Management: An Overview

In this chapter we will discuss: y y y y Definitions of Management The Role of Management Functions of Managers Levels of Management

y Management Skills and Organizational Hierarchy Approaches to Management

One of the most important activities in business is the management of the 4M¶s ± men, machines, material and money. The term µmanagement¶ can be interpreted differently in different contexts. Hence, it is difficult to define. In one context, it may comprise the activities of executives and administrative personnel in an organization, while in another, it may refer to a system of getting things done. In a broad perspective, management can be considered as the proper utilization of people and other resources in an organization to accomplish desired objectives. With increasing global competition, changes in the world of technology, changing business practices and increasing social responsibility of organizations, the role of managers has become all the more significant. In this chapter, we will first examine the definitions of management given by some eminent management thinkers to understand the essence of management. Secondly, we will discuss the five basic functions of management i.e., planning, organizing, staffing, leading and controlling. The chapter also focuses on the managerial skills required at various levels of the organizational hierarchy and briefly explains the various approaches to management.

The term µmanagement¶ can be interpreted in a variety of ways. To gain a better insight into the nature of management, let us look at some of the definitions of management: Harold Koontz and Heinz Weihrich define management as ³the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.´ Louis E. Boone and David L. Kurtz define management as ³the use of people and other resources to accomplish objectives.´ Dalton E. McFarland defines management as ³a process, by which managers create, direct, maintain, and operate purposive organizations through systematic, coordinated, cooperative human effort.´

Mary Parker Follet termed management as ³the act of getting things done through people.´ Definitions by Follet and Louis E. Boone and Kurtz call attention to the fact that managers achieve organizational goals by getting others to do the necessary tasks. The other two definitions suggest that management is much more than ³just getting the work done´ and (as shown in Figure 1.1) suggest the following aspects of management:

1. Managers carry out the functions of planning, organizing, staffing, leading and controlling: Henry Fayol was the first management thinker to outline the five basic functions carried out by managers. Every manager performs these basic functions. These functions are discussed in detail in the later part of this chapter. 2. Management is essential to any kind of organization: Wherever there are groups of people working together to achieve some common objectives, it becomes essential to guide, organize and control them. The term µmanagement¶ applies to any organization irrespective of the size or nature of operations. The prime concern of a CEO of a multinational company, the General Manager of a hotel, the first-level supervisor, the manager of a cricket team and the student president in a college is to manage their people and resources effectively. Figure 1.1: Key Aspects of the Management Process

3. Management is essential at all hierarchical levels: Management is necessary at all levels. However, the type of skills and the degree to which various skills are required at different levels of the hierarchy may vary. In order to perform their duties satisfactorily, managers need technical, human, conceptual and design skills. 4. The goal of all managers is to generate surplus: The aim of all business managers is to create a surplus. To accomplish this objective, the manager has to create an environment which encourages people to accomplish as much as possible with the least amount of resources and personal dissatisfaction. Even in non-profit organizations, the aim of managers is to accomplish their goals with the minimum amount of resources or to make as much surplus as possible with available resources. 5. The aim of all managers is to improve productivity, efficiency and effectiveness: Productivity is defined as ³the output-input ratio within a time period with due consideration for quality.´ It can be expressed as: Productivity = Outputs / Inputs (within a time period, quality considered) Productivity can be improved in the following ways: y y By producing more output with the same inputs. By reducing inputs, but maintaining the same level of outputs.

y By increasing outputs and reducing inputs, thereby, making the ratio more favorable. Productivity can be improved by ensuring efficiency and effectiveness in the operations of the firm. Effectiveness refers to achievement of stated organizational objectives while efficiency denotes the judicious use of resources to achieve organizational objectives. In the words of Peter Drucker, efficiency means ³doing things right´, while effectiveness means ³doing the right things.´ In his book, ³Management ± Tasks, Responsibilities, Practices´, Drucker states that effectiveness is the foundation of success whereas efficiency is a minimum condition for survival after success has been achieved.

As mentioned earlier, managers perform five functions ± planning, organizing, staffing, leading and controlling. Since these functions are very essential for effective management, they have been used as the basic framework for this book. They have been briefly explained in the next section of the chapter. In order to understand the role of management, in the late 1960s, Henry Mintzberg devised a new approach ± the managerial roles approach ± by observing what managers actually do. He did a careful study of five chief executives at work and found that they

were involved in a number of varied, unpatterned activities of short duration. Using a method called structured observation, Mintzberg isolated ten roles which he believed were common to all managers. As shown in Table 1.1, these ten roles were grouped into three categories ± interpersonal roles, informational roles and decisional roles. A manager is required to interact with many people, both within and outside the organization and hence, the need to perform interpersonal roles. The three interpersonal roles of a manager are figurehead, leader and liaison. In his role as a figurehead, a manager performs all the ceremonial or symbolic duties. Example, it would be the duty of a college dean to award diplomas at the convocation ceremony. In the leadership role, a manager is required to motivate the employees to perform at their best to achieve the company¶s objectives. In the liaison role, a manager is required to interact with people both within and outside the organization. A manager acts as a channel of information within the organization. The three informational roles of a manager are that of a recipient, disseminator and spokesperson. In the role of a recipient, a manager receives information pertaining to changes, opportunities and problems that the organization may face. As a disseminator, a manager provides information to subordinates that would influence their performance at work. And finally, a manager performs the role of a spokesperson when he or she represents the organization in public.

Table 1.1: Mintzberg's 10 Managerial Roles INTERPERSONAL Figurehead Leader Liaison INFORMATIONAL Monitor Performs ceremonial and symbolic duties such as greeting visitors, signing legal documents. Direct and motivate subordinates, training, counseling, and communicating with subordinates. Maintain information links both inside and outside organization, use mail, phone calls, meetings Seek and receive information, scan periodicals and reports, maintain personal contacts Forward information to other organization members, send memos and reports, make phone calls Transmit information to speeches, reports, memos outsiders through




Entrepreneur Disturbance Handler Resource Allocator Negotiator

Initiate improvement projects, identify new ideas, delegate idea responsibility to others Take corrective action during disputes or crises; resolve conflicts among subordinates; adapt to environmental crises Decide who gets resources, budgeting, setting priorities scheduling,

Represent department during negotiation of union contracts, sales, purchases, budgets, represent departmental interests

The functions of a manager provide a useful framework for organizing management knowledge under the various heads of planning, organizing, staffing, leading and controlling. Managerial functions are effective tools for managers to achieve the organization¶s planned objectives. They include the general administrative duties that need to be carried out in virtually all organizations. Figure 1.2 depicts the management process and shows the various functions that managers are involved in. It is evident from the figure that managers are involved in more than one activity at the same time. Figure 1.2: Management Functions

Planning Planning can be defined as the process, by which, managers decide the mission and objectives of the firm and take necessary steps to achieve the desired objectives. At the same time, managers need to determine the future trends in business and incorporate change and innovation into the organization from time to time.

and (4) the authority and reporting relationships within the corporate hierarchy.´ It is the management function that involves influencing and inspiring team members to perform well and accomplish corporate objectives. Organizing is a continuous process of determining (1) which tasks are to be performed. The duties and responsibilities at these three levels of management vary from organization to . and directing people towards the achievement of organizational goals. The organizational structure of a firm is a key element in determining its success or failure. motivating. and (3) motivating people to put forth the effort required to achieve organizational goals. and (3) supervisory or first-level management. (2) leadership styles and approaches. LEVELS OF MANAGEMENT In many small business enterprises. staffing is better known as ³human resource management´ and involves manning or filling the various positions in the organizational hierarchy. Figure 1. performance appraisal. it is the act of making things happen through others. On the other hand. (2) how tasks can best be combined into specific jobs. If plans are not organized properly even the best of plans can fail. Leading Leading is defined as ³the management function of influencing. as the size of an organization increases. This function also deals with compensation. recruiting and selecting candidates. (3) how jobs can be grouped into various units. assessing the number of people presently available in the organization. It is a normal practice to categorize management into three basic levels: (1) top-level management.3 illustrates the levels of management. a more sophisticated organizational structure is required. Activities like determining manpower requirements. Leading involves (1) communicating with others. Controlling The final step in the management process is to monitor the progress of an organization towards its goals. training and placing them in the organization come under the purview of staffing. the pitfalls associated with a poor plan can be eliminated by excellent organization. Organizing Organizing is the process of assigning tasks and allocating resources to individuals to enable them to accomplish organizational goals. promotion and career planning. The basic control process involves (1) comparing performance with standards. if any. Planning helps a firm decide its future course of action. Staffing Today. Controlling can be defined as the continuous measurement and analysis of actual operations against the established industry standards developed during the planning process and corrections of deviations.There are various types of plans and they may range from planning to define the overall purposes and objectives of an organization to planning for a specific action. In simple words. But. (2) middle-level management. (2) determining where negative deviations occur. and (3) developing remedial measures to correct deviations. the owner is the only member of the management team.

Figure 1. and very few at the top.2. as the managerial positions gradually decline as one progresses towards the higher levels of management (see Figure 1. The number of managerial positions at each level varies from organization to organization.3: Levels of Management Figure 1. there are more positions at the first-level. culture.4: Managerial Levels and Areas . technology. fewer in the middle. Many describe this kind of an organizational structure as a pyramid. prevailing in the organization.4). In most of the organizations. The various activities performed at each of these levels of management are illustrated in Table 1. etc. depending upon the size.organization.

a study has suggested that companies having an outsider as a board chairperson perform better.Top-Level Managers Top-level managers are usually appointed. ³chief´. ³President´. Members of the board are selected by shareholders. The top-level managers are responsible for the overall activities of the business and are accountable for its impact on the society at large. and maintaining overall control over organizational performance. ³director´. boards with more outsiders operate more independently and are more proactive. In public limited companies. and they include job classifications such as the ³Chief Executive Officer´ (CEO). ³Vice President´.´ But. as he/she helps the board to monitor the performance of the top management objectively. Middle-Level Managers Middle-level managers deal with the actual operation of various departments in an organization. on the other hand. ³Senior Vice President´ and ³Executive Director. they essentially act as ³rubber stamps. the number of board members vary from 15 to 25. top-level managers report to the Board of Directors. elected or designated by the organization¶s governing body. ³department head´ and . Their typical titles include ³manager´.´ Top-level managers are responsible for taking major decisions for the organization as a whole. They work to some extent with the middle-level managers in implementing the plans. Depending on the size of the company. When a board comprises a majority of individuals who have close ties with the management. They are directly responsible for the performance of managers at lower levels. Though it is a usual practice to elect the CEO as the chairperson of the board. They are few in number.

In a manufacturing plant. They may be addressed by different names. human and conceptual skills. These are technical. Robert K.³divisional head. one needs to have knowledge of methods. middle-level managers serve as a source of innovation and creativity. Since first-level managers act as a link between the management and the rest of the workforce. . This has resulted in making middle-level managers redundant and has thus reduced the number of middle-level managers in many organizations First-Level Managers First-level managers are directly responsible for the performance of employees involved in operations. Due to the advent of information technology. In many organizations. when needed. During the early 1970s. labor costs. They look to the top management for direction and guidance and are answerable to them. A fourth skill ± the ability to design solutions ± was later added to the above mentioned skills. employees at the operational level work with tools. Engineers. and in a large office ± the clerical supervisor. Technical skills are essential for first-level managers. in a research department ± the technical supervisor. managers need certain skills to perform the functions associated with their jobs. In order to do so. inventory levels. they often confront conflicting demands. and the growing use of computers to track many activities formerly monitored by first-level managers.´ The number of middle-level managers in complex organizations is far higher than other managers. Hence. the first-level manager may be called a foreman. processes and procedures. Technical Skills Technical skills refer to the ability of a person to carry out a specific activity. For example. MANAGEMENT SKILLS AND ORGANIZATIONAL HIERARCHY A manager¶s job is varied and complex. the power of these managers has gradually decreased because of union influence. Thus. online technical assistance has become available to firstlevel managers. First-level managers spend much of their time in training subordinates and clarifying doubts in work-related problems. They are usually called supervisors. They are responsible for output variables like number of units produced. accountants and employees in manufacturing departments all have the necessary technical skills for their specialized fields. First-level managers implement the operational plans developed by middle managers and take corrective actions. Kalz identified three kinds of skills for administrators. In recent times. computer specialists. and quality control. they play a vital role in the success of the organization. the increasing educational level of workers. and their supervisors must be able to teach them how to perform the tasks assigned to them using these tools. These managers are responsible for implementing the plans and strategies developed by top management for the accomplishment of organizational goals.

We can briefly summarize them as follows: Figure 1. peers and people outside the work unit such as suppliers. Human skills are of paramount importance in the creation of an environment. Design Skills Design skills refer to the ability of a person to find solutions to problems in ways that would benefit the organization. If they only see the problem. Managers at upper organizational levels should be able to design a rational and feasible solution to the problem by considering the various internal and external factors. and communicate with people to accomplish certain objectives.´ and will prove ineffective. These skills aid employees during interaction with their supervisors. Conceptual Skills Conceptual skills refer to the ability of a person to think and conceptualize abstract situations.6: Relative Need for the Main Categories of Skills . motivate.6. as top-level managers have the greatest need to see the ³big picture. customers and the general public. Top managers should not only recognize a problem but also suggest ways to overcome them. These skills are most important at the top management level.Human Skills Human skills or interpersonal skills refer to the ability of a person to work well with other people in a group. The relative significance of these skills varies at different levels in the organizational hierarchy as shown in Figure 1. It is the ability to lead. These skills are important for all levels in the organization. they become mere ³problem watchers. in which people feel comfortable and are free to voice their opinions. It is the ability to understand and coordinate the full range of corporate objectives and activities.´ to understand how the various parts of the organization relate to one another and associate the organization with the external environment.

10. The contingency or situational approach: In this approach. 12. wherein organizations have either succeeded or failed by following this approach. 9. 2. The systems approach: It considers organizations to be open systems as they interact with the external environment. The cooperative social systems approach: It advocates a system of cooperation using both interpersonal and group behavioral aspects. which were grouped into three catsegories ± interpersonal. 7. office operations. The sociotechnical systems approach: It realizes the impact of technical systems on personal attitudes and group behavior. Different circumstances may necessitate the use of different methods. It recognizes the importance of the inter-relationship between planning. style. etc. . The study identified ten managerial roles. systems. informational and decisional roles. 3. shared values and skills. 8. The managerial roles approach: This approach had been developed by studying the work methods of five chief executives. The decision theory approach: The focus in this approach is on the decisionmaking process and people involved in it. one tries to understand management principles with the help of cases. 11. the main assumption is that there is no hard and fast rule for all situations. which can be expressed in terms of mathematical symbols and relationships. staff. The empirical or case approach: In this approach. principles. 4. It stresses on the behavior of people in groups. 5. This approach focuses on areas involving close relationships between technical systems and the people involved such as production. techniques and knowledge from other fields and managerial approaches. Managerial practice depends upon circumstances. The McKinsey¶s 7-S framework: The seven S¶s used in this approach are strategy. The mathematical or ³management science´ approach: This approach treats management as a logical process. It also identifies the situations. The operational approach: This approach attempts to develop the science and theory of management by drawing upon concepts. The group behavior approach: This approach is based on sociology and social psychology.APPROACHES TO MANAGEMENT 1. The interpersonal behavior approach: This approach is based on individual psychology and focuses on interpersonal relationships. 6. organizing and controlling. structure.

We then focus on four well-established schools of management thought (see Table 2. (iii) the quantitative approach and (iv) the modern approaches to management. Like most modern disciplines. some emerging approaches in management thought are discussed. In this chapter. Table 2.1): (i) the classical approach. an awareness and understanding of important historical developments and theories propounded by early thinkers is important for today¶s managers. However. (ii) the behavioral approach.1: Major Contributors Classification of Management Approaches and their Major Classification of Management Approaches Classical approach Scientific management Bureaucratic management Administrative management Behavioral approach Group influences Hawthorne studies Maslow¶s theory needs Major Contributors Frederick W.Evolution of Management Thought y y y y Classical Approach Behavioral Approach Quantitative Approach Modern Approaches to Management INTRODUCTION According to one school of thought. Frank and Lillian Gilbreth and Henry Gantt Max Weber Henri Fayol Mary Parker Follet Elton Mayo Abraham Maslow Douglas McGregor Theory X and Theory Y . Taylor. we first take a look at the early approaches to management. Finally. A theory is a conceptual framework for organizing knowledge that provides a blueprint for various courses of action. Some are also of the opinion that management theory is too abstract to be of any practical use. both theory and history are indispensable tools for managing contemporary organizations. contemporary management thought has its foundations in the history of management and the many significant contributions of theorists and practitioners. history has no relevance to the problems faced by managers today. Hence.

experiment. or reasoning. administrative theory and bureaucratic management. Taylor. These views are labeled ³classical´ because they form the foundation for the field of management thought. Taylor first began to experiment with new managerial concepts in 1878 while employed at the Midvale Steel Co. it is a classical management approach that emphasizes the scientific study of work methods to improve the efficiency of the workers. by facts or truths gained through systematic observation. Frederick Winslow Taylor Frederick Winslow Taylor took up Henry Towne¶s challenge to develop principles of scientific management. scientific management was defined as ³that kind of management which conducts a business or affairs by standards established. . Taylor (1856-1915). Lillian Gilbreth (18781972). considered ³father of scientific management´.´ In other words. administrative theory and bureaucratic management ± are Frederick W. The major contributors to the three schools of management thought ± scientific management. Henry Fayol and Max Weber respectively. Classical theorists formulated principles for setting up and managing organizations. Taylor. Frank Gilbreth (1868-1924). his rise from laborer to chief engineer within 6 years gave him the opportunity to tackle a grave issue faced by the organization ± the soldiering problem. and Henry Gantt (1861-1919).Model I versus Model II values Quantitative approach Management science Operations management Management information system Modern approaches The Systems Theory Contingency Theory Emerging pproaches: Theory Z and Quality management Chris Argyris William Ouchi CLASSICAL APPROACH Classical management thought can be divided into three separate schools: scientific management. Some of the earliest advocates of scientific management were Frederick W. wrote The Principles of Scientific Management in 1911. At Midvale. An engineer and inventor. In the early 19th century. Scientific Management Scientific management became increasingly popular in the early 1900s.

´ and ³hold´ ± which they used to study tasks in a number of industries. According to Taylor. which they called therbligs (Gilbreth spelled backward with theµt¶ and µh¶ transposed). allowed them to analyze the exact elements of . Table 2. iii. scientific management as propounded by Taylor emphasizes: i. ii. Need for developing a scientific way of performing each job.´ ³position. Frank Gilbreth (1868-1924) is considered the ³father of motion study. In essence.4: Four Steps in Scientific Management Step Step 1 Step 2 Step 3 Step 4 Description Develop a science for each element of the job to replace old rule of thumb methods. These 17 motions.´ ³select. Frank and Lillian Gilbreth made numerous contributions to the concept of scientific management. Frank and Lillian Gilbreth were mainly involved in exploring new ways for eliminating unnecessary motions and reducing work fatigue. Supervise employees to make sure they follow the prescribed methods for performing their jobs. The Gilbreths devised a classification scheme to label seventeen basic hand motions ± such as ³search. 2. Motion study involves finding out the best sequence and minimum number of motions needed to complete a task. other workers would lose their jobs.µSoldiering¶ refers to the practice of employees deliberately working at a pace slower than their capabilities. Training and preparing workers to perform that particular job. workers indulge in soldiering for three main reasons: 1. Establishing harmonious relations between management and workers so that the job is performed in the desired way. Faulty wage systems employed by the organization encouraged them to work at a slow pace. Scientifically select employees and then train them to do the job as described in Step 1.´ Lillian Gilbreth (1878-1972) was associated with the research pertaining to motion studies. Workers feared that if they increased their productivity. Frank and Lillian Gilbreth After Taylor. Outdated methods of working handed down from generation to generation led to a great deal of wasted efforts. Continue to plan the work but use workers to actually get the work done. 3.

she received twenty-two honorary degrees. Figure 2. workers increased the number of bricks laid per day from 1000 to 2700 (per hour it went up from 120 to 350 bricks) without exerting themselves. and became a professor of management at Purdue University. Frank Gilbreth also developed the micromotion study. She had great interest in the human implications of scientific management and focused her attention on designing methods for improving the efficiency of workers.a worker¶s hand movements. Lillian was the first woman to gain eminence as a major contributor to the development of management as a science.1 Gantt scheduling chart . In recognition of her contributions to scientific management. A motion picture camera and a clock marked off in hundredths of seconds was used to study motions made by workers as they performed their tasks. By carefully analyzing the bricklayer¶s job. Using his approach. He is best known for his experiments in reducing the number of motions in bricklaying. Lillian¶s doctoral thesis (published in the early 1900s as The Psychology of Management) was one of the earliest works which applied the findings of psychology to the management of organizations. She continued her innovative work even after Frank¶s death in 1924. he was able to reduce the motions involved in bricklaying from 18 ½ to 4.

The Gantt chart in Figure 2. who would be paid a bonus for every worker who reached the daily standard. The chart indicates the progress of production in terms of time rather than quantity.Henry Laurence Gantt Henry L. Gantt later became an independent consultant and made several contributions to the field of management. Gantt felt that this system would motivate foremen to train workers to perform their tasks efficiently. If all the workers under a foreman reached the daily standard. work scheduled and work completed are shown. The vertical axis identifies the individuals and machines assigned to these work schedules. He is probably best remembered for his work on the task-andbonus system and the Gantt chart. The Gantt chart was the first simple visual device to maintain production control. he received a bonus.1) is still used today by many organizations. in less than the standard time. time.1 compares a firm¶s scheduled output and expected completion dates to what was actually . if the worker completed the work fast. The Gantt Chart (see Figure 2. Gantt (1861-1919) was a close associate of Taylor at Midvale and Bethlehem Steel.e. i. he would receive an extra bonus. It is a simple chart that compares actual and planned performances. Under Gantt¶s incentive plan. He also introduced an incentive plan for foremen. Along the horizontal axis of the chart.

In spite of the numerous contributions it made. According to Fayol. Fayol believed that ³with scientific forecasting and proper methods of management. Gantt¶s charting procedures were precursors of today¶s program evaluation and review techniques. became increasingly ineffective. The most prominent of the administrative theorists was Henri Fayol. there are a few limitations of scientific management. a prominent European management theorist. another classical theory ± the administrative management theory ± focused on principles that could be used by managers to coordinate the internal activities of organizations. principles of scientific management. These principles focus on the solutions of problems from an engineering point of view. General and Industrial Management.produced during the year. Many of the managerial concepts that we take for granted today were first articulated by Fayol.´ Fayol was unknown to American managers and scholars until his most important work.2) Figure 2. developed a general theory of management. the business operations of an organization could be divided into six activities (see Figure 2. Taylor and his followers overlooked the social needs of workers and overemphasized their economic and physical needs. Since workers are more likely to go on strike over factors like working conditions and job content (the job itself) rather than salary. satisfactory results were inevitable. y The proponents of scientific management were of the opinion that people were ³rational´ and were motivated primarily by the desire for material gain. French industrialist Henri Fayol (1841-1925). was translated into English in 1949. Administrative Theory While the proponents of scientific management developed principles that could help workers perform their tasks more efficiently. which were based on the ³rational worker´ model. y Scientific management theorists also ignored the human desire for job satisfaction. Limitations of scientific management Scientific management has provided many valuable insights in the development of management thought.2: Business Operations of an Organization . They are: y The principles of scientific management revolve round problems at the operational level and do not focus on the management of an organization from a manager¶s point of view.

cost of living. 2. It involves obedience to authority. productivity of employees and the ability of the firm to pay. . When a manager exercises authority. Authority and responsibility: Authority is defined as ³the right to give orders and the power to exact obedience. Division of work: Work specialization results in improving efficiency of operations. Authority and responsibility go handin-hand. 6. respect for superiors and dedication to one¶s job. 3. Subordination of the individual interest to the general interest: Individual interests should not take precedence over the goals of the organization. Unity of direction: Activities should be organized in such a way that they all come under one plan and are supervised by only one person. 7. Unity of command: Each employee should receive orders or instructions from one superior only. adherence to rules. 5. 4. Formal authority is derived from one¶s official position and personal authority is derived from factors like intelligence and experience.´ Authority can be formal or personal. Remuneration: The compensation paid to employees should be fair and based on factors like business conditions.Fayol outlined fourteen principles of management: 1. The concept of division of work can be applied to both managerial and technical functions. he should be held responsible for getting the work done in the desired manner. Discipline: Discipline is vital for running an organization smoothly.

12. 14.5.8. emphasizes the need for organizations to function on a rational basis. He therefore identified the characteristics of an ideal bureaucracy to show how large organizations should be run. ³a bureaucracy is a highly structured. Weber (1864-1920).´ In other words. Weber felt that nepotism was grossly unjust and hindered the progress of individuals. Material order indicates that everything is kept in the right place to facilitate the smooth coordination of work activities. and impersonal organization. 10. Jobs are divided into tasks and subtasks. Centralization: Depending on the situation. social order implies that the right person is placed in the right job (this is achieved by having a proper selection procedure in the organization). He observed that nepotism (hiring of relatives regardless of their competence) was prevalent in most organizations. 11. Table 2. Similarly. meaning office) referred to organizations that operated on a rational basis. formalized. Espirit de corps: This means ³a sense of union. Stability of tenure of personnel: A high labor turnover should be prevented and managers should motivate their employees to do a better job.´ Management must inculcate a team spirit in its employees. 9. The scalar chain defines the communication path in an organization. . The term ³bureaucracy´ (derived from the German buro. an organization should adopt a centralized or decentralized approach to make optimum use of its personnel. These characteristics would exist to a greater degree in ³ideal´ organizations and to a lesser degree in other. Initiative: Employees should be encouraged to give suggestions and develop new and better work practices. a contemporary of Fayol. 13. it is a formal organization structure with a set of rules and regulations. Equity: All employees should be treated fairly.5: Major Characteristics of Weber¶s Ideal Bureaucracy Characteristic Description The duties and responsibilities of all the employees are clearly Work specialization defined. Scalar chain: This refers to the chain of authority that extends from the top to the bottom of an organization. Each employee is given a particular task to perform repeatedly so that he and division of labor acquires expertise in that task. less perfect organizations. Bureaucratic Management Bureaucratic management. Order: This refers to both material and social order in organizations. A manager should treat all employees in the same manner without prejudice. was one of the major contributors to this school of thought. The characteristics of Weber¶s ideal bureaucratic structure are outlined in Table 2. According to Weber. one of the schools of classical management.

Managers make rational decisions and judgments based purely on of facts. T. The National Research Council sponsored this research in cooperation with the Western Electric Company.3 Limitations of Human Relations Approach Human relations theory recognizes the significance of human resources. Subordinates do not take any organization structure decision on their own and always look up to their superiors for approval of their ideas and opinions. While classical theorists viewed the organization from a production point of view. BEHAVIORAL APPROACH The behavioral school of management emphasized what the classical theorists ignored ± the human element. yet. The Human Relations approach made a significant contribution at a time when it was generally being assumed that workers have to be coerced to work. They try to be immune to feelings like affection.6 gives an overview of the key contributions to management theory by the behavioral management school of thought. This theory believes that each individual is unique and the attitude and behavior of an employee determines the way he or she works. Elton Mayo: Focusing on Human Relations Elton Mayo (1880-1949).Abstract rules regulations The rules and regulations that are to be followed by employees and are well defined to instill discipline in them and to ensure that they work in a co-coordinated manner to achieve the goals of the organization. hatred and passion so as to remain unattached and unbiased towards their subordinates. it did not succeed in establishing new concepts. Eventually the study was extended through the early 1930s. The behavioral approach to management emphasized individual attitudes and behaviors and group processes. Yet. This theory is against the view that people respond automatically to monetary stimulus. The study was started in 1924 by Western Electric¶s industrial engineers to examine the impact of illumination levels on worker productivity. people would perform effectively. enthusiasm. The limitations of the Human Relations theory are: y The Human Relations theorists are of the opinion that by removing fear. The researchers and scholars associated with the Hawthorne experiments were Elton Mayo.N. Human relations theory was one of the greatest advances in management. Whitehead and William Dickson. this approach has very little to say . the ³Father of the Human Relations Approach. Table 2. Impersonality managers The activities of employees at each level are monitored by Hierarchy of employees at higher levels. Fritz Roethlisberger. and recognized the significance of behavioral processes in the workplace. Exhibit 2.´ led the team which conducted a study at Western Electric¶s Hawthorne Plant between 1927 and 1933 to evaluate the attitudes and psychological reactions of workers in on-the-job situations. the behavioral theorists viewed it from the individual¶s point of view. This view attacked the assumption that workers can be motivated to work only through fear.

all of us have needs which are never completely fulfilled. Workplace culture sets production standards. which he labeled ³Theory X´ and ³Theory Y. Abraham H. Management sets production standards.about positive motivation. Theory X managers assume . According to Maslow. Theory X presents an essentially negative view of people. y Human Relations does not understand the economic implications of organizational problems. depends on the The group is the key factor in job performance. (iii) belongingness or social needs. behavior and effectiveness is predominantly determined by his relation with his fellow-workers and not by the kind of work he does. human needs occur in the following hierarchical manner: (i) physiological needs. This theory focuses more on the informal group and is very vague about the positive motivation aspects. Douglas McGregor: Challenging Traditional Assumptions about Employees Douglas McGregor (1906-1964) developed two assumptions about human behavior. First. It stresses on ³giving the workers a sense of responsibility´ but hardly tells what their responsibilities are. Therefore.´ According to McGregor. This theory also states the importance of attitudes and behaviors in managing the workforce effectively. its own Abraham Maslow: Focusing on Human Needs In 1943. It emphasizes more on interpersonal relations and on ³the informal group. Human Relations theory has made noteworthy contributions to the field of management. Although this theory has given great insights. they no longer act as motivators of behavior. a Brandeis University psychologist. (iv) esteem or status needs. most of the principles advocated cannot be applied in the organizational context. theorized that people were motivated by a hierarchy of needs. His theory rested on three assumptions. It provides valuable guidance in understanding the employees and managing them. Managers who accepted Maslow¶s hierarchy of needs attempted to change their management practices so that employees¶ needs could be satisfied. once needs at a specific level have been satisfied. these two theories reflect the two extreme sets of belief that different managers have about their workers. it has its limitations also. this approach assumes that a worker¶s attitudes. Table 2. Then the individual strives to fulfill needs at the next level.´ Consequently. (v) self-actualization. Third. or selffulfillment needs. Human Relations is one of the foundations on which the building of management is to be built. the work determine output. Fatigue is the main factor affecting Perceived meaning and importance of output. Human Relations theory also tends to be very vague. (ii) safety or security needs. The positive motivation aspect has been generalized by the Human Relations theorists. through our actions we try to fulfill our unsatisfied needs. Second. y Human Relations theory does not provide enough focus on work. Maslow (1908-1970).7: Elton Mayo and the Hawthorne Studies Pre-judgments Findings Job performance individual worker.

Management Science The management science approach stresses the use of mathematical models and statistical methods for decision-making. the action of which can be expressed in terms of mathematical symbols. relationships and measurement data. dislike work. have increased the effectiveness of managerial decision-making. (iv) facilities location and design. Recent advances in computers have made it possible to use complex mathematical and statistical models in the management of organizations. and (v) quality assurance. linear programming. Many managerial activities cannot be quantified because they involve human beings who are governed by many irrational elements. time series analysis etc. Operations management is concerned with: (i) inventory management. These theories helped managers develop new ways of managing the workers. (ii) work scheduling. individuals with mathematical. McGregor¶s Theory X and Theory Y influenced many practicing managers. the decision theory. To apply a quantitative approach to decision-making. Operations Management Operations management is an applied form of management science. Since one person cannot have all these skills the quantitative method requires a team approach to decision-making. want to avoid responsibility and need to be closely directed to make them work effectively. This approach has been criticized for its overemphasis of mathematical tools. (iii) production planning. economics and business background skills are required. It visualizes management as a logical entity. the simulation theory. Another name commonly used for management science is operations research. Like Maslow¶s theory.that workers are lazy. can exercise self-control and can enjoy their work. statistical. the probability theory. the critical path method (CPM). the program evaluation review technique (PERT). It deals with the effective management of the production process and the timely delivery of an organization¶s products and services. The tools used by operations managers . sampling. have little ambition. engineering. They generally have higher-level needs which have not been satisfied by the job. Theory Y is more positive and presumes that workers can be creative and innovative. Management science techniques are widely used in the following areas: y y y y y y Capital budgeting and cash flow management Production scheduling Development of product strategies Planning for human resource development programs Maintenance of optimal inventory levels Aircraft scheduling Various mathematical tools like the waiting line theory or queuing theory. are willing to take responsibility.

Inputs ± money. networking models. Feedback refers to information about the outcomes and the position of the organization relative to the environment it operates in. external environment. According to this theory. transformation processes. output and feedback (see Figure 2. The systems approach gives managers a new way of looking at an organization as a whole and as a part of the larger. inventory analysis. profits and other results produced by the organization. Outputs are the products. Systems Theory Those who advocate a systems view contend that an organization cannot exist in isolation and that management cannot function effectively without considering external environmental factors. machines and informational sources ± are required to produce goods and services.4: A Systems View of Organizations .4). which have significantly shaped modern management thought.are forecasting. men. MODERN APPROACHES TO MANAGEMENT Besides the classical. services. behavioral and quantitative approaches to management. materials requirement planning systems. Figure 2. and project planning and control techniques. Transformation processes or throughputs ± managerial and technical abilities ± are used to convert inputs into outputs. Two of these approaches are the systems theory and the contingency theory. an organizational system has four major components: inputs. statistical quality control methods. materials. there are certain modern approaches to management.

´ It is the process of deciding in advance what to do. relating today¶s events with tomorrow¶s possibilities. In other words. while controlling involves . how to do. Planning and controlling are inseparable.Fundamentals of Planning y y y y y y Definitions of Planning Nature of Planning Significance of Planning Types of Plans Steps in the Planning Process Prerequisites for Effective Planning INTRODUCTION Planning is the process of bridging the gap between where we are and where we want to be in the future. Proper planning minimizes risk and ensures that resources are efficiently and effectively utilized. planning is ³looking ahead. when to do it. and who does what. Planning involves determining organizational objectives and developing strategies to achieve the objectives.

It involves anticipating the future and consciously choosing the future course of action. one cannot tell whether one is going in the right direction or not. DEFINITIONS OF PLANNING In simple words. Terry.´ Thus.´ According to Heinz Weihrich and Harold Koontz. ³Planning is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualization and formulation of proposed activities believed necessary to achieve desired results. ³Planning is a continuous process of making present entrepreneurial decisions (risk taking) systematically and with best possible knowledge of their futurity. According to Peter Drucker. McFarland¶s definition of planning takes into account the dynamic nature of the environment. It involves looking ahead and relating today¶s events with tomorrow¶s possibilities. a manager makes use of facts and reasonable premises and also considers the relevant constraints. planning involves determining organizational objectives and deciding how best to achieve them. choosing from alternative future courses of action. Dalton E. Thus planning is a prerequisite of the control function. influencing and controlling the nature and direction of change. while planning. it requires decision-making that is. organizing systematically the efforts needed to carry out these decisions and measuring the result of those decisions against the expectations through an organized systematic feedback. NATURE OF PLANNING Planning is Goal-oriented Planning is an Intellectual or Rational Process Planning is a Primary Function Planning is All-pervasive Planning is Forward-looking Planning is a Perpetual Process Planning is an Integrated Process Planning Involves Choice SIGNIFICANCE OF PLANNING . Unless one knows where to go.´ Thus. how and when to take a particular action. The manager then decides what activities are needed. Planning gives an organization the required focus and direction. how they are to be carried out and how they would contribute to the achievement of the desired results.´ In the words of George R. Controlling without planning is meaningless. ³Planning involves selecting mission and objectives and the actions to achieve them. He defines planning as follows: ³Planning is a concept of executive function that embodies the skills of anticipating. and who are the people to be involved in it.establishing standards of performance and comparing actual results with the planned results. planning is deciding in advance what action to take.

Planning is very important in all types of organizations. It also helps coordinate and control various tasks and makes sure that resources are used optimally. It ensures that the employees of an organization carry out their work in a systematic and methodical manner. Organizations that plan in advance are more likely to succeed than those which fail to plan for the future.In a complex business situation.1: Planning and Management Levels . Focuses Attention on Objectives Offsets Uncertainty and Risk Provides Sense of Direction Provides Guidelines for Decision-making Increases Organizational Effectiveness Provides Efficiency in Operations Ensures Better Coordination Facilitates Control Encourages Innovation and Creativity Facilitates Delegation Figure 4. Planning is a prerequisite not only for achieving success but also for surviving in a complex and competitive world. planning helps managers meet the challenges posed by the environment. while at the same time minimizing the risks associated with them. It forces organizations to look ahead and decide their future course of action so as to improve their profitability. Planning is the first step in the management process.

strategic plans are general plans that indicate the resource allocation. These plans which establish overall objectives for organizations. including areas in which new products are needed. These plans help support the implementation of strategic plans. Tactical plans essentially indicate the actions that major departments and sub-units should take to execute a strategic plan.Strategic plans These plans are designed to achieve strategic goals.1: Eight Major Areas for Strategic Goals Major Areas Market Standing Description Desired share of present and new markets. who may consult lower-level managers before finalizing the plan and communicating it to top-level management. for the Innovation Human Resources Financial Resources Physical Resources Productivity Social Responsibility Profit Requirements Level of profitability and other indicators of financial wellbeing. Physical facilities and how they will be used in the production of goods and services. Compared to strategic plans. Tactical plans are developed by middle-level managers. More precisely. Such plans are more concerned more with actually getting things done than with deciding what to do. and service goals aimed at building customer loyalty. Table 4. They are thus essential for the success of strategic plans. development and performance of managers and other organization members. Efficient use of resources relative to outcomes. Innovations in products or services as well as innovations in skills and activities required to supply them. tactical plans cover a shorter time frame (usually 1 to 3 years). Table 4. Responsibilities in such areas as concern community and maintenance of ethical behavior. and priorities and actions necessary for achieving strategic goals. Supply. Sources of capital supply and how capital will be utilized. employee attitudes and development of skills. analyze the various environmental factors that affect organizations.1 describes eight major areas for strategic goals. relations with labor unions. Tactical plans They aim at achieving tactical or short-term goals. if any. A middle-level manager acting as a tactical planner deals with much less .

3. which are represented in Figure 4. The information needed for operational planning can be obtained almost completely from within the organization. weeks. However. It forms the basis for other functions in the management process. STEPS IN THE PLANNING PROCESS Planning is an endless process. no single planning procedure is applicable to all organizations. Establishing the Right Climate for Planning . The process is constantly modified to suit changes in environmental conditions and changes in objectives and opportunities for the firm. Operational plans Operational plans are developed to determine the steps necessary for achieving tactical goals.3: The Basic Steps in the Planning Process PREREQUISITES FOR EFFECTIVE PLANNING Planning is an essential managerial function and should be given due emphasis in order to make it more effective. all planning processes contain some basic steps. Unless operational goals are achieved. or even a few days. quantitative terms and serve as the department manager¶s guide to day-to-day operations. tactical and strategic goals will not be achieved. Lower-level managers who develop operational plans work in an environment of relative certainty. As organizations differ in terms of their size and complexity. such as a few months. Hence. the amount of risk involved in making operational plans is lesser than that involved in making tactical plans. The information that he requires is also less and most of it can be derived from internal sources. They spell out specifically what must be accomplished over short time periods in order to achieve operational goals. Therefore operational plans are necessary for the success of tactical and strategic plans.uncertainty and risk than the strategic planner. Figure 4. The following measures help to make the planning exercise more effective. Operational plans are developed by lowerlevel managers. These plans generally consider time frames of less than a year. They are stated in specific.

The feedback should address aspects such as how the planning process could have been made better. employees have to continually solve one problem after the other. This will help planners ensure that the plans meet the needs of the organization. As a result. one must acknowledge the good work done and have a little celebration. Goals should be SMARTER ± A SMARTER goal or objective is: Specific ± A goal should be specific. Time frame ± The goal should specify a time frame for achieving it. In order to avoid cynicism and fatigue from creeping into the planning process. it is essential to obtain inputs from those who will implement the plans and from representatives belonging to groups which will be affected by the plan. Redesigning the plan ± Sometimes. . Acknowledging and Celebrating accomplishments ± This step is frequently overlooked. Measurable ± The outcomes of a goal should be measurable. it is necessary to deviate from the plan. This would boost the morale of the planners and would ensure their fullest efforts in subsequent plans. Communicate the plan throughout the organization ± As plans keep changing. Moreover. Therefore. The persons responsible should periodically review the status of the plan. Evaluating the plan ± Feedback should be obtained regularly from the people implementing the plan. it becomes difficult to remember who is supposed to do what and according to which version of the plan. The persons responsible for implementing the plan should note such deviations when they occur and make necessary adjustments to the plan. Realistic ± The goals to be achieved should be realistic. People who are involved in these plans should also be involved in reviewing and authorizing the plan. whether the goals are realistic. and whether sufficient resources are available for implementing the plan. It is often observed that new targets are set once desired results have been achieved. Acceptable ± The goal should be acceptable to those who are to pursue it. Rewarding ± The goal should be such that those involved in its accomplishment are rewarded. Extending ± The goal should stretch the capabilities of the performer and motivate him to extend his capabilities beyond the usual limit. it would be in the best interests of the organization to put its plans in writing and make them known throughout the organization. the key stakeholders may also request copies of the various plans of the organization. Making people accountable ± Plans should specify who is responsible for what results.Clear and Specific Objectives Planning Premises Initiative at Top Level Participation in Planning Process Communication of Planning Elements Integration of Long-term and Short-term Plans Guidelines for Successful Planning and Implementation Involve the right people in the planning process ± While planning. not vague and hard to understand.

In addition. The manager must also specify subordinates¶ authority and responsibility. who reports to whom. A manager has to create the right conditions to enable the employees to effectively utilize the resources of the organization to achieve organizational goals. Robbins and Mary Coulter.Fundamentals of Organizing y y y y y y Definitions of Organizing Benefits of Organizing Formal vs Informal Organization Span of Management The Process of Organizing Prerequisites for Effective Organizing INTRODUCTION Organizing is a very important managerial function. or a football team. This applies to any organization ± business. People who know how to make effective use of their resources can make any organizational design or pattern work efficiently. a manager must provide verifiable objectives and a clear picture of the major duties to be performed. He has to make the employees understand the necessity of cooperation for accomplishing tasks. the next managerial function is to organize people and allocate resources to carry out the plan. Organizing is therefore designing and maintaining a formal structure of roles and positions. a manager should provide the subordinates with necessary information and tools for effectively performing their roles. This gives the subordinate an idea of what he must do to achieve the goals and objectives of the organization. DEFINITIONS OF ORGANIZING According to Stephen P. who is to do them. organizing focuses on how to do it. For a subordinate to understand his role. Thus. government. . how the tasks are to be grouped. and where decisions are to be made. µorganizing¶ is ³determining what tasks are to be done. If planning focuses on deciding what to do. after a manager has set goals and worked out a plan to accomplish those goals. Employees should understand their roles and responsibilities and should work together to achieve the organizational objectives.

.A. and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives. who has to perform them. L. In a nutshell. organizing is a management function involving assigning duties. grouping tasks. who has to report to whom and who should have the authority to take decisions.Thus. it helps individuals and workgroups to easily accomplish their tasks. The process of organizing helps managers to focus task efforts such that they are logically and efficiently related to a common goal.´1[2] According to this definition. y The process of organizing supports planning and control activities by establishing accountability and an appropriate line of authority. Allen defined organizing as ³the process of identifying and grouping the work to be performed. on what basis the tasks are to be grouped. The process of organizing helps maintain the logical flow of work activities. they regarded organizations as rational and economic entities. y y y y CLOSED SYSTEM VS OPEN SYSTEM Closed System View of Organizations The classical management theorists assumed that the primary goal of organizations was economic efficiency. BENEFITS OF ORGANIZING Effective organizing provides numerous organizational benefits: y The process of organizing helps an individual develop a clear picture of the tasks he or she is expected to accomplish. organizing refers to the grouping of activities and resources in a logical fashion. delegating authority and responsibility and allocating resources to carry out a specific plan in an efficient manner. y Organizing creates channels of communication and thus supports decision-making and control. By so doing. defining and delegating responsibility and authority. Consequently. Organizing coordinates activities that are diverse in nature and helps build harmonious relationships among members involved in those activities. Organizing helps an organization make efficient use of its resources and avoid conflict and duplication of effort. and that organizations were essentially closed systems. organizing refers to important dynamic aspects such as what tasks are to be performed.

i. If the initial conditions and the stimuli in a closed system are known. ± from the external environment in which they exist. technical. Thus. Open System View of Organizations Traditional closed-system views (like scientific management. etc. Prior knowledge of the following conditions and stimuli make it possible to accurately predict where each ball will come to rest: y y y y y y the position of every ball on the table the elasticity of the bumpers the coefficient of friction between the balls and the table the force with which the cue ball is hit the direction of the cue ball the type of spin on the cue ball Classical management theorists borrowed certain ideas from the closed-system concept that was popular during that period of time. ³A corporation is a living organism. even a relatively closed system. these theorists emphasized structure and attempted to eliminate environmental disruptions that could affect their studies of planned systems activities.According to Louis E. Let us consider the example of a pool table. According to Andy Groove. There is no exchange between the system and the external environment. According to this concept. For instance. requires outside intervention when it slows down or goes out of order.e. This sometimes led to the failure of plans and inefficient handling of resources. the open-system concept stressed the need for flexibility and adaptability in organizational structure. Boone and David L Kurtz. like a wind-up alarm clock.´2[4] This definition implies that closed systems require no inputs ± human. and bureaucracy) ignored the influence of the external environment. and the mutual interdependence between the organization and its external environment. But no organization can be a totally closed system. As a result. material and energy inputs. Different systems differ in the degree to which they depend on the external environment for information. ³Closed systems are sets of interacting elements operating without any exchange with the environment in which they exist. and it has to continue to shed its skin. the final condition. former CEO of Intel Corp. Unlike the closed-system approach. . a totally closed system is only a theoretical concept.. organizations should be adaptive and should take into consideration the influence of the external environment. the result can be predicted with certainty. The two basic characteristics of a closed system are: y y It is perfectly deterministic and predictable. the universal process approach.

like the movement of capital (example: corporate borrowings). but the exact number will depend on the impact of underlying factors. political. and the movement of people in and out of the labor force. Bartol and David C. SPAN OF MANAGEMENT Organizations are growing in terms of size and geographical coverage. are as important as the systems themselves. let us consider the example of the pool table. It is not how many people who report to a manager that matters. Boone and Kurtz define an open system as ³a set of elements that interact with each other and the environment. is a subsystem of a larger system ± social. and eight to fifteen subordinates at .The modern open-system model of organizing allows an organization to interact with its environment and evolve its organizational structure gradually over time. Delegation of such activities would leave managers free to handle key strategic issues. managers should delegate routine activities to their subordinates. An organization is a system consisting of several subsystems which interact with one another. One important thing is to be noted in the definition cited above. economic or legal system. thereby increasing the workload of executives. The open-system concept is based on the assumption that no system is totally deterministic or predictable because of the uncertainties in the external environment.´ The principle of span of management states that there is a limit to the number of subordinates a manager can effectively supervise. The span of control is a very important principle that emphasizes the need for coordination among the subordinates working under a particular manager. Thus. System-to-system interactions. The number of subordinates a manager has to supervise has a direct bearing on the degree to which managers can interact with and supervise subordinates. in turn. and whose structure evolves over time as a result of interaction. What counts are the number of relationships rather than the number of men. open systems are based on a biological model rather than a physical one. What matters is how many people who have to work with each other report to a manager. The question therefore arises: how many people can a manager supervise effectively? Students of management have come to the conclusion that a manager can effectively manage usually four to eight subordinates at the upper levels. To cope up with this workload. According to Kathryn M. Here again. This is analogous to the influence of the environment on the system. Martin. This disturbs the game and it now becomes impossible to predict where the balls will ultimately come to rest. The span of control refers to the number of subordinates a superior can supervise efficiently and effectively. The organization. the movement of goods and services (example: international trade). his or her opponent may pick up a ball from the table. As a player strikes the cue ball. ³The span of management or span of control is the number of subordinates who report directly to a specific manager.

are taken into consideration y The different kinds of authority and responsibility relationships that exist in an organization are understood y The way authority is delegated throughout the organization structure.the lower levels. along with their strengths and weaknesses. both horizontally as well as vertically. is taken into consideration y The way the manager implements organization theory is considered Human Resource Management and Staffing y y y y Human Resource Management: An Overview Staffing Recruitment Selection . According to the British consultant. The process of organizing consists of the following six steps: y y The objectives of the organization should be established The supporting objectives. along with the degree of delegation. the ideal number of subordinates for a higher level executive should be four while the number of subordinates for an executive at the lower level may be eight or twelve. by means of authority relationships and information flows. PREREQUISITES FOR EFFECTIVE ORGANIZING y The span of management and the levels of organization are clearly defined y The factors determining the basic framework of departmentation. policies and plans should be formulated the objectives should be identified and y The activities required to achieve classified y The best way of grouping the activities and utilizing the available human and material resources should be chosen y Authority should be delegated to the head of each group so that they can perform their activities y The various groups should be connected to each other. THE PROCESS OF ORGANIZING The process of organizing follows a logical sequence. Lyndall Urwick. Others are of the view that a manager can manage twenty to thirty subordinates.

(3) training and development. selection. Figure 12. People are vital for the effective operation of a company. shown in Figure 12. each manager is responsible for utilizing the skills and talents of the employees under him. development.1 Human Resource Management Process . very important in managing an organization. have created a strategic need for HRM expertise. managers must recognize the potential of human resources. Human resource management forms a crucial function in organizations of all sizes. Instead. determined benefits and compensation. HRM departments had a relatively small role to play in the organization¶s overall mission and plans. They developed staffing plans. however. when they are needed. talented. rapid technological changes and the need for new skills. Larger firms usually have a separate HRM department. (2) staffing. today HRM departments are playing a more strategic role in charting the course of their firms. and then acquire. and motivated employees is an important part of HRM. and (5) compensation. Changes in the environment. HRM is the management of various activities that are designed to enhance the effectiveness of the manpower in an organization in the achievement of organizational goals. Small organizations. performance appraisal. compensation and evaluation of performance to fill those needs. These changes have led to the acknowledgment that human resources need careful attention and are vital to the success of any business. cannot always afford to have a separate HRM department that can continually follow the performance of individuals in the organization and review their accomplishment of goals. (4) performance appraisal. handled complaints. Traditionally. in such organizations. In this chapter. we will first discuss HR planning. and compensation will also be discussed. changing demographics and limited skilled labor supply. Acquiring skilled. develop and retain these resources. The later part of the chapter will discuss the two important elements of staffing ± recruitment and selection. effectively. such as increasing costs. However. and recruitment. training and development. and still are. and conducted performance appraisal programs.INTRODUCTION The most important resource of an organization is its human resources ± the people who work in the organization. The HRM process is an ongoing function that aims to keep the organization supplied with the right people in the right positions. These activities were. Human resource management: an overview Human Resource Management (HRM) may be defined as the organized function of planning for human resource needs. The other steps in the HRM process ± staffing. This forms the basis of human resource management (HRM). To meet the challenges and competitive atmosphere of today¶s business environment. includes five basic activities: (1) human resource planning. The chapter concludes with a description of the socialization process of new employees. The HRM process.1.

It involves estimating the size and composition of the future work force. and helping the organization acquire the right number and the right kind of people when they are needed. Figure 12.2 Human Resource Planning .Human Resource Planning Human resource planning is the process of determining future human resource needs relative to an organization¶s strategic plan and devising the steps necessary to meet those needs [2].

evaluating and selecting qualified candidates for job positions in the organization. comprehensive interviews. The staffing process is a systematic attempt to implement the human resource plan by recruiting. Job analysis. selection test.´ staffing is just a part of the HRM process and plays an important role. Training and Development Although organizations often recruit fully qualified individuals who require little or no training. training is usually undertaken for new recruits as well as for existing manpower. These include preliminary screening. Recruitment involves finding and attempting to attract job candidates who are suitable for filling job vacancies. application blank. the management needs to find qualified people to fill the positions through the selection process. The two basic steps of staffing are recruitment and selection.Staffing Though the term ³human resource management´ is frequently used for the managerial function of ³staffing. job description. and job specification are important tools in the recruitment process. Once suitable candidates are attracted to the job position. . Staffing involves a set of activities aimed at attracting and selecting individuals for positions in a way that will facilitate the achievement of organizational goals. etc. Several methods are used in selecting prospective candidates.

Information must be available in order to measure the actual job performance against the standard job performance. Wages paid for time worked (or number of units produced) are typically payments made in the form of cash and reflect direct work-related remuneration such as basic pay. or bonuses. Training is formally defined as a planned effort to improve the performance of the employee in his area of work. It also includes the monetary and nonmonetary benefits that an employee receives as part of his employment relationship with the organization. Although the objectives. technical and operative ± will require some training at some point of time in their careers. some corrective action (such as additional training and development) might be arranged to make the performance meet the desired standards. on the other hand. . Standards in performance evaluation are prior specifications of acceptable levels of job performance. are forms of supplementary non-monetary payments over and above the wages paid. services (such as company cafeteria). methods. employees might be instructed in new decision-making techniques or the capabilities of data processing systems. Corrective action must be taken by managers to restore any imbalance between actual and standard job performance. In other words. and course or program contents often differ. measuring. Development is long-term in nature. the individual is likely to be rewarded (by a hike in pay or a promotion). They also help them get accustomed to the organizational climate. It helps the employee fit into the organization. information and corrective action. They include various protection plans (such as employee insurance). Thus.who require improved skills in order to advance in the organization. Thus. training denotes efforts to increase employee skills in their jobs. and providing the employee with feedback regarding his performance. If performance is low. Compensation Compensation consists of the wages paid directly to the employees for the amount of time worked or the number of units produced. the processes of training and development aim at increasing the ability of individuals and groups to contribute to organizational effectiveness. pay for time not worked (such as during vacations or sick leave). The process of performance appraisal involves defining the expectations for employee performance. Employees at all levels ± managerial. requires standards. and income supplements (such as stock ownership plans). the basic principles of teaching/learning are the same. When the performance is high. Performance Appraisal Performance appraisal compares an individual¶s job performance against standards or objectives developed for the individual¶s position. merit increases. effective performance appraisal as a control technique. For instance. evaluating and recording employee performance against these expectations. Benefits. Development programs are designed to educate employees beyond the requirements of their present positions in order to prepare them for promotions. The major purpose of performance appraisal is to influence employee performance and development in a positive way.

It is not an easy task to motivate employees because they respond in different ways to their jobs and to organizational practices. Factors that affect work motivation include individual differences and organizational practices. It is the set of forces that move a person towards a goal. interests and abilities. a manager must know what motivates his workers in order to make each individual employee perform to the best of his ability. is to channel this energy and direct this behavior toward the organization¶s ends. managers must consider how these factors influence and affect their job performance. values and attitudes. Motivating Employees for Job Performance y y y Definitions and Meaning of Motivation Classification of Motivation Theories Motivational Techniques INTRODUCTION In any type of organization. managerial practices and reward systems. how it is directed and how it is sustained. In order to motivate employees. The compensation program affects every member of the organization.A sound compensation program enhances the organization¶s ability to attract and retain employees. The manager¶s challenge. Individuals differ in their personal needs. Motivation is a human psychological characteristic that affects a person¶s degree of commitment. It deals with how behavior is energized. and it is one of the most important and time-consuming tasks of the human resources department. then. DEFINITIONS AND MEANING OF MOTIVATION . policies. Organizational practices that affect motivation include the rules.

Drives are action-oriented and provide an energizing thrust toward reaching a goal. Fred Luthans views motivation as ³a process that starts with a physiological or psychological deficiency or need that activates behavior or a drive that is aimed at a goal or incentive. start or initiate motivated behavior Theories 1. Motivation clarifying individual¶s perception by the of . motivation is the willingness to exert high levels of effort toward organizational goals. conditioned by the effort¶s ability to satisfy some individual need. and achievement. Robbins. Drives are directed at fulfillment of needs. Figure 16. Need is the origin of any motivated behavior.1 depicts the motivation process. status.Two-factor theory 3.Expectancy theory 2. Once the goal is attained. Need is a felt deprivation of physiological or psychological well-being. Needs hierarchy theory 2.According to Stephen P. he is driven by a desire to fulfill the need. drives and goals.´ The three key elements in the above definitions are needs. Figure 16. Needs set up drives aimed at goals. When an individual recognizes a need.ERG theory Process Concerned not only with factors that arouse behavior.Equity theory Managerial Examples Motivation by satisfying individual needs for money. the physiological or psychological balance is restored and the drive is cut off.1: The Basic Motivation Process Table 16. Needs exist in each individual in varying degrees.1: Approaches to Motivation Type Content Characteristics Concerned with factors that arouse. but also 1. Incentives or goals are the instruments used to induce people to follow a desired course of action. this is the basic process of motivation.

while the hygiene factors correspond to Maslow¶s physiological. Table 16. direction. safety and social needs. Maslow classified these needs into five groups: physiological needs. Abraham Maslow and popularized during the early 1960s. Maslow¶s hierarchy of needs theory argues that human needs form a five-level hierarchy (see Figure 16. social needs (love and belongingness). need for security. Figure 16.2: Comparison of Maslow¶s and Herzberg¶s Theories of Motivation . or choice of behavioral patterns work inputs. Maslow¶s needs hierarchy theory One of the most popular explanations for human motivation was developed by the psychologist. Table 16.2: Maslow's Needs Hierarchy Herzberg¶s two-factor theory Motivators in the Herzberg¶s two-factor theory correspond to the higher-level needs of esteem and self-actualization in Maslow¶s needs hierarchy. self-esteem needs and selfactualization needs.with the process.2). performance requirements and rewards.2 compares Maslow¶s and Herzberg¶s theories of motivation.

McClelland has contributed to the theories of motivation by highlighting the importance of three basic needs to understand motivation. People with a high need for achievement have an intense desire for success. there is confusion in the original classification and statements. growth. put forth by Herzberg are characterized by logical It was. They take a realistic approach to risk. therefore. who reviewed research pertaining to Herzberg¶s theory spelt out the various problems associated with Herzberg¶s findings. affiliation needs. They are achievement needs. They are 1. Thus. concluded that Herzberg¶s arguments did not withstand logical or empirical scrutiny. 2. Need for achievement Achievement-motivated people thrive on pursuing and attaining goals. It is very natural for people to attribute good results to their own efforts and blame external factors for their failures. the theory minimizes differences across people. McClelland¶s initial work centered on the need for achievement. and power needs. and 3. Edwin Locke.MASLOW¶S NEEDS HIERARCHY OF HERZBERG¶S TWO-FACTORY THEORY Motivators: Responsibilities Challenging Work Recognition Achievement Maintenance Factors: Job security Good pay Working conditions Type of Supervision Interpersonal relations Self-actualization needs Esteem needs Social needs Safety and security needs Physiological needs Several researchers have challenged Herzberg¶s findings. Supervisors who want to motivate achievement-oriented employees need to set . Individuals with high need for achievement can be a valuable source of creativity and innovative ideas in organizations. these researchers contended that satisfaction and dissatisfaction in individuals are not the outcome of different factors but it is individuals who assign different sources to their successes or failures. People with high need for achievement are characterized by restlessness and willingness to work long hours. it is easy to understand why people would associate feelings of satisfaction with factors such as challenge. and recognition. They typically seek competitive situations in which they can achieve results through their own efforts and which allow them to obtain immediate feedback on how they are doing. the arguments inconsistencies. McClelland¶s needs theory David C. According to some researchers.

ii. Vroom. If the What is the value assigned by the individual to the potential outcomes? . They are ready to console and help others in trouble. They are willing to assert themselves when a decision needs to be made. managers should provide them with a congenial and supportive work environment in which they can meet both corporate goals and their high affiliation needs by working with others. They love to engage in friendly interaction with others. it signifies µhow much reward one wants. They enjoy a sense of intimacy and understanding. individuals with a high need for institutional power focus on working along with others to solve problems and achieve organizational goals. iii.¶ The valence component helps an individual assess the anticipated value of various outcomes. They often run into difficulties as managers because they attempt to use the efforts of others for their own benefits. The need for power is manifested in two forms: personal and institutional. Need for affiliation reachable goals and provide immediate feedback about their Need for affiliation refers to the desire to maintain warm. In simple words. He contends that before putting in the effort to perform at a given level. In situations that require a high level of cooperation with and support of others. Affiliation-motivated people are usually friendly and like to socialize with others. McClelland¶s work suggests that individuals with a high need for institutional power become the best managers. People with high need for personal power try to dominate others by demonstrating their ability to wield power. Vroom¶s expectancy theory The expectancy theory of motivation was originally proposed by Victor H. because they are able to coordinate the efforts of others to achieve long-term organizational goals. They strive to maintain pleasant social relationships. friendly relationships with others. individuals with a high need for affiliation prove to be assets for an organization. but performance. individuals consider the following three issues: y What is the probability that the performance will be up to the required level? y What is the probability that the performance will lead to the desired outcomes? y Valence Valence is the motivational component that refers to the preference of an individual for a particular outcome. iv. They suffer pain when they are rejected. In contrast.challenging. Power-motivated individuals see almost every situation as an opportunity to seize control or dominate others. Need for power The need for power refers to the desire to be influential and to have an impact on a group. To motivate individuals with a high need for affiliation. They usually exhibit the following characteristics: i. The power motive has significant implications for organizational leadership and for the informal political aspects of organizations. including clients and customers.

For an individual to exert efforts towards a goal. They include money. Managers see this concept as a promising means of dealing with productivity problems and workers¶ grievances. Rewards can be broadly categorized into extrinsic and intrinsic rewards. promotion. The right kind of participation ensures an increase in the motivation and knowledge levels which contribute to the success of an enterprise. Intrinsic (job content) rewards are self-granted and internally experienced pay-offs. QWL is not only a very broad approach to job enrichment but also an interdisciplinary field of inquiry and action. recognition. MBO (discussed in Chapter 5) is the most popular and modern method of motivating employees at all levels for better performance. Participation allows an individual to satisfy his or her need for esteem (from self and from others). the valence component will be high. In other words. The major outcomes we consider are the potential rewards such as incentives or bonuses. Participation Motivation theories encourage the use of the participation techniques. and praise. Quality of Work Life (QWL) One of the most interesting approaches to motivation is the quality of work life (QWL) program. status symbols. Rewards may be defined as material or psychological payoffs for the accomplishment of tasks. and industrial relations. Motivational techniques Rewards Managers have found that job performance and satisfaction can be improved by properly administered rewards.possible reward or outcome of the work is of interest to the individual performing it. motivation and leadership theory. and offer constructive suggestions about how to use these rewards in organization settings. industrial engineering. Instrumentality This refers to the probability that successful performance will lead to certain outcomes. It gratifies the need for affiliation and acceptance. The motivation theories discussed in this chapter throw light on the role of the extrinsic and intrinsic rewards in improving productivity. Expectancy Expectancy is the probability that certain efforts will lead to the required performance. it gives people a sense of accomplishment and a chance for advancement. he must see a non-zero probability of effort leading to that goal. It is a combination of several fields which include industrial and organization psychology and sociology. since it ensures participation and freedom in setting goals and achieving them. . Extrinsic rewards are pay-offs granted by others. Individuals prefer intrinsic rewards such as satisfaction from performing challenging and interesting jobs. expectancy is the probability (ranging from 0 to 1) that a particular action or effort will lead to a particular outcome. organization theory and development. perks and amenities. all individuals will be motivated to reach their goal only when they see some connection between their effort and performance. In other words. Above all. or a good feeling of accomplishment.

5. such as the layout of office or plant.Job Enrichment A modern and more permanent approach to motivation is job enrichment. developing strategies. Leadership y y y Definition and Meaning of Leadership Key Elements of Leadership Leadership Theories INTRODUCTION The success or failure of managers depends on their leadership qualities. A person may be an effective manager ± a good planner. Encouraging involvement and participation of employees and interaction between workers. Given the challenges of dynamic engagement in today¶s business . Here. 2. have to select the goals and objectives of an organization. Giving people feedback on their job performance. 4. Managers are involved with bringing together resources. Thus. temperature. Making workers feel personally responsible for their tasks. as leaders. and an organized administrator ± but lack the motivational skills of a leader. decide what is to be done and motivate people to do it. organizing and controlling activities in order to achieve objectives. They can be successful leaders by helping subordinates to find solutions to their problems. Involving workers when bringing about changes in the physical aspects of their work environment. 3. At the same time managers. Ensuring that workers get to know how their tasks contribute to the finished product and the welfare of the enterprise. Leaders set goals and help subordinates find the right path to achieve these goals. A job may be enriched in the following ways: 1. lighting and cleanliness. Another may be an effective leader ± skilled at inspiring enthusiasm and devotion ± but lack the managerial skills to channel the energy he/she arouses in others. and 6. sequence and pace or the acceptance or rejection of materials. Allowing workers to make independent decisions on issues like work methods. the attempt is to build a higher sense of challenge and achievement in jobs. leadership is that function of management which is largely involved with establishing goals and motivating people to help achieve them.

and so on. KEY ELEMENTS OF LEADERSHIP It has been observed that every group that attains its goals or performs efficiently has a skilled leader. help to define the leader¶s status. rather than try to figure out who effective leaders are. (3) the ability to inspire and (4) the ability to behave in a manner that will develop a harmonious work culture. In other words. Different studies do not agree about which traits are leadership traits. y Leadership involves other people ± employees or followers ± who by the degree of their willingness to accept direction. (2) the ability to understand the fact that people are motivated by different forces at different times and in different situations. mental. A leader¶s skill comprises of four major elements: (1) the ability to use power effectively and in a responsible manner. . researchers tried to determine what effective leaders do ± how they delegate tasks. Moreover. Still. or how they are related to leadership behavior. Behavioral Theories When it became evident that effective leaders did not seem to have a particular set of distinguishing traits. they can and do shape group activities in a number of ways. DEFINITION AND MEANING OF LEADERSHIP y Leadership is the use of non-coercive influence to shape the group or organization¶s goals. Most of these traits are really patterns of behavior. researchers tried to study the behavioral aspects of effective leaders. LEADERSHIP THEORIES Trait Theory of Leadership According to this theory. y It involves authority and responsibility. Group members are not powerless. y It is a process in which one individual exerts influence over others. y Leadership involves an unequal distribution of power between leaders and group whereas many non-leaders possess many of them. leaders do not possess all the traits mentioned in these theories. how they carry out their tasks. and personality traits of various leaders. the trait approach does not give one an estimate of how much of any given trait a person should possess. leaders are born. and motivate behavior towards the achievement of those goals. most organizations today are putting a premium on managers who also possess leadership skills. in terms of deciding the way ahead and being held responsible for the success or failure in achieving the agreed objectives. the leader will usually have more power. how they communicate with and try to motivate their followers or employees. Many researchers have tried to identify the physical. not made.

No one style was effective in all .3: The Leadership Grid Situational or Contingency Theories The use of the trait and behavioral approaches to leadership showed that effective leadership depended on many variables. such as organizational culture and the nature of tasks.Figure 17. No one trait was common to all effective leaders.

They are important for practicing managers. Taken together. for subordinates. the degree to which the leader is able to improve the chances that the subordinates will achieve their goals. The contingency theories focus on the following factors. began trying to identify those factors in each situation that influenced the effectiveness of a particular leadership style. secondly. the theories resulting from this type of study constitute the contingency approach to leadership. therefore. The path-goal theory indicates that effective leadership is dependent on. Researchers. Situational or contingency approaches obviously are of great relevance to managerial theory and practice. Mitchell. The pathgoal theory of leadership attempts to explain how a leader can help his subordinates to accomplish the goals of the organization by indicating the best path and removing obstacles to the goals. clearly defining. They started looking at and studying different situations in the belief that leaders are the products of given situations. 2. firstly. Figure 17. House and Terence R. In other words. the path-goal theory suggests that the leaders should set clear and specific goals for subordinates. the paths to goal attainment. 3. who must consider the situation when they design an environment for performance. They should help the subordinates find the best way of doing things and remove the impediments that hinder them from realizing the set goals.situations. Path-goal theory This theory was developed largely by Robert J. Task requirements Peers¶ expectations and behavior Organizational culture and policies There are four popular situational theories of leadership: (1) Fiedler¶s contingency approach to leadership (2) The path-goal theory. and in which he or she operates. and. (3) The Vroom-Yetton model and (4) Hersey and Blanchard¶s situational leadership model.4: The Path-Goal Theory . 1. A large number of studies have been made on the premise that leadership is strongly affected by the situations in which the leader emerges.

The Control Function y y Importance of Controlling Levels of Control .

Some people confuse µcontrol¶ with µsupervision. the growing complexity of present day organizations and the need to identify operational errors in organizations to avoid incurring excessive costs. The process involves the following steps: i. a plan. The control function is concerned with ensuring that the planning. and cope with uncertainty. and controlling. it helps identify deviations from the established standards of performance. The term µcontrol¶ has different meanings in different contexts.Establishing standards . Leading involves the managerial function of influencing. the need to detect environmental changes that significantly affect organizations. staffing and leading functions result in the attainment of organizational objectives. The management process includes planning. staffing. organizing.y y y Basic Control Process Types of Control Requirements for Effective Controls INTRODUCTION Control is an essential function of management in every organization. handle complex situations. decentralize authority. The management process is incomplete and sometimes useless without the control function. controlling plays an important role in helping managers detect irregularities. motivating and directing the human resources of the organization to achieve organizational goals. IMPORTANCE OF CONTROLLING The control function is gaining importance in today¶s organizations due to a number of factors. Staffing involves the managerial function of placing the right person in the right job in the organization. they all involve the same basic process. In other words. BASIC CONTROL PROCESS Even though control systems need to be tailored to suit specific situations. Organizing provides the structure of an organization by determining how and where the employees will be placed in the organization and the responsibilities that they will need to fulfill to attain predefined objectives. When exercising the control function. a manager measures the performance of an individual. leading.Determining areas to control ii. Planning sets forth the objectives a manager intends to achieve.¶ Supervision is a part of control. These factors include the need for accountability in organizations. minimize costs. or a program against certain predetermined standards and takes corrective action if there are any deviations. µcontrol¶ refers to the evaluation of performance and the implementation of corrective actions to accomplish organizational objectives. control is a tool that helps organizations measure and compare their actual progress with their established plan. In the management context. In addition to addressing the above mentioned factors. identify opportunities. organizing.

Measuring performance iv.Taking corrective action when necessary vii.2: Major Control Types based on Timing Stages of Production Capital Labor Input Raw materials Market information Equipment Planning Organizing Transformation process Staffing Leading Controlling Goods Services Output Profits Waste materials Feedback control Exercised after a product or service has been produced to ensure that the final output meets quality standards and goals.Adjusting standards and measures when necessary TYPES OF CONTROL Controls Based on Timing Table 19.Comparing performance against standards v. REQUIREMENTS FOR EFFECTIVE CONTROLS Controls should reflect plans.Recognizing good or positive performance vi.iii. Feed forward control Type of Control Description Inputs are monitored to ensure that they meet the standards necessary for the transformation process. positions and structures They should be understandable They should be cost-effective . Concurrent control Regulates ongoing activities that are a part of the transformation process to ensure that they conform to organizational standards.

Controls should identify only important/major exceptions Control systems should be flexible Control systems should provide accurate information The End. .

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