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Principles and Practices of


1. Who has worked on the principle of Esprit De Corps in the evolution of

Ans. Henri Fayol had worked on the principle of Esprit De Corps in the evolution of
management. Actually known as the “Father of modern operational management.” He had
given 14 major principles, in which last was Esprit De Corps. In this he emphasizes the need for
team work and the importance of communication in obtaining it. Experience shown that, team
contributes more than individuals.
2. In what sense can objectives or goals of an organization be regarded as plans?
Also bring out the nature of managerial planning.

Ans. Plans are documents that outline how goals are going to be met including resource
allocations, schedules and other necessary actions to accomplish the goals.
Planning is a process that involves defining the organization’s goals, establishing the overall
strategy for achieving those goals, and developing a comprehensive set of plans to integrate and
coordinate organizational work.

Basic functions of management

Management operates through various functions, often classified as planning, organizing,

leading/motivating, and controlling.

• Planning: Planning is the conscious determination of future course of action. This

involves why in action, how to take action, and when to take action. Thus, planning
includes determination of specific objectives, determining projects and programs, setting
policies and strategies, setting rules and procedures, and preparing budgets. Based on the
futurity involved in the planning process, plans may be prepared for long-term period,
usually five years or more, intermediate-term period usually 2-5 years, or short-term
period usually one year. Plans for these three periods are coordinated and a longer-term
plan provides basis for shorter-term plan.
• Organizing: (Implementation) making optimum use of the resources required to enable
the successful carrying out of plans.
• Leading: Determining what needs to be done in a situation and getting people to do it.
• Controlling: Monitoring, checking progress against plans, which may need
modification based on feedback.

Formation of the business policy

• The mission of the business is its most obvious purpose—which may be, for example, to
make soap.
• The vision of the business reflects its aspirations and specifies its intended direction or
future destination.
• The objectives of the business refers to the ends or activity at which a certain task is
• The business's policy is a guide that stipulates rules, regulations and objectives, and may
be used in the managers' decision-making. It must be flexible and easily interpreted and
understood by all employees.
• The business's strategy refers to the coordinated plan of action that it is going to take, as
well as the resources that it will use, to realize its vision and long-term objectives. It is a
guideline to managers, stipulating how they ought to allocate and utilize the factors of
production to the business's advantage. Initially, it could help the managers decide on
what type of business they want to form.
How to implement policies and strategies

• All policies and strategies must be discussed with all managerial personnel and staff.
• Managers must understand where and how they can implement their policies and
• A plan of action must be devised for each department.
• Policies and strategies must be reviewed regularly.
• Contingency plans must be devised in case the environment changes.
• Assessments of progress ought to be carried out regularly by top-level managers.
• A good environment and team spirit is required within the business.

• The missions, objectives, strengths and weaknesses of each department must be analysed
to determine their roles in achieving the business's mission.
• The forecasting method develops a reliable picture of the business's future environment.
• A planning unit must be created to ensure that all plans are consistent and that policies
and strategies are aimed at achieving the same mission and objectives.
• Contingency plans must be developed, just in case.

All policies must be discussed with all managerial personnel and staff that is required in the
execution of any departmental policy.

• Organizational change is strategically achieved through the implementation of the eight-

step plan of action established by John P. Kotter: Increase urgency, get the vision right,
communicate the buy-in, empower action, create short-term wins, don't let up, and make
change stick.

Where policies and strategies fit into the planning process

• They give mid- and lower-level managers a good idea of the future plans for each
• A framework is created whereby plans and decisions are made.
• Mid- and lower-level management may add their own plans to the business's strategic

Steps in planning
1. Perception of opportunities or problems: It is not possible to solve a problem before
we become aware of it. Similarly we cannot leverage an opportunity till we are aware it
2. Establishing objectives: Objectives specify what the organization aims to achieve in
light of the opportunities or problems it faces. Key result areas are identified and key
result indicators are decided upon, then the remaining planning process tries to align the
organizational resources towards achieving the objectives in the key result areas.
• Key Result Areas: Market standing, innovation, productivity, physical & financial
resources, profitability, manager performance & development, worker
performance & attitude, and public responsibility, service, quality. These are
KRA’s according to Drucker.
3. Planning premises: Planning premises are the assumptions on which the plan is based.
The assumptions relate to the internal and external environment of an organization.
4. Identification of an alternative: There are always multiple ways to achieve any
objective. When an objective has been finalized, we should generate the various possible
means of achieving the objective.
5. Evaluation of alternatives: Even though a large number of alternatives exist to achieve a
single objective, all of them might not be acceptable. The alternatives generated should
be evaluated in the light of the long term strategy, the competitor’s strategy, legal and
social implications.
6. Choice of alternative: After evaluating the various alternatives, we select the one, which
best fits, the organization. At the same time we must remember that the alternatives were
generated on the basis of certain planning premises and that the planning premises are
subject to change. So we should be prepared with alternate plans in case the best
alternative becomes useless due to any reason.
7. Formulation of supporting plans: Plans derived from the main plan are called
supporting plans. In these the constituent aspects of the main plans like men, materials,
finance etc are planned. These plans support the main plan.
8. Establishing a sequence of activities: The basic and supporting plans are finalized and
implemented. The implementation of plans involves establishing a chronological
sequence of various activities.

Types of Plans
Plans can be differentiated in the following ways:
1 On basis of Breadth Strategic Plan, Operational Plan
2 On basis of Time Frame Long Term, Short Term
3 On basis of Specificity Directional, Specific
4 Frequency of Use Single Use, Standing

Strategic Plans: Plans that apply to the entire organization establish the organization’s overall
goals and seek to position the organization in terms of its environment.
Operational Plans: Plans that specify the details of how the overall goals are to be achieved.
Long Term Plans: Plans with a time frame of greater than one year.
Short Term Plans: Plans covering a year or less are called short-term plans.
Directional Plans: Plans that specify general guidelines about the objective but are flexible
insofar as the methodology is concerned.
Specific Plans: Plans that are clearly defined and leave no room for interpretation.
Single Use Plans: A one-time plan specifically designed to meet the needs of a unique situation.
Standing Plans: Ongoing plans that provide guidelines for activities performed repeatedly.
Following are the types of plans according to Koontz.

Mission & Purpose

An organization’s mission indicates exactly what activities the organization intends to engage in
now and future.
• Externally oriented and relates to the societal role an organization intends to play.
• Depicts organization’s business character.
• It acts as a guide to decision makers in the organization.

Objectives & Goals

A managerial objective is the intended goal that prescribes definite scope & suggests direction to
planning efforts of a manager.
• They have a hierarchy.
• Any organization has multiple objectives.
• They are dynamic.
• They provide a direction to decision making.
• Integrate Organization & its workers.


Strategy is a course of action through which an organization relates itself with the environment
so as to achieve its objectives.
• Strategy is long term and forward looking.
• Relates to the environment and factors in both the internal and external variables of an
• Formulation of strategy is continuous and irregular.
• Uncertainty is higher in strategy.

Policies are general statements or understandings which guide or channel thinking in decision-
• Defines how a company deals with shareholders and stakeholders.
• Provides guidelines to decision makers.
• Narrow the range of individual discretion.

A procedure is a series of related tasks that make up the chronological sequence and the
established way of performing the work to be accomplished.
A method is a prescribed manner for performing a given task with adequate consideration to the
objective, facilities available and total expenditure of time, money and effort.

Rules are a prescribed guide for conduct or action.

Management by Objectives (MBO)

The term was coined by Peter Drucker and is defined as follows;
MBO is a comprehensive managerial system that integrates many key managerial activities in a
systematic manner, consciously directed towards the effective utilization of material, physical,
and human resources of the organization by integrating the individual by with the organization
and organization with the environment.

Features of MBO
1. A philosophy, not a technique.
2. It integrates various management principles & techniques.
3. Emphasis is on objectives.
4. Participative decision-making.
5. Periodic reviews (appraisals) and corrective measures.
6. MBO provides a framework for delegation & decentralization.

The Process of MBO

Organizational Planning
Objectives Premises


Superior’s Objectives

Superior’s recommendation for Subordinate’s Statement of his

subordinate’s objectives objectives

Matching Resources Subordinate’s Agreed


performance review
& Appraisal
Benefits of MBO
1. Better managing: MBO helps in better management simply because lesser management
is required. The concerned managers are clear about the objectives and what is expected
of them and this makes the job easier for their seniors.
2. Role clarity: As the KRAs are decided in MBO and everybody concerned is involved in
the decision-making process, ambiguity in who is supposed to do what is lessened.
Moreover since the subordinate has in a way set his own targets he knows clearly about
3. Personal satisfaction: As managers are involved in setting objectives for themselves and
then later they are involved in a very rational process of performance appraisal too, this in
itself makes the manager feel more important and at home in the organization.
4. Basis for organizational change: Change is the only constant. MBO helps organizations
change as it provides them with a framework for the same. Planned change instead of
reactive change is possible in MBO.

Limitations of MBO
1. Time & Cost: Since MBO is participative management; it is money and time intensive.
This is because the communication process in MBO is long and tedious. A large amount
of information is generated in MBO and this data has to be retrieved, processed and
analyzed. All these activities are above the normal managerial activities a manager is
expected to perform.
2. Failure to teach the philosophy: MBO is a philosophy of relationship-based
management. Since it is a radical approach to management, prior training is required for
the management personnel in any organization.
3. Problems in objective setting: MBO requires verifiable and quantifiable objectives as
they have to be measured and later the performances of the managers also have to be
judged. Setting up quantifiable objectives is easy in certain functional areas like sales but
very difficult in other areas like HR.
4. Emphasis on short term objectives: The need to set precise and measurable targets
often forces managers to adopt a short term view of targets as they find it easier to
quantify short term objectives.
5. Inflexible: Since the objectives of any department or manager are decided upon after a
long drawn out process involving a large number of players, it is often noticed that there
is a great resistance to change these objectives. We should recall that objectives are
nothing but what we aim to do in the future and future is always uncertain and subject to
changes whether we like it or not.
6. Frustration: MBO is sometimes seen as an agent of rapid change. This increased
expectations from MBO sometimes leads to disappointment. In many organizations MBO
fails due to incorrect implementation and a lack of proper education.