important is ho0 a leader helps su&ordinates in accomplishing organisational as 0ell as personal goals#

#108

LESSON ( 1< CONTROL INTRODUCTION %ontrolling is an important element of management process# It is mainly concerned 0ith measurement and correction of performance in order to attain pre-determined goals# $lanning and controlling arc closely inter-connected 0ith each other# $lans cannot &e carried out automatically# .he managers have to regulate the activities revie0 the progress and steer the operations to confirm to plan# !ence control is concerned 0ith the attainment of organisational o&'ectives through regulating Individual performance# It is not an e@aggeration to state that the success or failure of any organisation depends upon the controlH process# It touches every facet of the managerial activity# %ontrol process in the organisation can &e compared 0ith that of a thermostat 0hich regulates the room temperature# %ontrolling is the function of every manager It Is mainly concerned 0ith the e@ecution of plans in a desired 0ay so as to o&tain &etter results in the 0ords of !enry ?ayol: D%ontrol consists in verifying 0hether everything occurs in conforn2ity 0ith the plans adopted the instructions received and principles esta&lishedD# Its o&'ect is to point out 0eaknesses in order to rectify them and prevent recurrenceD# In a 0ay it -isH acting as a facilitating function# D$&#n#t#on +ccording to E?* 1rech# D%ontrol is checking performance against predetermined standards contained in the plans 0ith a vie0 to ensure ade/uate progress and satisfactory performanceD# +s per this definition control guides actions to0ards some pre -determined goal In the 0ords of -eorge R# .erry D%ontrolling Is determining 0hat is &eing accomplished that is evaluating the performance takes place according to plansD# .his definition emphasized the fact that the managerial activity of controlling compels the events to conform to plans through appropriate corrective measures# .o understand the real meaning of control the definition given &y the !aimann is useful# .o him D%ontrol is the process of checking to determine 0hether or not plans are &eing adhered to 0hether or not proper progress is &eing made to0ards the o&'ectives and goals and acting if necessary to correct any deviationsD .his definition summarizes the purpose of control# +s per this definition control involves measurement of performance against standards set for the purpose of initiating corrective action# .he a&ove definitions give rise to the follo0ing characteristics for control concept# La)t F!n"t#on o& Mana%$'$nt %ontrol follo0s other managerial functions like planning staffing organisation and directing# !ence it is considered as the last function# A#l P$r*a)#*$ %ontrol ensures consistency in action in a desired 0ayG %ontrol affects other managerial functions and# In turn affected &y them# !ence it is termed as all pervasive# Cont#n!o!) Pro"$)) .here is a 0rong notion that control is needed 0hen something is going 0rong# It is a dynamic process of measuring checking and regulating the managerial activities in an un-interrupted manner# +s the process of management is incomplete 0ithout controlling controlling is considered as an unending process# ForAar Loo/#n% $ast activities can neither &e Improved nor controlled# %ontrol does not only deal 0ith the Dpost-mortem of 0hat has happened &ut also regulates the activities for improved performance in the near future# .hus control is looking at future through the eyes of the past# Ob4$"t#*#ty %ontrol is not an end in itself# It is only a means for accomplishing predetermined o&'ectives# %ontrol 0ithout o&'ective lacks sense and proves to &e un0orthy of its e@istence# D$l$%at#on %ontrol &ecomes meaningless 0ithout proper: authority# 7hen authority is delegated control compels the delegate to discharge his duties in a proper 0ay# F$$ ba"/ It refers to efficient system of reporting &ack for effective control %ontinuous monitoring and revie0 of operations are essential flBr effective control in any organisation# In&or'at#on Information is key to success# %ontrol depends upon the information regarding the actual performance# +ccurate and timely availa&ility of feed&ack is the &asis for the success of control Plann#n% V) Control .here is a close relationship &et0een planning and control these t0o are supplement to each other# 7hile planning is looking ahead control makes use of standards for improving future on the &asis of the past

#109

e@perience#

0ASIC CONTROL PROCESS .he &asic control process involves three steps: AiB Esta&lishing standardsG AiiB Measuring performanceG and AiiiB %ompare the results 0ith standards and correcting deviations# .he details of these three steps are given &elo0#H E)tabl#),'$nt o& Stan ar ) .he term standard refers to HnormH or some criteria of performance# Standards are either /ualitative or /uantitative goals to &e attained# .o illustrate some of the standards 0e may consider the follo0ing verifia&le goals performance productivity profita&ility etc# are the &est e@amples of /uantitative standards# Innovations social responsi&ility and morale are the e@amples of /ualitative standard# .he management may esta&lish standards on the &asis of past e@perience# .hese standards are helpful to management either for measuring the performance or 8udging the success or failure of the organisation# M$a)!r$'$nt o& P$r&or'an"$ It is essentially a comparison process 0herein the actual are measured against standards for the purpose of detecting the deviations &ut measurement is not al0ays practica&le# Fet a for0ard looking manager has to 0ork it out to prevent reoccurrence of mistake committed &y the management .he purpose of the measurement of performance is to alert the management a&out the pro&a&le departures from the esta&lished path appropriate actions# Corr$"t#on o& D$*#at#on %ontrol does not end 0ith the measurement of performance and its comparison 0ith standards# +ppropriate corrective action is to &e taken on the &asis of feed&ack o&tained# .aking corrective action seems to &e more appropriate 0hile the 0ork is in progress# 7hen the actual differ from that of standards reasons for such variances are analyzed to identify the root causes# (nce reasons are kno0n it is easy to take corrective action at an appropriate time# ?or this purpose the management needs control information#

.he &asic control process is sho0n in a&ove figure# It illustrates that the desired performance in the form of standards are laid do0n from plans# +ctual performance is the result of management operations like organising staffing M Directing Measurement and comparison of actual performance gives rise to identification of deviations# %orrective action is initiated on the &asis of analysis of causes for the occurrence of deviations# +ll appropriate measures must &e launched to correct deviations 0hich form the &asis of future desiredL performance# .hat is 0hy effective control system should try to overcome the 0eaknesses of traditional feed&ack system of getting communication to &e modified as feed for0ard system# .he main difference &et0een these t0o systems lies 0ith the flo0 of information 0hile Information to the end product of feed&ack it to the Input of the control system in feed for0ard tie# It to an innovative 0ay of monitoring real time information to adopt the functioning of the organisation to suit the dynamic conditions# F$$ ba"/ Control .he term H?eed&ackH refers to tile process of ad'usting future actions on the &asis of information a&out post performance# It to vital to the management &ecause it guides corrective actions# + good control system

#110

al0ays depends upon effective feed&ack of information# 1ut feed&ack al0ays consumes time# Management control cannot &e instantaneous &ecause of this time lag# .he traditional vie0 la that planning to a for0ard looking e@ercise controlling is a &ack0ard looking e@ercise# 1ut a good control system should &e futuristic# .hat to 0hy !arrold 4oontz o&served that: since past can not &e changed effective control should &e aimed at preventing present and future deviations from plans# .he present age of computerization comes handy to o&taining feed&ack on a real time &aste# It means that it inculcates Dact no0D philosophy in control process# I'+ortan"$ o& Control .he importance of control in an organisation need not &e over emphasized# Many &enefits accrue out of effective control system# .o highlight the importance of control the &enefits of control are summarized in the follo0ing paragraphs# Fa"#l#tat$ D$"#)#on Ma/#n% .he purpose of control is to take corrective actions# %orrective measures involve right decisions so as to &ring the actual performance to that of a desired level# Ma'ority of the e@ecutive decisions are centering around control points# !ence control facilitates decision making process in# any organisation# C,$"/) on D$l$%at$ A!t,or#ty

No single manager can o&tain the total things in the organisation# !e has to delegate authority for the purpose of getting things done through his su&ordinates# %ontrol ena&les the manager to check 0hether or not the delegated authority is &eing properly used &y the su&ordinates# 1asis for future +ction .hrough the evaluation of final results control helps in spotting mistakes and 0eaknesses in the process of implementation of plans# %ontrol supplies useful information for future planning and organizing# + good control system ena&les the manager to correct the shortcomings in order to pave a smooth route for future activities# Such a system of control guides and directs action to0ards the organisational o&'ectives# I'+ro*$) E'+loy$$) Moral$ Effective control system ena&les the management to identify changes that are effecting the organisation so that su&ordinates can take advance action to cope-up 0ith threats and opportunities created &y such change# It allo0s timely feed&ack of information to the su&ordinates for taking appropriate measures to protect their positions# .his ensures a sense of security and comfort among employees 0hich in turn contri&utes to higher degree of motivation and morale# Pro'ot$) E&&#"#$n"y #n O+$rat#on) %ontrol ena&les the manager to take note of the activities to detect deviations arid to make ad'ustments in operations# It ensures him that the enterprise moves in a 0ay as planned# It tells the manager 0hether the o&'ectives are &eing achieved or riot# If not it helps the manager to revise the plans for achieving goals# .hus control contri&utes to organisational efficiency# 0a)#" o& Co(or #nat#on %ontrol tells the managers 0hat to do and 0hat not to do for the purpose of esta&lishing harmony among various divisions# %ontrol provides unity of direction and tries to esta&lish e/uili&rium &et0een means and ends# .hus control promotes co- ordination &et0een different units of the organisation# EM$rt) P)y",olo%#"al Pr$))!r$) %ontrol influences the &ehavior of the employees in a positive 0ay# 7orkers &ecome cautious in their duties &ecause their performance is su&'ect to evaluation and control# + good control system &rings necessary pressure on the employees to &ecome good doers# Not only that control makes the people to act promptly for minimizing the 0astages and losses# L#'#tat#on) o& "ontrol Esta&lishing a control system it self is not a panacea for all the Ills of organisation# Ab)$n"$ o& Pro+$r Stan ar ) .he success of an organisation depends upon &oth tangi&le and intangi&le factors# 7hile tangi&le factors are easily controlla&le Intangi&le aspectG like /uality of supervision inter personal relationships pu&lic relations &rand loyalty etc# cannot &e /uantified for esta&lishing standards# L#'#tat#on) o& Corr$"t#*$ A"t#on (perating conditions of a &usiness are highly dynamic and volatile# It is not possi&le to take corrective actions all the time# No &usiness enterprise 0ould have incurred losses had the corrective action &een proved to &e corrective or productive# It means that there arc several limitations in taking corrective actions#

#111

3!'an R$a"t#on %ontrols Invite opposition from the su&ordinates &ecause they interfere in their freedom# %ontrols 0ill not 0ork unless people accept them# $eople oppose controls 0hen they are &iased unrelia&le and su&'ective# Coat o& Control Esta&lishing a good control system is not so easy# It needs ela&orate effort time and money# In modem organisations 0here man-machine systems go hand in hand esta&lishing a control system is a complicated process# .his may result in e@cessive cost than the &enefits of control# Pr$(r$@!#)#t$) o& Control +n effective and ade/uate system of controlling must fulfill the follo0ing re/uisites# Plan .here is a close inter-relationship &et0een planning and controlling# .hey are not su&stitutes &ut supp2emenlto each other $lans 0ithout control a 0orthless and control 0ithout plans are meaningless# %ontrols must &e al0ays &ased on plans# Pro+$r Or%an#)at#on Str!"t!r$ +ny control process yields good results only 0hen the responsi&ility for detecting the deviations and initiating corrective actions is clearly defined and identified along the lines of hierarchy throughout the organisation# %ontrols to &e effective must &e supported &y a good organisational structure# S!#tab#l#ty + sound control system must suit the needs of the enterprise# %ontrol points designed for a manager are Inappropriate for a supervisor# %ontrols must &e tailored to the needs of an organisation# Pro'+tn$)) + good control system should detect and report the mistakes &efore the matter &ecomes serious# It should allo0 prompt action &y the management at correct time# ForAar Loo/#n% %ontrols should &e for0ard looking character# .hey should &e directed to0ards future# Since past to dead things can &e improved through control system In future control &ecomes useless if it falls to predict future# Fl$M#b#l#ty %ontrol should not &e static# .hey should remain 0orka&le under dynamic &usiness conditions# Since controlling is a continuous activity it should &e fle@i&le enough to &e adopted to changing conditions of an organisation# Ob4$"t#*#ty +s far as possi&le control should serve a specific purpose# .hey should develop impartial standards for the purpose of minimizing friction# E"ono'#"al .he &enefits from control should &e greater than cost# %ontrols are feasi&le and desira&le 0hen their e@pected &enefits e@ceed costs# E@pensive and *2appropriate control should &e avoided# S#'+l$ + good control system should &e easy to understand and simple to administer# .oo ela&orate and complicated control system /uite often fells to deliver the goods# A""$+tabl$ %ontrols 0ill not 0ork unless people accept the same# .hey should &e accepta&le to those to 0hom they are applica&le# Since control is for people it must &e accepta&le to the people# Int$%rat$ Control Sy)t$' %ontrol touches each and every activity of the organisation# 7hether the activities are strategic or routine the control should strive to o&tain effectiveness# %ontrol covers all levels of managers from top to &ottom# .hey affect other managerial functions in a great 0ay# 1ut some controls may &e disliked &y

#112

su&ordinates on the pica that they are unreasona&le and unaccepta&le# .his type of dislike among employees a&out control process should &e removed &y creating a favora&le environment# *est the effectiveness ofH control is destroyed through the resistance of employees# .o overcome the a&ove difficulties and to o&tain cooperation and participation of employees in the matters of control the management has to develop an integrated system of control# +ny control that is intimately interconnected and intert0ined 0ith other managerial functions is termed as an Integrated %ontrol System# It is of vital Importance to modem management in vie0 of their operation in comple@ environment# .he details of such an integrated system are summarized &elo0: Control an Plann#n% Since control refers to the use of activity for compelling events to conform to plans# It is evident that these t0o function are inter-related# $lanning involves setting the activities and controlling keeps them on the right track# $lanning is meaningless 0ithout control and control is &lind 0ithout proper plans# .he planning condition contri&utes to the smooth discharge of control &y 0ay of providing control standards through programs and &udgets# %ontrol function contri&utes to the adoption of ne0 and revised plans# Control an Or%an#)#n% .he term organising refers to a formal grouping of activities for the purpose of achieving organisational o&'ectives# It ensures that o&'ectives are achieved through optimum utilization of resources in an orderly manner and that too in the shortest possi&le time# Resources like money material machinery and skilled manpo0er are limited# .hese resources must &e effectively used and controlled# It may no longer &e possi&le for one man to control all the operations# .hat is 0hy it is necessary to delegate some responsi&ility and authority to the su&ordinates# %ontrol &ecomes easy 0hen authority is delegated# %ontrol receives negative response and &ecomes Ineffective 0hen authority is centralized# Not only that effectiveness of control directly depends upon the method of grouping of activities and level of delegation of authority# Control an D#r$"t#n%

It is the heart of administration# Since it tells the people 0hat to do ho0 to do here to do and 0hen to do# +ctivities like leadership and communication play an important rote in influencing the &ehavior of su&ordinates in securing desired performance# .his aspect is closely related 0ith control function# 7hile leadership guides action control compels these actions to adhere plans# %ommunication ensures free flo0 of timely and relevant Information# %ontrol uses this Information as a feed&ack for taking corrective action# Information is &ack&one for regulating the activities in any organisation# CONCLUSION In order to make the control process as an effective tool in the hands management it should &e integrated 0ith other managerial functions# +ll Important and critical aspects should &e &rought under the purvie0 of control process for o&taining &etter results# %ontrol should not &e isolated from the main stream of managerial functions# %ontrol function &ecomes effective 0hen# It is Integrated 0ith other managerial functions# %ontrol is not a perfect su&stitute for sound managerial practices and cannot ensure &usiness success on itsH o0n merit# ?or o&taining results the management has to develop an integrated approach#

#113

#114

LESSON ( 1= CO(ORDINATION !armonious relationships &et0een the various divisions and departments of an organisation is a must for its smooth functioning# .he activities of the various divisions have to he &lended and unified so as to give them a commonness of the purpose# !itherto the concept coordination 0as vie0ed as one of the functions of management# No0 it is regarded as the essence of the management processG It helps in achieving harmony among individual efforts to0ards the accomplishment of group goals# -roup goals can not &e achieved automatically# Individual efforts must &e integrated and synchronized in order to attain common o&'ectives# It is a dynamic concept# It implies an orderly arrangement of group efforts to ensure unity of action# +ccording to !enry ?ayol# Dto co-ordinate is to hannonize all the activities of a concern so as to facilitate its functioning on the path of success# $ro&a&ly in smaller organisation there is no need for coordination 0here all activities are performed &y one person# 7ith the increasing gro0th and comple@ity of modem organisations the need for coordination &ecomes Inevita&le# *ack of proper coordination results in inefficient operations delays frustrated feelings and 0aste of time# M$an#n% +ccording to E# ?# *# 1rech# D%oordination is &alancing and keeping together the team &y ensuring suita&le allocation of task to the various mem&ers and seeing that tasks are performed 0ith due harmony among the mem&ers themselves# +ccording to Me ?arland D%oordination is the process 0here&y an e@ecutive develops an orderly pattern of group efforts and secures unity of action in the pursuit of common purpose#D .his definition vie0s coordination as the task of-integrating the individual needs 0ith that of the organizational goalsD through proper linking# C,ara"t$r#)t#") .he a&ove o&servations reveal the follo0ing features of coordination# %oordination is not a distinct function# 1ut represents the essence of management: .he outcome of the coordination is to attain the common purpose# %oordination is essential in all 0ork situations 0here people 0ork together# %oordination is a continuous and an on going process# %oordination does not arise spontaneously or &y force# It is the result of concerted action# W %oordination is re/uired in group efforts &ut not in individual efforts# N$$ &or Coor #nat#on

E@istence of disintegrating forces emphasizes the need for greater coordination among various divisions of an enterprise# .hese disintegrating forces may act as &arriers to effective coordination# .hey are summarized &elo0: In"r$a)#n% S+$"#al#-at#on %oordination &ecomes essential 0hen the principle of specialization has &een practiced in 0ork situation# .he activities of the unit may &e divided on the &asis of product function region or some other form# .he greater the num&er of units the larger the num&er of specializations# Every e@ecutive is mostly 0orried a&out his unitHs performance# It results in conflicting Interests 0ithin the same organisation# + good coordination paves the 0ay for effective integration of efforts of all people for the accomplishment of a common goal# E'+#r$ b!#l #n% 'ot#*$ +s stated a&ove each e@ecutive is deeply motivated &y the performance of his o0n unit in /uestion# .his kind of attitude may 0ell fulfill his personal ego &ut isolates him from others# (rganisational goals can not &e accomplished 0ith this kind of tendency# %oordination is essential to ease out this situation# P$r)onal "on&l#"t) b$tA$$n $'+loy$$) Employees are human &eings# $ersonal rivalries 'ealousies and politics in the 0ork situation are &ound to create pro&lems to the management# ?or e@ample conflicts &et0een line and staff and differences &et0een production and sales personnel create pro&lems in the smooth functioning of a organisation# %oordination helps in harmonizing group efforts# S!bor #nat#on o& #n #*# !al #nt$r$)t to t,at o& or%an#)at#onal #nt$r$)t Individual interests are Important for developing loyalty Integrity hard 0ork Initiation and motivation# (rganisational Interests are much more important than individual interests# ?or achieving this su&ordination of Individual needs to that of organisational goals is a must# .he purpose of coordination is to attain this desired end# .he importance of coordination need not &e over emphasized# .he primary task of management is to coordinate effectively all the activities# it is the end result of managerial process# It is a creative force through 0hich mem&er of the organisation are encouraged to contri&ute to group goals voluntarily 0illingly and

#115

enthusiastically# It emphasizes systemHs approach to management# .he various functions of management can not &e vie0ed in Isolation &ut has to &e vie0ed in totality# %oordination allo0s personal satisfaction on one hand and social satisfaction on the other hand# It thus promotes efficiency and tones up the general level of employee morale# Ty+$) o& Coor #nat#on Depending upon the nature and coverage coordination may &e studied under different types# (n the &asis of its coverage coordination may &e divided into t0o types such as internal and e@ternal# +nother type of classification is possi&le on the &asis of its flo0 under t0o headings mainly vertical arid horizontal coordination# Internal and E@ternal %oordination Int$rnal an EMt$rnal Coor #nat#on %oordination &et0een units of the sale organisation is termed as internal coordination# It summarizes the activities of different units so as to make the organisation store effective# (rganisations are not free from the influence of eternal environment# !ence esta&lishing a close link &et0een organisations and e@ternal environment is a must either to survive or surpass the gro0ing competition# E@ternal environment includes technology competition market forces customers -overnment policy etc## E@ternal co-ordination tries to coordinate all these forces up to the advantage of an organisation# V$rt#"al an 3or#-ontal Coor #nat#on %oordination &et0een different levels of hierarchy do0n the line is termed as Dvertical coordinationD# It ensures that all levels of people from top to the &ottom 'for( in harmony# It is greatly facilitated &y a techni/ue like delegation of authority to the lo0er levels of hierarchy# %oordination &et0een people of the same cadre and &et0een different departments at the same level is termed as D!orizontal %oordinationD# +nother classification depending upon its content vie0s co-ordination from a different angle# Pro"$ !ral an S!b)tant#*$ Coor #nat#on $rocedural coordination implies the specifications of different units in the same organisation# (n the other hand su&stantive coordination is concerned 0ith the content of organisational activities# Pr#n"#+l$ o& Coor #nat#on Mary $arker ?ollet has laid do0n the follo0ing our principles for effective coordination# .hese principles help every manager in discharging his functions# W Early Start .hinking function of the management precedes the doing function# .he task of coordination &ecomes relatively easy if it starts at the planning stage# ?ree e@change of ideas helps in clearing dou&ts and remove misunderstanding# !ence plans must &e prepared in consultation 0ith all people# $lans &ecome successful if coordination is practiced at initial stage# Securing coordination &ecomes impossi&le at later stages like e@ecution of 0ork# D#r$"t P$r)onal Conta"t It stresses the importance of direct contact in removing conflicts and misunderstanding# Effective coordination is &est achieved through direct personal contact# Direct communication is the most effective 0ay to convey real feelings to facilitate greater coordination# K Cont#n!#ty %oordination is an unending process# It cannot &e left to chance# .he management has to continuously strive hard to maintain perfect &alance among different unitsJpeople# %ontinuous coordination helps the manager in ad'usting and re- ad'usting the range of activities so as to minimize 0astages misunderstanding and apathy# Int$%rat#on .he fourth principle of coordination calls for integration of efforts for achieving a common purpose# ?or this purpose coordination demands reciprocal relationship among all the concerned# K In $+$n $n"$ an Coor #nat#on %oordination influences all functional activities of management# In a Similar 0ay all other activities influence coordination# .his is termedH DInterdependenceD# Such as DinterdependenceD is imperative for the success of any organisation# Such interdependence of 0ork units has &een categorically classified under three heads &y 8ames D .hompson# .hey are AaB $ooled interdependenceG A&B Se/uential interdependenceG and AcB Reciprocal interdependence# 5a6 Pool$ Int$r $+$n $n"$

7hen departmentsJunitsJdivisions are not directly dependent on each other &ut indirectly responsi&le for over all performance of the enterprise it ill termed as D$ooled interdependenceD# It represents a situation 0here failure of one unitJdivision leads to the failure of the entire enterprise# Each unitJdepartment makes its

#116

o0n contri&ution and supports the main system in its o0n 0ay 5b6 S$@!$nt#al #nt$r $+$n $n"$ It refers to a situation 0here the output of one department &ecome the input of the other# .his type of interdependence usually e@ists in process industry# 5"6 R$"#+ro"al Int$r $+$n $n"$ It refers to t0o 0ay interdependence# !ere the output of one &ecomes input of the other and vice a versa A++roa",$) &or A",#$*#n% E&&$"t#*$ Coor #nat#on Different organisations adopt different mechanisms for achieving effective coordination# .here is no single method of coordinating the managerial activities that can &e universally accepta&le# 8#D# .homson has identified three important categories of approaches for achieving effective coordination# +ll of them are Integrative mechanisms# Each one of them is e@plained &elo0# 1. Integration through standardization: It involves the development of standard rules and procedures through 0hich the 'o& holdersJ departments have to direct their activities in order to ensure consistency in operations# 2. $lans and Schedules: Separate plans and schedules may &e prepared for each departments or units# +t corporate level all plans are merged and integrated so as to o&tain optimum results# %oordination &ecomes easy since departmental plans are fle@i&le than standards# 3. Mutual ad'ustments: +ctivities of company are coordinated through mutual ad'ustments among the sister unitsJdepartments on contingency &asis# !ere cooperation is assured &et0een the needy units for the purpose of getting the things done# In traditional organisations coordination is sought to &e achieved through standardization and planning# .he usual methods follo0ed &y the traditional and &ureaucratic organisations for achieving effective coordination are listed &elo0 1. Developing ela&orate system of rules and procedure for sorting out recurring pro&lems# 2. Non-routine pro&lems arc to &e referred to higher-ups# 3. 7here decisions relating to ne0 policy matters have to &e taken up they may &e referred to social committees# .raditional organisations could a&le to reap advantages through follo0ing the a&ove mechanisms for o&taining higher degree of coordination among sister units# .his traditional approach isH &est suita&le to normal and predicta&le conditions# 1ut this kind of approach is inade/uate to meet the re/uirements of a modern organisation under a dynamic environment Mere sophisticated methods have &een developed &y the researchers for the purpose of improving coordination# 8ohn %hild suggested the follo0ing forms of coordination for improved functioning of the organisations# 1. ?or understanding &usiness pro&lems and offering solutions direct contact &et0een managers and employees facilitates greater coordination# 2. 7hile too much rapport is re/uired &et0een employees and departments &etter coordination may &e o&tained through the appointment of liaison officers# 3. 7hile there are inter departmental conflicts 0hich cannot &e solved immediately coordination may &e attained through special task forces 0hich 0ould deal special situations# 4. Special committees may &e appointed to deal 0ith the recurring pro&lems of inter departmental conflicts# 5. +n organisation 0hich is too &ig 0ith several divisions may find it difficult to coordinate the total range of activities a systematic manner# .o ease out this pro&lem a coordinating department may &e created 0ithin the organisation on par 0ith other departments to perform this special function# 6. I& things are too complicated matri@ type of organisation may &e developed for esta&lishing effective coordination- "nder this method functions of some of the personnel may &e integrated 0ith the functions of other departments this kind of arrangement encourages effective understanding &et0een various divisionsJdepartments# .hisH facilitates higher degree of coordination among the mem&er unitS of organisation# Ian de Ien and others proposed three approaches as &asis for coordination# .hey are summarized &elo0# I'+$r)onal 'o $ .his model envisages designing of rules producers and programmers suita&le for smooth functioning of the organisation# P$r)onal 'o $ !ere human &eings are encouraged to find out ho0 things are going on and to discriminate 0hat to do and 0hat to do through effective feed &ack# $ersonal Involvement surely contri&utes to effective coordination#

#117

Gro!+ 'o $ 7hen operations are large a single individual cannot coordinate properly# .his model suggests esta&lishment of committees task forces meetings etc# .he logic &ehind this approach to that Dt0o &rains can think &etter than one &rain#D +s stated earlier no single approach to coordination is proved to &e useful to all organisations# .he suita&ility of a particular approach to coordination depends upon factors like size of the organisation comple@ity of its 0ork nature of 0ork force certainty and uncertainty conditions delegation of authority etc# H.he process of coordination &ecomes useful and meaningful only 0ith the delegation of appropriate authority In order to minimize the pro&lems of over riding departmental interest for the cause of the organisational o&'ective effective coordination is needed# ?or e@ample a finance manager may issueHs direction that no overtime allo0ance &e paid to 0orkers# +t the same time production manager is 0orried a&out realizing production target# !e may issue another direction that production 0orkers are entitled to overtime allo0ance# .his might have &een done in his an@iety to realize production target# .his situation resultG in misunderstanding and conflicts solution for this type of pro&lem lies 0ith effective coordination among mem&er departments# %oordination process is essential to make unified 0hole out of diversified functions on smooth lines# It pervades all the managerial activities from planning to controls# 1ig organisations are no0 creating separate departments for coordination among departments# Ne0 rules and procedures may &e developed to minimize pro&lems like red-tap ism overriding goals &lind loyalty and friction# Co(or #nat#on V) Co(o+$rat#on .he term co-operation refers to collective efforts of people 0ho associate themselves voluntarily to achieve some predetern2ined o&'ective It indicates a&out the #0illingness of individual to help each other# It is the result of voluntary attitudes of people in organisation# !o0ever it cannot &e a su&stitute for coordination# 7hile co-operation facilitates coordination coordination is all inclusive including cooperation# %oordination involves deli&erate effort on the part of management to &ring together the activities of various individualsJdivisionsJunits In order to provide unity of action# %oordination does not arise automatically# It re/uires conscious efforts 0hereas cooperation is the results of voluntary efforts put &y file people# .hus this scope of coordination among 0ider than cooperation# S!''ary .he term coordination refers to orderly arrangement of group efforts for the purpose of accomplishment of o&'ectives# It is the &asic responsi&ility of every manager# It is a continuous process# "nlike previously it is not vie0ed as a distinct activity &ut considered as the essence of management# .he pro&lem of coordination comes into picture 0hen management is dealing 0ith group efforts &ut not 0ith Individual efforts# .he term coordination should not &e confused 0ith cooperation# .he significance of coordination results in efficiency morale and optimum use of resources# (n the &asis of scope and coverage coordination may &e divided into different types# Namely internal Is e@ternal vertical Is# !orizontal procedural Is# su&stantive# Different techni/ues are availa&le for achieving higher degree of coordination# Similarly different managements deal the pro&lem of coordination through different approaches# 7hatever the approach it has to clarify the role of manager regarding his authority and responsi&ility for the purpose of attaining optimum use of resources to the common cause of the organisation#

#118

LESSON (1> RECENT TRENDS AND NE7 PERSPECTIVES IN MANAGEMENT 1. CORE COMPETENCE In the 2ONEs top e@ecutives 0ere assessed on their a&ility to reorganize their corporationsG in the 2OOEs top e@ecutive 0ill &e H'udged on their a&ility to identify cultivate and e@ploit core competencies that make gro0th possi&le# %ore competence is defined &y the follo0ing three criteria: 1. It provides potential access to a 0ide variety of markets# # 2. It makes a significant contri&ution to the perceived customer &enefit of the end product# 6# It is difficult for competitors to imitate# ?e0 companies are likely to &uild 0orld leadership in more than five or si@ fundamental competencies# In the long run if the organization is to &e competitive in the glo&al market place it 0ill derive its competitiveness from its a&ility to &ring high - /uality lo0-cost products to market faster than its competitors# In order to do this an organization 0ill need to consist of Da portfolio of competencies rather than a portfolio of &usinessD# Many companies have the technical resources to &uild competencies &ut key e@ecutives lack the vision to do so# .he concept challenges e@ecutives to rethink the concept of the corporation itself# If you accept the notion of a company as a set of core competencies the task of management Dis to &uild competencies and the administrative means for assem&ling resources spread across multiple &usinessD# FIRMS ACBUIRE 3IG3ER DEGREE OF COMPETITIVE ADVANTAGE ONL1 01 0UILDING CORE COMPETENCES 7e have seen in the foregoing sections that firms develop competitive advantage &y 0orking 0ith one or more of the various competitive advantage factors# +nalysis sho0s that in many cases companies and competition soon coverage on product - price H- differentiation - attri&utes .hey reach a stage 0here there is little scope left to different further 0hether on product service or any other conceiva&le attri&utes# +t such a stage 0here there is a saturation only corporations 0ho en'oy core competencies in the root technologyJprocessJe@pertise keep gaining# +nd in todayHs technology driven 0orld technology is one main source of core competency# .hrough command over technologies and processes firms &ring out proprietary products 0hich lend competitive advantage to them# $rof# %#4# $rahalad in his !1R article on .he %ore %ompetence of the %orporation kno0ledgea&ly discusses the concept of core competencies and its role in &uilding long-term competitive advantage# .hrough an e@amination of a large &unch of internationally successful companies and their 0orld famous products $rof# $rahalad drives home the point that it is not a particular product as such that lends these corporations a 0orld dominance# 1ehind the product there is the core competency the inter7oven technologyJprocessJe@pertise# ?or e@ample Sony has a core competence in miniaturizationG it can make any product tiny# $hilipHs has optical media e@pertise# It has achieved its competence in this field as a result of a decade long research and development# !onda has a core competence in engines 0hich gives it a competitive advantage in diverse products like car motorcycle la0n mo0er and generator: %anorHs core competence lie in optics imaging and microprocessor controls that together lend %anon distinct competitive advantage in products as diverse as copiers laser printers cameras and image scanners# 8I ) &uilt up core competence in video recordingJvideo tape technology 0hich finally gave 8I ) uni/ue and novel product in these fields# Famaha introduced the digital piano 4omatsu developed the under0ater remote-controlled &ulldozer and %asi< &rought the small-screen color *%D television# 1ehind every one of these inventions there lie the distinct core competencies of these corporations 0hich are &uilt out of the corporationsH command over several technologies # 1uilding core competence &ecomes essential to competitive advantage &uilding &ecause advantages emanating from the product-price- performance trade offs are almost al0ays short term# Especially in an era 0here technologies are altering e@isting &oundaries of &usinesses advantage can last only through Hcompetence en'oyed at the very roots of products# +nd only through e@pertise over several technologies and a complete command in their infinite variety of uses a company can occupy a highly advantageous position# Du$ontHs core competence in chemical technology r core competence in electronics and NE%Hs core competence in telecommunications semiconductors and mainframes 0ill see them through any e@acting competitive situations# .o &uild core competencies it is not necessary for companies to invest heavily in fundamental research# 7hat is re/uired is a corporationHs commitment to look for relevant technologies in its field harness them develop the human e@pertise to understand them and 0ork on them like &uilding &locks so that the corporation has the &asic strength to push out any product &ased on demands-of changing times and patterns# In fact companies 0ho al0ays make it a policy to manufacture the crucial components of their products instead of outsourcing them /uite often en'oy the scope for core competence &uilding 0hile those 0ho as a policy decide to source their crucial components from suppliers deny themselves the opportunity to &uild core competencies &usiness# .he latter may en'oy some cost advantage 0hich may ultimately give them a competing edge in the price-marketing factors# 1ut in the long term such a corporation could &e

#119

foregoing an opportunity for core competence &uilding in its chosen &usiness# 7hen the manufactures of crucial components are 'ust seen as a cost centre the chances of core competence &uilding are getting lost# ?or e@ample the +merican +uto giant %hrysler tends to vie0 engines as 'ust one more component for its car assem&ly# 1ut in the case of !onda it 0ould never give up the responsi&ility of manufacturing its engines# !onda has also centralized all its critical engine-related RMD in 8apan 0hile it does not mind out- sourcing &ody parts overseas and sharing responsi&ility for &ody-design 0ith its affiliates 0orld0ide# No 0onder !onda could &uild up a core competence in engines arid use it as the &ack up for gaining competitive advantage in several product categories# In the changed conte@t of India today the crucial task &efore corporate managements is 'ust not to &uild some short term competitive advantage &ut to endo0 the organisation 0ith a portfolio of core competencies# .he &attle for glo&al leadership is &eing 0aged on the strength of core competence and not on some &rands as is &eing perceived &y many# 1ehind the visi&le and apparent &attle of the &rands there lies a su&stantive 0ar &et0een core competencies of corporations# .he latter is al0ays &ehind the scene# (nly &y looking at the glo&al corporations can Indian companies get an idea of core competence &uilding# 1ecause in the historic evolution of &usiness Indian &usiness is only no0 reaching a stage 0here they can put into practice such an advanced concept# +nd the economic li&eralization has made the ground conducive to such an effort# Indian %ompanies must set themselves the task of core competence &uilding# 2. TOTAL BUALIT1 MANAGEMENT .he last fe0 years have seen unprecedented gro0th in the /uality profession IS( OEEE Series has 'ust &een a step to0ards .PM# .here is a great deal of profit &y /uality improvements in products and services# Indian %ompanies have realized that improvements in products and service &usiness processes and people is inescapa&le# In &usiness terms it has &een realized that /uality is the single greatest factor in achieving market success for any company# Instead of trying to increase sales to# gain profit 0hich route also increases operating cost /uality improvement &ecomes a shortcut to improved profits# Puality improvement itself enhances sales indirectly &y generating customer demand and this 0ill have its o0n momentum in the market# .he heart of .PM philosophy is the conviction that error free 0ork is possi&le to achieve# It is also phrased as doing right the first time 0orking smarter and zero defects# $erhaps one may not achieve the target &ut the mind is set for a perfect 0ork# .he founder of I1M .homas 8# 7atson once said that Dit is &etter to aim at perfection and miss than to aim at imperfection and hit itD# .he idea of prevention is therefore pivotal to .PM $rogrammed it may &e difficult to find practical support for this &ut this is the# aim of all /uality assurance# .he diligent use of measurementD process controls data driven limitation of 0aste and error is the emphasis# Documentation of 0ork process /uality audits and /uality assurances prevents /uality pro&lems# ?undamentally this is a&out developing a strong value in every&ody so as not to pass something on 0hich 0e kno0 is 0rong# .he let out clause for poor performance is Dto err is humanD# .he conventional 0ork-practices seem to have an anticipation of failure &uilt in them# .hen for managers M employees .PM preoccupation 0ith prevention involves a 6<E degrees shift from the normal attitude to0ards the 0ork performance# .hey normally set up a dual standard one for their o0n e@pecting /uality service and good products and #the other for #their 0ork life e@pecting safety nets to catch the mistakes# .hey attempt to set right the shoddy 0ork# +n accepta&le /uality level A+P*B sets up a dual standard# .his then offers a diametrically opposite mindset to total /uality# .he company instead of focusing on zero defects encourages defects &y setting +P*s# + classic e@ample is in the paper manufacturing industry# .he fi&re loss and the finishing losses are conveniently accepted &et0een ;_ and 22 _# .he impact on the environment &y the letting of the fi&re to escape into the effluent and the loss of the precious forest &ased ra0 material &am&oo and 0ood &ecomes no&odyHs concern# "ltimately in a monthly revie0 meeting an e@planation is ta&led attri&uting the situation to some reason and it is accepted# .he production is less to that e@tent though there is an input of the precious resource# .his is a testimony to the need 2E p errors from occurring rather than fi@ing them after the fact# T3E EERO DEFECT ISSUE Some see a conflict &et0een zero defects doing things right the first time and risk taking# $hilip 1# %ros&y holds the opinion that the real risk takers like people 0ho go into space make sure that they do the things right first time and they do it &efore going# Risk taking involves time to layout the re/uirements and to get clear on everything that is kno0n# .hings 0hich are not kno0n are to &e planned for# 7hen the rest of the operation is 0ell &ased the unkno0n &ecomes something that can &e dealt 0ith# .he risk aspect comes up only 0hen people are too lazy or preoccupied to 0ork out the re/uirements# Re/uirements need thought# Everyone has to kno0 the charter of the organisation and they have to understand their personal role in making it all happen# Qero defects is doing 0hat 0e agreed to do 0hen something has &een agreed 0ith the customer# .his implies clear re/uirements training a positive attitude and a plan# It is not leaping off into the unkno0n# Qero defect is a reality and is a goal too# It is a result of thinking things out# +ccording to $hilip 1# %ros&y discrepancies occur only &ecause they are e@pected to happen# .hey 'ust fi@ rather than prevent# Error prevention should &e more than a rhetoric for making .PM progress# Doing right the first time should &ecome a standard performance# It should virtually mean surpassing old standards# .he preventive action guards against compounding of errors and passing them on to the customers# ?or this purpose

#120

everyone 0ill have to &e his o0n inspector# .he people employed kno0 more a&out the operational side and they should &e encouraged to come out 0ith suggestions# Implementing many of them 0ould do the trick# In addition improving procedures and documents 0ould help the service side# .herefore in a 0ay doing right things first must &ecome a personal standard# $erhaps a change overnight &y implementing .PM may &e impossi&le# ?urther telling people 0hy and 0hen the Dold 0aysD 0ill stop gains more credi&ility# +t this point a 0ord a&out perfectionism may &e appropriate# It is orientated to0ards meeting the customer needs# ?ailure to train communicate and manage .P on a day to day &asis 0il2 prevent from &ecoming a standard operating procedure and attaining perfection# !uman resources are considered the most vital and valua&le resources of an organisation as the productivity and /uality outputs of an organisation are directly linked to people 0orking for it# ?urther the organisational performance is assessed in terms of its employeesH performance# +t the same time it is also o&served that human resources are very difficult to manage considering the variation present in the individuals in terms of their skills &ackground education culture and attitudes# !o0ever it is natural to demand that the individuals perform according to the e@pectations and needs of the organisation# .hus there is a need to ascertain employeesH performance in the light of organisational re/uirements and ensure /uality in the products and services delivered# +ccording to Moss A2ONOB the traditional performance appraisal A$+B process has &een accepted as a legitimate means of assessing and evaluating individual effort in the 0orkplace# .his kind of measurement of performance gains further importance due to the fact that all employees are responsi&le as individuals and as a team for ensuring /uality in the products and services 0hich an organisation delivers# 7ilkinson A2OO3B comments that involvement of all employees in monitoring their o0n 0ork 0ith the aim of constantly maintaining and improving /uality leads to total /uality management A.PMB# .hus any organization aiming for .PM must ascertain its employees#H involvement and commitment to /uality 0hich can &e determined through the $+ process# In this paper first the concepts of $+ are discussed and a critical vie0 of $+ is made to e@pose its limitations# Ne@t the modifications re/uired are highlighted follo0ed &y the development of a link &et0een performance appraisal and .PM in a logical form# .he article concludes emphasizing the transformation of $+ process into .PM process# TRANSFORMING PA TO TBM .otal Puality Management A.PMB an approach to management that focuses on /uality as the key to success# +ccording to Saunders and -raham A2OO3B .PM re/uires team0ork 0herein all employees of an organisation 0ork to0ards a common goal# It is imperative that every employee of the organisation understands the o&'ectives and synchronizes his or her effort 0ith others accomplishing the intended o&'ectives# 7ilkinson A2OO3B states that .PM attempts to emphasize thatH all employees are ultimately involved in serving the final customer soL that /uality matters at all stages 0hile team0ork and cooperation are essential ?urthermore everyone should strive for continuous improvement rather than rela@ing 0hen targets are achieved# Every person has a common focus so that people 0ith different 'o&s a&ilities and priorities are a&leH to communicate 0ith each other in pursuit of a common organisational purpose# Since .PM strongly advocates continuous improvement it &ecomes necessary to identify the strengths and 0eaknesses of all employees# .his is 0here $+ can lend a helping hand to find out the areas that call for improvement# .his means the outcome of $ + process is used not for punitive action 0hen deficiencies e@ist &ut to identify the action to &ring in improvement so that a 0eak performer is converted to a HstarH performer# Such a constructive application $+ is 0hat is desperately needed to achieve .PM# .PM 0hich insists on continuous improvement and emphasizes the role of people can definitely thrive 0hen $+ is used as a diagnostic tool# .his is &ecause $ + identifies the deficiencies in an individual and .PM advocates employee /uality improvement through education and training to overcome those deficiencies# (nce the employees realize the &enefits of $+ to them and to the organisation they 0ould &e more 0illing to participate in $ + process# Such a voluntary involvement ensures improvement of /uality products and services delivered &y the system# 8. 0ENC3 MARFING 1esides the popular reengineering techni/ue associated 0ith .PM other techni/ues such as &enchmarking are also receiving attention# 1enchmarking is the process of comparing 0ork and service methods against the &est practices and outcomes for the purpose of identifying changes that 0ill result in higher /uality output# 1enchmarking incorporates the use of organizational &ehavior techni/ues# +lthough it should not &e e/uated 0ith goal setting &enchmark metrics can &e used to set targets that are pursued identified# +nd then used as a &asis for future action# .he &enchmarking process involves looking &oth inside and outside the organization for 0ays of improving the operation# 1enchmarking offers a num&er of &enefits to organizations# ?irst this techni/ue helps organizations compare themselves against successful companies for the purpose of identifying improvement strategies# Second &enchmarking ena&les organizations to learn from others# .hird it helps create a need for change &y sho0ing the organization ho0 procedures and 0ork assignments should &e altered and resources reallocated# .here are a 0ide variety of e@amples in 0hich &enchmarking has helped organizations improve their total /uality# 1enchmarking is a continuous management process that helps firm identify the &enchmark compare themselves to the &enchmark and to use the kno0ledge in designing a practical plan to achieve superiority in the market place# .he measurement of relative performance lakes place along the thee components of a total /uality programmed products and services &usiness processes and procedures and people# .his &rings

#121

a&out changes that lead to /uantum and continuous improvements in products processes and services that result in total customer satisfaction and competitive advantage# .he strategy consultants Mc4insay M %o vie0ed &enchmarking as a skill an attitude and a practice that ensure an organisation al0ays has its sights set on e@cellence not merely on improvement# 1enchmarking involves o&serving competition for companies in other industries that e@emplify &est practice in some activity function and process and then comparing oneHs o0n performance to theirs# .his e@ternally oriented approach makes people a0are of improvements that are orders of magnitude &eyond -0hat they 0ould have thought possi&le# In contrast internal yardsticks that measure current performance inH relation to priorL period results # currentH &udget or the results of the other units 0ithin the company rarely have such an eye-opening effect# Moreover these internally focused comparisons have the disadvantage of &reeding complacency through a false sense of security and of stirring up more energy for intramural rivalry than for competition in the market place# 1enchmarking emerged as a management tool in 2O9O 0hen Uero@ Manufacturing (perations decided to compare the unit manufacturing cost arid the features of their copying machines to those of the competition from 8apanese $hotocopier companies# In the early days of &enchmarking the emphasis 0as on measurement per se and on straightfor0ard comparisons of performance parameters like productivity and efficiency measures 0ithin and &et0een companies 0hether in a manufacturing or service environment# Su&se/uently competitive &enchmarking &ecame more prominent 0ith a gradual shiftL in attention to &usiness processes 0ithin a more diverse range of &usiness functions 0hich had a key influence on overall performance# .he main locus of &enchmarking activity at present is on &est practices information on 0hich is o&tained &y active colla&oration 0ith &est in class companies having compara&le &usiness processes irrespective of the industry they &elong to# 1enchmarking identifies and /uantities performance gaps and determines ho0 much a company needs to improve to &e at the highest possi&le levels of functional performance and helps ensure continuing sustained competitive advantage at all management levels# Some organization use &enchmarking at the very start of pro'ects so that all planning and organizing efforts are conducted in light of state-of-the art developments in the industry# .his strategy typically &egins 0ith the formation of a team that defines the pro'ectHs goals and carefully identities the areas in 0hich &enchmarking 0ill &e used# In the ease of ne0-product development for e@ample I1M Rochester gathered a team of technical and marketing people to create ane0 minicomputer the +SJ:EE# During this process the I1M Rochester group looked &oth in house and at a verity of outside firms in order to gain insights into ho0 to &uild the highest /uality minicomputer in the shortest amount of time# In house they e@amined I1M Raleigh 0hich had a 0orld-class defect-prevention process and I1M Manassas 0hich had outstanding hard0are process documentation# .he outside companies it &enchmarked 0ere A2B Uero@* from 0hich it learned a&out the &enchmarking process in generalG A3B Motorola 0hich proceeded information on reducing /uality defectsG A6B 6M 0hich provided information that helped I1M RochesterHs resource manufacturing planning capa&ilityG A:B !e0lett-$ackard 0hich provided insights into the effective useH Hof service representativesG and A;B 8apanese firms from 0hich the company learned a great deal a&out 'ust-in-time inventory# +s a result of its &enchmarking efforts I1M Rochaster 0as a&le to produce that e@ceeded all e@pectations# (ther organizations use &enchmarking in carrying out their day-lo-day activities# %ommon e@amples include developing &enchmarking strategist to reduce manufacturing setup time increase the num&er of customers served per hour and cut delivery time# 1enchmarking IS also &eing used in training and development to create programs that are cost effective and ensure that personnel are performing their 'o&s as 0ell as anyone else in the industry# .his human resources focus is a ne0 t0ist in &enchmarking &ut one that 0ill &e receiving increased attention during the years ahead# + good e@ample is provided &y Magnavo@# +ll division managers at Magnavo@ 0ere asked to provide annual training cost data to the corporate human resources A!RB department# .he !R department /uickly realized that there 0as no uniform thinking along the division regarding ho0 to define training costs# Some divisions counted only direct costs such as la&or materials and outside consulting fees# (thers included the 0ages of all participants and support personnel# .he !R people then set a&out determining ho0 to measure thesis costs uniformly and ho0 to use this information to &enchmark against other firms# In all there 0ere fourteen training measures or 0hat are no0 commonly called metrics Asee ta&le 3#2B# In each case the company identifies the specific metric ho0 it 0as to &e calculated and an e@ample of ho0 other firms 0ere doing in this area# H.he company e@amined data for the "nited States at large as 0ell as for 1aldrige 0inners in particular# .he latter data 0ere o&tained from a survey /uestionnaire a common method of &enchmarking# +s a result of this pro'ect Magnavo@ is no0 a&le to track AIB the percent of payroll that is spent on trainingG A3B the percent of the 0ork force that receives trainingG A6B the average percent of improvement in on-the-'o& performance as a result of trainingG A:B the amount of money that training saves the organizationG and A;B the productivity and efficiency of its human resource development staff# .here are four types of &enchmarking activity - internal functional competitive and generic# Internal &enchmarking is done 0ith an organisation and typically &et0een closely related divisions similar plants or operations or e/uivalent &usiness units using common or shared performance parameters as a &asis for comparison# 1ecause of the relative case of starting a ne0 activity internally the lo0est resources implication and the greater assurance of gaining co-operation this is the area in 0hich many organisations choose to start &enchmarking activities# ?unctional &enchmarking is a comparison of performance and procedures &et0een similar &usiness functions &ut in different organisations and industries 1eing e@ternally focused it is a more positive approach than internal &enchmarking#

#122

En"o!ra%#n% #nno*at#on (ne 0ay to e@cite customers is through innovations# %ompetitive &enchmarking encourages innovation throughout an organization# It is the process of continually comparing a companyHs performance on critical customer re/uirements against the &est in the industry Adirect competitorsB in order to determine 0hich areas should &e targeted for improvement# %ompetitive &enchmarking focuses on direct competitors 0ithin the same industry 0ith specific compara&le &usiness operations or an indirect competitors in related industries having complementary &usiness operations# -eneric &enchmarking can &e undertaken 0ith e@ternal companies in different industries 0hich represent the &est- in-classH for particular aspect of the selected &usiness operations# 1enchmarking is undertaken in almost any area of &usiness Endeavour# .he key performance varia&les for measurement analysis and comparisons can &e found in operational areas such as production distri&ution installation and field service# .he key is to &e clear a&out the needs and 0hat is important to improve# An $&&$"t#*$ b$n",'ar/#n% +ro"$)) ,a) t,$ &olloA#n% &#*$ )t$+): - Determine the key performance areas to &e &enchmarked# .hey may include product and services customers &usiness processes in all departments and the organisation &usiness culture and the cali&re and training of employees - Identify the most relevant competitors and &est-in-crass companies# - Set the key standards and varia&les to measure# - Measure regularly and o&'ectively - Develop an action plan to gain or mair#t6in superiority# Specify programmers and actions to close the gap implement and monitor ongoing performance# .he key task in &enchmarking is to select the areas of a &usiness in 0hich it 0ould &e most &eneficial and practical to attempt to &enchmark and the specific parameters to use# .he parameters should cover the significant cost time and /uality measures that affect the key customer delivera&les the e@isting and potential competitive pressure points anticipated trends in ne0 technology the critical &usiness processes involved and the identification of possi&le ne0 areas of competitive advantage# .he ; $s approach developed &y Mc4insay M %o# for evaluating the parameters involves the partners Asuppliers and customersB people procedures and systems product and process design and physical configuration# .he &est practices &enchmarking process can &e seen as one of encouraging people to stand &ack from esta&lished practices and to look a&ove the fence# .his facilitates taking a critical look outside the company and learning from 0hat others are doing in compara&le &usiness activities# 1enchmarking is essentially a team activity# + team approach should &e encouraged &y seeking ideas suggestions and cooperation through a process of e@ternal consultation# Ne0 0ays of 0orking can &e introduced 0hich utilize the talents and a&ilities of employees more effectively# .he internal teams used in o&taining and analyzing &enchmarking data 0ill make recommendations to change improve or remove processes systems and practices# .he active involvement of employees at all levels ensures their continuing interest and commitment 1enchmarking thus acts as a po0erful agent for change and motivation# (nce the &enchmarking ha&it has &een seen to provide &enefits it can then- &e institutionalized on a gradual &asis either as a part of a routine reporting system or as part of a &roader continuing improvement process# %are should &e taken 0ith target setting# .he targets should not only &e clear achieva&le and realistic &ut e/ually demanding and providing tangi&le &enefits to the company together 0ith a sense of achievement for the participant DESCRIPTION OF 7ORFING GROUP: .he ma'or goal of the 1enchmarking Methodology 7orking -roup is to make a series of recommendations concerning the measurement of the performance characteristics of various internet0orking technologiesG further these recommendations may focus on the systems or services that are &uilt from these technologies# Each recommendation 0ill descri&e the class of e/uipment system or service &eing addressedG discuss the performance characteristics- that are pertinent to that classG clearly identify a set of metrics that aid in the description of those characteristicsG specify the methodologies re/uired to collect said metrics and lastly present the re/uirements or the common unam&iguous reporting of &enchmarking results# 1ecause the demands of a class may vary from deployment to deployment a specific non-goal of the 7orking -roup is to define acceptance criteria or performance re/uirements# +n ongoing task is to provide a forum for discussion regarding the enhancement of measurements designed to provide insight on the operation internet0orking technologies# If you are serious a&out improving companyHs performance and achieving an Industry - leading position thereHs simply no su&stitute for a /uality &enchmark report# T,r$$ )trat$%#" r$a)on) &or !)#n% b$n",'ar/ rat#o): I. Set -oals and +ction $rograms# 4no0 0here you are and kno0 0here youHre going# 1enchmark ratios are inherently measura&le and comprisa&le 0hich makes them ideally suited for management-&y

#123

o&'ective incentive program# .hey help you focus your attention on the most controlla&le aspects of your &usiness# Success and failure can &e clearly evaluated# 2. Monitor $erformance 4eep your eye on the &all# 1enchmark ratios provide an o&'ective standard &y 0hich to measure performance# 1y tracking key measurements at regular intervals &usy e@ecutives can pay closer attention to those key factors that affect a companyHs performance# ?ollo0 the num&ers and the num&ers 0ill set you free# 3. Share the Results# .ell the 0orld a&out your great results# 1enchmark ratios ena&le your current and future stakeholders to o&'ectively evaluate your companyHs condition# *enders creditors investors and employees 0ill use them toD &e understand your strengths and 0eaknesses# "se our ratios to get a loan negotiate &etter paya&lesJreceiva&les rates# +ttract investor and retain employees# ENTERPRISES RESOURCE PLANNING 5ERP6 In this age of completion of survival it is essential for any industrial organisation or &usiness enterprise to evolve 0ays and means to keep operational efficiency at the peak# 7ith the advent of information technology there have &een effort to utilize its gifts for the purpose of improving all kinds of industrial and commercial activities# 1ut the latest trends involve the total integration of information technology 0ith operational domains Enterprise Resource $lanning AER$B is an e@cellent e@ercise 0hich achieves such an integration 0ith remarka&le results in term of productivity# ER$ aims at definite competitive advantage in manufacturing marketing accounting !uman Resources and other areas in industrial organisations# It cuts across the interdepartmental &oundaries in an enterprise# It is said that ER$ links information islands# 7e often find that in several organisations there is a tendency for the various departments to function as if they 0ere independent empires main training unhealthy rivalries# .he fact the functions carried out &y them are complementary may &e forgotten# ER$ ho0ever effectively integrates islands of information 0ithin the organisation ensuring total transparency information sharing health dialogue a uniform system elimination of 0astage caused &y misunderstandings and improvement in overall productivity# ER$ sometimes defined as an integrated suite of application soft0are modules 0hich 0ill provide ade/uate information for the enhancement of productivity and competitiveness# .his is achieved &y optimizing the use of :M resources: Men Machines Materials and Money# Success in &usiness depends on the timely and effective gathering of vital information disseminating it as /uickly as possi&le and marketing decisions &ased on it# ER$ soft0are provides the essential infrastructure for the speedy dissemination of information across the diverse functions and locations# .he traditional system development envisages style for each function such as inventory production and marketing# .he focus &eing on functions decisions at the top managerial level involve delays o0ing to constraints in accessing information# +ny refom2 in the style of &usiness is a slo0 process since each individual department 0ould raise its pro&lems# ER$ the ne0 &usiness computing paradigm on the other hand addresses the entire organisation in one stroke# + continuous improvement as in total /uality management can easily &e planned and implemented# Puick response to ne0 customer needs or market trends is affected# "pdating the comprehensive data 0arehouse at the top managerial level is carried out online# *egacy systems 0hich demand e@pensive support are eliminated# ER$ solutions have spread not only to manufacturing industries &ut to &usinesses such as communication &anking insurance financing and healthcare# .raditional inventory control dictated the style of soft0are packages in the Si@ties# .he Seventies sa0 the emergence of MR$ AMaterial Re/uirement $lanningB 0hich moved a&out the fulcrum of a master scheduleG this again operated primarily in the area of inventory# .he ne@t decade 0itnessed the evolution of MR$ II AManufacturing Resource $lanningB 0hich em&races other functions such as processing manufacture and distri&ution# .he efficacy of the system naturally made it attractive to other functions and so it gradually spread its tentacles to finance human resources# and pro'ect management# MR$ II 0as found to &e a misnomer since it covered e@tensive domains and therefore ER$ 0as found to &e a meaningful term as replacement# +n effective ER$ system should necessarily fulfill various re/uirements# 7e have to realize that the system implementation involves su&stantial financial inputs and the end results should invaria&ly 'ustify the investment# .he system should not &e rigidG it should permit easy customization adaptation to ne0 environments and periodical up gradation# It has to &e tailor-made to suit to the re/uirements of the organisation# Its clientJserver capa&ilities and security are significant concerns# Initial investment as 0ell as maintenance cost should &e 0ithin afforda&le limits# Most importantly it should give early results# :. STRATEGIC ALLIANCES 1usiness Management today involves more than anything else theH of an organisation 0ith its environment# Environment provides opportunities and 0ields threats# +n organisation should try to e@ploit

#124

opportunities and overcome threats# Strategic alliance 0ith the environment helps e@ploiting opportunities and overcoming threats# In the $rocess organisation strengthD are multiplied and 0eaknesses are reduced# Strategic alliance 0ith the environment needs to &e carefully planned and tactfully e@ecuted# Strategic management involves effecting the strategic alliance of the organisation 0ith the environment &y formulating and implementing strategies directed at effecting the alliance# ?ormulation of strategies and implementation of the same thus constitute the core functions of strategic management# .he term strategy refers to the art or knack of commanding and maneuvering resources to attain a decisive advantage through fruitful e@ploitation of opportunities provided &y the environment or keeping at &ay certain threats 0ielded &y the environment# *i&eralization and glo&alization are changes in the &usiness environment 0ith ne0 found opportunities and e@pected and une@pected threats# ?or instance &usinesses no0 can tap foreign capital resources an opportunity# +t the same time in the domestic product market competition &uilds up a threat# .hrough strategic alliances competitive forces arc converted into colla&orative efforts for common &enefits# .hus strategic alliances among competing &usinesses are strategic responses of &usinesses to the changing environment# +ccording to management e@pert -riflin a strategy has essentially for &asic areas# Scope resource uni/ueness and synergy are these four areas# .he scope of a strategy defines its functional geographical product service and relational limits# ?unctional limits refer to marketingG production etc# geographical limits are concerned 0ith markets covered# $roduct limits define product lines and range# +n: relational limits deal 0ith 0hether the dealings arc internal to the organisation or are e@ternal to the organisation of &oth# Scope of a strategy thus prescri&es the level of concentration or spread of the activities of the orga2isation# .he resources of a strategy refer to 0hat and ho0 much or resources the organisation 0ill employ across various areas# Domestic or foreign private capital fresh e/uity or accumulated reserves senior or midlevel e@ecutives in-house RMD or outsourced RMD etc &e used is to &e decided# "ni/ueness of a strategy refers to the distinctive competence# of the organisation on the strength of 0hich the strategy is &uilt to attain leverage over its competitors as 0ell as other strategic alternatives# %lose to consumers through o0n retail esta&lishment speed of action technological edge may &e the distinct advantages# ?inally synergy of a strategy comes# Synergy is a system concept meaning that the output of the 0hole system is greater than the outputs of the individual su& systems 0orking independently of each other# .he advantage of &eing a system is the synergy# Should there &e no synergy there need &e no system# .he scope resources and uni/ueness of the strategy should give synergistic result# 7hile designing a strategy the management must see that all the four constituents of a strategy arc present# STRATEGIC MIG AND STRATEG1 FORMULATION .he strategic-mi@ has three levels# +t the top is corporate strategy at one level &elo0 is the &usiness strategy and at the &ottom is the functional strategy# .here is a hierarchy of strategies# %orporate strategy is a&out the course charted for the 0hole or the organisation# It deals 0ith the D0hatD aspect# It is also kno0n as the DgrandD strategy# %orporate strategy depends on the corporate goal# +nd corporate goals could range from on the one end a curtailment goal to on the other a diversification goal 0ith status-/uo and gro0th goals in &et0een# .he curtailment goal calls for a retrenchment strategy# It is a &old attempt to do a0ay 0ith e@cess fat units that are causing entropy divisions that are not pro-synergistic and functions that have lost strategic significance# In a 0ay it is a&out turn-around or do0nsize of an organisation# Most pu&lic sector units need this strategy at present# .he status-/uo goal calls for a sta&ility strategy# !ere the organisation is pretty happy 0ith the present# It neither 0ants to add on a fe0 0ings nor shed some feathers# It is a consolidation-oriented goal# +nd hence adopted after retrenchment or after hectic gro0th phase or so# Mature companies adopt this strategy# .he e@pansion goal calls for gro0th strategy 0herein scale advances through more geographical coverage are attempted# there is DgeographicalD spread and rise in market share# Market coverage is &eing mastered here# ?inally &ack0ard and for0ard e@pansion goal comes 0ith a diversification strategy# Related and unrelated diversification are possi&le# It should &e noted that competitive distinctiveness and synergy are not lost# It is /uite possi&le 0ith unrelated diversification strategic management may call for division of the &usiness into strategic &usiness units AS1"sB each 0ith o0n mission vision and strategic Initiatives# .hen 0ith respect to each such S1"# suita&le corporate level strategy may have to he dra0n up# %orporate level strategic alternatives for Dstars D Dcash co0s#D HH/uestion marksD and DdogsD may have to he formulated# In formulating corporate strategy indepth environmental analysis and organisational analysis need to &e made to kno0 ho0 the strengths and 0eaknesses of the organisation can &e matched 0ith the opportunities and threats of the environment# D1usiness StrategiesD are concerned 0ith the Hho0G# !o0 should the organi;`ation approach its aligning 0ith the environmentT .here are four approaches here# -riffin puts up them as follo0s# Defender Reactor +nalyser and $rospector strategies are these# .hese strategic alternatives emerge from certainty-uncertainty conditions of the environment and the firmHs response# Defender strategy is of the most unassuming form# It is pro status-/uo# .he firm is satisfied 0ith the present# .his is suita&le in a certainty environment# .he firm perhaps has a narro0 niche market# .he firm has no &ig am&itions# 1ut 0hen discontinuous changes take place in the environment the firm adopting defender

#125

strategy might have no territory to defend# It can ho0ever 0ork if distinct and core competences are the &ases on 0hich the firms plans and actions are founded# +nalyzer strategy is one 0here the firm is not silent &ut steadily modifying its course in tune 0ith the changing environment I2nd competitorsH strategies# It suits the risk-type environment 0hen 0hich 0ay the environment is changing can &e kno0n &y adopting pro&a&ilistic recasting models# Ne0 products and markets are scouted for in a moderate 0ay *aggards are gently given up 0hile cash-co0s receive the full thrust# + mi@ of diversification e@pansion and retrenchment goals are thus found here# $rospector strategy looks out for ne0 opportunities and learns a&out the same# In an uncertain environment discontinuous changes are the reality# So prospector strategy suits such environment# E@cept tonal a&ility to give up old customs and im&i&e ne0 cultures is the &ack&one of the prospector strategy# ?inally the Reactor strategy has found favour 0ith a fe0# It is ill-conceived one and as such is not tuned to environment# No opportunity is reaped &ut /uite a num&er of threats are faced# In the end instead of strengthening ?unctional strategies address the operative functional areas like production marketing finance personnel and RMD# $roduction strategy addresses choice of plant location scale of production etc# Marketing strategy deals 0ith the ; $s product place price promotion and pu&lic relations# ?inance strategy governs capital structure assets portfolio risk-return trade-off 0orking capital management etc# $ersonnel strategy is concerned 0ith recruitment selection# compensation development and separation of human resources# +nd RMD strategy deals 0ith RMD &ase support competitiveness etc# ;. 0USINESS PROCESS REENGINEERING 50PR6: 1usiness $rocess Reengineering means not only change -- &ut dramatic change# 7hat constitutes dramatic change is the overhaul of organizational structures management systems employee responsi&ilities and indolence measurements incentive systems skills development and the use of information technology# 1usiness process Reengineering A1$RB can potentially impact every aspect of ho0 0e conduct &usiness today# %hange on this scale can cause results ranging from envia&le success to complete failure# Successful 1$R can result in enormous reductions in cost or cycle time# It can also potentially create su&stantial improvements in /uality customer service or other &usiness o&'ectives# .he promise of 1$R is not empty -- it can actually produce revolutionary improvements for &usiness operations# Reengineering can help an aggressive company to stay on top or transform an organization on the verge of &ankruptcy into an effective competitor# .he successes have spa0ned international interest and ma'or reengineering efforts are no0 &eing conducted around the 0orld# (n the other hand H 1$R pro'ects can fail to meet the inherently high e@pectations of reengineering# Recent surveys estimate the percentage of 1$R failures to &e as high as +0,. Some organizations have put forth e@tensive E$R efforts only to achieve marginal or even negligi&le &enefits# (thers have succeeded only in destroying the morale and momentum &uilt up over the lifetime of the organizational# .hese failures indicate that reengineering involves a great deal of risk# Even so many companies are 0illing to take that risk &ecause the re0ards can &e astounding D1usiness Reengineering is the fundamental rethinking and radical or &usiness processes to achieve dramatic improvements critical# contemporary measures of per &race such as cost /uality service and speed ### (( Dr. M#",a$l .3!''$r .oday many organizations have ac/uired e@tensive e@perience in performing 1$R# Many of these e@perts are still not in agreement on every activity necessary for performing 1$RG yet the core activities have remained sta&le during the continuous de&ate# .he disagreements may &e in part due to the Huni/ueness of each organization# 1ecause organizations differ the activities necessary to successfully perform 1$R may also differ# 73AT IS PROCESS REENGINEERINGH 7ork process reengineering as developed &y corporate +merica refers to the ma'or redesign and restructuring of core &usiness processes# It is most effective 0hen a particular process is identified that is impeding the gro0th or competitiveness of an organization or 0hen a particular process is only minimally meeting a &usiness need# Reengineering is defined &y the D&oundedD process that is the target of the reengineering initiative# .he reengineering process should: W &e applied across multiple functions 0ithin an organizationG W have the support of upper managementG and leverages information technologies to overhaul support and dramatically improve 0ork processes# Many corporations have found that over time core processes 0ithin their organization &ecome inefficient &ureaucratic cum&ersome and lose their intended focus# Routine practices often add tasks and steps that do not add value to the core &usiness goal# .hese inefficiencies slo0 do0n the organization detracting from the intended goals# .he process reengineering model used &y E$+Hs (ffice of Reinvention 0as designed to &ring a&out meaningful lasting change to the U* $rocess# It employees a structured change process to meet the

#126

identified &usiness needs in an effective and efficient manner# .his effort 0ill result in a more user friendly reengineered process that is /uicker more cost effective produces a consistently superior result and $rovides focused stakeholder involvement and information e@change# REENGINEERSNG 0USINESS PROCESS (ne of the most important competitive strategies today is &usiness process reengineering A1$RB most often simply called reengineering# 7e 2 that reengineering is more than automating &usiness processes to make modest improvements in the efficiency of &usiness operations# 7e defined reengineering as a fundamental rethinking and radical redesign of &usiness processes to achieve dramatic improvements in cost /uality speed and service also 1$R com&ines a strategy of promoting &usiness innovation 0ith a strategy of making ma'or improvements to &usiness processes so that a company can &ecome a much stronger and more successful competitor in the marketplace# !o0ever figure points out that 0hile the potential pay&ackJof reengineering is high so is its risk of failure and level of disruption to the organizational environment Making radical changes to &usiness processes to dramatically improve efficiency and effectiveness is not an easy task# 7hile many companies have reported impressive gains many other have failed to achieve ma'or improvements they sought thought reengineering pro'ects# .hatHs 0hy organizational redesign approaches are an important ena&ler of reengineering along 0ith the use of information technology# ?or #e@ample one common approach is the use of self directed cross 8unction or multidisciplinary process team M Employees from several departments or specialties including engineering marketing customer service and manufacturing may 0ork a team on the product development process# +nother e@ample is the use of case manager 0ho handle almost all task in a &usiness process instead of splitting tasks among many different specialists# COMMON STEPS 73EN PERFORMING 0PR $ro'ect $hases Re/uired ?or Successful 1$R $hase I: 1egin (rganizational %hange $hase 3: 1uild the Reengineering (rganization $hase 6: Identify 1$R (pportunities $hase :: "nderstand the E@isting $rocess $hase ;: Reengineer the $rocess $hase <: 1lueprint the Ne0 1usiness System $hase 9: $erform the .ransformation .he tasks e@perts agree upon to successfully perform 1$R can &e grouped into seven steps or phases# +ll successful 1$R pro'ects &egin 0ith the critical re/uirement of communication throughout the organization# CONCLUSION 1usiness $rocess Reengineering A1$RB is that the fundamental rethinking and radical redesign of &usiness process to achieve dramatic improvement in critical contemporary measures of performance such as cost /uality service and speed# .hat it indicates three points 1. 1e applied across multiple functions 0ithin an organisation# 2. !ave the support of upper management and leverages information technologies to overhaul support and 3. Dramatically improve 0ork processes# It is very much useful for every &usiness#

#127

M.0.A 5S6 DEGREE EGAMINATIOND MA1 2??<(1 MANAGEMENT CONCEPTS .ime : .hree hours Ma@imum : 2EE Marks $+R. +- A; @ N a :E MarksB +ns0er any ?IIE /uestions Define management# *ist its functions# E@plain the importance of decision-making in management# Dra0 the structure of plans# 7hat are planning premisesT E@plain the important principles of organizing# E@plain the principles of effective communication# 7hat are the essentials of effective control systems T 7hat is .otal Puality ManagementT $+R. 1- A: @ 2; a <E MarksB +ns0er any .!REE from P# No# O to P# No# 2:# P# No# 2;# is compulsory Mention the different opinions a&out school of management thoughts# CManagement is valua&le for organizational successK

%omment# Define o&'ectives# Discuss the characteristics of &usiness o&'ectives# 7hat is organizational structuralT Discuss ma'or determinants of organizational structure# C%ommunication is sharing understandingK# %omment#

#128

M.0.A 5PM6 DEGREE EGAMINATIOND MA1 2??<(2 MANAGEMENT CONCEPTS .ime : .hree hours Ma@imum : 2EE Marks $+R. +- A; @ N a :E MarksB +ns0er any ?IIE /uestions E@plain the significance of Management# State the principles of (rganisation# 7hat are the steps involved in planningT Suggest the various &ases for departmentation of a &usiness enterprises# E@plain the important channels of communication that are generally used in modern &usiness enterprises# E@plain the approaches for organisational design# 1ring out the nature and importance of *eadership# 7hat are the pre-re/uisites of effective managerial control T $+R. 1- A: @ 2; a <E MarksB +ns0er any .!REE from P# No# O to P# No# 2:# P# No# 2;# is compulsory Descri&e and evaluate !enry ?ayol5s contri&ution to the management theory# C7hile planning is looking ahead control is looking &ankK = %omment# 7hat do you understand &y organisingT 7hat are the important principles of sound organisationT CManagement is essentially a process of MotivationK = %omment# E@plain the nature and importance of leadership# 1riefly e@plain the factors that determine a good control system# Discuss the recent trend and ne0 prospective in Management#

#129