PRINCIPLES OF

MANAGEMENT

FOR
DIPLOMA IN HOTEL
MANAGEMENT & CATERING
TECHNLOLGY
COMPILED

BY
SANGESH
SYLLABUS

UNIT I

UNIT II

INTRODUCTION
DEFINITION OF THE TERM MGT
NATURE OF MGT
MGT VS ADMINISTRATION
LEVELS OF MGT
AREAS OF MGT
PRODUCTION MGT
INVENTORY MGT
FIFO,LIFO
FINANCIAL MGT
MARKETING MGT
PERSONAL MGT
PERSONNEL MGT
SKILL OF MANAGER
HUMAN SKILL
TECHNICAL SKILL
CONCEPTUAL SKILLS
ROLE OF MANAGER Distinguish
between managers & Executive.

EVOLUTION OF MANAGEMENT
THOUGHT

PIONEERS OF MGT FREDERICK,

WINSLOW, TAYLOR, HENRY FAYOL.

PROCESS OF MGT PLANNING,

ORGANIZING, STAFFING, DIRECTING
AND CONTROLLING.
UNIT III

UNIT IV

PLANNING (MEANING)
IMP OF PLANNING
STEPS IN PLANNING
MBO PROCESS & BENEFITS.
ORGANIZING (DEFINITION)
PROCESS
PRINCIPLES OF ORGANIZATION
SCALAR PRINCIPLE
DEPARTMENTATION
UNITY OF COMMAND
SPAN OF CONTROL
UNIT V

MOTIVATION
THEORIES
LEADERSHIP
STYLES OF LEADER AND
LEADERSHIP QUALITES.
FORMAL & INFORMAL LEADERS.
THEORIES
CONTROLLING
PROCESS OF CONTROL
MGT OF EXCEPTION

UNIT I

COMMUNICATION

PROCESS AND TYPES

BARRIERS

DECISION MAKING

PHASE PAST, PRESENT, FUTURE

DEVELOPMENT

TEST AND REVIEW

WHY WE STUDY MANAGEMENT?

To enhance the understanding of events/ activities, challenges and skills that will give

Meaning to our future work experience and careers as managers or other professional careers we
may choose.
Make us become effective manager who will be able to help the organization achieve a high level of

performance through the utilization of its human and material resources.

Equip ourselves with effective management theories and practices that can be applied to all types of

organization and any occupational settings we may choose to be in the future.

Make us to become effective managers who will be able to detect and locate problems to be solve,

thus making good decision about appropriate solution and utilizing organizational resources effectively to
implement these solutions.

Enable us to assess the future, make plans for it, thus acting as good planners.

To be responsible and accountable for employees to be in the same track towards accomplishment of

organizational goals.
DEFINITION OF MANAGEMENTS, ORGANIZATION AND MANAGERS.
a)

MANAGEMENT:
Earlier definition by Mary Parker Follet Management scholar as:
The art of getting things done through people
Stoner
The process of planning, organizing, leading and controlling the efforts of an organization
member and of using all other organizational resources to achieve stated organizational goal.
Holt
The process of planning, organizing, leading and controlling resources in an organization.

Management is merging quality and variety with cost that is providing unlimited variety of
goods, better quality and at lowest price level to the customers.

Management is defined as a process of identifying problems and threats and taking care of
these problems and threats in such manner that ultimately these turn out into opportunities
which could benefit the organization in accomplishment of its objectives.

Meaning of management at glance:

(i)
As an activity: getting things done through others being with them.
(ii)
As a process: a series of interrelated functions performed in all organizational.
(iii)
As a discipline: a subject of study drawing upon knowledge of others disciplines. A
young and growing discipline.
(iv)
As a group: a body of persons who perform the task of managing organization. An
elite group in the society.
Nature or Characteristics of management:
1. Goal oriented.
2. Universal.
3. Integrated process
4. Social process
5. Activity based
6. Group activity
7. Art as well as science
8. Multi disciplinary
9. Intangible
10. Optimum co-ordination between human and material resources.
11. The combination of multiple functions
12. Management is a distinct entity.
13. Management is a profession
14. Management based on authorities
15. It is needed at all level
16. It is a social responsibilities
17. Purposeful
18. It is an executive function
19. It is a coordinating force
20. Dynamic in nature
21. Management principles are relative not absolute ---- it means that management
results are according to the situation.
22. Management is creative and innovative formulate creativity; creativity is the
process of developing new ideas.
After a careful study of definitions we embark upon such features, which illustrate the nature
of management. Such features are as follows:
1. It is a process: process means a systematic method of doing some work.
Management is recognized as a continuous process. It is that process in which work is
done with others or it is got done from them. In order to achieve the pre-determined
objective a manager performs the work of planning, organizing, staffing, leading and
controlling. A manager did these works in a continuous order. So, it is a process.
2. Group efforts: management always efforts to group efforts and does not apply to an
individuals. A group rather than an individual can easily and effectively attain
management of an enterprise.

3. It is a social process: management is called a social activity because it is connected

with the people working in a human group and which requires organizing their efforts.
Any activity, which is connected with the people living in society, is called a social
activity. In this context management is also described as a social activity.
4. Attainment of pre-determined objectives: group efforts in management are always
directed towards the achievement of some pre-determined objectives; with out
objectives management would be difficult if not impossible.
5. Management has a distinct entity: in view of the widening scope of business it is not
possible for an owner to perform all functions himself. We can say that specially
qualified experts are needed for managing the company.
6. Management is a universal activity: it is clear that management is not only
connected with business but also with non-business activities also, which is also
important. Management is everywhere.
7. Management as a profession: when we have recognized the distinct entity of
management, there should not be any doubt or hesitation to call it a profession. The
quality of a profession is that he must posses some special qualifications or ability for
which he is paid remuneration. The knowledge of management is also a qualification
and managers also get their remuneration for it. Hence, management is considered a
profession.
8. Management is an intangible force: management is a force, which is not visible. It
can only be feeling or realized on the basis of the success of an organization.
9. It is a combination of multiple functions: the basic function of management is to
achieve the objectives of the organization successfully. That is why a manager has to
perform various function like planning, organizing, staffing, leading and controlling etc.
hence management does not mean one particular job but it happens to be a
combination of various jobs.
Conclusion:
Management fulfills several essentials of a profession but like other professions
management does not restrict entry into managerial jobs, to people with a special
academic degree.

Objectives of management at a glance

Securing maximum results with minimum efforts.

Maximum prosperity for employer and employee.
Human better mere
Elimination of all types of waste
Economic growth
Social justice
Importance of management at glance:

1.
2.
3.
4.
5.
6.

Achievement of group goals

Optimum utilization of resources
Minimization of cost
Survival and growth of business
Generation of employment
National development

MANAGEMENT AND ADMINISTRATION

On the basis of different opinions of the experts over the world management and
administration, there are three prevalent concepts: (i)

American concepts: Administration is a higher-level activity or system and

management is lower.

(ii)

English concepts: management is the higher-level system and it has more power
than administration.

(iii)

Modern concepts: According to it, management and administration are

synonymous. In the modern scientific age of management this is the most
prevalent and accepted concept of management and it makes no difference
between management and administration.

DIFFERENCE BETWEEN MANAGEMENT AND ADMINISTRATION

Sr.
No.

Basis
of
Administration
difference

1.

Meaning

2.

Purpose

3.

Nature

4.

Decisions

5.

Scope

6.

Usage

7.

Features
affecting
decisions

8.

Relationship

9.

Function

10.

Concerned

11.

Level

12.

Influence

13.

Concerned

14.

Involvement

15.

Skills

16.

It means the determination of

objectives, plans and policies of an
enterprise.
Administration
aims
at
determining the objectives.
Administration is a decision
making function.
Administration decides what is to
be done and when it is to be done.
The term administration is
applicable at the top level of
management.
The term administration is
generally used from business
organizations like govt., offices,
colleges, universities etc.
Administration
decisions
are
influenced by govt. policies, social
and political circumstances and
economic additions.
Administration is related mainly
with the owner and top-level
managers.
It is a determinative or thinking
function.
It is concerned with determination
of major object and policies.
It is mainly top-level function.
Its services are influenced mainly
by public opinion and other
outside forces.
It is not directly concerned with
direction of human efforts.
Planning and controlling are the
main functions involved in it.
Conceptual and human skills used
eagerly in govt. and public sector.
Minister,
Commander,
Commissioner, Registrar, Vice Chancellor, Governor etc.

Management
Management is to translate threats
into opportunities.
Management aims at achieving predetermined objectives.
Management is an execution or
doing function.
Management decides who will do
the function and how he will do it,
where he will do it.
The term management is more
applicable at middle level and
lower level of management.
Management is generally used with
reference to business enterprises.
Management decisions are mainly
influenced by the target of
enterprise.
Management is related with the
workers
and
employers
of
organization.
It is an executive or doing function.
It
concerned
with
the
implementation of policies.
It is largely a middle and lower
level function.
Managerial decisions are influenced
mainly by objectives and policies of
organization.
It is a activity concerned with
directions of human efforts in the
executions of plans.
Directing and organizing are main
functions involved in it.
Technical and human skills used
mainly in business organization.
Managing
director,
general
manager, sales manager, branch
manager etc.

LEVELS OF MANAGEMENT (MANAGERIAL HIERARCHY)

The management levels may be classified as follows:

(i)
(ii)
(iii)

Top management
Middle management
Supervisory or operating management

Top or executive management:

Top management refers to the managing at the highest level in the management
hierarchy. It is the ultimate source of authority. It is held responsible for the general success
or failure of the organization.
Top management consists of the board of directors and the chief executive or
managing director they establish overall long-term goals and plans of the organization. It is
their responsibility to ensure success of the organization. It is basically an organ of overall
review and control. Chief executive is concerned with the overall management of the
companys operations. He maintains coordination among different departments of the
company. He also keeps the organization in harmony with its external environment.
Features:

To analyze and interpret changes in external environment of the company.

To establish long term corporate plans.
To formulate and approve the master budget and departmental budgets.
To design broad organization structure.
To appoint departmental heads and key executives.
To coordinate and integrate the activities of different departments and
divisions of the company.
To provide overall direction and leadership to the company.
To exercise the overall review and control of the financial and operating
results of the company.
To represent the company to the outside world.
To decide the distribution of profits.

Intermediate management:
Intermediate or upper middle management comprises departmental or divisional
heads.
E.g. works manager, marketing manager, finance manager etc.
It is also known as departmental or functional management. Every divisional head is
the overall uncharged of one particular division or department. He is accountable for the
performance of his division or department to the chief executive. He performs the usual
managerial functions of planning, organizing, staffing, directing and controlling in relation to
one department. He coordinates and controls the activities of all personal working in different
branches of his department.
Middle management:
Middle management consists of all sectional heads.
E.g. plant manager, area sales manager, branch manager, office manager etc.
These executives serve as a link between intermediate or top management and the
operating management.
Function:
(i)
To interpret and explain the plans and policies formulated by top management.
(ii)
To control the operating performance.
(iii)
To cooperate among themselves so as to integrate the various activities of
department.
(iv)
To train, motivate and develop supervisory personal.
(v)
To lay down rules and regulations to be followed by supervisory personnel.
Supervisory or operating or first-line management:
This is the lowest level of management in an organization. It consists of supervisors,
foremen, sales officers, and purchase officers etc. supervisors and operating managers
maintain close contacts with rank and file workers and supervise day-to-day operations. They
are concerned with the mechanics of jobs.
Function:
1. To plan day-to-day production with is the goals laid down by higher authorities.
2. To assign jobs to workers and to make arrangements for their training and
development.
3. To issue orders and instructions.
4. To supervise and control workers operations and to maintain personal connection with
them.
5. To arrange material and tools is maintain machinery.
6. To advice and assist workers by explaining work procedures, solving problems etc.
7. To maintain discipline and good human relations among workers.
8. To report feedback information and workers problems to the higher authorities.

PRODUCTION MANAGEMENT
Planning, implementation, and control of industrial production processes to ensure smooth
and efficient operation. Production management techniques are used in both manufacturing
and service industries.
Production management responsibilities include the traditional five M's: men and women,
machines, methods, materials, and money.
Managers are expected to maintain an efficient production process with a workforce that can
readily adapt to new equipment and schedules. They may use industrial engineering
methods, such as time-and-motion studies, to design efficient work methods. They are
responsible for managing both physical (raw) materials and information materials (paperwork
or electronic documentation). Of their duties involving money, inventory control is the most
important. This involves tracking all component parts, work in process, finished goods,
packaging materials, and general supplies.
The production cycle requires that sales, financial, engineering, and planning departments
exchange informationsuch as sales forecasts, inventory levels, and budgetsuntil detailed
production orders are dispatched by a production-control division. Managers must also
monitor operations to ensure that planned output levels, cost levels, and quality.
INVENTORY MANAGEMENT
Inventory is a list for goods and materials, or those goods and materials themselves, held
available in stock by a business. It is also used for a list of the contents of a household and
for a list for testamentary purposes of the possessions of someone who has died. In
accounting inventory is considered an asset.
Inventory management is primarily about specifying the size and placement of stocked
goods. Inventory management is required at different locations within a facility or within
multiple locations of a supply network to protect the regular and planned course of production
against the random disturbance of running out of materials or goods.
The scope of inventory management also concerns the fine lines between replenishment
lead time, carrying costs of inventory, asset management, inventory forecasting, inventory
valuation, inventory visibility, future inventory price forecasting, physical inventory, available
physical space for inventory, quality management, replenishment, returns and defective
goods and demand forecasting.
Other definitions of inventory management from across the web:
Involves a retailer seeking to acquire and maintain a proper merchandise assortment while
ordering, shipping, handling, and related costs are kept in check.
Systems and processes that identify inventory requirements, set targets, provide
replenishment techniques and report actual and projected inventory status.

Handles all functions related to the tracking and management of material. This would include
the monitoring of material moved into and out of stockroom locations and the reconciling of
the inventory balances. Also may include ABC analysis, lot tracking, cycle counting support
etc.
Management of the inventories, with the primary objective of determining. controlling stock
levels within the physical distribution function to balance the need for product availability
against the need for minimizing stock holding and handling costs.
In business management, inventory consists of a list of goods and materials held available in
stock.
An inventory can also be a self examination, a moral inventory.
FIFO and LIFO accounting Methods: are means of managing inventory and financial
matters involving the money a company ties up within inventory of produced goods, raw
materials, parts, components, or feed stocks.
FIFO stands for first-in, first-out: meaning that the oldest inventory items are recorded as
sold first.
LIFO stands for last-in, first-out: meaning that the most recently purchased items are
recorded as sold first. Since the 1970s, U.S. companies have tended to use LIFO, which
reduces their income taxes in times of inflation.
When a merchant buys goods from inventory, the value of the inventory account is reduced
by the cost of goods sold (CoG sold). This is simple where the CoG has not varied across
those held in stock; but where it has, then an agreed method must be derived to evaluate it.
For commodity items that one cannot track individually, accountants must choose a method
that fits the nature of the sale.
Two popular methods which normally exist are: FIFO and LIFO accounting (first in - first
out, last in - first out). FIFO regards the first unit that arrived in inventory as the first one sold.
LIFO considers the last unit arriving in inventory as the first one sold. Which method an
accountant selects can have a significant effect on net income and book value and, in turn,
on taxation. Using LIFO accounting for inventory, a company generally reports lower net
income and lower book value, due to the effects of inflation. This generally results in lower
taxation.

FINANCIAL MANAGEMENT
The management of the finances of a business / organisation in order to achieve
financial objectives
Taking a commercial business as the most common organisational structure, the key
objectives of financial management would be to:
Create wealth for the business
Generate cash, and
Provide an adequate return on investment bearing in mind the risks that the business is
taking and the resources invested
There are three key elements to the process of financial management:
(1) Financial Planning
Management need to ensure that enough funding is available at the right time to meet the
needs of the business. In the short term, funding may be needed to invest in equipment and
stocks, pay employees and fund sales made on credit.
In the medium and long term, funding may be required for significant additions to the
productive capacity of the business or to make acquisitions.
(2) Financial Control
Financial control is a critically important activity to help the business ensure that the business
is meeting its objectives. Financial control addresses questions such as:
Are assets being used efficiently?
Are the businesses assets secure?
Do management act in the best interest of shareholders and in accordance with business
rules?

(3) Financial Decision-making

The key aspects of financial decision-making relate to investment, financing and dividends:
Investments must be financed in some way however there are always financing
alternatives that can be considered. For example it is possible to raise finance from selling
new shares, borrowing from banks or taking credit from suppliers
A key financing decision is whether profits earned by the business should be retained rather
than distributed to shareholders via dividends. If dividends are too high, the business may be
starved of funding to reinvest in growing revenues and profits further.
Strong financial management in the business arena requires managers to be able to:
1. Interpret financial reports including income statements, Profits and Loss or P&L, cash flow
statements and balance sheet statements
2. Improve the allocation of working capital within business operations
3. Review and fine tune financial budgeting, and revenue and cost forecasting
4. Look at the funding options for business expansion, including both long and short term
financing
5. Review the financial health of the company or business unit using ratio analyses, such as
the gearing ratio,profit per employee and weighted cost of capital.
6. Understand the various techniques using in project and asset valuations
7. Apply critical financial decision making techniques to assess whether to proceed with an
investment
8. Understand valuations frameworks for businesses, portfolios and intangible assets.

MARKETING MANAGEMENT
Marketing is an integrated communications-based process through which individuals and
communities are informed or persuaded that existing and newly-identified needs and wants
may be satisfied by the products and services of others.
Marketing is used to create the customer, to keep the customer and to satisfy the customer.
With the customer as the focus of its activities, it can be concluded that Marketing is one of
the premier components of Business Management - the other being Operations (or
Production). Other services and management activities such as Human Resources,
Accounting, Law and Legal aspects can be "bought in" or "contracted out".

Marketing Definition:
Marketing is defined by the American Marketing Association as the activity, set of institutions,
and processes for creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large. The term developed from the
original meaning which referred literally to going to a market to buy or sell goods or services.
The Chartered Institute of Marketing defines marketing as "The management process
responsible for identifying, anticipating and satisfying customer requirements profitably."
Marketing practice tended to be seen as a creative industry in the past, which included
advertising, distribution and selling.
Traditionally, marketing analysis was structured into three areas: Customer analysis,
Company analysis, and Competitor analysis (so-called "3Cs" analysis). More recently, it has
become fashionable in some marketing circles to divide these further into certain five "Cs":

Customer analysis
Company analysis
Collaborator analysis
Competitor analysis
Analysis of the industry Context.

Department analysis is to develop a schematic diagram for market segmentation, breaking

down the market into various constituent groups of customers, which are called customer
segments or market segmentations.
Marketing managers work to develop detailed profiles of each segment, focusing on any
number of variables that may differ among the segments: demographic, psychographic,
geographic, behavioral, needs-benefit, and other factors may all be examined. Marketers
also attempt to track these segments' perceptions of the various products in the market using
tools such as perceptual mapping.

HUMAN RESOURCE MANAGEMENT / PERSONNEL MANAGEMENT

Human resources: Human resources are a term used to refer to how people are managed
by organizations. The field has moved from a traditionally administrative function to a
strategic one that recognizes the link between talented and engaged people and
organizational success.
The field draws upon concepts developed in Industrial/Organizational Psychology and
System Theory. Human resources have at least two related interpretations depending on
context.
The original usage derives from political economy and economics, where it was traditionally
called labor, one of four factors of production although this perspective is changing as a
function of new and ongoing research into more strategic approaches at national levels.
This first usage is used more in terms of 'human resources development', and can go beyond
just organizations to the level of nations.
The more traditional usage within corporations and businesses refers to the individuals within
a firm or agency, and to the portion of the organization that deals with hiring, firing,
training, and other personnel issues, typically referred to as 'human resources
management'.

Key functions of Human Resource Management:

1. Recruitment and Selection
2. Redundancy
3. Industrial and Employee Relations
4. Record keeping of all personal data
5. Total Rewards: Employee benefits and compensation
6. Confidential advice to internal 'customers' in relation to problems at work
7. Career development
8. Competency Mapping (Competency mapping is a process an individual uses to
identify and describe competencies that are the most critical to success in a work
situation or work role.)
9. Time motion study is related to HR Function

10. Performance Appraisal.

Role of Human Resource Department
Human Resources are exactly it says: resources for humans within the workplace! Its main
objective is to meet the organizational needs of the company it represents and the needs of
the people hired by that company. In short, it is the hub of the organization serving as a
liaison between all concerned.
1. Organizational Development: To ensure its success, a company must establish a
hierarchal reporting system. The funnel of responsibility is critical to the efficiency of a
smoothly operating business entity in which there is a clearly defined understanding of
who is responsible for what.
They provide consultation to a company's management team to identify what the company's
core business and culture is about, and proceeds to plan and map the company's
organizational infrastructure to support those needs.
2. Employee Recruitment and Selection Process: There are many steps to recruiting
and selecting qualified employees. First, a department head must inform the HR
manager of an opening in their department.
Then the HR manager must obtain the job description to formulate a Job Description Sheet
for publication either internally, publicly, or both. Then HR must field the (many) responses to
that job announcement to weed out the qualified from the unqualified applicants.
Once that is completed, the interview process must be coordinated. They prepare the job
description, contact the newspaper, run the ad, field the calls, compile a list of potential
candidates, submit that list to the department's hiring manager for approval and selection,
contact the chosen candidates to set up preliminary interviews, and interview the candidates!
Although most interviews are with the hiring manager or their associates, not all applicants
get to meet with the department's hiring manager right away. It is not uncommon for a
company to filter out those who fail to impress the HR manager first. For those select few
who make it through, the HR manager schedules interviews between the department's hiring

manager and potential candidates, and follows up with the hiring process to establish the
new hire with the company.

3. Employee Training & Development: As a company and the requirements of a position

evolve, a company needs to take certain measures to ensure a highly skilled workforce is in
place.
The Human Resources Department oversees the skills development of company's
workforce, acting as an in-house training center to coordinate training programs either onsite, off-site, or in the field. This might include on-going company training, outside training
seminars, or even college, in which case an employee will receive tuition reimbursement
upon earning a passing grade.
4. Employee Compensation Benefits: This covers salaries, bonuses, vacation pay, sick
leave pay, Workers' Compensation, and insurance policies such as medical, dental, life, and
401k.
The Human Resources Department is responsible for developing and administering a
benefits compensation system that serves as an incentive to ensure the recruitment and
retainment of top talent that will stay on with the company.
When an employee is hired, the company's Benefits Coordinator is required to meet with
employees one-on-one or in small group settings to explain their benefits package. This often
requires an employee to make an informed decision and to provide their signature for
processing purposes
5. Employee Relations: With the increased rise in unethical practices and misbehaviors
taking place in today's workplace such as age, gender, race, and religion discrimination and
sexual harassment, there needs to be mandatory compliance with governing rules and
regulations to ensure fair treatment of employees. In short, employees need to know they
have a place to turn when a supervisor abuses his or her authority in anyway.
Whether corporate or union, the HR Department will get involved to act as arbitrator and
liaison between legal entities, regulatory agencies such as Human Rights, supervisors (who
might be falsely accused), and employees to properly address and resolve the issue at hand.

6. Policy Formulation:
Regardless of the organization's size, company policies and procedures must be established
to ensure order in the workplace. These policies and procedures are put in place to provide
each employee with an understanding of what is expected of them.
Similarly, these policies and procedural guidelines will assist hiring managers in evaluating
their employee's performance. These policies can be established company-wide or used to
define each department's function. It is Human Resource's responsibility to collaborate with
department managers on the formulation of these policies and regulations to ensure a
cohesive organization. A common practice is the development and implementation of an
Employee Procedure Manual or Employee Handbook that is either distributed to each
employee at the time of hire or a master copy allocated one to a department.
7.The Human Resources Information Systems:
keeps track of the vast amount of data, a human resources department must have a good
HRIS in place to automate many functions such as planning and tracking costs, monitoring
and evaluating productivity levels, and the storing and processing of employee records such
as payroll, benefits, and personnel files.
It is very important that you, the job seeker, understand how the HR function works
specifically in the area of candidate recruitment.
If you are considering a career in human resources, you can choose to become a Generalist
or a Specialist. Whether a job seeker or a HR professional, research a company well before
applying for a position.

SKILLS OF A MANAGER
In order to have a proper achievement of good and in order to have plan to be
properly worked on a manager must have certain skills such as: (1)
(2)

(3)

Conceptual skills: A manager must have conceptual knowledge of

management. Each principle and concept should be clear in the
mind of a manager and he should be effectively able to apply him.
Technical skills: it is concerned with the application of skill or
knowledge acquired. Management does not simply mean the
knowledge of principles of management rather it is its application
which makes its effective.
Human skills: A manager should have Psychological knowledge.
He should able to deal with different persons in different
circumstances.

Decision making skills: in crucial times a manager should be able to have the ability of
making decisions. These decisions must be effective and practical in use as well.
MANAGERIAL SKILLS:
1. Planning skills: the manager must pass the skills of thinking the skills of analyzing
the environment; it includes what is happening in the society organization and political
system. He must be able to assess or guess the changes in environment, traits
offered by the changes in environment. He must be able to match two sets of
environment on the basis of external and internal analysis.
2. Organizing skills: organizing skill is needed to specify who will achieve what and how
manager must be in a position of identification of specific activities and specific jobs. A
manager must be clear about grouping of various jobs, span of management, type of
relationship to be established between various people and various jobs.
3. Leading skill: leadership is the ability of individual to influence the people.
Recognition of human factor is also included in leading skill of human factor various
leadership track like communication and motivation are also included in the leadership
skills.
4. Technical skills: technical skills refer to the ability and knowledge in using the
equipment, techniques and procedures involved in performing specific tasks. These
skills require specialized knowledge and proficiency in mechanics of a particular job. A
manager must know which skills should be employed in his particular enterprise and
be familiar enough with their potentiality to ask discerning question of his technical
advisors.
5. Human skills: human skills consist of the ability to work effectively with other people.
These are required to win co-operation of others and to build effective work teams.
Human skills are reflected in the way a manager perceives his superiors, subordinates

and peers. An awareness of the importance of human skills should be part of

managers orientation.
6. Conceptual skills: conceptual skills comprise the ability to see whole organization
and interrelationships between its parts. These skills refer to the ability to visualize the
entire picture or to consider a situation in its totality. Such skills help the manager to
analyse the forces working in a situation and to take a broad and foresighted view of
the organization.
7. Diagnostic skills: it includes the ability to determine by analyzing and examination,
the nature and circumstances of a particular condition. It is not only the ability to
specify why something happened but also the ability to develop certain possible
outcomes. It is the ability to it through unimportant aspects and quickly gets though the
heart of problem.
8. Controlling skill: there are certain standards, which are fixed in a way such that
accomplishment of those standards leads to the accomplishment of goals. A manager
must keep check on the activities of subordinates and must rectify them if there are
any problems.
9. Decision making skills: there are two types of decisions to be taken by the manager.
(i)
Routine and program decision
(ii)
Non-routine and non-program decisions.

FIRST-LINE
MANAGEMENT
Conceptual
Human

Technical

MIDDLE
MANAGEMENT

Conceptual
Human
Technical

TOP
MANAGEMENT

Conceptual
Human
Technical

RESPONSIBILITIES OF MANAGER

1. Responsibility towards suppliers: people who supply raw material, mechanical

components, financial institutions and advertising agencies. It is the duty or says
responsibility of the manager that the suppliers are being paid at the time.
2. Responsibility towards distributors: it is the responsibility of the manager to check
regular supply of the product. Product must be checked for the quality, packaging (as
in the case of children packaging plays a very important role). There must be free
testing of goods that is distribution of samples. There should be fair return on
investment that is fair commission must be paid. To motivate them the organisation
must reward them, credit facilities must be made available to the middle class people
etc.
You can survive in the vest way if the industry will survive:
a. You can take the advantage by showing collectiveness.
b. Compiling with the norms lay down by the association.
c. Providing correct information to organisation.
d. Sharing latest knowledge.
e. Supporting the individual members of the association.
f. Indulging in fair and ethical competition.
g. Not using any political or other strategies.
3. Responsibility towards union: employees union is recognized as the enemy of the
organisation.
4. Responsibility towards govt.: Birth growth and death of any organisation will
generate according to statuary provisions and these will be governed by the
government of the organisation and this can be done by
(i)
Sending the correct information.
(ii)
Taxes and duties must be paid regularly.
(iii)
Organisation must try to operate as a model citizen.
(iv)
Organisation must not try to damage the culture of that area and
must try to maintain the rich culture of that area.
5. Responsibility towards customer
6. Responsibility towards society
7. Responsibility towards competitors
8. Responsibility towards workers
9. Responsibility towards shareholders or owners

ROLES OF A MANAGER

There are different types of managerial roles some of them are given below:
1. Figurehead: In this role manager performs symbolic duties required by the status of
his office. Making speeches, bestowing honors, welcoming official visitors, distributing
gifts to retiring employees are examples of such ceremonial and social duties.
2. Leader: This role defines the managers relationship with his own subordinates. The
manager sets an example, legitimizes the power of subordinates and brings their
needs in accord with those of his organisation.
3. Liaison: It describes the managers relationship with the outsiders. A manager
maintains mutually beneficial relations with other organisations, governments, industry
groups etc.
4. Monitor: It implies seeking and receiving information about his organisation and
external events. An example is picking up a rumor about his organisation.
5. Disseminators: It involves transmitting the informations and judgments to the
members of the organisations. The information relates to internal operations and
external environment. A manager calling a staff meeting after a business trip is an
example of such a role.
6. Spokesman: In this role, a manager speaks for his organisation. He hobbies and
depends his enterprise. A manager addressing the trade union is an example.
7. Entrepreneur: It involves initiating changes or acting as a change agent. For example
a manager decides to launch a feasibility study for setting up a new plant.
8. Disturbance handler: This refers to taking charge when the organisation faces a
problem or crises. For example a strike, feud between subordinates, boss of an
important customer. A manager handles conflicts, complaints and competitive actions.
9. Resource allocate: In this role a manager approves budgets and schedules sets
priorities and distribute resources.
10. Negotiator: As a negotiator a manager bargains with suppliers, dealers, trade unions
agents etc.

UNIT II
EVOLUTION OF MANAGEMENT THEORIES
Begin from ancient civilization. Organized management practice in 2000 B.C during
King Hummurabi. Great Pyramid in Egypt, 100,000 workers involve. Egyptian use
mathematical to organize labor, supervise to build within specified design and time.
China Sun Tzu War, touching on strategy, planning and leadership use by military
strategy.

THE FORMATION OF MANAGEMENT PRACTICES

Management thought started with industrial revolution around 1800. This point saw
the invention and use of machinery setting up factories and creation of entrepreneurial
capital that finance the industries. People think ways to improve efficiency and
effectiveness.
Pre classical view point.
The factories became widespread and large number of employees needs to be
coordinated. Therefore the challenge had motivated a number of individuals to think of
ways and means to run the factories more effectively.
Management theories can classified into 5 view points that are :
-

Pre classical view point

Classical view point
Behavioral view point
Quantitative view point
System view point

a)

Charles Barbage ( 1792-1871)

Known as father of modern computing
English mathematician, pioneered in computing and management.
The idea of work specialization work is divided into various jobs.
Recognized specialized physical work as well as mental work
(Specialists
Invented a profit sharing plan _ a bonus for useful suggestions and
portion of wages that was dependent on factory profits.
Ideas used in Scanlon plan.

CLASSICAL VIWEPOINT
A perspective on management that emphasizes finding ways to manage work
efficiently. Three different approaches:
a)
b)
c)

1.

Scientific management
Bureaucratic management
Administrative management

SCIENTIFIC MANAGEMENT
Approach that emphasizes findings ways to manage work efficiently. Three different
approaches are:
A) Frederick Winslow Taylor) 1856-1915)
The father of scientific management.
-

Observed soldering by employees- working at less than full capacity

meaning feared that, Increasing their productivity would cause them or
others to lose jobs.

Faulty wage system encourages workers to operate at slow pace.

Generate rules handed down were inefficient.

Thus, developed science management:

1)
2)
3)
4)

Scientifically study each tasks and develop the best method for performing the
tasks.
Carefully select employees, train them by using scientifically developed
method.
Cooperate fully with employees to ensure them using proper method.
Divide work and responsibility. Management will plan work method using
scientific principles and employees are responsible for executing the work
accordingly.

Frederick made use of time and motion study to substantiate his theories and increase
productivity. He divides work into different task. He redesigned the work, improve
production by his principle- management should develop a science for each tasks to
be performed.
B) Henry L Gantt (1861-1919)
Gantt chart graphic aid to planning, scheduling and control.
Management tool that helps managers to schedule their work.

Fayol proposed that management was a common activity to all human beings
who involve in organization. His principles consist of the elements as follows:
1. Division of work. Output can be increased by specialization, making employees more
efficient.
2. Authority. The right or power to give orders to subordinates is authority. Wherever
authority exists, responsibility arises.
3. Discipline.
Employees must obey the organizational rules. Good discipline must
result from an agreement between firm and employees with fairness and clear
understanding of both sides. Penalties can be applied to violations of rule.
4. Unity of Command. Each subordinate should receive orders from one superior.
5. Unity of Direction. Organizational activities that have the same objective should be
guided by one manager, using one plan.
6. Subordination of individual Interests to the General Interest. The interests of one
employee (or group of employees) should not precede over the interests of the
organization as a whole.
7. Remuneration. Employees must be paid a fair wage. Rewards should be used as a tool
of encouragement.
8. Centralization. The degree to which subordinates are involved in decision-making.
Whether the decision is centralized or decentralized is a question of proportion.
9. Scalar Chain. The line of authority from top to the lowest ranks of management.
Communication should go along this chain. To avoid delays, cross communications can
be allowed if agreed by all involved parties.
10. Order. Materials and people should be in right place at right time.
11. Equity. Managers should be kind and fair to their subordinates
12. Stability of Tenure of Personnel. High employee turnover causes inefficiency.
Managers should ensure replacements at hand when vacancies arise.
13. Initiative. The power of thinking out, proposing and executing. Management should
encourage employees to originate and carry out plans. This urging tends to boost levels
of effort.
14. Esprit de Corps. Fostering team spirit is the way to construct harmony and unity among
employees.

Table: Compare Henri Fayol to Frederick Taylor

Henri Fayol
1841-1925
General administrative theorist
1916
General Principle of Management

Frederick W. Taylor
1856-1915
Scientific management theorist
1911
The Principle of Scientific

Underlined all elements necessary

Management
Emphasized on technology and

to organize and manage corporation as a procedures employed by individual

whole.
Top down

workers improve efficiency.

Bottom up

Conclusion
In contrast to The Principles of Scientific Management, introduced in 1911 by Frederick
Winslow Taylor, one of the prominent classical theorists in the concurrent period, which
emphasized on the technology employed by individual workers in order to improve
production efficiency; Fayol underlined all of the elements necessary to organize and
manage a major corporation as a whole.
His main contribution is in the point that he was the first general administrative theorist who
developed the complete theory of management by suggesting what managers should do and
what constitutes good management practices. More than eight decades have passed since
these principles were proposed. As we are moving into the age of rapid industrial and
technological development, you might think these principles are only common sense at
present. It important to understand that it really needs intuition to propose such a significant
idea in the environment where there were no clear boundaries of worker and management
responsibilities, no existence of effective work standard, and no clear concept about how
organizations work and how they should be structured or managed.

Nevertheless, there are some limitations and arguments on certain elements of his proposed
principles. For example, Division of work / specialization, which means dividing jobs into
specialized and repetitive tasks in order to make them as simple as possible. The argument
is that job can become too specialized. When this happens, employees express their
frustrations and boredom by taking the days off, socializing around instead of concentrating
in their own jobs, and ignoring quality of works. At last, efficiency declines.
Another controversy is on Unity of Command principle. While Fayol and many Classical
theorists believed that a subordinate should have only one superior to whom he or she is
directly responsible, contemporary theorists view this principle is logical only when
organizations are comparatively simple.

Yet in some circumstances, Unity of Command causes inflexibility as we can see from matrix
structure, which creates a dual chain of command and totally breaks Fayols rule.
My last example of controversy is related to Authority. Fayol assumed authority was a
power derived from managerial position. This power was the sole source of influence over
subordinates. Therefore, managers were all powerful in every aspect.
This might be true fifty years ago while staff were less important. Nowadays, preceding
conditions no longer exist. Authority from legitimate right is not equal to power, which can be
referred to an individuals capacity to influence decisions. As a result, an exclusive focus on
authority produces a narrow, unrealistic view of influence in organization.
Given the fact that all changes that have taken place in environment for more than eighty
years, some elements of Fayols principles definitely become limited. Though, for most part,
they still provide valuable insights into managing effective and efficient organizations.

FUNCTIONS OF MANAGEMENT

1. Planning:
It is a process of thinking before doing. It involves determinations of goals and the
activities required to be performed to achieve the goals. It consists:
What is to be done?
(i)
How it is to be done?
(ii)
Where it is to be done?
(iii)
When it is to be done?
(iv)
By whom it is to be done?
So planning is a process of shorting out the path for attaining the determined objective
of the business. Over all planning is deciding that in present, what is to do in future.
2.

Organising:
Organizing refers to the way in which work of a group of people is arranged and
distributed among the group members to achieve the objectives of an organisation. As a
function of management organizing refers to the following:
(a)
Bringing together human and non-human resources that
is the work to be done and its distribution in human resources.
(b)
To define and establish authority responsibility relationship for
the achievement of goals.
(c)
Determination of objectives.
(d)
Division of activities into jobs
(e)
Fitting individuals into jobs, and
(f)
Developing relationships.
In conclusion we can say that organizing refers to distribution of work to the superiors and
sub-ordinates and fixing there authorities and responsibilities.

3. Staffing:

Staffing is the process of determining the manpower requirement that could meet the
companys objectives. Staffing is a managerial function of attracting, acquiring,
developing and maintaining the human resources required to achieve the organisation
objective efficiently.
Staffing also involves upgrading of quality/skills of the staff to get higher performance
from then. Personnel department of an organisation looks after the function of staffing.
Staffing usually includes the following activities:

Human resource planning.

Announcing vacant positions, that is recruitment.
Receiving applications.
Administering test.
Interviewing.
Medical test.
Final selection and appointment letter.
Orientation and placement.

4.

Directing or Leading:
Directing as a function of management is concerned with instructing, guiding and
inspiring people in the organisation to contribute to the best of their capabilities for the
achievement of organizational objectives. As a conclusion directing includes the following:
(a)
Communication: it is the process of passing information and
understanding from one person to another. This process is necessary for
making the subordinates understand what the management expects of them. A
manager has always to tell the subordinates what to do, how to do it and when
to do it. He has to create an understanding in their minds in regard to these
matters.
(b)

Leadership: a good manager must also be an effective leader.

Leadership is concerned with influencing the behavior of followers. In order to
get the cooperation of employees, the manager must have leadership skills.
The style of leadership will vary from situation to situation.

(c)

Motivation: effective motivation is necessary for getting

voluntary cooperation of the subordinates. Different types of rewards motivate
different people. Every manager should study the behavior of individuals
working under him to provide him or her proper inducements. To some financial
incentives are important, while others are motivated by non-pecuniary
incentives like job security, job enlargement, freedom to do work and
recognition.
(d)
Issuing orders and instruction by the superior.
(e)
Leading the subordinates to influence their activities towards
achievement of goals.
(f)
To ensure that the subordinates are working as per plans and
policies.

5. Controlling:
Controlling is a process of verifying whether actual performance is in accordance to the
planned performance and to take corrective action wherever required.
It involves comparison of actual performance with the planned performance as to quality,
quantity, time taken etc. and than analyze the deviations and to take corrective measures
to correct the deviations. It involves the following steps:
1.
2.
3.
4.
5.

Establishment of standards.
Measurement of actual performance.
Comparison of actual performance with the planed performance.
Find out deviations.
Taking corrective action.

UNIT III
PLANNING
Planning in organizations and public policy is both the organizational process of creating
and maintaining a plan; and the psychological process of thinking about the activities
required to create a desired goal on some scale. As such, it is a fundamental property of
intelligent behavior. This thought process is essential to the creation and refinement of a
plan, or integration of it with other plans, that is, it combines forecasting of developments with
the preparation of scenarios of how to react to them.
The term is also used to describe the formal procedures used in such an endeavor, such as
the creation of documents diagrams, or meetings to discuss the important issues to be
addressed, the objectives to be met, and the strategy to be followed. Beyond this, planning
has a different meaning depending on the political or economic context in which it is used.
Two attitudes to planning need to be held in tension: on the one hand we need to be
prepared for what may lie ahead, which may mean contingencies and flexible processes. On
the other hand, our future is shaped by consequences of our own planning and actions.
Planning is a process for accomplishing purpose. It is blue print of business growth and a
road map of development. It helps in deciding objectives both in quantitative and qualitative
terms. It is setting of goals on the basis of objectives and keeping in view the resources.

What should a plan be?

A plan should be a realistic view of the expectations. Depending upon the activities, a plan
can be long range, intermediate range or short range. It is the framework within which it must
operate. For management seeking external support, the plan is the most important document
and key to growth. Preparation of a comprehensive plan will not guarantee success, but lack
of a sound plan will almost certainly ensure failure.
Purpose of Plan: A plan is an important aspect of business. It serves the following three
critical functions:

Helps management to clarify, focus, and research their businesses or project's

development and prospects.

Provides a considered and logical framework within which a business can develop and
pursue business strategies over the next three to five years.

Offers a benchmark against which actual performance can be measured and

reviewed.

Essentials of planning: Planning is not done off hand. It is prepared after careful and
extensive research. For comprehensive business plan, management has to
1. Clearly define the target / goal in writing.
1. It should be set by a person having authority.
2. The goal should be realistic.
3. It should be specific.
4. Acceptability
5. Easily measurable
2. Identify all the main issues which need to be addressed.
3. Review past performance.
4. Decide budgetary requirement.
5. Focus on matters of strategic importance.
6. What are requirements and how will they be met?
7. What will be the likely length of the plan and its structure?
8. Identify shortcomings in the concept and gaps.
9. Strategies for implementation.
10. Review periodically.

STRATEGIC PLANNING
Definition:
Long range planning focus on the organizing as a whole. It need managers to
considers the organization as a total unit and ask themselves what must be done in
along term to attain organizational goals.
Strategic Management
The process of ensuring that an organization possesses and benefits from the use of
an appropriate organizational strategy.
Strategic Management Process:

Environme
ntal
analysis
- General
- Operating
- Internal

Establishing
organizationa
l direction
- mission
- objective

Strategy
formulati
on

Strategy
impleme
ntation

Strategic
control

Importance of the planning Process

A plan can play a vital role in helping to avoid mistakes or recognize hidden opportunities.
Preparing a satisfactory plan of the organization is essential. The planning process enables
management to understand more clearly what they want to achieve, and how and when they
can do it.
A well-prepared business plan demonstrates that the managers know the business and that
they have thought through its development in terms of products, management, finances, and
most importantly, markets and competition.

Planning helps in forecasting the future, makes the future visible to some extent. It bridges
between where we are and where we want to go. Planning is looking ahead.
1.

Makes the objectives clear and specific: planning clearly specifies the objectives
and the policies or activities to be performed to achieve these objectives in other
words what is to be done and how it is to be done are clarified in planning.

2.

Off setting the uncertainty and change: planning is necessary to look ahead
towards future and to take decisions regard facing the expected changes/requirement
of the future. E.g. before coming of summer session producers started production for
the products to be used in summer.

3.

Plans facilitate decision-making: to achieve the objective predetermined under

planning, business has to take various decisions by considering the available
resources. If job may be completed by using various alternatives (e.g. manually or by
machines) and the best alternative is decided by the management, which is more
helpful in achieving the objective.

4.

Provides basis of control: under controlling actual performance is compared with

the planed performance (target/objective). So planning is the base of controlling
process.

5.

Leads to economy and efficiency: planning clarifies the work and its method of
doing. Resultantly it reduces confusion and wastage of resources in the form of
thinking at the time of doing. So efficiency of the worker will risen which will further
result economy in production.

6.

Facilitates integration: under planning proper directions as per plane are provided
to the subordinates. Resultantly they all make effort towards the achievement of
preplanned objective. Such co-ordination of sub-ordinates and their departments will
certainly help the organisation in achieving its objective.

7.

Encourages innovation and creativity: planning is the process of thinking in

advance and so plans are made to achieve a target at future date by using latest
methods and technology to perform the industrial/business activities and so plans lead
to innovation.

8.

Facilitates control: planning facilitates the managers in performing their function of

control. Planning and control are inseparable in the sense that unplanned action
cannot be controlled because control involves keeping activities on the predetermined
course by rectifying deviations from plans.

9.

Improves motivation: the effective planning system ensures participation of all

managers, which improves their motivation. It improves the motivation of workers also
because they know clearly what is expected of them. Moreover, planning also serves
as a good training device for future managers.

10.

Improves competitive strength: effective planning gives a competitive edge to the

enterprise over other enterprises that do not have planning or have ineffective
planning. This is because planning may involve expansion of capacity, changes in
work methods, changes in quality, anticipation of tastes and fashion of people and
technological changes, etc.

11.

Encourages innovation and creativity: planning helps innovative and creative

thinking among the managers because many new ideas come to the mind of a
manager when he is planning. It creates a forward-looking attitude among the
managers.

12.

Achieves better coordination: planning secures unity of direction towards the

organisational objectives. All the activities are directed towards the common goals.
There is an integrated effort throughout the enterprise. It will also help in avoiding
duplication of efforts. Thus, there will be better coordination in the organisation.
MANAGEMENT BY OBJECTIVE

DefinitionA management that uses organizational objectives as the primary means of managing
organizations.
- Popularize through the writing of Peter Drucker.
- MBO- strategy has 3 basic parts:
1 Individual within an organization are assigned a specialized set of
objectives that they try to reach during a normal operating period.
These objectives are mutually set and agreed upon by individuals and
their managers.
2 Performances reviews are conducted periodically to determined how
close individual are to attaining their objectives.
3 Rewards are given to individuals on the basis of how close they come
to reaching the goals.

MBO PROCESS:

1 Review
organizational
objective
2 Set
worker
objective
3 Monitor
progress
4 Evaluate
performance
5 Give rewards

Manager gains a clear understanding

organizations overall objectives.

of the

Manager and worker meet to agree on worker

objectives to be reached by the end of the normal
operating period
At intervals during the normal operating period, the
manager and worker check to see if the objective are
being reached
At the end of the normal operating period the
workers performance is judged by the extend to
which the worker reached the objectives.
Rewards given to the worker are based on the extent
to which the objectives were reached.

SUCCESSFUL MBO PROGRAM

1.
2.
3.
4.

Top management must be committed to the MBO process and set

appropriate objectives for the organizations.
Managers and subordinates together must develop and agree on each
individuals goals.
Employees performance should be evaluated. The evaluation helps to
determine whether the objectives are fair.
Management must follow through an employee performance evaluation by
rewarding employees accordingly.

ADVANTAGES AND DISADVANTAGES OF MBO

ADVANTAGES
MBO
programs

DISADVANTAGES
continually Time
consuming

leaving

both

emphasize what should be done in managers and employees less time

an organization to achieve goals.
to do actual work.
MBO process secure employee Increase the volume of paper works
commitment

to

organizational goals.

attaining (Elaborate goals, communication of

goals etc)

2. ORGANIZING: (also spelled organising) is the act of rearranging elements following one
or more rules.
The first step in implementation of a plan is organizing. Organizing means to break up the
plan of action into smaller activities so that it can be accomplished by a group of people. The
organizing function thus not only determines the persons needed to do a job, but also defines
the job of each position in the organizational hierarchy.
Organizations are groups of people frequently trying to organize some specific subject, such
as political issues. So, even while organizing can be viewed as a simple definition, it can get
as complex as organizing the world's information.
An organization is a group of two or more people that exists and operates to achieve clearly
stated, commonly held objectives. (Straub and Attner, Introduction to Business, Kent
publishing, 2004.p. 9109.)
Organization is a group of people working together in a structured and coordinated fashion to
achieve a set of goals. (Ricky W. Griffin, Management 7th Edition, Houghton Mifflin Book
Company, Boston, USA)
Organization is a systematic arrangement of people to accomplish some specific purpose.
(Stephen P. Robbins and Mary Coulter, Management, 5th Edition, Prentice Hall of India
Ltd)

IMPORTANT OF ORGANIZING

o Important to management system.

o To create and maintain relationship between all resources, by specifying which
resources to be used, when, where and how.
o Minimize costly weaknesses
o Accomplish better objectives by using coordinated efforts of people.
Organizational Structure:
Formal system that separates and integrates tasks:
Allocating people and resources to tasks.
Clarifying responsibilities through job descriptions, organizations charts and
lines authority.
Letting employees know what to expect by them establishing rules, regulations
operation procedures and performance standards.
The chain of command and hierarchy of responsibility, authority and accountability are
established through organizational structure.
Organizational structure can be divided into four elements:
1.
2.
3.
4.

Specialization
Standardization
Coordination
Authority
a)

Specialization:

Identifying specialized task, assigning to individuals/ work that are trained.

Middle managers will be responsible for directing work, functional and first line
usually supervises such as marketing, accounting or quality control.

b)

Standardization:

Developing the procedures an organization uses to ensure employees perform

their tasks in uniform and consistent manner.

How?
Description, instructions, rules and regulations to standardize subordinates jobs
success
Application forms will standardize the selection of employees.
On the job training programs will promote standardized skills and reinforce
values to organizations success.

c)

Coordination:

Formal and informal procedures that integrates both managerial and

employees activities.

d)

Authority:

Right to make decision and take actions. Various organizations distribute authority
differently.
Centralized organization- top manages make decision, communicate to lower
managers.
Decentralized organization Greater decision making responsibility is given to lower
level managers.

Scalar principle:
Definition: Classical-management rule that subordinates at every level should follow the
chain of command, and communicate with their seniors only through the immediate or
intermediate senior. According to its proponent, the French management pioneer Henri Fayol
(1841-1925), a clear understanding of this principle is necessary for the proper management
of any organization.
The more clear the line of authority from the ultimate authority for management in an
enterprise (CEO) to every subordinate position, the more effective will be decision making
and organization communication at various levels in the organization.

Departmentation (Grouping)
One reason organizations exist is to do things that would be hard for one person to do by
themselves. For example, it's hard to conceive of one person building an office building.

Instead, we have organizations of thousands of people with diverse skills that work together
to build buildings. However, coordinating, controlling and just keeping track of a lot of
individuals introduces its own problems.
The basis on which individuals are grouped into departments and departments into total
organizations.
Approach options include;
1.
2.
3.
4.
5.

Functional - by common skills and work tasks

Divisional - common product, program or geographical location
Matrix - combination of Functional and Divisional
Team - to accomplish specific tasks
Network - departments are independent providing functions for a central core breaker

Common Bases for Departmentation

What organizations actually do is a group person in a way that relates to the task they
perform. This still leaves a lot of possibilities. Here are six common bases for
departmentation:
Knowledge and Skill. People are grouped by what they know. For example, hospitals
have departments like Neurology, Allergy, Cardiology, Internal Medicine, GastroEnterology, etc.
Work Process. Workers are grouped based on the process or activity used by the
worker. For example, a manufacturing company may create separate casting, welding
and machining groups. Often, it is the underlying technology that determines the
departmentation. For example, a print shop may have separate letterpress and offset
departments -- two different processes for getting the same outputs.
Business Function. Grouping by the basic function in the organization: purchase
supplies, raise capital, generate research, etc. This leads to the familiar departments of
manufacturing, marketing, engineering, finance, and so on.
Time. When work is done. For example, shifts in a factory or hospital or hotel.
Output. Grouping based on the products or services that the employee works on. For
example, a manufacturer may have different divisions for each of its product lines.
Client. Grouping based on the type of clients their work is ultimately sold to. For example,
computer companies often have different sales departments for home, small business,
educational, government and large business customers.
Place. Groups are based on the geographical areas that they serve. For example, during
WW2, the US War Dept. was organized into 7 "theatres" corresponding to regions of the
world where the US was fighting. Similarly, Post Offices are often divided by regions and
zip codes.

Means (Function)
Specific
Types

knowledge & skill

work process
business function

time

small organizations of various kinds

large-scale manufacturing
assembly line production

professional bureaucracies:
universities, hospitals

Kinds of
Companies

Strengths

Works well with smaller

organizations
Groups skill sets so they can consult
with each other and socialize each
other: put all the accountants
together, all the factory workers
together, etc.
Avoids duplication of efforts: just
one HR dept., one operations
division, etc.

Allows economies of scale: single

purchasing dept. can order large
quantities of paper for all parts of the
organization

Does not create sense of

ownership/responsibility for final
product:
Encourages finger-pointing: "not my
department"

Weaknesses

People in different functional areas

dont understand the whole, nor
other parts

Ends (Market)

Output
Client

Place

Often found in really big

orgs and multinationals
divisionalized forms &
conglomerates
Orgs with high product line
heterogeneity
Orgs in fast moving
industries

Orgs with extra resources

available, like Microsoft

Allows different parts of org

to evolve in different ways at
different speeds to adapt to
the complex environment
Some sense of ownership of
product: in effect creates
many small companies
responsible for one small
product.

Sense of belonging to team

and of common fate.

Can create significant

duplication of effort and
knowledge throughout org.
Innovations don't spread:
brilliant new time
management system in one
division is unknown in other
divisions

No economies of scale

Matrix & Project-based Organizations

An attempt to organize company according to both function and market dimensions
simultaneously, so that each person belongs to both a functional department and a
product/market department. Some people therefore report to two bosses.

The big advantage of matrix organizations is that they are great for sharing of information
and enabling people to coordinate their efforts with larger organizational goals and
strategies.
The problem, of course, is that having two bosses can be confusing, and is a situation that is
easily exploited by subordinates, who can pit their bosses against each other. The
subordinates can also be unwitting victims of power struggles among the bosses.
The matrix form works best when one dimension is a permanent affiliation (typically
functional), and the other is a temporary dimension, such as a client project. So a person is,
say, a marketing research analyst, and is presently assigned to the Carnation project, which
will take 6 weeks, and will then be assigned to the R.J. Reynolds project, and so on.

Criteria For Choosing

An organization can divide itself into departments any way it wants using any criteria it wants
-- there is no law about it. It doesn't have to be rational. However, there is a theory
(developed by James Thompson) about what is the best way to do it. According to the
theory, there are 4 basic rational criteria for choosing the bases for departmentation:

1. Work-flow interdependence.
This refers to the flow of product from person to person as it is being constructed. There are
four kinds of increasingly tight interdependence:

pooled: sharing of resources and consequences only. In other words, the positions
have really nothing to do with each other, they are only interdependent in the general
sense of being part of the same company, so they are funded by the same budget.
sequential: work is fed from one position to the next, like an assembly line
reciprocal: work passed back and forth between a pair of positions/tasks
team: work flows around and through a network of positions, like the ball in a
basketball game.

Now here is the key idea: where work-flow interdependence is critical, rational organizations
try to group tasks/positions together which are more tightly interdependent. That is,
operations which are team-interdependent should be grouped first (i.e., at the lowest levels in
the organization), operations that are reciprocal-interdependent should be grouped second,
and so on. This is illustrated in the figure below, which gives the organization chart of a
hypothetical manufacturing organization.

Counting from the bottom up, the first and second groupings are by work process, the third is
by business function, and the fourth is by output (product). Now think about it in terms of
interdependencies. The tightest interdependencies are between the turning, milling and
drilling operations. These are team or reciprocal interdependencies. So they are the first to
be grouped together (under "General Foreman: Fabricating").
The next tightest interdependencies are the sequential interdependencies between
fabrication and assembly, since first you make the materials, then you assemble them. So
these are grouped together under "Manager: Manufacturing".
There are also sequential interdependencies between the business functions of design
(engineering), manufacturing, and marketing. So at the next level up, we merge all of these
under "Vice-President: Snowblowers".
Above this level, most of the workflow interdependencies are only of the pooled variety: the
snowblower department really has little to do with the frostbite remedy department, except
that they all dip into the same general pool of organizational resources (capital, management
talent, physical assets, etc.).
2. Process interaction.
This refers to consultations among people about how to do things. For example, lawyers in a
corporation consult each other to take advantage of specialized skills and to develop a
common approach to things.
3. Economies of scale.
Groups formed in order to achieve economies of scale. For example, if each department in a
factory has a maintenance person, it may be inefficient because the small departments don't
have quite enough work for a fulltime maintenance person, while the big departments have
too much.
This approach also encourages specialization, as within a central maintenance department
there can be specialists for different kinds of problems.

4. Social considerations
Groups are formed in order to minister to people's social needs. This often leads to functional
groupings because people are comfortable with their "own kind" (as in technical people
prefer technical people, sales types like sales types, etc.).
Often there are individual concerns, like two people who don't get along, the force certain
departments to be placed under other departments, or not placed under certain departments.
UNITY OF COMMAND
The chain of command, sometimes called the scalar chain, is the formal line of authority,
communication, and responsibility within an organization.
The chain of command is usually depicted on an organizational chart, which identifies the
superior and subordinate relationships in the organizational structure.
According to classical organization theory the organizational chart allows one to visualize the
lines of authority and communication within an organizational structure and ensures clear
assignment of duties and responsibilities.
By utilizing the chain of command, and its visible authority relationships, the principle of unity
of command is maintained. Unity of command means that each subordinate reports to one
and only one superior.
SPAN OF CONTROL
In a business of more than one person, unless the business has equal partners, then there
are managers and subordinates. Subordinates are workers controlled by the manager.
A hierarchy describes the structure of the management of the business, from the top of the
company the managing director, through to the shop floor worker, who reports to their
foreman, in a manufacturing business.
The hierarchy of a business is usually best understood by drawing an organisation chart
showing which levels of management and employees report to whom.

An example of a hierarchy is shown in the diagram below

A span of control is the number of people who report to one manager in a hierarchy. The
more people under the control of one manager - the wider the span of control. Less means a
narrower span of control.

The advantages of a narrow span of control are:

A narrow span of control allows a manager to communicate quickly with the

employees under them and control them more easily
Feedback of ideas from the workers will be more effective
It requires a higher level of management skill to control a greater number of
employees, so there is less management skill required

The advantages of wide span of control are:

There are less layers of management to pass a message through, so the message
reaches more employees faster
It costs less money to run a wider span of control because a business does not need
to employ as many managers

The width of the span of control depends on:

The type of product being made products which are easy to make or deliver will need
less supervision and so can have a wider span of control
Skills of managers and workers a more skilful workforce can operate with a wider span
of control because they will need less supervision. A more skilful manager can control a
greater number of staff

A tall organisation has a larger number of managers with a narrow span of control whilst a
flat organisation has few managers with a wide span of control.
A tall organisation can suffer from having too many managers (a huge expense) and
decisions can take a long time to reach the bottom of the hierarchy
BUT, a tall organisation can provide good opportunities for promotion and the manager does
not have to spend so much time managing the staff
Chain of command is the line on which orders and decisions are passed down from top to
bottom of the hierarchy. In a hierarchy the chain of command means that a production
manager may be higher up the hierarchy, but will not be able to tell a marketing person what
to do.
The advantages of hierarchies are:

Helps create a clear communication line between the top and bottom of the business
this improves co-ordination and motivation since employees know what is expected of
them and when.

Hierarchies create departments and departments form teams. There are motivational
advantages of working in teams.

The disadvantages of hierarchies are:

The formation of departments can mean that:

- Departments work for themselves and not the greater good of the business.

- Departments do not see the whole picture in making decisions.

Hierarchies can be inflexible and difficult to adjust, especially when businesses need
to adapt to changing markets remember employees do not tend to react well to
change.

UNIT IV

Motivation
INTRODUCTION
MOTIVATION IS THE MOST IMPORTANT CONCEPT IN UNDERSTANDING THE
BEHAVIOUR OF THE INDIVIDUAL.
EVERY ORGANISATION HAS PEOPLE WITH OUTSTANDING ABLITIES WHO PERFORM
BETTER THAN THE OTHERS.
WE TRY TO ANSWER THE QUESTION BY UNDERSTANDING THE MEANING OF
MOTIVATION.
MEANING:
THE TERM MOTIVATION WAS GENERATED FROM THE LATIN WORD MOVERE
WHICH MEANS TO MOVE.
DEFINITION:
MOTIVATION REFERS TO THE WAY IN WHICH URGES (A strong restless desire),
DRIVES, DESIRES, ASPIRATIONS (A cherished desire) NEEDS DIRECT, CONTROL OR
EXPLAIN THE BEHAVIOUR OF HUMAN BEINGS. BY DALTON.
MOTIVATION IS THE WILLINGNESS TO EXERT HIGH LEVELS OF EFFORT TOWARDS
ORGANISATIONAL GOALS, CONDITIONED BY THE EFFORTS ABLITY TO SATISFY
SOME INDIVIDUAL NEED. BY STEPHEN P.ROBBINS.
THE DEFINITION OF MOTIVATION INCLUDES THE FOLLOWING:
THE FACTORS TO INFLUENCE HUMAN BEHAVIOUR ARE PSYCHOLOGICAL,
SOCIOLOGICAL, ECONOMIC AND MANAGERIAL.
THE EFFICIENCY OF SUCH BEHAVIOUR THIS MAY BE TESTED BY THE RESULTANT
ACTION. WHETHER THIS BEHAVIOUR HAS DIRECTED, CONTROLLED OR
IMPLEMENTED THE DESIRED ACTION.
MOTIVATION PROCESS:
UNSATISIFED TENSION DRIVES SEARCH BEHAVIOUR SATISIFACTION OF
NEED REDUCTION OF TENSION.

THEORIES OF MOTIVATION
CONTENT THEORIES

MASLOWS HIERARCHY OF NEEDS.

THEORY X & Y.

CLAYTON ALDERFERS E R G THEORY.

PROCESS THEORIES:

VROOMS EXPECTANCY MODEL.

PORTER-LAWERS MODEL.

ADAMS EQUITY THEORY.

CLAYTON ALDERFERS E R G THEORY

ALDERFER IDENTIFIED AND RE WORKED THREE GROUPS ARE CORE NEEDS:

EXISTENCE NEEDS

RELATEDNESS NEEDS

GROWTH NEEDS

E PHYSIOLOGICAL &SAFETY NEEDS.

R INTERPERSONAL & SOCIAL NEEDS.
G

HIGHER LEVEL NEEDS IS NOT SATISFIED, THE DESIRE TO SATISFY

LOWER-LEVEL NEEDS INCREASES.

VROOMS EXPECTANCY MODEL

VICTUR VROOM (1964) PRESENTED THIS THEORY AS AN ALTERNATIVE TO

CONTENT THEORIES.

THIS MODEL HAS BEEN EXPANDED AND REDEFINED BY PORTER AND

LAWLER (1968).

VROOMS MODEL IS BUILT AROUND CONCEPTS OF VALENCE AND

EXPECTANCY AND IS COMMONLY CALLED AS VIES THEORY.

MOTVATION FORCE IS A PRODUCT OF VALENCE AND EXPECTANCY.

MOTIVATION FORCE= VALENCE x EXPECTANCY.

[STRENGTH OF DRIVE TOWARDS ACTION]

[STRENGTH OF ONES DESIRE FOR SOMETHING]
[PROBABLITY OF GETTING IT WITH A CERTAIN ACTION]
PORTER-LAWLER MODEL

THERE ARE VARIOUS ELEMENTS IN THIS MODEL ARE:

EFFORT-THE AMOUNT OF EFFORT THAT EMPLOYEE WILL PUT.
PERFORMANCE ABLITY.
REWARDS - LEVEL OF PERFORMANCE.
SATISFACTION REWARD & PERFORMANCE.
IMPORTANCE OF PORTER-LAWLER MODEL:
MATCHES THE ABLITIES OF THE INDIVIDUAL TO THE REQUIREMENT OF THE JOB.
EXPLAIN THE ROLES OF THE EMPLOYEES.
EXPLAIN THE EXPECTED LEVEL OF PERFORMANCE TO THE EMPLOYEE.
MAKES SURE THAT THE REWARDS ARE THE VALUED BY THE EMPLOYEE.

LEADERSHIP
Leadership in the management scope refers to the art of inducing subordinates to
accomplish their assignments with zeal, devotion and confidence.

Manager, as a

leader, influences his subordinates to work together willingly on related tasks to attain,
and makes them to put their best efforts. Managerial leadership is one of the most
effective tool of handling people to work effectively towards accomplishing the
prescribed objectives.

DEFINITION AND MEANINGS

Leadership is the art or process of influencing people so that they will strive willingly
and enthusiastically toward the achievement of group goal.

Leadership is the ability to influence and to motivate others to achieve organizational

goals.

Leadership is the relationship in which one person (the leader) influences others to
work together willingly on related tasks to attain goals desired by the leader and/or
group.

Leadership is direction setting, aligning people, motivating and inspiring.

Leadership is quality of behaviour of individuals whereby they guide people of their

activities in organized effort.

IMPORTANCE OF LEADERSHIP
Now-a-days leadership has become an important task of management due to:

Rapid advancement in technology,

Specialization in the field of commerce and industry,
Enhancement of size of industry,
increase of social demands, etc.

Successful implementation of various programmes, plans and projects depend upon

the way in which these are guided. It depends on the successful person of good
leadership.

FUNCTIONS OF LEADERSHIP
The leader, as a manager, creates the love for work devotion to duty, but also induces
subordinates to work with greater sincerity, zeal and interest with maximum efficiency
and with better understanding. The leader as a manager performs the following four
distinct functions:
DIRECTING
The first function of leadership is to initiate the subordinate to work and give
the desired result.
RESPONDING
Psychologically handle the subordinates for favourably responds to the
call/direction of manager.
REPRESENTING
Represent his own personality in a clear and understandable way, and at the
same time he should represent the subordinates to his own side as they
appear and as they really are.
CONVINCING
Create confidence among his subordinates with regard to his thinking,
approach, and character.
POWER AND LEADERSHIP
Leaders apply power within organization to influence individuals or groups of
employees, peers and managers. However, they do not always have to exercise their
power in order to influence others. There are different forms of power which are
explained as under:
LEGITIMATE POWER
Legitimate power derived from a specific position in the organization
structure and the formal authority vested in it.
REWARD POWER: This form of power derived from the ability to provide valued rewards to
others.
COERCIVE POWER: Power derived from the ability to penalize others.
INFORMATIONAL POWER: Power derived from the ability to control access to important
information.

EXPERT POWER
Power derived from the managers personal skills, technical knowledge, and
experience.
REFERENT POWER
Power derived from the ability to inspire respect, admiration, and loyalty.
CURRENT TRENDS IN LEADERSHIP
Managers in Japanese firms use participative leadership styles and invite
considerable employee involvement in organizational decision to build commitment.
They also promote harmony among organization members by emphasizing personal
relationships rather than maintaining a strictly task orientation. A growing trend in
Japan is the careful design of work groups to substitute for leadership, especially in
technical units such as research-and-development department.
THEORIES OF LEADERSHIP
There are three major theories which are explained as under:
TRAIT THEORIES
According to this approach, certain personal characteristics of individual
(traits) are necessary for a successful leader:
These studies attempted to identify certain traits that distinguish (a) leaders from
followers; and (b) successful leaders from unsuccessful leaders. It is also pointed out
that leaders should have the following traits:
Decisiveness
Clear vision
Deep but correct foresight
Perfect judgment
Perfecting his subordinates
Participative management
Better public contacts
Progressive minded.
Strong desire for power
Prefer independent activity
Dislike detailed

BEHAVIORAL THEORIES
According to this approach, leadership depends upon behaviour and styles of leaders
because it is strongly affected by situations from which leaders emerged and in which
they operate. One leadership style cannot be effective in all organizational settings.
Successful leadership depends on the relationship between organization situation and
leaders style. Basically there are two type of styles of leadership:
Autocratic leader: A leader who tends to centralize authority and to make unilateral
decisions.
Democratic leader: A manager who tends to delegate authority and to encourage
participation in decision making.
According to continuum of autocratic-democratic leader behavior manager, as a
leader, can select from seven behaviors along the continuum from autocratic to
democratic behavior. At one extreme, the leader makes all decisions and tells
employees how to implement the decisions. At the other extreme, the leader allows
employees to make decisions and also allows employees to choose how to meet their
goals. A continuum of autocratic-democratic leader behavior is given below:
LEADERSHIP STYLES:
1.
2.
-

Task oriented function/ production centered.

Concern on getting the job done to her / his satisfaction rather than develop or
employee growth.
Plan and defines work to be done
Assigns task responsibilities
Sets clear work standards
Urges task completion and monitor results
Supervise employee.
Concerned to get the job done rather than the development of the employees.
Employee oriented/ people centered.
Managers try motivate rather than control the employees.
Encourage to participate in decision making.
Develop trust and respect.
Show high amount of consideration towards employees ideas and feelings.
Characteristic of Manager:
Warmth and has special rapport with subordinates.
Respect the feeling of others
Sensitive to others needs and mutual trust.

Formal and informal leaders

It has been observed above that a manager should also be a good leader. But in actual
practice, every manager is not able to provide the kind of leadership desired by his
subordinates. This gives rise to informal leaders who do not hold any managerial post in
the organisation.

A formal leader, on the other hand, is one who possesses organisational authority to
direct and control the activities of his subordinates. He can issue orders and instructions
to his subordinates by virtue of his formal authority in the organisation. An informal leader
is elected by the management, as in case of a formal leader.

Sometimes, informal leaders become more acceptable to the workers as compared to the
formal leaders. In such a situation, the formal leaders become the position-holders only.
They are not able to achieve the voluntary cooperation of the workers in all matters. It is
also true that a work-group may have different leaders for different purposes. The
members of a work-group may be influenced by one leader while doing their jobs. But as
regards their personal problems, they may go to another leader as far as their reaction is
concerned.

Management often tries to suppress informal leaders. But it should be remembered that
the trouble they cause reflects the desires of the group. If they are suppressed, the
workers may become more antagonistic to management, morale may fall even lower and
new informal leaders may step to the fore.

Therefore, it is better to work with informal leaders. There are many ways in which a
manager can build up good relations with the informal leaders working with him. Among
other things, he can pall necessary information to them first, seek their advice on
technical and human relations problems, and assign them to train other.

CONTROLLING

Definition:
-

The process to assure that actual activities conform to planed activities

(J.F stoner).
The process of monitoring performance and taking action to ensure desired
results.

The Important of Controlling:

-

Assist the management process- PLOC by determine what is necessary, when

and why it is required.

Deals with the change, or uncertainty. Plans and goals set by organization
deals with future which is always uncertain and is constantly changing. E.g
market shift, product demand.

Deals with complexity- As organization grow in size and diversity, they become
complex. Control is needed to coordinate activities and accomplish integration.
Deals with human limitation (mistake) e.g wrong forecasts thus it help tosspot
mistake.

Ensure delegation and decentralization are operate smoothly. Enable

managers to check on performance.

The control process:

Establish standards and methods for measuring the performance standard. E.g
customer waiting time.
Measure the performance e.g R & D gas in the air. Its depend on the situation. What,
when and how frequently to measure.
Determine whether performance matches standards. If the performances match the
standard no corrective action is needed.
Take corrective action if the performance does not match the standard then corrective
actions may be include

Management by Exception
Management by Exception is a "policy by which management devotes its time to
investigating only those situations in which actual results differ significantly from planned
results.
The idea is that management should spend its valuable time concentrating on the more
important items (such as shaping the company's future strategic course). Attention is given
only to material deviations requiring investigation."
It is not entirely synonymous with the concept of exception management in that it describes a
policy where absolute focus is on exception management, in contrast to moderate application
of exception management.
This type of management can be powerful when it is necessary to process lots of data in
order to make managerial decisions. The problem with this policy is that it can result in
myopic behavior.
This behavior implies that lower management shifts its goal from running a successful
business in a real world environment, to feeding centralized auditors and managers with
financial data which will be interpreted as within. In this situation, a company manager might
sell off assets like equipment (vital to long run productivity) in order to manipulate accounting
ratios used in determining exception. Thus, lower management can in some cases dodge
being marked as an exception, to the long term detriment of the plant they are managing.
Management by exception and/or reporting by exception is a process by which top
management is spared from routine, planned, expected and irrelevant information or
situation. However, it initiates feedback and reporting in the event of any extra ordinary
situation or circumstance that would be out of the scope of the junior management as they
still lack the expertise in important strategic matters.

UNIT V
COMMUNICATION
It is the process of exchange of the messages and receiving the response of that
message. The person who sends the messages is known as sender and the person who
receives the message is known as receiver and the response to the message is known as
feed back. Since the feedback requires another message to be communicated by the
sender to the receiver. So communication process becomes a circular process.
Allen Lousis communication is the sum of all the things which one person does when
he wants to create understanding in the mind of another. It is a continuous process of
telling, listening and understanding.
George Terry communication is an exchange of facts, ideas, opinions and emotions by
two or more persons.
In simple words, exchange of ideas/messages, response there off in total is known as
communication. Any method of communication like wordsoral or written, pictures,
graphs, diagrams, etc. may be adopted to communicate. Effective communication is that
communication in which the receiver is understood actually what the sender wants to
convey, and in the same form. Noise is something, which has disturbed the effective
sending and receiving of communication.
Characteristics/features of communication
1.

Co-operative process: it is a process of co-operation because two or more persons

are required for the exchange of message i.e. sender(s) and receiver(s).

2.

Two way process: it involves both sending the message and receiving the response
to that message. Communication is not completed unless the receiver of the message
has understood the message and has given his response.

3.

Pervasive function: communication is necessary at all levels of management i.e. top,

middle and lower level and also in all the depths of the organisation.

4.

Continuous process (circular process): it is a continuous process because

transmission of messages is going on a continuous process.

5.

Flows in all directions: communication may flow upward and downward, between
superior and subordinate, horizontally (gang plank) between persons of similar ranks or
diagonally between persons at different levels.

Advantages/Importance of communication
1.

Facilitates planning: while making plans several ideas, problems, suggestions etc.
are communicated for an effective planning system and so communication facilitates
better planning.

2.

Helps in decision making: by providing the required information, needed for making
various decisions communication helps a lot because the quality of decision depends on
the quality of information available with the decision maker.

3.

Facilitates co-ordination: flow of communication is in all directions results a better

co-ordination in all level of management as well as all depth of organisation.

4.

Classifies authorities and responsibilities of various positions: by way of

communication authority and responsibility of various posts/positions are conveyed
(classified) to the position holder.

5.

Improves better relations among superiors and subordinates: by effective

communication misunderstanding between superiors and subordinates can be removed.
Moreover clear and accurate information can be communicated at proper time resulting
better relations between the two.

6.

Helps in motivating: communication helps in the process of motivation by sharing of

information, consultation and discussion of various problems for prompt
redressed/solution, quick solution of problems creates satisfaction resulting motivation
towards work.

7.

Information regarding organisational rules: subordinates should be informed by

communicating them, rules and principles of the organisation and any misunderstanding
regarding there of must also be clarified. This will necessarily improve the acceptance of
organisational rules.

8.

Facilitates directing function: communication makes a link between managers and

workforce of the organisation resulting a continuous flow of directions, instructions,
orders, suggestions, problems etc. so it facilitates directing function.

9.

Better public relations: by way of communication customers, suppliers,

shareholders, govt. and society may be provided required information. Resulting better
co-operation and good relations among all these groups.

10.

Improves efficiency: an effective communication helps in understanding ideas,

instructions or guidelines in a close and clear way and removes all confusions. Resulting
better understanding, better efficiency.

Process/Steps of communication

1.

Sender: The person who initiates the communication process in known as sender.
The sender has some need, information, thought, idea or inform which he wants too
communicate to some other person to achieve some purpose. By initiating the message,
the sender attempts to achieve understanding and a change in the behavior of the
receiver.

2.

Encoding or communication symbol: the next element in the process is that of

encoding the information to be transmitted. The sender of information organizes his ideas
into a series of symbols (words, signs, etc.), which, he feels, will communicate to the
intended receiver or receivers. This is known as encoding of message, i.e., converting to
communicable codes which will be understood by the receiver of the message.

3.

Message: the next element in the process of communication is message. The

message is the physical form into which the sender encodes the information. The
message may be in any form that could be experienced and understood by one or more
of the senses of the receiver. Speech may be heard, written words may be read and
gestures may be seen or felt. Thus, a message may taken any of the two form i.e. verbal
or non verbal. Verbal message is in the form of word language, while non-verbal would be
in the form of gestures like wink, smile, grunt, frown, warming of hand, shaking of head,
etc.

4.

Receiver: the next element in the process of communication is the receiver, the
person who receives the message is called receiver. The communication process is
incomplete without the existence of receiver of the message. It is the receiver who
receives and tries to understand the message. If the message does not reach the
receiver, communication cannot be said to have taken place. The socio-demographic and
physiographic characteristics of the receivers influence in selection of an appropriate
channel of communication.

5.

Decoding: decoding is the process by which the receivers draws meaning from the
symbols encoded by the sender. It is affected by the receivers past experience,
education, perception, expectations and mutuality of meaning with the sender. The
greater the overlap or commonality of the receivers field of experience and sender, the
greater success of the probability of expected communication. A model of communication
by Wilbur Schramm. It illustrates that an individual with significantly different educational
or cultural background ahs to put in greater effort to ensure successful communication.

6.

Feedback: after receiving the message, the receiver will take necessary action and
send feedback information to the communicator. Feedback is a reversal of the
communication process in which a reaction to the senders message is expressed. The
receiver becomes the sender and feedback goes through the same steps as the original
communication. The feedback is optional and may exist in any degree (from minimal to
complete) in any given situation. Generally, greater the feedback, the more effective the
communication process is likely to be. For example, early feedback will enable the
manager (sender) to know if his instructions have been properly understood and carried
out.
Two-way communication takes place when the receiver provides feedback to the sender.
For instance, giving an instruction to a subordinate and receiving it acceptance is an
example of two-way communication. On the other hand, in case of one-way
communication, feedback is totally absent. Here the sender communicates without
expecting or getting feedback from the receiver.
A policy statement from the chief executive is an example of one-way communication.
One-way communication takes less time than two-way communication. In certain
situations one-way communication is more effective to get work from the subordinates.
Two-way communication is superior to one-way communication in the following respects:
(a)
Two-way communication is more accurate than one-way communication. The
feedback allows the sender to refine his communication, so that it becomes more precise and
accurate.
(ii) Receivers self-confidence is higher in case of two-way communication, as they are
permitted to ask questions and seek clarification from the senders.
However, in case of two-way communication, the sender may feel embarrassed when the
receiver draws his attention to senders mistakes and ambiguities.

7.

Noise: surrounding the entire spectrum is the noise that affects the accuracy and
fidelity of the message communicated. Noise is any factor that disturbs, confuses or
otherwise interferes with communication. It can arise at any stage in the communication
process. The sender may not be able to encode the message properly or he may not be
properly audible. The message may get distorted by other sounds in the environment. The
receiver may not hear the message, or comprehend it in a manner not entirely intended by
the sender of the message. The channel also may cerate interference by filtering, i.e.
allowing some information to pass through and disallowing others. In any case, there is so
much of noise or interference in the entire process that there is every possibility of the
communication being distorted.
Types of communication OR forms of organisational communication
1.
2.

On the basis of relationship: (a) formal communication, (b) informal

communication.
On the basis of flow or types of formal communication: (a) downward
communication, (b) upward communication, (c) horizontal communication, (d) diagonal
communication.

Formal communication: it refers to the communication which rakes place on the basis of
organisational relationship formally established by the management. It is used to transmit
official messages within or outside the organisation. It strictly follows the chain of command.
It may be verbal but mostly it is expressed in written form to have a proof.
Informal communication: it refers to the communication which takes place on the basis of
informal or social relations among the people in an organisation. It is developed at its own
due to mutual confidence and relations. Generally it is used to transmit personal message
and do not follow the principle of chain of command. It is mostly expressed in verbal/oral
form. It may take place among the persons having different positions at different level and
chain is not a restriction. Network of informal communication is also known as grapevine.
Barriers to effective communication*
1.

So many levels of management: when the message has go through multiple levels
of management. These levels may become obstacle in flow of communication. It happened
when chain of command is strictly followed.

2.

Selective reception: when a part of information is blocked by any person in the

channel of communication it is termed as selective reception. In other words only the
selected part is further exchanged and remaining is blocked. It happens when information
provider is of the view that the information disagrees with in interest.

3.

Language barrier: sometimes sender and receiver of message do not understand the
same language and in that case messages not communicated. Moreover if the pronunciation
of words by sender is not clear it may become an obstacle.

4.

Status barrier: the difference is status of sender and receiver may also become
obstacle to effective communication. E.g. subordinates bay pass on interpreted (distorted)
information to their superiors to please them and do not reveal their mistakes.

5.

Poor listening skills: sometimes people are poor listeners and they believe that the
information is not enough important to pay attention to it resulting poor communication.

6.

Credibility of source: effective flow of communication also depends on trust and

confidence of the receiver on the source of information/message and also on sending
channel (sender).

7.

Physical distance of receiver and sender: physical distance between these two
may also become a barrier generally in those circumstances where sender is interested in
knowing the reaction of the receiver quickly. But verbal communication is not possible there.

8.

Emotional and psychological barriers: these barriers arise from emotions, attitudes
and social values of the participants. People may refuse to accept the messages affecting
them emotionally.

9.

Symbolic barriers: sometimes the some word of language/symbol may carry different
meaning to different parties as per their traditions, customs or religion and in that case
communication will not be an effective communication.

10.

Lack of organisational facilities: in some organisations there are no suggestion

boxes regarding complaints and also the subordinate cant disturb the chain of command.
Such lack of organisational facilities is also barrier in effective communication.

11.

Specialization barrier: when a department or a person treats him more specialized, it

will result no attention towards other departments/persons.

12.

Complex organisational structure: when organisational structure is of complex

nature, the information may get filtered, modified or lost at different levels before reaching to
the last level.

13.

Semantic problems: effective communication does not only include of transmission

of information/idea but also includes that the receiver has understood the information in the
same way as was desired by the sender. E.g. announcement in increase in budget is meant
for increase by installing new plan and new technology machines and plant. But workers may
think that due to increase budget their salary and wages will raise.
Overcoming communication barriers

1.

Clarity of information: subordinates should be kept informed on policy that affects

them on a regular basis. Clear-cut instructions should be issued and follow-up measures

should be taken to ensure that the instructions are thoroughly understood and are being
implemented.
2.

Prompt information: the management should make a practice of passing along the
information promptly to everyone concerned so that action, when required, is not delayed.

3.

Creation of proper atmosphere: in particular cases, as for instance, when a boss is

talking to his subordinate, the atmosphere should be peaceful, so that there is effective
communication of instructions and suggestions.

4.

Effective listening: the sender must listen to the receivers words attentively, so that
the receiver may also listen to the sender at the same time.

5.

Feedback: communication should be two-way traffic. There should be some system

by which the workers should be able to convey their suggestions and grievances to the top
management. Two-way communication is also necessary for feedback for the purpose of
control.

6.

Effective channels: management should try to cut the roots of the rumors. If the
communication channel is well maintained, there will be no room for rumors, lies, guesses
and misconceptions. Worker should get open doors for any clarification or consideration at all
times. This will also increase the morale of the employees.

Principles of effective communication

1.

Principle of clarity: the beginning of all communication is some message. The

message must be as clear as possible. No ambiguity should creep into it. The message can
be conveyed properly only if it has been clearly formulated in the mind of the communicator.

2.

Principle of objective: the communicator must know clearly the purpose of

communication before actually transmitting the message. The objective may be to obtain
information, give information, initiate action, and change another persons attitude and so on.
If the purpose of communication is clear it will help in the choice of mode of communication.

3.

Principle of understanding the receiver: understanding is the main aim of any

communication. The communication must crate proper understanding in the mind of the
receiver. Thus according to Killian, communication with an awareness of the total physical
and human setting in which the information will be received. Picture the place of work;
determine the receptivity and understanding levels of the receivers; be aware of social

climate and customs; question the informations timeliness. Ask what, when and in what
manner you would like to be communicated with if you were in the similar environment and
position.
4.

Principle of consistency: the message to be communicated should be consistent

with plans, policies, programmes and goals of the enterprise. The message should not be
conflicting with previous communications. It should not crate confusion and chaos in the
organisation.

5.

Principle of completeness: the message to be communicated must be adequate and

complete; otherwise it will be misunderstood by the receiver. Inadequate communication
delayed action, poor public relations affects the efficiency of the parties to communication.

6.

Principle of feedback: this principle calls for communication a two-way process and
providing opportunity for suggestion and criticism. Since the receiver is to accept and carry
out the instructions, his reactions must be known to the sender of message. The latter must
consider the suggestion and criticism of the receiver of information. But feedback principle is
often given a back seat by most managers, which defeats the very purpose of
communication.

7.

Principle of time: information should be communicated at the right time. The

communicator must consider the timing of communication so that the desired response is
created in the minds of the receivers.

DECISION MAKING
DEFINITION
-

Process where a course is selected as the way to deal with a specific problem.

Selection of one alternative from two or more alternative.

THE NATURE OF MANAGERIAL DECISION MAKING

Decision making is one of the vital tasks of a manager e.g in planning, organizing,
controlling.
Decision making is a process which affects all the managers operating functions. The
key to successful decision making depends on the proper formulation of the specific
problem at hand.
Types of decision making:
1. Programmed decisions
2. Non- program decision
PROGRAMMED DECISIONS
It is a repetitive decision that can be handling by a routine approach. It is usually made
in accordance with some established habit, rule or procedure (STONER). Grievances
procedures for employees are an example of programmed decisions.
NON- PROGRAMMED DECISION
This is a type of decision that deals with a unique, unusual or exceptional problem.
The nature of the problem that occurs is unstructured and something different. Eng is
the selection and training of personnel.
e.g

Nature of problems an decision making in organization

Highest level

Un structured

Non- programmed

nature of problem

programmed
nature of decision making

Organizational
hierarchy
structured
lowest level
organizational levels

Programmed decisions

Non programmed decision

A repetitive decision that can be handle

by routine approach. Well structured
situations using predetermine decision
rules, related rules and policies. E.g
grievances procedures for employees.

Unstructured, unique, unusual or

exceptional problem, requires a higher
level management participation. E.g
J.E. Virus out break.

DECISION MAKING CONDITIONS

There are three different conditions under which decision are made. Each of those
conditions is based on degree to which the future outcome of a decision alternative is
predictable. These conditions are:
1.
2.
3.

Certainty
Risk
Uncertainty

CERTAINTY:
The decision maker knows the out-come of the problems. Individual are fully informed
in terms of:
-

The nature of the problems

Possible alternatives
Result of alternatives

RISK
Future conditions are unknown in advanced. Some information are available but not
enough to answer all questions and normally most of the management decisions are
made under this condition. Occurs in the situation in which an individual can define
as :
Nature problems
Possible alternatives
UNCERTAINTY
Individual cannot even assign subjective probabilities to possible state of nature
because the individual do have the information or intuitive judgment to use as basis
for assigning the probabilities to each state of nature.

The essential elements in a decision making process includes the following:

1.

The decision maker,

2.

The decision problem,

3.

The environment in which the decision is to be made,

4.

The objectives of the decision maker,

5.

The alternative courses of action,

6.

The outcomes expected from various alternatives, and

7.

The final choice of the alternative.

Process/Steps in rational decision making

The understanding of the steps will enhance and improve the analytical and decision
making process.
Steps 1
Investigate the situation.
Define the problem
Diagnose the causes
Identify decision objectives

Step 2
Generate alternative solutions.
Consider as many alternatives as possible
Step 3
Evaluate and choose among alternative solutions

Once the possible solutions are developed, the decision maker has to examine
the probable desirable and undesirable consequences of each alternative.

Step 4
Implement and monitor the chosen solution
Design the implementation for the chosen situation. Decision makers
responsible for reviewing the plan periodically and comparing the actual
performance with the planned solutions.
State Of Nature Types And Decisions
Routine
Decisions

Adaptive
decision

Certainty
Objective probabilities

Innovative
decision
Uncertainty
Subjective probabilities

RISK CONTINUUM

Routine:
Choices made in response to relatively well known problems. Solution obtained from
standard rules, operating procedures and computer programs.
Adaptive:
Combination of moderately. Unusual and partially known problems and alternative solutions
that are modifications of other known and well define solutions.

Innovative:
Involve combining the discovery, identification and diagnosis of unusual and ambiguous
problems with the unique. Novel and creative alternative solutions.
Represents a series of mini decisions made over a period of months or several
years.
Represents an individual decision, involve many people, many and various
time.

Do not unfold in a logical, orderly sequence.

Made in the midst of a lot other managerial tasks.

Differences:
ROUTINE

ADAPTIVE

Made under conditions of Moderate

levels
certainty, low level risk
uncertainty and risk.

INNOVATIVE
of High levels of risks and
certainty.

CONDITION THAT AFFECT DECISION MAKING

States of nature:
Condition, situations and events that managers cannot control, but influence their decisions.
e.g new technologies, entrance of new competitors into market, new laws and political
instability.
Certainty:
Managers are fully informed of the problem, alternative solutions that will lead to desired
result, probability that certain states of the nature will occur.
Objectives probability:
The likelihood that the state of nature will occur, based on hard facts and figures.
Rational decision and non- rational decision model:
Rational
Make optimal decision, possessing and understanding all information relevant to their
decisions at the time they are made.
Non-rational model
Information gathering and processing limitations make it difficult for managers to make
optimal decisions.

Rational decision:
Permits maximum achievement of an objective within limitations of environment in which
decisions are made. It merges the rationality of the decision maker and the decision into
sequence of basic steps:
1.

Problem awareness and diagnosis.

It include noticing, interpreting and incorporation

Noticing
Managers
Monitor
environmental
forces and decide which
are problems

Interpreting
Managers
Assess the forces they
have notice determine
what is causing it

Incorporation
Managers
Relate their interpretation
to the current or desired
state of their department/
organization to the future
problems.

2.

Set objectives
What to be achieve and by what date.

3.

Search for alternative solutions

Seeking additional information, thinking creative, consulting experts, undertaking.

Compare and evaluate alternative solutions.

Emphasizes expected results, including relative cost of each alternatives.

5.

Choose among alternative solution.

Final choice

6.

Implement the solution selected.