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PROFESSIONAL SKILLS FOR MANAGERS
DEPARTMENT OF COMMERCE AUXILIUM COLLEGE (Autonomous) (Re-accredited by the NAAC with A grade) Gandhi Nagar, Vellore.
Compiled by N. Fathima Thabassum Lecturer, Department of Commerce (Shift II) Auxilium College.
Unit I : Nature of Management: Introduction- Definition of management- Fayol’s Principles of management- Duties of manager- Skills of manager- Human SkillsTechnical Skills- Diagnostic skills- Role of managers- Interpersonal roles- Informational roles- Decisional roles- Practical Assignments.
Evolution of Management Thought
As the mind controls the human body and its functions, management (mind) controls the various activities (human body) in the Organisation. Management occupies the central place among production factors as it combines and co-ordinates all other resources.
Definition of Management:
Management is the art of getting things done through others. Henry Fayol defines as “To manage is “to forecast and plan, to organize, to command, to co-ordinate and to control.” According to Harold Koontz “ Management is the process of designing and maintaining an environment in which individuals, working together in groups efficiently to accomplish selected aims.” To sum up, • Managers carry out their managerial function • Applies to any kind of Organisation •Applies to managers at all Organisational levels •Aim is to create a surplus •Concerned with productivity, implies effectiveness and efficiency • Management of 4 M’s in the Organisation – Men, Machine, Materials and Money
Basic functions of Management:
Management operates through various functions, often classified as planning, organizing, staffing, leading/directing, controlling/ monitoring and Motivation. They are explained as follows:
Planning: Deciding what needs to happen in the future (today, next week, next month, next year, over the next 5 years, etc.) and generating plans for action. Organizing: (Implementation) making optimum use of the resources to carry out of plans successfully. Staffing: analysing the Job, recruiting, and hiring individuals for appropriate jobs. Leading/Directing: Determining what needs to be done in a situation and getting people to do it. Controlling/Monitoring: Checking progress against plans. Motivation: Motivation is also a kind of basic function of management, because without motivation, employees cannot work effectively. If motivation doesn't take place in an organization, then employees may not contribute to the other functions (which are usually set by top level management).
Fayol’s Principles of management:
Henry Fayol has set forth fourteen principles of management. They are as follows: 1. Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. 2. Authority. The right to issue commands, along with which must go the balanced responsibility for its function. 3. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management plays their part by providing good leadership. 4. Unity of Command. Each worker should have only one boss with no other conflicting lines of command.
5. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it. 6. Subordination of individual interest (to the general interest). Management must see that the goals of the firms are always paramount. 7. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system. 8. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its personnel. 9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels. 10. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection. 11. Equity. In running a business a ‘combination of kindliness and justice’ is needed. Treating employees well is important to achieve equity. 12. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely. 13. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of ‘personal vanity’ on the part of many managers. 14. Esprit de Corps. Management must foster the morale of its employees. He further suggests that: “real talent is needed to coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible jealousies and disturbing harmonious relations.”
Duties of Manager at different Levels of management
In organizations, there are generally three different levels of managers: first-level managers, middle-level managers, and top-level managers. These levels of managers are classified in a hierarchy of importance and authority, and are also arranged by the different types of management tasks that each role does. In many organizations, the number of managers in every level resembles a pyramid, in which the first-level has many more managers than middle-level and top-level managers, respectively. Each management level is explained below in specifications of their different responsibilities and likely job titles. Top-Level Managers Typically consist of Board of Directors, President, Vice President, Chief Executive Officers, etc. These individuals are mainly responsible for controlling and overseeing all the departments in the organization. They develop goals, strategic plans, and policies for the company, as well as make many decisions on the direction of the business. In addition, top-level managers play a significant role in the mobilization of outside resources and are for the most part responsible for the shareholders and general public. Middle-Level Managers Middle level managers typically consist of General Managers, Branch Managers, Department Managers, etc. These individuals are mainly responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. Their roles can be emphasized as executing plans of the organization in conformance with the company's policies and the objectives of the top management, they define and discuss information and policies from top management to lower management, and most importantly they inspire and provide guidance to lower level managers towards better performance.
Designing and implementing effective group and inter-group work and information systems.
• • •
Defining and monitoring group-level performance indicators. Diagnosing and resolving problems within and among work groups. Designing and implementing reward systems that support cooperative behavior.
First-Level Managers Typically consist of Supervisors, Section Officers, Foreman, etc. These individuals focus more on the controlling and direction of management functions. For instance, they assign tasks and jobs to employees, guide and supervise employees on day-to-day activities, look after the quantity and quality of the production of the company, make recommendations, suggestions, and communicate employee problems to the higher level above, etc. In this level, managers are the "image builders" of the company considering they are the only ones who have direct contact with employees.
• • • •
Basic supervision. Motivation. Career planning. Performance feedback.
In order to be effective, a manager must possess and continuously develop several essential skills. A successful practice of management depends upon such skills. Different writers suggest different types of skills required of managers. Regardless of organizational level, all managers must have five critical skills: technical skill, interpersonal skill, conceptual skill, diagnostic skill, and political skill. Technical Skill Technical skill involves understanding and demonstrating proficiency in a particular workplace activity. Technical skills are things such as using a computer word processing program, creating a budget, operating a piece of machinery, or preparing a presentation. The technical skills used will differ in each level of management. First-level managers
may engage in the actual operations of the organization; they need to have an understanding of how production and service occur in the organization in order to direct and evaluate line employees. Additionally, first-line managers need skill in scheduling workers and preparing budgets. Middle managers use more technical skills related to planning and organizing, and top managers need to have skill to understand the complex financial workings of the organization. Interpersonal Skill: Interpersonal skill involves human relations, or the manager's ability to interact effectively with organizational members. Communication is a critical part of interpersonal skill, and an inability to communicate effectively can prevent career progression for managers. Managers who have excellent technical skill, but poor interpersonal skill are unlikely to succeed in their jobs. This skill is critical at all levels of management. Conceptual Skill Conceptual skill is a manager's ability to see the organization as a whole, as a complete entity. It involves understanding how organizational units work together and how the organization fits into its competitive environment. Conceptual skill is crucial for top managers, whose ability to see "the big picture" can have major repercussions on the success of the business. However, conceptual skill is still necessary for middle and supervisory managers, who must use this skill to envision, for example, how work units and teams are best organized. Diagnostic Skill Diagnostic skill is used to investigate problems, decide on a remedy, and implement a solution. Diagnostic skill involves other skills—technical, interpersonal, conceptual, and politic. For instance, to determine the root of a problem, a manager may need to speak with many organizational members or understand a variety of informational documents. The difference in the use of diagnostic skill across the three levels of management is
primarily due to the types of problems that must be addressed at each level. For example, first-level managers may deal primarily with issues of motivation and discipline, such as determining why a particular employee's performance is flagging and how to improve it. Middle managers are likely to deal with issues related to larger work units, such as a plant or sales office. For instance, a middle-level manager may have to diagnose why sales in a retail location have dipped. Top managers diagnose organization-wide problems, and may address issues such as strategic position, the possibility of outsourcing tasks, or opportunities for overseas expansion of a business. Political Skill Political skill involves obtaining power and preventing other employees from taking away one's power. Managers use power to achieve organizational objectives, and this skill can often reach goals with less effort than others who lack political skill. Much like the other skills described, political skill cannot stand alone as a manager's skill; in particular, though, using political skill without appropriate levels of other skills can lead to promoting a manager's own career rather than reaching organizational goals. Managers at all levels require political skill; managers must avoid others taking control that they should have in their work positions. Top managers may find that they need higher levels of political skill in order to successfully operate in their environments. Interacting with competitors, suppliers, customers, shareholders, government, and the public may require political skill. These managerial skills are used by different managers. Top manager needs to have more conceptual skill than technical skill. They have to think about the future of the company (goal and objectives). Any small activities that support to achieve the goal and objectives are done by their employee. Top managers always think about the life of the business. Middle manager is doing more in the interpersonal skill. They have to meet many people, so they need interpersonal skill to communicate with people. Example: negotiators. The last one is Lower manager which need technical skill in their job. The lower managers are dealing with small activities that may lead to achieve the goal and objectives. These three
managers must have a good relationship each other, so that the objective and goals can be achieved.
In addition to the broad categories of management functions, managers in different levels of the hierarchy fill different managerial roles. These roles were categorized by researcher Henry Mintzberg, and they can be grouped into three major types: decisional, interpersonal, and informational. Decisional Roles: Decisional roles require managers to plan strategy and utilize resources. There are four specific roles that are decisional. The Entrepreneur Role requires the manager to assign resources to develop innovative goods and services, or to expand a business. Most of these roles will be held by top-level managers, although middle managers may be given some ability to make such decisions. The Disturbance Handler corrects unanticipated problems facing the organization from the internal or external environment. Managers at all levels may take this role. For example, first-line managers may correct a problem halting the assembly line or a middle level manager may attempt to address the aftermath of a store robbery. Top managers are more likely to deal with major crises, such as requiring a recall of defective products. The third decisional role that of Resource Allocator, involves determining which work units will get which resources. Top managers are likely to make large, overall budget decisions, while middle mangers may make more specific allocations. In some organizations, supervisory managers are responsible for determine allocation of salary raises to employees. Finally, the Negotiator works with others, such as suppliers, distributors, or labor unions, to reach agreements regarding products and services. First-level managers may negotiate with employees on issues of salary increases or overtime hours, or they may work with other supervisory managers when needed resources must be shared. Middle managers
also negotiate with other managers and are likely to work to secure preferred prices from suppliers and distributors. Top managers negotiate on larger issues, such as labor contracts, or even on mergers and acquisitions of other companies. Interpersonal Roles: Interpersonal roles require managers to direct and supervise employees and the organization. The Figurehead is typically a top of middle manager. This manager may communicate future organizational goals or ethical guidelines to employees at company meetings. A Leader acts as an example for other employees to follow. The leader gives commands and directions to subordinates, makes decisions, and mobilizes employee support. Managers must be leaders at all levels of the organization; often lower-level managers look to top management for this leadership example. In the role of Liaison, a manger must coordinate the work of others in different work units, establish alliances between others, and work to share resources. This role is particularly critical for middle managers, who must often compete with other managers for important resources, yet must maintain successful working relationships with them for long time periods. Informational Roles: Informational roles are those in which managers obtain and transmit information. These roles have changed dramatically as technology has improved. The Monitor evaluates the performance of others and takes corrective action to improve that performance. Monitors also watch for changes in the environment and within the company that may affect individual and organizational performance. Monitoring occurs at all levels of management, although managers at higher levels of the organization are more likely to monitor external threats to the environment than are middle or first-line managers.
The role of Disseminator requires that managers inform employees of changes that affect them and the organization. They also communicate the company's vision and purpose. Managers at each level disseminate information to those below them, and much information of this nature trickles from the top down. Finally, a Spokesperson communicates with the external environment, from advertising the company's goods and services, to informing the community about the direction of the organization. The spokesperson for major announcements, such as a change in strategic direction, is likely to be a top manager. But, other, more routine information may be provided by a manager at any level of a company. For example, a middle manager may give a press release to a local newspaper, or a supervisor manager may give a presentation at a community meeting.
Unit II: Planning Skills: Meaning of Planning- Steps in Planning- Types of Plans-Formal Vs Informal Planning- Practical Assignment.
Planning means looking ahead and chalking out future courses of action to be followed. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed programme regarding future courses of action. It is rightly said “Well plan is half done”. Therefore planning takes into consideration available and prospective human and physical resources of the organization so as to get effective co-ordination, contribution and perfect adjustment. It is the basic management function which includes formulation of one or more detailed plans to achieve optimum balance of needs or demands with the available resources.
Definition of Planning:
According to Koontz O’ Donnel “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are to where we want to go. It makes it possible for things to occur which would not otherwise happen” According to Urwick, “Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses”. Planning is deciding best alternative among others to perform different managerial functions in order to achieve predetermined goals.
Features of Planning:
1. Planning is goal-oriented. 2. Planning is done for future. 3. Planning is an intellectual process. It involves creative thinking, sound judgment and imagination. 4. Planning involves choice & decision making.
5. Planning is the primary function of management .It serves as a guide for organizing, staffing, directing and controlling. 6. Planning is designed for efficiency It leads to accomplishment of objectives at the minimum possible cost. 7. Since future is unpredictable, planning must provide enough room to cope with the changes in customer’s demand, competition, govt. policies etc.
Advantages of Planning:
1. Planning begins with determination of objectives. In fact, it makes objectives more clear and specific. 2. Planning facilitates co-ordination. 3. Planning minimizes uncertainties. 4. It helps in optimum utilization of resources and avoids wastage of resources by selecting most appropriate use that will contribute to the objective of enterprise. 5. It provides basis of controlling.
Disadvantages of Planning:
1. Planning is based on forecasts which are mere estimates about future. 2. Planning has tendency to make administration inflexible. 3. Planning is a time consuming process because it involves collection of information, it’s analysis and interpretation thereof. This entire process takes a lot of time specially where there are a number of alternatives available. 4. Collection, analysis and evaluation of different information, facts and alternatives involves a lot of expense in terms of time, effort and money.
5. External constraints such as government control, natural calamities and unforeseen events may create hurdles in the implementation of plans.
Steps in Planning:
The process of planning involves the following steps 1. Analysing environment: At the outset the internal and external environment is analyzed in order to identify company’s strengths and weaknesses (in internal environment)and opportunities and threats (existing in the external environment) this is also known as SWOT (Strengths Weaknesses Opportunities and Threats ) analysis . 2. Establishing objectives or goals: The objectives are established in the light of the environmental scanning (study).The objectives or goals are clearly defined in specific terms along with priorities in all the key areas of operations. The major problems associated with such objectives are also identified and defined, so that there may be special emphasis on their planned solutions. 3. Seeking necessary Information: All relevant data and facts are collected from internal and external sources such as Availability of supplies, physical and human recourses of the company, finance of disposal, relevant government policy etc then such collected information and factors are analyzed. These information can be used in two ways 1. To make necessary modifications in objective and goals 2. To take help them in premising assumption.
4. Establishing the planning premises: In order to develop consistent and coordinate plans, it is necessary that planning is based upon carefully considered assumption and predictions. 5. Identifying the alternative course of action: After established the goals or objective and taking other related steps , feasible alternative programs or course of action are searched out . Impossible or highly difficult propositions are left out . 6. Evaluating the alternatives: Problems consequences of each alternative course of action in terms of its pros and cons (eg. Cost, benefits, risks etc) are assessed and then relative importance of each of them is found out by looking at their overall individual strengths and limitations especially in the light of present objective and the environment of the company. 7. Selecting the alternative or Course of action: The alternative which appears to be most feasible and conducive to the accomplishment of company’s objective, is selecting the final plan of action as strategy.
Types of Plans:
Three major types of plans can help managers achieve their organization's goals: strategic, tactical, and operational. Operational plans lead to the achievement of tactical plans, which in turn lead to the attainment of strategic plans. In addition to these three types of plans, managers should also develop a contingency plan in case their original plans fail.
I. Operational plans An operational plan is one that a manager uses to accomplish his or her job responsibilities. Supervisors, team leaders, and facilitators develop operational plans to support tactical plans. Operational plans can be a single-use plan or an ongoing plan. Single Use Plan: Single-use plans apply to activities that do not recur or repeat. A one-time occurrence, such as a special sales program, is a single-use plan because it deals with who, what, where, how, and how much of an activity. A PROGRAM is a single use plan to carry out a special project within an organization. The Project itself is not intended to remain in existence over the entire life of the organization. Rather, it exists to achieve some purpose. If the plan is accomplished, it will contribute to the organization’s long term success. A BUDGET is a single user financial plan that covers a specified length of time. It details how funds will be spent on labour, raw materials, capital goods, information systems, marketing and so on, as well as how the funds will be obtained. Continuing or Ongoing plans: Continuing or ongoing plans are usually made once and retain their value over a period of years while undergoing periodic revisions and updates. The following are examples of ongoing plans: A POLICY is a standing plan that furnishes broad guidelines for taking action consistent with reaching organizational objectives. A PROCEDURE is a set of step-by-step directions that explains how activities or tasks are to be carried out. Procedures outline more specific actions than policies do. Organizations usually have many different sets of procedures covering the various tasks
to be accomplished. Managers must be careful to apply the appropriate organizational procedures for the situations they face and apply them properly. A RULE is a standing plan that designates specific required action. Rules are “do” and “don't” statements put into place to promote the safety of employees and the uniform treatment and behavior of employees. II. Tactical plans A tactical plan is concerned with what the lower level units within each division must do, how they must do it, and who is in charge at each level. Tactics are the means needed to activate a strategy and make it work. Tactical plans are concerned with shorter time frames and narrower scopes than are strategic plans. These plans usually span one year or less because they are considered short-term goals. Long-term goals, on the other hand, can take several years or more to accomplish. Normally, it is the middle manager's responsibility to take the broad strategic plan and identify specific tactical actions. III. Strategic plans A strategic plan is an outline of steps designed with the goals of the entire organization as a whole in mind, rather than with the goals of specific divisions or departments. Strategic planning begins with an organization's mission. Strategic plans look ahead over the next two, three, five, or even more years to move the organization from where it currently is to where it wants to be. Requiring multilevel involvement, these plans demand harmony among all levels of management within the organization. Top-level management develops the directional objectives for the entire organization, while lower levels of management develop compatible objectives and plans to achieve them. Top management's strategic plan for the entire organization becomes the framework and sets dimensions for the lower level planning.
IV. Contingency plans Intelligent and successful management depends upon a constant pursuit of adaptation, flexibility, and mastery of changing conditions. Contingency planning involves identifying alternative courses of action that can be implemented if and when the original plan proves inadequate because of changing circumstances. Keep in mind that events beyond a manager's control may cause even the most carefully prepared alternative future scenarios to go awry. Unexpected problems and events frequently occur. When they do, managers may need to change their plans. Anticipating change during the planning process is best in case things don't go as expected. Management can then develop alternatives to the existing plan and ready them for use when and if circumstances make these alternatives appropriate.
Formal Vs Informal Planning:
In an organisation, planning may be both formal and informal in nature. Informal planning takes place when a manager plans institutively without any structure or rigid framework while formal planning involves a structured process of investigation and action. Whatever be the form of planning, it is to be noted that planning is essentially future-oriented and a goal-oriented behaviour. It is also the first step of the managerial decision –making process and precedes all other managerial functions i.e., organising, leading and controlling.
Unit III: Organising and Decision making skills: Meaning of Organisation- Organisation Skills- Principles of sound organization-Types of organizations- Practical Assignment Organising is one of the fundamental management functions, which closely follows planning. Organising is the process of assigning duties and responsibilities, grouping of tasks on some rational basis, establishing the line of authority and allocating resources to carry out the organizational plans.
Definition of Organising:
Allen defines Organising as “ the process of identifying and grouping of the work to be performed, defining and delegating responsibility and authority and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing their objectives.” Koontz and O’Donnell defines as “ Organisation is the establishment of authority and relationships with provision for coordination between them, both vertically and horizontally in the enterprise structure.
Principles of Sound Organisation:
There are some general guiding principles, which help to form a good organization. There principles are. 1. Principle of Organization Objective: It should be same, consistent, defined and clear. It should aim at achieving high production with customer focus, growth and survival. At the core, there should be unity of objective. 2. Principle of Division of Work and Specialization: Every unit or person of an organization is assigned to a specific task and accomplishment. For this, there is a need to focus on specialization and assignment of specific work to individual.
3. Principle of Parity of Responsibility and Authority: Responsibility is the obligation on the path of a person towards the boss for completing the assigned task. It is also called as accountability. A person at a higher position in the organization exercises authority or power over his subordinates for getting the task done. Authority is vested in the superior of the organization so as to extract work from subordinates. Therefore, authority is always associated with responsibility to get things done. There should be a balance between authority and responsibility. 4. Principle of Functional Definition: Each employee must be assigned specific task, role, relationship and job-related activities. What is expected of him, must be defined in the organization. 5. Principle of Scalar Chain: Scalar chain, chain of command or line of authority, means that there should be a continuous line of authority (or scalar chain) from top of the organizational pyramid to the lower levels. The chain provides a superior-subordinate relationship. Levels above in the chain are superiors while lower levels in the scalar chain are subordinates. Scalar chain is useful in the delegation of authority down the chain. It is also useful in maintaining effective communication between different layers of the organization. 6. Principle of Unity of Command: Unity of command means that there should be only one source of authority for each subordinate. This also means: one subordinate-one boss. The principle of unit of command is important for maintaining discipline and for fixing responsibility for the result. 7. Principle of Balance: All the techniques and values of the organizations must be effectively balanced. Many issues have divergent focus in organization. These are: line vs. staff; centralization vs. decentralization, unity of command vs. specialization, vertical hierarchy vs. span of control, etc. Proper balance between these issues must be maintained.
8. Principle of Flexibility: Flexibility means adaptability to change. This is needed due to uncertainty, scope for diversification and growth, new opportunity, and competitive forces in the environment. Organization-design should have some in-built flexibility to withstand the rebaptism, excessive control, complicated procedure, etc. 9. Principle of delegation: Authority needs to be delegated in the organization. Delegation is for empowering the subordinates to achieve results. 10. Principle of Efficiency: Organization structure should be useful in achieving the optimum utilization of resources at least cost and least effort. Considering system view of the organization (which is input-processing-output framework), the maximization of output and minimization of inputs will improve the efficiency. 11. Principle of Continuity: Continuity means survival and existence despite turbulence in market forces. Therefore, the organization must look at long-term goals rather than mere profit-making and short-terms goals. 12. Principle of Cooperation: Cooperation means involvement as a team and solving the functional goal of the organization as one unit. This can be achieved by evolving a proper code of conduct, rule of business, conflict resolution mechanism and cooperation. 13. Principle of Coordination: There are many functions, such as marketing, finance, HRD, etc., in an organization. Different groups have different priorities and local level objectives. Proper coordination is needed to work in one direction and for achieving the overall (global) corporate goals. Proper communication, meetings, news-letters, etc., are helpful to achieve this. 14. Principle of Span of Control: Any superior can handle only limited numbers of subordinates. Narrow span of control is useful for complex jobs while wider span of control is useful for routine type of jobs. By span of control, we mean how many subordinates a manager (or, superior) can handle.
Types of Organisations:
1. Line Organisation. This is the oldest as well as the most common type of organisation. It is still used by many concerns especially the small ones. It is also known as the “Military System” as this type of organisation is usually found in the army. The characteristic feature of this type is that line of authority flows vertically form the top most executive to the lowest subordinate throughout the entire organisational structure. The authority is greatest at the top and reduces through each successive level down the organisational scale. A variation of the pure line organisation is the departmental line organisation, under which the business enterprise is divided into several departments and the authority flows downward from the General Manger through the departmental managers to the lower subordinates. The departmental heads are independent of each other and enjoy equal status. 2. Functional Organisation. In this type of organisation the personnel and their work are organised on the basis of the same type of work of activities. All works of the same type are grouped together and brought under one department managed by an executive who is an expert. Thus there are separate functional departments, for the major functions of the business viz., engineering or production, purchase, sales, finance personnel etc. Each department performs its specialised function for the entire organisation. For example, the purchase department deals with purchases on behalf of the entire organisation, and so on. Now-a-days almost all business concerns usually follow some sort of functional plan to carry out the primary functions of business. However, it is the rare to find a pure functional organisation and there is always an element of line organisation mixed with it. 3. Line and Staff Organisation. In order to avoid the defects of the line and functional types of organisation, too much concentration of control in the former and too much division of the same in the latter, the line and staff organisation was evolved. It seeks to strike a balance between the first two types. Under this type, the organisational structure is basically that of the line organisation, but “Staff, officers of functional experts are engaged to advise the line officers in the performance of their duties. Line officers are the executives, and the staff officers are their advisers. Being a combination of the Line and
Functional organisations, it has the advantages suited for large concerns. A large-size business concern, with its multifarious functions of complicated nature needs an organisation where there will be an unbroken line of authority and responsibility so that responsibility can be fixed, discipline can be maintained and decision-making and execution can be prompt. At the same time, it requires that a high degree of specialisation and co-ordination of functions are achieved without which efficiency is bound to suffer. The Line and Staff organisation caters to both these needs. The Line officers make the decisions and issue instructions to subordinates, the staff officers have no authority to issue instructions. But in their decision-making function, the Line officers receive advice and guidance from the Staff Officers. 4. Committee Organisation. A committee means a body of persons entrusted with discharging some assigned functions collectively as a group. Committees may be permanent (standing) or temporary (adhoc) bodies. Committees are found to exist in different areas and levels of an organizational structure, in both business and nonbusiness institutions. Because of its advantages, the committee form of organisation is very often preferred by different concerns. However, a committee organisation is rarely found in its pure form, it is usually found in addition to a line and staff organisation.
Decision making is an integral part of every manager’s job. A decision is a calculated choice from available alternatives and is the outcome of judgment and evaluation. Decision Making is a goal oriented activity. It is the process of choosing a course of action from available alternatives. This process involves understanding the problem, collecting information, developing and evaluating alternatives, choice of the solution and its evaluation. It is the end result of deliberations and reasoning.
Definition of Decision Making:
Allen defines decision making as “the work a manager performs to arrive at conclusions and judgment” According to Haynes and Massie, “Decision making is a process of selection from a set of alternative courses of action which is thought to fulfill the objective of the decision problem more satisfactorily than others “
Steps Involved In Decision Making Process
Decision-making involves a number of steps which need to be taken in a logical manner. This is treated as a rational or scientific 'decision-making process' which is lengthy and time consuming. Such lengthy process needs to be followed in order to take rational/scientific/result oriented decisions. Decision-making process prescribes some rules and guidelines as to how a decision should be taken / made. This involves many steps logically arranged. It was Peter Drucker who first strongly advocated the scientific method of decision-making in his world famous book 'The Practice of Management' published in 1955. Drucker recommended the scientific method of decision-making which, according to him, involves the following six steps: 1. 2. 3. 4. 5. 6. Defining / Identifying the managerial problem, Analyzing the problem, Developing alternative solutions, Selecting the best solution out of the available alternatives, Converting the decision into action, and Ensuring feedback for follow-up.
The figure given below suggests the steps in the decision-making process:-
1. Identifying the Problem: Identification of the real problem before a business enterprise is the first step in the process of decision-making. It is rightly said that a problem welldefined is a problem half-solved. Information relevant to the problem should be gathered so that critical analysis of the problem is possible. This is how the problem can be diagnosed. Clear distinction should be made between the problem and the symptoms which may cloud the real issue. In brief, the manager should search the 'critical factor' at work. It is the point at which the choice applies. Similarly, while diagnosing the real problem the manager should consider causes and find out whether they are controllable or uncontrollable. 2. Analyzing the Problem: After defining the problem, the next step in the decisionmaking process is to analyze the problem in depth. This is necessary to classify the problem in order to know who must take the decision and who must be informed about the decision taken. Here, the following four factors should be kept in mind: a. Futurity of the decision, b. The scope of its impact, c. Number of qualitative considerations involved, and d. Uniqueness of the decision.
3. Collecting Relevant Data: After defining the problem and analyzing its nature, the next step is to obtain the relevant information/ data about it. There is information flood in the business world due to new developments in the field of information technology. All available information should be utilised fully for analysis of the problem. This brings clarity to all aspects of the problem. 4. Developing Alternative Solutions: After the problem has been defined, diagnosed on the basis of relevant information, the manager has to determine available alternative courses of action that could be used to solve the problem at hand. Only realistic alternatives should be considered. It is equally important to take into account time and cost constraints and psychological barriers that will restrict that number of alternatives. If necessary, group participation techniques may be used while developing alternative solutions as depending on one solution is undesirable. 5. Selecting the Best Solution: After preparing alternative solutions, the next step in the decision-making process is to select an alternative that seems to be most rational for solving the problem. The alternative thus selected must be communicated to those who are likely to be affected by it. Acceptance of the decision by group members is always desirable and useful for its effective implementation. 6. Converting Decision into Action: After the selection of the best decision, the next step is to convert the selected decision into an effective action. Without such action, the decision will remain merely a declaration of good intentions. Here, the manager has to convert 'his decision into 'their decision' through his leadership. For this, the subordinates should be taken in confidence and they should be convinced about the correctness of the decision. Thereafter, the manager has to take follow-up steps for the execution of decision taken. 7. Ensuring Feedback: Feedback is the last step in the decision-making process. Here, the manager has to make built-in arrangements to ensure feedback for continuously testing actual developments against the expectations. It is like checking the effectiveness of follow-up measures. Feedback is possible in the form of organised information, reports and
personal observations. Feed back is necessary to decide whether the decision already taken should be continued or be modified in the light of changed conditions. Every step in the decision-making process is important and needs proper consideration by managers. Decisions are frequently needed in the management process. However, such decisions should be appropriate, timely and rational. Faulty and hasty decisions are wrong and even dangerous. This clearly suggests that various advantages of decisionmaking are available only when scientific decisions are taken by following the procedure of decision-making in an appropriate manner.
Unit IV: Leadership Skills: Definition and meaning of leadership- Types of leadersMotivation Communication skills: Meaning and Process of Communication-Characteristics of effective communication- Forms of Communication – Barriers of Communication
Leadership is the process involving two or more people in which one attempts to influence the others behaviour towards the accomplishment of some goals .A leader is one who guides and directs other people. He gives the efforts of his followers a directional purpose by influencing their behaviour. Without effective leadership, it is difficult for any enterprise to function effectively. A manager will be a leader only if he is successful in influencing and motivating his subordinates to work enthusiastically to accomplish the stated goals.
Definition of Leadership:
Koontz and O Donnel : “ Leadership is the ability of a manager to induce subordinates to work with confidence and zeal.” George R Terry : “ Leadership is the activity of influencing people to strive willingly for mutual objectives”.
Characteristics of an Effective Leader:
1) Honest 2) Forward-Looking 3) Competent 4) Inspire and Emphasize good qualities in others. 5) Intelligent 6) Have Confidence and Belief. 7) Tactful
8) Truly Humble - Lead to Serve 9) Non-Judgmentally Observant 10) Face and Solve Problems 11) demonstrate good teamwork 12) Stimulates innovation and learning. 13) Effective interaction at all levels with their customers and external experts. 14) Communicate Consistently, Clearly, Concisely 15) Give Clear Direction 16) Willing to admit Mistakes. 17) Have a Sense of Humor
Types of Leaders or Leadership Styles:
In the past several decades, management experts have undergone a revolution in how they define leadership and what their attitudes are toward it. They have gone from a very classical autocratic approach to a very creative, participative approach. Somewhere along the line, it was determined that not everything old was bad and not everything new was good. Rather, different styles were needed for different situations and each leader needed to know when to exhibit a particular approach. Four of the most basic leadership styles are: --Autocratic --Bureaucratic --Laissez-faire --Democratic Autocratic Leadership Style This is often considered the classical approach. It is one in which the manager retains as much power and decision-making authority as possible. The manager does not consult
employees, nor are they allowed to give any input. Employees are expected to obey orders without receiving any explanations. The motivation environment is produced by creating a structured set of rewards and punishments. Most people tend to resent being treated like this. Because of this, autocratic leadership usually leads to high levels of absenteeism and staff turnover. For some routine and unskilled jobs, the style can remain effective where the advantages of control outweigh the disadvantages. Bureaucratic Leadership Style Bureaucratic leadership is where the manager manages "by the book¨. Everything must be done according to procedure or policy. If it isn't covered by the book, the manager refers to the next level above him or her. This manager is really more of a police officer than a leader. He or she enforces the rules. This is a very appropriate style for work involving serious safety risks (such as working with machinery, with toxic substances or at heights) or where large sums of money are involved (such as cash handling)
Democratic Leadership Style The democratic leadership style is also called the participative style as it encourages employees to be a part of the decision making. The democratic manager keeps his or her employees informed about everything that affects their work and shares decision making and problem solving responsibilities. This style requires the leader to be a coach who has the final say, but gathers information from staff members before making a decision. As participation takes time, this approach can take more time, but often the end result is better. The approach can be most suitable where team working is essential, and quality is more important than speed to market or productivity. Laissez-Faire Leadership Style The laissez-faire leadership style is also known as the "hands-off¨ style. It is one in which the manager provides little or no direction and gives employees as much freedom as possible. All authority or power is given to the employees and they must determine goals, make decisions, and resolve problems on their own. It can be effective if the leader
monitors what is being achieved and communicates this back to his or her team regularly. Most often, laissez-faire leadership works for teams in which the individuals are very experienced and skilled self-starters. Unfortunately, it can also refer to situations where managers are not exerting sufficient control.
Motivation is one of the most important factors determining organizational efficiency. All organizational facilities will go to waste in absence of motivated people to utilize these facilities effectively. Every superior in the organization must motivate its subordinates for the right types of behavior. The performance of human beings in the organization is dependent on the ability in the motivation. Rensis Likert called motivation as" the cost of the management". Motivation is an effective instrument in the hands of management in inspiring the workforce. Motivation increases the willingness of the workers to work, thus increasing efficiency and effectiveness of the organization.
Motivation is an important factor which brings employees satisfaction. This can be done by keeping into mind and framing an incentive plan for the benefit of the employees. This could initiate the following things: a. Monetary and non-monetary incentives, b. Promotion opportunities for employees, c. Disincentives for inefficient employees
Definition of Motivation:
Motivation may be defined as the process of stimulating someone to adopt at desired course of action
Robert Dubin has defined motivation as “Something that moves the person to action and continues him in the course of action already initiated “.
Importance of Motivation:
The following are the importance of motivation in the organization: 1. Best utilization of resources: - Motivation ensures best and efficient utilization of all types of resources. Utilization of resources is possible to their fullest extent if the man is induced to contribute their efforts towards attaining organizational goals. Thus, people should be motivated to carry out the plans, policies and programmes laid down by the organization. 2. Will to Contribute: - there is a difference between "Capacity to work" and "willingness to work". One can be physically and mentally fit to work but he may not be willing to work. Motivation results in feeling of involvement to present his better performance. Thus, motivation bridges the gap between capacity to work and willingness to work. 3. Reduction in Labor Problems: - all the members try to concentrate their efforts to achieve the objectives of the organization and carry out plans in accordance with the policies and programmes laid down by the organization if the management introduced motivational plans. It reduces labor problems like labor turnover, absenteeism, indiscipline, grievances, etc. because their real wages increase by the motivational plans. 4. Sizeable increase in production and productivity: - when motivated properly, people try to put efforts produce more, thus increasing their efficiency and as a result of this general production and productivity of the organization increases. They (motivated employees) use the methods, system and technology effectively in the best interest of the organization. 5. Basis of Cooperation: - In a zeal to produce more the member's work 'an s a team to pull the weight effectively, to get their loyalty to the group and the organization, to carry
out properly the activities allocated and generally to play an efficient part in achieving the purpose which the organization has undertaken'. Thus, motivation is a basis of cooperation to get, the best result out of the efforts of the human beings on the job. 6. Improvement upon skill and knowledge:- all the members will try to be efficient as possible and will try it improve upon the skill and knowledge to the progress of the organization which, in turn will provide the promised and more, ultimately enabling them to satisfy their needs - personal and social both. 7. Acceptance of organizational change: - change is the law of nature. Due to several changes in the society, changes in technology, value system, etc. organization has to incorporate these changes to cope with the requirement of the time. If people are effectively motivated, they gladly accept, introduce and implement these changes without reserving any resistance to change and negative attitude, thus keeping the organization on the right track of progress. 8. Better Image: - a firm that provides opportunities for the advancement of its people has a better image in the minds of the public as a good employer. This, image helps in attracting qualified personnel and thus simplifies the staffing function. This will also improve employee satisfaction and reduce industrial stifle. In a nutshell, to achieve the organizational and individual goals in an economical and efficient manner, motivation is an important tool in the hands of management to direct the behavior of subordinates in the desired and appropriate direction and thus minimize the wastage of human and other resources
Communication is essence of management. The basic functions of management (Planning, Organizing, Staffing, Directing and Controlling) cannot be performed well without effective communication. Organizations these days are very large. It involves number of people. There are various levels of hierarchy in an organization. There should be effective communication between superiors and subordinated in an organization,
between organization and society at large (for example between management and trade unions). It is essential for success and growth of an organization. Communication gaps should not occur in any organization. But now with advent of technology, we have cell phones, video conferencing, emails, and satellite communication to support business communication. Effective business communication also helps in building goodwill of an organization.
Definition of Communication:
According to Theo Haimann , “Communication is the process of passing information and understanding from one person to another. It is the process of imparting ideas and making oneself understood by other”.
Process of Communication:
Communication is a process of exchanging verbal and non verbal messages.
It is a
continuous process. Pre-requisite of communication is a message. This message must be conveyed through some medium to the recipient. It is essential that this message must be understood by the recipient in same terms as intended by the sender. He must respond within a time frame. Thus, communication is a two way process and is incomplete without a feedback from the recipient to the sender on how well the message is understood by him.
Message Sender Encoding Media Decoding Receiver
Response Communication Process
The main components of communication process are as follows: 1. Context - Communication is affected by the context in which it takes place. This context may be physical, social, chronological or cultural. Every communication proceeds with context. The sender chooses the message to communicate within a context. 2. Sender / Encoder - Sender / Encoder is a person who sends the message. A sender makes use of symbols (words or graphic or visual aids) to convey the message and produce the required response. For instance - a training manager conducting training for new batch of employees. Sender may be an individual or a group or an organization. The views, background, approach, skills, competencies, and knowledge of the sender have a great impact on the message. The verbal and non verbal symbols chosen are essential in ascertaining interpretation of the message by the recipient in the same terms as intended by the sender. 3. Message - Message is a key idea that the sender wants to communicate. It is a sign that elicits the response of recipient. Communication process begins with deciding about the message to be conveyed. It must be ensured that the main objective of the message is clear.
4. Medium - Medium is a means used to exchange / transmit the message. The sender must choose an appropriate medium for transmitting the message else the message might not be conveyed to the desired recipients. The choice of appropriate medium of communication is essential for making the message effective and correctly interpreted by the recipient. This choice of communication medium varies depending upon the features of communication. For instance Written medium is chosen when a message has to be conveyed to a small group of people, while an oral medium is chosen when spontaneous feedback is required from the recipient as misunderstandings are cleared then and there. 5. Recipient / Decoder - Recipient / Decoder is a person for whom the message is intended / aimed / targeted. The degree to which the decoder understands the message is dependent upon various factors such as knowledge of recipient, their responsiveness to the message, and the reliance of encoder on decoder. 6. Feedback - Feedback is the main component of communication process as it permits the sender to analyze the efficacy of the message. It helps the sender in confirming the correct interpretation of message by the decoder. Feedback may be verbal (through words) or non-verbal (in form of smiles, sighs, etc.). It may take written form also in form of memos, reports, etc.
Characteristics of effective communication:
Effective communication is a part and parcel of any successful organization. A communication should be free from barriers so as to be effective. Communication is a two way process where the message sent by the sender should be interpreted in the same terms by the recipient. There are 7 C’s of effective communication which are applicable to both written as well as oral communication. They are Completeness, Conciseness , Consideration, Clarity, Concreteness, Courtesy, Correctness. The following are the characteristics of effective communication:
1. Clarity of Purpose: The message to be delivered must be clear in the mind of sender. The person to whom it is targeted and the aim of the message should be clear in the mind of the sender. 2. Completeness: The message delivered should not be incomplete. It should be supported by facts and observations. It should be well planned and organized. No assumptions should be made by the receiver. 3. Conciseness: The message should be concise. It should not include any unnecessary details. It should be short and complete. 4. Feedback: Whether the message sent by the sender is understood in same terms by the receiver or not can be judged by the feedback received. The feedback should be timely and in personal. It should be specific rather than general. 5. Empathy: Empathy with the listeners is essential for effective verbal communication. The speaker should step into the shoes of the listener and be sensitive to their needs and emotions. This way he can understand things from their perspective and make communication more effective. 6. Modify the message according to the audience: The information requirement by different people in the organization differs according to their needs. What is relevant to the middle level management might not be relevant to the top level of management. Use of jargons should be minimized because it might lead to misunderstanding and misinterpretations. The message should be modified according to the needs and requirements of the targeted audience. 7. Multiple Channels of communication: For effective communication multiple channels should be used as it increases the chances of clarity of message. The message is reinforced by using different channels and there are less chances of deformation of message. 8. Make effective use of Grapevine (informal channel of communication): The employees and managers should not always discourage grapevine. They should make effective use of grapevine. The managers can use grapevine to deliver formal messages and for identification of issues which are significant for the employees. The managers can get to know the problems faced by the employees and can work upon it.
Media or Methods or Forms of Communication:
1. Oral Communication 2. Written Communication 3. Gestural Communication Oral Communication Oral Communication involves exchange of messages through spoken words. It may take place. i) by face- to face contacts ii) through mechanical devices like telephone. Oral or Verbal communication offers the following advantages: 1. Economical 2. Personal touch 3. Speed 4. Flexibility 5. Quick response Oral Communication suffers from the following weaknesses1. Lack of record 2. Time Consuming 3. Lengthy message 4. Physical distance 5. Misunderstanding Written Communication Written Communication is transmitted through written words in the form of letter, circular, memos, bulletins, instruction cards, manuals, handbooks, reports, returns, Merits of written communication are: 1. Effectiveness 2. Lengthy messages 3. Economical 4. Repetition 5. Permanent record
6. Better response Demerits of written communication are: 1. Time Consuming 2. Expensive 3. Inflexibility 4. Little secrecy 5. Lack of personal touch 6. Misunderstanding Gestural Communication A gesture is a form of non-verbal communication in which visible bodily actions communicate particular messages, either in place of speech or together and in parallel with spoken words. Gestures are communications like facial expressions, hand signals, eye gazing, and body postures. Examples include smiles, handshakes, waving, and raising certain fingers to say something. Gestures allow individuals to communicate a variety of feelings and thoughts, from contempt and hostility to approval and affection, often together with body language in addition to words when they speak.
Barriers to Communication
Following are the main communication barriers: 1. Perceptual and Language Differences: Perception is generally how each individual interprets the world around him. All generally want to receive messages which are significant to them. But any message which is against their values is not accepted. A same event may be taken differently by different individuals. For example :A person is on leave for a month due to personal reasons (family member being critical). The HR Manager might be in confusion whether to retain that employee or not, the immediate manager might think of replacement because his teams productivity is being hampered, the family members might take him as an emotional support.
The linguistic differences also lead to communication breakdown. Same word may mean different to different individuals. For example: consider a word “value”. a. What is the value of this Laptop? b. I value our relation? c. What is the value of learning technical skills? “Value” means different in different sentences. Communication breakdown occurs if there is wrong perception by the receiver. 2. Information Overload: Managers are surrounded with a pool of information. It is essential to control this information flow else the information is likely to be misinterpreted or forgotten or overlooked. As a result communication is less effective. 3. Inattention: At times we just not listen, but only hear. For example a traveler may pay attention to one “NO PARKING” sign, but if such sign is put all over the city, he no longer listens to it. Thus, repetitive messages should be ignored for effective communication. Similarly if a superior is engrossed in his paper work and his subordinate explains him his problem, the superior may not get what he is saying and it leads to disappointment of subordinate. 4. Time Pressures: Often in organization the targets have to be achieved within a specified time period, the failure of which has adverse consequences. In a haste to meet deadlines, the formal channels of communication are shortened, or messages are partially given, i.e., not completely transferred. Thus sufficient time should be given for effective communication. 5. Distraction/Noise: Communication is also affected a lot by noise to distractions. Physical distractions are also there such as, poor lightning, uncomfortable sitting, unhygienic room also affects communication in a meeting. Similarly use of loud speakers interferes with communication.
6. Emotions: Emotional state at a particular point of time also affects communication. If the receiver feels that communicator is angry he interprets that the information being sent is very bad. While he takes it differently if the communicator is happy and jovial (in that case the message is interpreted to be good and interesting). 7. Complexity in Organizational Structure: Greater the hierarchy in an organization (i.e. more the number of managerial levels), more is the chances of communication getting destroyed. Only the people at the top level can see the overall picture while the people at low level just have knowledge about their own area and a little knowledge about other areas. 8. Poor retention: Human memory cannot function beyond a limit. One cant always retain what is being told specially if he is not interested or not attentive. This leads to communication breakdown.
Unit V: Co-ordination and controlling skills: Types of co-ordination- Techniques of Co-ordination-Definition of Control- Control Process- Techniques of Control – Measurement of Performance.
Co-ordination is the unification, integration, synchronization of the efforts of group members so as to provide unity of action in the pursuit of common goals. It is a hidden force which binds all the other functions of management. Management seeks to achieve co-ordination through its basic functions of planning, organizing, staffing directing and controlling. Therefore, co-ordination is not a separate function of management because achieving of harmony between individuals efforts towards achievement of group goals is a key to success of management. Co-ordination is the essence of management and is implicit and inherent in all functions of management.
Definition of Co-ordination:
According to Mooney and Reelay, “Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals”. According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding”. In the words of Haimann, “Co-ordination is the orderly synchronisation of efforts of the subordinates to provide the proper amount, timing and quality of execution so that their unified efforts lead to the stated objective, namely the common purpose of the enterprise.”
Types of co-ordination:
The co-ordination may be divided on different bases, namely;
1. Scope – on the basis of scope or coverage, co-ordination can be. a) Internal – refers to co-ordination between the different units of an organisation within and is achieved by integrating the goals and activities of different departments of the enterprise. b) External – refers to co-ordination between an organisation and its external environment comprising government, community, customers, investors, suppliers, competitors, research institutions, etc. It requires proper match between policies and activities of the enterprise and the outside world. 2. Flow – on the basis of flow, co-ordination can classified into: a) Vertical – implies co-ordination between different levels of the organisation and has to ensure that all the levels in the organisation act in harmony and in accordance with the goals and policies of the organisation. Vertical co-ordination is assured by top management through delegation of authority. b) Horizontal or lateral – refers to co-ordination between different departments and other units at the same level of the management hierarchy. For instance, co-ordination between production department and marketing department is horizontal or lateral coordination. Co-ordination may also be: 3. Procedural and substantive – which according to Herbert A. Simon, procedural coordination implies the specification of the organisation in itself, i.e. the generalised description of the behaviour and relationship of the members of the organisation. On the other hand, substantive co-ordination is concerned with the content of the organisation’s activities. For instance, in an automobile plant an organisation chart is an aspect of procedural co-ordination, while blueprints for the engine block of the car being manufactured are an aspect of substantive co-ordination.
Techniques of co-ordination:
The main techniques of effective co-ordination are as follows. 1. Sound planning – unity of purpose is the first essential condition of co-ordination. Therefore, the goals of the organisation and the goals of its units must be clearly defined. Planning is the ideal stage for co-ordination. Clear-cut objectives, harmonised policies and unified procedures and rules ensure uniformity of action. 2. Simplified organisation – a simple and sound organisation is an important means of co-ordination. The lines of authority and responsibility from top to the bottom of the organisation structure should be clearly defined. Clear-cut authority relationships help to reduce conflicts and to hold people responsible. Related activities should be grouped together in one department or unit. Too much specialisation should be avoided as it tends to make every unit an end in itself. 3. Effective communication – open and regular communication is the key to coordination. Effective interchange of opinions and information helps in resolving differences and in creating mutual understanding. Personal and face-to-face contacts are the most effective means of communication and co-ordination. Committees help to promote unity of purpose and uniformity of action among different departments. 4. Effective leadership and supervision – effective leadership ensures co-ordination both at the planning and execution stage. A good leader can guide the activities of his subordinates in the right direction and can inspire them to pull together for the accomplishment of common objectives. Sound leadership can persuade subordinates to have identity of interest and to adopt a common outlook. Personal supervision is an important method of resolving differences of opinion. 5. Chain of command – authority is the supreme co-ordinating power in an organisation. Exercise of authority through the chain of command or hierarchy is the
traditional means of co-ordination. Co-ordination between interdependent units can be secured by putting them under one boss. 6. Indoctrination and incentives – indoctrinating organisational members with the goals and mission of the organisation can transform a neutral body into a committed body. Similarly incentives may be used to create mutuality of interest and to reduce conflicts. For instance, profit-sharing is helpful in promoting team-spirit and co-operation between employers and workers. 7. Liaison departments – where frequent contacts between different organisational units are necessary, liaison officers may be employed. For instance, a liaison department may ensure that the production department is meeting the delivery dates and specifications promised by the sales department. Special co-ordinators may be appointed in certain cases. For instance, a project co-ordinator is appointed to co-ordinate the activities of various functionaries in a project which is to be completed within a specified period of time. 8. General staff – In large organisations, a centralised pool of staff experts is used for coordination. A common staff group serves as the clearing house of information and specialised advice to all department of the enterprise. Such general staff is very helpful in achieving inter-departmental or horizontal co-ordination. Task forces and projects teams are also useful in co-ordination. 9. Voluntary co-ordination – when every organisational unit appreciates the workings of related units and modifies its own functioning to suit them, there is self-co-ordination. Self-co-ordination or voluntary co-ordination is possible in a climate of dedication and mutual co-operation. It results from mutual consultation and team-spirit among the members of the organisation. However, it cannot be a substitute for the co-coordinative efforts of managers.
Control means the power or authority to direct, order or restrain. Control requires two things .First, that there is a clear-cut and specific plan according to which work is to proceed. Secondly, that there is a possibility to measure the results of operations with a view to detecting deviations. Only then the action can be taken to prevent or correct deviations. In an enterprise, naturally, it is the task of the manager to control the performance of work and the workers placed under his charge.
Definition of Control
Def. Koontz and O’Donnell “ The managerial function of controlling is the measurement and correction of the performance of activities of subordinates in order to make sure that enterprise objectives and the plans devised to attain them are being accomplished”
The Organizational Control Process
The control process involves carefully collecting information about a system, process, person, or group of people in order to make necessary decisions about each. Managers set up control systems that consist of four key steps: 1. Establish standards to measure performance. Within an organization's overall strategic plan, managers define goals for organizational departments in specific, operational terms that include standards of performance to compare with organizational activities. 2. Measure actual performance. Most organizations prepare formal reports of performance measurements that managers review regularly. These measurements should be related to the standards set in the first step of the control process. For example, if sales growth is a target, the organization should have a means of gathering and reporting sales data.
3. Compare performance with the standards. This step compares actual activities to performance standards. When managers read computer reports or walk through their plants, they identify whether actual performance meets, exceeds, or falls short of standards. Typically, performance reports simplify such comparison by placing the performance standards for the reporting period alongside the actual performance for the same period and by computing the variance—that is, the difference between each actual amount and the associated standard. 4. Take corrective actions. When performance deviates from standards, managers must determine what changes, if any, are necessary and how to apply them. In the productivity and quality-centered environment, workers and managers are often empowered to evaluate their own work. After the evaluator determines the cause or causes of deviation, he or she can take the fourth step—corrective action. The most effective course may be prescribed by policies or may be best left up to employees' judgment and initiative. These steps must be repeated periodically until the organizational goal is achieved.
Organizational Control Techniques
Control techniques provide managers with the type and amount of information they need to measure and monitor performance. The information from various controls must be tailored to a specific management level, department, unit, or operation. To ensure complete and consistent information, organizations often use standardized documents such as financial, status, and project reports. Each area within an organization, however, uses its own specific control techniques, described in the following sections. I. Financial controls After the organization has strategies in place to reach its goals, funds are set aside for the necessary resources and labor. As money is spent, statements are updated to reflect how
much was spent, how it was spent, and what it obtained. Managers use these financial statements, such as an income statement or balance sheet, to monitor the progress of programs and plans. Financial statements provide management with information to monitor financial resources and activities. The income statement shows the results of the organization's operations over a period of time, such as revenues, expenses, and profit or loss. The balance sheet shows what the organization is worth (assets) at a single point in time, and the extent to which those assets were financed through debt (liabilities) or owner's investment (equity). Financial audits, or formal investigations, are regularly conducted to ensure that financial management practices follow generally accepted procedures, policies, laws, and ethical guidelines. Audits may be conducted internally or externally. Financial ratio analysis examines the relationship between specific figures on the financial statements and helps explain the significance of those figures: Liquidity ratios measure an organization's ability to generate cash. Profitability ratios measure an organization's ability to generate profits. Debt ratios measure an organization's ability to pay its debts. Activity ratios measure an organization's efficiency in operations and use of assets. In addition, financial responsibility centers require managers to account for a unit's progress toward financial goals within the scope of their influences. A manager's goals and responsibilities may focus on unit profits, costs, revenues, or investments. II. Budget controls A budget depicts how much an organization expects to spend (expenses) and earn (revenues) over a time period. Amounts are categorized according to the type of business activity or account, such as telephone costs or sales of catalogs. Budgets not only help managers plan their finances, but also help them keep track of their overall spending.
A budget, in reality, is both a planning tool and a control mechanism. Budget development processes vary among organizations according to who does the budgeting and how the financial resources are allocated. Some budget development methods are as follows: Top-down budgeting. Managers prepare the budget and send it to subordinates. Bottom-up budgeting. Figures come from the lower levels and are adjusted and coordinated as they move up the hierarchy. Zero-based budgeting. Managers develop each new budget by justifying the projected allocation against its contribution to departmental or organizational goals. Flexible budgeting. Any budget exercise can incorporate flexible budgets, which set “meet or beat” standards that can be compared to expenditures. III. Marketing controls Marketing controls help monitor progress toward goals for customer satisfaction with products and services, prices, and delivery. The following are examples of controls used to evaluate an organization's marketing functions: Market research gathers data to assess customer needs—information critical to an organization's success. Ongoing market research reflects how well an organization is meeting customers' expectations and helps anticipate customer needs. It also helps identify competitors. Test marketing is small-scale product marketing to assess customer acceptance. Using surveys and focus groups, test marketing goes beyond identifying general requirements and looks at what (or who) actually influences buying decisions.
Marketing statistics measure performance by compiling data and analyzing results. In most cases, competency with a computer spreadsheet program is all a manager needs. Managers look at marketing ratios, which measure profitability, activity, and market shares, as well as sales quotas, which measure progress toward sales goals and assist with inventory controls. Unfortunately, scheduling a regular evaluation of an organization's marketing program is easier to recommend than to execute. Usually, only a crisis, such as increased competition or a sales drop, forces a company to take a closer look at its marketing program. However, more regular evaluations help minimize the number of marketing problems. IV. Human resource controls Human resource controls help managers regulate the quality of newly hired personnel, as well as monitor current employees' developments and daily performances. On a daily basis, managers can go a long way in helping to control workers' behaviors in organizations. They can help direct workers' performances toward goals by making sure that goals are clearly set and understood. Managers can also institute policies and procedures to help guide workers' actions. Finally, they can consider past experiences when developing future strategies, objectives, policies, and procedures. Common control types include performance appraisals, disciplinary programs, observations, and training and development assessments. Because the quality of a firm's personnel, to a large degree, determines the firm's overall effectiveness, controlling this area is very crucial. V. Computers and information controls
All organizations have confidential and sensitive information. Controlling access to computer databases is the key to this area. Computers are being used to collect and store information for control purposes. Many organizations privately monitor each employee's computer usage to measure employee performance, among other things. Some people question the appropriateness of computer monitoring. Managers must carefully weigh the benefits against the costs—both human and financial—before investing in and implementing computerized control techniques.
Measurement of Performance
Performance whether of an individual or a group of individuals is determined when the three factors are taken together. This may be stated by means of following equation. Performance = Ability x Effort x Opportunity Performance measurement is the process whereby an organization establishes the parameters within which programs, investments, and acquisitions are reaching the desired results. Reviewing the performance of an organisation is also an important step when formulating the direction of the strategic activities. It is important to know where the strengths and weaknesses of the organisation lie, and as part of the ‘Plan –Do – Check – Act’ cycle, measurement plays a key role in quality and productivity improvement activities In the cycle of never-ending improvement, performance measurement plays an important role in: • Identifying and tracking progress against organisational goals • Identifying opportunities for improvement • Comparing performance against both internal and external standards Thus, it is also important to understand the impact of Total Quality Management (TQM) on improvements in business performance, on sustaining current performance and reducing any possible decline in performance.