Management Fundamentals and Information Systems

(Covers Latest Syllabus of Doeacc B3.1 Course)

Vishal Goyal

 Syllabus
 Lectures  90

 Practical/tutorials  30  Total
 Introduction to Management (2 hrs.)

 120

Understanding the meaning and definitions and Management, Nature of Management an art or science, Importance of Management in today‘s organizations, An overview of management processes - Planning, Organizing, Staffing, Directing, Coordinating and controlling, Evolution of Management Though - the classical school, the Behavioral Approach, the Management Science Approach, the Contingency Approach and the systems Approach

 Planning (4 hrs.)

Strategy, plan, policy and programs; purpose of planning; Mission, Vision and goal setting; and SWOT Analysis, Forecasting - need of forecasting in Planning; Types of Planning; and tools of Forecasting - Moving Average, Exponential Smoothing and Regression Models

 Organizing (6 hrs.)

    

Principles and structure of organization, Theories and types of organization, Concept of: Authority, Responsibility, Power, Delegation & Centralization of Authority, Span of Control. Formal and informal organizations

 Staffing (2 hrs.)
Meaning nature and principles of staffing, Job Rotation, Job enrichment, Job enlargement

 Directing (incl. Decision Making) (4 hrs.)
Communications in the Organization, Motivational Theories, Leadership, Decision Making

 Controlling (2 hrs.)
Concepts and Principle of Controlling, Basis Control Processes, Open Loop, Closed Loop and Feed forward Control Mechanisms, Essentials of a good control system.

 Production and Operations Management (10 hrs.)

Production planning, aggregate planning, MRP, Selective inventory control, EOQ and ordering systems, Production methods - job, batch, flow, continuous production; CAM and FMS, Quality control- Quality Costs, Statistical Quality Control; Control charts and their uses.

 Marketing Management (10 hrs.)

Overview of Marketing function, Product, Price, Promotion and Distribution strategies, Marketing research and its role

 Financial Management (10 hrs.)

Accounting Principles, balance sheet and profits and loss statements, Working capital Management, Cost concepts, break even analysis, Investment decisions - Pay Back Period, NPV, IRR.

 Human Resources Management (10 hrs.)

Nature and Function of HRM, Human Resource Planning - HR information system, Performance appraisal System, Rewards and Incentive schemes

 Information Systems, Organization, Management & Strategy (10 hrs.)

    

Emergence of Digital Firm in the existing era of IT, Information needs of management at various level of an organization, flow of information in the organization: top down, bottom up and integrated. Information System: Meaning, nature and their role Approaches to Information Systems: Technical Approach, Behavioral Approach and Socio Technical Approach. Types of Information Systems in Organization: Decision Support System, MIS, Expert System, Knowledge Management System, Transaction Processing System. Importance of information systems in supporting various levels of business strategy formulations and decision makings, Software and Hardware Requirements for developing efficient Information System (It is expected that such discussion should cover the latest developments taking place in software and hardware).

 Information Systems and Managerial Functional Areas (12 hrs.)

   

Understanding various processes/decisions involved in Production and Operations management; and determining their information needs, developing necessary information systems for Production and Operations management and their integration with the overall enterprise information systems. Processes and decisions required for effective and efficient Sales and Marketing Management; need for necessary information systems for them and their integration with other information systems in an organization. Appreciating the information requirement of a finance manager for various financial decisions in an organization and how suitable information systems can be designed to meet their requirements, integration of financial information system with that of the enterprise information system. Determining information requirements of a personnel manager and his/her need for necessary information systems for better decisions. Integrating Personnel Management related information systems with overall information system in an organization.

 Current Issues in Information Systems (8 hrs.)
 Role of Intranet and Internet in the development of various information systems in an organization, E-Commerce, Enterprise Resource Planning (ERP), Role of Information Systems in Supply Chain Management, Information Systems and Customer Relation Management (CRM).

        

BOOKS RECOMMENDED FOR READING AND REFERENCE MAIN READING Harold Koontz and Heinz Weihrich, "Essentials of Management" C. B. Gupta, "Management Concepts and Practices" W.S. Jawadekar, "Management Information System" James A O'Brien, "Introduction to Information Systems" SUPPLEMENTARY READING Gareth R. Jones and Jennifer M. George, "Contemporary Management" K.C. Laudon and J.P. Laudon, " Management Information Systems: Organization and Technology"

...............................................................................................................................................................................................4 1...................................................................................................2 1............................5 1............................................................................................................................................................................................................1..........................5................................................................................................................1 3................................................  Syllabus ...........................2 1..............................................................5.....4................................................2  Table of Contents ........................2 1.............................................. 6 Human Relations Movement: ......................................................................................................... 5 Controlling: ..............................4 1 Introduction to Management ...................... 11 3............................................................6 Span of Management: .......................................................2 1...........................1 1................................................................................................................................ 5 Coordination:.... 5 Scientific Management (1856-1915): . 7 Systems Approach: .................5........................................................................................ 2 1..............................................................5 Evolution of Management Thoughts:........5 1.........................1...........................................4...........................4........................................................................................................................................ 9 Principles of Organizing ....................................................................................................................................................................... 13 ..................4 Nature of Management an art or science ........ 4 Management Processes ....................1 3................1....................... 6 Administrative Management theory: Henri Fayol (1841-1925) 14 principles of management ..................6 1................................................................................ 5 Directing (Leading/Actuating/Motivating): ......................2 3.............................................................................................................3 3.......................5......... 8 2................ 9 Process of Organizing:.......................................................................... 10 Mechanistic or Classical structure ...................................................... 10 Organic or behavioral structure: ...........................4 Organization: ..................................................................................................6 1....................................................................................................7 2 Planning ....................................... 2 Importance of Management in today’s organizations ...............5 3.......................................................................................................................................................4............................................................................................... 6 Behavioral Approach: ........1..........................................................................................................................................................................................................5............................3 1...................4.................................1 1..........................................................2 3..............4.......................... 7 Contingency Approach: .....4 1...........................................3 1.............................................................. 8 3 Organizing ................................................................................... 5 1...............4.................................. 5 Staffing: .................... 9 Organization Structure: ................................................................. Table of Contents  Preface......................4............................................................................................................................................5.......... 7 1................................................................................................1 Introduction to Management: Management is a critical element in the economic growth of a country....... 5 Organizing: ..................................... ............. 12 Authority: .. 9 3......................................................................................................... 5 Planning: .....................................................3 1................ 6 Quantitative Approach (management science approach): (During Second World War) ..................5...............................................Error! Bookmark not defined.....................................

........................................... 14 Uses of Authority: ......12 ............ 20 Principle Principle Principle Principle Principle Principle Principle of of of of of of of staffing objectives .................................................................................2..............................................................3 Staffing ..... 26 Maslow‘s Hierarchy Needs ..........................................................2................................ 21 Job enlargement:................................................................................................................................................................................................................................................................................................................................................................................6 4............................ 26 FREDRICK HERZBERG‘s TWO FACTOR THEORY ......................................................1 3........2..............................2 4.................6 5.................4 4........................................................1 5................................................................................................................................................................................................ 21 Work simplification: .....................................................3 3.......................... 20 management development .....................................2........................................................................................................7.................. 24 Features of motivation: ........................................................................................................................................................................................................2 3...................................................................................................................................................2................................................................................ 13 Difference between Authority and Power .... 17 Disadvantages of informal organization ................................. 21 JOB ENRICHMENT ................................... 27 Maslow Theory V/s Herzberg‘s Theory ......................................................2. 20 4....................................................................................1 4........................................6......2.................................................................4 4..........................2 4............................................................................................................................4 5...........................................................equity theory on job motivation ...................................................................18 4.. 27 McClelland‘s Need for achievement Theory ...........................................................................................................................................................11.......................11 5....3...................................... 16 Why informal groups are formed: ....................................................................................................................7.1 5.......3........................................................................8 5..................................................................................................................5 4.....................5 4 Staffing ............11....................2.......................................................................................................................................................................................................................................................................3...........................4 3.............................10 3.............................................................................................................................. 22 4............9 5..................................... 20 universal development ...................... 28 J Stacey Adams ............................................................................................ 20 Staffing Principles ..................................................11....11.............1 3.............................................................................2 4...................................11 Responsibility ....................1 4................. 14 Decentralization of Authority.........................................11......6 Job ......... 16 Difference between Formal and Informal organization ............................................................................................................3 4..................................................23 5................................................................................ 28 5........................................................................................ 15 Informal Organization: .......................2 Communications in the Organization: ........................................................................8 3..............7 4.................................................... 25 Need and Importance of Motivation ......... Decision Making) .........9 3..................... 25 Factors that motivate a person: ...6.............................................................................................................................. 17 3.............................................................................................................................................................................................3.................................... 20 Methods of Job Design................................ 20 Job Design... 20 job definition ....................................... 28 Victor Vroom‘s Expectancy Theory: .........................................................................................................2.............................6...............................................................................2 5..................................3 4........................................... 21 Job rotation: ............ 24 Direction ...2..............5 4...... 16 Types of Informal Groups: ...............................................................................1 4.........6...............3 5.................................7 5..................3................... 20 staffing .........................5 5............................................................................................................3..3................................................... 25 Motivational Theories .3......................................................................................................................................... 20 open competition in promotion ....................................7 Power:......................................................................................................................................................................................2..... 24 Motivation: ....................... 23 Motivational Theories: ....................2............... 18 Nature of Staffing .................................... 16 Benefits of informal organization to its members ...............4 5 Directing (incl....................................................................................................... 20 managerial appraisal.............2 3............................................................................................................ 14 3............. 14 Delegation of Authority ........10 5..........................................

..................................................5............................................................... 40 7.......................................................................................................2 6............... 33 Steps in Control Process: ........ 39 7................1................................................................................................................ 32 5...............3 Production and Operations Management .................................................................................3 Routine and Strategic Decisions.5 MRP.................................................................................. 40 7..........................................................1 Nominal Group technique: .....................................................................3 Contingency Approach ..................Material Requirement Planning .....2 7.... 30 5........................3...............5... 38 Characteristics of aggregate planning .....................4.......................................................................2...............................................................................................................................................................................................................4................... 38 Production Plan (manufacturing aggregate plan) ...................................................2.......................................................................................................................4....................................................................................................3. 37 Production Planning ..................................................... 34 Closed loop system: .................................................................................................................................................................................................................................................2 Approaches to tackle disadvantages of group decision making ...........3.....4........5.................................................................................. 32 5................................................................................................................................................................... 35 6...........................................................................3 7......... 39 7.......3... 31 5...............................................................................................................4 7.................................................................................... 38 Staffing Plan (service aggregate plan) ...................................................................................................................................2 Major and Minor Decisions ..............................1 6...............................................................................................................................2 7.......................................................................................................................................................... 31 5....................33 6.............................5 Controlling ............................................. 32 5........................................2.........................................................................................................................................................................2 Delphi Technique: ....................................... 34 Past –oriented: ... 30 5....................................3.................................................................................................................................................................................................. 31 5..................................1 7....................................................................................................5..........................1 Material Requirements Planning ..................................................................... 30 5..................................................4............................................ 38 Objectives of Aggregate Planning ..............4 Individual and Group decisions .......................................................1 Programmed and Non Programme ..................................................4....3...................................1..........................2 Just-in-time Systems (JIT) ........................4 6........ 32 5. 35 6...................1 Benefits of JIT are: ....................... 33 Types of Control Methods .......4............................4...............................................5........................................3.......................................1 Difference between Leader and Manager .............2 BEHAVIOURAL APPROACH . 40 .............................. 31 5...........................................................................4 Purchasing .......................................5...........................................1 TRAIT APPROACHES ..........................1 6.......4....2 7.................3.......................................3 6... 29 5.......... 36 7 Production and Operations Management ................................................................................................. 33 Purpose or need for control .......................................................(MRP)................. 38 Definitions: ..................... 32 6 Controlling .............................................. 35 6............................................. 34 Open loop systems: .....................2...1 Types of Decisions: .... 32 5.......................................3...................................................1....................................3 Steps in Rational Decision Making..............................................1............................................................................4.......2..........7 Essentials of effective control systems /Comparison of Past oriented and Future oriented controls ...........................................8 Control in an organization ................................................................................................................................................................1 7......................................................1 7.................... 30 5.....6 Future –Oriented (Feed forward Control Mechanisms): .37 7............................................................2 6....................................................................2............. 31 5..................................... 39 Steps involved in purchasing ....................3 Leadership .........4 Decision Making.......................2....................................2 DIFFERENT APPROACHES TO LEADERSHIP ........................ 38 Aggregate Planning ..........................................................................................................4............. 40 7...

.............7.................................7 Inventory Control ..........................1 Marketing .............................10...........2 Marketing Mix ...................................................... 45 7.......................................8..........................................................................................1 Computer-aided Manufacture (CAM) ................................................................................................................................1...2 Acceptance Sampling: ................ 46 Benefits of Quality Circles .13............3 7.......................................................................................... 42 7.......................3 Uses of Control charts ..7...............1 7.........................................................3.......................................... 46 Key points of TQM advocated by William Edwards Deming: ...............8..............................................................................................................................................................................................................................................................................9................................................................................................................................4 7.............10.............................................. 42 7................ 50 .......................1..............1 Process control: ..........................................................................1........................................1 Unit mass production: ...............................................................................................50 8.............................2........ 43 7........... 41 Monitoring and controlling Inventories ............................................ 46 7.................................................................2 Key features of Mass production ...............................................................................................8.......... 45 7.10................... 44 7................................................................................................................................... 47 Total Cost of Quality: .....................................................................8......... 42 7............ 45 7...... 41 Criteria for judging the inventory system ..............................................................................8.......10........................................1 Benefits of Quality Control ......3............15 Quantitative Techniques/ Operation Research Techniques (OR) ...............................................................................2 7..................4.............................................................................. 42 7..... 45 7...........................................................................................11 7............1.................................................................................2 Batch:...13 7............4 New technology in Manufacturing ............................ 46 7..............1..........................................................14 7.........................1.6 7...............................10......................................1............................... 43 7...........................................................................................................................................................................1 Control Charts ...........7........................10.. 47 7............................................1 Statistical Quality Control ... 48 8 Marketing Management .............................................................................3 b) Flow /Continuous Mass production ..........................3...............8....................................................................12..... 44 7......................................................................................................................................................................................... 44 Inspection .............................8..................................2 Flexible Manufacturing Systems (FMS) .....................1................................................................................................................................................... 40 Economic Order quantity Model (EOQ Model) .....................................................................................................................12 7.....................................................................................1 7......................................... 44 7.............................................................3 Mass Production ............................................................. 40 EOQ Formula: ................10 Quality Control ..............................................................1 Key characteristics of Jobbing Production ......................................... 41 7.............................. 42 7....1.............1.. 45 7............................... 42 7......................... 45 7.........................................7.............................1 The Benefits of CAD/CAM ............................................................... 47 7.............................................................................. 44 7..........................................................................................................................................1 7.............10............................14..........................................................................................................................................................8.7............................................................................. 43 7.........................5 7..................................1....... 40 Assumptions of EOQ Model: .........2 Quality Costs ............................................... 42 7....................................................................................................................................................................... 50 Needs and wants of consumer: ..2 Automatic Process control: .....8.........4..................................................................8 Types of production Methods ....... 47 Four segments of quality costs: .............7....................................... 50 8........8..................1 8...............................................................................................................................................................13.......................................8....................2 Types of control charts .............................................................................................................................................................................................. 46 TQM –Total Quality Management ...............................................2 Quality Circles.........................14....................................... 41 Selective Inventory Control ..........1 Analysis of Patterns on Control Charts .........................2 8............... 50 Kinds of Organizations based upon marketing ....................4........8.........................1.............9 7....1 Job: ................................................................................................................................................................................1 Key characteristics of Batch Production .......... 46 Task of Quality Circles ........ 45 7.........................................................

....................8.... 67 10........................................................................................ 67 10.................................... 53 Advertising: ...................................3........................................................... 51 Product Life Cycle .................................... 58 9 Financial Management.............................9 10......4.......................................... 52 Promotion............................................................................................................................................................................... 61 Scope................................6.......................1 HRM ........................................... 55 Publicity: .. 64 Planning Procedure .................................................................................................................................................................... 61 Nature ....................................2 10............................................................................................................................................................................. 65 Steps in the HRP Process .......................................................................................................1......1......................................................................................1 10.....................................................2 8......3 Differences between Human Resource Management (HRM) and Human Resource Development (HRD)......2 Differences between Personnel Management (PM) and Human Resources Management (HRM) ........................................................................................................................ 55 8............................................................................................................................................................................... 65 Benefits of Human Resources Planning ..................................... 61 Human Resource Management: Defined ...........................................................................................................3 Performance criteria for Top Managers ....................1...............2 Essentials of a good Appraisal system ...................................... 54 Sales promotion: ..................................................................................................1 10............................1 8.................................................1...................................4................ 63 10...............................4 8............5 10......................1 Ranking Method: ...........6............................................................. 66 10.......................................................................5..................................4................. 51 8.. 62 Major Influencing Factors .......................................................3............................................................................... 62 Functions.......................6 8...................................................................5...8 8.................................................................................................................................................................6.......................................................................................................................... 56 Market Research................ 68 ................. 61 Objectives ....5 10.................................................................................. 67 10......................................................................................................4................................................................................. 61 Human Resource Management: Evolution ................................................... 67 10.....7 10.......................................6..................................6............................................................ 55 Market Segmentation ............6 10..................................................................................3 8......................................... 66 Performance Appraisal ......................................................................................................................................................................................................................................................4 10.............................................................................6 Human Resource Information System ............1 Price .........3 10. 67 10.............1..................... 67 10......................................6.......................................................2 Rating Scale Method .........................................................................................................................5....................................................................................... 65 10.......................3 Human Resources Planning ..........................................................................................................................5..................3........................60 10 Human Resources Management .................................... 67 10.. 63 Futuristic Vision....6................................................. 66 10..................61 10...................................................... 63 10...............................................10 10........................................... 53 Personal Selling: .............................................. 57 Marketing Organization.............................................................................................................4.......................................................3 Criteria of Performance Appraisal .....................1..........8 10............................................9 Distribution......7 8.....................2 Performance criteria for Middle Level Managers .....1...............................1...................................................................................................................................3 8........2 10.................4 8...5 Product .................................................................................................... 61 HRM: Beliefs .........................................................................................................................1........................................1 Performance criteria for Operatives ...................................................................1 Purpose of Appraisal ............................................................................................................................................................................................................................ 62 Functions of HRM ...................................................................................................................................................................................................4 Performance Appraisal Methods ..................6............................................................................................................................................4 10......................................6........................3...................... 64 10...............................................................................................................................1....

...........4...................................................................................................................................................................................................................... 79 12 Information Systems and Managerial Functional Areas ................................................................................................................................................................................ 73 Transfers .............................2 Reward and Incentive Schemes Promotion............................... .....2 11.............. 70 10................5 Appraisal Interview: ....................................... 69 10............................................6......................1 ..............................................................5..................................8......................... 73 Dismissal ........................................5 10.....4............................................6........8.................. 68 10....... 72 Dry promotion: When the promotion is associated with no increase in the pay-scale........................... 75 11.......................................................................5 Critical Incident Technique: ....................................................6...6 Promotions .................................................................2 10..2......................... 71 Primary compensation (Monetary): ....11 Advantages of Appraisal ....................8 Management by Objectives (MBO) ............................................................................................................................10...................10 Limitations of Performance Appraisal ....................................2.........................................6.............. 71 10..................... 70 10............................................3 10.............................................. 76 EXPERT SYSTEMS: APPLIED AI ............6................. Transfer..........6........................................................... 70 10............................................................................................................................. 69 10......................................................1 10............4..............................................................................................................4 Forced Choice Method: .......................... 70 10........ 72 Two types of Promotions:......................................6........................................................................6 Appraisal of Management ....................................................................6...............................6.... 75 Decision Support System (DSS) .................................... 75 MIS (Management Information Systems) .........................................................................2 Tell and listen: ....... 71 10.................................................................... 73 Criteria for promotion: Merit v/s Seniority .........................................................................................................3 11..................................................6........................................................................................8................... Demotion and Dismissal ..........................3 Problem solving Interview: ........................................................................................8..........................................................2.......9......................... 72 10. 68 10........ 78 Transaction Processing System (TPS) .............1 10..... 71 10.......................................................................................................................................................................................................6.................................................................................................8 10..................................................... 72 Requirements of a sound Promotional Policy ........................................ 73 11 Information Systems and Managerial Functional Areas .... 71 10............................7 10....................................................................................................................................6.......................................................................................................................1 Intrusion of subjective criteria: .... 77 Knowledge Management System ................................................12 How to make appraisal system more effective: ...........................................................................1 Tell and sell: .....................2.......................... 69 10.......... 69 10.............................7.............3 Checklist Method: .......................................6..................................6.........7 Organizational Structure :.................................................4 11................................................................5........83 14 83 ............6..........................5....................................................................................................5 Types of Information Systems in Organization ..................... 72 Non-monetary Incentive: ............9 Limitations of Appraisal Methods .....................4 10.............................................................1 11................8...................7.........................2...................................2 11.8........... 68 10............................81 13 Current Issues in Information Systems ...........................................................................................................75 11..................

FOUNDATIONS OF THE MANAGEMENT AS A SCIENCE PERSPECTIVE Practicing managers who believe in management as a science are likely to believe that there are ideal managerial practices for certain situations. but that management as an art requires no specific body of knowledge. Manager carries out the functions like: Planning.Introduction to Management 1 Overview: Understanding the meaning and definitions and Management. Controlling. the Behavioral Approach. the manager will look to specific means of performance improvement. Nature of Management an art or science. performed to determine and accomplish the objectives by use of people and resources‖. when faced with a managerial dilemma. Management is the process of designing and maintaining an environment for the purpose of efficiently accomplishing selected aims. Webster‘s College Dictionary defines an art as ―skill in conducting any human activity‖ and science as ―any skill or technique that reflects a precise application of facts or a principle. but good management can definitely become monopoly and give it a competitive edge over its rivals. attempted to discover ―the one best way‖ to perform jobs. the quality and performance of the management determines the success of an organization. He or she may rely on concepts learned in business school or through a company training program when determining a course of action. actuating and controlling. Staffing. prescribed way in which a manager should act. the manager who believes in the scientific foundation of his or her craft will expect that there is a rational and objective way to determine the correct course of action. if a manager has a problem with an employee‘s poor work performance. Conversely.not by performing the task himself. Scientific management. Importance of Management in today‘s organizations. According to George R. Those who believe in management as an art are likely to believe that certain people are more predisposed to be effective managers than are others. some people will not be capable of being effective practicing managers. According to Mary Parker Follett. pioneered by Frederick W. expecting that certain principles will work in most situations. Frank and Lillian Gilbreth. Staffing. Management is a process ―consisting of planning. Many early management researchers subscribed to the vision of managers as scientists.‖ Reflected in the differences in these definitions is the use of precision in science. and that some people cannot be taught to be effective managers. 4. the Management Science Approach. and that it is a skill borne of personality and ability. managers use a specific body of information and facts to guide their . That is. Thus. A manager is one who contributes to the organization‘s goals indirectly by directing the effort of others. in that there is a particular. the Contingency Approach and the systems Approach 1. It coordinates current organizational activities and plans future ones. For instance. only skill. Directing. That is. 1.the classical school. Men Money Material Machines Management is the dynamic. Organizing.Planning. They used scientific processes to evaluate and organize work so that it became more efficient and effective. Terry. The scientific management movement was the primary driver of this perspective. and others. In the competitive economy. those who believe management is an art are likely to believe that there is no specific way to teach or understand management. Evolution of Management Though . management as a science would indicate that in practice.1 Introduction to Management: Management is a critical element in the economic growth of a country. 2. This manager is likely to follow general principles and theories and also by creating and testing hypotheses.2 Nature of Management an art or science One of the enduring questions in the field of management is whether it is an art or a science. organizing. Coordinating and controlling. The four economic/production factor: 1. perhaps paying less attention to political and social factors involved in the situation. Now-a-days organizations cannot hold its monopoly on capital or technology. and behaviors. Scientific management‘s emphasis on both reducing inefficiencies and on understanding the psychology of workers changed manager and employee attitudes towards the practice of management. Leading. life giving element in every organization. Organizing. even with an understanding of management research and an education in management. 3. Taylor. Management is the ―art of getting things done through people”. an overview of management processes .

Another scholar that promoted the notion of management as an art was David E. 2. and then find ways to improve how tasks are performed. management is an immature science.Frederick W. This manager as an artist was likely to respond differently to each employee and situation. ART AND SCIENCE IN MANAGEMENT RESEARCH Noted researcher Thomas Kuhn. wisdom. the nature of the areas of study renders it immature. challenging the prior notion that managers behaved rationally and methodically. Mintzberg revolutionized thinking about managers at the time that his work was published. Thus. this manager is likely to consider a broad range of social and political factors. and should train them to perform the tasks according to the established procedures. Managers should hire workers who have skills and abilities needed for the tasks to be completed. the science) of management attempts to create a paradigm for managers. and gains in knowledge come sporadically.g. For example. While its foundations in psychology.e. but because it is also concerned with practice and application. Rather. and exceptions to these facts are ignored as anomalies. because these assumptions change over time as society and the business environment change.. Lilienthal. because scientific ―facts‖ do not remain stable over time. as a contrast to the example given previously. 3. Mintzberg determined that mangers engaged in very fragmented work. Rather than having a standard response to such a problem. there is still a great deal of debate on major questions in the field. addresses issues associated with the state of current scientific research and the opportunities for scientific discovery. determined that managers did not sit at their desks. in the physical sciences). sociology. by not only getting work done but understanding the meaning behind the work. evaluating. Thus. thinking. social sciences researchers may strive to .. and other related areas give it a long and rich history.. and is likely to take different actions depending on the context of the problem. Lilienthal argues that management requires more than a mastery of techniques and skills. Conversely. and leadership. Managers must codify new methods of performing tasks into written work rules and standard operating procedures. in which ―truths‖ are able to be determined through research. he promoted the idea of the manager as a motivator and facilitator of others. a manager who has a problem with an employee‘s poor work performance is likely to rely on his or her own experiences and judgment when addressing this issue. to determine a course of action. In mature fields of study. management is more of an art. the study of management is still very young when compared to other fields of research (e. FOUNDATIONS OF THE MANAGEMENT AS AN ART PERSPECTIVE Practicing managers who believe in management as an art are unlikely to believe that scientific principles and theories will be able to implemented in actual managerial situations. Managers must study the way that workers perform their tasks and understand the job knowledge (formal and informal) that workers have. working for long. Drucker terms management ―a liberal art. in which facts are established. in his previous editions of this text. using their own knowledge of a situation. Lilienthal believed that combining management and leadership into practice. Henry Mintzberg is probably the most well-known and prominent advocate of the school of thought that management is an art. Instead. Thus. rather than generic rules. who in 1967 had his series of lectures titled Management: A Humanist Art published. as effective managerial behavior. it also requires that managers understand individuals and their motivations and help them achieve their goals. through his observation of actual managers in their daily work. This was in line with the perspective of management as an art. and deciding all day long. That is. Mintzberg. because it indicated that managers did not necessarily have routine behaviors throughout their days. Another proponent of the management as art school of thought is Peter Drucker. In fact. 4. with constant interruptions and rare opportunities to quietly consider managerial issues.g. and strong consensus exists among researchers regarding the fundamental assumptions of that field. many of the central questions of that field have been answered. Kuhn.‖ claiming that it is such because it deals with the fundamentals of knowledge. rather than use a prescribed set of responses dictated by set of known guidelines. but instead used their own social and political skills to solve problems that arose throughout the course of work. management research) suffer from envy of the physical sciences. drew distinctions between mature and immature fields of study. He is critical of the assumptions that make up the management paradigm. Drucker argues that the discipline (i. instead. In many ways. these managers are likely to rely on the social and political environment surrounding the managerial issue. in immature fields of study. many scholars have argued that the social sciences (e. famed management scholar who is best known for developing ideas related to total quality management. Mintzberg is an academic researcher whose work capturing the actual daily tasks of real managers was ground breaking research for its time. due to the difficulties of studying human behavior in a number of disparate settings. As such. in his book The Structure of Scientific Revolutions. In this set of published lectures. uninterrupted time periods. Managers must establish a level of performance for the task that is acceptable and fair and should link it to a pay system that rewards workers who perform above the acceptable level. Management Taylor’s Principles of Scientific 1.

There are developments all over the world. This is possible due to effective and efficient management. The success of management is reflected through the efforts of highly dedicated and motivated work-force. 5. It furthers technological improvements: Modern world is witnessing continuous breakthroughs in science and technology. It facilitates optimum utilization of resources: Managers make use of several resources such as men. etc. Thus. Under science one normally learns the ‗Why‘ of a phenomenon. Such innovativeness helps them to carry out their activities effectively and efficiently. the production manager makes optimum use of resources through systematic production planning and control. some consistent answers have been developed in the field of management. This results in reduction in wastages of resources. due to freedom of self. individual managers‘ experiences and skills must guide them. 7. In many ways this is due to the increased sophistication of management research. In Science 1. to direct and to control activities. The importance of management can be stated as follows: 1. These principles are universal to all environments. Management is not only acquisition of knowledge (which is a science). The success of any organization depends largely on the smooth relations between Conclusion: Management – a Science or an Art? Science is organized knowledge. Management is the art of getting things done through others in dynamic and mostly non-repetitive situations. 1. and cultural as well as in economic nature. In other words. to organize. Everyone knows that Japan and Germany we're totally in ruins after the World War II. Efficient management facilitates optimum utilization of resources in order to accomplish results. managers provide monetary and nonmonetary incentives to their subordinates.expression. whereas. Because there are no hard and fast rules in certain circumstances. legislative.3 Importance of Management in today’s organizations Peter Ducker once remarked 'Management is what the modern world is all about'. Again. It motivates personnel: Managers need to create a good environment in the organization. It encourages initiative: Managers of successful organizations follow the principle of encouraging initiative. machines. Maintains good relations: Managers develop good relations with their subordinates.S. and U. principles and techniques. social. economies of less developed nations arc poorly managed. Today.create a more ―scientific‖ approach to their fields in order to grant them more legitimacy. Results are cumulative and communicable. You are well aware that there is a wide gap of development between Europe and Asia. inquiry are systematic and 2. Modern world is witnessing continuous breakthroughs in science and technology. economies of well developed nations are well managed. 4. but today these two nations are highly developed. but it is also application of knowledge which requires skills. In other words. Knowledge of management theory and principles is indeed a valuable aid and kit of the manager but it cannot replace his other managerial skills and qualities. It facilitates innovation: Modern management is dynamic in nature. In these circumstances. For instance. Thus. money. The development of management theory involves development of concepts. group and organizational effectiveness. there are still a number of research gaps in management. This is mainly because of the quality of management in the concerned organizations. it is evident that management plays a vital role in the success and development of not only the business organizations but the entire nation as a whole. can certainly improve This knowledge has to be applied and practiced by the manager just as the medical or legal practitioners practice their respective sciences. new methods and new techniques are being introduced in business activities. . it helps to improve individual. There is no doubt that all the breakthroughs and developments were made possible by efficient and effective management. European countries. and as such brings higher returns. others fail even during good times. However.A. 6. and specialization. Management is both an art as well as a science. there is still a great deal of disagreement and confusion in other areas. 3. methods. much of the management research conducted in academic institutions blends the notion of management as an art and as a science. Management knowledge Managerial practices. A good manager is one who is sensitive to its environment. management transforms resources into results. subordinates often come out with innovative ideas. whereas. Such technological developments are not only vital to the concerned organization but also to the entire nation and even to the whole world. 2. are highly developed as compared to Asian and African nations. The art or practice of management is different in different situations viz. despite our increased knowledge in some areas. They need to provide good working conditions and facilities to the employees. Minimizes wastages: Managers minimize wastages by following the process of management. Every manager at all levels needs to plan. Good relations are maintained by proper directions. In order to have a dedicated and motivated work-force. Methods of empirical. but in reality it is the 'Management Gap'. communication and leadership. the practice of management is likely to be dictated by the perspective of management as an art. Some of these trends in management research that have pushed the field in either direction—namely increased statistical sophistication and the emphasis on contextual influences—are described below. New machines. to come out with suggestions and actions that would not only help the organization to grow and expand but also enable the subordinates to fulfill their career aspirations. You must have heard that some organizations survive and succeed during bad times. Despite its relative immaturity. Information can be ordered and analyzed 3. thanks to better and innovative management. political. Thus. Successful managers generate innovative ideas to solve business problems or to handle their tasks and responsibilities. They encourage their subordinates to show their initiative. Japan. materials. You may call this gap as the 'Science and Technology gap'. under art one learns the ‗How‘ of it.

4.4. Assists society: Managers are socially responsible. It is impossible for anyone to imagine a world without high computing environment. or proposal. all that exists is a planning study. operational level. employment opportunities. The main advantage is that the computers can be programmed and changed from time to time with change in activities. In management field the computer plays a vital role directly or indirectly.4. Several economists during this period explained their concepts and functions of management.2 Organizing: According to Allen. At all the 3 levels of management i. Quite often. defining and delegating responsibility and authority and establishing relationships‖. 8. recruiting. to contribute towards the organization‘s goals. an analysis. Middle Level and High level wide use of computers is made. and so on. It is the worst nightmare for any organization to imagine its functioning without high end automated systems. The major advantage is that the systems provides the top level management with effective updates of slightest changes in the working conditions and abreast them with what is happening in the major areas. Facilitates expansion and diversification: Successful managers are responsible for the growth and expansion of the enterprise. Motivation can be financial and non-financial. Because of this factor.management and employees. the society at large is benefited in terms of quality goods at good prices. Without the active involvement and commitment on the part of the superiors and their subordinates. 1. appraising. 1. It is intentional in the sense that it makes sure that all the tasks necessary to accomplish goals are assigned to people who can do them best. Turgot explained the importance of direction and control. The transactions carried out help to improve the routine business activity and affect the overall performance of any organization. Communication is the process of passing information and understanding from one person to another. The transactions may include calculations. between different levels. or interest. These systems provide the top level management with rapid access to timely information. With computers the manager can take better decisions and can draw conclusions with help of precise data in no time. summarizing or sorting of data. Now-a-days. The blooming technology has taken deep roots in every field nowadays. promoting. 1. Before a decision is made. The middle level management benefits the most by the use of computers and automated systems. The rise and the falls in employee‘s performance can be easily traced with several automated systems. It includes identifying work force requirements. selecting. and keeping filled positions in the organization. It is stimulating and inspiring workers to do their best. Say explained importance of planning. timing. Preparing daily reports in graphical format makes it easier for the manager. It measures performance against goals and plans.4 Management Processes There are mainly following management processes: • • • • • • Planning Organizing Staffing Directing Coordinating Controlling 1. In Operational level of any organization there are thousands of transactions to be performed daily. Leadership is process by which a manager guides and influences the work of subordinates. and between different departments or sections. effort. 9. Planning is determination of what is to be done. explained concept and consequences of division of labour. leadership and motivation. Motivation means arousing desire in the minds of people to give their best to the enterprise. In most of the companies the top level management uses the executive information systems which are structured and automated tracking systems. Organization refers to the ―structure which results from identifying and grouping work.6 Controlling: It is the measuring and correcting of activities of subordinates to ensure that events conform to plans. placing. Most of the organizations have automated computer systems for handling their transactions. But 1. Organizing is that part of management that establishes an intentional structure of roles for people to fill in an organization. it is not possible for any organization to grow and expand.4. Quality of workers' life: Modern management shares the fruits of productivity and efficiency with the workers. The use of computers drastically increases the speed at which the transactions occur and provide greater accuracy. . Workers are provided not only with good working conditions but they are also rewarded monetarily and non-monetarily.5 Evolution of Management Thoughts: The period between 1700 and 1850 highlights the Industrial revolution. who have to do it and how the results are to be evaluated.1 Planning: Planning involves selecting missions and objectives and the actions to achieve them. 1. Like.3 Staffing: Staffing is an important part of organizing or building the human organization. profit is not the only motive. Planning is the function that determines in advance what should be done. Adam Smith. between superior and subordinates. It is a function to be performed at all the three levels –Top.e. Successful organizations have reconciled profit motive with social responsibility. and to harmonize individual goals to contribute to organization goals. It involves three sub functions: communication. Middle and Supervisory. The computer helps the manager to take crucial decisions and helps in solving problems.5 Coordination: It is to reconcile the differences in approach. inventorying the people available.4. 1. and training or otherwise developing both candidates and current jobholders to accomplish the tasks effectively. it is the inefficient management that retards the growth and expansion of the organization. Staffing is defined as filling.4. how and where it is to be done. and as such their quality of life enhances. Let us see how the computer is essential for the levels of management. 10.4 Directing (Leading/Actuating/Motivating): It is the process of guiding and influencing the work of the people. 1.

5.2 Administrative Management theory: Henri Fayol (1841-1925) 14 principles of management 1.5. 2. Centralization 9. 3. Modern Management Approaches: 1. Administrative Management theory and 3.5. Emphasis was on humanizing the administration of control process and encouraging the process of self direction and control. 3. Stability of tenure of personnel : Job Security 13. Human relations movement. working non- 3.) Features: 1. 2. democratic and participative style of supervisory leadership is more effective than task-centered leadership. George Homans. Limitations: 1. Time and Motion study: Differential payment: Incentive linked with Production Drastic reorganization of supervision: Separation of Planning and doing Scientific Recruitment and Training for workers to bring out the best results. Scientific Management 2. 5. Economic incentives are strong enough to motivate workers for increased production proved wrong. 2. They have other needs as well. Based on wrong assumption that satisfied workers are more productive workers. Workers do not want money only. Union is strength: Harmony and unity among the staff. 4. it is important to provide social satisfaction to the workers. (Douglas McGregor. Systems Approach 4. Equity : Fair treatment 12. 5. It is as much incomplete as the Scientific and Administrative Management Approaches. 4. No correlation between improved conditions and high production. Scalar chain . 2. Abraham Maslow.and Warren Bennis. Modern Management Approaches: 1. 4. 4. Intimate friendly cooperation between the management and workers 3. It puts great weightage to participative and group decision –making. 2. Security need. Behavioral Approach 2. It wants him to give up the ‗Desire for Power‘.4 Behavioral Approach: This approach is more matured version of Human Relations Approach. 3. Only focused on Human variables and ignored the task and structure variables. Pragmatic approach to organizational conflicts and change.Kurt Lewin. A business organization is not only a technoeconomic system but also a social system. 3. Quantitative Approach /Management Science 10.1 Scientific Management (1856-1915): (Father of Scientific Management is Frederick Winslow Taylor) Important contributions: 1. 2. 2. The evolution of management thought during this period can be studied in two parts: 1. 6. Chester Barnard. 5. social need. which cause resentment among them. 1. Contingency Approach 1.Rensis Likert. Advance tools and machines eliminated some workers.Chris Arglyris. Limitation of Scientific Management: 1. financial rewards are also important.5. Early Management Approaches: 1.management as a separate field of study emerged during the second half of the 19th century. 4. It makes unrealistic demand on the superior. Over-emphasized on the importance of symbolic rewards and underplays the role of material rewards. No man is entirely ‗economic man‘. Its production oriented and not employee oriented. More flexible organization structures and jobs built around the capabilities and aptitudes of average employees. 4. Time and motion study is not accepted as entirely scientific. 3. Initiative 14.5. Mary Parker Follett. 6. It considers the organization as groups of individuals with certain goals. 1. 7. Division of work Authority and responsibility Discipline Unity of command Unity of Direction Remuneration Subordination of individual interest to general interest 8.3 Human Relations Movement: Based on Hawthorne experiment done by Prof Elton Mayo (1927-1932) Features: 1. egoistic need etc. So. Separation of planning and doing leads to greater monotony of work and reduces the skills. Order : Right place for everything 11. Employee-centric. 5.

Systems Approach is based on the concept of ‗Holism‘. OR techniques provide the rational base for decision making process. 5. information. 1. According to this approach. 1. the Operations Research (OR) techniques were used to solve the War related problems.1. Managers are thus required to develop the situational sensitivity and practical selectivity. 3.7 Contingency Approach: 1. It says that there is no one way of doing the things under all situations. Classical Approach emphasizes on task and structure. satisfaction ) 1. An organization is also a system composed of 4 interdependent parts: Task.. than technical. 8. According to this approach. orderly. products. It provides Quantitative techniques and tools to make objectively rational decisions. Every system has flows of information. In such situations. 3. Government agencies etc. structure. Every system/organization has many external systems like suppliers. in motivational and leadership approaches. fuel. A System is a set of interdependent parts which together forms a unitary whole that performs some function.5. they used it for solving problems of the Industries. But after the war ended. material and energy.6 Systems Approach: Common pitfall of the Classical. customers. Objectively rational -> Unemotional. permeable. Behavioral approach emphasized on ‗People‘ whereas Quantitative approach emphasized on ‗Mathematical Decision Making‘. equipment.5. Open System interacts with its environment.5 Quantitative Approach (management science approach): (During Second World War) Initially. Drawback: Organizations have more human problems related to organizing. A system can be open or closed. It facilitates disciplined thinking. in establishing control systems. human efforts )and leaves the system as outputs( services. like mechanical systems. Keynote of this approach is precision and perfection. 2. in deciding degree of decentralization. reasoned decisions 2. 4. 9. management principles and concepts of different schools have no general and universal applicability under all conditions. These enter into the system as input (raw material. 4. 7. creditors. in resolving conflicts and managing change in employee development and training and various other areas. 1. their 6. . the task of the manager is to identify the best suitable technique for a particular situation that can contribute best to the attainment of the management goal. 2. Behavioral and Quantitative schools is that they stress one aspect at the cost of others.g. 3.5. Close Systems don‘t interact with environment. and changeable. people and technology. Human and social systems are Open systems as they constantly interacts with their environments. Methods and techniques highly effective in one situation may not work in other situation. staffing. Earlier theorists considered Organization as a closed system with its own boundaries. This approach is applicable in designing organizational structure. 5. Later they were considered as open systems that are more flexible. E. technology. leading etc. you can‘t only take decisions based on quantitative tools.

Moving Average.1 . purpose of planning. and tools of Forecasting . Mission. plan. policy and programs.need of forecasting in Planning. Forecasting .Planning Overview: Strategy. Types of Planning. Exponential Smoothing and Regression Models 2 2. Vision and goal setting. and SWOT Analysis.

management. 4. Theories and types of organization. Key departments are placed directly under the higher . a) If a company believes that advertising is the key to success will set up separate advertising department that will report to the president.2 Process of Organizing: Organization is used in two different senses. the overall goal of the organization may become submerged or conflicts may develop. A man is born in an organization. corporations.Organizing Overview: Principles and structure of organization. This will complicate communication and increase the payroll. Manufacturing unit have various groups /departments – Production. 2. b. Determining levels at which various types of Decisions are to be made: a. prisons etc. 1. Differentiation: Departmentalization or segmentation of activities on the basis of some homogeneity. Structure Process of Organizing Organization is the process of defining and grouping the activities of the enterprises and establishing the authority relationship among them.g. whereas in textile industry it may be treated as a section under Production Department. But friendship groups. ethnic groups are all not an organization as it does not involves any significant amount of conscious planning or deliberate structuring. b) In all Chemical and Pharmaceutical companies product development may be considered as key . 3. Span of Control. Finance. Concept of: Authority. Consideration of Objectives: (To know the objective of the organization) It will determine the various activities which need to be performed and the type of organization which needs to be built for this purpose. the manager differentiates and integrates the activities of his organization. Institutes) and work in an organization (Offices and factories). 6. There are six steps involved in this: 1. Narrower the span. Formal and informal organizations 3 3. 1. e. E. schools.1 Organization: An organization is a social unit or human grouping. The Department which is to be considered as key depends on company‘s objective. Decision of level/extend of Decentralization of authority and responsibility Extremely decentralization may lead to loss of control and on the other hand extreme centralization too will lead to wrong decisions at wrong times. Power. churches. Integrates: Process of achieving unity of effort among the various departments. Delegation & Centralization of Authority. Setting up a coordination Mechanism: According to Peter Drucker.g. Marketing. an organization is like a tune. Deciding which Department will be Key Department namely Organization 3. In performing organizational functions. As individuals and departments carry out their specialized activities. Colleges. Key Departments are those which are involved in the activities essential for the fulfillment of goals. Like the structure of an army will be different from the structure of a business enterprise. Specialization: The activities in an enterprise should be divided according to the functions and assigned to the persons according to their specialization. Grouping of Activities into Departments: This step is to identify the activities necessary to achieve the objective and grouping similar kind of activities into departments and divisions. Personnel etc. 2. • • Objectives: Objective should be clearly defined as it influences the structure of the organization. Determining the span of management Determining the number of subordinates that who should report to each executive. Organization pervades all the important phases of man‘s life. educated in an organization (schools. Hospitals. deliberately structured for the purpose of attainment of specific goals.3 Principles of Organizing Certain principles are to be followed in order to develop sound and efficient organization structure. armies. For example. Process of organizing 2. It is consists of individual sounds but with relations among them. taller will be the structure with several levels of management. Deciding the levels at which major and minor decisions have to be taken. so production manager will directly reports to the top management. Result of that process. 5. Responsibility. 3.

Personal Ability: There must be proper selection. d. does not indicate the organization‘s informal relationships and channels of communication. The formal structure of an organization has two dimensions: 1. decisionmaking. communication. Broadly. This facilitates unification and coordination of activities. motivation etc. departmentalization of jobs. Unity of direction: There should be one objective and plan for a group. training of the staff as people constitute an organization. Communication will be mostly between superior and his subordinates in the form of commands There is insistence on loyalty and obedience to superiors as a condition of membership Once the task has been assigned to the lower level.• Span of Control: Span of control should be minimum as there is a limit to the number of persons that can be supervised by the boss. responsibility can be shown. No superior should be allowed to avoid responsibility by delegating authority to his subordinates. Vertical • • Horizontal depicts differentiation of total organizational job into different departments. Organization structures vary tremendously. where the flow of authority. Scalar Principle: Also called ‗Chain Command‘. Balance: Balance between size of departments. of be The organizational structure can be depicted by an organization chart. Organization Level 2 Organization Level 3 Tall Organization implies: a. and should permit expansion and replacement without dislocation and disruption of the basic design. Distance from top to bottom Extended communication lines Narrow span of control Centralization . Organizations may be departmentalized on the basis of functions. Flexibility: Should be adaptable to the changing circumstances. Decision making will be centralized. Exception: Only exceptionally complex problem should be taken to the higher level so that they can focus their time on more crucial and important issues.4 Organization Structure: In second sense. hierarchy of command. place.1 Mechanistic or Classical structure It is of pyramid shaped. control. who has the greater degree of responsibility at each level. Authority: Authority should be equal to the responsibility and must be clearly stated. between span of control and short chain of command and among all types of factors such as human. and undermining of authority. indiscipline. organization is the structure for carrying out the functions of planning. Vertical refers to the hierarchy of authority. Simplicity: Organization structure should be simple and the levels should be minimum to avoid ineffective communication and coordination. Delegation: Each manager should have enough authority to accomplish his task. Merits: Clear and well defined work setting to its employees. It implies centralization of authority at the top. products or some combinations of the three. • • • • • • • • • Tall Organization • • Decision Making Center (Authority Base) Organization Level 1 3. Demerits: • Each individual carries out his assigned part as something apart from the overall purpose of the organization as a whole. The line of authority must properly defined. b. narrow span of supervision and intense division of labour. • • 3. c. But the chart does not shows certain things like. Efficiency: Organization structure should enable the enterprise to function efficiently and accomplish its objective with lowest possible cost. between centralization and decentralization.4. it is difficult to change that. Responsibility: Superiors should be held responsible for the acts of his subordinates. placement. we can categories an organization into two• • Mechanistic or classic organization Organic or behavioral structures • • • Unity of Command: Each subordinate must have one superior to obey as otherwise it will cause disorder. As it is a tool to accomplish the goals. financial and technical. Horizontal 2.

Task: It is another important determinant in formation of organization structure.g.3. Like a) Mutual benefit Organizations – Benefit their members only e.g. Less extended communication lines. Mass and Process. 7. Worthy. as American culture supports decentralization of authority where as German culture does not .4. • Communication takes place at all directions. Strategy: It means long-term goals of an enterprise and allocation of resources necessary for carrying out these goals. Thus. 5. 3. Marketing organizations etc. Whereas in fast changing environments when jobs need to be constantly redefined to cope with the ever-changing needs of the environment . Small spans give . According to James C. 6. large numbers of workers can be supervised by one. initiatives. behavioral Structure is appropriate. Culture: Culture bounds on what may or may not be done. 2.. workers perform similar types of unskilled jobs. It is done at all levels. c) In mass technology. Stable environment – when people do fixed and specialized jobs with little need to change their Skills. Firms in North America tends to be more decentralized than the firms in Germany ..e. Labour unions b) Business Concerns – Benefiting the owners e. Unit is the simplest technology and process is the most complex. • 1 2 3 Flat organization implies: a. Size: The number of employees working for an organization in a single location. Private Hospitals. this is not possible.where creative decision making is required . Merits • It is flexible. and decisionmaking abilities. more general supervision and more decentralization. flat structures are best as with maximum decentralization it develops self-reliance. c) Service Organization – Benefiting clients e. Extremely wide spans of control c. d) Commonweal organization – benefiting the public at large e. With the change in strategy. 4. Trade Associations. people‘s responsibilities and functions can be quickly changed to meet situational demands. Insurance Companies. Three broad types of technology are: Unit. b) The more complex the technology. However in unit or process technology.. Demerits • Continuous uncertainty about the tasks of people as it is ambiguously defined and is changing. Technology: The structure is largely influenced by its technology. Post Offices. i. Government Hospitals etc. The strategy of diversification into new products or new geographical areas will lead to change in the structure of an organization.. on what is desirable and what is not. • Decision making is not centralized at the top. in another study Porter and Lawler concluded that there is no clear overall superiority of a flat organization structure over a tall organization structure.. Type of structure useful in a particular organization depends on a number of factors: 1. the more need for supervision and coordination at various levels is required. What type of organization is best? There is no specific structure that is suitable in all situations. There is little specialization and hierarchy of command. Complex technology leads to taller structure. Universities etc. Manufacturing Companies.g. It is the role that it plays in a society. • Commitment to one‘s task is more valued than obedience or loyalty. Joan Woodward‘s study has shown that. Environment: According to Burns and Stalker. a) The more complex the technology. As the number of employees increases the amount of formality increases to cope with the complexity of employee interrelationships and communication problems. classical structures with strong control and tightly specified duties are good when stable environment is there. Span of control: We have seen there is a close relationship between the span of control and the shape of organization structure.g. High levels of decentralization b. the more the need for better personnel administration and plant maintenance to keep the equipment in operation for higher proportion of the time and the greater the number of clerical and supporting staff. the structure of the organization needs to be changed.2 Organic or behavioral structure: • It generally has wider spans of control which give rise to a flat form. Here workers perform highly skilled jobs for which small groups are inevitable.

private company or a government agency. 10. Form: Whether the enterprise is a cooperative. In other words. the reason for levels of organization is the limitations of the span of management. span of authority. The purpose of organizing is to make human cooperation effective. Narrow span will result into tall structure with many levels of supervision between top level and the lowest levels. a classical structure will be appropriate. Whereas. Thus he has added one level of management through which communication between him and salesman will pass and also he has added the cost of four additional managers. If the organization is composed of unskilled members or poorly motivated employees. organisation levels exist because there is limit to the number of persons a manager can supervise effectively. Cooperative is based on democratic principles and therefore will be different from a private firm which is based on dictatorship principles. Wide span will result into flat organization with fewer management levels between top and bottom e. Too wide span may cause overstraining to the managers and too little control or guidance to the subordinates. If he feels he is not able to work closely enough with each salesman. span of supervision. If the top managers believe that people are good and committed to organizational goals. skills and experience as well as their needs and personality characteristics. Organization with Narrow spans 3..rise to tall structures and big spans to flat structures. If 16 sales persons are reporting to a sales manager then span of management will be 16. His span of management is now 4.5 Span of Management: Meaning and Importance: The term ‗Span of Management‘ refers to span of control. they would create an organization which emphasizes freedom of action whereas if they believe that by nature people are lazy and uncooperative they would prefer to create an organization which emphasizes direction and control. Managerial Characteristics: Structure is influenced by the value system of its top managers. Organization with Wide span Advantages • Superiors are forced to delegate Disadvantages • Tendency of overloading superiors to become decision bottlenecks • Danger of superior‘s loss of control • Requires exceptional quality of manager What is an appropriate Span? . Too narrow span may result in under-utilization of managers and over controlled subordinates. Employee Characteristics: The abilities. He decides to reduce the span by adding 4 assistant managers under him. It indicates the number of subordinates who report directly to a manager.g. 8. supervise four salesmen. if it is composed of skilled members and have a strong need of independence and self realization. or span of responsibility. Behavioral one will be appropriate. Two reasons why the appropriate management must be known span of a) It affects the efficient utilization of managers and the effective performance of their subordinates. 9. b) There is a relationship between organizational structure and the span of management.each to Advantages • Close Supervision • Close control • Fast communication between subordinates and superiors Disadvantages • Superiors tend to get too involved in subordinates work • Many levels of management • High costs due to many levels • Excessive distance between lowest level and top level.

g. Thus large span of control can be used. whereas if involved in different types of job.C Worthy) believe that a manager can effectively manage as many as 20 subordinates. Line and Staff Authority: There are two types of authority in an organization: Staff and Line. A staff officer has the ‗Authority of Ideas‘ only. e.g. who checks the accuracy of accounting records and suggests the measures to prevent fraud.g.. e. a small span is necessary. According to Henri Fayol. Market researchers who gathers and analyses data on marketing problems and advises the marketing manager on the demand for new products. e.6 Authority: Authority is a formal right of the superior to command and compel his subordinates to perform a certain act. Thus the span must be based on a manager of average ability. Ability of the Manager: Depending upon the capability of the manager the group size reporting to him can be determined. Type of Work: If the employees are doing similar jobs. Coercion. Level of Management: Economic Consideration: Smaller spans means a larger number of managers with added salaries and other costs they entail whereas Wide spans involve extra costs in the inefficiencies that result from diminished managerial leadership. On the other hand. Factors governing the span of Management: It is clear from the above discussion that there is no unanimity among writers about the average span that is appropriate Modern writers have suggested a Contingency method to determine the appropriate span of management. Expert Power: When the expertise in a given subject. 4-5 subordinates should report to a superior. A supervisor can direct more employees if they are working on an assemblyline operations than if they are working in a warehouse or maintenance situation. Geographic Location: An office manager with 25 employees located in a single place may be able to supervise them well . This power arises from the ability to grant reward.This will reduce the span of management. E. Line Authority: A superior exercises direct command over subordinates.Defined Authority and Responsibility: If the responsibility and authority of the employee are properly defined. an internal auditor. Reference. Line and staff Organization of a typical Manufacturing Company is given at end of chapter. to the head of accounting department. expertise and legitimacy • Reward Power: This power has influence when influential person feels that he will be rewarded.. Ability of the Employees: If the employees are skilled. Well. the ideal number of subordinates is 3 to 6. French and Raven have suggested five types of power: Reward. Lawyers. Professor Coercive Power: This involves punishment if the subordinates don‘t comply with their superiors.Many researches have done to determine the ideal number of subordinates directly reporting to a manager. According to Lyndall Urwick. Sophisticated Information and Control System: Will not require close supervision. The order will then be robbed of its authority. But a sales manager with 25 sales people located at different locations /districts would find direct supervision difficult.Assistant manager. GM (Board of Dir) . they need not to contact the superiors frequently for guidance and instructions. Reference Power: When the subordinates desires more and more to identify with or imitate their superiors.Foreman – assistant foreman Human Relations View Authority depends on the willingness of his subordinates to accept it. close supervision is required . It says that the appropriate span can be determined by the specifics of the manager‘s particular situation. • • . etc.g. The information which a staff officer furnishes or the plans he recommends flow upward to his line superior who decides whether they are to be transformed into action. senior has the e) f) g) h) • • 3. than less attention is required by the manager.. For e. Classical View Authority originated at the top in the formal structure of an organization and flows downward to subordinates. 8 number of subordinates is right. e.Production Manager.g. Authority is ―the right to give orders and power to exact obedience. According to Ernest Dale. Staff Authority: It is merely advisory... It is the ability of individuals or groups to induce or influence the beliefs or actions of other persons or groups. if incompetent employees are there. the subordinates may not question the superior‘s right to do so but they may choose not to comply with the order. span of management can be larger. self motivated.g. If a superior shouts at everyone to work hard. if the group below the manager is of 20.. Some experts (J. a) b) c) d) 3. According to Hamilton. competent. Professors. The authority becomes somewhat meaningless unless those affected accept it and respond to it.‖ Broadly there are two views on the source of Authority in an organization.7 Power: Power is a broader concept than Authority.

Whereas the responsibility of a foreman is continuous as it does not ceases once the assignment is accomplished. It is delegated to an individual by his superior. Responsibility has two dimensions: Responsibility for: It is the obligation of a person to perform certain duties written in his job description Responsibility to: It is the accountability of a subordinate to his superior. It rests in the position.1 Difference between Authority and Power 1. Authority Power 1. 4. discharged by The observation by Terry says‖ it is something like imparting knowledge. 2.  E. manager retains the overall 3. • • 3. there may be elaborate set of sanctions invoked against him. It arises normally by position. the manager cannot do all the tasks himself for the accomplishment of group goals. 2.7. It serves as the basis of informal organization.‖ Advantages of Effective Delegation   It relieves the manager of his heavy workload It leads to better decision: It leads to better decisions. responsibility a misuse of And if responsibility subordinates may find situation.  . It rests in the individual.g. It is inevitably associated with check-up. 3. A subordinate cannot be expected to accept responsibility for activities for which he has no authority. he assigns the work to his subordinates and also gives them the necessary authority to make the decisions within the area of their assigned duties. he must entrust him with part of the rights and powers which he otherwise would have to exercise himself to get that work done. conspicuous (shown on organization chart) and finite 5. If authority exceeds authority can result. It helps in improving the confidence of subordinates.9 Delegation of Authority Delegation of functional authority from line authority of president Line Authority of the President Controller: Accounting Procedures Personnel Manager: Personnel Procedures Purchasing manager: Purchasing Procedures Public Relations Manager: Public Relations Procedures Meaning: In an enterprise. According to Louis A Allen. Secures expertise in the making of decisions. the authority also changes. punishment. You share with others who then possess the knowledge. its location cannot be known from the formal organization chart. inconspicuous and infinite. It helps train subordinates and builds morale: Effective delegation causes subordinates to accept responsibility. It is the institutionalized right of a superior to command and compel his subordinates to perform a certain act. It is specific when on being subordinates it does not arise again. Authority should be equal to the responsibility. if the subordinate is authorized to take the necessary decisions on the spot. Responsibility may be specific or continuing. Therefore. •The delegating authority. It speeds up decision-making: The time involved in consulting the superiors to make small decision can be eliminated. 3. exceeds authority the himself in a frustrating 3.• Legitimate Power: When the subordinates perceive that the seniors have rights to determine their behavior. It serves as the basis of formal organization. ―If the manager requires his subordinates to perform the work. Permits centralization of decision making and coordination of activity. supervision control.7. It is undefined. With the change in position. but you still retain the knowledge too. His capacity to work and to take decisions is limited. Hence even when his position has changed his power remains with him. since the subordinates closest to the scenes of action usually have the best view of the facts.‖ •Delegation does not mean surrender of authority. This downward pushing of authority to make decisions is known as Delegation of Authority. It is the ability of a person to influence another person to perform an act.8 Responsibility As Authority is the right to issue commands. It is mostly well defined. Responsibility is the obedience of a subordinate to obey those commands. It is earned by an individual through his own efforts. 4. the responsibility of a consultant is specific. Responsibility cannot be delegated or transferred.2 Uses of Authority: • Enforces obedience to norms: In case of disobedience. 3.

decentralized and the subordinate become liable for that. make the nature and the scope of the task clear. •It is a situation that exists as a result of systematic delegation of authority throughout the organization. They feel more motivated and satisfied in their jobs. efficiency and speed of decision making process. In case of large. Number of Employees.10 Decentralization of Authority Delegation of authority is closely related to the organization‘s decentralization of authority. are more knowledgeable about the specific details and circumstances of problems that arise in their departments. Ensures the development of more capable managers: As under such structures. who are not in touch with the specific situation. and also helps in improving organization‘s efficiency. 3. History and age of an organization: If an organization has grown by acquisition and mergers. is a to the and of Decentralization •It is the end result of delegation and dispersal of authority. 4. According to Fayol. as it may or may not be practiced as a system. Ability of lower level managers: Talented executives are often unwilling to accept . it is delegated to the levels where the work is performed.     Give the subordinates some positive incentives for accepting responsibility. It helps in creation of a formal organization structure: It helps in building superiorsubordinate relationship which give rise to a formal organization structure. 3. •It is vital and essential to the management process. Do not make the subordinates accountable to more than one superior. if they have the authority to take decisions. diverse organization decentralized operations enhances the flexibility. 2. Others take pride in delegating the authority to the subordinates. managers often have to deal with difficult situations. the decision making authority is concentrated in few hands at the top and in a decentralized set-up. Create a climate of mutual trust and goodwill. In a Centralized set up. they will make better decisions than top managers. multi-product. 6. superior continues to be responsible for the work delegated to the subordinates 3. Permits quicker and better decision-making: The managers. By delegation only subordinates can be involved in the organization and the management can get things done. Train the subordinate properly. Make the subordinate clearly understand the limits of his authority. Guidelines for Effective Delegation    Before delegating the authority. activities and markets: How much decentralization? Determination of amount of decentralization is based on the following factors: 1. Thus. Size of organization: Number of plants.‖ Everything that goes to increase the importance of the subordinate‘s role is decentralization and everything that goes to reduce it is centralization‖ Distinction between Delegation and Decentralization Delegation •Delegation process. they are assumed to be excellently trained for promotion into positions of greater authority and responsibility. 4. This gives them power. prestige and status. First be in front of him for check-up and guidance and then be at back to follow his performance. 5. Autonomy of subordinates permits greater experimentation and flexibility to meet new conditions. •It is optional. •It refers granting authority creation responsibility between individuals. The superior is relieved from his responsibility for the work •In delegation. Reduces problems of communication and Red Tapeism: It helps in the communication process as the organization grows. It is the tendency to disperse the decision making authority in an organized structure. 2. Assign authority proportionate to the task. Philosophy of top management: Some managers pride themselves in making decisions themselves. Facilitates diversification of products. Advantages of Decentralization 1. managers are able to exercise more autonomy. who are close to work. Every organization has to decide as to how much decision making authority should be centralized in hands at the top and how much should be distributed among managers at lower levels. it is likely to be decentralized. It helps in recognizing the importance of human element under decentralization. The subordinate will work better if he has the freedom to commit honest mistakes.

Power overlays: Comprising employees who have power as distinct from authority. quality control.. management has no hand in its emergence. cost accounting. . ideas. evolution and functioning. group leadership. The more interactions between persons.3 Difference between Formal and Informal organization Formal Informal Organization Organization •It is prescribed structure of roles and relationships consciously coordinated towards a common objective. he wants to tests himself against other members to determine whether or not his opinions. •There is a prescribed. profitability. same office generally form groups than those who are not located together. People respect them and solicit their assistance outside of formal channels. Rewards take the form of continuous membership. plant engineering and personnel tend to be decentralized.11. Ranks of individuals are made clear by the use of titles. friendship etc. 2. goals and tasks predominantly centre around individual and group esteem. Decision Overlays: comprising employees who are respected and consulted on account of their old age. 4. Group formation is a result of activities. efficiency. its technological environment and its competition with other organizations. satisfaction. These factors. Exchange theory: Based on reward-cost outcomes of interaction. Interaction theory: According to George Homans. Propinquity theory: People/employee from same geographical area. goals and tasks are predominantly oriented towards productivity. Pfiffner and Frank P. People with /or abilities are 3. 3. •Communication is simple. Sherwood have identified five types of informal groups that function outside the formal organizational structure.. 6. 3. less dynamic. Functional Overlays: Comprising employees who exert influence and affect the course of action on account of an extra-ordinary amount of knowledge which they possess. 2. tend to become more centralized. Majority of formal organizations are pyramid-shaped.centralization from their superiors. Human: This constitutes the informal group with which individuals identifies themselves. One can easily chart all relationships. 5. Punishments are isolation. Complementarity Theory: complementary needs and attracted to form groups. mostly written system of reward and punishment. They want to perform independently so that they may give expression to their abilities. Similarity theory: People with similar attitudes. 3. interactions and sentiments. They call these groups as Overlays. •Its value. tools etc. mature judgment and wisdom over and beyond their position or function in the formal hierarchy. Technical: Money.g. Strategy and organization‘s environment: The strategy of an organization influences the types of its markets.11 Informal Organization: Any organization has two aspects: 1. There are number of multidirectional. Machines.11. etc. •The organization is not very enduring being dependent on the sentiments of members. 2. 3. social esteem. arising out of the social tendency of people to associate and interact. •It is well-defined in shape. and work related needs form a union. harassment etc. Social Overlays: Comprising employees with similar work-related needs. the more will be their shared activities and sentiments. •There is an unwritten system of reward and punishment. Nature of Management functions: In large multiplant company such functions as purchasing. influence the decentralization of an organization. 6.11. in turn. 5. Social Comparison theory: Need for self evaluation i. E. 4. growth and so on. It is shapeless.2 Types of Informal Groups: John M. Rewards can be both monetary and nonmonetary. •This organization usually grows to •It is natural and spontaneous structure. •Ranks of the members are implicit. •Its values.1 Why informal groups are formed: 3. 1. affiliation. which often 1.e. In other words. and judgments correspond to those of others in the group. companies operating in industries in which the markets are less uncertain. satisfaction. intricate relationships which cannot be easily charted. interests. traffic.

4. 6. 5. The story given at the origin is filtered. Members are expected to conform to these norms. They may protect one another from authoritative action.11. Aid on the Job: In case of accidents or illness. 3. Breeding ground for innovation and originality: Individuals can experiment with their ideas without persuading to their boss. and conventions bind an Informal organization as it does not have any chart. Thus the worker finds his work unsatisfactory. It is a clandestine transmitter and receiver of information.11. before it is officially released.5 Disadvantages of informal organization 1. the worker becomes just another unit of labour for the management. individual loses his identity. 4. Sense of belonging: For job satisfaction. 8. workers face many occasions loaded with tensions and frustrations. and industrialization. Generally friends are those who had similar experiences and can thus share and understand his troubles. to 3. In such case. Check on authority: Such groups force managers to plan and act carefully than he would otherwise. the person must feel that he is important to the task and to the organization. cultures. •It also tends remain small. Group Think Philosophy: some members begin to worship the group because the group has decided so. This develops a delusion of righteousness. before trying them out. Social Control: The informal organization provides all its members a set of norms –‟guides to correct behavior‟. 2. members of an informal organization may help one another. elaborated and assimilated. 2. he seeks sympathetic ear of a friend. Therefore the group resists those demands of management which they perceive as detracting from their culture. But with too much technical changes. Subtraction of details + Add new details + amending existing details. 3. 7. Rumor: An undesirable characteristic of informal organization is called ―grapevine‖.any size. Line and staff Organization of a typical Manufacturing Company President Vice President Finance Director of Research Vice President Production Director of Public Relations Vice Prsident Sales Manager Accounting Manager Cash Control Manager Purchasing Manager Factory Manager Personnel Manager Domestic Sales Manager Advertising Manager Foreign Sales Chief Production Control Chief Parts Production Chief Assembly Chief Maintanence . Important channel of communication: News travels quickly via informal organization. 3. change. Resistance to change: Customs. Safety Valve for emotional problems: In daily routine. In such groups.4 Benefits of informal organization to its members 1. Such groups boost the self-image and personality of the individual. An informal organization fills this void by constantly emphasizing and reinforcing each member‘s individual personality.

at right places. 2. Key to other managerial functions. It ensures greater production by putting the right man in the right job. Qualified. It inculcates the corporate culture into the staff which in turn ensures smooth functioning of all the managerial aspects of the business. It helps to avoid a sudden disruption of an enterprise‘s production run by shortages of personnel. Smooth human relations are the key to better communication and co-ordination of managerial efforts in an organization. 5. It greatly influences the direction and control in the organization. 6. selecting.etc. inventorying the people available. sudden death. The staffing function helps developing this asset for the business. appraising. (Forecasting –it is future manpower requirement for a period of say five (5) years. and transfer of the original incumbents. Manpower planning can either be Short Term or long term. Manpower Planning It is the process by which a firm ensures that it has right number of people and the right kind of people. and keeping filled positions in the organization. 4. 8. . Production)—Subordinates (Foreman)—workers. •In case of strong incumbents –More skilled and difficult jobs should be assigned to them The final step will be finding out the person who can be given additional charges in case of unexpected vacancies. Business cannot be successful unless it is capable of bringing in and developing the right kind of people. Steps involved are: –To determine the requirements of manpower for a particular period. Job enrichment. •It includes identifying work force requirements. 9. 7. Long Term effect: Staffing decisions have long term effect on the efficiency of an organization.1 Staffing Staffing is defined as filling. Marketing. Weak incumbents are those whose skills falls short of their job requirements. efficient and well motivated staff is an asset of the organization.4 Staffing Overview: Meaning nature and principles of staffing. Strong incumbents are those whose skills far exceed their job requirements. Staffing function helps to build proper human relationships in the organization. placing. It helps in discovering talented and competent workers and developing them to move up the corporate ladder. recruiting. Therefore the potential contribution of the staff in their anticipated future roles should also be taken into account in staff selection. Short Term manpower planning: It is temporary match between the existing individuals and the existing jobs. Steps involved in this planning: -To identify the weak and strong incumbents. Long Term Manpower Planning: It is done to find a proper match between the future jobs and their future incumbents. Human resources development: Skilled and experienced staff is the best asset of a business concern. Building healthy human relationships. and training or otherwise developing both candidates and current jobholders to accomplish the tasks effectively. at the right time doing the work for which they are economically most suitable. Potential contribution: Staff selection should be based on the ability of the prospective employees to meet the future challenges that the organization need to address. •In case of weak incumbents following things can be done: -Assigning difficult part of their jobs to others -Improving them through short term training or counseling -Replacing them by other individuals. •All managers have a responsibility of staffing. promoting. Board of director—Chief Executives—Managers (Finance. Staffing function is very closely related to other managerial areas of the business. Importance and need for proper staffing 10. The effectiveness of other managerial functions depends on the effectiveness of the staffing function. Job Rotation. 3.) 1. It helps to prevent under-utilization of personnel through overmanning and the resultant high labour cost and low profit margins. Staffing function assumes special significance in the context of globalization which demands high degree of efficiency in maintaining competitiveness. Job enlargement 4. It is a vital tool in the hands of management to control the cost by avoiding both shortages and surpluses of personnel in an organization.

Whereas in case of excess of existing manpower – Steps should be taken to get rid of excess hands – either by premature retirement or discharge or layoffs etc. •It identifies and organizes the knowledge. qualifications.–To ascertain the existing number of rank and workers in each sections. It reveals what is actually done as opposed to what should be done. Job description: A formal statement of duties. b) Friends and relatives of present employees: Those employees with good personnel relations are asked to recommend their friends and relatives. c) Applicants at the gate (Walk ins): Unemployed persons are called and those who are found suitable for the existing vacancies are selected. internal candidates may prove unsuitable. skills. and responsibilities associated with a job. According to Dalton E. •This is accomplished by gathering task activities and requirements by observation. f) Advertising the vacancy: By advertising the vacancies in the leading newspapers. Persons are recommended for appointment by their labour unions. flexibility. d) Internal candidates respect tradition and may not be bringing in new ideas. Job specification: It is a statement of minimal acceptable human qualities necessary to perform a job satisfactorily. C.V‘s and letters) •The Interview . it is the process of attracting potential employees to the company. McFarland. The management should have a proper plan for recruitment regarding quantity and quality of personnel required and the time when it is required. c) In case of extensions-New lines. quality of candidates they can provide etc. Selection Once the recruitment activities have succeeded in attracting sufficient numbers of relevant applicants from the external market. It is defined as the process of identifying the sources for prospective candidates and to stimulate them to apply for the jobs. Vacancies can be filled be selecting the individuals from amongst the existing employees of the company. It is generating applications or applicants for specific positions. •Breaking down the complexity of a person's job into logical parts such as duties and tasks. Disadvantages: a) It may encourage favoritism b) It limits the choice of selection to few candidates available in the enterprise. and attitudes required to perform the job correctly. it lays down the abilities and qualities that a worker should possess. conditions of a job. departments and to compare it with the required number. Recruitment Once the requirement of manpower is known. or other recording systems. Sources of Recruitment: Internal and External Internal: present work force of a company. If the number of required people is more than the existing number. Diversifications etc. in order to meet the requirements of the job. the aim of the subsequent selection activities is to identify the most suitable applicants and persuade them to join the organization. d) College and technical institutes (Campus Interviews): Many companies remain in touch with the technical institutions and colleges to recruit young and talented persons. External: a) Re-employing former employees: Those who have been laid off or have left for personal reasons may be re-employed. Employees remain loyal to the organization Labour turnover is reduced People are motivated to become efficient Don‘t need induction training Better employer-employee relationship is established g) Employees in the lower ranks are encouraged to look forward to rising to higher positions. e) Employment exchanges: It serves as an important source of recruitment. They must weigh the cost involved. Under selection process the qualification of the candidate is compared with the job requirement. •The exact list of these abilities and qualities varies from company to company. Job Analysis: It is the means to describe the present methods. interviews. the process of recruitment starts. Advantages and Disadvantages of Internal Recruitment Advantages: a) b) c) d) e) f) Sense of security develops among the employees. g) Labour unions: Companies with strong labour unions. then Management should decide how to deal with the shortages –whether through recruitment or through promotion. description and specifications of the job. Companies must combine these sources of recruitment as all the vacancies cannot be filled from one single source. •Making job description as a base. The final step will be to determine the need for and kind of training which is to be given to the existing and new employees. Salient features of selection process: •The application details (forms. Manpower planning also involves analysis.

4. The most effective means of developing managers is to have the task performed primarily by a manager's superior. duties and tasks that are defined and can be accomplished. whether they are inside or outside the enterprise. holidays.3 Principle of job definition Specifications for the job rest on organization requirements andon provision for incentives to induce effective and efficient performance of the tasks involved. and appropriate training. a) They are given the copies of firm‘s chart and an explanation of individual position in it. the better it functions and produces. how it serves the community etc. 4. 4. measured.7 Principle of universal development The enterprise can tolerate only those managers who are interested in their continuous development. Induction is the process of introducing new recruits to an organization and explaining their role within it. –Entrant should know whom to approach and the correct procedure to follow. Having considered all the terms and conditions. Key stages in the selection process: a) Short Listing of applications or C. Breaking down tasks . The letter of appointment must include details of terms and conditions attached to the work: Wages. pension schemes. The staffing policy of the organization has to be developed on the basis of long term requirement of the organization.V. sick pay. Applications Application forms C.2 Nature of Staffing Selection decision Selection Tests •Intellectual ability •Aptitudes •Personality The managerial function of staffing is of continuous nature. 4. The more organized and efficient the different components in the business are. 4.6 Principle of management development The objective of management development is to strengthen existing managers. safety regulations etc. 4. c) New entrant is informed about the rules. e) He is guided whom to contact for help if they experience any problem. The managers have to give attention to the staffing needs of the organization.3. 4.2 Principle of staffing The quality of management personnel can be ensured through proper definition of the job and its appraisal in terms of human requirements.V‘s b) Inviting the short listed candidates for interviews c) Conducting interviews (supported by tests where appropriate) d) Making a decision about choice of the candidates e) Making an attractive offer and confirming it f) Writing to unsuccessful candidates Proper selection process will help in placing the right candidate at the right job.5 Job Design Organization is the strength of any business. 4.3. evaluation of candidates and incumbents. Placement is an important aspect of selection process.’s Letters Short listing Process Interviews •One to one •Two to one •Panels 4. privileges and activities of the company. what it does. According to Dale Yoder. company rules.3.3. working conditions.4 Principle of managerial appraisal Performance must be appraised against the management action required by superiors and against the standard of adherence in practice to managerial principles. working hours. Labour turnover will reduce and overall efficiency will increase.3. A job consists of responsibilities.1 Principle of staffing objectives The positions provided by the organization structure must be staffed with personnel able and willing to carry out the assigned functions.•Tests Salient features of Selection process Applications References d) Recruits are personally welcomed by the senior members and then introduced to the colleagues.4 Job What a person does at work to satisfy an employer's needs and expectations. output quality. Once an offer of appointment is accepted. and rated. a contract of employment exists.3. 4. security arrangements and so on are discussed.5 Principle of promotion open competition in Managers should be selected from among the best available candidates for the job.3. b) Details of efficiency standards. It is an important process as the impression gained by the new employees during this period can influence their perceptions of the organization for the years. in exchange for pay.3 Staffing Principles 4. the recruit now signs a document saying he understands and will abide by them. Employees too will derive maximum job satisfaction and reap maximum wages. Placement and Induction It is the process of placing right candidate on the right job. Placement means ―The determination of a job to which an accepted candidate is to be assigned and his assignment to that job‖.

since the diversity of change is stimulation in and of itself.6 Methods of Job Design 4.  It entails more self-monitoring and more planning and controlling decisions. In a plastic container fabricating plant an experienced die cutter might. Furthermore. An easy way to understand this process is by citing an example. etc. The major criticism of the approach is that little is actually achieved by adding to a dull job more of the same tasks. reduce operation costs. job enlargement will employees to increase productivity. Theoretically. It is associated with the design of jobs and is an extension of job enlargement. cut one shape. duties and responsibilities of job. The rationale behind the theory is that an enlarged job will increase job satisfaction and productivity.associated with each component in the system has led to the concept of job design. Elements of Job Design a)    b)   c)       Task Analysis What tasks will be done How each task will be done. giving people more jobs to do. It may involve taking on more duties and adds variety to a person's job. then all triangles from the six colors. The main purpose of job design (or re-design) is to increase both employee motivation and productivity. This information is then used to write job descriptions The organization of activities to create the optimum level of performance. Increased productivity can manifest itself in various forms. from one color of plastic. This is done for the purpose of identifying and correcting any deficiencies that affect performance and motivation. In this way there would be a varied selection of activities to keep the employee involved.  It aims to create greater opportunity for individual achievement and recognition by expanding the task to increase not only variety but also responsibility and accountability. Satisfaction and dissatisfaction are the two factors that affect an employee's self-esteem and opportunity for self-actualization in the workplace.6.  In order for a job enrichment program to produce positive results. • • The motivation will occur from the relief of boredom. 4. 4. that require the same level of skill. a circle. Like enlargement. • • In a job enlargement program this single task would be enlarged to cutting a multitude of shapes from a variety of colors. increasing employees' motivation can be achieved through increased job satisfaction. Job design: It defines and delineates the tasks. . A single employee may follow the project from beginning to end. The motivation effect of job enrichment is alleged to be greater and more powerful than that of job enlargement. • The process of job enlargement is relatively simple and can be applied in a variety of situations. On the other hand. The traditional information feedback loop between superior and subordinate is altered in job enrichment. For example.  It allows the employee to take on some responsibilities normally delegated to management. the focus can be that of improving quality and quantity of goods and services.1 Work simplification: It is the analysis of a job's most basic components to restructure or redesign them to make the job more efficient.6. employees will enjoy a greater feeling of responsibility and personal competence since additional abilities are utilized. Perhaps the die cutter would cut all circles from six colors first.6. Or perhaps the cutter would alternate colors and shapes. under the job simplification process. and/or reduce turnover and training costs. motivate Job-design analysis starts by looking at a job with a broad perspective and swiftly moves toward identifying the specific activities required to do the job.2 Job enlargement: The reverse of Taylor's work simplification theory is job enlargement. How the tasks fit together to form a job Worker Analysis Determines-Capabilities the worker must possess Responsibilities the worker will have Environmental Analysis Used to analyze physical environment including: Location Lighting Temperature Noise Ventilation • Horizontal loading is often used which is.3 JOB ENRICHMENT  It is an increase in the number of tasks that an employee performs and an increase in the control over those tasks. • 4. • • Job enlargement is doing different tasks and not just the same thing all the time. worker needs and organizational needs must be analyzed and acted upon. This involves enlarging a job by horizontally increasing the number of tasks or activities required. enrichment lessens boredom and increases feeling of responsibility and competence.

6. Advantages:       Disadvantages: . not all jobs can or should be enriched. Multi skilling benefits the employer as if they are short of staff in one area. But in addition. This. Less absenteeism Broadens experiences Gives broad understanding Increased training costs Reduced productivity Demotivates specialists. it requires more creativity and judgment. One day a person may be working in one part of the factory and the next day they may work in a different part. but allows the opportunity to increase his/her skills and knowledge about other jobs. they can move people across. and review and control procedures. in itself. Furthermore.  Job rotation is the movement between different jobs.4 Job rotation: It allows an employee to work in different departments or jobs in an organization to gain better insight into operations. This avoids the employee becoming bored as with job rotation they are doing different jobs all the time and learning new skills. does not modify or redesigns the employee's job. Herein lies a problem with enrichment: Some people are not willing (or able) to take on the responsibility. Multi skilling is when people have many skills so they are able to carry out many different jobs. It helps in Lower staff turnover and less absenteeism. the recognition of alternatives.   4.

This is the way by which Superiors • • • • Directs the efforts of his subordinates Defines the goals of the organization Tells the subordinates what is expected.. Usually non verbal communication is expected to support the verbal communication. c) Doubts can be clarified on the spot d) Important points can be emphasized. c) Can be kept as permanent records and can be referred at any time. f) Poorly written messages can lead to confusion. 3. Demerits: a) Not suitable for lengthy communication b) No record of communication c) Sometimes. gestures etc. Merits: a) Its time and money saving device. Memo. Decision Making) Overview: Communications in the Organization. Merits: a) Suitable for lengthy communication Downward Communication: Communications that flow down from superior to subordinates are known as Downward Communications. Oral communication is not taken seriously. Motivational Theories. d) If vocal expression is poor then it can be misunderstood and misinterpreted. Leadership.g.Directing (incl. Thus. Orientation 4. 2. Like: smile.. Decision process 6. E. 6.1 Communications Organization: in the According to Newman and Summer. Written communication is always in black and white which can take the form of a Reports. communication is not merely transmission of information form one person to another but also correct interpretation and understanding of information. Recruitment 3. Decision Making 5 5. It is needed in all the areas. Notes. Interviews. is very b) If the two parties are far off. .‖ Communication means the process of passing information and understanding from one person to another. Lectures. To teach the employees about their safety. postures. d) Serves as a solid base for taking action against a subordinate who disobeys it. Forms of communication: 1. opinions or emotions by two or more persons. Non-Verbal : People communicate in different ways like through Facial expression. d) Suffers from lack of flexibility e) Difficult to maintain secrecy about the matter communicated. Handbooks. Demerits: a) Greater chance of being misunderstood b) Very Time consuming c) No scope for face-to-face discussion. Oral: Information is given directly. either face to face or through telephone. To project the image of the company. Coordination 7. Actions often speak louder than words. Conferences.. Written communication is the only way out. e) It provides more flexibility.‖Communication is an exchange of facts. Letter. Circulars. ideas. Establish and dissemination of goals 2. A proper understanding of information important aspect of communication.. few of them are as below: 1. Administers rewards and punishment. Purpose of communication Communication is of vital importance in any system. it is comparatively more effective. nod or shrug of shoulder. b) As there is an element of personal touch. (even beyond the reach of telephonic range). etc. Evaluation /Control Process 5. etc.

• • They refer to the communication among the subordinates who are working on the same level of organization. Barriers to communication The continuous force at work which tends to distort communication and promote disorganization are the barriers. It avoids the much slower procedure of hierarchical communication. It spreads speedily.‖ Requirements of effective direction 1. Horizontal Communication: It is also known communication. According to Koontz and O‘Donnell. Should be adequate and complete in all respect. Such • • • • . Direct Supervision 4. Direction means issuance of orders and leading and motivating subordinates as they go about executing orders. Oral downward communication includes speeches. It is a most vital management tool. • • Downward flow of information is time consuming. they also talk about people working in an organization. organizing and staffing are not enough. The manager must stimulate action by giving direction to his subordinates. and marketing information and so on. There should be proper provision of training to the executives for improving their writing skills.2 Motivational Theories: 5. It is primarily nondirective and usually found in participative and democratic environment. planning. He should know what he wants to communicate It should be in easily understandable language. Likewise. Information often gets distorted or lost as it comes down. Follow through 5. For effective implementation of any administrative decision. • • • Lack of planning Poor listening and premature evaluation Information Overload Principles of Effective communication The success of manager depends on how well he communicates.Written downward communications are memorandum. Such communication help coordinate the activities of different departments. Meetings. • The manager who wants to communicate must be clear in his mind about the objective of his communication. Efficient communication 5. Distrust of communicator: Some executives modify the original communications. Handbook. These generally act as feedback.2 Motivation: It is the process of channeling a person‘s inner drives so that he wants to accomplish the goals of the organization. Harmony of objectives 2. Letters. It usually gets changed during the process of passage from one person to another. Restricting communication : Poor retention: Employees usually retains only 50% of the communicated information. • • • • Grapevine reaches the subordinates informally. They might structure the sentences awkwardly or with wrong selection of words. It also helps the management to know the grievances or suggestions of the subordinates. It helps the management to know how far downward communications have been understood and carried out.‖ Directing is the interpersonal aspect of managing by which subordinates are led to understand and contribute effectively and efficiently to the attainment of enterprise objectives. Grapevine. financial data. Communicator should not act in the way that contradicts his message. as cross-wise or lateral • • • • • • Message should not be mutually conflicting There should be good atmosphere in organization. Pamphlets. It is mostly oral. communication will be poor. procedures e-news displays. 5. Faulty organization: If the span of control is too big. Unity of command 3. executives lose the trust and confidence of their subordinates. Instructions.2.2. It cuts across the chain of command. They might talk too fast. Few barriers are as follows: • Badly/poorly expressed messages: They might omit essential contents.( Relationship should be good) the • There should be follow up of communication to know whether or not the receiver has understood the message correctly. • It also helps the upper management to know specifically about the production performance. communication must be carefully Upward Communication: Communications that flow down from subordinates to superior are known as upward Communications. Motivation is an act of stimulating oneself or someone else to get a desired course of action or to get a desired reaction.1 Direction Direction is a vital managerial function. Medium of selected.

Motivation is an art: It is an art to encourage and influence subordinates to put in their best efforts. 2. this would motivate the employee. etc b) Bonus : It refers to extra payment over and above salary given to an employee as an incentive. 5. etc.3 Features of motivation: 1. When authority is delegated. etc.e.2. It directs human behavior toward accomplishment of goals. position.e. and as such he may be devoted to him job. condition prevailing in market. as human needs and wants are never ending . f) Job enrichment : Job enrichment involves providing more challenging tasks. etc. h) Good superiors : Presence of good and mature superiors motivates the subordinates. can also be good way of motivating employees. Job satisfaction is an outcome of motivation. 5. Motivation is system oriented: It‘s a combine effect of three groups of factors. 5.e. punishment. c) Delegation of Authority : Delegation of authority motivates a subordinate to perform the tasks with dedication and commitment. Motivation is an act of managers: Its is one of the important aspects of management. etc. Forces operating in the external environment i. proper sanitation.2. positive motivation can be provided by giving higher pay. This would make job of the employee more challenging and satisfying. etc. For instance an executive who is involved in preparing and presenting report may be asked to formulate plans. working condition. NON-MONETARY INCENTIVES : a) Status or Job title: By providing a higher status or designation. etc. b) Appreciation and recognition : Praise and recognition for good work done by the employee would definitely improve employees‘ morale. values. Motivation is different from job satisfaction: It is an act to satisfy needs and desires. superiorsubordinate relationship. 4. While fixing salaries. capability of the employee. Given same set of incentives. etc . Forces operating from within an individual. the organization structure. Motivation can be positive or negative: There can be positive motivation and negative motivation. such as medical allowance. recreational allowance. etc. d) Working condition : Provision for better working condition. the organization must take a number of factors in to consideration: Cost of living. Mangers motivate their subordinates by providing monetary or non-monetary incentives. Proper performance evaluation and feedback. c) Incentives : The organization may provide additional incentives. 2. the employee can be motivated.5. Proper promotions and transfers. Proper welfare facilities. Monetary factors : a) Salaries and wages: Salaries and wages is one of the most important factors. educational allowance. 5. Job satisfaction only results when such needs and desires are fulfilled. air conditioned rooms. needs. two different managers may provide different results with the same set of peoples. compact and convenient machine. i) Cordial relations : There must be good cordial relations throughout the organization. g) Workers participation : Inviting the employee to be member of quality circle. Other factors : Providing training to the employee. 3. nature of job.4 Factors that motivate a person: 1. 1. etc. 2. 7. Reasonable salaries must be paid on time. customs. If properly motivated employees put in their best efforts in order to achieve the goals. e) Job Security : Guarantee of job security or lack of fear of dismissal. power.managers have to identify the emerging needs of their subordinates and strive to satisfy them. 6. 3. or a committee or some other form of employee participation will motivate the employee. Motivation is complex in nature: Different individual behave differently to a given set of incentives.2. companies‘ ability to pay. culture. • Forces operating in within the organization i. and responsibilities. Flexible working hours. Motivation is a continuous process: It is not a onetime process. such as good ventilation. 4. • 8. Higher efficiency : .negative motivation implies the use of penalties.5 Need and Importance of Motivation 1. Employees prefer and are proud of higher designations. the subordinate knows that his superior has placed faith and trust in him. HRA. his nature. Motivation is goal oriented: Motivation is a behavioral concept. religion. 3. i. d) Special incentives : The company may provide special incentives for deserving employees for giving valuable suggestion or for special efforts on part of the employee.

Social Needs: Human beings also feel the need to belong to a group or community. It results in greater compliance and acceptance of order and instruction. Safety or Security Needs: These needs come second in the hierarchy of needs. They provide suggestions to improve quality and to reduce cost. 2. They would also prefer praise and recognition from others. and then the other needs. Such needs induce a person to accomplish something special which others have not done. it ceases to influence human behavior. This would reduce wastage and breakage. 10. such needs to be satisfied first.2. 2. Salient Features of Need Hierarchy Theory: 1. Self-actualization Needs: These needs lie at the highest level of the hierarchy of needs. Herzberg‘s Two-factor Theory 3. They work with a sense of dedication and commitment. Physiological Needs: These are the basic needs of human beings. Proper motivation results in improved morale of the employees. This is because optimum utilization of the available resources.2. even in accident prone industries. Victor Vroom‘s Expectancy Theory 5. Reduced wastages and breakage : Motivated employees take utmost care in handling machines.Efficiency is the relation between returns and costs. Motivated employee feels a sense of belonging toward the organization 3. clients. Lower level needs to be satisfied earlier: Lower level needs must be satisfied either wholly or partly before higher level needs emerge. . shareholders. Human beings feel the need to be protected from the danger of accidents. b) Helps to overcome resistance to change. Structure of needs: Human needs are arranged into hierarchy. Such needs lie at the lowest level of hierarchy. Humans needs are multiple and inter-related. 2. good pay. 3. People want that others should respect them. 9. The employees put in their efforts to satisfy their needs. material and other resources. and there are some other needs at the higher level hierarchy. c) Develops positive attitude in the employees. or the need of highest level of promotion comes from these needs. Skinner‘s Behavior Modification Theory 5. McClelland‘s Achievement Theory 4. etc. Maslow‘s Need Hierarchy Theory 2. incentives. This results in better relation with the public. 4. Wide range of needs: People have a wide range needs. Improved Morale : Morale is the state of mind and willingness to work. clothing. In other words. mental tensions. loss of job. 8.7 Maslow’s Hierarchy Needs Selfactualizati on Needs Ego And Esteem Needs Social Needs Safety or Security Needs Physiological Needs 1. Adam‘s Equity Theory 6. They prefer to be loved and cared by others. 4. 5. Even the best employee may create problem or mistakes if their morale is low. It is the unsatisfied need that acts as a motivator. A satisfied need is not a motivator: It is to be noted that that a satisfied need is not a motivator. and others. 4. Reduce absenteeism : Proper motivation reduces absenteeism.6 Motivational Theories 1. Improves corporate image : Satisfied employees are more loyal to the company. Esteem Needs: It refers to ego needs. A higher level need does not become active. Nobody would prefer to live in isolation from the rest of the society or group. It includes food. They want others to have good opinion about them. Facilitates initiative and innovation : Satisfied employees find out ways and means to improve the efficiency of the organization. etc they may not leave the organization. 5. There are some needs at the lower level. Reduces employee turnover : When employee are provided with job security. Reduced Accidents : When motivated employees work with due care and concentration there are fewer chances of accidents. if lower level needs remain unfulfilled. and shelter. When people are motivated they produce best results with lowest possible cost. According to Maslow. 5. Good relation : Motivation reduces labour grievances and disputes. 7. Thus it results in higher benefits to the organization. The need for challenging jobs. 3. Other benefits : a) Increased job satisfaction to the employees. 6. which in turns develop good corporate image.

Importance of Need Hierarchy Theory: 1. that direct the behavior of the individuals.9 Maslow Theory V/s Herzberg’s Theory 1. and then in1959in the book titled ―Motivation to work‖. 3. 3. 3. in the book ―Motivation and Personality‖. expectations. 5.8 FREDRICK HERZBERG’s TWO FACTOR THEORY Herzberg and his associates found substantial evidence indicating that employees have two sets of needs. Thus. A study of self-fulfillment needs enables the management to provide challenging jobs to dynamic and innovative employees. B. This theory enables the managers to study human behavior in different situations. The manger may also invite suggestions from the subordinates. Critical appraisal: Maslow’s theory is criticized on the following grounds: 1. The analysis of physiological needs enables the manager to frame proper wage policies. One relating to Job Satisfaction Job Motivation factors: According to Herzberg. it is not enough to satisfy job satisfying factors. This includes experiences. Herzberg theory is a modified version of Maslow theory. The job satisfying factors may remove job dissatisfaction. managers make an attempt to motivate employees by providing them monetary and non-monetary incentives. 2. Needs need not follow the pattern of hierarchy: There are cases where needs need not follow the pattern of hierarchy as suggested by Maslow. Oversimplification of needs: Maslow has provided an oversimplification of human needs. or the employees are given better status or designations. 5. there are certain factors which must be satisfied otherwise people will be dissatisfied with the job. Motivators bring in job satisfaction. He called such factors as Hygiene Factors. safety needs would emerge after the physiological needs are completely satisfied. Categories of needs/factors: According to Maslow there are five categories of needsPhysiological. Inter-dependence of needs: A higher level need arises after a lower level need is completely satisfied. Needs need not be the only determinant of behavior: There are other motivating factors rather than needs alone. The Motivators Factors include:      Challenging tasks Appreciation and recognition Responsibility Delegation Carrier Development 5. published in1954 . Policies and administration Interpersonal relations. and at different times. The study of security needs enables the manager to make the subordinates permanent by giving them Job security. c) Social needs. Social. Esteem and Selfactualization. 4. Ego needs facilitates promotion of employees. The Hygiene factors include:     Salaries and wages Bonus and other incentives Job security Policies and Administration 2. Herzberg stressed that job motivation factors. so that adequate wages are paid to the employees. perceptions. 4. b) Safety and security needs. The other relating to Job Motivation Job Satisfaction Factors: According to Herzberg. Security. According to Herzberg. there are two factors. Motivators must be satisfied if the people are to be motivated to perform better. Lower needs /hygiene factors : a) Physiological needs. A.2. It is . Applicability: Maslow theory has universals applicable to lower level mangers Emphasis: application. work committees or such other participative systems. Very few people strive to fulfill self-actualization needs.     Hygiene factors eliminate job dissatisfaction. 6. 2.5. There are cases of individuals who want to fulfill their self-actualization needs even though their primary needs may not have been fulfilled. Originality: Maslow theory is original piece of work on human motivation. but it does not means that people may be motivated to work. b) Self Actualization needs.2. Accordingly. All Individuals needs not have the same set of needs: It is often noticed that a good number of individuals who are satisfied once their physiological needs and safety needs are satisfied. It was first published in 1957 in the book ―job altitudes‖. The analysis of social needs enable the manger to make the employees members of quality circles. Deserving employees may be selected as leaders of certain work groups. 4. Upper needs/motivators: a) Esteems needs.

Outputs are everything we take out in return. awareness and cognizance of the wider situation . However.in forming a comparative view and awareness of Equity. they will set high goals and usually try to do most things on their own than getting them done by others. Those. nor even necessarily on the belief that reward exceeds effort at all. It recognizes the importance of various individuals‘ needs and motivations. Those.2. Social relationship takes precedence over task accomplishment. The way that people measure this sense of fairness is at the heart of Equity Theory. Need for achievement 2. is not dependent on the extent to which a person believes reward exceeds effort.equity theory on job motivation John Stacey Adams.It emphasizes on all five sets of needs to motivate people.11 Victor Vroom’s Expectancy Theory: Under conditions of free choice. Achievement. These terms help emphasize that what people put into their work includes many factors besides working hours. 5. According to the need of the people.12 J Stacey Adams . Equity.2.2. is dependent on the comparison a person makes between his or her reward/investment ratio with the ratio enjoyed (or suffered) by others considered to be in a similar situation. and that what people receive from their work includes many things aside from money. 5. which commonly manifests as a sense of what is fair. Need for Power If a person has high Need for achievement. Responsibility.10 McClelland’s Need for achievement Theory According to McClelland. their relationship with their work. an individual is motivated towards that activity which he is most capable of rendering and which he believes has the highest probability of leading him to his most preferred goal. and incorporates influence and comparison of other people's situations . Rather. Equity. It emphasizes motivate people. put forward his Equity Theory on job motivation in 1963. It is more realistic. in that the theory acknowledges that subtle and variable factors affect each individual's assessment and perception of Adams' equity theory Adams called personal efforts and rewards and other similar 'give and take' issues at work respectively 'inputs' and 'outputs'. challenging work. a workplace and behavioral psychologist. despite being logically accurate. three important needs are: 1. Need for Affiliation 3. who have high need for Affiliation.and crucially comparison .feature more strongly in Equity Theory than in many other earlier motivational models. status. There are similarities with Charles Hendy‘s extension and interpretation of previous simpler theories of Maslow. will try to obtain authority and exercise power. Herzberg and other pioneers of workplace psychology. a) b) c) d) e) Working condition. Adams used the term 'referent' others to describe the reference points or people with . who have high need for Power. Herzberg‘s theory is more applicable to managerial level rather than at lower level of workers. when they feel unfairly treated they are highly prone to feelings of disaffection and demotivation. Salary. and thereby the motivational situation we might seek to assess using the model. Development.for example colleagues and friends . The Adams' Equity Theory model therefore extends beyond the individual self. organizations can improve the selection and placement processes. Recognition. The person will try to influence others and winning arguments. Inputs are logically what we give or put into our work. This model well suits in those situations only where the employees have the freedom to make their choice among alternative courses of action or behavior. and the sense of fairness which commonly underpins motivation. It is more difficult to implement /apply. and thereby their employer. When people feel fairly or advantageously treated they are more likely to be motivated. will reflect the desire to interact with people socially. on the motivators factors to 5. It harmonizes the individual goals that are different from the organizational goals. security.

their personal motivation. For example. and thanks. Note also. subordinates. This explains for example why and how full-time employees will compare their situations and input-tooutput ratios with part-time colleagues.the ratio of input and output . commitment.and is quite different from merely assessing effort and reward. between inputs pay. Leadership is defined as influence.Equity . invests. however it is the ratio of input-tooutput . are an over-simplification .3 Leadership Leadership is an important aspect of managing. and with it. We form perceptions of what constitutes a fair ratio (a balance or trade) of inputs and outputs by comparing our own situation with other 'referents' (reference points or examples) in the market place as we see it. 5. The essence of leadership is followership. inputs equity outputs dependent on comparing own ratio of input/output with ratios of 'referent' others Inputs are People need to Outputs are typically: effort. In practice this helps to explain why people are so strongly affected by the situations (and views and gossip) of colleagues. i. salary.whom we compare our own situation. enthusiasm. etc. People tend to follow those whom they see as providing a means of achieving their own desires. wants and needs. ('referent') development. tolerates. comparing commission . balance or ratio recognition. as they see it. This comparative aspect of Equity Theory provides a far more fluid and dynamic appreciation of motivation than typically arises in motivational theories and models based on individual circumstance alone. and all aspects of what a person receives and benefits from in their work and wider career. into their work situation. In terms of how the theory applies to work and management. Equity Theory explains why people can be happy and motivated by their situation one day. promotion. personal sacrifice. the art or process of influencing people so that they will strive willingly and enthusiastically towards the achievement of group goals. superiors. It is the willingness of people to follow that makes a person a leader. perks. that what matters is the ratio. and if the part-timer is perceived to enjoy a more advantageous ratio.. whom we deem to be relevant reference points or examples ('referent' others). and yet with no change to their terms and working conditions can be made very unhappy and demotivated. fairness is arrangements. if they learn for example that a colleague (or worse an entire group) is enjoying a better reward-to-effort ratio. measured by bonus and tolerance. Equity theory thus helps explain why pay and conditions alone do not determine motivation. one's own intangibles heart and soul. Crucially benefits. etc. feel that there typically all loyalty. who very probably earn less. and other factors of give and take . and outputs. support with the ratio interest..it depends on our comparison between our ratio and the ratio of others. Adams Equity Theory goes beyond . which is the pivotal part of the theory. Remember also that words like efforts and rewards. relevant training.reward-to-effort . in establishing their own personal sense of fairness or equity in their work situations. Crucially this means that Equity does not depend on our input-to-output ratio alone . praise in our boss and and outputs.e. pension adaptability. sense of achievement and advancement. others.. The success of industrial enterprise depends a lot upon the quality of its leadership. Adams' Equity Theory is therefore a far more complex and sophisticated motivational model than merely assessing effort (inputs) and reward (outputs). Importantly we arrive at our measure of fairness . trust between inputs reputation. The actual sense of equity or fairness (or inequity or unfairness) within Equity Theory is arrived at only after incorporating a comparison between our own input and output ratio with the input and output ratios that we see or believe to be experienced or enjoyed by others in similar situations. endured by stimulus.with the balance or ratio enjoyed by other people.hence Adams' use of the terms inputs and outputs. flexibility. partners etc.by comparing our balance of effort and reward. then so this will have a negative effect on the full-timer' sense of Equity. hard is a fair balance financial rewards work. sacrifices. ability. . importantly. skill. of colleagues and enjoyed or responsibility. which more aptly cover all aspects of what a person gives. friends. we each seek a fair balance between what we put into our job and what we get out of it.plus determination. or work and pay. etc. travel. not the amount of effort or reward per se. But how do we decide what is a fair balance? The answer lies in Equity Theory. expenses. Equity Theory adds a crucial additional perspective of comparison with 'referent' others (people we consider in a similar situation). It also explains why giving one person a promotion or pay-raise can have a demotivating effect on others.which counts.

Terry found that the leader must have the following traits: 2. Personality traits (Adaptability.‖ According to Keith Davis. Personal motivation 7.2.2 DIFFERENT APPROACHES TO LEADERSHIP There have been many researches on the concept of the leadership and its effectiveness in the organization. A person emerges as a Leader. Integrity 6. Appearance. Knowledge of human relationship 4.2. 5. It is difficult to define traits and also to measure the traits in each leader. In negative behavior. Ralph M. leader‘s emphasis is on penalties and punishments. Mental and physical energy 2. Friendliness and affection 5. 5. From the point of view of Authority. 3. Moral qualities 5. Not all leaders possess all the traits. Enthusiasm 4. the raising of man‘s performance to a higher standard. 2.‖ leadership is ability to persuade others to seek defined objectives enthusiastically. Manager seeks those objectives which his subordinates do not regard as their own. The basic question which is under the consideration over here is. Sense of purpose and direction 3. Aggressiveness. Intelligence 9.3.3. Empathy or social sensitivity 5. Motivation 2. Prominent in the behavioral approach is the notion that leaders are not born but can be trained. Technical competence Fayol. Stogdill identified specific traits related to leadership: 1.. 2.‖ Leadership is the lifting of man‘s visions to higher sights. Good health 2. 1. enthusiasm and self confidence) . the building of man‘s personality beyond its normal limitations‖. Knowledge and managerial ability Ordway Tead specified these leadership traits in the ten qualities 1. 5. 4. and some social traits ( cooperativeness . 2.According to Peter Drucker. Communication skill 8. 10. 1. leadership behavior can be . 4. Leaders have informal power (i. Leaders imply existence of followers. Interpersonal skills. Teaching skill and.2 BEHAVIOURAL APPROACH This theory tries to find out the answer to the question ―What determines the leadership?‖ This approach emphasizes what leaders do actually on the job and the relationship of this behavior to leader effectiveness. Authority 3. 5. According to Alford and Beatty. A manager is appointed 3. Leadership behavior can be studied on three points: 1. ability to influence. 1.3. Teaching skill 9.3. administrative ability) George R. Technical mastery 7. height). ―Leadership is the ability to secure desirable actions from a group of followers voluntarily without the use of coercion. Emotional stability 3. Few Physical Traits (Energy. Intelligence and ability traits. Faith Limitations of Traits Approach: Leader‘s traits have not been a very fruitful approach to explain the leadership. Manager always has some formal authority 2. ―What characteristic does a good leader possess?‖ And ―What is the most effective leadership style?‖ Generally. Objectivity 6. This approach over-looks the situational qualities of leader. It implies that training cannot make a man a leader. explained these trait as 1. Motivation: From the point of view of Motivation leadership behavior can be negative or positive. Managers may not have followers. there are three basic and important theories: • • • Trait Approaches Behavioral Approaches Contingency Approaches 5. Social skill 10.e. Supervision 1. some task related traits (such as persistence. achievement drive and initiative). 3.1 Difference between Leader and Manager Leader Manager 1. leader‘s emphasis is on rewards to motivate the subordinates. 4. • • In positive behavior. 4. 3. Intelligence and mental vigor 4. Decisiveness 8. Physical and Nervous energy 2. Physical fitness 3. Generally the objectives of subordinates are the objectives/goals of leader.1 TRAIT APPROACHES This theory of leadership by the name itself says that it is concerned more with the TRAIT (personal abilities) of the leader.

In Authoritarian style one remains in constant fear. 3. Generally repetitive.4. what to do about employees. Hence in non programmed decision making we can differentiate good managers from the bad ones. In this type of leadership the entire group is involved in and accepts responsibility for goal setting and achievement 2. Subordinates have considerable amount of freedom of action 3. From the point of view of supervision. 2. Non-programmed – Non routine decisions and non repetitive. Hence.4. Production oriented: Cares more production than for the welfare of subordinates. 1.• • • Autocratic Democratic Free Rein ―A SIMPLE COOK-BOOK APPROACH FOR SELECTING THE BEST LEADERSHIP STYLE DOES NOT EXIST‖ a) Autocratic Leadership: In this type of leadership. routine and easiest for the managers to make. No definite rule or procedure exists If the problem has not been arisen before or if deserves a custom-tailored treatment. Directing – Deciding on the instructions and orders to be given. Effective leadership style varies within the situation.2 Major and Minor Decisions It depends on the importance of the decision. Programmed – Decisions that are made in accordance with some policy. He orders others what to do and how to do. This style of leadership can be a disaster if he does not know the competence and integrity of his people and their ability to handle the kind of freedom.1.4 Decision Making Decision Making is an essential part of management.3. delegation of authority. 4. 1. Hundreds of decisions are made by the managers daily. Leader shows more concern for people than for production. Decision Making is choosing among the alternatives.g.1 Programmed and Non Programme 1. and procedure for control. Leadership style can be • • Employee oriented: cares more for the welfare of employees than for production.1. division of work. can be major decisions. leader exercises 5. The leader alone determines policies and makes plans. 2. Where as in Benevolent style one remains under gratitude. where to invest. who are always late. A manager has to take many important series of decisions. 5. But in non programmed decisions two managers will probably end up with different decisions. 3. 3. It permeates through all managerial functions like Planning. 4. Like. keeping in mind the goal/purpose of decision. The theory holds that people become leaders not only because of the attributes of their personalities but also because of various situational factors and the interactions between leaders and group members. consciously and subconsciously. Organizing. . The task of leader is to encourage constructive inter-relationship among employees and to reduce intra-group conflicts. 5. Decision on He only provides the information. Replacement of men by machinery or diversification of the existing product line.Deciding the structure of the organization.4. for his 5. where should the firm‘s new warehouse be built.3 Contingency Approach Fiedler‘s suggested this approach to leadership. recording office supplies etc. 2. There is no one best style of the leadership under all conditions. For how long in the future will the decision commit the company? A decision which has long range impact. In programmed decisions two managers will reach the same result. absolutely no control. etc. The relative importance of the decisions can be determined by1. 4.. materials and facilities to his men to enable his men to accomplish the objectives.: Deciding on salary of employees who have been ill. rule or procedure. It demands strict obedience and relies on power. involves decision making. Organizing . The effective leader himself should study the situation and should find out which style would be most appropriate to the given circumstances. it must be handled by Non Programmed Decision. 5. fixing of responsibility. Direction and Control. It can be authoritarian as well as benevolent. etc. 1.2.1 Types of Decisions: 5. Planning-Objectives and policies are laid down which requires decisions making. e. Like. Controlling – Deciding on the performance standards for control. nature and form of organization. b) Democratic Leadership: Also known as participative or person oriented leadership. c) Free Rein : In this type of leadership. strategic control points.

4. b) Easy implementation of the decision – Because there will be more coordination from all those involved so this will lead to fast and easy implementation of the decision.4.2 Delphi Technique: This technique is used for a group which is dispersed geographically. Finally each member silently gives his individual rating to each view through voting and the outcome of the voting decides the group decision. d) More information processed – because many people are involved there will be more points discussed to get the required decision. 4. b) Analysis of variables is easy.4. 5.3 Routine and Strategic Decisions Routine. c) Definite procedures are known to deal with the problem.1. Converting the decision into effective action and follow-up of action. So we get better decisions as views of the concerned are involved. Strategic Decisions are made by higher level managers and requires large funds and lengthy deliberations (discussions) Done for long term e. Groups can be dominated – Influential people can decide the course of decision making. Subjective factors are – Ethics. The managers of the departments and the affected people are involved. 3.g. 1.1 Nominal Group technique: Members first silently and independently generate their ideas on the problem in writing. Measuring and comparing the consequences of alternative solutions.2. 3. 5. social and political beliefs etc. Advantages of Group Decisions a) Increased acceptance by those affected – Because the affected are also involved in the decision making. 3. 6. parking facilities. The recorded ideas are discussed for the purpose of clarification and evaluation. better lighting. Developing alternative solutions or courses of action 5. c) Easier communication – Less communication required to implement the decision because all of them were involved in the decision part and most of the communication part was taken care at decision making time only. 2. Questionnaires members.2 Approaches to tackle disadvantages of group decision making 5. 5. Done for short term e. Decision for automation of the plant. lowering the price of the product. They are related to present activities. Recognizing the problems Deciding priorities among problems Diagnosing the problem.4.4. Disadvantages of group decision making 1. or housekeeping decisions are those which are supportive rather than central to the organization‘s operations. .4.g. 4. Principles of conduct. leading to decisions making where most of the people involved are unhappy. 5. Changing product line. they know the problems involved and this will lead to increased acceptance by them. All this ideas are summarized on a black board. Decisions which recur very often become minor decisions as they are repetitive and are taken at lower levels. 2. They then present their ideas to the group without discussion. Qualitative factor that enter the decision Decision that involves certain subjective factors are important decisions. can be considered as minor decisions. Impact of the decision on other functional areas-If it affects only one functional area then the decision is minor else it‘s a major decision.3 Steps in Rational Decision Making Rational Decision Making is that decision which when chosen leads to attainment of the desired ends. 5.4. Longer durations required for decisions 2.4 Individual and Group decisions Individual decisions are taken where a) Mostly routine kind of activity is involved.the storage of raw material for a particular period. They are taken to achieve the efficiency in the ongoing activities. Group decisions – These are important and strategic decisions affecting nearly the entire organization. Recurrence of decision – Decisions which are rare and has not taken place before are usually major decisions and are taken at higher levels.2. values. After receiving the response from all the group members a group decision is taken. cafeteria service etc.1. Groups can compromise – Peer pressure can lead to conformity of decisions which are far from the ideal one. tactical. Group can be indecisive – It may happen that no decisions are made as most of the time gets wasted in blaming each other. Provision for air conditioning. are sent to the group After receiving the answers from all the group members the feedback report along with the newly developed questionnaires are sent to all the group members for further probing on the response for the first questionnaire.2.

By implementing some control system only. entry of new competitors in the market.. Organization‘s various markets. .  According to Mockler ―Management control can be defined as a systematic effort by business management to compare performance to predetermined standards. In planning phase. applying corrective measures so that the performance takes place according to the plans.‖Control is checking current performance against predetermined standards contained in the plan.Brech.‖ According to E.Wrong part are ordered.‖Controlling is determining what is being accomplished i.‖ 2. Discovery of new raw materials. Wrong pricing decisions are made. events occur that tends to pull it ―off target‖. 6. Control is necessary because unpredictable disturbances occur and cause actual results to deviate from the expected or planned results.Domestic and Foreign require close monitoring.  •    Disturbances can range from minor matters such as a short delay in the delivery of raw materials. 6. evaluating the performance and if necessary.‖ According to George R. A control system enables a manger to catch these mistakes before they become serious. can a superior determine whether his subordinates are performing or not. the instructions issued and principle established. Measuring and comparing actual results against standards. It is the process of ensuring the operations proceed according to plan. Diversified product lines need to be watched closely to ensure that quality and profitability are being maintained.3 Steps in Control Process: Three steps involved in control process are: 1. Markets shift etc. with a view to ensuring adequate progress and satisfactory performance. plans. so that the system can comply with the set goals/objectives. or to enable the system to change safely to meet the new conditions. To measure progress: There is a close link between planning and controlling the organization‘s operations.g. The main object of control is to bring to light the variations between the standards set and performance. in order to determine whether performance is in line with these standards and presumably in order to take any remedial action required to see that human and other corporate resources are being used in the most effective and efficient way possible in achieving corporate objectives. Complexity: Today‘s vast and complex organizations. • Mistakes: Managers and their subordinates often commit mistakes like.1 Controlling Control is a primary management task.F.e. To indicate corrective action: Controls are needed to indicate corrective actions. Establishing Standards 2. or objectives. To uncover deviation: Once the organization is set into motion towards its objectives. problems are diagnosed incorrectly. Essentials of a good control system 6. with geographically separated plants and decentralized operations. Open Loop.‖ Control activities seek to keep the system output in line with the original plan. Basis Control Processes. In controlling phase. measurement of progress towards the goal is done.6 Controlling Overview: Concepts and Principle of Controlling. make control a necessity. A good control system is one that effects the corrections to the organization before the deviations become serious.2 Purpose or need for control 1. Terry. etc. their own responsibility is not reduced. As Henri Fayol says‖ In an undertaking. The control function enables managers to detect changes that are affecting their organization‘s products or services. and then to take necessary steps to prevent the occurrence of such variations in future. • Delegation: By delegating the authority to subordinates. 3. we establish the goals and objectives of the organization and the methods for attaining them. Events which pulls the organization ―off target‖ are: • Change: It is an integral part of any organization‘s environment. control consists in verifying whether everything occurs in conformity with the plan adopted. Like : Emergence of new product.L.. to disturbances which threaten the organization itself e. Closed Loop and Feed forward Control Mechanisms.

based on the output is measured and is fed back to make the appropriate alternations to the input. school grade reports. ratio of current assets to current liabilities. 1. It also provides basis for rewarding. training. Control system would be most effective when the time lag between the output and corrective action is as short as possible. sales per capita in the market area. Taking corrective action. The standards must be defined in quantitative terms as far as possible. Two factors which influence the speed of control are – Organization structure and reporting period. the next step is to correct these deviations. are close loop systems.3. selling cost per unit of sale etc. accounting reports etc. units of production per machine hour. Most of the mechanical systems like. Comparisons reveal variations. Corrective actions should be taken without wasting time. or promoting individuals. Revenue standards: Average sale per customer. With well organized control system. Manager should be able to determine the correct cause for deviation. This type of control system is best suited to more stable conditions. Etc 2. disciplining. Capital Standards: Rate of return on capital invested. It should not be expressed in general terms like: ―Cost should be reduced‖ or ―Orders should be executed quickly‖. Employee attitudes etc.1 Closed loop system: In such systems the feedback. etc.5 Past –oriented: (Also known as ‗Post-action Controls) Measures give results after the process. 2. 4.g. Standards must be flexible to adapt to changing conditions. • • Most of the operational and tactical level systems are closed systems. Taking corrective action: After comparing the actual performance with the prescribed standards and finding the deviations.Thermostats. defective system of training. Profitability. in heating systems. The entire operation cannot be observed.. Instead it should be ―Overheads must be reduced by 12 percent‖. where existing plans and . charts and statements. The actual levels are measured and compared with the plan and adjustments made to the stock replenishment order quantities to bring stock levels in line with the plan. Measuring and comparing actual results against standards: Measurement of performance can be done by personal observation (appraisal). 3. They examine what has happened in the past in a particular period. proper remedial measure should be taken. Inspection of goods and services. Few variations are desirable like -output above standard or expenses below standard. Cost standards: direct and indirect cost per unit produced. Money & Materials) Process or operation Towards goals Programme of Corrective Action and its Implementation Identification Of Deviations Analysis of Causes of deviations Output (Goal) Feedback In business. etc. Productivity. etc. material cost per unit. the comparisons of actual figures with the standard figures become easier. etc. success of a public relation programme. Some Key areas could be: Market position. Standards must emphasize on the achievement of results rather than on conforming to the rules and methods. Types of standards 1. before effective action can be taken. 3. so that normal position can be restored quickly. Based on the cause. Or ―All orders must be executed within three working days‖. Thus forms a close loop. Cause could be : Poor and inadequate machinery and equipment. Intangible standards: Competence of managers and employees. Types of Past oriented Control methods 6. 5. E. Establishing Standards: The first step is to establish Standards against which results can be measured. reports. Personnel Development. Control as a closed loop system Input (Man.5. lack of motivation of subordinates. Physical standards: Labour hours per unit of output. 6. then there will be delays. inadequate communication system. thus each organization must develop some key areas for the purpose of control. by a study of various summaries of figures. But other variations are not desirable like variation/change in the delivery schedule agreed with the customer. If an item of information has to pass through several levels of the organization‘s hierarchy.4 Types of Control Methods Two basic types are: Future oriented and past oriented controls. stock control system with planned level of stock is a close system. This method is used to plan future behavior in the light of past errors or successes. defective system of remuneration. defective selection of personnel. 6.

8. those used in finance and 2.g. Examples of feed forward: Company hearing of a possible industrial dispute would make alternative production arrangements. who is responsible for them. It measures the results during the process so that action can be taken before the job is done or the period is over. 7. an open system can be used. Suitable: The control system should be appropriate to the nature and needs of the activity.targets are appropriate and where clear cut quantifiable standards are set. Network planning etc. To meet with tough standards.advance withdrawal of labour.. e. such as engaging nonunion labour. • 3. Acceptable to organization members: When standards are set unilaterally by upper level managers. • • Objectivity: It specifies that the results must be clear and definite. where environment is unpredictable or turbulent and management intervention becomes essential. So that.. and what should be done about them. Timely and forward looking: The control system should be such that it should enable the subordinates to inform their superiors expeditiously about the threatened deviations and failures. • To spend a dollar to save 99cents is not control. Reveal exceptions at strategic points: Small exceptions in certain areas have greater significance. • Control action is not automatic and may be made without monitoring the output of the system. and providing direct access to information to the employees 6. Should not lead to less attention to other aspects: Control system is only one phase of . different from personnel. Most organizations use both these control systems. before the problem becomes too serious. to avoid the problem itself.g.5. such systems would be rare and also it would be dangerous. Although. Objective and Comprehension: The control system should be both objective and understandable.. thus enables the manager can take corrective actions immediately. will provide greater sense of accomplishment than to meet easy standards..g. the next week or next month. 6. 5. It serves as a warning –posts to direct attention rather than to evaluate the outcomes/results. At higher level. Cash flow and fund flow analysis. Prescriptive and Operational: The control system must not only detect deviations from standards but should also provide solutions. against which results of the output can be compared. rather its wastage. E. Flexible: The control system should be flexible to suit the needs of any change in the environment. These two controls (past oriented and future oriented) are not alternative to each other. • It must disclose where failures are occurring. there is a danger that employees will regard those standards as unreasonable and unrealistic. in. Understandable : Avoidance of red-tapeism.2 Open loop systems: • No feedback loop exists and control is external to the system and not an integral part of it. 6. Economical: The benefit derived from a control system should be more than the cost involved in implementing it.7 Essentials of effective control systems /Comparison of Past oriented and Future oriented controls 1.g. generally managers prefer a forecast of what might occur. Controls used in sales department will be 9. in order to be effective. 10. 5% deviation from the standard in office labour cost is more important than 20% from the standard in cost of output. 6. E. the managers can take immediate corrective actions. Immersion heater without an automatic thermostat Control is therefore not an integral part and heater must be 1externally controlled by switching it on and off at appropriate times. Motivate people to high performance: A control system is most effective if it motivates people to high performance. if some form of automatic control built in control is not applied. than larger deviations in other areas. At operational level. E. cash control forecast tells about cash needs in advance. 4.6 Future –Oriented (Feed forward Control Mechanisms): Also known as feed-forward controls or steering controls. • The feedback system should be as short and quick as possible. • Mostly people respond to challenge.

Marketing Management control 5. Research and Development Management control 4. care of equipment etc. Production Management control Future-oriented Control Past-oriented Control Feedback Feed Forward 3. prevention of wastes. interviewing.8 Control in an organization Management control is concerned with present performance and future objectives and it can be divided into several functional areas: 1. e. Inputs Process Outputs c) Assessment of accounting operational controls. 2. the quality of output. d) Capital expenditure decisions for replacement and enhancement. . evaluation of financial and operating budgets. Personnel Management Control includes: a) Recruitment.. and hiring b) Welfare activities c) Health and safety d) Assessment of personnel operational controls. debtors and stocks. b) Formulation. e) Remuneration and compensation schemes. if controls put pressure to increase the output then.. Comparison of Past oriented controls: oriented and Future 6. monitoring.operation and thus other aspects of operations should not suffer.g. should not be neglected. Financial Management control a) Working capital management – cash flow.

Quality control. EOQ and ordering systems. batch.job. CAM and FMS. educational establishment. Staff deposits) Nurses. It is the central part of the manufacturing process. organization structure of the production function is as follows: Production Director Manager. hospital.e. (Loans. retailer. Its responsibility is to plan. Production planning and control: Responsible for providing framework and impetus for production. aggregate planning. flow. MRP. rewarding and retention of employees. Financial Computer Services Equipment. Production Management Inputs Energy Materials Labour Capital Information Transformation (Conversion) Process Goods or Services Outside Information Feedback Information for Control of process inputs And process technology Operatio Inputs n Bank Output Manufacturing Manager: Responsible for manufacturing and assembly processes. is concerned with the provision of goods. exists to satisfy the needs of its customers or consumers.‖ Manufacturing Assembly Product Processing Inspection* Research Design Development Quality Control Work study Value analysis The above chart can defer depending upon the type of production. healthy patients Production management. Production Planning and Control (as quality processes. and the extent to which sophisticated computerized systems are in operation. the relative standing of group such as quality control. Production methods . Machinery Plant Equipment Buildings . or even government agency. Operation process: management as a transformation Equipments.Quality Costs.1 Production Management and Operations Hospital energy Doctors. whether it is a manufacturing.Production and Operations Management Overview: Production planning. method or series of acts especially of a practical nature. in particular. Educated Universit Staff. Control charts and their uses 7 7. i. Statistical Quality Control. Staff. Manager. Technical Manager or production Engineer: They provides link between marketing and production. Thus an operation can be defined as ―A process. facilities knowledge Students. Production Planning And control Production Scheduling Purchasing Stores/inventory Materials planning Works ordersProgressing Quality control Technical Manager (Productio n Engineer) Manufac turing Manager Maintenanc e Manager An organization. so Cashiers. He works in accordance with the schedules submitted by the production planning and control. facilities. required to satisfy the needs and wants of the organization‘s existing and potential customers. The production function of an organization exists in order to make available goods or services required by the customers. those who are the recipients of what is produced or services carried out by the organization. continuous production. planning and control of the system. and involves the design. materials and purchased items) Production engineering (Responsible for quality of design and with overall responsibility for Quality Control standards in production). He is also responsible for recruitment.. Selective inventory control. purchasing and maintenance. training. Quality control is at three sub units: • • • Manufacturing (as shopfloor inspection). Operations/Production management is the management of a system which provides goods or services to or for a customer. facilities. resource and control the processes involved in converting raw materials and components into the finished goods. Health services. energy equipment. y Research In a manufacturing Organization.

etc. It involves. informing the customers about the difficulties during production process and to intimate them the difference in the quality and deviation from the standards.g. Other objectives that should be considered are: • • • • • maximize customer service minimize inventory investment minimize changes in workforce levels minimize changes in production rates maximize utilization of plant and equipment . Progress orders through the factory: It is basically a monitoring and reporting task. Computers. in machine operation and safety. 7. 6. and outputs. 3. Maintain stock and purchasing records 8. its possible to apply computer to the process. the planning process is a very complex task.that products can be produced according to the needs and wants of the customer. Reduces idle machine time. Development and application of computers in the production process. tools etc.4 Objectives of Aggregate Planning Objective of aggregate planning is to minimize total cost over the planning horizon. given customer requirements and capacity limitations. workforce levels. production process requires careful planning and controlling. to the customers. given customer requirements and capacity limitations.1 Characteristics of aggregate planning • Looks at aggregate product demand • • Looks at aggregate resource quantities. the production function is to provide goods required by its customers. Elements of production planning and control system are: 1..3. Liaise with the marketing department: It is important to ensure that the productive effort is meeting the customer‘s needs. 2. Ability to adapt quickly to avoid difficulties. Possible to influence both supply and demand by adjusting production rates.3. inventory and backorder levels. Thus. to carry out its operations in a cost –effective way. stock control.3 Staffing Plan (service aggregate plan) It is a managerial statement of the period-by-period staff sizes and labour-related capacities. the final step is to ensure that the appropriate paperwork is available and correctly completed. Prepare production schedules and programmes: Schedules are basically timetables. Although. components etc.2 Production Planning Modern production processes are complex and costly. Set production targets 7. Materials of all kinds. and inventory investment. 7. Plan availability of machines. parts. equipments etc. It also involves payment and incentive. invoiced and delivered to the customers. Progress documents etc. Ensure labour requirements: It involves detailing of the number and types of employees required. 10. Thus. invoices etc): The output of the production system should be accounted for. all have to be blended together.: It includes availability.3 Aggregate Planning It is attempting to match the supply of and demand for a product or service by determining the appropriate quantities and timing of inputs. inventory levels. Thus. are: • • • Effective control over the processes concerned. Computers can undertake masses of calculations very rapidly and also can perform separate operations at the same time and also are able to store huge amount of information. 7.. 7. if a new machine or process is to be used.2 Production Plan (manufacturing aggregate plan) A managerial statement of the period-by-period (time-phased) production rates. but most of the decisions are programmable types of decisions.for period of. growth and other objectives of an organization. They are prepared in detail where the sequence of operations and its priorities are specified. capacity and loading of machines. Therefore. in a way that it meets with the profit. which also involves some ‗chasing up ‗of progress in situations where orders have fallen behind schedule. 7.3. transformation. staffing. work-force levels. into production instructions. specify jigs. Ability to take advantage of opportunities arising from the speed and accuracy of feedback information received from the computer. to enable the production system. from one week – one month) 5. Plan the supply of materials. Carefully planned loading can reduce the material waiting time.: It involves purchasing. E. Raise final production documents (Delivery notes. stock levels. 7. Maintenance Manager: Responsible for the overall maintenance of all machinery. but facilities cannot be expanded. It also involves providing training to labours. and MRP(Material Resources Planning) 4. The main objective of preparing schedule is to ensure that the work is completed on time and within budgeted costs. (Plans refers to short term plans . Benefits of computer applications in preparing and maintaining schedules. to be paid to each employee. 9. Decisions made on production. Machines.3. and labour. as defined by final pre-production design and preliminary sales forecasts. Translate the customer’s requirements.

respects. but which represents the best value over a period of time. 7. quantity. 3. Appraisal and selection of suppliers 2. Arrangements for the originating requisition either directly from supplier or via stores and amend stock/delivery records as appropriate. price and delivery of goods. until further usage reduce them. Inspection of goods received is vital to check that the supplier is fulfilling the order to the correct specification. storage space. the purchasing department has to work closely with both production and marketing department. The order can be a contract for over a period of time. and also its cost effective. Receiving requisition from appropriate authority 2. invoices etc. 5.1 Definitions: Usage (Output) reduces stocks over a period of time. The quantity to be ordered as well as the time to place an order is also dedicated by • • the future supply (effected due to economic or political pressures) Favorable trends in short term prices. an order with the supplier is placed. Purchasing mix In purchasing material goods. will cause costly delays in production. As soon as the delivery is made stock shoots up again. other goods. The purchase manager has to exercise his responsibilities in close collaboration with other colleagues. 3. where lead time certain. orders fulfilled. It not only affects the stock. Establishing and maintaining effective working relationships with relevant departments (Production. On successful completion of the above point.4. insurance. This may not always be the lowest price available. 4. 1. distribution methods etc. Activities of purchase department: 1. • The lead time between an order and a delivery is important aspect of stock control. it could be spot or one-off (small order). 7. prices. Purchasing decisions can only takes place after due agreement with financial. Such usage will invariably absorb some of the buffer stock unless planned deliveries are made on time. 4. an optimum way of balancing the costs of insufficient stock against the costs of holding stock (tied-up capital. Buffer Stocks are reserved stocks held for emergency shortages. Selection of suppliers to negotiate quality. quality. to ensure that the manufacturing process is fully supplied with all its materials. damage etc) is essential. production or marketing colleagues. delivery and relative urgency of goods etc. stock control becomes easier. Economic Order Quantity : The optimum quantity of each product that must be ordered to balance the inventory holding costs against the order processing costs. 5. the more cost will be required. Marketing and Finance) 6. on other hand. and services.7. 4. delivery dates. Quantity: Quantity of goods to be ordered and time at which they should be ordered are important. Thus. To decide the quality of a raw materials /goods. With insufficient quantities at a particular time. price and delivery are crucial in several • . to ensure reliable delivery of goods. Developing effective links with existing suppliers and maintaining good relationships with potentials suppliers and with competitors. Whereas.4 Purchasing The primary responsibility of Purchasing/procurement department is to secure sufficient and suitable raw materials. components. Delivery: One of the factors which purchasing department must consider is the appraisal and selection of suppliers. Generally. issue of quantity. 2. Quality: The quality of goods purchased should be   Suitable to the manufacturing process Suitable to the needs /wants of a customer. All these issues are described by key term ―Purchasing Mix‖. while order processing costs decrease. Maintenance of records of orders made. Purchasing goods and services at prices which represent the best value to the business in the long term. holding costs increase with more inventory.4. Lead Time is the time between orders placed and delivery made. but also production. There are various techniques used by operation research scientists to work out the economic order quantity (EOQ) for each item and to set the optimum re-order levels too. 3. with larger the quantity of goods ordered. Purchasing decisions are often risky and involves considerable costs. Collating up-to-date information about suppliers.2 Steps involved in purchasing 1. to maintain the temporarily idle stock. Maintenance of adequate stock/inventory levels. as compared with uncertain lead time. Price: The purchasing department must aim to the price that best suits the organization by taking into account quality.

Reduction in manufacturing time. 6.5.1 Material Requirements Planning . inventory data. 4. the system should maintain no stock (Buffer stocks/reserves) but in practice.5. We need to know a) Ordering cost i. Finished goods a) To ensure availability of goods to meet demand b) To smooth out fluctuations in demand. The demand is even throughout the period. It works best in stable production environment It relies heavily on the efficiency of suppliers and their dedication to total quality. delays in delivery etc. Two basic questions are: • • How much to order to replenish stocks? When to order? O. It makes recommendations to reorder materials. manufacturing plants hope to achieve a relatively low level of stocks (inventory). 3. Improved quality This system is basically inflexible. transportation cost etc b) Holding cost: Expenses on the following: Storage cost.(MRP) It is a system for effectively managing material requirements in a manufacturing process. And of MRP – Steam Locomotives JIT systems require total commitment from the workforce and its suppliers. It is not easy to implement. Finished goods. 7. An analogy to JIT can be Electric Locomotives.e. components. 2. Inventory control is used to ensure that the costs of buying and holding stock are minimized.5.. and a faster turnaround time for finished goods. MRP is a set of techniques that uses bill of material data. when to place an order and how much stock should be maintained.5 MRP. Information systems have long been an important part of the manufacturing environment. Work in progress: a) To act as buffer between production processes. The demand for a given period (say for a year) is known. 4.2. By adopting MRP. Inventory orders can be replenished immediately. 7. 7. but just in time. 2. Fully acceptable quality of materials. Theoretically. administration cost. 3.1 Benefits of JIT are: 1. Expenses on the following: Requisition. Reduce scrap and wastage 5. MRP begins with the items listed on the Master Production Schedule and determines the quantity of all components and materials required to fabricate (put together) those items and the date that the components and material are required. taking into account the necessary inventory levels for operating the business and keeping the customer supplied.7 Economic Order quantity Model (EOQ Model) To determine Order Quantity we can use EOQ Model. There is no room for errors such as faulty components. • The reason for maintaining inventory levels are: 1.1 Assumptions of EOQ Model: 1.6 Inventory Control Inventory of an organization is its idle resources at any particular point in time.Material Requirement Planning 7. The JIT aims to coordinate the supply of materials so that they arrive just when they are needed –neither before nor afterwards.7. Raw Material: a) To take advantage of bulk buying b) To smooth out irregularities in supply c) To ensure internal supply to production. This approach to material planning and inventory management has been used with great success by a number of large Japanese Companies. a reduction in warehousing and associated costs. 7. Challenge management to consider why buffer stocks are required and thus to analyze the production process with a view to making improvements. minimum stock should be held. adjusting for inventory quantities on hand or on order and offsetting the net requirements by the appropriate lead times. It is an integral production process designed to ensure that materials (raw materials. subassemblies and parts) are available when required. Uninterrupted production flows 2. 3. MRP is accomplished by exploding the bill of material. insurance cost etc. 7. This approach is based on twin assumptions: 1.R scientist applies certain mathematical and statistical formulae to determine. . In any manufacturing organization the inventory can be describe as: • • Raw materials and purchased items Work in Progress (Semi finished goods/subassemblies etc): Goods in intermediate stages of production. preparation of purchase order. Increase equipment utilization.7.2 Just-in-time Systems (JIT) It represents a good step forward from MRP. 2. and the master production schedule to calculate requirements for materials. Simplified planning and scheduling. The cost per order is constant regardless of the size of order.

but regardless of its complexity or simplicity. procurement of material takes time. Adaptability 3.7.  Physical deterioration with the passage of time  Price fluctuation because of inherent volatility of certain commodities. comprising an additional 20 per cent of the period‘s expenditures. Inventory system should be able to handle these things.4 Criteria for judging the inventory system Apart from the objective of minimizing the cost of the firm. Comprehensibility: The Inventory control system varies from simple to complex.3 Monitoring and controlling Inventories There are various measures for judging the effectiveness of inventories: • • Just In Time System (JIT) Selective Inventory Control  Since they (item A) represent a high investment. a small proportion of items are used substantially and a large proportion of items accounts for small usage. This approach classifies categories: A. and . If the usage rate of material and lead time for procurement are known specifically. 7. inventories of B items are also kept low. Comprehensibility 2.7. the number of items used during one week multiplied by their unit cost)   The most expensive items. it should be clearly understood by all the concerned departments. suffices to meet the needs of production during the procurement period. the total cost of ordering and carrying inventories are: 𝑈 𝑄 𝑇𝐶 = ∗ 𝐹 + ∗ 𝑃 ∗ 𝐶 + 𝑈 ∗ 𝑃 𝑄 2 Ordering cost = U/Q *F Carrying Cost = Q/2 *P*C Purchase ordered) Cost = U*P (independent of quantity 7. but with a slightly greater safety margin against depletion. 3. new situations. constituting perhaps 10 per cent of the period‘s outlay.2000 P = Purchase price per unit = Rs. (For example. and should be able to take corrective steps. then ordering level will be: Ordering level = Lead time in days ∗ average daily usage 7.7. The next most expensive item. Timeliness: Inventories may suffer loss due to the following factors:  Obsolescence. Timeliness 1. inventories into three The carrying cost varies directly with the order size (since average level of inventory is one-half of the order size) whereas the ordering cost varies inversely with the order size. 7. Its purpose and logic must be transparent to all. and hence order level must be such that inventory at the time of ordering. 2.7.2 EOQ Formula: U = Annual Demand Q = Quantity ordered F = Cost per order C = percent carrying cost P = price per unit TC = Total cost of ordering and carrying On the above assumptions.5 Selective Inventory Control In most inventories. for a given period. ranging from expensive machine parts to nuts and bolts. (In terms of monetary value of annual consumption) ABC/ Selective Inventory Analysis. Inventory system should be able to induce timely action.25 EOQ model assumes that material can be procured instantaneously and hence implies that an order can be placed when inventory level drops to zero. It is done with twofold aima) To reduce capital investment in inventories and b) To lessen the likelihood of running out of important Items needed for production are all items used in production.5. The cost of carrying is fixed percentage (%) of the average value of inventory. the other criteria are: 1. To determine the minimum point of the total cost curve. are listed in order of their cost. But in real world. Adaptability: A certain degree of flexibility and adaptability must be designed into the system to make it more versatile. All others are classed C. inventories of A items are kept as low as possible. caused by changes in technology and shift in consumers taste. are classed B.12 C = carrying cost = 25 per cent of inventory value 𝑄 = 2 ∗ 2000 ∗ 20000 = 5164 12 ∗ 0. It must provide. set its derivative equal to zero: 𝑈 𝑄 𝑑𝑇𝐶 𝑑 𝑄 ∗ 𝐹 + 2 ∗ 𝑃 ∗ 𝐶 + 𝑈 ∗ 𝑃 = =0 𝑑𝑄 𝑑𝑄 𝑈𝐹 𝑃𝐶 − 2+ =0 𝑄 2 𝑄 = 2𝐹𝑈 𝑃𝐶 U = annual Sales = 20000units F = Fixed cost per order = Rs. uses a selective approach to inventory control. are classed A. for every possible new products. which calls for a greater concentration of effort on inventory items accounting for the bulk of usage value. B and C.

inventories of C items are much larger and less closely controlled.

7.8 Types of production Methods
There are number of ways in which the production process/method can be classified and these will affect the nature of task. The classifications are mainly applicable to manufacturing but are also acceptable in Services when layouts are considered. Process choice is important since it has implications for the way the system operates and is not quick to change. The three broad categories of production are: 1. Job 2. Batch 3. Mass production 7.8.1 Job: It is also termed as Jobbing production or unique production. These products are small, tailor-made components, huge pieces of equipment or large single item such as ship. Generally, the product is made for a particular customer or to a particular order. It is found in industries like – Heavy engineering (e.g.., production of electricity generating plant), ship building and civil engineering (e.g. Bridge construction, a new building), a film, or for a one-off services e.g., a consultancy assignment. It is also found in the industries where prototype models or spare parts or tailor –made items are produced. e.g., designer dress, handmade shoes, etc. Every factory, usually have jobbing department somewhere or the other. The production is usually made in-house and then transported to the customer and commissioned before acceptance. Since the parts produced in this system are unique, both planning and controlling are not easy. 7.8.1.1 Key characteristics of Jobbing Production 1. No standardization: A wide variety of different operations are performed under varying circumstances. 2. Varying sequences circumstances. of operations in varying

7.8.2 Batch: It is the production of standardized units, parts, in small or large lots (batches). • • It is found in light engineering industry. The products of batch are dealt with systematically in lots or batches. Once each lot is processed in the current operation they move to the next operation. Same equipments are used for a number of different products. E.g., Subcomponents produced for manufacturer, Car Components etc. another

• • • •

Problem with batch production is to determine the optimum size of batches.If too many units are produced, stocks will lie idle or go to waste; if too few are produced, then the items will go out of the stock. General purpose equipments and skilled labour are used. This gives high flexibility but low efficiency, with problems in controlling inventories, schedules and quality. It is a halfway production. between Jobbing and Mass

7.8.2.1 

Key characteristics of Batch Production Standardized set of operations, carried out intermittently (occasionally) , as each batch moves from one operation to the next. General purpose machinery and plant are used. Heavy shop-floor stores requirement Narrower range of skills required Emphasis on production planning and progressing Relatively short production runs.

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These characteristics lead to a well controlled and efficient method of production. Its main disadvantage is time delay caused by the queuing effect, waiting for each batch to be completed before moving on to the next operation. This problem can be overcome by changing to an assembly line operation which is a prominent feature of flow production, or mass production. 7.8.3 Mass Production The principle of Mass production was first adopted by Henry Ford. There are two kinds of Mass production: a) Unit mass production b) Flow/continuous mass production. 7.8.3.1 Unit mass production:  Such production systems are based on high demand created by mass market.  In unit mass production, small range of products is produced in large quantities by ‗flowing‘ uninterruptedly from one operation to the next until completion.

3. There are sequence of operations but they are not repeated 4. General purpose machinery and equipment 5. Varied work layout, depending upon operation. 6. Unpredictable demands in stores. 7. Skilled Workforce with wide range of skills. 8. Adaptable and equally skilled supervision. Many of these conditions make it difficult to plan, integrate and control the types, sequence and timing of operations. The idle time for both men and machines cannot be avoided. Thus the entire manufacturing process tends to be relatively expensive.

Linear sequences of operations are used to make the product or services, with equipment dedicated to that product or small range of products. Several basic materials are processed through successive stages into one final product. It is more automated and standardized than a line process. The capital cost is high as specialized machines are required for production. Once the production line is set up, the control becomes relatively simple. It is not used in services because there is no labour content. Process is essentially repetitive where each product passes through the same sequence of operations. E.g., Motor vehicle manufacturing, Food preparation in McDonald‘s, Bank Operations – Cheque Processing. This process is very efficient but inflexible.

Controlling the speed of rotation of those machines and varying them in numbers produces a glass ribbon of varying width and thickness. Continuous production is largely controlled by production controllers with feedback. The majority of transducers and controllers employ PID (Proportional, Integral, and Derivative) control which controls the final output element based on the variables response to the control element. The most important difference between batch production and continuous production is that in Continuous the chemical transformations of the input materials are made in continuous reactions that occur in flowing streams of the materials whereas in Batch they are done in containers. 7.8.4 New technology in Manufacturing It can be summarized as, ―The application of computing and microelectronics to the planning, resourcing and controlling of the manufacturing process, from the design stage to the completion of the product.‖ a) Computers in production control: Computers handles Stock control, sales orders, purchase orders, machine scheduling, capacity planning, tooling lists and work scheduling. Firms which uses computers in production planning and control, enables in higher productivity, by better utilization of machines and reduced overheads. b) Computer-aided design (CAD): CAD is used to translate engineering concepts into engineering design by means of programs. CAD programs are capable of providing 3-dimensional representations on a screen. c) Computer-aided manufacturing (CAM): d) Robots: Robots are the programmable machines that can replicate a limited range of human actions. • • • It is used where the employee are reluctant to undertake repetitive, dirty or noisy work. It can be used in handling dangerous tasks – handling radioactive materials. Helps in reducing production costs, once programmed, they produce accurate results.

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7.8.3.2 Key features of Mass production  Specialized machines and equipments, set out in a line formation.    Highly standardized methods, tools and materials. Long production runs for individual products. Narrow range of skills and specified range of operations required by workforce at any one point in the line. Controls can be exercised because of standardized nature of the entire process. the

 

Mass production methods are the most efficient way of producing large quantities of articles or items. Its main drawback is that it requires human beings to adapt themselves to the production process.

7.8.3.3 b) Flow /Continuous Mass production  The start-up costs of these processes are generally high, so they tend to be run continuously with little or no labour intervention.  E.g., Petrochemicals, Beer production, steelmaking Paper-making, Electricity, cement production etc. Such production methods are continuous for weeks or months . The control system in such methods becomes almost automatically self –regulating.

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Continuous production is a method used to manufacture, produce, or process materials without interruption. This process is followed in most oil and gas industries and petrochemical plant and in other industries such as the float glass industry, where glass of different thickness is processed in a continuous manner. Once the molten glass flows out of the furnace, machines work on the glass from either side or either compress or expand it.

e) Control Devices and process Measurement: Devices can be used to monitor and record the variables like – pressure, temperature and constituents levels. etc. e.g., Fluorescent spectrometer can analyze samples of the product and produce a complete chemical analysis of constituents of its material. The above applications can be combined as: 1. Computer-integrated Manufacturing (CIM) 2. Computer-aided engineering 3. Flexible manufacturing systems (FMS)

7.8.4.1 Computer-aided Manufacture (CAM) It is a general term which refers to any production system in which manufacturing plant and test equipment are controlled by computer. • • • CAM is more than just metal-cutting. It embraces important engineering processes such as welding, assembling and painting. CAM is applicable to processes where parts are complex and accuracy is vital.

but it is possible to produce large quantities of almost, identical goods. Thus, almost identical goods can be produced with certain tolerances and customers can accept items with those tolerances, not beyond that. The role of quality control is to ensure that appropriate standards of quality are set and those variances beyond the tolerance are rejected. Thus, Quality Control is a system for setting quality standards, measuring performance against those standards and taking appropriate action to deal with deviations, outside performance tolerances. Quality control activities can be very costly, as it represents an overhead cost in the production area. The degree of time and resources spent on them such as price, consistency, safety and legal requirements. E.g., highly priced porcelain will be subject to far higher quality controls than household earthenware. E.g., Pharmaceutical products are subject to health controls, backed by legislation, and thus require highest standards of quality. 7.9.1 Inspection Inspection is an important part of quality control. One must make a choice between - whether to carry out 100 % inspection or lesser amount on a sampling basis. • • When perfect quality is needed, e.g., in Nuclear reactor plant, 100% inspection is applied. In batch or mass production, 100% inspection is not always required.

CAM system can be expected to achieve: 1. More speedy production of parts. 2. A consistently high level of product quality. 3. Ability to achieve high production levels even when skilled craftsmen are in short supply. The software of CAM generates numerical control (NC) tapes for the computer control of machines (CNC- Computerized Numerical Control machines) and robots. CNC machines handle turning, drilling, milling and sheet metal working. One of the examples is FMS (Flexible Manufacturing Systems). 7.8.4.1.1 The Benefits of CAD/CAM • Greatly improved productivity of designers. • • • • Reduces the waiting list of projects to be tackled by the design department Development of uniform throughout the organization. design standards

Improved quality and consistency of finished products Simplified quality control testing and inspection. through automatic

7.8.4.2 Flexible Manufacturing Systems (FMS) Flexible Manufacturing Systems (FMS) is one, where a small group (or cell) of Computerized Numerical Control (CNC) machine tools is used, in a coordinated way, for producing components, without manual intervention, in a small batch operation. A typical FMS consists of the following: 1. A group of NC machines each with the capacity to manufacture a range of parts 2. A number of robots and wire-controlled work carriers 3. A computer control station Such systems can lead to 1. Reduced work-in-progress 2. Reduced stock-levels 3. Faster throughput times 4. Quicker change-over times 5. Lower unit costs

In 100% inspection, the inspector has to carry out inspections in noisy and busy surrounding, and thus their concentration gets affected. Due to which even in 100% inspection, few percent % of defective items are also passed. The most widely used techniques of inspection are random sampling. Random Sampling means that a batch is accepted or rejected on the basis of the number of rejects found after taking a random sample from the batch. Continuous sampling is used in Mass production and entails an initial 100% inspection until a predetermined number of correct items have passed in succession. Then random sampling begins and continues until further reject appears. Again 100% inspection is recommended and the cycle is repeated • • Inspection Control begins with inspection of raw materials and other items purchased from suppliers and continue with inspection during production, and ends with a final inspection before delivery to the customer. The responsibility for checking quality on the shop floor is to ensure adherence to the organization‘s quality standards.

7.9 Quality Control
In physical world of production, numerous control systems are in operation. One is Quality Control. The control of quality rests on the assumption that, in mass production, no two units are exactly identical,

These standards are set with several objectives in mind: 1. To produce product which are satisfactory to the customer (Quality, reliability ,Variety etc)

However. The chart contains a center line that represents the average value of the quality characteristic corresponding to the in-control state. Its uses are a) It is a proven productivity. c) Regular rotation of machines.10. To attain above points within agreed level of inspection costs. method.2 Types of control charts 1. a) p chart b) c chart c) u chart 2.1. or when the plotted points exhibit some nonrandom pattern of behavior. b) Mismeasurement of a part or parts. An unusual or nonrandom pattern in the data. d) Differences in measuring or testing devices that are being used in order. A trend of seven points in a row upward or downward. comparing them against standards and taking any immediate corrective action to prevent further faults. Control charts for Attributes. A run of eight points on one side of the center line. equipment.1 Analysis of Patterns on Control Charts A control chart may indicate an out-of-control condition either when one or more points fall beyond the control limits. Two other horizontal lines. To control the process of producing the items 3.1. 2. b) Improvement or deterioration in technique.10. 7. 3. Control charting is one of the tools of Statistical Quality Control (SQC) It is the most technically sophisticated tool of SQC. b) Differences between operators or operator techniques.1. This pattern may indicate: a) A special cause of variance from a material.1.10 Statistical Quality Control Two main methods dealing with these issues are: ‗Process control and Acceptance sampling‘ are the two methods of ―Statistical Quality Control‖. It was developed in the 1920s by Dr. for the purpose of improving the economic effectiveness of the process. a point that plots outside of the control limits is interpreted as evidence that the process is out of control. the sensing and measuring devices are built into the machine concerned to provide immediate information and immediate corrective actions. Shewhart developed the control charts as a statistical approach to the study of manufacturing process variation. Dr. Even if all the points plot inside the control limits. Cycling of data can indicate a) Temperature or other recurring changes in the environment. if they behave in a systematic or nonrandom manner.10. These methods are based on continuous monitoring of process variation. e) It provides information about process capability.1 Control Charts Control charts show the actual performance against standard performance and the amount of deviation. 7. then this is an indication that the process is out of control. The control points are connected with straight line segments for easy visualization. As long as the points plot within the control limits. The process is out of control if any one or more of the criteria is met. a) X bar chart b) R chart 7. This may show a) Gradual deterioration or wear in equipment. 1.2 Automatic Process control: In this. shareholders and stakeholders. Control charts for Variables. Process controls can be expedited by the use of control charts and automatic process control. nearly all of the sample points will fall between them. the process is assumed to be in control. or measurement system change.3 Uses of Control charts Control chart is a device for describing in a precise manner what is meant by statistical control. or materials or a shift in the measurement system. methods. Walter A. in a graphical form. Shewhart of the Bell Telephone Labs.2. These control limits are chosen so that if the process is in control.1. called the upper control limit (UCL) and the lower control limit (LCL) are also drawn.10. To accept or reject items 2.1. technique for improving 7. This pattern indicates a shift in the process output from changes in the equipment. and no action is necessary. To improve the process itself. 3. b) It is effective in defect prevention. 7. and investigation and corrective action is required to find and eliminate the assignable causes responsible for this behavior. 7. To produce products which are consistent with the organization‘s responsibility to its workforce. d) It provides diagnostic information. Three main reasons for inspecting work: 1. 7. . A typical control chart is a graphical display of a quality characteristic that has been measured or computed from a sample versus the sample number or time. c) It prevents unnecessary process adjustments.1.1 Process control: It consists of checking items as they progress through the production process.1.10. One or more points outside of the control limits.10.

Such controls are feasible where 1. Accurate measurement is possible 2. Where continuous inspection is highly desirable 3. Where reliability of inspection is important. 7.10.2 Acceptance Sampling: This is where customer samples, a batch of newly delivered goods, and either rejects or accepts the batch on the basis of an acceptable quality level (Usually a small of percentage of rejects per batch). If the number of rejects in a sample is in excess of the agreed percentage, the whole batch is returned to the supplier. The samples variables. • • can be checked by attributes or

With this philosophy, there is emphasis on continual improvement of the product and preventing errors rather than relying on post production inspection to reject faulty items and to correct mistakes.

7.12.1 Key points of TQM advocated by William Edwards Deming: a) The organization, at all levels, must accept and practice their commitment continuously to improve customer satisfaction. b) Quality improvement must be embedded in the organization's culture from top to bottom. c) Aim for constant improvement in product and processes. d) Encourage self-improvement and education at all level. e) Choose suppliers for quality and reliability rather than price. f) Encourage cooperation and teamwork and develop trust throughout the organization.

Objective measurement in inspection is called Checking by variables. Subjective measurement in inspection is called Checking by attributes.

The checking by attributes, involves human judgment instead of a ‗scientifically‘ measured fact. Human inspection is most suited to instances where a) Objective standards are not available. b) Where discretion is required in analyzing and assessing faults and errors. This approach is most likely to apply to the more complex issues of quality control.

g) Provide adequate training and equipment and encourage pride in their own work and the product. A feature of TQM is that a closer link is established between top management and shop floor operators. Operatives are encouraged to take decisions and accept more responsibility. As a consequence, the formal structure and middle management are reduced or eliminated. Quality Circles are another facet of the total quality approach which originated in Japan.

7.11 Benefits of Quality Control
a) Reduction in cost of scrap or re-working b) Reduction in complaints from customers c) Enhanced reputation for company‘s product d) Feedback to designers and engineering staff about performance of product and machines required to produce them.

7.13 Quality Circles
Quality circles are small groups of about 8-10 employees, which meet together on a regular basis to discuss day-to-day issues such as quality, productivity, and safety etc. The objectives of such groups are:   Making improvement Organizing their implementation: It involves a degree of decision making to the shop floor situations.

7.12 TQM –Total Quality Management
It is applied where there is a defined culture of quality awareness and quality improvement in every process, in every department and at every level in the organization. Organization practicing TQM have a long term commitment to quality and consider quality to be core value of the organization.   They take an external view of quality as compared with traditional internal views. Internal view of quality concentrates on ensuring that items produced conform to their specification within accepted tolerances. This view considers that quality costs money and as production costs must be minimized, quality factors are always limited by their costs. External view, Pioneered by Japanese, places much emphasis on original design which the customer ordered. It considers quality at the heart of the production process, where every part will be fit for its purpose and will be right first time.

With quality circles, we delegate the real power to employees at shop floor, not only by suggesting them regarding quality, but also to implement those suggestions. 1. Membership of Quality Circles is voluntary, but usually consists of many shop floor employees and foreman or supervisors. It consists of both skilled and unskilled employees such as quality engineers and inspector. 2. Each circle selects its leader 7.13.1 Task of Quality Circles a) Identify problems in local work situations. b) Select a problem for solution

c) Set realistic target for improvement (e.g. to reduce wastage rates by 15% over next 12 months) d) Propose plan to local management e) Implement and test plan f) Revise plan, results. where necessary, and monitor

5. Inspection: Vehicles, equipment, buildings and people. 7.14.1 Four segments of quality costs: 1. Internal Failure. This area covers the costs that are borne by the organization itself such as scrap, rework, redesign, modifications, corrective action, concessions and overtime. a) Failure costs that arise before your company supplies its product to the customer. Along with costs of finding and fixing bugs are many internal failure costs borne by groups outside of Product Development. b) The costs of the wasted time, the missed milestones, and the overtime to get back onto schedule are all internal failure costs. 2. External Failure. This area covers the costs that are borne by the customer such as equipment failure, warranty, administrative cost in dealing with failure and the loss of goodwill. a) Costs associated with defects found after the customer receives the product or service. b) Costs that result from poor quality, such as the cost of fixing bugs and the cost of dealing with customer complaints. c) Failure costs that arise after your company supplies the product to the customer, such as customer service costs. d) External failure costs are huge. It is much cheaper to fix problems before shipping the defective product to customers. 3. Appraisal: This area covers finding defects by inspection, audit, calculation, test and measurement. Costs incurred to determine the degree of conformance to quality requirements. 4. Prevention: This area covers avoiding defects in planning, preparation, training, preventative maintenance and evaluation. a) Costs of activities that are specifically designed to prevent poor quality. b) Examples of "poor quality" include coding errors, design errors, mistakes in the user manuals, as well as badly documented or NON-maintainable complex code. 7.14.2 Total Cost of Quality: The sum of costs: Prevention + Appraisal + Internal Failure + External Failure. The objective of Total Quality Cost is to achieve measurable improvement in materiel quality and quality cost reduction on a systematic basis. The purpose of the Total Quality Cost Model is to i. Provide quality cost information to enable informed, effective decision-making related to cost of quality Identify failure costs to facilitate appropriate corrective action

Quality circles provide means of achieving employee participation on the shop floor. The primary responsibility of Quality circles is not only reducing costs but also to improve quality, use of equipment, efficiency and safety. 7.13.2 Benefits of Quality Circles a) Greater awareness of shop floor problems by circle members. b) Greater confidence in tackling problems and generating solutions on the part of circle members c) Improved productivity and quality and safety. d) Improved motivation, commitment and confidence on the shop floor.

7.14 Quality Costs
What is the cost of quality? Does it raise the price of goods and services? Are huge savings possible by implementing continual improvement efforts? These questions are not easy ones, but quality is measureable, as are its costs. Cost of quality (COQ) is a phrase coined by Philip Crosby, noted quality expert and author and originator of the ―zero defects‖ concept, to refer to the costs associated with providing poor-quality products or services. Many quality practitioners thus prefer the term cost of poor quality (COPQ). Like all things, there is a price to pay for quality. This total cost can be split into two fundamental areas: a) Non Conformance. This area covers the price paid by not having quality systems or a quality product. Examples of this are: 1. Rework. Doing the job over again because it wasn't right the first time. 2. Scrap. Throwing away the results of your work because it is not up to the required standard. 3. Waiting. Time wasted whilst waiting for other people. 4. Down Time: Not being able to do your job because a machine is broken. b) Conformance: Conformance is an aim of quality assurance. This aim is achieved at a price. Examples of this are: 1. Documentation: Writing technical instructions paperwork. 2. work instructions, and producing

Training: On the job training, quality training, etc.

3. Auditing: Internal, external. 4. Planning: Prevention, do the right thing first time.

ii.

iii. iv. v.

Identify appraisal improvement

and prevention

targets for

Internal Failure  Bug fixes  Regression testing  Wasted in-house user time  Wasted tester time  Wasted writer time  Wasted marketer time  Wasted advertisements [7]  Direct cost of late shipment [8]  Opportunity cost of late shipment

External Failure  Technical support calls[9]  Preparation of support answer books  Investigation customer complaints  Refunds recalls of

Enable results tracking Identify relationships between improvement actions and results to enable ―what if‖ analysis

and

 Coding / testing of interim bug fix releases  Shipping of updated product  Added expense of supporting multiple versions of the product in the field  PR work to soften drafts of harsh reviews  Lost sales  Lost customer goodwill  Discounts to resellers to encourage them to keep selling the product  Warranty costs  Liability costs  Government investigations[10]  Penalties[11]  All other costs imposed by law

The graph shows that there is a minimum Total Quality cost, which is a combination of prevention, appraisal and failure. Reducing any of these reduces the total. The key to minimum cost, is striking the correct balance between the three. Clearly prevention reduces both appraisal and failure costs, however eventually the cost of prevention itself starts to increase the total cost and so this must be controlled and set at an effective level. Total Quality Cost Analysis includes a measurement of Quality Costs. Quality costs are those costs encountered when efforts are aimed at avoiding defects (preventive actions), looking for defects (appraisal activities), or repairing and/or recovering from a defect (failure resolution). Figure 1: Examples of Quality Costs Associated with Software Products. Prevention  Staff training  Requirements analysis  Early prototyping  Fault-tolerant design  Defensive programming  Usability analysis  Clear specification  Accurate internal documentation  Evaluation of the reliability of development tools (before buying them) or of other potential components of the product Appraisal  Design review  Code inspection  Glass box testing  Black box testing  Training testers  Beta testing  Test automation  Usability testing  Pre-release outof-box testing by customer service staff

7.15 Quantitative Techniques/ Operation Research Techniques (OR)
Operation Research Techniques are used in decision making, planning and controlling. It encompasses a collection of techniques which apply scientific methods to complex problems in organizations. OR involves scientific models or framework to represent real situations. conceptual

The model utilizes mathematical and statistical terms to express the variables involved in decision making. Techniques are: Network Analysis (PERT and CPM) The chief benefits of such techniques are that they assist in analysis of problem and also develop the solution. Advantages of O.R Models

.• Provides a basis for solution of complex problems in static or dynamic situations. • Large number of factors were taken into account at one time.

The thinking behind this orientation is that customers buy products or services rather than solutions to problems. so as to meet them with the highest level of customer satisfaction.. 8. Price 3.. E.2 Needs and wants of consumer: Needs are the basic physical and psychological drives arising from being human..2 Marketing Mix A vital element in every marketing strategy is marketing mix. what is going on outside the organization than. 4. when he identified 12 key variables in the typical marketing programme. Distribution Marketing mix is the central part of an organization‘s marketing tactics...1.g. Life insurance Companies. e.g. Need for food. They are the basic necessities. A market may consist of a mere handful of people (e. a) Senior managers. customers of antiques) or may consist of millions (e. The concept was first expounded by Professor Neil Borden of Harvard University in 1940‘s. clothing etc.g. i. Product Orientation: In such organizations. competitors. Production oriented: In such organizations. Promotion and Distribution strategies. 1. Thus. when a production manger meets customers to discuss the quality problem or a minor design change. advisers. the organizations stands or falls by the quality of its product.g. E. Obtains customer reactions. concern is to find out what the customers‘ needs and wants are. 3.g. Product.  8. and where lower cost will encourage people to buy. the need for food could be transformed into a specific desire (want) for roasted chicken. Sales orientation: In such cases. Marketing activities are conducted mainly across the external boundaries of the organizational system. Market oriented organization is one which focuses on the needs of its customers.1. consumers of breakfast cereals). Education. group of existing and potential buyers and users of its goods and services. organizes sales and distribution etc. middlemen etc) has been identified and evaluated and the decision has . The marketing role in an organization is carried out by numerous individuals. distribution and cost. Price.1 Marketing Every business or public organization has its market.Marketing Management Overview: Overview of Marketing function. Human beings have relatively fewer needs. b) Middle level managers also carry out marketing role when dealing with issues related to public. c) Finally marketing department is there.e. E. in order to attract customers to its products. but can generate enormous number of wants. 2.. based on how they regard their customers: 1.  Marketing is…. and they are undertaken by managers of all kinds. with what is happening internally. Whereas wants are specific desires directed towards fulfilling the basic needs. examines the market place and assesses the organization's ability to meet current and future demands on its resources. the concentration is on production efficiency. the focus is on selling skills than on the needs of the buyers.. prepares the marketing plan i. suppliers.‖ Marketing is the one function of management which has to be more concerned with. Its primary 8.g. Thus. Product 2.. Marketing research and its role 8 8. E.. its staff does Assesses customer wants. Arts. the concept is that people will not buy until they are persuaded to buy by positive selling. or bread-and –cheese.g.e. The marketing concept takes the view that the most important stakeholders in the organization are the customers. not only by marketing specialists. Promotion 4. Later these 12 variables were reduced to 4 main headings. This works well when the demand is well ahead of supply. This approach is called ‗marketing concept‘ and is found in supermarket chains and in numbers of travel agencies. marketing is directed in creating and changing people‘s wants. Once the market situation (Customers. Journalism etc. he is fulfilling a marketing role.1 Kinds of Organizations based upon marketing Different kinds of organization are there. This means that the customers form the starting point for the organization's corporate strategy. ―The management function which organizes and directs all those business activities involved in assessing and converting customer purchasing power into effective demand for a specific product or services and moving the product or services to the final consumer so as to achieve the profit target or other objectives of the company.

g. price relatively high. It is far less common in industrial products. estate cars. a) Introduction: Unit Cost are high (because they include the development costs). Competition at its peak. The range of products offered by an organization is called ‗product mix‘. the very existence of a product range is a selling point for a product. Package not only provides protection (Foodstuffs. Mass market begins to evaporate. Such facilities are applicable to both the individual consumers. when a major competitor is suddenly declared bankrupt). coronary care. dental treatment. for improvement of health or treatment.” e. Packaging. Within these product lines. X-radiography. is a matter of secondary importance. Prices fiercely competitive. Para-medical services etc. or by modern diagnostic apparatus. diagnostic services. This means applying the organization's ‗signature‘ to its product by the use of special names. increasing competition. d) Saturation: Sales Stagnate. dangerous liquids and delicate pieces of machinery). but here other considerations apply such as the appearance of the goods on shelf. The selling effort is not just confined to Promotion element in the marketing mix. guarantees. e) Decline: Sales decline permanently. loaves of bread etc.3 Product Product is anything that is offered to a market for its use or consumption. and after sales services. Cold Drink can be opened safely by pulling the ring. or by nursing care. Measures taken against remaining competition. Within each product line. So. sport cars etc. Brand. Profits level off (stable). the role of the marketing mix becomes crucial. but also it reinforces the brand image and the point-of-sale attraction to the buyer. Profit shrinks. and to the industrial or commercial buyers. By using marketing mix as an organization's marketing plan.. Accident services. holiday arrangements and accountancy services. medium-priced family saloons. b) District Hospital: Surgical and medical services. Philips. Variations in engine sizes. Now-a-days. parker. various alternative services are offered e. a) Brand: One important method used to sell benefits is by branding products. 2 door and 4 door versions of family saloons. warranties. c) After sales Services: Some products are sold with emphasis on after sales service. Product Variety Quality Brand Name Packaging etc. Computer suppliers frequently provide customer training as an integral part of their product package. Product is withdrawn from the market. customers buy the benefits of a product. c) Maturity: Sales continue to rise. Whether these things are achieved by surgery. Car retailers sell vehicles with various kinds of warranties concerning replacement of faulty parts at the supplier‘s expense.. Physiotherapy and so on. e. executive saloons. such as machine tools.1 Product Life Cycle Products typically pass through five major stages in its life. Examples of product mix are: a) Motor car manufacturer: Cheap. it is possible to adapt speedily and profitably. Brand names like: Coco Cola. or the possibility of seeing the contents through the packaging and convenience of the pack. we want hospitals. b) Packaging: It is the presentation of a product to the market.. range of colors etc. It begins by being designed into the product itself. Few competitors. Promotion Advertising Personal selling Sales promotion Publicity etc Distribution Channels Sales Force Coverage Transport etc 8. The other aspects are: Quality. technical advice and similar benefits. various other refinements can be offered e. Any market situation can change rapidly over a short period of time (e. Profits low or even zero. Goods like soft toys and items of clothing may not need such protection. to changes in the marketing environment. The product offered by a manufacturer consists of physical items. basic family runabout..g. or by drugs. mass market.. “People generally want to acquire the benefits of the product. unit cost decline. Profits at peak level. the development of mix to meet conditions at a particular point or period in time is essentially a contingency approach to marketing management.g.been made to penetrate or develop a market. television sets. but more slowly.g. Price softens.. general surgical.3. Mass market. The time is a vital factor in assessing the particular mix to be offered to a market. sales and profits are low. Price softens further. and organizations sell the benefits of that product. TARGET MARKET TIME Price : Basic Price Discounts Credit items etc. signs or symbols. rather than its features.g. Consumer protection lobbies /cells are formed to provide after the sale services. Thus. The product can be a physical object or a service of some kind. b) Growth: Sales rise rapidly. Thus. . 8. Branding is a feature of consumer products. Products offered by service industries include hospital care.

4 Price The next important element in the marketing mix is the price. 3) Interest rates are usually variable. then they will prefer lower price to slightly higher quality or improved distribution arrangements. then there won‘t be any pressure to adjust the prices according to competitors. Such products tend to be for higher income groups or specialist interest groups. Seeing the current position of the product in its life cycle. it is possible to assess the potential growth of sales. i) The basic food stuffs like packet of coffee or loaf of bread will have relatively long life cycle. e. If price is not the major factor in the buyer‘s analysis. Like extension of 1 years warranty period into 2 years warranties period. Its adaptability in the light of economic trends and Whether it is the focus of short term fads or of long lasting fashions.. just to gain temporary advantages over competitors. c) In certain situations. improving quality or adding features without increasing prices) a) When a new product is introduced. When competitors change their price structure. But the costs which cannot be absorbed by improved productivity are the crucial ones. A bargained price may well attract considerable sales and at the same time discourage competitors. you too follow the same. All others are only costs. Few products stand still in terms of their costs. If price is dominant issue for buyers. But. Thus the cost of financing product fluctuates. if you can offer other advantages in the marketing mix. the prices can be reduced and the production volume can be increased. the price tends to be high on account of the initial development and marketing costs. Thus. d) The activities of competitors play an important role in taking pricing decisions. product life cycle contributes an important role in forecasting and planning of product. It is possible to introduce a product with a very low price in order to obtain a foothold in a new market. then if the competitor is dropping the prices. the price may be so low that the business may fails to generate sufficient revenue to cover its operating and capital costs.g.g. Many costs can be offset by productivity savings.g. it is possible to a) plan the product mix b) plan the development and introduction of new products c) Plan the withdrawal of obsolete or unprofitable products. the cheap flight rates of Jet airways. Prices are important at certain times like:     When new product is introduced During periods of rising costs of production.. Pricing is a very flexible element of marketing mix and enables firms to react swiftly to competitive behavior.  Cost of production (development)  Ability to generate sufficient revenue and profits . E. 8. 2) Material costs and energy costs are generally irregular and tend to increase. Competitors may throw out a challenge by improving the product and offering a better distribution service. the motor car with high petrol (fuel) consumption will tend to have short life cycle. When competitors change other elements of marketing mix. d) Set the revenue targets for each product within the total range. The danger associated with this is that. ii) In economy.. It is important because it is the only element of the mix which produces revenue. If the product offers no particular advantages over what others are offering. such as    Its relevance to basic needs.  Desired market share for the product  Prices being offered by the competitors. prices are raised by lowest possible margin and few attractions are offered along with it.The total length of time over which a product may decline depends on a variety of factors. degree to which the prices can be made soft in order to maintain the market share. Taking into account the various stages of product life cycle and the period of time concerned. As the product begins to attract sales and initial costs starts covering. (e. b) Various costs which influences the price of a product: 1) Labour costs increase from year to year. and to increase the share of the existing market. where cost of energy is high. iii) Pop records/CDs/Cassettes etc or other leisure items develops out of fashion and reappears over the course of time.

Advertising 2. i.. The methods of promotion like advertising are very effective in reaching to consumer market but are of little significant to industrial markets.g.1 Advertising: It is the process of communicating persuasive information about a product to target markets by means of the written and spoken word. before 8. the aim of the message is to turn the customers‘ needs into wants. the most expensive medium is Press and then comes television.g. If the product is at the Introductory stage -. where personal selling is more important.. Stages in which customer behavior can be identified are:      Unawareness of product Awareness of product Interest in product Desire for product Adoption/purchase of product  b) Advertising Message: Probably the most important aspect of any advertising campaign is the decision about – what to say to the prospective customers and how to convey it. in a range of such pens offered by a newcomer to the market. say a Motor car manufacturer sells different models. Sales promotion and 4. This means that one product in a line is reduced to below cost levels with the aim of attracting attention to the product line or range as a whole. The principle methods of promotion are: 1. Publicity.then marginal extra quality and delivery terms may prove to be more attractive. Following questions must be considered placing an advertisement for a product a) How much should be spent on advertising? b) What message do we want to put across? c) What are the best media for our purposes? d) When should we time our advertisements? e) How can we monitor advertising effectiveness? a) Advertising Expenditure: Decision about advertising will usually be made in conjunction with assessments about the position of the product in its life –cycle.. with different capacities e.more amounts of resources will be put into advertising.Hoarding In terms of expenditure. it needs to be drawn to the attention of the market-place. The concept of loss leader is also applied to internal price differentials. . journals etc.5. a new fiber-tipped pen. Price is important factor in determining the relative standing of one product or product line with another within the product line. and its benefits need to be identified. Personal selling 3. magazines. then the seller may reduce the differentials to attract the buyers to 2 liters cc model. There are five principle media of advertising: a) The press – newspapers. It is the Advertising Message that makes the people aware of the product and favorably inclines towards it. between 1600cc – 1 liter models.g. Advertising aims in achieving the following: a) Increase customer familiarity with a product (or variations of its product range) The four methods of promotion are applied to each stages of customer behavior. These promotional methods may vary with varied market/customer. various options can be adopted by the company:  Percentage-of-sales approach: where advertising expenditure is related to sales revenue. Loss leader can be a very good way in establishing the range in the market. They provide bulk of expertise and carry biggest amount of responsibility. The advertising copy (text) also aims to make people desire the product.Advertising may be used to score points off the competition e.e. It is important for e. For e. Basically. may be sold at a loss in order to draw attention to a range as a whole and to establish a share of the total market.. and by visual material.g. ‗our vehicle does more miles per gallon than theirs. Base the advertising on what the competition is spending. ‗ In deciding how much to spend on advertising. Saturation . Aim of organization‘s promotional strategy is to bring existing or potential customers from state of relative unawareness of the products to a state of actively adopting them. 8. It is in these areas that marketing departments come into their own. But it discourages innovative approaches to advertising expenditure and does not allow for distinctions to be made between products or sales territories. with 2 doors and 4 doors versions etc. b) Commercial Television c) Direct Mail d) Commercial radio e) Outdoor. If 1600 cc models are selling well but 2 liters models are not.5 Promotion Every product needs to be promoted. Decline stage – little or no expenditure done for advertising.

b) Inform customers about specific features of a product c) Inform customers about the key benefits of a product d) Indicates distinctive features or benefits of a product. If the advertisement requires being displayed/shown frequently. closing a sale etc) 1. Local magazines are useful. The use of territory helps to reduce the costs of travel. 2. c) What is the best way of putting a message across? It is an important as we have to decide how to get the message over to the customers.5. Product: Allocating work according to the product. How much brand awareness in the market. Arousing interest in the product 3. competitors‘ activities etc) Communicating regular information to customers and prospective buyers (new catalogues etc) Prospecting (looking opportunities) out for new selling To fulfill the above mentioned duties. advertising plays a vital role in the first three stages. catalogues etc) Techniques of selling (creating interest. Personal selling is the most expensive form of Promotion. Advertising creates the interest . Most countries exert some degree of state control over the content and form of advertising. Effectiveness of advertisement i. type.g. selling clinches In industrial markets. On sales. based on personal selling. Organizations must weigh the anticipated benefits against the costs involved. it only based on personal selling. (by comparing with competing products) e) Establishing credibility of a product f) Encourage potential customers to buy the product To achieve the above aims. put out at a peak viewing time. the advertisers usually have to abide by a number of laws and codes of practice. Customer 1. Steps in personal selling: 1. personal selling becomes important. Creating a preference for product Making a proposal for a sale Closing the sale Retaining the business In customer market. specialists sales representatives are The sales force can be organized on the basis of 8. organization structure etc) The product on offer (goods . For effectiveness. are said to be adopting a Push strategy whereas those relying on advertising are said to be adopting a Pull strategy. but personal (confirm/secure/finalize) the deal. about whether it is effective and how much it is effective is difficult to measure. would be most effective. dealing with objections. to take the final decision. 1. After that. services . then hoarding are useful as TV advertisement will incur more cost. location etc) Sales plan for their territory Promotional material (brochures. there is no substitute for the final faceto-face meeting between the buyer and the seller/representative. The tasks of a sales representative: • • • • After-sales queries) servicing (dealing with technical customer The frequency of exposure to the message. Gathering information (feedback on reactions. of coverage sought to reach and desire. The content of the advertisement should not contain anything offensive to a particular group in society.2 Personal Selling: However vivid the message is out over by advertising. Direct mail is also effective but is expensive. new banking services) then television advertisement. personal selling plays an extensive role. Newspapers. Advertising Effectiveness: Two aspects are there. Product 3. ranges etc) Sales and profit targets Customers (size. 2.. Territory: Territory is allocated on the basis of workload and potential sales. In such sales. Territory /geographical areas 2. but the right selection of newspaper/ magazine is important. accommodation and related expenses and also eases the administrative burden of controlling the sales force. the sales representatives need to have the following information about: • • • • • • • Own organization (customer policies. 6. 4. Actual evaluation of advertising/marketing. resources available. or mass market. nor should it contain information or suggestions which are misleading. The choice of media depends on the organization‘s requirements in terms of: • • • • • The extent customers..e. 5. will it make a relevant impact? The timing of advertisement The cost involved. Establishing customer contact 2. In industrial market. advertising does not play any role. If wide coverage is sought (e. Companies which utilize an aggressive sales policy.

It is used most frequent in the field of consumer products. without involving middlemen or intermediaries.6 Distribution The last element of marketing mix is distribution. Encourage dealer/retailer cooperation in pushing particular lines. E. computers.3 Sales promotion: Sales promotion activities are a form of indirect advertising designed to stimulate sales mainly by the use of incentives.required who can deal with technical as well as general queries. The evaluation of sales promotion is never a clear cut matter. Achieve higher levels of customer acceptance /usage of a product or product line. Publicity is news about the organization or its products. i. trade customers oriented Promotions Sales promotion is push strategy of promotion.g. The other method could be to interview a sample of consumers from the target market and checking on Dealer‘s stock-levels. Indirect means there are number of intermediaries between the original producer and the final buyer. The purpose of distribution is to move the product or service to the final consumer. per customer) 2. Reasons for Direct channel: . Concerts. Draw attention to a new product or line b. (e. arts and learning are useful means of gaining public image for the organization and its products. c. move their items directly to the buyers. shelf space etc. Channels of distribution 2. Some channels are direct. such activities contribute significantly to an organization‘s public image. Various forms of sales promotional activities: 1. both live and recorded are backed by sponsors. a Direct channel is more found in industrial markets than in consumer markets. ships and other large or expensive items. Customer: Sales force organized on this basis must have thorough knowledge of their customers‘ needs and sales records. Publicity usually comes under public relations.5. as it does not involve any cost. consumers oriented Promotions • • • • • • • Free samples Twin pack bargains (two for the price of one) Temporary price reduction Point-of-sale demonstrations Special discounts Bonus/prizes for sales representatives Provision of display material 8. Objectives of a trade oriented promotion: a. Develop goodwill of dealers/retailers. reported in the press and other media without charge to the organization. donating substantial sums of money towards an academic or research institution. b. Sponsorship events in arts and sports are a form of publicity.4 Publicity: Publicity is different from all the other methods of promotion. Nevertheless. Value of sales per call 4.. 8. Publicity itself is free. during and after promotion period. Manufacturer of Goods like -machine tools. patronage of sports. Encourage sales of slow moving items c.e. which is concerned with mutual understanding between organization and its public.. Majority of the products use indirect channels. Stimulate off-peak sales of selected items d. The performance of sales force cannot be taken in isolation as marketing involves other aspects too. Number of new sales/new customers 5. The various channels of distribution are: Manufacturer A Manufa cturer Manufacturer Wholes aler Retailer Custom er Customer D Manufacturer Retailer Customer Customer 2. Persuade dealers/retailers to devote increased shelf space to organization‘s products. Sales expenses in proportion to sales achieved. but the costs of sponsorship are not. Physical Distribution Channels of distribution: Channels are the marketing institutions which facilitates the movement of goods and services from their point of production to their point of consumption. computer sales) 3. B C Wholesaler Channel A. Distribution is primarily concerned with 1. Net sales achieved (per product. Thus.g. The most popular method of evaluation is to measure sales or market share before.e. Like when computers are sold to the customers. Objectives of promotion directed at consumers: a. It aims to push sales by offering various incentives. 8.. The effectiveness of sales representatives can be measured on the basis of the following criteria: 1. A costly way of publicity is donations i. Mouth Publicity. Call rate (number of calls in a given period) 3.5.

those who are interested in family saloons. They usually offer a wide selection of lines. The product. Geographical 2. colorful and well produced 8. Retailers provide various advantages to the customers like. populations. e. They buy in bulk from manufacturers or imports and directly distributes to their retail outlet.. Skiing equipment. store and subsequently distribute direct to customers on a nation –wide basis. or sub-markets. Channels of distribution provide the managerial and administrative framework for moving products from suppliers to customers.g. there are several sub-markets. It enables them to cultivate a particular part. Use of part-time agents. In such channels. Channel C is a short indirect channel as retailer is omitted. Generally such retailers concentrate on one range of goods only E.. clothing . They get items at significantly lower price 2.  Channel B is an indirect channel.. Buyer. Where the manufacturer sells a wide range of products over a wide geographical area. For rapid turnover of stock For customers it‘s advantageous as 1.7 Market Segmentation It is undertaken by suppliers in order to get a clearer picture of the market place in order to offer a particular marketing mix to one or more segments. transport. a Retailer is an outlet for their product and an important source of market intelligence concerning customer buying habits and preferences. catalogues. with the aim of reaching such groups with a particular marketing mix. Some footwear chains exclusively meets the demands of fashion conscious teenagers. stores the goods. Depending upon the market. Large retail groups handle a diversity of goods. Their ability to attract customers relies on 1. Climate etc. Industrial Markets: Relatively small number of customers. manner of promotion and distribution arrangements must all be considered in the light of differing requirements of different market segments. others aim at middle-aged market where comfort and quality are more important than current fashion. displays of various kinds of goods. lengthy negotiations on price between manufacturer and customers. Density. mail-order business is rapidly growing. They buy from the manufacturer. E. Geographical -. Retailer makes the product available to the consumers at the point-of-sale. Consumer markets: Lower cost comparison with other channels. manufacturers of foodstuffs. Food items. Comprehensive. But it is a convenient way of choosing goods and there are always credit facilities available. in the private motor-car market. deliver to retailers. stock/inventory levels and customer service. DMarts. incurred in Retailers dominates and multiples on their own. Wholesalers buys in bulk from manufacturer. With wider use of computers and telephone links. In mail-order businesses large range of goods are offered. Such channels of distribution are required for   mass market consumer goods. and are competitively priced. price range.g. Basis for segmentation: 1. Cash and carry outlets deal in groceries. ranging from buyers who are looking for sports cars.g. The middlemen like wholesaler acts as link in the chain. and in cash and carry outlets. For a manufacturer and wholesaler. break them down into small quantities. footwear. Keep down inventory levels 2. It does not offer any price advantages over retail business. It is concerned with order processing.g. E.behavior 1. footwear traders. dialogues required where product is to be custom built. Physical Distribution Channels of distribution are marketing institutions whereas Physical distribution is a set of activities. This kind of operation can be found in mailorder businesses. convenient access. The degree of physical distribution depends on the proportion of total costs taken up by distribution costs. The . wholesalers are omitted.Regions. Demographic 3. confectionery. Whereas Physical distribution provides physical means of doing so.. working on commission basis. E. undertake promotional and advertising activities. the manufacturer and the distributor has to vary their marketing mix. Such channels are advantageous to the customers than to manufacturers. Market segmentation markets. Opportunity to buy small bulk quantities Channel D is another shorter indirect channel.g. opportunity to put in small quantities. packaging. Need for technical advice and support after sales. stocks of items.soaps etc. is important in consumer 2. Market segmentation can be defined as the subdivision of a market into identifiable buyer-groups. of a market. or segment. warehousing. and arranges credit and other services for them. Ebony. those looking for economical car. wholesalers directly trade with customers to 1.

Some of these questions can be answered by the analysis of secondary data and others by the analysis of primary data. Magazines.g. Markets orients towards what is happening outside the organization.g.R • • • Presentation of report Marketing operates on the external boundaries of the organization. occupation and class.8 Market Research Marketing research is fundamental about the acquisition and analysis of information required for the making of marketing decisions. Schools In the first market i.e. The trend towards non-price competition requires firms to evaluate their own methods of assembling the marketing mix for their market. This is the area where market research is applied. Like better aftersales services or more effective advertising as compared to competitors. stable or declining? What is the company‘s reputation with its existing customers? And so on. since generally they are familiar to the local markets. gender. Better market picture (especially in relation to marketing opportunities between segments of that market) 2.g. Location (Domestic or overseas... with reference to data collection methods (surveys etc). Secondary data can be obtained easily and cheaply. we can gather the data from primary and secondary sources. End-use (Routine/ general etc. medium. Types of buyer (Public service. present and future. Regular follow-up will be conducted. wholesalers.) non-routine. 3. specialized/ The second is oriented towards the way in which the organization is responding internally to its customers. e. Information is required in marketing because of the following trends in the market: • • Shift from purely local to wider national and international markets Trend towards competition based on non-price weapons. e. non responses etc. Benefits of market segmentation from buyer‘s point of view: • Their needs are met in a more appropriate way.. Private firms etc) 2. regional/national) E. trade. Usage rate (Regular or infrequent) 6.. information from Government statistics. instrumentation (questionnaires ) Field work (utilizing questionnaires . School. e. Steps in Market research study: • • Definition of problem Design of study/project. Whereas in the second market i. Secondary data are Published information or data from the records of company. For marketing research. Customer size (Large... Middle class. Demographic – Subdivision is done on the basis of age. structured interviews) Data analysis techniques) (using statistical and O.e. small) 3. banking and other reports. Private company 2. Working class. 8. Enables to tailor marketing mix to suit the needs of particular segment. 5. computers will be offered at cheap price and only specified items will be provided instead of complete package. Journals Segmentation by social class: Upper middle class.g. Buyer Behavior --usage rate (usage rate is volume purchased) some users use the product frequently whereas some use the same product on a seldom basis. in the market place.g. but may be less relevant or up-to-date. if the market share for a product is falling. skilled working class. Social class influences tastes. a computer supplier will apply marketing mix to two different markets – 1. Its main object of attention is customer (market place) and their responses. The organizations must seek out information about the distant markets. Class of buyer (e.2. Private Company. interviews and for such surveys specialist research organizations/ agencies are employed. The two basic areas in which the information is sought are 1. marketing agencies etc. different Secondary sources are sales reports. etc. scanners. complete package will be offered like computers with printers. Marketing tactics and methods. the company will put number of questions: What is the situation for competitors? Is market expanding. Primary data is frequently collected by means of surveys. are customers. . buyers insists on quality or service or economy) 4. Primary sources competitors etc. etc at competitive price. Regular readers of Newspapers will buy it daily but the same newspaper will be purchased by others if coverage of an interesting event or match is there. Industrial Segmentation takes place on one or more of the following basis: 1. Benefits of market segmentation from seller‘s point of view: 1. Markets (existing and potential) 2. then to clarify the problem. Etc. based on questionnaires. values and attitudes of individual. press reports..

Marketing Environment a) Economic and demographic trends b) Technological change c) Legal developments d) Social change e) Markets. Better understanding of consumer Decisions. The. advertising and sales promotion. Earlier marketing was only a sales activity. suppliers. . Low Cost Disadvantage s Difficult to construct. Marketing Organization a) Management structure b) Staff motivation c) Efficiency d) Training e) Relationships with other departments. Motivational Research More flexible than Questionnaires. needs to be conducted in a systematic way. is covered in motivational research. interview and questionnaire concentrates on what the customer likes or dislikes rather than why. and 2. middlemen etc. Both these methods. A systematic audit would encompass the following aspects: 1. marketing activities and marketing environment with the primary aims of assessing present effectiveness and of recommending future action. Few organizations see marketing as essentially a selling activity and also there are those who see marketing as an activity which begins and ends with the customers. This is an independent examination of an organization‘s marketing objectives. Depending upon the kind of values/thinking etc. and like any other rational evaluation. The requirements of the tasks are objectivity. competitors. Target population can be controlled. Profitability and cost effectiveness a) Profitability of products and markets b) Marketing costs 6. to handle such highly skilled operations. with the concept of long term market developments. Structured Interviews 8.9 Marketing Organization There are several ways of looking at marketing. This critical assessment is valuable to organization‘s corporate planning as well as to its marketing planning. Marketing Plans and Control a) Sales forecasting b) Market plans c) Product development d) Control procedures e) Marketing research 4. They generally consist of research specialists. we form different marketing departments in different organizations. independence and suitable experience. Costly and time consuming. It involves considerable amount of time to conduct audit and this time is expensive in labour costs.Market research agencies play a significant role in market research and are formed by the firms. Later. Some organizations see it as an extension of their production process. Permits interviewer and consumer bias. Is only applied to small Groups. The audit may be carried out by the organization‘s own staff or by external consultants. Advantages Questi onnaire s Wide Coverage. The main disadvantages are those of time and cost. where concentration is on attitudes and motives of customers. Not easy to interpret results. channels of distribution and sales force 5. Marketing Mix a) Evaluation of products. It requires expertise of psychologists for design and interpretation of such surveys. Product can be shown to consumer. The most important methods of evaluating the organization‘s total marketing effort are by employing a marketing audit. Marketing strategy a) Corporate objectives b) Marketing Objectives c) Marketing plans (Strategy) d) Marketing resources e) Strengths and weaknesses 3. others as the means by which their product or service is brought to the attention of the marketplace. The other prime aspect of marketing research is the way in which the organization responds to the demands of the market-place. why part. Low return rate Costly and timeconsuming. customers. Such agencies use trained interviewers structured forms for gathering information. pricing policies. The audit needs to be carried out on a periodic rather than on an adhoc basis.

suitable marketing strategies to meet opportunities identified. Seeking out and identifying marketing opportunities. suppliers and others in the market-place Key objectives of any marketing department To contribute to the organization‘s corporate aims in respect of profitability. and their impact on consumers. concerning the organization‘s products. both internal and external. Acquiring sufficient and suitable information. Promoting a reputable image for the organization in the market-place. b. Developing new products in the market-place. d. . distributing the organization‘s e. improvements in the organization‘s marketing policies. Selling and products f.marketing concept gained importance. i. g. Ensuring that the organization‘s products are brought to the attention of existing and potential customers by means of suitable advertising and promotional methods. Proposing and seeking acceptance for. Designing and implementing approved marketing plans. Preparing in conjunction with other departments. competitors. c. advantageous h. growth and social responsibility by a.

Pay Back Period.Financial Management Overview: Accounting Principles. Cost concepts. NPV. balance sheet and profits and loss statements. break even analysis. Investment decisions . IRR 9 . Working capital Management.

It tries to build and maintain cordial relations between people working at various levels in the organization. productivity etc. concerned with people at work and their relationships within the enterprise. 10. and personnel management. utilizing knowledge and inputs drawn from psychology. promotion. desirable working relationship between employees and employers. mutuality and collaboration is essential for developing human resource. 2. HRM is concerned with getting better results with the collaboration of people. recruitment. talents and aptitudes obtained in the population. 10. 3.Human Resources Management Overview: Nature and Function of HRM. remuneration. 10. 2. It covers wide range of subjects – Employee relations. These three phases may be termed as welfare. transport. Human resource is the most important asset in the organization and can be developed and increased to an unlimited extent. During the middle part of the century emphasis shifted to the employee's productivity. selection. incentives.5 HRM: Beliefs The Human Resource Management philosophy is based on the following beliefs: 1. health and safety. layoff and retrenchment.1. application and evaluation of policies. Human Resources Management concerns with the human side of enterprises and the factors that determine workers‘ relationship with their employing organizations. It is an integral but distinctive part of management. Performance appraisal System. utilization. etc. 3. 3. settlement of disputes. Employees feel highly motivated if the organization provides for satisfaction of their basic and higher level needs.HR information system. 8. trust.1. Personnel aspect-This is concerned with manpower planning. In other words. economics. It tries to put people on assigned jobs in order to produce good results. 9. It is all about people at work. training and motivation. A healthy climate with values of openness. medical assistance. creative abilities. 10. 10.1. acquired knowledge and skills represented by the talents and aptitudes of the persons employed in the organization.3 Nature Human Resource Management is a process of bringing people and organizations together so that the goals of each are met.4 Scope The scope of HRM is very wide: 1. they represent the total of the inherent abilities. total quality management and worker's participation in management. grievance and disciplinary procedures. It is a multidisciplinary activity. as well as the values. It is pervasive in nature as it is present in all enterprises. Human Resource Planning . and effective modeling of human resources as contrasted with physical resources. Rewards and Incentive schemes 10 10. recreation facilities. Employees feel committed to their work and the organization. It encourages employees to give their best to the organization. selection.2 Human Resource Management: Evolution The early part of the century saw a concern for improved efficiency through careful design of work. collective bargaining. procedures and programmes relating to human resources to optimize their contribution towards the realization of organizational objectives. Its focus is on results rather than on rules. It is the sum total or aggregate of inherent abilities. skills. development.1. compensation and motivation of human resources by the organization. acquired knowledge and skills as exemplified in the talents and aptitudes of its employees.1. creches. 2. It is the recruitment. organization of physical and social conditions of work. 5. From the national point of view. which is concerned with the human resources of an organization. Its objective is the maintenance of better human relations in the organization by the development. talents and aptitudes of an organization's workforce. if the organization perpetuates a feeling of belongingness. etc. Welfare aspect-It deals with working conditions and amenities such as canteens. enthusiasm. attitudes. HRM can be planned and monitored in ways that are beneficial both to the individuals and the organization. 5. placement. Recent decades have focused on increased concern for the quality of working life. creative abilities. human resources may be defined as the knowledge. 7. transfer. Industrial relations aspect-This covers unionmanagement relations. housing. 4. The various features of HRM include: 1. It helps an organization meet its goals in the future by providing for competent and well-motivated employees. skills. both as individuals and groups. employees and employees. joint consultation. 6. rest and lunch rooms.1 Human Resource Management: Defined Human Resource Management has come to be recognized as an inherent part of management. . development and empowerment.1 HRM Human resources may be defined as the total knowledge. It tries to help employees develop their potential fully. approaches and beliefs of the individuals involved in the affairs of the organization. education. The human resources are multidimensional in nature. training and development. 4. whereas from the viewpoint of the individual enterprise. HRM helps in attaining maximum individual development. etc.

To achieve employees. and maintain high morale among 2. 4. Feedback Counseling. Human Resource Management undertakes the following activities: 1. employee's job 8. 8. Developing and maintaining motivation for workers by providing incentives. 5. contract negotiation and 4. Reviewing and auditing manpower management in the organization 14. To increase to the fullest the satisfaction and self-actualization. 15. To develop and maintain a quality of work life. Potential Appraisal. 11. Remuneration of employees.6 Objectives 1. To provide the organization with well-trained and wellmotivated employees. 10. 3. Staffing: Manpower or human resource planning a) Job analysis: competency matrix b) Job description/Position description c) Job evaluation d) . 11.Determination of actual number of employees needed for various jobs Recruitment and selection of people a) Attracting talent b) Selection process c) Motivating the talent to join the organization 10. 9. Training and Development Induction Acclimatization process for new employees Training a) Competency mapping and gap analysis b) Appraisal c) Training need assessment d) Training process Development a) Potential assessment b) Development process Career planning a) Fast track (talent management) b) Normal career path management 6. grievance handling. 10. Human resource or manpower planning.7 Functions In order to achieve the above objectives. To identify and satisfy the needs of individuals. To help the organization reach its goals. 7. Job Rotation. Organization development and Quality of Working Life.1. Social security and welfare of employees. To equip the employees with precision and clarity in transaction of business. 3. Maintenance Communication Installing and maintaining two way communication Health Design/Selection and implementation of health schemes Safety a) Awareness creation b) System for safe working conditions Employee relations a) Establishing fairness b) Designing and implementing employee relations policies and procedures Legalities a) Dispute b) Grievances c) Unions d) Employment related legalities e) Health and safety related legalities . Motivation Appraisal a) Appropriate appraisal system b) Appraisal process Compensation and benefits Determination of salary and benefit packages Rewards a) Recognition motivation b) Monetary motivation 10. 7. selection and placement of personnel. Taking corrective steps such as transfer from one job to another. To inculcate the sense of team spirit.6. and maximum 3. 13. 6. Training and development of employees. 4. 17. Setting general and specific management policy for organizational relationship. To ensure respect for human beings. 7. 10. Aiding in the self-development of employees at all levels. 12. 16.1. To be ethically and socially responsive to the needs of society. To enhance employee's capabilities to perform the present job. Quality Circle. 12. 5. Employee commitment is increased with the opportunity to discover and use one's capabilities and potential in one's work.8 Functions of HRM 1. To ensure effective utilization development of human resources. Appraisal of performance of employees. To ensure reconciliation of individual goals with those of the organization. Staffing the organization. Role Analysis for job occupants. Recruitment. 9. To develop overall personality of each employee in its multidimensional aspect. Collective bargaining. team work and inter-team collaboration. 2. 13.1. It is every manager's responsibility to ensure the development and utilization of the capabilities of subordinates. 2.

PM is traditional. 10. 7.2 Differences between Personnel Management (PM) and Human Resources Management (HRM) X 1 PM Personnel mean employed persons of an organization.9 Major Influencing Factors In the 21st century HRM will be influenced by following factors. 11. It will ultimately lead to sense of team spirit. Environmental challenges. Management of these people is personnel management (PM). 4. abilities. creative abilities and skills/competencies. HRM takes efforts to satisfy the human needs of the people at work that helps to motivate people to 10. In every decision-making process there should be given proper weightage to the aspect that employees are involved wherever possible. anticipating. it will conform to customer's needs and expectations. 360 degree feedback will further lead to increased focus on customer services. The scope of HRM views the organization as a whole and lays emphasis on building a dynamic culture. HRM is considered a strategic management function. There should be a properly defined recruitment policy in the organization that should give its focus on professional aspect and merit based selection. Size of the workforce. 5. 7. HRM is continuous. Networking skills of the organizations should developed internally and externally as well horizontally and vertically. Opportunity and comprehensive framework should be provided for full expression of employees' talents and manifest potentialities. 10. There should be focus on job rotation so that vision and knowledge of the employees are broadened as well as potentialities of the employees are increased for future job prospects. routine. TQM will cover all employees at all levels. 4 5 6 PM is treated like a less important auxiliary function. Impact of new economic policy. 6. 4. Drastic changes in the technology as well as Life-style changes. More emphasis should be given to Total Quality Management. subordinates as well as self-review. avoiding discrimination and biases and identifying performance threshold. PM is primarily concerned with recruitment. HRM Human resource management (HRM) is the management of employees‘ knowledge. team-work and inter-team collaboration. 7 8 The scope of PM is relatively narrow with a focus on administering people. planning and advancing continuously. PM is reactive. creating of highly involved workforce. Downsizing and rightsizing of the organizations. be as 3 5. For proper utilization of manpower in the organization the concept of six sigma of improving productivity should be intermingled in the HRM strategy. peers. maintenanceoriented. it will ensure effective utilization of resources and will lead towards continuous improvement in all spheres and activities of the organization. Political ideology of the Government. which will work as various issues affecting its strategy: 1. on-going development function aimed at improving human processes. 3. Culture prevailing in the organization etc. responding to demands as and when they arise. Rising employees' expectations 3. PM is an independent function with independent sub-functions. PM is the exclusive responsibility of the personnel department. administrative function. HRM follows the systems thinking approach. 9.1. The career of the employees should be planned in such a way that individualizing process and socializing process come together for fusion process and career planning should constitute the part of human resource planning. It should not be confined to organizational aspects only but the environmental changes of political. 2. decreased hierarchies. New skills required. Composition of workforce. selection and administration of . Lean and mean organizations.10. aptitudes. The capacities of the employees should be assessed through potential appraisal for performing new roles and responsibilities.1. It is not considered in isolation from the larger organization and must take into account the linkages and interfaces. 9. talents. 8. 8. HRM is a concern for all managers in the organization and aims at developing the capabilities of all line managers to carry out the human resource related functions. For performance appraisal of the employee‘s emphasis should be given to 360 degree feedback which is based on the review by superiors.10 Futuristic Vision 2 On the basis of the various issues and challenges the following suggestions will be of much help to the philosophy of HRM with regard to its futuristic vision: 1. economic and social considerations should also be taken into account. HRM is proactive. 6. 2.

Predicting future labour shortages 4. HRD emphasizes mainly on training and development of employees. wages/salary. job as motivators. 10. Analysis of the consequences of changes in working practices and hours 3. HRM at its center has HRD. the management management invests controls the cost in this capital of labor. its objectives should be in tandem with the broader objectives of HRM. 5 HRM takes decisions HRD thus on HRD plans. PM preserves In HRM information and communication is maintains its one of its main tasks secrecy. their abilities and their attitudes constitute an important organizational resource that should be used effectively and efficiently to achieve organizational as well as employees' goals.manpower. wider. 10. deploying and possibly discarding labour is done. Employee is Employee is treated treated as an not only as economic economic unit as unit but also a social his services are and psychological exchanged for entity.4 Human Resources Planning It is the comparison of an organization‘s existing labour recourses with forecast labour demand. Thus. 6 HRM takes care of all HRD focuses on the human needs and upgrading the tries to satisfy these skills and needs so that the competencies of employees are the employees in motivated from all the order to improve angles to contribute the performance their best to achieve of the employees organizational goals. 2. lateral and feedback type communication. performance. Employees are HRM treats considered as employees as profit cost centers and centers and therefore. Improved It is the other way satisfaction is round (performance considered to be is the cause and the cause for satisfaction is the improved result). depends on the decisions of HRM. Specific activities are: 1. 4 HRM emphasizes that employees. HRD focuses on those learning experiences which are organized for a specific period to bring about the desired behavioral changes. HRD has to work within the realm of HRM and therefore. compared to HRM is narrower. through their development and better future utility PM‘s angle is HRM angle that employees emphasizes on the should be used mutual benefits. both mostly for of employees and organizational their families and benefits and also the company. 2 Scope of HRM is HRD HRD is a subset of HRM Scope of HRD as . Devising schemes for handling the human problems arising from labour deficits or surpluses. training. HRM and HRD are interdependent. HRD's cooperation is important for overall success of HRM. 9 10 11 12 13 14 15 make their best contribution. PM treats Employee is treated employee as a as a resource and as commodity or a a human being. and hence the scheduling of activities for acquiring. on the job. which take into account vertical.3 Differences between Human Resource Management (HRM) and Human Resource Development (HRD) X HRM 1 HRM is a subset of the entire management processes of an organization. job simplification and so on. challenges are and creativity on the compensation. tool or like equipment that can be bought and used. profits. Important HRM considers work motivators in PM groups. rewards. 3 HRM manages and develops the human elements of an organization in its entirety on longer term basis. therefore. Estimation of labour turnover for each grade of employee and the examination of the effects of high or low turnover rates on the organization‘s performance.

d) Possible and economic increase in supply of labour. 5. HRP should help management in making decisions concerning recruitment. ‗Human resource Audit’. Potential supply of labour a) Effects of local emigration and immigration b) Effects of recruitment or redundancy by local firms c) Possibility of employing categories not now employed. 2. e. educational backgrounds. It should not extend too far into the future. . 7. and apparent potential of each of the organization‘s department and its employees. Human resources Audit: Management needs to set out all its available information on the organization‘s existing personnel. Plan should be detailed. against current and forecast requirements. 10. 6. 5. Analysis of the skills.g.4. experience. Demand For Labour a) How Many? b) What Kind? c) When? d) Where? 2. working hours and/or practices. Forecasting: HRP are the predetermined responses to anticipated future events. 1. Redundancies can be avoided by preparing ―skills Inventories‖ (details of capabilities... the avoidance of redundancies. qualification.g. Effective Human Resources Planning (HRP) results in the right people doing the right things in the right place at precisely the right time.4.e. Creation of an HRP group: Including the managers in charge of the main functions within the organization. Supply of Labour a) Present supply minus wastage b) External labour market factors c) Changes in hours. Part-time workers d) Changes in productivity. capacities and potentials of employees. This is required to inform management of all the jobs that existing employee might be capable of undertaking. Main points to be considered are as follows: 1. Instructions to individuals and departments must be incorporated into the plan. Present utilization of human resources a) Number of employees in various categories b) Estimation of labour turnover for each grade of employee and the analysis of the effects of high or low turnover rates on the organization‘s performance c) Amount of overtime worked d) Amount of short time e) Appraisal of performance and potential of present employees f) General level of payment compared with that in other organizations . and experience of the existing employees).5. Human Resources Plan a) Recruitment/redundancy Programme b) Training and Development Programme c) Industrial relations policy d) Accommodation plan 10. training and staff development. Productivity or working conditions. 3. All alternative considered. centralization or 4.3 Benefits of Human Resources Planning 1. regional subsidies etc.. as expenditure 2.g. 10. COMPANY OBJECTUIVES 1. courses of action should be 4. The aim to create such documents is to match the present and future human resources. e.4. it can produce a plan showing how many and what kind of employees are expected to be required in the future. its potential supply and the external environment. This document is a list of abilities. and the estimation of the cost of employing labour. External environment of the organization a) Population trends b) Recruitment position c) Local housing and transport plans d) National agreements dealing with conditions of work e) Government policies on education. It should be concise and easy to understand. taken from the ‗skill inventory‘.1 Planning Procedure Certain principles should be applied while preparing a human resource plan. accurate prediction of distance future is difficult. performance records.2 Steps in the HRP Process In drafting the human resource plan the organization must consider the demand for labour. Analysis of such information is set out in a separate document. constraints are involved. The organization will be ready to adapt future HRM activities to meet changing circumstances. use of part time workers 3. Statement of Human resources objectives in the light of the organization‘s objectives by considering: a) Capital equipment plans b) Reorganization decentralization c) Marketing plans d) Financial Institutions e) Changes in products or in output 3. retirement. By studying the interaction of these factors.

5. 2. Appraisals can be done on a day-to-day basis. pay raises and history. interviewing. 10. can be 9. storing. and accounting functions within a business. Complete integration with payroll and other company financial software and accounting systems. 6. status changes. hundreds of companies sell some form of HRIS and every HRIS has different capabilities. 6. and effectively support the success of their reporting employees. In appraisals. subordinates or peers or by self. and the assessment of their suitability for promotion or further training. management. emergency evacuation procedures. Applicant and resume management.2. Decision concerning future HRM activities can be taken in advance. contributions and potential of group members. It is a part of MIS. payroll. personal employee information. and selection. 9. Pick your HRIS carefully based on the capabilities you need in your company. Foreseeable pitfalls of future events might be avoided. retrieving and validating data needed by an organization about its human resources. The Human Resource Information System (HRIS) is a software or online solution for the data entry. 8. It serves as a guide for formulating a suitable training and development Programme. 3.1 Purpose of Appraisal 1. career growth and development. 5. to evaluate the personalities. data necessary for employee management. using all the data available and considering all available options. personality etc. 6. 4. the better The Human Resource Information Systems (HRIS) provide overall: 1. It can serve as a basis for job change or promotion: By establishing whether the worker can contribute still more in a different or a higher job. With an appropriate HRIS. management and key employee succession plans. semi annually or annually. 10. pay grades and positions held. 5. Human Resources staff enables employees to do their own benefits updates and address changes.e. attendance and PTO use. Management of all employee information. Additionally. and equal treatment is facilitated. and data information needs of the Human Resources. knowledge development. It refers to all the formal procedures used in working organizations. . An effective HRIS provides information on just about anything the company needs to track and analyze about employees. Benefits administration including enrollment. 2. 4. were compared with others and ranked or rated. ethically. Coordination and integration of worker‘s efforts is improved. Applicant tracking.. Reporting and analysis of employee information. 7. Typically. Appraisal is the analysis of employees‘ past successes and failures.6 Performance Appraisal Performance appraisal or merit rating is one of the oldest and most universal practices of management. 4. It serves as a feedback to the employee. 10. The HRIS that most effectively serves companies tracks: 1. thus freeing HR staff for more strategic functions.6. and applicants. Finally. we do three types of reviews: Performance review: Analysis of employee‘s past successes and failures Potential Review: Assessment of subordinates‘ suitability for promotion or further training. training received. 7. it helps in suitable promotion and placement. 2. Company-related documents such as employee handbooks. and personal information updating. Normally packaged as a data base. Employee‘s merit like initiative. former employees. and safety guidelines. and 10. 8. high potential employee identification. Labour shortfalls and surpluses may be able to be avoided. Measures to influence future events initiated by the organization itself. managers can access the information they need to legally. who are by the existence of an appraisal system. data tracking. Management is compelled to assess critically the strengths and weaknesses of its labour force and personnel policies. 4. Appraisals can be made by superior. dependability. 3. by identifying the strengths and weaknesses of an employee. 3. 3. performance development plans. Reward Review: To determine salary hikes. assured of the management‘s continued interest in them. disciplinary action received. It serves as an important incentive to all the employees. Planning forces the organization to assess critically the feasibility of its HRM objectives. Earlier. maintaining. what the man does rather than what he is. It helps the firm create and develop employee training and management succession programmes. Your company will need to select a Human Resources Information System and customize it to meet your needs. and occasionally. These days the emphasis is more on the Performance part i.5 Human Resource Information System A HRIS is a systematic procedure for collecting.

It provides a rational foundation for the payment of piece work. They can be broadly categorized into two: Objective and Subjective. cooperativeness. System should have built-in incentives i. absenteeism. It serves as a means for evaluating the effectiveness of devices for the selection and classification of workers. These are applied where jobs are more complex and vague.4. information and queries from middle-level managers 6. reward should follow satisfactory performance. 2. That reflects his ability to adjust to the working conditions. It must have the support of all line people who administer it: If the line people think it is too theoretical. too unrealistic. Length of services: It is considered that the longer the worker is with the organization the more successful he is. 9. The regular appraisal system enables the superiors to be more observant as.3. attendance.6. ability to deal with people. better work methods.3 Performance criteria for Top Managers 1. better personnel policies. regard for safety.6. 8. System should be both valid and reliable: Validity of rating is the degree to which. 7.4 Performance Appraisal Methods 10.3. Reliability is the consistency with which the ratings are made. Easily understandable: Appraisal System should not be complex and too time consuming.6. Return of capital employed 2. work sample tests. Work Sample tests: This serves as the measure of proficiency. which may be used to measure the proficiency of employee. 2.1 Ranking Method: It is Oldest and simplest method. Extent to which middle-level managers regard themselves as managers and behave likewise. of ideas. they are truly indicative of the intrinsic merit of employees. they will be appraising the performances of their juniors and will be justifying those estimates. 3. Quantity and quality of output in a given period. 3. 5. One man is compared with all the other men and places him in a simple rank order. his satisfaction etc.3 Criteria of Performance Appraisal Number of criteria are there. System should be periodically evaluated to be sure that it is continuing to meet its goals. (From best to worst) Pitfalls are: . contribution to socio-cultural values. 10. 4. Total cost per unit of output in a given period 5. Number of absents in a given period 10. Extent of upward communication of ideas. 2. 10.1 Performance criteria for Operatives 1. etc) 3. Extent of upward communication information and queries from supervisors. too ambitious.5. The worker who requires longer time to learn is considered inferior to one who learns in a relatively short time. Labour cost per unit of output in a given period. they will resent it. 6. 4. Amount of training necessary: When training period is expensive to the organization.e. Labour productivity indices (improvements in labour productivity arise from capital investment. peers and subordinates. rating of employee‘s job proficiency by their superiors. ability to get along with fellow workers. Subjective Criteria: Extend of upward communication of ideas. Degree of knowledge among middle level managers about corporate goals and policies. These are dependent on the human judgement and opinion and are subject to errors. Contribution to socio-cultural values of the environment (this aspect is essential to determine whether the organization has secured a niche for itself as a worthwhile institution in society. degree of knowledge about corporate goals.2 Performance criteria for Middle Level Managers 1. accidents etc. wages. Material cost per unit of output in a given period 4. Extent to which front-line supervisors regard themselves as managers and behave likewise.6. 5. 6. 4. Objective Criteria: Amount of production.. either by different raters or by one rater at different times. 5.6.3.2 Essentials of a good Appraisal system 1. 6. 3. dependability. Rating by supervisors : Opinion of foreman or managers about the characteristics of a worker like job knowledge. bonuses etc. 10. Rational use of overhead facilities 6. front-line 10.6. Coordination among supervisors 7. It can be used at lower level where jobs are more specific and clearly defined. Number of accidents in a given period 7. length of service. or that it has been foisted on them by those who have no comprehension of the demands on the time of operators. Degree of knowledge among supervisors about corporate goals and policies. amount of training required. 10.6. System must fit in that particular organization‘s operations and structure. training time can be used to measure of a worker‘s proficiency. Quantity and quality of output in a given period. etc.

the standards are very concrete because these are neither numbers nor alphabets. sample.6.g. Follow ups: Requests. Preventing price-cutting by dealers and customers • 10. Two types of scales are used: Discrete: The rater tick mark the category which he feels best describes the person being rated. Pointing out uses for other company products besides the salesman‘s own line. but the persons of varying ability whom the rater has selected and ranked in the ability under consideration. 4. the list of the critical job requirements . • man-to-man.4. In Man to man rating scale. thus helps in giving unbiased rates.. first we draw. 10. minus and question mark sign in front of each statement depending on whether he feels the description applies.6. These statements are grouped. 4.6. Below Average Above Average Average Poor • • Continuous (or graphic): There are four kinds of standards used in rating scales -. or there is doubt.numerical or alphabetical.2 Rating Scale Method It is used where the large groups of people are appraised and also where the absolute difference between the rated individuals are required. 3. does not apply. sometimes all have unfavorable statements and sometimes have both favorable and unfavorable statements.4. when the rater cannot compare several people simultaneously.4. Thus its process is quite time consuming. • When the groups have all unfavorable or all favorable statements.3 Checklist Method: In this method we use a list consisting of number of statements about the worker and his behavior. Since the values do not appear on the list. Various components of person‘s performance are not done. Communicating true information to managers and customers.g. Using new sales techniques and methods 8. It is expensive. Planning ahead 3. 7.g. Various problems are : Difficult to prepare the good checklist. in a group of 50 individuals. Sometimes all these groups have favorable statements. there would be 1225 separate comparisons.5 Critical Incident Technique: In this method. Orders 2. 1. for each job. E. and behavior • The problem with numerical or alphabetical scales is that the numbers or alphabets which are used to describe the various categories of characteristics do not convey the same meaning to all raters.6. 10. then the rater must check one statement which he believes best characterizes the individual being rated.. Difference between ranks is not equal at different positions Thus paired comparison technique of ranking has evolved. Complaints.. so the rater does not know how highly he has rated an individual.4 Forced Choice Method: This form consists of number of statements which describes an individual being rated. one for the statement which best describes the individual and one for the statement which is least descriptive. Here each individual is compared with every other person. e. Separate checklists are required for each job as statements used in one checklist to evaluate one category of workers cannot be used in another checklist to evaluate the other category of workers. 10.4. Thus a scale of men is created for each trait. Characteristics is ‗Job knowledge‘ can be divided into five categories on a discrete scale: Exceptionally Good statement on this list is assigned a value depending upon its importance. those requirements that are vital for the success and failure of the job.e. The final rating is taken as the average of the scale values of all statements that his superior has checked in rating the person.. Carrying out promises 5. It use is difficult in large group. Number of comparison = N (N-1)/2 E. 2. The rater is asked to place a plus. 3.1. The weightage for each statement is unknown to the rater and the individual‘s rating is determined by adding together the weights of each of the statements that have been checked. Descriptive-adjective. Highly subjective 2. Each .i. The final rank is determined by the number of times he was judged better than others. Persisting on tough accounts 6. then the rater makes two checks in each group. For the Job of Salesman following can be the critical factors: 1. When each group has both favorable and unfavorable statements.

It tends to encourage upward communication. In this type of interview. The subordinate is likely to leave the interview with favorable attitude towards the superior. 2. and enlarging the pool of possible promotion candidates.5. The interviewer is not a directive counselor during the second part of the interview. The employee is asked to review the year‘s progress and discuss the problems. Benefits: 1. needs. individual or group assignments. 10. 2. Skills required are: Careful Listening. innovations. three types of appraisal interviews are: 10. The format and pattern of the report varies with organization. Knowing customer requirements A good salesman has to handle all or most of these factors to succeed. the interviewer comes with diagnosis and remedy. Because awareness of weakness is not essential for development.2 Objective: Tell and listen: 1. This has effects of equalizing opportunity. Making effective use of pauses. It creates good relationship between superior and subordinate during the interview. 4. satisfactions. 3. The severity of incidents may influence the supervisors‘ opinion. 5. Supervisors may not recall the incidents completely and may be his records may be subject to moods. Feedback will be effective if less time lapse will be there between performance appraisal and the interview. Benefits: 1.5 Appraisal Interview: The performance appraisal of a worker is generally followed by an interview which serves as a feedback for him. 4. 10. 2.6. They are inexperienced and insecure and require the advice and assurance of an authority figure. To communicate the evaluation to employee but also to drain-off his feelings aroused by the evaluation. Based on diagnosis and judgement. Once all the factors are identified. In this way a performance record of a man is recorded for his future evaluation. 4. 6. 10. In first part he covers the strong and weak points of the subordinate‘s job performance and avoids interruption and controversy by postponing any points of disagreement for later consideration. Pitfalls: • • • It is difficult to identify all the critical factors. Makes the management employee-minded rather than production-minded.6. they explore the subordinate‘s feeling about the evaluation. Interviewer limits his influence and stimulates thinking rather than supplying remedies or solutions.6. Initiating new selling ideas. 7. the supervisors will observe and record instances and events of on the job behavior falling under any of these factors as they take place. He sees the job as employee sees it. and is a major determinant of the subordinates‘ promotion or transfer. Here individuals from different departments are brought together to spend few days working on. responding to the feelings in order to show that one understands them.6. Assessment Center: It is used where the organization needs to predict future performance more accurately for promotional decisions. It is very effective with young and new employees. It helps in persuading the person to change in the prescribed manner. 3. 2. In second part.5. Interview is divided into two parts: 3. 2. The interviewer listens to all the disagreements and encourages the subordinates to express their feeling about the evaluation. rather than making his own viewpoint. Not well known People from comparatively low status department. can be allowed to compete with the people from more well-known departments. 5. 3. improving morale. a) to let employee know how he is doing b) To gain employee‘s acceptance of the evaluation c) To get the employee to follow the plan that is outlined for his improvement. 1.3 Objective: Problem solving Interview: Confidential Report: It is prepared by the immediate supervisor. This is observed by group of people and thus the ranking is based on pooled judgement of observers. According to Norman Maier. He considers all the ideas on job improvement that employee brings up. if they are promoted. similar to the ones they will be handling.9. and dissatisfactions he has encountered. The appraisal of subordinate is not directly communicated to them.5. Interviewer acts as a helper. 10. . People chosen by this method are better than chosen by any other method.1 Objective: Tell and sell: Employee development 1.

Interdependence of sub-systems: Example: The sub-standard output of the production department could be . Level 2: Managers working with their bosses establish objectives for each department that are consistent with the organization‘s objectives.7 Organizational Structure : According to Burns and Stalker. Factors affecting Managerial Performance Before doing appraisal. It encourages more systematic evaluation of performance. It presumes a certain level of trust throughout the hierarchy. Depending upon the kind of organization structure. Qualities like initiative. E. g. The objectives of each department and consistent with the overall objective of the organization. Jobs that involves speculation. if the selection of persons and planning of market have been done at higher levels. 1. the systematic and logical cause –effect tracing of performance should be done at all levels. are Have there: Organismic or 4.9 Limitations of Appraisal Methods The limitations arises due to .. trial and error or based on unknown factors cannot use this method easily. They are more static and tend to carry out almost fixed strategies in a relatively stable environment. as it is judged on the basis of degree of accomplishment of specific objectives.6 Appraisal of Management Measuring the proficiency at managerial level is the most difficult area of performance appraisal. to a large extend. Time period in which task has to be accomplished.6. It is sometime not feasible to set specific objectives for a time period.g. 4. – • • Pitfalls: • flexible organizational • 1. so they will be more committed to accomplish the goals. Elaborate organizational charts or manuals are nonexistent. Minimal formal organizational consciousness. 3. 10. This process repeats down to the lowest level managers in the organization. It involves too much paper work and meetings. due to which managers might not get time for their routine work. in research department it‘s difficult to say what is to be achieved /accomplished with next six months. 3. Environment Constraints: There are several constraints which may be outside the control of the middle level manager and to ignore all such facts in judging the performance would not be fair.10. Format of the formal document (Refer Book Tripathi/Reddy) Advantages of MBO: • Since the managers themselves are involved in setting the objectives. It overlooks his past performance and also does not identify his future potentials. Such organizations are more innovative. It deals only with the individual‘s present job‘s performance. 10.8 Management by Objectives (MBO) A popular appraisal technique is MBO. Organismic: relationships. 1. 2. 10. due to which both productivity and profit is suffering. the kind of loyalty and commitment of managerial personnel to the goals of an organization. and responsibilities are clearly • • • 2. it is good to survey the following constraints within which management is working. if the quality of manpower is deteriorating over a period of time or if the market is contracting for a product. thus ensures that people and departments do not work at cross purpose. Formal structural pattern in the form of charts are available.6. they meet again to review the accomplishments and set further objectives for the future. Organizational leadership: The kind of top level leadership must also be taken into account. which may not actually exist. Managers at every level become highly performance conscious.. Effective top leadership orients and motivates the entire organization for better performance. In such a case.Due to some trouble at the planning stage. Relationships defined. E. about the production and purchase department or due to poor quality purchases made by purchase department.6. two types of Organizations Mechanistic. they decide: • • • Task to be accomplished by the manager. the appraisal will get effected. Level 1: It is a process which ideally begins at the top of the organization with the establishment of specific organizational objectives. The appraisal starts with the setting of various objectives at various levels by the process of meeting between managers and their bosses. Thus while appraising the manager. as the nature of top level leadership determines.6. Objective criterion of management is usually applicable at lower level only. then the performance appraisal of the Middle level manager should not be affected. drive and imaginations are not encouraged. Such structures rapidly adjust with the changing environmental situations. When the fixed time is over. 2. The basis on which progress will be judged. Mechanistic: Are more rigid. During the meeting.

although they may have little to do with punctuality.7 Reward and Incentive Schemes Promotion. On the other hand. Intrusion of subjective Criteria. • • • Possibility of inconsistent criteria. rather should come from some higher level. Feedback of poor performance should not be directly given by the immediate superior. to avoid redundancies and to prepare effective HRP. has a salutary effect on the entire organization.g. b) Those that have done good work in the distant past may be assumed to be good in the recent past too. Clear identification of obstacles . Due to the way supervisor makes his evaluation. Explains them compensation. With no compensation plans.10 Limitations of Performance Appraisal • Danger of favoritism. Cooperation and loyalty are more pronounced. 2. E. Demotion and Dismissal Reward and Incentive Schemes A good compensation plan. due to lack of definitive information. Employees will be happier in their work. Hypercritical or ‘Horns’ effect: It is the tendency to rate the people. Unknown skills might be uncovered which can help Management to identify the needs for training.6. may rate a punctual worker higher on various factors. Hence the process becomes a ritualistic chore to be completed as quickly as possible.g.6. in assessing the caliber of employees. 4. Fortune of the subordinate will fluctuate with the change in the top positions. Reluctance to ‘Play God’: Some managers are unwilling to ‗play God‘ by judging others.Subjective approach: If the superior appraises performance solely in terms of executive qualities. • • • • • • • • • It enables in retaining the services of desirable employees. Keeps labour costs within reasonable limits. biasness and stereotyping by managers who conduct appraisals. 2. • • of their line managers. Limitations can be divided into two categories: 1. All information might not be available. 2.9.1 Intrusion of subjective criteria: 1. Try to gain the acceptance from the employees or their leader for the proposed appraisal system.12 How to make appraisal system more effective: 1. He might rate his people lower than he should. 10. 2. • 10. Conducting appraisals managers remain in touch with the staff of their department. c) Those who agree with the boss and are skilled flatterer get better rating than their performance justifies. They usually fill the forms (appraisal) at the last moment and treat the entire process casually. Transfer. lower than their performance justifies. compensations will be determined subjectively on the basis of haphazard and arbitrary decisions. Superior is a perfectionist. so his level of expectation is high. Rewards them according to merits and ability. Promotes two way communications between boss and worker. Assessors might focus on specific cases of outstanding good or bad performance while ignoring employee‘s overall ability. as boss and employees are compelled to meet and discuss work related problems. This system involves extra work which managers might be reluctant to accept. Method itself. Raises their morale and productivity. Appraisal monitors the feasibility of targets set by the higher management.organizational problems as well as individual difficulties.. a) Superior who is fond of punctuality. who receive valuable feedback on problems encountered when implementing policies. Halo Effect: It is the tendency of superior to allow his good impression of one or more important work characteristics of an individual to carry over the total evaluation. e. Central tendency and leniency: superior may give average grades to most of the characteristics. ‗why and how‘ of their Simplifies wage and salary administration and control. There can be both monetary and non-monetary forms of compensation prevalent in an enterprise. 3.11 Advantages of Appraisal • Appraise become aware of what exactly is expected of them and of their status in the eyes . Makes promotions and transfers easy. which will create frictions and low morale in an enterprise. • • • 10.6.1. then the rating may vary on the basis of how well the rater likes or gets along with subordinate. well administered.6. It enables the bosses to learn about employees and true nature of their duties. Defensiveness of employee 10. 10.

Rubber industries. It is non-variable payment. Competition: With perfect competition. if more specialized knowledge is required or more mental work involved. g.10. E. and induced to engage in a behavior beneficial to the organization. • It also offers opportunity to management to provide recognition and incentives to the better employee. logical and prompt source of recruitment for the management to fill vacancies as they arise. Sacrifice quality for the sake of quantity. It is also a method of sharing profits with workers by rewarding them financially. then wages will be low.. • Promotion schemes provide an opportunity to the present employee to move to the jobs that provides greater satisfaction and prestige.. it (Promotions) has little significance. Textile and Metallurgical Industries. g. The importance of two types of incentives –monetary and non-monetary. for their increased rate of output. • • Drawback: • • • • Disadvantages: • 10. to make both ends meet. Applied in Mining. It serves as an orderly. will have little influence. Increase productivity. to motivate the workers to perform better. Generally financial incentives motivate people at lower level effectively. Cost of living: This aspect is essential. persuaded to remain. Call Centers. wages may be high.2 Two types of Promotions: 1. Basic principle of this compensation is to offer additional money.7.8. It is quick. System becomes stagnant.7. State Regulation Incentive Compensation: Payments are based on the factors like individual output or group output. can be determined by a) The need for achievement b) His position in the hierarchy. b) External Alignment (Pricing the Job): It involves comparison of present company‘s wage rates with others in the community. E. responsibility and status also increase. Unfair discrimination in promotion can upset and demotivate staff members. Jealousy may arise among workers because some are able to earn more than others. e. repetitious and overly conformist. Labour Unions: With strong and organized labour unions.8. It is a managerial device of increasing the workers‘ productivity. Results in ‗inbreeding‘: In this company‘s ideas and habits are perpetuated and little new thinking is able to occur.1 Dry promotion: When the promotion is associated with no increase in the payscale. 10. The newer employees introduced at lower levels. they will get more bargaining power. Decrease absenteeism Increase Punctuality Better discipline and industrial relations. • • • • • • Praise Credit for good work Security of tenure Happy environment Good competition Participation and access to information.g. Advantages: • • • • • • • • Less need for supervision. Horizontal: Minor promotions within the same classification of a job. It is also called as ‘payment by results‘.2 Non-monetary Incentive: • Assigning Important and interesting work. • Fair treatment 10.8 Promotions A promotion takes place when an employee moves to a position higher than the one formerly occupied. software industries Prevailing wage rates: Ability to pay: Job requirements: Like. the salary/wages may be at par with others. Whereas the people in managerial positions are motivated by non monetary incentives like increase in power or responsibility. whereas if supply is sufficient. from lower division . In small organizations. Demand and Supply of labour: With short supply of labour. It is variable payment. inexpensive and suitable to management as they are aware of the abilities of their subordinates. His pay.. The monetary incentives are based on the following factors: a) Internal Alignment: It involves job evaluation which determines the relative worth of the jobs in an enterprise.1 Primary compensation (Monetary): It is the most basic element by which individuals are attracted to an organization. 10. The manager must study the psychological framework of each individual and decide the type of incentives -Monetary or Non-Monetary. Workers will tend to overwork and undermine their health. but is significant in big organizations with vertical job relationships.

No employee is transferred against his or her wish.g. out of the organization..skills. (Merit and Seniority) 4.. but to quit. In some organizations. It prevents people leaving an organization.8.clerk – upper division clerk. • To manage human resources in a constructive way. but must acquire greater proficiency. Promotion should be open for all the individuals within the company. If seniority is the only criteria for promotion. Advantages (Seniority): It is objective means of distinguishing among personnel. • • • It is simple and exact. Disadvantages: • • • • 10. counseling and review.8. status and pay. Vertical: Crosses the boundaries of a job classification.5 Transfers • A transfer is a move to a job within the company which has approximately equal importance. responsibilities. It must provide for a uniform distribution of promotional opportunities throughout the organization. Personnel department should only send the names of the potential employees and their history records. After one month or so.8.6 Dismissal Dismissal means termination of employment by 1.8. 2. but the concerned department should take the ultimate decision.g. 6. Promotion of clerk – office superintendent.4 Criteria for promotion: Merit v/s Seniority It is best to promote those. Leads to promotion of incompetents. to determine whether all is going well. to satisfy employees who accuse the management of being unfair and unjust. foreman – first grade foreman. In some organization it is the custom for the least satisfactory employees to be transferred from one department to another. Assistant professor. Review of promotional decision by higher management becomes essential. determines its place and pay in the hierarchy of jobs. It gives feeling of security and improves the morale of the employees. rarely merit is given complete control. Content of the job. Accumulation of years of experience or any length of service does not always produce ability. associate professor. • • • • Need for transfer is explained. transfers are used as a means of developing promising employees by giving them experience in several departments. Rank in the man: Rank is tied to the man than to his job. To be promoted the person should move to the greater responsibility from his present assignments. it is required because employee is unhappy or dissatisfied in his or her present job. Failure of employer to renew a fixed term contract 3. Unsatisfactory employees are not dealt with by transferring them to other department. 8. Professors. Promotional policy should not compel reluctant employee to accept promotion. in promotions. who are more capable without seeing his seniority. legal fees. which encourages favoritism. It adversely affects the morale of the meritorious workers and drives able and ambitious men. Employer with or without notice 2. the man needs not to be moved from his present assignment. The third point is also termed as ―Constructive Dismissal‖. Sometimes. . seniority is considered as the criteria for promotion. with or without notice. E. refurnishing etc. inequities and 2. It must ensure consideration of all eligible inservice candidates and not of the few highly ‗visible‗ones only. as it is considered highly Thus. An employee transferred to another district is given financial assistance from the organization to cover removal costs. Promotions must be sanctioned by the concerned line heads. the worker has no alternative. 10. 3. Foreman – Production Manager Rank in the job: Here rank is more tied to the job than to the man. Professor 10. 10. with the promoted person and his new superior.3 Requirements of a sound Promotional Policy 1. Levels of skills and performance determine the job‘s place in the hierarchy of jobs. Thus reduces labour turnover. But. and efforts. 7. 5. E. Should have definite system for the selection of employees who are to be promoted from within the promoted zone. instead of the contents of the job. Promotion criteria should be common. It means the employer is behaving so unreasonably that. it is sometimes necessary to transfer employees to other jobs. To be promoted. no individual will take initiatives to perform better or to learn new skills. personnel department should hold a meeting. It must provide suitable follow up. Employee‘s resignation. Second grade subjective. Ratio of internal promotions to external recruitments should be same at various levels in the departments. satisfaction under the • • • Transfers increases job following circumstances.

violence. . the employer must give the employee notice of dismissal. Persistent drunkenness.Normally. but sometimes dismissal without notice is permissible. abusiveness to customers or colleagues. or incompetence that immediately causes damage to the employer‘s business. Such dismissal is termed as ―Summary dismissal" and could occur when an employee‘s behavior makes impossible the employment. fulfillment of a contract of Examples: Theft. willful disobedience.

bottom up and integrated. MIS. At its most basic level a C-D DSS could be a simple threaded e-mail. More specifically. the term is usually used to describe a computer-based system designed to help decision-makers use data. so managers require DSS tools to convert them into data that can be valuable in the decision making process.2. System. DS systems can be separated into seven broad categories.  Types of Information Systems in Organization: Decision Support System. Behavioral Approach and Socio Technical Approach. Another example of a data-driven DSS would be a Geographic Information System (GIS). e-mail and other correspondence) Video (i. each aiding decision making by different methods. While data-driven DSS rely on data that is already in a standardized format that lends it to database storage and analysis. nature and their role  Approaches to Information Systems: Technical Approach. Most often this will come in the form of a data warehouse – a database designed to store data in such a way as to allow for its querying and analysis by users. knowledge and communications technology to identify problems and make decisions to solve those problems. In an effort to clarify the term.1 Decision Support System (DSS) Definition: A Decision Support System (DSS) is an umbrella term used to describe any computer application that enhances the user’s ability to make decisions. which can be used to visually represent geographically dependant data using maps. Knowledge Management  Importance of information systems in supporting various levels of business strategy formulations and decision makings. 11. Knowledge-Driven DSS . document-driven DSS makes use of data that cannot easily be standardized and stored. Document-Driven DSS Document-driven DSS are support systems designed to convert documents into valuable business data.e. Data-Driven DSS Data-driven DSS are a form of support system that focuses on the provision of internal (and sometimes external) data to aid decision making. Communication-Driven DSS will exhibit at least one of the following characteristics:     Supports coordination and collaboration between two or more people Facilitates information sharing Enables communication between groups of people Supports group decisions. Transaction Processing System. Examples of document-driven tools can be found in Internet search engines. At its most complexity it could be a webconferencing application or interactive video.e.Information Systems and Managerial Functional Areas Overview: 11  Emergence of Digital Firm in the existing era of IT.1 11.  Information System: Meaning. memos. Software and Hardware Requirements for developing efficient Information System (It is expected that such discussion should cover the latest developments taking place in software and hardware). Types of DSS Since the definition of Decision Support Systems can be stretched to include almost any application that processes data there is some confusion as to exactly what constitutes a DSS.e. Communications Driven DSS A C-D DSS is a type of DSS that enhances decision-making by enabling communication and sharing of information between groups of people. TV commercials and news reports) None of these formats lend themselves easily to standardized database storage and analysis. Information needs of management at various level of an organization. Expert System. The three primary forms of data used in document driven DSS are:    Oral (i.2 Types of Information Systems in Organization 11. designed to sift through vast volumes of unsorted data through the use of keyword searches. Document-driven DSS is the newest field of study in Decision Support Systems. transcribed conversations) Written (i. reports. flow of information in the organization: top down.

While these systems may well be linked into a data warehouse or other large volume of data.2. Measurable. Desktop DSS Desktop DS systems are much smaller applications designed to be run from a desktop PC. By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually. web-based or something else entirely. even if the data used for decision support remains confined to a legacy system such as a data warehouse. The development and management of information technology tools assists executives and the general workforce in performing any tasks related to the processing of information. The term simply describes any decision support system that is operated through the interface of a web browser. Spreadsheets offer decision-makers easy to understand representations of large amounts of data. MIS systems provide a valuable function in that they can collate into coherent reports unmanageable volumes of data that would otherwise be broadly useless to decision makers. and offer decision support to managers at all levels of an enterprise. Scope of DSS In addition to these basic types of Decision Support System there are also two separate categories used to define systems. Model-Driven DSS Model-driven support systems incorporate the ability to manipulate data to generate statistical and financial reports. to aid decision-makers. general use systems that can perform a wide variety of functions. Agreed. For instance. MBO is a management process by which managers and subordinates agree upon a series of objectives for the subordinate to attempt to achieve within a set time frame. knowledge-driven systems are designed to sift through large volumes of data. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems. 11. Data Processing Not only do MIS systems allow for the collation of vast amounts of business data.Knowledge-driven DSS are systems designed to recommend actions to users. objectives should be Specific. . as well as simulation models. but they also provide a valuable time saving benefit to the workforce. MIS systems can be used to transform data into information useful for decision making. Management by Objectives While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool. Computers can provide financial statements and performance reports to assist in the planning. Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor. Realistic and Time-Specific. Enterprise-wide systems will typically be basic. and help enable effective decision-making. Spreadsheet-based DSS Model. the desktop spreadsheet. spreadsheet data is arranged in such a way as to make it easy to convert the data into visualizations to further aid decision-makers.and Data-driven DS systems can be built using spreadsheets. Strategy Support While computers cannot create business strategies by themselves they can assist management in understanding the effects of their strategies. identify hidden patterns in that data and present recommendations based on those patterns. MIS systems can also use these raw data to run simulations – hypothetical scenarios that answer a range of ‗what if‘ questions regarding alterations in strategy. In addition to these basic types of DSS there are also two additional factors: whether the DSS is spreadsheet-based. MIS and business systems are especially useful in the collation of business data and the production of reports to be used as tools for decision making. Additionally.2 MIS (Management Information Systems) Definition: Management Information Systems (MIS) is the term given to the discipline focused on the integration of computer systems with the aims and objectives on an organization. An example of a desktop DSS is Microsoft Excel. Model-based decision support systems can be extremely useful in forecasting the effects of changes in business processes. allowing for faster decision making and quicker reflexes for the enterprise as a whole. Web-based DSS Any type of DSS can be web-based. Enterprise-wide DSS Enterprise-wide DS systems are systems that are linked into large data warehouses. as they can use past data to answer complex ‗what-if‘ questions for decision makers. they will typically be more limited in scope. there are several specific fields in which MIS has become invaluable. Typically. Applications of MIS With computers being as ubiquitous as they are today. Objectives are set using the SMART ratio: that is. there's hardly any large business that does not rely extensively on their IT systems. monitoring and implementation of strategy. MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product. However.

contains some of the logic of an application. something that a search on keywords is unable to do. and an example of an organizational MIS division can be found at the Department of Social Services for the state of Connecticut.3 EXPERT SYSTEMS: APPLIED AI Currently. Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasury‘s MIS handbook. It is one of the most popular for building expert systems in business. each case of suspected rule violations will be evaluated consistently. A rule in a knowledge base. The frame provides a way to gather a lot of information about an object into one place. there are few applications in business that a computer scientist would call AI. however. Imagine a brokerage house in which the compliance department must see that brokers follow the firm's and the SEC's rules. 1995). The broker might be trying to generate commissions when there was no valid investment reason for the transactions. Quick Reflexes As a corollary to improved supply chain management comes an improved ability to react to changes in the market. enabling them to push out ahead of the competition and produce a better service and a larger piece of the pie. they are more demanding. Expert organizations such as the Institute of MIS along with peer reviewed journals such as MIS Quarterly continue to find and report new ways to use MIS to achieve business objectives. Possibly because users are not accustomed to systems that provide advice. For an expert system to advise us on what personal computer to buy. including its memory size. 11. The rule above implies something about when an investigation should be undertaken. including everything from the sourcing of materials to the manufacturing and distribution of the finished product. In tracking this performance it can be extremely useful to make use of an MIS system.The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. Benefits of MIS The field of MIS can deliver a great many benefits to enterprises in every industry. With better information on the production process comes the ability to improve the management of the supply chain. a frame might contain the characteristics of each PC. If the firm uses an expert system to help advice its analysts. The groupware solution does simple searches on word matches. perhaps because of an impending retirement. Also. Components of Expert Systems An expert system consists of the following components: The user interface The knowledge base The inference engine Interface is an extremely important component of an expert system. THEN investigate the transaction p 10 This hypothetical rule indicates that the probability of an investigation is to be increased if the broker sold stock one day and bought it back the next. a function they perform better than their competition. Core Competencies Every market leading enterprise will have at least one core competency – that is. What is a knowledge base? How does it differ from a database? One important way to represent an expert's knowledge is through the use of rules. Another motivation for creating an expert system is to capture knowledge from an expert who is likely to be unavailable in the future. Better MIS systems enable an enterprise to react more quickly to their environment. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analyzed by decision-makers. Another representation technique is known as a frame. It might show a simple relationship among the data because they are stored together or defined as connected in some way. One company built an expert system to help diagnose and solve the problem of oil exploration rig drills getting stuck. they can discover new patterns and relationships in the data. An expert system also provides for some consistency in decision making. it becomes an important part of the user's daily activities. The success of any MBO objective depends upon the continuous tracking of progress. A knowledge base contains more information about logic than a conventional database. Why build such systems? One purpose is to make the expertise of an individual available to others in the field. organizations take advantage of an applied branch of artificial intelligence called expert systems (ESs)-advisory programs that attempt to imitate the reasoning process of human experts (Turban.2. An ordinary database makes it very difficult to figure out the logic of the application. and so on. the type of video board. the speed of the chip. Instead. . MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself. the monitor. Expert systems feature more sophisticated approaches to search. An example of a rule might be as follows: IF the broker sold stock in an account on one day AND bought the same stock for the same account the next day. Enhance Supply Chain Management Improved reporting of business processes leads inevitably to a more streamlined production process. the type of chip. if the advisory system is used frequently. A good interface makes the system much more pleasant to use and helps promote its acceptance. A database stores numbers and symbols. The knowledge of the firm's best drilling expert became available on all rigs through the expert system. = Knowledge Representation The production rule above is an example of one type of knowledge representation. How is this kind of knowledge discovery different from the knowledge bases one can build with a groupware application such as Lotus Notes? Both kinds of applications have the same goals. By building an exceptional management information system into the enterprise it is possible to push out ahead of the competition.

Many of these shells are designed for personal computers. experts are reluctant to reveal their expertise to systems developers. 4. Figure 22-1 contains several production rules for personal financial planning. tasks or projects of e. 11. and it was difficult for him to explain his logic because he was not conscious of his decision-making steps. Looking at Figure 22. we need to know that risk tolerance is high (which is already known) and we need a rule to show that a shelter is recommended. The next section. In many cases. the goal is to show that the client needs exploratory oil and gas investments. For example a typical claim justifying the creation of a KM system might run something like this: an engineer could know the metallurgical composition of an alloy that reduces sound in gear systems. selection. Systems Development The development of an ES follows much the same process as recommended for a DSS in the previous chapter. the inference engine establishes sub goals that. Provide network maps of the organization showing the flow of communication between entities and individuals. if achieved. and similar sources. alone. formalization. how difficult it can be to conduct knowledge engineering. describes how information systems are used to assemble reports and reach executive decisions. Sharing this information organization wide can lead to more effective engine design and it could also lead to ideas for new or improved equipment. organization. the system begins with a goal. best practices.design methods. The inference engine examines the rules and tries to find rules with true IF conditions. rather than explicit. distributed databases etc. 2. We should point out. and many meetings were canceled because of his schedule. It is one of the major components of an expert system's shell. linking. The inference engine may employ forward or backward chaining. In some instances. A KM system could be any of the following: Document based i. Knowledge Management System (KM System) refers to a (generally IT based) system for managing knowledge in organizations for supporting creation. and solutions. a program that is designed to facilitate the development of an expert system. an expert system can use a semantic network. By checking other rules. The development process is different because advice is far more tentative than the numeric solution of a problem or the processing of transactions. accumulated and embedded in a context of creation and application.2. Based on AI technologies which use a customized representation scheme to represent the problem domain. Distinguishing features of a KMS can include: Purpose: a KMS will have an explicit Knowledge Management objective of some type such as collaboration. Forward chaining involves going through the rules one at a time to infer that exploratory oil and gas investments are the best recommendation. Expert-system development lends itself naturally to prototyping and learning through test cases.Finally. and typically they work through production rules.g. An example will help illustrate how the inference engine might work (Luconi. Management support.4 Knowledge Management System Knowledge management systems provide a means to assemble and act on the knowledge accumulated throughout an organization. . Such knowledge may include the texts and images contained in patents. or utilize other information sources. KMS systems deal with information (although Knowledge Management as a discipline may extend beyond the information centric aspect of any system) so they are a class of information system and may build on. The idea of a KM system is to enable employees to have ready access to the organization's documented base of facts. Subject. capture. A true rule then "fires" and performs the action indicated in the THEN clause. The kind of systems described in this chapter may be some of the most difficult to implement successfully. Processes: KMS are developed to support and enhance knowledge-intensive processes. however. and Morton. capturing. storage and dissemination of information. valuation. In this case. sources of information. many hours were spent in meetings with the expert. 3. competitor intelligence. In backward chaining. 3. Context: One perspective on KMS would see knowledge is information that is meaningfully organized. In a network. 1986). web. 2. backward chaining is more efficient.1. To conclude that the exploratory shelter is recommended. so these systems must also direct users to members of the organization with special expertise. Increasingly social computing tools are being deployed to provide a more organic approach to creation of a KM system. Organizational knowledge is often tacit. The expert is extremely knowledgeable. visualization. 5. ontology) are used to summarize the document e.e. Organization etc. acquisition. Ontology/ Taxonomy based: these are similar to document technologies in the sense that a system of terminologies (i. If we are interested only in whether exploratory oil and gas investments are the best recommendations and we are not interested in other possible investments.g. Access to an organization’s knowledge is often provided via an intranet equipped with specialized search software. Sometimes the individual designing the system is called a "knowledge engineer" to distinguish him or her from a traditional systems analyst. information is connected through a series of nodes. construction. structuring. assume we know that the THEN condition of the third rule is our goal.e. The program traverses the nodes along the paths of the network when it is seeking information for its computations. It was not until the meetings moved to the floor of the American Stock Exchange just after the close of trading that we managed to make progress on the system. In the AESOP example presented below. Suppose the client's tax bracket is 33 percent and her liquidity is more than $100000 and our client has a high tolerance for risk. The IF conditions of rule I are true. 1. At each stage. it can achieve its sub goal of having a shelter recommended.. The Inference Engine The inference engine is the reasoning part of the expert system. creation. the inference engine finds if rule I is true. 1. would indicate the client needs exploratory oil and gas investments. identification. It can comprise a part (neither necessary nor sufficient) of a Knowledge Management initiative. systems are developed as an experiment and are never fully implemented. so the sub goal is attained and rule 3 is true. Author. sharing good practice or the like. any technology that permits creation/ management/ sharing of formatted documents such as Lotus Notes. as in DAML & other XML based ontology.

2. Transaction processing systems offer enterprises the means to rapidly process transactions to ensure the smooth flow of data and the progression of processes throughout the enterprise. interactions and work-flows purposes. but that the systems themselves remain operational permanently. Can avoid re-inventing the wheel. this only counts as a bone fide transaction if both the withdrawal and deposit take . May reduce training time for new employees 4. reconstruction and application in different contexts. the creation and fostering of communities or knowledge networks. TPS interfaces are designed to acquire identical data for each transaction. evolution. activities. i. KMS can be used for a wide range of cooperative. led by such organizations as the Association for Work Process Improvement and the Transaction Processing Performance Council. Typically. collaborative. also called the knowledge life cycle. TPS systems are therefore designed to incorporate comprehensive safeguards and disaster recovery systems. although this is not necessarily the case. networks. To ensure this. skill management systems. and that partners and suppliers are paid and can make payment. modifies and retrieves the data transactions of an enterprise. in knowledge-intensive business processes along the entire knowledge life cycle. e. to manage media contents. KMS designs are held to reflect that knowledge is developed collectively and that the “distribution” of knowledge leads to its continuous change. involved participants in knowledge networks and communities fostered by KMS. and Open Standards. Instruments: KMS support KM instruments. 5. retention. 2. customers will not tolerate mistakes. the capture. Standardization Transactions must be processed in the same way each time to maximize efficiency.g. TPS systems are designed to process transactions virtually instantly to ensure that customer data is available to the processes that require it. 11. Sharing of valuable organizational information throughout organizational hierarchy. initiatives and policies. refinement. These measures keep the failure rate well within tolerance levels. Benefits of KM Systems Some of the advantages claimed for KM systems are: 1. transactions made by the system must pass the ACID test. accessing. adhocracy and hierarchy communities. has become a vital part of effective business management. Open Protocols and Open Knowledge licenses. privileges. virtual organizations. A transaction is any event that passes the ACID test in which data is generated or modified before storage in an information system Features of Transaction Processing Systems The success of commercial enterprises depends on the reliable processing of transactions to ensure that customer orders are met on time. 4. maintenance. distribution. therefore. the creation of corporate knowledge directories. The ACID tests refers to the following four prerequisites: Atomicity Atomicity means that a transaction is either completed in full or not at all. leverage and transfer in new outcomes of knowledge providing new services using new formats and interfaces and different communication channels.5 Transaction Processing System (TPS) Definition: A Transaction Processing System (TPS) is a type of information system that collects. For example. Reliability Similarly. Participants: Users can play the roles of active. by different participants with differing backgrounds and experiences. 3. reducing redundant work. expertise locators. in the face of advancing technology and customer demand for immediate action. regardless of the customer. if funds are transferred from one account to another. A KMS offers integrated services to deploy KM instruments for networks of participants. collaborative filtering and handling of interests used to connect people. access must be restricted to only those employees who require their use. works. participants and other active users in order to extract and generate new knowledge and to enhance. projects. roles. TPS systems must be designed to ensure that not only do transactions never slip past the net. Retention of Intellectual Property after the employee leaves if such knowledge can be codified. active knowledge workers.e. retrieval and last but not least the application of knowledge. The term KMS can be associated to Open Source Software. a TPS will exhibit the following characteristics: Rapid Processing The rapid processing of transactions is vital to the success of any enterprise – now more than ever. stores.. Controlled Access Since TPS systems can be such a powerful business tool. taxonomies or ontologies. Transactions Processing Qualifiers In order to qualify as a TPS. societies and other virtual networks.transfer. creation and sharing of the codifiable aspects of experience. revision. departments. The field of transaction processing. Restricted access to the system ensures that employees who lack the skills and ability to control it cannot influence the transaction process.

Real Time Processing In many circumstances the primary factor is speed. there are two broad types of transaction: Batch Processing Batch processing is a resource-saving transaction type that stores data for processing at pre-defined times. Isolation Transactions must appear to take place in isolation. when a fund transfer is made between two accounts the debiting of one and the crediting of another must appear to take place simultaneously. any transaction with a negative value would be refused. so batch processing saves IT resources from having to process each transaction individually. Types of Transactions While the transaction process must be standardized to maximize efficiency. . For example. Credit card transactions need only be processed once a month in order to produce a statement for the customer. Examples of batch processing include credit card transactions. TPS systems ensure that transactions take place in their entirety. For example. If an integrity constraint states that all transactions in a database must have a positive value. every enterprise requires a tailored transaction process that aligns with its business strategies and processes. allowing both the bank and customer to keep track of funds. These four conditions ensure that TPS systems carry out their transactions in a methodical. If one account is debited and the other is not credited. Durability Once transactions are completed they cannot be undone. a log will be created to document all completed transactions. Batch processing is useful for enterprises that need to process large amounts of data using limited resources. The funds cannot be credited to an account before they are debited from another.place. it does not qualify as a transaction. when a bank customer withdraws a sum of money from his or her account it is vital that the transaction be processed and the account balance updated as soon as possible. Consistency TPS systems exist within a set of operating rules (or integrity constraints). For this reason. standardized and reliable manner. for which the transactions are processed monthly rather than in real time. To ensure that this is the case even if the TPS suffers failure.

developing necessary information systems for Production and Operations management and their integration with the overall enterprise information systems. need for necessary information systems for them and their integration with other information systems in an organization. Determining information requirements of a personnel manager and his/her need for necessary information systems for better decisions. Processes and decisions required for effective and efficient Sales and Marketing Management. and determining their    information needs. Integrating Personnel Management related information systems with overall information system in an organization. integration of financial information system with that of the enterprise information system. . Appreciating the information requirement of a finance manager for various financial decisions in an organization and how suitable information systems can be designed to meet their requirements.Information Systems and Managerial Functional Areas Overview: 12  Understanding various processes/decisions involved in Production and Operations management.

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13 14 . Information Systems and Customer Relation Management (CRM). E-Commerce. Enterprise Resource Planning (ERP).Current Issues in Information Systems Overview: Role of Intranet and Internet in the development of various information systems in an organization. Role of Information Systems in Supply Chain Management.

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