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Management by Objectives
Management by Objectives
Concept By : Peter Drucker in 1954 Importance of Objectives : 1. Legitimacy of the orgn. 2. Direction 3. Coordination 4. Benchmarks for success 5. Motivation 8 Key areas needing objectives : 1. Market standing 2. Innovation 3. Productivity 4. Physical & financial resources 5. Managerial performance and development 6. Worker performance & attitudes 7. Profitability 8. Public & Social responsibility
DECISION MAKING
DECISION : A choice from available alternatives Characteristics of Decision-Making 1. Goal-oriented 2. Alternatives 3. Analytical-intellectual 4. Dynamic process 5. Pervasive function 6. Continuous activity 7. Commitment of time, effort & money 8. Human & social process 9. Integral part of planning
DECISION TREE
It is a model, graphic decision-making tool typically used to evaluate decisions, containing a series of steps. Types of Decision Trees : Classification Tree analysis Regression tree analysis CART analysis (Classification & Regression tree) Group Decision Making Groups such as committees, task force, teams, review panels are useful to take decisions. These decisions are complex and wide knowledge, skills, experience and mutual support. Methods for taking decisions by a group in organisations : Authority rule Majority rule (Voting) Minority rule Consensus Unanimity
Group think(an extreme form of consensus) The tendency of cohesive groups to seek agreement about an issue at the expense of realistically appraising the situation. Superiority Risky shift Group Decision-making Techniques 1. Brainstorming : A technique that encourages group members to generate as many ideas as possible, on a given topic without evaluating them. 2. Nominal group technique : (a paper group) The idea is to respect interpersonal communication and to increase the deliberation and contribution of individual members 3. The Delphi Technique : The formal procedure for obtaining the consensus of a number of experts through the use of a series of questionnaires.
ORGANISING
The process of prescribing formal relationships among people and resources, to achieve goals. It refers to the way work is arranged, allocated among members of the organisation, to achieve goals. According to Allen, it is the process of identifying & grouping the work to be performed, defining & delegating responsibility and authority for establishing relationships for enabling people to work effectively together in accomplishing objectives. Steps: 1. Identifying the work 2. Grouping the work 3. Establishing relationships 4. Delegating authority 5. Providing for coordination & control
Responsibility :
The obligation of a subordinate to perform the duty as required by the superior.
Authority : The formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve goals.
Delegation : The process by which a manager assigns a portion of his total work load to others.
Organisation Structure
The way in which an orgn.s activities are divided, organised and coordinated. Types : a) Classical Pyramid shaped, tall orgn., implies centralisation of authority at top b) Behavioural Flat orgn. Structure, implies decentralisation. Elements of Orgn.Structure : a. Job Design b. Departmentalization c. Vertical coordination d. Horizontal coordination
1 2 3 4 5 6
DEPARTMENTATION
The process of dividing large orgns. Into smaller, flexible administrative units. Major Patterns of Departmentation (on basis of function, product/service, regions, customers,process,time,numbers,marketing,knowledge & skill) Four major patterns : 1. Functional structure 2. Divisional structure 3. Hybrid structure 4. Matrix structure Basic criteria for choosing basis for deparmentation: 1. Work-flow interdependence 2. Process interaction * Pooled (sharing of resources) * Sequential * Reciprocal * Team 3. Economies of Scale 4. Social considerations
FORMS OF AUTHORITY
1. Line Authority (Line or Military or scalar type) 2. Staff Authority 3. Team authority AUTHORITY : It is the right to give orders and the power to exact obedience. Sources from which authority originates : Formal authority Acceptance of authority by subordinates Competence theory of authority RESPONSIBILITY : It is the obligation on the part of a subordinate to perform the duties assigned to him. It originates from superior-subordinate relationship. ACCOUNTABILITY : When a subordinate is assigned some duties to be performed, he will be accountable to his superior for doing or not doing that work. DELEGATION OF AUTHORITY :(dynamics of management) Delegation refers to the process by which a superior gives a subordinate the authority to do a particular task. It means assigning work to others and give them authority to do it.
PROCESS OF DELEGATION(Elements)
RESPONSIBILITY
AUTHORITY
ACCOUNTABILITY
Sources of Power
Legitimate power Coercive power Reward power Expert power Referent power Information power
Types of Organisation
1. 2. 3. Line Organisation (pure line, military, scalar) Functional Organisation Line & Staff Organisation
Principles of Delegation
1. Principle of delegation by results expected 2. Principle of functional definition of authority & responsibility of task assigned 3. Scalar principle (vertical line) 4. Authority level principle (freedom to make judgements) 5. Principle of unity of command 6. Principle of parity of authority & responsibility 7. Principle of absoluteness of responsibility Degrees of Delegation: Over delegation, (High degree of delegation) Under delegation, (Low degree of delegation) Moderate degree of delegation Steps in Delegation: 1. Preparation of establishing objectives of delegation 2. Planning 3. Reviewing the objectives of the task and plan 4. Monitoring the progress 5. Evaluation and appreciation of the subordinates efforts
Centralisation : The process of systematically retaining power and authority in the hands of top level managers. Decision making powers are concentrated at the top levels. Decentralisation : It refers to the degree to which authority and power of decision making is delegated to the lower levels of an organisation. Types of Decentralisation : Political Decentralisation Administrative Decentralisation Fiscal Decentralisation Economic/ Market Decentralisation
Span of Management
Span of Management(Control/supervision/authority/responsibility) It indicates the number of persons that a manager can manage effectively. It describes the number of subordinates that report to each manager. Different Concepts of Span of Management : 1. Tall structure Narrow span on management 2. Flat structure Broader span of management 3. Graicunas Theory of Span of Management (based on mathematical calculations) Identified three superior-subordinate relationships : a) Direct Single relationships b) Direct Group relationships c) Cross relationships Formula prescribed : No. of relationships = n(2*n-1 + n-1) n stands for no. of subordinates
Factors determining suitable Span of Management Quality of leadership of superior Competence of subordinates Nature of work Delegation of authority Clarity of plans Degree of decentralization Methods of communication Use of staff assistance
CONTROLLING Control : It is the process of comparing actual performance with established standards, for the purpose of taking action to correct deviations. Controlling : It is the process of regulating orgnl. activities so that actual performance conforms to expected orgnl. Standards and goals. Features of Controlling : 1. Control is a positive force 2. It is a continuous process 3. It is forward looking 4. It is a universal process 5. It is a dynamic process 6. It is goal-oriented 7. Delegation is the key to control effectively 8. Control is based on planning
Importance of control
Achievement of goals Execution and revision of plans Brings order and discipline Facilitates decentralisation of authority Promotes coordination Cope with uncertainity and change Major purpose of Control in an organization : 1. Controls make plans effective 2. Controls ensure consistency of organizational activities 3. It makes orgns. Effective 4. It makes orgns. Efficient 5. It provides feedback on project status 6. It aids in decision making
PROCESS OF CONTROL