NOTES ON MANAGEMENT CONCEPTS

Management is the process of reaching organizational goals by working with and through people
and other organizational resources.

Management has the following 3 characteristics:

1. It is a process or series of continuing and related activities.

2. It involves and concentrates on reaching organizational goals.
3. It reaches these goals by working with and through people and other organizational resources.
Management (or managing) is the administration of an organization, whether it be a business, a not-
for-profit organization, or government body.

G.R.Terry defines as ”Management is a distinct process consisting of planning, organizing, staffing

and controlling, performed to determine and accomplish stated objectives by the use of human
beings and other resources.”

Most organizations have three management levels:

first-level,
middle-level, and
top-level managers.
Management is called a process because it comprises a series of actions that lead to the
achievement of organizational objectives.

The series of action involved in the management process are classified as:

Planning
Organizing
Staffing
Directing, and
Controlling

These functions are interdependent and interrelated and there is no rigid sequence of their
performance.

According to W. J. Duncan, Management consists of those organizational activities that involve goals
formation and accomplishment, performance appraisal, and the development of an operating
philosophy that ensures the organizations’ survival within the social system.

The important aspects of the definition are:

1. Organizational activity
2. Goal formation:
3. Goal accomplishment and evaluation
4. Decision making and implementation
5. Organizational survival
 EVOLUTION OF MANAGEMENT THOUGHT

Contributions of management practitioners and writers have resulted in the emergence of

different management approaches resulting into management theory jungle.

Major contributions to the management analysis approaches are:

1. Scientific management
FREDRICK W. TAYLOR
Principles of Scientific Management
Replacing rule of thumb with science
Harmony in group action
Achieving cooperation of human being rather than individual
Maximum output
Developing workers for their own and the companies highest prosperity

2. FRANK AND LILIAN GILBRETH (1900)

3. HENRY L. GANTT (1901)
4. HENRY FAYOL: FATHER OF SCIENTIFIC MANAGEMENT
FAYOL (1841–1925) considers management to consist of six functions:
Forecasting
Planning
Organizing (or staffing)
Coordinating commanding(or leading)
Controlling

Fayol considered the qualities required by managers as:

Physical (“health, vigor, address”)

Mental
Moral
Educational Technical (“peculiar to the function”); and
Experience

Fayol’s Principles of Management

1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual to General Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity, loyalty and devotion
12. Stability of Tenure
13. Initiative
14. Esprit De Corps

5. HUGO MUNSTERBERG (1912)

6. WALTER DILL SCOTT(1910,1911)
7. VILFREDO PARETO(BOOKS 1896-1917)
8. ELTON MAYO AND F.J.ROTHELISBERGER(1933)
9. MAX WEBER(TRANSLATIONS 1946,1947)

10. SYSTEMS THEORY: CHESTER BARNARD

A system is defined as “a set or assemblage of things connected, or interdependent,
so as to form a complex unity; a whole composed of parts in orderly arrangement
according to some scheme or plan”

KEY CONCEPTS OF SYSTEMS THEORY

I. A system – such as an enterprise – is more than the sum of its parts; it must
be viewed as a whole.
II. Systems can be considered to be either “closed” or “open”.
III. A system must have “boundaries”
IV. Closed physical systems are subject to entropy
V. Open system to survive must achieve a state of “dynamic homeostsis”. A
system to achieve dynamic homeostasis, or a kind of dynamic equilibrium,
must have feedback
VI. All systems are subsystems
VII. Open systems, and social systems in particular, tend toward increased
elaboration and differentiation.
VIII. The open system, as it grows, tend to become more specialized in its elements
and to elaborate its structure, often enlarging its boundaries or creating a new
suprasystem with wider boundaries.

11. MODERN MANAGEMENT THOUGHT

Major contributors include CHRIS ARGYRIS, ROBERT R. BLAKE, C. WEST CHURCHMAN, ERNST
DALE, KEITH DAVIS, MARRY PARKER FOLLETT, FREDRICK HERZBERG, G.C. HOMANS, HAROLD
KOONTZ, RENSIS LIKERT, DOUGLAS McGREGOR, ABRAHAM H. MASLOW, LYMAN W.
PORTER, HERBERT SIMON, GEORGE A. STEINER, LYNDALL URWICK, NORBERT WIENER AND
JOAN WOODWARD

THE PURPOSE AND NATURE OF PLANNING

The purpose and nature of planning might be summarized by reference to the following principles:

1. Principle of Contribution to Objectives: Every plan and all its derivative plans must
contribute in some positive way to the accomplishment of group objectives.
2. Principle of Efficiency of Plans: A plan is efficient if, as placed into effect, it brings about the
attainment of objectives with the minimum of unsought consequences and with results
greater than costs.
3. Principle of Primacy of Planning: Planning is the primary requisite to the managerial
functions.
4. Principle of Pervasiveness of Planning: Planning is a function of every manager in an
enterprise.
 5. Principle of Planning Premises: The understanding of and agreement to utilize consistent
planning premises by those who engage in planning are a prerequisite to coordinated
planning.
6. Principle of Policy Framework: Policies establish the framework upon which planning
procedures and programs are construed.
7. Principle of Timing: Effective and efficient planning requires adequate timing horizontally
and vertically in the structure of plans.
8. Principle of Planning Communication: Plans can be best structured and coordinated when
everyone responsible for planning has access to complete information concerning his area of
planning.
9. Principle of Alternatives: Alternatives exist in every course of action, and planning involves
the selection of the alternative course of action which will best enable the enterprise to
reach its goals.
10. Principle of the Limiting Factor: In choosing among alternatives, primary attention must be
given to those factors which are limiting or strategic to the solution of the problem involved.
11. The Commitment Principle: Planning should encompass a period of time in the future
necessary to foresee the fulfilment of commitments involved in the plans.
12. Principle of Flexibility: Effective planning requires that the need for flexibility be a major
consideration in the selection of plans, although the costs and dangers of flexibility must be
weighed against its advantages.
13. Principle of Navigational Change: Effective planning requires continual checking on events
and expectations and redrawing of plans to maintain a course toward a desired goal.
14. Principle of Strategic Planning: Effective planning under competitive conditions requires
that the course of action selected to be chosen in the light of what a competitor will or will
not do.
PLANNINING

A manager’s most essential task in an effort for the effective performance of employees:

 To see that everyone understands the group’s mission and objectives , and
 The methods of attaining them
 Employees must know what they are expected to accomplish

This task termed planning.

Most basic of all managerial functions.

Planning involves:

Selecting missions and objectives, and

Deciding actions to achieve them.

It requires:

Decision making – choosing a course of action from amongst the available possible alternatives.

Planning provides a rational approach to achieving preselected objectives.

Planning implies managerial innovation.

Planning bridges the gap from where we are to where we want to be /go.
Planning and controlling are like siamese twins i.e. Inseperable and go simultaneously hand in hand

Types of plans

Plans can be classified as:

1. Mission or purpose
2. Objectives or goals
3. Strategies
4. Policies
5. Procedures
6. Rules
7. Programs, and
8. Budgets

Steps in planning

Being aware of opportunities

Setting objectives or goals

Considering planning premises

Identifying alternatives

Comparing alternatives in light of goals

Choosing an alternative

Formulating supporting plans

Quantifying plans by making budgets

Objectives

Objectives are the ends toward which enterprise activities are aimed.

A distinction is made between objectives, goals and targets.

Objective is thought of as the end point of a management program, whether stated in general or
specific terms, while the implication of goal or target is almost invariably one of specific quantitative
or qualitative aims.

Goals are general guidelines that explain what you want to achieve in your community. They are
usually long-term and represent global visions such as “protect public health and safety.”

Objectives define strategies or implementation steps to attain the identified goals. Unlike goals,
objectives are specific, measurable, and have a defined completion date. They are more specific and
outline the “who, what, when, where, and how” of reaching the goals.

Objectives can be structured as a hierarchy.

1. SOCIOECONOMIC PURPOSE

2. MISSION

3. OVERALL OBJECTIVES OF
THE ORGANIZATION
(LONG RANGE, STRATEGIC)

4. MORE SPECIFIC
OVERALL OBJECTIVES

5. DIVISION OBJECTIVES

6. DEPARTMENT AND
UNIT OBJECTIVES

7. INDIVIDUAL OBJECTIVES
 PERFORMANCE
 PERSONAL DEVELOPMENT
OBJECTIVES

Objectives give the business a clearly defined target.

The most effective business objectives meet the following criteria:

S – specific .
M - measurable
A - agreed by all those concerned in trying to achieve the objective.
R - realistic.
T- time specific the main objectives that a business might have are:

Survival

Profit maximisation
Profit satisficing
Sales growth
Mutiplicity of objectives

A business may have several objectives simultaneously e.g.

 A certain rate of profit and return on investment

 Emphasis on research to develop a continuing flow of proprietary product
 Developing publicly held stock ownership
 Financing primarily by earning plow back and bank debt
  Assuring competitive prices for superior products
 Distributing products in overseas market
 Achieving dominant position in the industry
 Adhering in all respects to the value of our society

Long range and short range objectives

Managing by objectives

No one can accomplish ambiguous goal.

People must know what their goals are?

What actions contribute to attainment of these goals? And

When they have been accomplished?

Peter drucker - objectives are needed in every area where performance and results directly and
vitally affect the survival and prosperity of the business.

This requires “management by objectives” and “control by self-control”.

Appraisal approach to mbo

Motivation approach to mbo

Systems approach to mbo

Mbo, to be effective, needs to be viewed as a comprehensive system. It must be considered a way of

managing, and not an addition to the managerial job.

Quantitative objectives

Qualitative objectives

Process of managing by objectives

 Preliminary setting of objective at the top

 Clarification of organizational roles
 Setting of subordinates’ objectives

Benefits of managing by objectives

 Better managing
 Elicits commitment
 Helps develop effective controls
Weaknesses in managing by objectives

 Failure to teach the philosophy

 Failure to give goal setters guidelines
 Goals are difficult to set
 The dangers of inflexibility
 Setting arbitrary goals
 Failure to insist on verifiability
 Over insistence on numbers
 Use of inapplicable standards

Strategies and policies

Strategies and policies are closely related.

Strategies denote a general program of action and a deployment of emphasis and resources toward
the attainment of comprehensive objectives.

Policies are the general statement or understandings that guide manager’s thinking in decision
making. They ensure that decisions fall within certain boundaries. They generally do not require
action but are intended to guide managers in their commitment to the decision they ultimately
make.

The strategic planning process

Inputs to the organization

The various organizational and goal inputs of the strategic planning process includes:

Inputs

 People
 Capital
 Managerial skills
 Technical skills
 Others

Goals of stake holders:

 Employees
 Consumers
 Suppliers
 Stock holders
 Governments
 Community
 Others

Industry analysis

Enterprise profile

Orientation, values and vision of executives

Mission, major objectives, and strategic intent

Internal environment

Development of alternative strategies

An organization may adopt different strategies like:

 Diversify, extending the operation into new and profitable markets

 International expansion to other countries
 Joint ventures, and
 Strategic alliances
 Liquidation , by terminating an unprofitable product line or even dissolution of the firm
 Retrenchment

Evaluation and choice of strategy

Four alternative strategies

1. The WT strategy
2. The WO strategy
3. The ST strategy
4. The SO strategy

Blue Ocean strategy

Red Ocean strategy

The portfolio matrix: a tool for allocating resources

Boston consulting group developed the business portfolio matrix.

 Question marks:
 Stars
 Cash cows
 Dogs
Major kinds of strategies and policies

The major strategies and policies that give an overall direction to operations of an organization are
likely to be in the areas of:

Growth,
Finance,
Organization,
Personnel,
Public relations,
Products or services, and
Marketing

Some key questions to be considered:

What is our business?
Who are our customers?
What do our customers want?
How much will our customers buy and at what price?
Do we wish to bea product leader?
What is our competitive advantage?
Do we wish to develop our own new products?
What advantages do we have in serving our customers needs?
How should we respond to existing and potential competition?
How far can we go in serving our customer needs?
What profits can we expect?
What basic form should our strategy take?
Where are customers and why do they buy?
How do our customers buy?
How is it best for us to sell?
Do we have something to offer that competitors do not?
Do we wish to take legal steps to discourage competition?
Do we need, and can we supply, supporting services?
What are the best pricing strategy and policy for our operation?
How can we best serve our customers?

Hierarchy of company strategies

 Corporate – level strategy

 Business strategies
 Functional strategies
Premising and forecasting

One of the essential step in effective and coordinate planning is premising.

Planning premises are defined as the anticipated environment in which plans are expected to
operate. Forecasts that are planning premises and forecasts that are translated into future
expectancies, usually in financial terms, from actual plans developed needs to be distinguished.

Environmental forecasting

Values and areas of forecast

1. The making of forecasts and their review by managers compel thinking ahead, looking to the
future, and providing for it.
2. Preparation of the forecast may disclose areas where necessary control is lacking.
3. Forecasting, especially when there is participation throught the organization, helps unify and
coordinate plans.

Forecasting with delphi technique

A typical process of delphi technique can broadly be summarized in 6 steps:

1. A panel of experts on a particular problem area is selected, usually from both inside and
outside the organization.
2. The experts are asked to make (anonymously, so that they will not be influenced by others)
a forecast as to what they think will happen, and when, in various areas of new discoveries
or developments.
3. The answers are compiled, and the composite results are fed back to the panel members.
 4. With this information at hand (but still with individual anonymity), further estimates of the
future are made.
5. This process may be repeated several times.
6. When a convergence of opinion beins to evolve =, the results are then used as an acceptable
forecast.

Policies

Every management is required to make a number of decisions. These decisions may be for long term
purpose or short term purpose.
A decision gives guidelines to implement a plan. Here policy play an important role in providing
guidelines to take a decision.

Features of policy

1. A policy gives guidelines to the employees of the organization for taking a decision.
2. A policy restricts the freedom of the employees decision making within the policy
framework.
3. A policy provides and explains to employees as how and what should they do rather what
they are doing.
4. A policy provides some descretion to employees. So an employee can take a decision by
considering the prevaling situation. If not so, policy will become a rule.
5. A policy is framed on the basis of the objectives of the organization.
6. A policy permits the top executives to delegate authority and still retain control.
7. A policy is a predetermined course of action.
8. Policies are generally expressed in qualitative, conditional or general way.
9. Policy is framed by all managers in an organization in their respective areas.
10. Policies are recognized intention of the top management.

Need and importance of a policy

The very purpose of framing a policy is to achieve the overall objectives of an organization.
1. Achieving the objectives
2. Clear thinking
3. Uniformity
4. No exploitation
5. Continuity
6. Delegation of authority
7. Stability
8. Better control
9. Orientation
10. Efficiency evaluation
11. Training
12. Self confidence
13. Team work
14. Motivation
15. Loyalty
16. Morale
17. Guide to management
18. Quick decision
Sound policy

A policy is an ornament of an organization. The image of the organization depends on its policies.

Characteristics of a sound policy

1. Relationship with objectives

2. Definite and simple
3. Realistic approach
4. Written form to act as evidence
5. Ensure understanding and uniformity
6. Broad outlines
7. Consistency
8. Changes
9. Balance
10. Adequate policies
11. Communication
12. Recognition of interest
13. Practicable
14. Compromise
15. Flexible
16. Participation
17. Acceptable

Factors influencing policy making

1. Psychology of the owner or businessman

2. Willingness of the owner or businessman
3. Experience of the owner or businessman
4. Belefs on the policy
5. Perception of the owner and top management people
6. Financial resources
7. Reaction of employees
8. Policy of the competitors
9. Achievements of the competitors
10. Government regulation and control
11. Business environment
12. Objectives of the organization
13. Price
14. Public attitude and behavior
15. Customer and customer behavior

Formulation of a policy

The process of policy formulation involves the following steps:

1. Identification of area
2. Objectives
3. Analysis of environment
4. Corporate analysis
 5. Collection of information
6. Analysing the information
7. Identification of alternatives
8. Appraisal of policies
9. Selection of a policy
10. Approval of policy
11. Communicating the policy

Types of policies

1. Internal or originated policy

2. Appealed policy
3. External or imposed policy
4. General policy
5. Specific policy
6. Written policy
7. Implicit policy

PRINCIPLES OF SOUND ORGANISATION

The Purpose of Organization:

1. Principle of Unity of Objectives: The organization as a whole and every part of it must
contribute to the attainment of the enterprise objectives.
2. Principle of Efficiency: An organization should attain its objectives with a minimum of
unsought consequences or costs.

The Cause of Organization:

1. Span of Management Principle: There is a limit to the number of persons an individual can
effectively manage, even though that limit is not finite for every case but will very with the
complexity of the relationships supervised and the ability of managers and subordinates.

The structure of Organization: Authority

1. The Scalar Principle: In every enterprise, the ultimate authority must rest somewhere, and
there must be a clear line from this point to every subordinate position in the organization.
2. Principle of Responsibility: The responsibility of the subordinate to his superior for authority
received by delegation is absolute, and no superior can escape responsibility for the
authorized activities of his subordinate.
3. Principle of Parity of Authority and Responsibility: The responsibility exacted for actions
taken under authority delegated can not be greater than that implied by the authority
delegated nor should it be less.
4. Principle of Unity of Command: Since responsibility is a personal matter and the Superior –
Subordinate relationship is an eminently personal thing, each subordinate should have only
one superior.
5. The Authority – Level Principle : At some level in an organization, authority exists for making
any decision within the competence of the enterprise, and only decisions that cannot be
made at a given level should be referred upward in an organization.
The structure of Organization: Departmentalized Activities

1. Principle of Division of Work: The structure of organization should be so divided and group
the activities of the enterprise that they contribute most effectively and efficiently to
enterprise objectives.
2. Principle of Functional Definition: The content of every posit ion and department must be
clearly defined with regard to the activities expected , with respect to the authority
delegations made, and with respect to the authority relationships involved within it and
between it and other positions.

The process of Organization

1. Principle of Balance: The application of principles or techniques must be balanced in the

height of the over – all effectiveness of the organization in meeting enterprise objectives.
2. Principle of Flexibility: It being the task of managers to provide for attaining objectives in the
face of changing environments, provision must be for building in organizational flexibility.
3. Principle of Continuity: The organization must provide means for its own continuity.
4. Principle of Leadership Facilitation: The structure and authority delegations of the
organization must be so designed as to facilitate the leadership position of the manager.
Organization is a mechanism or structure which helps the activities to be performed effectively.
Irrespective of the organizational objectives, there is a need of an organization.

Organization is the detailed arrangement of work and working conditions in order to perform the
assigned activities in an effective manner.

Koontz & O’Donnel explains, “organizing involves the establishment of an international structure of
roles through determination and enumeration of the activuities required to achieve the goalsof an
enterprise and each part of it; the grouping of these activities, the assignment of such groups of
activities to the manager, the delegation of authority to carry them out and provision for co-
ordination of authority and informal relationship, horizontally and vertically, in the organization
structure”

The concept of organizing can be understood in two forms:

1. structure, and
2. process

nature of organization

the nature of organization can best be exlained by the following points:

1. Structure of relationship
2. Managerial function
3. Ongoing process
4. Encourages team work
5. Foundation of Management
6. Goal oriented
7. Adaptive to change
8. Situational
Process of Organizing

1. determination of objectives
2. division of activities
3. grouping of activities
4. defining authority & responsibility
5. co-ordination of activities
6. reviewing and re-organising

Importance of Organising

1. Facilitates administration
2. Growth & diversification
3. Create synergies
4. Establishes accountability
5. Optimum use of technology
6. Facilitates communication
7. Facilitates creativity
8. Improves inter personal relationships
9. Facilitates coordination
10. Facilitate teamwork
11. Facilitate controls
12. Increase in output
13. Optimum allocation of resources

Organization Chart

In order to enable the people have clear understanding of various positions, departments, their sub-
units and relationship amongst different departments, visual maps termed as organization structure

“an organization chart shows in the visual form the various major positions or departments in the
organization, the way various positions are grouped into specific units, reporting relationships from
lower to higher levels and official channels for communicating information.

Organization chart is the representation of the way a firm is organized in boxes and lines.

Boxes represent the activities performed, position and people who perform these activities.

Lines represent the relationships amongst them, through official chain of command and channels of
communication.

Straight lines: indicates the direct line relationship.

Dotted lines: represent the staff/ advisory relationship between departments/ units/sub-units
An organization chart depicts:

1. Division of work
2. Chain of command
3. People who perform the activities
4. Levels of management
5. Basis of division

Different bases of division for organizing activities are:

 Departmentation by enterprise function

 Departmentation by territory or geography
 Departmentation by customer group
 Departmentation by prduct
 Matrix Organization
 Strategic Business Units

Span of Management

The number of workers that a manager can effectively supervise is known as span of management or
span of control.

The optimum number of subordinates that a manager could supervise is difficult to be defined. span
of management is situational and largely depends on the type of organization structure/;

1. tall structure
2. flat structure

Flat structure

These structures have a wide span of control. When superior supervises a larger number of
subordinates, a flat structure is created with lesser number of hierarchical levels.

for example :
span of control for each managerial position is 2 span of control for each managerial position is 4
subordinates subordinates
level 1 1 executive level 1 1 executive
level 2 2 executives level 2 4 executives
level 3 4 managers level 3 16 managers
level 4 8 managers level 4 64 managers
level 5 16 managers level 5 256 workers
level 6 32 managers
level 7 64 managers
level 8 128 managers
level 9 256 workers

Factors Affecting Span of Management

1. Competence of managers
2. Nature of work
3. Assistance to managers
4. Education of subordinates
5. Clear plans and policies
6. Organizational level
7. Clearly defined authority
8. System of control
9. Financial factors

Graicunas’ theory

V.S.Graicunas introduced a theory on span of management and explained three types of

relationships that a superior can have with subordinates.
The kind of relationships and the formulae for arriving at the number of such relationships
can be illustrated as:

kind of relationship formula number of number of

subordinates relationships
direct relationship n 2 2
(one-t0-one
relationship) 3 3
cross relationship n(N-1) 2 2

3 6
group relationship n( − 1) 2 2

3 9
total number of n( + − 1) 2 6
relationships
3 18
 Relationships illustratIon

Suppose a is the superior with 3 subordinates b, c, and d.

kind of relationship number of

relationships
direct relationships a –b 3
a–c
a-d
cross relationships b–c b–d 6
c–b c–d
d-b d-c
group relationships a – b (c) a – b (d) 9
a – c (b) a – c (d)
a – d (b) a – d (c)
a – b (cd) a – c (bd)
a – d (bc)
total number of 18
relationships

Line and Staff relationship

Line authority is exercised by the superior over his immediate subordinates.

This forms a chain of authority from top to bottom.
People who exercise line authority are termed as line managers.

Staff managers are those who assist line managers (in advisory capacity) in discharging their
line duties efficiently.

Production, Marketing, Finance and now Personnel also are considered as line departments
and Accounting, R&D, Public Relations departments are considered as staff departments.

Line and Staff supplement and compliment each other and are considered as the way of
organizational life.

Distinction between line and staff

line staff
line managers form part of the organizational staff specialists do not form part of the
hierarchy organizational hierarchy
they are responsible for attainment of overall they help line managers in achieving the overall
organizational objectives objectives
they are in charge of operating departments of they are in charge of service departments of the
the organization organization
they direct or line authority over people working they do not have direct authority. they only
in their departments provide advisory services to line managers
their services are operative and executive their services are advisory
they enjoy legitimate power they enjoy referent and expert power
their authority flows vertically downwards over
their authority flows in all directions – vertical,
people of line department horizontal and diagonal
they make organizational decisions the help in effective implementation of these
decisions
they hold accountability for final results of they are not accountable for these results.
decision making

importance of staff

Staff specialists provide the following services to line managers:

1. They make recommendations to line managers on important organizational matters and,

thus improve the quality of decisions taken by line managers.
2. By sharing the work load of line managers, they enable them to concentrate on important
and strategic organizational issues
3. They being experts in their specialized areas provide creative and innovative ideas to line
managers.
4. By providing advisory services to line managers, they ensure uniformity of activities carried
out by line departments.

Types of staff

staff that provides assistance to line manager are classified in three types.

1. Personal staff
2. General staff
3. Specialized staff

Line and Staff conflict

Though staff is an advisory body that assists line managers to carry their work efficiently, but
the conflict may arise between them. The conflict between line staff arises due to the
difference in approach that they adopt towards the organizational problems. The reasons for
the conflict may arise due to the following reasons:

1. Attitude of line and staff

2. Ultimate responsibility
3. Absence of motivation
4. Managerial problems
5. Age consideration
6. Delayed call for help
7. Encroachment upon line authority
8. Practical approach to problem
9. Lack of overall vision of the organizational problems
10. Staff advise is sought for as a last resort
 Resolution of line and staff conflict

1. clear understanding of the authority-responsibility structure

2. timely assistance
3. emphasis on interdependence
4. patient hearing to the staff
5. regular communication
6. independent staff working
7. tolerance
8. committees

Decentralization & Delegation

What is Delegation

The concept of division of work and assignment to people down the scalar chain is termed
delegation.

“delegation is a process the manager uses in distributing work to subordinates.”

Decentralization is the process of dispersing decision making authority in an organization structure.

Decentralization is fundamental aspect of delegation, to the extent that the authority that is
delegated is decentralized.

Centralization and Decentralization are tendencies as indicated as:

complete complete

centralization decentralization

(no organization (no organization structure)

structure)

authority delegated

authority not delegated

Different kinds of centralization

 Centralization of performance pertains to geographic concentration

 Departmental centralization
 Centralization of management is the tendency to restrict delegation of decision making.
Without a proper decentralization, managers will not be able to exercise their discretion to handle
the ever changing situation they face.

Delegation of Authority

Authority is delegated when a superior gives a subordinate discretion to make decisions.

The process of delegation involves:

1. Determining the results expected from a position

2. Assigning tasks to the position
3. Delegating authority for accomplishing these tasks, and
4. Holding the person in that position responsible for the accomplishment of the tasks

Process of Delegation

1. Determining the goals

2. Define responsibility
3. Define authority
4. Motivation of subordinates
5. Holding accountability
6. Establishing controls

Importance of Delegation

1. Relief to managers
2. Development of managers
3. Development of subordinates
4. Better decision making
5. Faster decisions

Overcoming weak delegation

1. Define assignments and selgate authority in light of results expected.

2. Select the person in light of the job to be done.
3. Maintain open lines of communication.
4. Establish proper controls
5. Reward effective delegation and successful assumptions of authority

Advatages and limitations of Decentralization

Advantages

1. Relieves top management of some burden of decision making and forces upper level
managers to let go.
2. Encourages decision making and assumption of authority and responsibility.
3. Provide managers more freedom and independence
in decision making.
4. Promotes establishment and use of broad conroles. that may increase motivation.
 5. Make comparision of performance amongst different organizational units.
6. Facilitates setting up of profit centers
7. Helps product diversification
8. Aids in adaptation of fast changing environments.

Limitations

1. Make it more difficult to have a uniform policy

2. Increase complexity of coordinationof decentralized units
3. May result in loss of some control by upper-level managers.
4. May be limited by inadequate control techniques.
5. May be constrained by inadequate planning and control system.
6. Can be limited by the lack of qualified managers.
7. May limited by external forces
8. May not be favoured by economies of scale of some operations.

Controlling
Controlling, a managerial function, is the measurement and correction of performance in order to
make sure that enterprise objectives and the plans devised / planned to attain them are being
accomplished.
Nature of control
It is a pervasive function
It is a process
It is an inevitable function of management
It is closely associated with planning function
It is associated with all managerial functions
It is a corrective device
It is a positive function

Importance of Control

Helps detecting mistakes

Helps managing complex situations
Helps managers face change and uncertainty
Helps managers in monitoring the actions of employees
Helps in identifying potential of the organizations
Facilitate decentralization and delegation

Basic process of Control

Basic control process involves three steps:
 Establishing standards
 Measuring performance against these standards, and
 Correcting variations from standards and plans
.
Benchmarking
Benchmarking is an approach for setting goals and productivity measures based on best industry
practices.
Benchmarking types:
 Strategic benchmarking
 Operational benchmarking
 Management benchmarking

Control as a Feedback System

Managerial control is essentially the same basic control process as found in physical, biological, and
social systems.

feedback loop of management control

desired actual measurement comparison of actual

perfor perfor of actual performance against standards
mance mance performance

implement program of analysisof identification

ation of corrective causes of of
corrections action devioations deviations

Feed Forward or Preventive control

Feed Forward Control illustrates the problem of only using feedback from the output of a system
and measuring this output as a means of control.
It shows the deficiency of historical data, such as those received from accounting reports.

Feed Forward in Human Systems

Feed Forward versus Feedback Systems
Feedforward in Management

Feed forward controls at operating level and strategic level.

Operating level: Preparing budgets is the most common and simple technique of predicting future
activities and their impact on present activities.
Strategic level: Managers anticipate environmental changes (technological, political, legal etc.) that
will affect organizational policies.

Requirements feedforward control

 Make a thorough and careful analysis of the planning and control system, and identify the
more input variables.
 Develop a model of the system.
 Take care to keep model up to date
 Regularly assess variations of actual input data from planned for inputs, and evaluate the
impact on the expected end result.
 Take action.
Concurrent control

They control the activities while they are being performed.

Feedback Control

Feedback control analyses the final output, compares it with standard output, finds deviations and
checks the deviations. it brings actual performance in conformity with planned performance.

Importance of Feedback control:

 Provides a measure against which organizational performance is evaluated.
 Helps managers in evaluating individual performance of workers and institute rewards (for
good performance) and penalties (for poor performance).
 Alerts managers to alter the transformation or conversion process, if the need be.
 Helps managers in detecting errors which have not been detected at earlier stages
(feedforward and concurrent controls).
 Provides the basis for future planning. depending on actual performance, plans can be
revised or fresh plans can be made.

In a business system, feedback or control of outputs normally consists of:

Quality and Quantity controls:
Financial controls
Control on employees’ performance
Control of overall performance

Profit and Loss control

The income statement for an enterprise as a whole serves important control purposes, mainly
because it is useful for determining the immediate revenue or cost factors that have accounted for
success or failure.

Limitations of profit and loss control

Control through return on investment

The return on investment approach referred as ROI measures both the absolute and the relative
success of a company or company unit by the ratio of earnings to investment of capital.

Information technology

The developments in information technology greatly facilitate organizational control at a relatively

low cost. The systems model of management shows that communication is needed for carrying out
managerial functions and for linking the organization with its external environment.