Int. To MGT

St.
Mary’s University
INTRODUCTION TO MANAGEMENT
CHAPTER ONE
MANAGEMENT: AN OVERVIEW
This chapter is mainly concerned with giving answers to the following questions:
 What is management?
 Why is management important?
 What do managers do?
 Are all management jobs the same?
 If there are differences, what are they?
Chapter Objectives:
After completing this chapter the student is expected to:

 Explain the different meanings and definitions of management
 Describe the significances of management
 Discuss why management is both an art and science
 Identify the different classifications of managers
 Describe the roles managers play and the skills they need.
1.1. MEANING AND DEFINTION OF MANAGEMENT
Meaning:
The word “Management” has various meanings. The most important ones
include the following:
i. Management refers to a group of people who are responsible for guiding
and controlling the organization (Managerial personnel).
ii. Management is the process of running an organization (planning,
organization, staffing, directing, and discipline).
iii. Management is a body of knowledge, a discipline
iv. Management is a factor of production, economic resource as land, labour
and capital
Definitions of Management
Management is defined by different authorities in different ways. The following

are some of the common definitions given by different authorities in the field.
i. Management is the art of getting things done through and with people in
a formally organized group.
ii. Management is the art of knowing what you want to do in the best and
cheapest way.
Department of Management 1
St. Mary’s University
iii. Management is the art of securing maximum results with a minimum of

efforts so as to secure maximum prosperity and happiness for both the
employer and employee, and give the public the best possible service.
iv. Management is the process of planning, organizing, staffing, directing and
controlling the use of a firms resources to effectively and efficiently attain
its objectives.
Why do the definitions of management differ?
Authorities agree that it is impossible to provide a single universally accpeted

definition of management due to various reasons. Thus, the different
orientations about the definition of management emanate from the following
reasons.
i. Management has various aspects, that cannot be represented by a single
definition.
ii. The theorists who gave the definitions had different areas of interest or
training, and all defined management from their perspective (engineering,
sociology, psychology, mathematics, etc)
iii. Management as a discipline is young and there is a lack of clarity of
concepts and principles.
Nevertheless, despite all the above reasons for providing different definitions,
the definitions are not contradictory. In fact most of the definitions of
management do share a common idea “management is concerned with the
accomplishment of objectives / goals through the efforts of other people”.
Precise Definition of Management
Though management is defined in various ways as mentioned earlier, the

following is the commonly used precise definition of management:
“Management is the process of planning, organizing, directing and controlling to

accomplish organizational objectives through the coordinated use of human and
material resources.” It is the process of efficiently and effectively getting
activities completed with and through other people. It is the process by which
human and non-human resources are coordinated to accomplish a set of
objectives.
Definition of Terms
Organization – is a group of two or more people coming together to achieve
common objectives (goals)
Resources – are inputs that will be utilized in order to perform a given task.
Planning – is determining courses of actions that will be gone for, in order to

achieve objectives.
Organizing – refers to integrating resources to their best efficiency and

effectiveness.
Directing – refers to leading, motivating, and influencing people, so that they can
behave in the desired way.
Controlling – refers to ensuring whether objectives are efficiently and effectively

achieved or not.
Effectiveness – doing the right thing.
Efficiency – refers to doing things right and performing something with the
minimum possible input (cost).
1.2. SIGNIFICNACE OF MANAGEMENT
As people began forming groups to accomplish activities that they could not
achieve as individuals, management has been essential to ensure the
coordination of individual efforts. Thus, the task of managers has been rising in
importance, as society has come to rely increasingly on group effort, and as
many groups have become large.
Basically, an organization is a group of two or more persons that exists and

operates to achieve clearly stated, and commonly held objectives. Each member
of an organization is expected to do part of jobs that are important to meet the
organizational objectives. However, members may be working in opposite
directions. To prevent this from happening and to ensure the coordination of
work to accomplish the objectives set, management is needed. Therefore,
management is essential whenever and wherever human efforts are to be
undertaken collectively to achieve specific goals. Thus, the success of group
activity is determined by management. The success and failure of a given
concern or firm depends on the competence of its manager. Every scientific and
technological development is result of organizations; and the achievements of
organizations are, obviously, the achievements of their managers.
1.3. IS MANAGEMENT A SCIENCE OR AN ART?

The question whether management is an art or a science has been an issue of
debate for a long period of time.
Science is defined “as a systematized knowledge derived from observation,
study, and experimentation carried on in order to determine the nature and
principles of the subject under study”. Similarly, management has a structured
body of knowledge with its own distinct concepts and principles that are
developed with reference to the general truths underlying the management

practice. From this point of view, management is termed as a science. However,
although management is recognized as a science, it should be noted that it is not
as comprehensive or as exact as the other pure sciences. The reason is that the
variables with which managers deal differ. Managers deal with the human
elements. And the behavior of human beings is unpredictable. As a result, they
cannot be subject of controlled laboratory experiment.
According to Terry, “art is brining about of a desired result through the
application of skill; it is the application of knowledge and skills to accomplish
results”. Art is grounded in the knowledge or principles developed by science.
Just as a doctor uses the science of medicine while diagnosing and treating the
patients, a manager uses the knowledge of management theory while performing
his managerial functions. Art is the application of knowledge that constitutes the
science. Thus, art needs the existence of science and science demands skillful
application of knowledge. However, art is not only based on a systematic body
of knowledge based on evidence, but it derives its creative power through
intuition, inspiration and other purely subjective qualities.
Like all other practices management is an art. It is knowhow, it is the application

of knowledge; and it is doing things in the light of the realities of the situation.
Management principles are not developed for the sake of knowledge,
but their application for specific situation. Thus, in the art side of management
managers make decisions and try to solve problems based on their intuition
experience, instinct and personal insight. Management is therefore considered as
both a science and an art.
1.4. Levels of Management
Levels of management are hierarchical arrangement of managerial positions in
an organization. The number of levels of management may depend on the size
of the organization. In general, however, there are three managerial levels,
which includes:
i. Top level management,
ii. Middle level management, and
iii. Fist level (operating level management)
These levels of management can be presented graphically as indicated below
Top –
level
Management
Top – level Management
Middle
Top – level management includes that–oflevel
board of directors, executive committee
Managementmanger, etc. of an organization.
and chief executive, or president, or general
Functions of top management include;
 Establishing broad objectives;
Operating – level
Management
 Designing major strategies;

 Outlining Principal policies;
 Providing effective organizational structure that insures integration;
 Providing overall leadership and direction;
 Making overall control of the organization;
 Dealing with external parties such as the government, community,
business, etc. by representing the organization, and
 Analyzing the changes in the external environment and respond to it.
Middle – level Management

Middle-level management includes heads of the different functional areas and
their assistant: divisional heads, department heads, section heads, plant
managers, branch management, etc. The major functions of middle-level
management are:
 Acting as intermediary between top and operating level management;

 Translating long-term plans of top management into medium range plans;
 Developing specific targets in their areas of reasonability;
 Developed specific schedules to guide actions and facilitate control;
 Coordinating inputs, productivity and outputs of operating level
management.
Operating level management (First level management)
First – line management is found at the lowest level in the hierarchy.
The first – line managers comprise the largest managerial group in most
organizations and they are responsible for directly and managing operating
employees and resources.

They direct small team of workers and keep a check on their performance so that
short-term plans and work target are achieved.
Specific functions of first line managers include the following:

 Plan daily and weekly activities based on the quarterly and yearly plans.
 Assign operating employees to specific tasks.
 Issue instructions at the workplace.
 Motivate subordinates to charge or improve their performance.
 Provide subordinates feedback about the ongoing performance.
 Take action to resolve performance problems.
 Identifying ways of improving communication among subordinates.
1.5. Functional and General Managers

We can distinguish or classify managers based on the scope of the activities they
manage into:
i. Functional and
ii. General managers
i. Functional Managers
Functional managers are managers appointed to supervise single operations
which require specialized skills.
Eg. Accountants, personnel, marketing and production managers
ii. General Managers
General Managers are responsible for the overall operations of a more complex
unit, such as company or division.
General Managers usually coordinate two or more departments and hold

functional managers accountable for their specialized areas.
1.6. Managerial Roles

Managerial functions are broad areas of activities that represent the ends for
which management is practiced. They are purposes that tell little about what
managers actually perform. They simply indicate the objectives of managers
when they do their work. Thus, from the above definition, it can be inferred that
there must be the means to successfully accomplish managerial functions and
categories of actual managerial behaviors. These are managerial roles.
Managerial roles represent specific tasks that managers undertake to ultimately
accomplish the functions of planning, organizing, staffing, leading and
controlling. They are an organized set of activities belonging to an identifiable
job that give realism and systematize managerial functions.
Beside the functional approach of management the other approach to study

management is to examine the roles that managers are expected to perform.
Managerial roles are related to how managers carry out their jobs in their day to
day managerial life. Managerial functions are general administrative duties that
need to be carried out in all productive organizations. Managerial roles are
specific categories of behavior/managerial behavior. Managerial functions
involve “desired out comes”. These outcomes are achieved through the
performance of managerial roles (actual behavior). In other words, roles are the
means and functions are the ends of the manager’s job.
Henery Mintzeberg developed ten managerial roles, which can be classified in to
three broad categories. These are interpersonal, informational and decisional
roles.
1) Inter personal roles
These are the roles that the managers play in interacting with other people
both within the organization and outside the organization. Managers spend a
lot of time with peers, subordinates, suppliers, customers, government
officials and community leaders because of their formal authority, superiority

and strategic position. Therefore, they are required to have an understanding
of interpersonal relations. These roles again are classified in to three
categories.
a) Figurehead role:- when managers perform duties of
social or legal obligations that represent an organization at different
occasions such as ceremonial and symbolic in nature it is said to be
Figurehead role. These duties include:-greeting visitors, signing legal
documents, taking important customers to lunch, attending social
functional involving their subordinates like wedding, funerals, Handing
out merit certificates to works etc or speaking at functions in schools and
churches etc.
b) The leadership role:- the influence of a manager is
clearly seen in his role as a leader of the unit or organization. This
involves directing and coordinating subordinates activities such as hiring,
training, motivating and guiding. He must be an example/role model
leader so that his subordinates follow his directions and guideline with
respect and dedication.
c) Liaison role:- Managers must maintain a net work of
outside contacts in order to asses the external environment such as
competition, social changes or changes in government rules, regulation
and laws that affect the organization interest. In this role the managers
build up their won external information system.
The Liaison with external sources of information can be developed by
attending meetings and professional conferences by personal phone calls,
trade journals and by informal personal contacts within outside agencies.
2) Informational Role
Managers emerged as a source of information about certain issues concerning
the organization. They play the role of central point for receiving and sending
important information. Informational roles describe the manager’s activities
used to maintain and develop an information network. In informational role
managers perform the following three roles.
a) The monitor role:- in this role managers constantly monitoring and
examining their internal and external environment by collecting and
studying information concerning their organization. They seek
information from various sources in order to make decision and solve
problems that would be achieved by reading reports and periodicals, by
asking their liaison offices etc.
b) The disseminator role:- Manager’s must transmit their information
regarding changes in policies or other matters to their subordinates,
their peers and to other members of the organization. He/she should
provide important information to subordinates that they might not
ordinarily know about. This can be done through memorandums, phone
calls, individual meetings and group meetings. Managers do not put
aside information rather they pass it to peers. The type of information to

be forwarded to organizational members may include facts, opinions,
interpretations and influences.
c) Spokes person role:- the manager represents his/her organization or
unit to other people internally or externally. A manager represents his
organization in either sending relevant information to people out side
the firm or making some demand on behalf of the firm. He transmits
information to outsiders as official position of the organization.
Managers are also responsible to provide official statements to people
outside the organization about company policies, plans, actions or
development. The information can be transmitted to outsiders through a
speech at the trade show, reports, holding a press conference, giving
public interview or through advertising media’s.
3) Decision making/Decisional role

On the basis of the managers interpersonal and information received, a
manager must make decisions and solve organization problem in that
respect. These are manager’s activities to make choices from alternatives.
Managers are responsible to identify problems and opportunities and then
balance conflicting interests. In the decisional role the manager becomes an
entrepreneur, disturbance handler, resource allocator and negotiator.
a) Entrepreneurial role: - here managers are continuously involved in
improving the organization and facing dynamic technological
changes and initiating and designing of change in the organization
by assuming the risk of change. They always look out for new ideas
for product improvement. They initiate feasibility studies, they
arrange capital for new products, they ask for suggestions from
employees, how to improve the organization. In general they take
risks for investment.
b) Disturbance handler role: - managers have to work like a fire
fighter. They must seek solutions of various unanticipated problems
such as strikes, complaints, grievances, shortage of materials etc. the
manager makes decisions or takes corrective action to response to
pressure beyond his/her control. They have to take corrective actions
during crises, disputes and sudden departure of subordinates,
importance customers or suppliers.
c) The resource allocator role:- the manager must divide work and
delegate authority among his subordinates. He/she must make
decisions how to optimally allocate scarce resources among the
unlimited needs. This role of managers pertains to decisions about
how to allocate people, time, equipment, budget and other resources
to attain desired results. Managers decide exactly where the
organization will expend its resources according to the priorities of

organizational objectives.
d) Negotiator role:- the manager deals or negotiates with individuals or
groups about certain issues in view of reaching agreement on certain
problems. The manager also bargains with units and individuals to
obtain advantages for his/her unit or organization.
1.7. Managerial Skills

A skill is an acquired and learned ability to translate knowledge into
performance. It is an ability or proficiency in performing a particular task. In
order to be effective at all levels in which managers perform; they must possess
and continuously develop several essential skills. Managerial skills are skills of a
manageability of a manager to perform his duties and responsibilities expertly.
Modern business organizations are dynamic, complex and competition in the
market place is very high. Consequently managers must be highly skilled to
succeed. The major managerial skills that managers need to possess include:
Technical skills, Human skills and Conceptual skills. These essential skills
briefly explained as follows.
Technical skills
Technical skill involves the use of knowledge, methods and techniques in
performing a job effectively. It is a specialized knowledge and expertise, which
is utilized in dealing with day-to-day problems and activities. This skill is
acquired through education and training or formal studies in colleges and
institutions. Technical skill is more important at lowver level management and
as one move to higher level management; the relative importance of technical
skill will diminish. E.g. engineers accountants, computer programmers, program
analysis etc.
Human skills
It is the ability to work with other people in a co-operative manner i.e. the ability
to influence others, to motivate, to lead and understand others. It involves
understanding, patience, trust and genuine practice in interpersonal
relationships. Though there are some controversies, these skills are equally
important at all levels of management because all tasks in an organization are
done with people. This skill includes effective communication, creation of
positive attitude towards others, development of co-operation among group
members and motivation of subordinates.
Conceptual skill
It is ability of a manager “to see” the big picture of the organization, to view the
organization from a broad perspective. It is the ability to view the organization
as a whole entity and as well as a system comprised of various parts and
subsystems integrated into a single unit. It is especially important for top level
managers ho keep the whole system under focus. They must understand the
complexities of the overall organization, to see the big picture and how each unit
of the organization contributes towards the success or achievement of
organizational skills. Conceptual skills are more important in strategic (long
range) planning; therefore it is the top level managers/executives who require
more of these skills than middle level manages and supervisors.
1.8. UIVERSALITY OF MANAGEMENT
Is a manager’s job universal? Are the principles of management universally
applicable? It is already stated that managing is found in all types, functions,
levels and sizes of organizations. Management can be applied to all organized
human efforts whether they are in business, government, and educational,
social, religious or other fields. Universality of management suggests that the
manager uses the same managerial skills and principles in each managerial
position held in various organizations. It means that management is generic in
content and is applicable to all types of organizations. Many professionals in the
field of management agree that “management is universal”. This is to mean that
regardless of title, position or management level, all managers do the same job.
They all execute the five management functions and work through and with
others to set and achieve organizational goals.
These proponents argue the universality of management by stating that the
functions of managers are rarely the same whether the organization are private
or public, profit making or not for profit, manufacturing or service giving and
small firms or industrial giants. This is because of the fact that the basic
principles and concepts of management are universally applicable to all types of
organizations.
Lawrence A. Appley declared that ‘He who can manage, can manage anything’.
Accordingly an industrial manager could manage a philanthropic organization,
a retired army general could manage a University, a civil servant could manage
an industrial organization, and so on. Let’s discuss the factors that have
contributed to the universal organization (arguments for universality)
 Managers perform the same functions irrespective of their level in the
organization, industry or country. The functions performed by the
company president and the office supervisor are the same. Regardless of
the level, all managers plan, organize, lead and control. The difference
lies in such things as the breadth of the objectives, the magnitude of the
decisions taken and etc.
 Classical writers like Fayol, believed that there are certain principles in
management which are universally applicable. Such principles as one
man one boss (unity of command), division of work to improve speed
and efficiency, limiting the number of persons to be supervised, the
principle of motivation etc. have found universal expression irrespective
of the nature and level of management in organizations.
 The fundamentals governing the management of a business, a church or
a university are the same; the difference lies in the techniques employed
and the practices followed. All managers are accountable for

performance of other people; they plan, make decisions, and organize
work and so forth.
 The very fact that managers regularly move from public to private sector
organizations bears ample testimony to the fact that management
concepts are universal across organizational types. For example, D.D.
Eisenhower went from a general in the US army to President of
Columbia University to President of the United States.
Nowadays, management has got rationalistic and quantitative approaches,
which contribute for the universality of management principles. One can say a
best that management principles are universal but their application is situational.
1.9. Basic Management Functions

The Basic Management functions include
 Planning
 Organizing
 Staffing
 Directing, and
 Controlling
Planning: -
- It is the first function that all managers engage in.
- It lays the groundwork for all other functions.
- Planning usually:
- Identifies the goals of an organization
- It maps out courses of action
Length of time and scope of planning:

- Will vary according to the level in the company
Top-level management planning may cover a period of five or ten years. (Long –
range planning)
The plans at the top management level may cover expansion of the business and
how it will be financed.
Lower level management planning is however concerned with planning today’s
or tomorrow’s actions.
A manager’s plans affect and are affected by, the plans of others and the
requirements of governments ruling
Organizing
Organizing is concerned with:
1. Assembling the resources necessary to achieve the organization’s

objectives.
2. Establishing the activity-authority relationships of the organization
Planning has established the goals of the company and how they are to be
achieved
Organizing is therefore concerned with developing the structure to reach these

goals.
Staffing:
Staffing is concerned with locating prospective employees to fill the jobs created
by the organizing process.
Involves:
- Recruiting and selecting potential candidates for a job.
- Matching the job demands with the candidates’ abilities.
- Orienting new employees to the job environment
- Keeping employees qualified
- Appraising performance and providing feed-back
- Determining the proper pay and benefit for each job
Directing /leading:
Directing is aimed at getting members of the organization to move in the
direction that will achieve its objectives.
It involves motivating and encouraging employees, to participate in the

decision-making process.
Controlling:
Controlling deals with:

 Establishing standards of performance
 Reassuring performances against established standards, and
 Dealing with deviations from established standards.
It attempts to:
 Prevent problems
 Solve the problems that occur
In general, controls ensure that work is performed to standards as planned.
INTRODUCTION TO MANAGEMENT
Chapter Two
THE EMERGENCE AND DEVELOPMENT OF MANAGEMENT THOUGHT
2.1. Introduction
The formal study of management theory is the result of the twentieth
century. And different contributors contributed their share to
management theory as a separate discipline.
2.2. The Early Management Pioneers
The following are some of the early management pioneers who

contributed for the development of management.
Robert Owen (1771-1858)

Working as a manager of Cotton Mills Company in Scotland, Robert
Owen was concerned about the poor working and living conditions of
workers. As a result, he placed great importance on ensuring that the
living machine should be treated with kindness and sufficiently supplied
with the necessities of life. As a result he:
 tried to improve the working conditions in his factory;
 provided meal, housing and marketing facilities to the employees in
the factory;
 reduced the working hour from 13 to 101/2 hours; and
 refused to hire children below-the age of 10 years.
Charles Babbage (1792-1871)

Babbage was a mathematician and is best remembered as the inventor of
the ‘analytical machine’ which was the forerunner of the modern
computer. His contributions to management are:-
 He stressed the importance of division of labour on the basis of

skills.
 He emphasized the necessity of replacing the manual operations by
machines.
 He laid down the foundation for formulating scientific management.
Henry Robinson Towne (1844-1924)

Towne was a founder and manager of yale and Towne manufacturing
company. He has succeeded in motivating the engineers to study
management. According to him, a manager should be:
 an administrator;
 an engineer; and
 a thorough statistician
Thus, he wanted to see these three people in a single person-called

manager. Towne emphasizes that this combination of qualities, together
with at least some skill as an accountant, is essential to the successful
management of industrial work.
2.3. Forerunners of Modern Management

The prominent forerunners of modern management include: F.W Taylor,
H.Fayol, Gilbreths, Weber, H.L.Gantt, Elton Mayo,and other
1. Frederick Winslow Taylor (1856-1915)
Taylor realized that to expand productivity, ways and means had to be
found to increase the efficiency of workers. He observed certain factors
which led to low productivity.
Some of these factors were:

 incentive rate cutting by employers;
 poor methods of training;
 lack of standards of performance;
 lack of a spirit of cooperation on the part of both labor and
management.
In an effort to address these problems, Taylor built the body of principles

that now constitute the essence of scientific management.
2. Henry Fayol (1841-1925)

Henry Fayol was a French engineer and geologist. While Taylor was
interested in improving worker and factory productivity, Henry Fayol
was concerned with the executive managerial role.
Henry Fayol divided the activities of industrial organization in to six

categories. These are:
a. Technical:- production and manufacturing.
b. Commercial:- buying, selling and exchange.
c. Financial:- identification and utilization of available funding.
d. Security:- protection of persons and properly.
e. Accounting:- stocktaking, preparation of balance sheet and
statistical data.
f. Management:- planning, organizing, coordinating, commanding
and controlling.
Fayol further developed fourteen principles of management, which will

be separately discussed later. He was considered as the father of
administration process/management theory.
3. Henry Laurence Gantt (1861-1919)

Gantt was a prominent follower of Taylor. He was more interested than
Taylor in the human relations aspect of management. Gantt made four
main contributions to the evolution of management thought. These
contributions are listed below.
(i) He invented a chart for comparing actual with planned
performance. The device is now called Gantt chart.
(ii) He devised a task bonus plan for paying workers. His plan paid
workers a guaranteed day wage for output less than standard, a bonus
for meeting the standard, and an additional reward for output above the
standard.
(iii) He advocated that management has a responsibility to train workers
to become more skilled, develop better work habits and perform reliably.
(iv) He advanced the idea that business should concentrate on providing
services, not on making profit.
4. Frank and Lillian Gilbereth (1868-1924 and 1878-1972)

Frank and Lillian Gilbreth were a husband and wife team that further
developed Taylor's ideas. They were among the first to film workers in
order to analyze motion sequences so that the most efficient way for
performing specific task could be learned. The Gilbreths advocated for
the development of people through better training, improved work
methods, and better work environment. Moreover, they found out that
such incentives as pride, competition, and desire for recognition are
often as important as money, shorter hours, and promotions.
5. Max Weber (1864-1920)

Weber was a German Social Scientist. He wanted to frame a rigid form of
organization to eliminate inconsistencies, which lead to ineffectiveness.
He emphasized the strict adherence of rules and regulations in an

organization. He was the advocate of bureaucratic organization. His
theory of bureaucracy will be discussed later.
6. George Elton Mayo (1880-1949)

The classical writers viewed people as machines that could be motivated
by financial incentives alone. They ignored the behavioral aspects of
people. It was Elton Mayo and his associates that applied psychological
approach to management for the first time. They found out that
production is affected by the desires, attitudes and feelings of the
workers. According to Mayo, productivity would be increased and
efficient management could be realized through understanding of people.
He conducted the Hawthorne experiment focusing on the human
behavior and discovered that when workers are given special attention
by management, the production is likely to increase irrespective of the
actual change of working condition. Consequently, he is regarded as the
founder and the father of behavioral approach.
2.3. Approaches to management thought

Different writers have provided different approaches or categorization
schemes for studying management. Accordingly, the study of
management theories can be categorized into three broad approaches
which include:
 Classical theories
 Neo-classical theories and
 Modern theories
2.3.1 Classical Management Theories

The term classical means something accepted traditionally or long
established. The development of the classical theory can be examined
from the point of view of three different perspectives or streams. These
are:-
(i) Scientific management
(ii) Administrative theory , and
(iii) Bureaucratic theory
(i) Scientific Management: This perspective of classical approach to

management concentrated on the problems of lower level or supervisory
management, dealing with the everyday problems of managing the
workforce. At the turn of the 20th century, business started expanding,
creating new products and markets. But labour was in short supply.
There were two possibilities to solve the problem:
(a) Substituting capital for labour, or
(b) Use the available labour more efficiently
The second solution, i.e. using the available labour more efficiently, was
the concern of scientific management.
Frederick Winslow Taylor was the founder of the scientific management

school of thought. The major theme of scientific management was that
work could be studied scientifically. In other words, Taylor realized that
efficiency at work could be improved through careful 'scientific' analysis.
He advocated for the detailed study of each job to determine the "one
best way" of organizing and doing work. The primary emphasis was on
the application of scientific methods to the solution of managerial and

organizational problems.
Taylor's fundamental concern was to find out ways and means to

improve production efficiency. According to him, if efficiency in
production is enhanced, both the employers and the employees will
benefit.
Taylor stressed that, workers and management need to consolidate their

cooperation, and work together for the attainment of common goals, in
order to prosper. What he observed was however the opposite. The
relationship between workers and employers was poor. They were
conflicting, and this led to inefficiency. Lastly, Taylor suggested the
following major reasons for the conflict and inefficiency observed.
(i) Soldering by employees:- the workers deliberately delayed work
for the fear that an increase in productivity would expose them to
unemployment. The employees were afraid that their service would no
longer be required if they complete the work early.
(ii) Defective management system: - the management based its
managerial activities on common sense, individual judgment, and
traditional ways, and lacked a sense of mutual cooperation.
(iii) Lack of understanding about what constitutes a 'fair day's work'
and a 'fair day's pay' from both the management and the works side.
(iv) Inefficient methods or work: - the system was not scientifically
designed
(v) Lack of incentive (bonus) mechanisms
(vi) Poor methods of selection and training of workers.
In an effort to address these problems, Taylor built the body of principles

that now constitute the essence of scientific management. As a result he is
considered as the 'father of scientific management' and the theory is
'Taylorism'. The principles developed by Taylor are discussed here
under.
Principles of Scientific Management

i. Rules of Thumb should be substituted by scientific methods.
Taylor advocated that the old method of doing work should be replaced
by scientific method. The nature of work performed by each worker
should be determined. This includes the allotment of fair works to each
employee, standardization of work, adoption of piece rate of payment
system, and the like.
ii. Specialization should be Practiced. Taylor advocated the division
of entire work into managerial and non-managerial categories. He
separated the planning function from executive function. Before
Taylor's period, both planning and executive function were performed by
the same person. Taylor emphasized that supervisors should do the
planning function, while the executive function be assigned to the
workers alone. He believed that vertical specialization would improve job
performance.
iii. Proper selection and training should be done. Taylor emphasized
the proper selection and training of workers. He suggested that workers
should be selected and provided with job training. The management
should find out the physical, educational and psychological requirements

of each job, and suitable person to each job.
iv. Harmony in group action- F.w Taylor advocated for peace and
friendship in group action. He stressed that, dissatisfaction of any worker
should be avoided in the group action. Dissatisfaction of workers can be
avoided through the introduction of scientific selection, training and
strategic placement of workers.
v. Wage incentive should be utilized. According to Taylor, man is
mechanical and as a result motivated by economic benefits.
Consequently, he proposed different piece rate systems, in which a
worker was paid in proportion to the amount he/she produced.
Moreover, Taylor and his associates like the Gilberths, have conducted
many studies and experiments to find out how workers could be more
productive and/or efficient. The following are some of the major studies
carried out by Taylor and his followers.
a. Motion study- is the study of relating to the movement of a machine
operator and his machine while performing a job. It is the art of
determining the perfect movement necessary to perform a given job by
eliminating all unnecessary movements of machine operator and the
machine.
b. Time study- is the art of determining how long it would take to
perform a given element of work or particular job.
c. Fatigue study- is the process of determining the working hours and
resting hours of employees to accomplish a given task.
Major contributions of Taylor

The following are the major contributions that Taylor made to the
development of the principles of scientific management.
i. The development of science of work i.e. finding out the one best way
of doing a given work through time, motion, and fatigue study.
ii. Scientific selection and prospecting development of the workforce.
iii. The constant and intimate cooperations of management and workers
theory (process of functional approach).
iv. The separation of planning function from executing function
II. Administrative Management theory

The administrative management theory was initiated by Henry Fayol.
Fayol believed that management is not personal talent, but a skill like any
other fields. The Administrative management theory has two major
purposes:
 To identify the fundamental functions of management
 To develop basic principles of management that could guide the creation,
design and maintenance of large organization.
Fayol found out that the activities of every organization should be

divided into six categories, as indicated in the foregoing discussions.
Fayol also developed 14 important principles of management that are
applied to all types of organizations. These principles are presented here
after.
Fayol's 14 principles of management

1. Principle of Division of work: Division of work makes a man
specialist. Specialization leads to better efficiency and maximum output.
It also avoids wastage of time. According to Fayol, division of work is
applied to both technical and managerial kinds of work.
2. Principle of Authority and Responsibility: Authority is the right to
command to get the work done. On the other hand, responsibility is the
accountability of authority so that the official authority is not misused.
Thus, responsibility is the natural outcome of authority.
3. The principle of Discipline: It suggests that, all people in an
organization should respect the rules that govern the organization, and
those stated in the employment agreement. Fayol further states that, these
rules and agreements should be clearly defined and understood, and
enforced fairly and judiciously.
4. Principle of Unity of Command: This principle suggests that every
one should have only one superior, and each subordinate is responsible
to only one superior. Otherwise, conflict & confusion in authority &
instruction would arise.
5. The Principle of Unity of Direction: This principle of Fayol states
that "there should be one head and one plan" for a group of activities
having the same objective. For example, the personnel department should
have only one personnel manager, with a specified plan for a group of
activities having the same objective. For Fayol, this principle is necessary
for unity of action, coordination of strength, and focusing on effort.
6. Principle of Subordination of Individuals Interest to
Organizational (General) Interest: H. Fayol expected the reconciliation
of the individual interest with the organizational interest. While the
individual interests should be integral with organizational interest as
much as possible, the organization must take priority over the interest of
an individual or a particular group, where there is a conflict between the
two.
7. Principle of Remuneration of Employees. Remuneration and
method of payment should be fair and afford the maximum possible
satisfaction to employees and employer.
8. Principle of Centralization: Centralization means, the authority is
concentrated at the upper level. Decentralization refers to the delegation
of authority downward. Fayol believed that while some authority should
be given to the subordinates to make decisions, all major decisions
should be made at the top management.
9. Principle of Scalar Chain: Scalar chain is the chain of superiors
ranging from the top management to the lowest level in the organization.
However, this is proved to be very time consuming, in case when people
in different departments but at the same level of hierarchy, needed to
communicate with each other. Fayol solved this problem by introducing
the Gangplank-policy, which states such people could communicate
with each other directly, but with the permission of superior.
10. Principle of Order: Both materials and people must be well chosen,
well placed, and well organized for a smooth-running of an organization;
For material things "A place for every thing and everything in its place".
For people, "A place for everybody, and everybody in his/her place".
11. Principle of Equity: Equity refers to combination of fairness,
kindness and justice. These will encourage employees to work well and
be loyal. Therefore, all the employees of the organization should be

treated equally by the managers.
12. Principle of Stability of Tenure of Employees: Employees turnover
should be discouraged or minimized. Tenure and long-term
commitment should be encouraged. A person needs time to adjust
himself with the new work. Hence, employees and managers must have
job security. The managerial personnel in particular should be stable.
13. Principle of Initiative: Thinking out a plan and carrying it out successfully
can be satisfying. Therefore, subordinates must be encouraged to initiate new
ideas and carry out their plans.
14. 14. Principle of Esprit de Corps (Spirit of coordination): This is the
principle “Union is strength”. All the employees of the organization are
put together as team, in order to achieve the objective of the organization.
It implies that teamwork, team spirit and togetherness must be
developed and maintained.
III. Bureaucratic Theory

The chief advocate of the bureaucratic organization was Max weber. To
Weber, a pure form of organization is characterized by rationality and
impersonality. Rationality implies goal directedness. Impersonality
implies objectivity in interpersonal relations. Human resource decisions
in bureaucracies were to be strictly impartial based on qualification and
work demands rather than on caste system in the personal preference of
decision makes.
According to Weber, bureaucracies are goal-oriented organizations

designed according to rational principles, in order to efficiently attain
their goals.
Common Features (Characteristics) of Bureaucracy

 Hierarchy of Authority Stable and clearly defined authority is
needed to ensure clear authority responsibility relationship, and to give
commands for proper discharge of duties at various levels.
 Specialized division of labour- tasks are divided into very
specialized jobs.
 Written rules of conduct-rigorous set of rules must be followed to
insure predictability and eliminate uncertainty in task performance.
 Impersonality _ superiors take on impersonal attitude in dealing
with subordinates.
 Promotion based on achievement- employment and promotion
based on merit and technical competence.
 Record Keeping- every decision and action is taken only after
writing in a number of documents.
 Efficiency -
Advantages and Disadvantage of Bureaucracy- Some of the advantages

of bureaucracy are precision, speed, unambiguity, knowledge of the
files, unity, strict subordination, reduction of friction and of material
and personnel costs.
Some of the drawbacks of bureaucracy are:

 Rigidity of rules, regulations and procedures;
 Failure of cooperation and coordination;
 Displacement of goals; and

 Red tape (excessive procedure).
Contributions of the Classical Management Approach

The greatest contribution of the classical approach was that, it identified
management as an important element of organized society.
Management has increased in importance. The identification of
management functions such as planning organizing and controlling
provided the basis for training new managers.
Moreover, many management techniques used today are direct

outgrowth of the classical approach. For instance, time and motion
analysis, work simplification, incentive wage systems, production
scheduling, personnel testing, and budgeting are all techniques derived
from the classical approach.
2.3.2. Neo – Classical Theories

The basis for Neo-classical theory is classical theory. Neo-classical theory
modified, improved and extended the classical theory. In the 1920s and
1930s, observers of business management began to feel the
incompleteness and shortsightedness in the scientific as well as the
administrative management movements. As can be realized from the
foregoing discussions, the scientific management movement analyzed the
activities of workers, whereas the administrative management writers
focused on the activities of managers. Thus, the importance of the man
behind the machines and the importance of individual as well as group
relationship in the work place were never recognized.
Elton Mayo and his associates clearly pointed out that workers should
not be treated as mere factors of production but should be treated as
human beings. Elton Mayo emphasized that workers attitudes, feelings
and needs are extremely important on the job. His famous study of the
Hawthorhe plant (Western Electric) located in USA, laid the foundation
for the human dimension in organization.
Some writers classify Neo-classical theories into two branches, namely,

the human relations approach and the behavioral science approach.
These approaches are briefly discussed here under.
2.3.2.1. The Human Relations Approach

The human relations approach became very popular in the 1940s and
1950s. It refers to the manner in which managers interact with
subordinates. According to the followers of this approach, to develop
good relations, managers must know why their subordinates behave as
they do and what psychological and social factors influence them. The
concentration of scientific management was on the physical environment
of the job, whereas human relations concentrated on the social
environment. Elton Mayo is the founder of the human relations
approach. Mayo and his associates conducted the Hawthorne studies in
a number of different stages and these studies contributed to the
evolvement of the human relations approach.
Discuss the five stages of the Hawthorne studies, emphasizing the purpose and the findings of each study!
The Major Conclusions of the Hawthorne studies

The following are the major conclusions of the Hawthorne study.
i. Individual workers must be seen as members of a group. They
should not be treated in isolation.
ii. The need to belong to a group and have status within it is more
important than monetary incentives or good physical working
conditions.
iii. Informal groups at work exercise a strong influence over the
behavior of workers.
iv. Superiors and/or managers need to be aware of the social needs of
workers and cater for them, if workers are to collaborate with the official
organization rather than work against it.
It is worthwhile to note here that prior to the Hawthorne studies no

consideration was given to the importance of the human factor or it was
overlooked. What is peculiar of Mayo and his associates is that, they
underscored the need for greater and deeper understanding of the social
and behavioral aspects of management.
2.3.2.2. The Behavioral Science Approach

Individuals who studied to the social sciences such as psychology,
sociology, and anthropology began studying people at work. The
approach of these scholars was considered to be distinct from the human
relations approach in that, they applied the scientific approach to the
study of human behavior. Behavioral scientists underscored that
individuals are motivated to work for various reasons in addition to
making money and forming social relationships. They concentrated on
the nature of the work itself, and the degree to which it can fulfill the
human need to use skills and abilities.
Contributions of Neo – Classical Theory

The Neo – Classical approach has contributed a lot in developing
important ideas and carrying out research undertakings in the people
managing aspect of the discipline of management. The basic rational is
that, since management must get work done through others,
management is really applied behavioral science. The point is that a
manager must motivate, lead, and understand interpersonal relations.
Limitations of Neo – Classical Theory

The basic assumption that managers must know how to deal with people
appears valid. But management is more than applied behavioral science.
For the behavioral approach to be useful to managers, it must help them
in problem solving situations and make them better practitioners of the
process of management.
2.3.3. Modern Management Theories
Modern management theories indicate further refinement, extension and

synthesis of all the classical and neo-classical approaches to
management. The concern of the classical approach was to satisfy the
basic economic needs of the organization and the society. Neo – classical
approach emphasized the satisfaction of personal security and the social
needs of workers. Both approaches need to be suitably integrated to
emphasize the need for the recognition of human values and the need for
productivity as well.
Some writers classify the modern management theory into three streams.
These include:
i. The Quantitative / Management Science Approach,
ii. The Decision Theory Approach,
iii. The Systems approach, and
iv. The Contingency approach.
2.3.3.1. The Quantitative Approach

The quantitative approach is also known as the mathematical, operation
research or the management science approach. According to the
proponents of this approach, since managing is a logical and rational
process, it can be expressed in terms of mathematical relationships and
models. This will lend exactness to management process and substitute
certainty for guesswork, knowledge for judgment and hard facts for
experience.
The management scientists introduced various mathematical tools for

solving problems of management in the areas of-quality control,
inventory control, warehouse operations, resource allocation, etc.
However, the management scientists didn’t contribute to the theory of
management except that they made mathematical tools available to
practitioners of management.
2.3.3.2. The Decision Theory Approach

The decision theory approach looks upon the management process as a
decision making process. According to the decision theorists, the entire
field of management can be studied from the study of the decision-
making process, since the performance of various management functions
involves decision-making.
It is true that every task of the manager involves decision-making. The

totality of management is however, something more than decision
making. The core tasks of the modern manager are innovating,
integrating the organization with its external environment, and creation
of an organizational climate which is conducive to the optimum
performance of its members.
2.3.3.3. The System Approach
The system approach to organization and management emerged in the

1950s. The contributors of this theory include; Ludwig Von Bertalanffy,
Lawrence J. Henderson, H.G, Scott, Daniel Katz, Rober L. Khan, etc.
These theorists viewed organization as an organic and open system
composed of interacting and interdependent parts, called sub-systems.
The systems approach to management views the elements of an
organization as interconnected. The approach moreover views the
organization as linked to its environment. The point is that,
organizational effectiveness and survival depends on the organization’s
interaction with its environment.
The following are some of the features of the systems theory:

 System: - It is a set of interrelated parts that work together to
achieve an objective. A Company, a University and the Human body are
examples of systems.
 Sub-system: - is a set of related parts that work together to achieve
an objective as one component of a large system. For example, the
human body’s circulatory system, nervous system, respiratory system
etc. are sub-systems of the human body.
 Open and Closed Systems: – A system can be open or closed. Open
systems are those systems, which interact with the external environment.
They take inputs from the outside environment for survival. Closed
systems are systems which do not interact with the outside environment.
They don’t take inputs from the environment.
 Input – Transformation – Output Model: – An open system
receives inputs such as money, material, personnel, and technology from
its environment and transforms them into outputs such as goods and
services, interacting with environmental variables.
 System Boundary: – is the part of the system that separates the
system from the environment and filters the inputs going to the system,
and the outputs that go out of the system.
 System Goals: – Organizations have a variety of goals. The major
goal of an organization is survival. All other goals depend on the
achievement of this one goal.
 Feed-back: – Business systems have inherent feed-back mechanisms
that provide various types of useful information to management.
Management makes use of the information in controlling the
performance at different stages of work. Feed-back also helps to improve
the quality of the products manufactured and the services redered by a
given organization.
 Psychosocial system: – A business organization is a psychosocial
system in the sense that people working in a firm develop social
relationship and they constantly interact with one another.
 Creativity: – Business is creative in that it fruitfully converts the
available resources into useful products.
 Interdependence – Various sub-systems of a business system are
interdependent and interacting. Different departments are interlinked in
one way or another to achieve specified goals. Interdependence also
exists between various firms and/or industries.
INPUTS TRANSORMATION (THROUGH-PUT) OUT PUTS
- Human Organizational Environmental Variables - Product

resources Variables - Economic - Service
System Boundary
- Money - Methods conditions s

- Materials - Processes - Actions of - Profits
Sub –
- Knowledge - Objectives competitions - Educati

- Energy - Policies - Union on
Systems
- Decisions Activity
Management know –how & technology transforms
inputs
Feed-back
Schematic Model for system
Systems have five basic characteristics, which include the following:

i) They consist of a set of components.
ii) They have identifiable boundary.
iii) There is an input-throughput – output relationship.
iv) They have a purpose to accomplish.
v) They are made up of sub-systems.
2.3.3.4. The Contingency Theory Approach

The Contingency theory was mainly developed in the 1970s. One of the
important contribution of the contingency perspective may best be
summed up in the statement that ‘There is no one best way to manage’.
According to this approach, the best way to conduct managerial activities
varies with the situation. In some situations, manager’s best approach to
a subordinate may be directive and dictatorial; in others a sympathetic
and democratic approach may be appropriate. Thus, according to the
contingency approach, managers must find different ways that fit
different situations. They must continually address themselves with the
question “Which method will work best here?” Applying the
contingency (situational) approach requires that, mangers diagnose a
given situation and adapt to meet the conditions present.
CHAPTER THREE
THE PLANNING FUNCTION
3.1. Meaning and importance of managerial planning
3.1.1. The concept of planning

Planning is the most fundamental function of management. Different authorities define it
in different ways. The following is however, the commonly used definition of planning:
Planning is the process of deciding in advance about the short and long-run
objectives of the organization and selecting courses of action for accomplishing
them.
The primary purpose of planning is to minimize the risk or obstacles
surrounding future operations. From this point of view, planning can be defined
as the process of preparing for change and coping with uncertainty by
formulating the means for attaining goals. It is anticipatory decision making that
establishes organizational goals and specifies the methods of achieving them.
In general, planning involves determination of objectives, formulation of
programmes and courses of action for attaining them, developing of schedules
and timing of action as well as assignment of responsibilities for their
implementation.
Planning tries to answer the following basic questions:
a. Where are we now?

b. Where do we want to be?
c. What is the gap?
d. How can we get there?
The following figure can summarize the basic questions that address the function
of planning
3) Gap?
[Current status] 4) How to bridge [Future image]

the gap?
1) Where are we now? 2) Where we want to be?
3.1.2. The Nature characteristics of planning

i. Planning is the foundation (primacy) of management: Planning
provides all the basis from which all future management functions arise.
ii. Planning is a continuous process: It is a never – ending activity of a
manager. Plans tend to be a statement of future intentions relating to objectives and
means of attaining them.
iii. Planning is persuasive: Planning is the function of all mangers. It is needed
and practiced at all managerial levels. Every manger has a planning function to
perform within his particular areas of activities. Thus, planning is inherent in
everything a manager does. Therefore, planning is a persuasive function of
management.
iv. Planning is participatory:
v. Plans are arranged in a hierarchy: Plans are first set for the entire
organization. Such plans are called corporate plans. The corporate plan provides the
framework for the formulation of divisional, departmental and sectional goals. The
following figure demonstrates the hierarchical arrangement of plans.
Corporate plans
Departmental / Divisional / Plans
Sectional plans
Unit plans
Hierarchy of plans
vi. Planning commits the organization into the future:
vii. Planning is the antithesis of status-quo:
viii.Planning is subject to flexibility:
ix. Planning is action oriented.
3.1.3. The Importance of Planning
i. Provides direction.
ii. Minimizes risk and uncertainty.
iii. Focuses attention on the organization’s goals.
iv. Facilitates control.
v. Leads to success.
3.2. Types of plans

Plans can be classified into various categories based on different dimensions.
These dimensions includes:
 Repetitiveness
 Time dimension,
 Scope/ breadth dimension, and
 Flexibility dimension.
3.2.1. Classification of Plans Based on Repetitiveness
Based on repetitiveness plans can be classified into two; namely, standing plans
and single use plans.
A. Standing plans:
Standing plans are used again and again over a long period of time. Once established,
standing plans continue to apply until they are modified or abandoned. Standing plans
help managers in disposing of routine problems in predetermined and consistent manner.
They include: polices, procedures, methods, rules and standards.

i. Policies – are general statements that serve as guides of administrative action
or decision-making. They direct the way in which activities are to be achieved. They
are concerned with “how” of administrative action.
ii. Procedure- show the sequence of activities. Procedures indicate the steps to be
accomplished as well as the required time and order of performance. They are series of
steps to be used in achieving certain objectives.
iii. Rules- are statements that either prescribe or prohibit action by specifying what an
individual may or may not do in a given situation. A rule is a very specific and detailed
guide to action. It is established to direct or restrict action in a fairly narrow manner.
Compared to policies and procedures, rules are narrow in scope, specific in their
application, and allow few or no deviations form a stated statement.
The drawback of rules is that they tend to limit flexibility and initiative. To avoid the
unpleasantness, members would follow the rules. They are only interested in meeting the
rules rather than achieving goals.
Methods- are sub-units of a procedure. They show clearly as to how a step of procedure
should be performed.
ii. Standards- are units for measuring performance. They are established to measure
the time, quantity, quality or wastage level, and cost of work. However, all kinds of
jobs do not lend themselves to quantitative measurement. It is worth-noting that
standards are established and used when performance can be measured.
B. Single – use plans
Single use plans are designed to accomplish objectives usually within a relatively short
period of time. They are non-recurring in nature and deal with problems that probably
will not be repeated in the same form in future. In general, single use plans are
predetermined courses of action developed for relatively unique, non-repetitive
situations. The three basic types of single use plans are programmes, projects and
budgets.
i. Programmes -are large-scale planned activities which have distinctive mission, time
schedule, and assignment of responsibility. Programmes consist of objectives, policies,
procedures, and methods so managed and designed to provide a course of action to
achieve goals. Programmes are means of achieving some designed results within the
scheduled time.
ii. Projects – are usually a component part of a specific programme.
They are less complex and narrow in scope than programmes and require fewer
resources.
iii. Budgets – are numerical plans that deal with the future allocation and
utilization of various resources to different activities in the organization. Budgets are
primarily designed and used to allocate and utilize the resources of an organization,
which include: financial, human, material and any other essential resources. As most
people think, budgets are not defined in monetary terms only. Thus, they are also
used to control the allocation and utilization of labour, raw materials the or space,
machine hours and so on. To be more specific, some of the common non-financial
budgets include: sales, production-materials, manpower, time and space budgets, etc.
Budgets usually serve as a control device for feed-back and evaluation purpose. They
exercise control by allocating resources cross departments in advance, and by
specifying how these resources are to be utilized. They provide standards against
which planned performance can be compared to actual performance. It helps to
preserve the organization’s resources and promote efficiency.
3.2.2. The Time Dimension of Plans
Planning must encompass a sufficient period of time in the future to fulfill the
commitments resulting from current decisions. Accordingly, we can classify
plans into three, based on the typical time frames used indescribing planning
periods as: (i) Long –range, (ii) Intermediate-range, and (iii) Short-range, plans.
i. Long-range plans
Long range planning has longer time horizon. It is concerned with the distant
future. The time period of long-range plans is usually more than five years.
Long-range plans are intended as guidelines from which we can develop our
intermediate range and short range plans with specific commitments to
action.
ii. Intermediate-range plans – are those plans, which provide a link

between long-range and short-range plans. They cover a time period usually
between 1 – 5 years, though it may vary with the type and scope of the
enterprise.
iii. Short-range plans – are plans which specify what resources will be
committed and what actions will be taken in the immediate future. Short-
range plans usually constitute the steps toward the implementation of long-
range plans. As a result, they will be more detailed and specific than the
intermediate and the long-range plans. Short-range plans usually cover a
period of one year or less, in most cases.
The following table shows the different planning time horizons with their corresponding
example.
Time Horizon Examples
Short – range plans Annual plans like sales plan, production plan,
materials requirements plan, operating expense
budget, short-term training.
Intermediate – range plans - Modernization of
production equipments and office facilities.
- Development of
employees
Long – range plans - Long-term leases of
production equipment, transport equipment, and
warehouse facilities.
- Construction of new
plants.
- New product
development
3.2.3. Scope/Breadth Dimension of plans
The scope / breadth dimension of plans is a method of categorizing plans based

on the range of activities covered. Some plans are very broad and long-range,
focusing on key organizational objectives. Accordingly, plans are classified into
three categories based on their scope or breadth. These include:
(i) Strategic plans;

(ii) Tactical plans;
(iii) Operational plans.
i. Strategic plans – Strategic plans determine the organization’s mission

objectives, major courses of action and the allocation of major resources
necessary to achieve the organization’s objectives. Strategic plans thus
provide the organization with the overall long-range direction and lead to the
development of policies. Strategic planning is usually done taking into
account the environmental threats and opportunities and the internal

strengths and weaknesses of the organization.
Strategic plans are generally:

 performed by top level managers;
 mostly long-range in their time frame;
 expressed in relatively general non-specific term; and
 a type of planning that provides general direction to the
organization.
ii. Tactical plans – focus on the process of developing action plans through
which strategies are executed. As mentioned earlier, strategic plans focus on what the
organization will be in the future; whereas tactical plans emphasize how this will be
accomplished. Tactical plans refer to the implementation of activities and the
allocation of resources necessary for the achievement of the organization’s objectives.
They specifically focus on short-term implementation of activities and resource
allocations.
The following are typical examples of tactical planning:

 Developing annual budget for each department, division, project;
 Choosing specific means of implementing strategic plans;
 Deciding on course of actions for improving current operations.
iii. Operational Plans – are the most specific and detailed plans, focusing on the
day-to-day and week-to-week activities of the organization. Such plans
include: Production schedules, sales plans, lesson plans, etc.
3.2.4. Flexibility Dimension of Plans

Plans are also classified as variable plans, alternative plans, and supplementary
plans, based on the degree of their flexibility to respond to environmental
uncertainties.
i. Variable plans – state figures in terms of ranges to allow for the

uncertainty of the environment. For instance, the time estimated for a phase
of a project might be stated as “three months plus or minus one week.” The
advantage of variable plans is that one can easily estimate the tolerable limits
for the organization.
ii. Alternative plans – are similar to variable plans in recognizing

environmental uncertainties, except that, in this case, the planner usually sets
up two or more entirely separate plans.
iii. Supplementary plans – are used to reduce that constraining effects of

the original plan by providing a prearranged appeal channel.
3.3. Organizational Objectives

The management process begins with setting organizational objectives.
Objectives give meaning and purpose to the organization. Without objectives,
without something to achieve, organizations would be purposeless. Objectives
determine the scope of future events. They serve as reference points to
concentrate resources and efforts. Therefore, objectives determine what action to
take today to obtain results tomorrow.
3.3.1. The Nature / Characteristics of Objectives

Like any other management function, objectives have certain basic features.
Obviously, objectives state end results, and overall objectives usually need to be
supported by sub-objectives. Generally speaking, objectives have the following
features and/or characteristics.
i. Objectives Form a Hierarchy
In many organizations objectives are structured in a hierarchy of importance.

Thus, there are objectives within objectives. The hierarchy of objectives is a
graded series in which organization’s goals are supported by each succeeding
managerial level down to the level of the individual. The objectives of each unit
contribute to the objectives of the next higher unit. Each operation has a single
objective which must fit in and add to the final objectives.
The following figure demonstrates the hierarchy of objectives ranging from top
management to individual objectives.
Means Ends
Overall
objectives
Divisional
objectives
Department objectives
Individual
Objectives
Hierarchy of objectives in the form of a means-ends chain.
ii. Objectives Form a Network

Objectives interlock in a network fashion. They are inter-related and inter-
dependent. The concept of network of objectives implies that, once objectives are
established for every department and every individual in an organization, these
subsidiary objectives should contribute to meet the basic objectives of the total
organization.
iii. Multiplicity of Objectives
Organizations pursue multifarious (many and various) objectives. At every level
in the hierarchy, goals are likely to be multiple. For example, the marketing
division may have the objective of sale and distribution of products. This
objective can be broken down into a group of objectives for the product,
advertising, research, and promotion managers. The advertising manager’s
goals may include: designing product messages carefully, create a favorable
image of the product in the market, etc
3.3.2. Importance of Objectives
All organizations are goal seeking, that is, they exist for the purpose of achieving
some goals, efficiently and effectively. In general, objectives serve the following
major functions:
i. Legitimacy – objectives describe the purpose of the organization so
that people know what it stands for and will accept its existence and
continuance. Objectives thus help to legitimize the presence of organization
in its environment.
ii. Direction – objectives provide guidelines for organizational efforts.
Once objectives are formulated, every activity is directed toward their
achievement, every individual contributes to meet the goals.
iii. Coordination – objectives keep activities on their track. They make
behavior in organizations more rational, more coordinated and thus more
effective, because every one knows the accepted goals to work toward. In
setting effective goals managers help members at all levels of the organization
to understand how they can best achieve their own goals by directing their
behavior toward the goals of the organization.
iv. Benchmarks for Success – objectives serve as performance standards
against which actual performance may be checked. They provide a
benchmark for assessment. They help in the control of human effort in an
organization.
v. Motivation – Goals / objectives are motivators. The setting of a goal
(objective) that is both specific and challenging leads to an increase in
performance because it makes it clear to the individual what he is supposed
to do. He can compare how well he is doing now versus how well he has
done in the past and in some instances how well he is performing in
comparison to others.
3.4. The Planning Process
The process of planning refers to the specific steps followed in developing

organizational plans. The following are the major steps that a planning process
should follow.
a. Understanding the existing situation
The influence of the external environment is of great concern in planning. As a
result, it is essential to be aware of the external opportunities and threats that can
affect the planning process. Thus, the organization is required to analyze the
following and other environmental situations while involving in the planning
process.
 Analyze the economic situation (competition, price, demand, supply,
etc.).
 Analyze the political situation (government policies, taxation, peace and
stability etc.).
 Analyze the social and cultural situations (culture of the society,
direction of culture change, attitude of the society towards different
products etc).
Moreover, it is important to examine the internal situations and determine the
existing strengths and weaknesses of the organization. Thus, planning requires a
realistic diagnosis of the existing strength, weaknesses, opportunities and threats
of the organization.
b. Forecasting
Planning is deciding about what is to be done in the future. As a result, it
becomes essential to have information about what the future would look like.
Thus, the manager is required to make certain assumptions based on forecasts of
the future in order to plan properly.
c. Establishing objectives/goals
The next step of the planning process is to identify the objectives/goals of the
organization. The objectives fixed must clearly indicate what is to be achieved,
where action should take place, who is to perform it, how it is to be undertaken,
and when it is to be accomplished. Objectives also need to be measurable. Thus,
scheduled completion dates, quantity standards, cost limitations, quality
specifications, should be established in advance while trying to achieve the
objectives.
d. Determine and evaluate alternative plans (course of actions).
Next to the establishment of objectives, alternative plans are developed and
thoroughly evaluated. Thus, once alternative courses of action are determined,
they must be evaluated. Usually, alternative plans or course of actions are
evaluated against such factors like cost, risks, benefits, organizational facilities,
etc. Compute oriented mathematical plans or techniques can also be used to find
out the best course of action.
e. Selecting the plan (course of action) and formulate derivative plans

This step of the planning process involves selection of the most desirable plan
and the development of derivative plans. Selection of one course of action to face
future challenges introduces inflexibility in the planning process. Once a choice
is made and a master plan prepared, derivative plans must be developed to
support it.
f. Implementing the plan

 After the optimum alternative plan or course of action has been selected,
the manager is required to develop an action plan to implement it.
g. Controlling and evaluating the results.
Once the plan is implemented, the manager is responsible to monitor and
evaluate the progress made. He may be required to make the necessary
modifications based on the evolution results. It is likely for plans to be affected
by environmental factors. In such a situation, modification of plans becomes
very essential.
3.5. Decision-Making
3.5.1. Definition of Decision-making
A decision is the selection of a course of action from among a set of alternatives.
Decisions usually imply alternatives. A decision problem demands two or more
alternatives. Decisions are also made to achieve goals.
In general, decision-making may be viewed as the process by which individuals
select a course of action from among alternatives to produce a designed result. It
is a process made up of four continuous interrelated phases which include:
 explorative (searching);
 speculative (analyzing);
 evaluative (weighing); and
 selective (commitment).
a. Explorative: The decision maker must find occasions for making a
decision. He must make a realistic appraisal of where the firm is, what are
the current problems. Asking “What should be done?” and “What are the
challenges?” represents searching.
b. Speculative: The decision maker must analyze various factors
affecting a “decision problem” so that an appropriate response can be
obtained. “How to take advantage of the challenging opportunities in the
environment?” and “How to utilize the resources to get the maximum
possible benefit for the organization?” indicate analyzing.
c. Evaluative: The decision maker is expected to make a cost-benefit
analysis of various alternatives. Asking “what are the costs?” and “what are
the potential benefits?” indicates evaluating.
d. Selective: This is a question of making a choice among
alternatives.
3.5.2. Types of Decisions

The quality of decision-making skills is one of the critical factors in managerial
success. Managers are evaluated by the decisions they make and, more often, by
the results obtained from their decisions. As a result, it is useful to distinguish
between decisions made by managers at different levels in the organization.
Managers are usually involved in making two types of decisions as indicated
below.
a. Programmed Decisions
A programmed decision is one that is routine and repetitive. Rules and polices
are established well in advance to solve recurring problems quickly. For
example, a hospital establishes a procedure for admitting new patients; a
supervisor administers disciplinary actions against workers reporting late for
work etc. Thus, programmed decisions can be made in a routine way on the
basis of pre-established set of alternatives.
b. Non-programmed Decisions: usually deal with unique/unusual problems.
In such cases, the decision maker is forced to make decision in a poorly
structured situation where there are no readymade courses of action to resort.
Deciding how to restructure an organization, to improve efficiency, where to
locate a new company warehouse, whom to promote to the vacant position of
Regional Manger, are examples of non-programmed decisions.
3.5.3. The Decision – making Process.
The decision-making process describes the elements of an organization that
accepts and processes information inputs and transforms them into useful
conclusions. To make good decisions, managers should invariably follow a
sequential set of steps. If managers do not go through a systematic and rational
sequence, they are likely to make a decision that will solve the wrong problem.
The decision making process can be described graphically as follows.
1 2 3 4 5 6
Awareness Diagnose Develop the Implement
of and state the Evaluate the
potential Select the best & follow-
problem problem alternatives
alternatives alternative up the
decision
Internal Environment
Feed-back
External Environment
Decision Making – the basic step

i. Awareness of the problem (Define the problem)
The first step in the decision-making process is recognizing a problem. The

manager needs to become aware that a problem exists and that is important
enough for managerial action. Problems generally arise because of disparity
between what is and what should be.
ii. Diagnose and state the problem
 Once aware of a problem, the manager must state the real problem. He
must try to solve the problem, not the symptoms. What appears to be the
problem initially, may turn out to be superficial ultimately. It may not be
the real problem at all.
iii. Developing Potential Alternatives

The statement of the problem in clear, measurable terms, enables executives to
develop alternatives. Developing alternative solutions to the problem
guarantees adequate focus and attention on the problem. It helps managers to
fully test the soundness of every proposal before it is finally translated into
action. Managers should encourage people to develop different solutions for the
same problem.
iv. Analyze / Evaluate the Alternatives

In this step, the decision maker tries to outline the advantages and disadvantages
of each alternative. The consequences of each alternative would also be
considered.
v. Select the Best Alternative
In this step, the decision maker merely selects the most appropriate alternative or
combination of alternatives from the alternatives listed along with their
correspondent advantages and disadvantages. The following four criteria are
commonly used for making the right choice among available alternatives:
a. The risk
b. Economy of effort
c. Timing
d. Limitation of resources
vi. Implement and Verify / Follow-up the Decision
After making a decision, a manager is required to implement it.
. He must seek feed-back regarding the effectiveness of the implemented
solutions and establish follow-up procedures to evaluate the effects of the
decision
3.5.4. The Decision-making Environment (condition)
Decision-making does not take place in a vacuum. There are various conditions
that affect the decision-making process and the decision maker as well.
Consequently, decisions are made under the conditions of certainty, risk,
uncertainty and conflict or competition.
i. Decision-making under certainty

Decision-making under certainty implies that all the information required to
arrive at a final decision is known with complete certainty. Thus, the decision-
making under certainty model assumes that manager taking decision has full
knowledge of the certainty of the information, its non-ambiguity and stability.
This means that, a manager making decision under certainty relies on a standing
plan or policy, and in such a condition decisions are made routinely.
ii. Decision-making under risk
In the condition of risk, a decision maker (manager) knows what the problem is
and is aware of all possible outcomes and their probability of occurrences. He
knows what the alternatives are. But does not know how each alternative will
work. Thus, the manager is faced with the dilemma of choosing the best
alternative available.
iii. Decision-making under uncertainty
This is the most difficult decision making condition for the manager. Hence, a
manager cannot develop probability estimates for various alternatives. Thus, in
the situation of uncertainty the manager is not able to determine the exact odds
(probabilities) of the potential alternatives available.
iv. Decision-making under conflict or competition
In this decision condition, there is a clash of interest of competitive firms and
every decision maker carefully considers the actions of his opponents and takes a
decision that minimizes loss or maximizes the gain.
3.5.5. Management By Objectives

Management by objectives (MBO) is a system of managing in which managers
work together with subordinates to establish objectives and design plans to
achieve them. It is a process by which managers and subordinates work together
in identifying goals, setting objectives, and designing plans.
i. Central Goal Setting: Under this stage the top management sets
different goals for the entire organization with the help of other managers
positioned at different levels. Once the organizational goals are established,
they should be made known to all the concerned members of the organization
and be clearly understood by them.
ii. Preparation of Departmental Divisional and Individual Goals: The

step that follows after the development of the organizational goals is
preparing goals for the different departments, divisions and individuals as
well. These goals are usually prepared by a joint effort of the subordinates
and the concerned managers. The main concept here is that, everybody gets
involved in the goal setting activities and develops a sense of responsibility to
work towards the achievement of the jointly set objectives.
iii. Matching Goals and Resources: The objectives are not ends by
themselves unless we make available the required resources and the means to
achieve them. Consequently, the concerned manager is responsible to make
sure that all the subordinates are provided with the necessary tools and
materials to achieve the intended goals effectively.
iv. Review and Appraisal of Performance: The manger is required to conduct
periodic review to monitor performance and check the progress made
towards the achievement of the goals. By doing so, he will be able to
recognize any unanticipated problem encountered while performing the
actual task. Moreover, such a practice can improve the moral of the
subordinates.
Advantages of MBO
MBO has the following major advantages:
i. Sets clear goals
ii. Motivates (encourages) employees
iii. Develops managerial skill.
iv. Improves communication between management and subordinates
v. Reduces conflict.
vi. Facilitates control.
vii. Apart from the above-mentioned advantages, the usage of MBO
system can ensure better performance of the organization, provide
coordinated effort to the organization, etc.
CHAPTER FOUR
ORGANIZING MANAGERIAL FUNCTION
An Overview of Organizing
 Specific Objective:
After completing this lesson, the trainee will be able
to give a general overview about the organizing
function.
The management process starts through planning i.e. in planning, objectives that
are going to be achieved are identified, established and courses of actions are
also determined. The managerial functions of planning and organizing are
intimately related. Organizing begins with and governed by plans, then the
manager continues his activity by:
- Giving practical shape to the activities/works to be performed

- Identifying the roles whereby workers are supposed to play in
- Making known to the group what their duties and responsibilities are.
Therefore to design & maintain such systems of roles is the managerial
function of organizing. Some of the definitions of organization and

organizing managerial activities are given below.
A primary focus of organizing is determining both what individual employees
will do in an organization and how their individual efforts should best be
combined to advance the attainment of organizational objectives. The end
result of the organizing process is an organization - a whole consisting of
unified parts (a system) acting in harmony to execute tasks to achieve goals
effectively and efficiently.
Organization: - can be defined as a group of individuals working together in a
coordinated manner to achieve the common stated objectives.
 Organizing is a function of management, which is concerned with developing
a frame work of how total work is divided into manageable components in
order facilitate accomplishment of objective.
 Organizing defines the part which each member of an enterprise is expected
to perform and the relation between such member in order to achieve
objectives.
 Organizing is a part of managing that involves establishing an intentional
structure of roles for people to fill in an organization.
4.2 Differences Between Formal and Informal Organization
Formal Organization is a type of organization, which is established deliberately,

or consciously to achieve pre determined objectives. Some of the features of
formal organizations are
 Formal organization is consciously brought into existence for the achievement

of pre-determined objectives.
 Clearly defined duties, responsibility and authority exist in the formal
organization.
 Formalized line of communication (scalar chain) exists in the formal
organization.
 In the formal organization duties are provided in writing to all the
employees.
Informal Organization is an organization, which consists of small social groups

and friendly association of people. Some of the features of informal organizations
are
 It is not deliberate, rather it is voluntary and spontaneous relation which is

created based on status, interest, belief, background etc.
 It is undocumented and officially unrecognized relationship between
members.
 Informal organization can affect the organization positively or negatively.
 The management neither creates them nor destroys (abolish) informal
organization.
Differences between formal and informal organization
FORMAL INFORMAL
ORGANIZATION ORGANIZATION
Formation Consciously formed Spontaneous and

and tends to be stable dynamic based on
interest, belief,
background, etc
Goals Profit/service to the Members

society satisfaction
Communicatio Well defined flow of Unspecified channel

n communication which of communication,
is usually slow, which is very fast.
Documentatio Duties, responsibilities Commonly no such

n of workers are given in formal document
writings. will be used.
Stability Usually formal org is There is high lack of

permanent and stable stability
Growth It may grow to bigger It tends to remain

size small
Membership Formal Procedure to be Members can join

& Departure a member and to depart and leave the
from membership association based on
Motive To accomplish the To accomplish

objective social and friendly
activities
Therefore the management must know that within the formal organization, there
is also an informal organization that will be created based on different terms.
The informal organization is the result of the need of people’s need for social
interaction and friendly associations in which the formal organization does not
provide.
Finally, the management should always give proper attention about the informal
organization that exists in the enterprise. The management should know the
effect of the informal organization on the enterprise performance and how to
influence the informal organization and how to direct their activities to the
accomplishment of the common objectives.
IMPORTANCE OF ORGANIZAING
 Facilitate growth and diversification: - If there is an existence of organized

effort in an organization, it creates a room for the growth and diversification
of an organization because of the coordinated group effort. Usually growth
refers to increase in the scale of production and diversification is starting
production of new type of product.
 Facilitate administration: - poor organizing function leads to waste in motion

and expensive overlap in work. Important work may be subordinated or
may be overlooked totally. Effective organizing function allows
management to relate resource to flow continually to overall objectives, it
provide an appropriate platform from where management can perform the
function of planning, directing and controlling etc in a smooth way.
 Provides optimum utilization of resources: - Organization identifies the

right job or position and assigns the right resources accordingly. Organizing
eliminates overlapping and duplication of work resources and human effort
with in the organization.
 Identifying the activities of employees: -In a formal organization the

employee will be given a clearly defined duties and responsibilities to
accomplish. Therefore each employee of the enterprise will be able to
accomplish his task easily. Every one will be in a position to know what to
do, what task and responsibility is expected from him, to whom to be
accountable to, etc which is clearly defined in organizing process
 Provides specialization: - Through the division of labor, the employee will be

assigned in their field of studies, therefore the employee gets the chance to
specialize upon the job and specialization provides individual to use their
talents profession and experience in an efficient and effective way.
 Brings better performance of an organization and achievements of goal: -

Under organizing there will be coordinated group activity which provides a
team spirit and better performance of the enterprise through group
activities.
 Stimulate creativity: - specialization provides individuals with well-defined

duties, clear lines of authority and responsibility. Sound organizing function
and organizational structure enables managers to turn over routine and
repetitive jobs to supporting position and concentrate on important issues
where they can exploit their potential better.
The Organizing Process
 Specific Objective:
After studying this lesson, the trainee will be able to

discuss the basic steps in the organizing process.
Hence organizing function involves identifying, grouping, assigning various
activities and prescribing authority relationships to accomplish predetermined
objective. As per the definition managers perform the organizing process by:
1) Identifying the work: - we organize to achieve the objectives, so it is essential

to identify the total work necessary to achieve the goals. The wok must then
be classified in a systematic way so that each person in the organization gets a
separate and distinct task. Work must be divided and distributed because no
one can handle the total work in an organization single-handed. Identification
of work enables managers to concentrate on important activities, avoiding
unnecessary duplications, overlapping and wastage of efforts.
2) Grouping of the work: - division of work creates the need for coordination. In
order to provide for a smooth flow of work, all closely related and similar
activities must be grouped together. Thus, departments and divisions are
created under the direction of a manager.
3) Establishing formal reporting relationships: - in order to secure compliance
to organizational directives, reporting relationships must be specified. Once
formal relationships are established, it would help individuals to know what
must be done, how it must be done, to whom the matters must be referred
and how particular jobs relate to one another etc. Without formal
relationships it would be difficult to process the total because there is no way
to know how the work is progressing, is supposed to handle the work, where
the work has to be coordinated so as to achieve enterprise objectives. As soon
as the formal relationships are established, they would provide a framework
for assigning duties and responsibilities to individuals in an unambiguous
fashion.
4) Providing for measurement, evaluation and control: - finally, the

manager should establish signposts and control points in the organization so
that the subordinates' performance can be measured, evaluated and
controlled at regular intervals. If deviations occur, they must be spotted early
and appropriate remedial actions taken immediately.
5) Delegating authority and responsibility: - authority is the right to act, to

issue order and exact obedience from others. Without authority a manager
may not be able to perform the tasks with confidence and show results. While
assigning duties the manager should clearly specify authority and
responsibility limits. So that the subordinate know well in advance as to what
type of work is expected of him by the superior.
One result of organizing is to create structure for organizational participants

where they can work for organizational goals. Taken together, the concepts of
structure and process can be viewed as the static and dynamic features of the
organization.
4.4 ORGANIZATIONAL STRUCTURE
Organizational structure is a formal pattern of interaction and coordination

designed by management to link the task of individuals and groups to achieve
organizational goal. It is used as a tool for creating a relationship among the
various functions, which make up the organization.
Organization structure refers to the net work of relationship among individuals

and positions in an organization. Organization structure describes the
organization's framework just as human beings have skeletons that define their
parameters, organizations have theirs. It is like the architectural plan of a
building. Just as the architect considers various factors like cost, space, special
features needed etc. while designing a good structure, the manager too must
look into factors like benefits of specialization, communication problem etc. some
of the main concepts of organizational structures are: -
 It is a purposive creation: - organizational structures are created deliberately
to achieve specific goals. Structure is the means for converting the
disorganized resources of men, machine and materials into useful, productive
enterprise.
 Structures should be understood easily: - usually structure takes the shape of

pyramid, it is traditional but it works reasonably well. Preparation of
organizational structure should be in a motive of providing a clear idea about
structures and flows.
 Structures tend to be relatively permanent, with continuous, gradual change,
with major changes occurring at strategic time. Usually existence of
organizational structure is for a longer period of time. So design of
organizational structure must be taken after a careful examination of all
relevant factors.
 Structure has two dimensions, one horizontal and the other vertical. The
horizontal aspects define the basic departmentalization. Vertical aspects of
structure relates to the creation for a hierarchy of superiors and subordinates
leading to the establishment of management structure. Taken together, they
set the formal structure of the organization.
 Organizational structure is a means to a given end- a toll by which selected

goals are attained. It is a method of reducing the variability in behavior of
those who work for the organization. It is a method of regulating behavior in
order to achieve a common purpose in a coordinated manner.
Specialization and coordination are the main issues in the design of

organizational structure. The term specialization includes division of labor and
the usage of special machinery's, tools and equipment. Co ordination means an
orderly performance in operations to achieve organizational objectives.
The organizational structure of an organization differs from an organization to

another based on the nature of work, the managerial activities, the human
resource etc.
Major Organizational Concepts
Specific Objective:
After completing this lesson, the trainee will be able to describe the
following concepts as they apply to organizations: power and
authority, unity of command, delegation, span of control and
centralization vs. decentralization.
4.5.1 DIVISION OF LABOR & SPECIALIZATION
Classicists advocated fragmentation and routinization of work to reap the

advantages of specialization. Specialization is glamorous term because it
promises greater efficiency and productivity.
Organization performs a wide variety of tasks. A fundamental principle is that

work can be performed more efficiently if employees are allowed to specialize.
The essence of work specialization is that, rather than an entire job being done by
one individual, it is broken down into a number of steps, each step being
completed by a separate individual. In essence, individuals specialize in doing
part of an activity rather than the entire activity. Division of labor is the degree to
which organizational tasks are divided into separate jobs. Once the
organizational tasks are divided into parts, the professionals can be assigned to
such parts according to their profession and experience.
Division of labor allows for specialization of efforts and permits workers to

perform a manageable number of tasks. It creates groups of specialists. It
improves one's skill at performing a task through repetition. Division of labor
allows for specialization of efforts and permits worker to perform a manageable
number of tasks. It creates a group of specialists.
Benefits of division of labor
- Employees become efficient when they perform well-defined manageable

tasks.
- Employees can acquire expertise (specialize) in their tasks
- Employees with appropriate ability for tasks to be performed can be
selected.
- The organization achieves standardization across tasks.
- Managers can easily have control over performance and detect problems,
- The employees will be in a position to exploit a new technique or way of
performing repetitive task in order to make simplifications.
- There will be less wastage of materials and time while performing the task.
Etc
Disadvantages of division of labor
- Specialization makes workers to be unfit for other jobs, it produce workers

who are mental dull, frustrated, deprived and insecure.
- Performing repeated job will be very boring to the employees etc.
- The long-term proficiency of the employees will be decreasing and they
usually become passive.
Though division of labor is very necessary to an organization, but it should not
be carried to such an extreme that makes the employees bored and alienated. It
should be used wisely with employee motivation system.
4.5.2 DEPARTMENTATION
Departmentation is a part of organizing process, which divides and groups

different activities and employees of an enterprise into various departments.
Departmenration is establishment of a distinct area or sub-system with in the
organization (system) over which a manger has authority for performance of
specified activities and results. In large-scale organization it is very necessary to

divide the overall operation into sub activities and working group. Therefore,
Departmentation is done through specifying responsibilities and delegating the
necessary authority to accomplish the objective. Departmentation makes an
organization to expand and to have a wide control over resources.
BASES OF DEPARTMENTATION
There are several keyways in which an organization may decide about the
pattern that will be used in grouping the various, similar activities performed.
The most common bases of department used by organizations are
I. Functional Departmentation
Functional departmentation is the most widely employed basis for organizing

activities. The basic aim of functionalization is to simplify complexity by
grouping all the work to be done into major functional departments. Few people
can understand to be proficient in all aspects of business. It is quite logical to
group the activities in the organization into such typical departments as
production, marketing, finance etc. therefore, It is grouping of activities in
accordance with the function of the organization. It involves grouping together
jobs that are similar in function. Functional departmentation is most commonly
used bases in an organization. One responsible person with sufficient authority
to have control over the department activities heads each department.
President
Vice president
Production Finance Personnel Marketing

Department Department Department Department
Advantages of functional departmentation
- It follows the principle of division of labor (specialization) i.e. specialists

can work in their field of training and skills.
- It makes supervision easier, since each manager is responsible to one
function, it will be easy to control the proper performance of the
department.
- It makes easy to hire workers according to their profession
- The system is easy to understand
- It is simple to train workers on a specific function etc
Disadvantages of functional departmentation
- Employees may tend to focus on the attainment of departmental goals and

often to the exclusion on organizational goals
- It does not create a good training ground for development of general
managers. It makes the manager to specialize in a single line. Functional
departmentation is not an ideal training ground for top level mgrs.
- If there is profit or loss at the end of the period, it is difficult to identify the
accountability behind the result
- Because of specialization work might be routine and non-motivating.
II. Territorial/Geographical Departmentation
Territorial departmentation is grouping of activities in area wise (geographical

location) and each area is in charge of a single person. This method of
departmentation may be suitable for large companies that distribute on a
massive scale nationally. It is difficult for them to co ordinate all regions from the
head quarter, because each region has distinct needs, tastes and facilities.
Geographic or territorial departmentation or helps in exploiting the local
advantages and reduces the transport cost. Decision regarding product design,
pricing and marketing may be left to the discretion of the territorial manger who
are close to customers and know their needs better, territorial departmentation
reduces transport costs and provides an excellent opportunity to build
community good will.
President
Vice president
Western Eastern Southern Northern

division division division division
(Gambella (DireDewa (Nazareth (Bahirdar
branch) branch) Branch) Branch)
Advantages of territorial departmentation
- The firm will get the chance to have face to face communication with the
local customer
- It reduces heavy transport cost
- It provides the manager to improve their skill in various fields
- Usage of regional resources at reasonable cost is possible
- Accounts are prepared in area-wise, so the profitability of each area is
clearly known to the management etc.
Disadvantages of territorial departmentation
- Because of the distance, it is very difficult to have control over the branches
from the head quarter.
- It gives rise to the problem of communication
- Similar activities may be done in the various regional divisions, which leads
to duplication of works etc.
III. Departmetnation by product
Departmentation by product is adopted in the case of multi product enterprise. It

is a way of arranging activities associated with production and selling of a
product under the direction of one manager. Most of the time functional units for
each product are created with in the general structure of the organization.
President
Vice president
(Production Manger)
Product 1 manager Product 2 Product 3 Product 4

(Cadillac) manager manager manager
(Chevrolet) (GMC truck) (Pontiac)
Advantages of departmentation by product
- It creates high brand establishment and product visibility.

- It enables an organization to develop executives who have broad
managerial experience in running the total organization.
- Attention can be directed towards specific product or service
- It is best well suited for large organization etc.
Disadvantages of departmentation by product
- It requires large number of professional personnel and resources, and hence

is costly.
- There is higher cost through duplication work and facilities. Sometimes
machines and equipment may not be used fully.
- Workers under each product line may tend to focus more on their product
and forget the other product of the organization etc.
IV. Departmentation by Customer
Under the departmentation by customer, separate departments are created to

serve the needs of particular customer. The purpose is to respond and interact
with specific customers or groups of customer on an effective way. This type of
departmentation is preferred when the needs of customers are different in
nature, For example a bank or financial institution may divide its loan section
into number of heads and assign them to various departments, such as loans to
the business men, farmers, professionals and so on.
President
Vice president
Mortgage Commercial Agricultural Developme

bank bank bank nt bank
Advantages of departmentation by customer
- It fulfills the expectations and needs of customers.

- It gives a great knowledge to the organization about the customers
- The organization can develop rapport (agreement) with attractive and
resourceful customer etc.
Disadvantages of departmentation by customer
- It is almost impossible to consider all the customers, their interests, habits

and customs
- Organization may discriminate the high potential buyer from the lower
ones etc.
V. Departmentation by Process
Under the departmentation by process of equipment, activities are grouped on

the basis of various manufacturing processes. Similar types of labor and
equipment are brought together to achieve a common goal. It permits intensive
and economical usage of costly equipment.
President
Vice President
(Manufacturin
Drilling Grinding Welding Finishing
Advantages of departmentation by product

- It is advantageous when machines or equipment used require special
operating skills
- Highly advantageous to manufacturing companies.
- It allows specialization with in the organization.
Disadvantages of departmentation by product
- Co ordination becomes difficult in the organization

- Efforts may only focus on the unit goals of the organization. Etc
VI. Mixed Departmentation
In practice, an organization may use one or more basis of departmentation. For

instance a national multi product diversified corporation may adopt
geographical and product wise departmentation at the same time. Within such
division it may have functional base like finance and marketing. This kind of
departmentation practice is known as mixed departmentation.
4.5.3 CENTRALIZATION AND DECENTRALIZATION

The concept of centralization and decentralization is more connected with
decision making and authority.
Centralization means that the authority to take for most decision is concentrated
at the top of the managerial hierarchy. Centralization is the systematic and
consistent reservation of authority at central points within the organization. In
centralization little delegation of authority is the rule; power and discretion are
concentrated at the top level. The control and decision making resides at the top.
Most organization starts out with centralization of authority; such an
arrangement helps the manager to be in touch with all operations. Centralization
is usually adopted by small scale organizations but as the organization becomes
more complex in terms of increasing size, diversification of activity etc then there
will be a need to move the decision making centers to the operating levels. Thus
the larger the size of an organization is the more urgent is the need for
decentralization. The advantages of centralization are power and prestige is
provided to the executives, uniformity of policies, practices and decisions are
fostered. Full utilization of the main office and information specialists is
promoted, due in large part to their proximity to the top management level,
highly qualified specialists can be utilized, the danger of actions and drifting and
getting off course is reduced etc.
Decentralization refers to the degree to which authority is delegated to the lower

level. Decentralization is an extension of the concept delegation and cannot exist
unless authority is delegated. The centers of decision-making are dispersed
throughout the organization. Decentralization in recent years has come to be

accepted as a golden calf of management philosophy. In decentralization a great
deal of authority is delegated and more decisions are made at the lower level
management. “Every thing that goes to increase the subordinates role is
decentralization and everything which goes to reduce is centralization”.
Absolute cent (pure cent) is not practical except in very small firms. Absolute
power would mean that subordinates have no duties and authority.
ADVANTAGES OF DECENTRALIZATION
- Reduce the workload on overburdened executives: - the executive need not

bury himself in an endless routine, as he is not expected to look into the
affairs of a division from close quarters. Decentralization relives the top
managers from routine duties and enables them to concentrate on other
important issues of the organization.
- Decentralization creates a room for developing general managers: - if the

organization system allows decentralized performance, in the near future the
organization will be having a kind of employees equipped with managerial
ability of decision making and analyzing their surrounding.
- Helpful in adaptation to fast changing environment: - if an organization

becomes more centralized, by it self it creates delay of performance, in our
dynamic environment the organization cannot afford loosing valuable
resource of an organization which is time.
- It is a motivational method: - Decentralization gives an individual an

opportunity to learn by doing. When employees of an organization are
provided with an authority to take a decision, it creates self-esteem and
sense of belongings.
- For the purpose of making quick decision on the spot: - Decentralization

brings the decision making process closer to the action area. Since decision
do not have to be referred up through the hierarchy. Acquaintance with
local conditions enables divisional heads to decide to solve problems more
quickly and more effectively than the higher level executives.
- It facilitates diversification and expansion: - it may be extremely difficult for

a multi product enterprise to provide a balanced and proportionate emphasis
on its profitable product line through centralization. In order to provide a
better service to the community decentralization is the only key.
DISADVANTAGES OF DECENTRALIZATION
- It results in duplication of effort and resources.

- It allows lack of uniformity of standards among organizational units because
different decisions will be taken by different managers at each division based
on different skills
- Creates problem of coordination among different departments and units and
makes it more difficult to have a uniform policy.
- It becomes difficult for the head quarter to control the different division.
- It increases the chances that the lower level manager will take undesirable
action
4.5.4 DELEGATION OF AUTHORITY
All of us have lived with the concept of authority since birth. First our parents
were authority figures, then schoolteachers, principals finally employers (bosses)
all remind us that we live in a society with distinct authority relationships exists.
Authority is the right to give orders and the power to exact obedience. It is the
right to command others to act or not to act in a manner deemed by the possessor
of the authority.
Authority is vested in organizational position, not to individual, managers have
authority because of the position they hold, and if other people in the same
position would have the same position. Authority flows down the vertical
hierarchy; positions at the top of in the organizational structure are vested with
more formal authority.
Power and Authority
Many scholars argue that the concept of power and authority are synonymous,
while others contend that they are distinctly different. Authority may be viewed
as the right to do something. It is the formal right of decision and command. The
manager's authority turns him into a decision-maker on issues affecting the
business. Power is a broader concept than authority.
Power is a measure of a person's potential to get others to do what he or she

wants them to do, as well as to avoid being forced by others to do what he or she
does not want to do. Power can be derived from many sources. Not necessarily
from job position. Power can be intentional or unintentional. Power can be
thought of as a strong influence on the direction of an individual's behavior.
Some of the sources of power are
1) Legitimate Power: - which is derived from a person's official position in an

organization or person's position in the organizational hierarchy For example
a captain in the military has a power over lieutenants, sergeants and the
soldiers.
2) Coercive power: - which is derived from a person's ability to create fear in

another individual and is based on the individual's expectation that
punishment will be received for not agreeing or complying with the

superior's commands or beliefs. The personal characteristics of an individual
that make other people want to associate with the person.
3) Reward power: -is the opposite of coercive power in that it is derived from
the ability to grant rewards for compliance with the superior's wishes .e. good
grade,
4) Expert power: - is derived from the perception of belief of an individual that

the superior possesses outstanding skill, knowledge and expertise in certain
areas. Therefore the subordinate desires to fulfill the wishes and directions of
the superior for example, subordinate will want to follow the directions of a
manager with an impressive track record of project successes, high
profitability and good communication skills.
5) Referent power: - is based on the identification of an individual with a leader

who is held in high esteem. Often this leader is a person who is older and
perceived as wise, honest and consistent.
Fig: Differences between Authority and Power
Authority Power
 Right to do something  Ability to do something

 Legitimate power given by an  Derived from many formal and
organization to members holding informal sources
position
 Narrow them, authority is one of  Broad concept which creates action
the major sources of power when authority fails to achieve
results.
To promote the effective functioning of the formal organization, a number of

authority relationships are needed. The reasoning is different managers need
different decision making power, in both type and amount to make the formal
group's efforts meaningful and effective in attaining specific goals. The types of
authority that commonly exist in a formal organization are
Line authority: - is a form of authority in which individuals in management

positions have the formal power to direct and control immediate subordinates. It
is represented by the chain of command, which links superiors and subordinates.
It is the superior-subordinate relationship whereby a superior makes decisions
and tells them to a subordinate, who in turn makes decisions and tells them to
the subordinate and so on, forms a line from the very top to the very bottom
level of the organizational structure.
Line authority is easily understood by the members of an enterprise. A superior

has a direct command over subordinates; this is the essence of line authority.
Each member knows from whom he/she receives orders and to whom he/she
reports. A person with line authority has charge of and is responsible for the
work of a unit and its direct contribution to the goals of the enterprise.
Staff authority: - is the authority/rights to advise recommend and counsel in the

staff specialists, areas of expertise. Or staff authority is the authority originally
meant to be used as a support provider to the line authority. This concept exists
today and is valid. Whereas a line officer has direct authority over other
individuals and can command that ideas be used, a staff person must usually sell
his or her ideas to the line personnel on the bases of their merit. Staff authority is
of many types like
Advisory staff authority: - they provide specialized counseling to line managers.

Advisories staff manager studies problems, offers suggestions and prepares
plans for the use and help of the line manager. For example personnel
department role include giving suggestions for interviewing format,
performance evaluation, special bonus plan, company benefit etc.
Service staff authority: -these staff members have a service relationship with the
line members. Service units perform a service consisting of activities, which have
been separated from the line job. For example the maintenance department are
service department who will be providing services (e.g. to the production
department) when the need arises.
Functional staff authority: -is an authority delegated to an individual or

department over specific activities undertaken by personnel in other
departments. Staff departments may be given a functional authority to control
their systems.
Responsibility: - Responsibility is the obligation to perform the task or an

activity. It is the obligation of an individual to perform certain activities, which
are assigned to him. If an individual accepts the job or responsibility he should
see that the job is well completed to the best of his ability. Managers in
organizations possess authority and are therefore responsible for other people,
money and resources. It is what one is expected to do in order to carry out one's
prescribed job. Responsibility may be continuing or it may terminate with the
accomplishment of a single action.
Responsibility comes into existence when a person with authority or a manager,

accepts the obligation to perform work and starts to use authority. The viewpoint
taken here is that authority is the essential management entity in organizing. To
achieve goals, the use of authority gives rise to the acceptance of obligations for
these goal attainments and it is these obligations that give rise to responsibility.
Authority and Responsibility
It is common in organizations today to violate the parity principle. Which

suggest that the authority and responsibility of any manager should be equal.
Marketing managers are given the responsibility for increased sales, but they
don't have the authority to spend for advertising, promotion or training etc.
office managers are given the responsibility for smooth operations, but they have
no authority to hire or fire key personnel or purchase important equipment. A
manager's authority should provide him or her with the power to make and
enforce decisions concerning assigned or defined duties. Responsibility places
the obligation on the person to perform these duties by using this authority.
Authority without responsibility has no ultimate purpose or justification for

existing; likewise, responsibility without authority to carry out the assigned
duties has a no meaning. A manager cannot perform assigned duties when the
necessary authority is lacking to see that the work is accomplished.
Therefore it should be noted that authority must be carefully tailored to fit the
responsibilities involved. Failure to strike a happy balance between the two may
be frustrating to superiors and subordinates as well.
Accountability: - means that the people with authority and responsibility are
subjected to reporting and justifying task outcomes to those above them in the
chain of command. It is a mechanism at which authority and responsibility
brought into alignment. Subordinates must be aware that they are accountable
for a task and must accept the responsibility and accountability for performing.
Delegation of authority: - delegation is the assignment of authority to others in

order to carry out certain tasks. To delegate means to grant authority from the
superior to subordinates to accomplish a particular assignment. It is a delivery
by one individual to another of the right to act, to make decisions, and to request
resources and to perform other tasks in order to fulfill job responsibilities.
Every manager must delegate some tasks or duties to subordinate, since

management means getting work done through others. Organization becomes
operational through delegation only. Effective managers will normally delegate
as many operating tasks as possible to subordinates and concentrate their efforts

on (exceptional) management tasks.
Delegation is a two-sided relationship. It is a demanding function: it requires

sacrifices from both the assignor and the assignee. The superior must be willing
to sacrifice a portion of his authority and the subordinate must be prepared to
shoulder additional responsibilities. The major reasons why managers do not
delegate are Tendency of desiring to do things personally, fear of being exposed,
unconscious acceptance of power, desire to dominate, unwillingness to accept
risks, attitude that subordinate is incapable of using authority properly etc.
The process of Delegation
The process of delegation consists of three steps
1) Allocation of work duties to subordinates: - the first step in this process is to

determine clearly what the subordinates are supposed to do. Then the
capabilities of subordinates should be considered to match them with the
assigned duties. This would ensure the optimal utility of human resources.
However, the distribution and allocation of duties among subordinates must
be fair and well balanced. The tasks should be distributed in such a manner
that the subordinates are not unnecessarily overburdened and that each one
is capable of efficiently completing it. The total task can be divided into
identifiable parts so that the manager can handle some parts himself and
other parts can be handled either by skilled workers only or by any worker.
This way, the coordination and supervision would become easier.
2) Delegation of authority and extent of delegating: - the second step is to give

authority to subordinates to make and implement decisions regarding
procurement of resources and supervision of activities that are relevant to the
duties assigned to them. This authority must be clearly stated and if possible
in writing so that there is no ambiguity or indecision. This authority should

also be related to tasks so that, if the tasks change, so would the authority.
The subordinates have the authority to make decisions relative to their tasks
and implement them except those decisions that are not with in the scope of
their domain, then these should be referred to the higher authority.
3) Creation of obligation: - the third aspect is the obligation on the part of the
subordinates to perform their duties satisfactorily. The person assigned the
task is morally responsible to do his best since he has willingly accepted these
tasks. Obligation is a personal concern for the task. Even if the subordinate
gets part of the task done through other people, the obligation and the
accountability still lies with the subordinate. According to Newman, Summer
and Warren "By accepting an assignment a subordinate in effect gives his
superior a promise to do his best in carrying out his duties. Having taken a
job, he is morally bound to complete it. He can be held accountable for
results".
Advantages of delegation are:
 It reduces burden on the manager, It provides the manager with more time,
which can be spend in the external environment, It enables the manager to be
relieved from the operational work and to concentrate and expertise on other
important activities, It frees the top manager from operational issues
 Subordinate will get a chance to participate in managerial issues, Motivates

the subordinate, Creates sense of belongings and job satisfaction, It enlarges
the subordinate understanding and develop the capacity
 Delegation leads to better decision since the subordinates are closer to the
situation they have clear and complete information
 Delegation speeds up decision making. Decision taken by the lower lever

managers are more timely than those that go through the formal scalar chain
process.
4.5.5 SPAN OF MANAGEMENT
Span of management refers to the number of people who are supervised by a

single manager effectively. It also shows the number of people who report
directly to a single manager. Span of management is also known as span of
control, span of supervision, span of authority etc.
How many subordinates will have to report directly to each manager? This is
the span of management question. Obviously, a manager cannot supervise
unlimited number of employees. There is a limit to one’s capacity to control the
work of different subordinate. A manager’s ability to supervise a large number
of subordinates depends upon different factors like knowledge, time, energy etc.
A wide span of control (organization) results in a large number of workers
reporting to one supervisor. Wide spans or a manager who has a relatively large
number of immediate subordinates usually results in few organization levels and
a "flattening out" of the structure. Usually wide span or management are
challenging to a manager and requires special consideration before assigning a
manger over large number of individuals.
A narrow span result in small number, therefore the principle of span of
management is a statement of the limitation of the number of people that a
manager can efficiently manage. Narrow spans, expedite more personalized
manager-subordinate relationships, which results "tall organizational structure"
i.e. one with relatively many levels.
It states that no single executive should have more people looking to him for
guidance and leadership than he can reasonably be expected to serve. To
overcome the biological limitations, every manager has to delegate work to as
many subordinates as he can effectively manage. Thus, span of management is
the reason for departmentation and delegation of authority. It is not how many
people report to a manager that matters, but it is how many subordinates a single
manager can effectively control and handle, it is how many people report to a
manager, how many people who have to work with each other to report to a
manager, the number of relationships etc.
From this relationship it can be seen that with just three subordinates there are 18
relationships and with four subordinates, these relationship number 44, and
these relationships jump to 100 when the number of subordinates is increased to
five. Therefore, no executive should attempt to control over large number of
subordinates whose work interlocks.
Factors to be considered in determining the span of control (factors affecting the
span of management)
Different attempts and formulas were made in order to determine the span of
control but the modern approach has shifted away the finding of universally
acceptable magic formula. The current view is that span is more flexible, the
number of employees, which has to work under a manager, depends upon
different factors. Therefore in order to determine the span of control under a
manager these common factors should be considered.
 Nature of the work: - if the subordinates are involved in performing the

same or similar activities, then it is possible for the manager to supervise more
subordinates. In addition, if the work is standardized, the span of management
may be increased. But if the subordinates perform diversified and complex
operations, it will be more difficult for the manager to be effective in managing
large number of individuals.
 Capacity of the manager (supervisor
 Capacity of the employees: - if the subordinates are well trained and

developed and experienced with the principle of division of labor (specialization)
the manager can supervise large number of employees.
 Geographical closeness of subordinates:- if all the people assigned to a

manager are located in one area and are with in eyesight, the manager can
supervise relatively more people than if the employees are dispersed at different
locations
 Availability of time for supervision: - if the manager spend too much time
in planning and organizing, then he will not be having enough time to supervise
large number of employees under him. Beside the above the degree of interaction
required, the extent of standardized etc should be considered while fixing the
span of control.
CHAPTER FIVE
STAFFING MANAGERIAL FUNCITON
General objective:
After completing this chapter, students are expected to be able to explain the
basics of staffing function in the management process.
5.1. The Meaning of staffing:

Staffing can be defined as:
- The processing of obtaining and maintaining capable and competent
people to fill all positions from top managements to operative level.
- Therefore, the staffing process involves the following steps:
i. Human resource/ Manpower planning
ii. Recruitment
iii. Selection
iv. Orientation and induction
v. Training and development
vi. Performance appraisal
5.2. Human Resource Planning:

Human resource planning is the process by which managers ensure that they
have the right number and kind of people who are capable to effectively and
efficiently perform their tasks, at the right time and place.
It involves analysis of:
 Current and expected skill needs of the organization

(internal factors); and,
 Factors such as the labour market, government regulations, the
labour union etc. (external environment).
The Basic Human Resource Planning Steps
The basic human resource planning steps usually include reviewing current
human resource status and developing future programme. These steps are
discussed here under.
1. Current Assessment / Human Resource Inventory
- The first step in the human resource planning process:
 Reviewing the organization’s current the status

 Taking inventory provides information about the organization’s
present personal
 Helps to know who occupies each position
 The qualifications, length of service and responsibilities of each
employee.
Generally human resource inventory helps the managers to assess what talents
and skills are currently available.
Job analysis:
It is the process of collecting, analyzing and coordinating information about jobs.

Primary purpose of job analysis is to
- Determine the duties and responsibilities of the job.

- Determine the kind of person needed to fill each job, and provide
information for preparing job description and job specification.
- The outcomes of job analysis are job description and job specification.
Job description
- It is a written statement of what job holder does, how it is done, and
why it is done.
- It describes the content of the job.
- It is a written document of the duties and responsibilities of a job.
Eg. Job description of a marketing manger may read:
 Duties include, hiring, training, and supervising sales staff

responsibilities for the overall performance of the department and
report to zonal manger.
Job specification
- Focuses on the person
- It states the minimum acceptable qualification and experience that a
jobholder must possess to perform a given task effectively and efficiently.
- It identifies the knowledge, skills and abilities needed to do the job
effectively.
Eg. A job specification for a marketing manager might read:
- The position requires: MBA (specialization in marketing)
- Eight years experience in sales and minimum of three years
supervisory experience,
- Achievement motivated and dynamic individual with well
developed inter personal skills.
Summary: A job description can be used to describe the job to potential

candidates. The job specification keeps the manager’s attention on the
qualification necessary for a person to be able to perform the given job.
2. Developing Future Programme / companion of forecast inventory
- Human resource planning provides information to guide current

staffing needs.
- Moreover, it provides projections of future human resource needs and

availability.
- After assessing current capabilities and future needs, managers are
able to estimate shortages:
- Both in number and in type.
5.3. Recruitment
Specific Objective:
- After completing this lesson, students you be able to describe how the
recruitment of employees is carried out in an organization.
What is Recruitment?
- It is the process of locating, identifying and attracting capable
applicants.
- It is also making potential candidates interested in particular job
positions and apply for it.
Sources of recruitment
- There are two sources of recruitment

i. Internal sources
ii. External sources
i. Internal source – includes the existing work force of the organization.
Vacancies can be filled by selecting from among the pool of present work force
provided that they can fit the emerging positions.
Methods of Internal recruitment

The methods of internal recruitment include the following:
a. Reviewing of personnel records
b. Job posting and bidding system
c. Inside moon lighting, i.e. – paying bonuses of

different types for internal workers assigned to perform a certain job for a
short period of time.
Merits of Internal sources:

 Motivational and job satisfaction
advantage (provision of continuity employment)
 Enhancing morale and creation of a
sense of security among workers.
 Less expensive – minimizes training or
orientation cost
 Easy to apply – performance of
employees can be easily evaluated, etc.
Demerits of Internal sources

 Limits the pool of talent available to the organization
 Discourages new blood from entering the organization
 Successful people are promoted until they finally reach a level in which
they are unable to perform adequately.
ii. External source of recruitment

It is used:
 When an organization has exhausted internal sources;
 When internal sources are found to be unsuitable; or
 When it becomes necessary to fill vacant positions with new employees.
Major alternative external sources: The major alternative external sources
include the following.
a) Employees’ referrals (word of
mouth): It refers to encouraging employees to recommend capable and
skilled persons to fill the available vacancies. Its drawback is however,

cliques may develop within the organization.
b) Advertising: vacancies can be advertised in daily newspapers,
employment newsmagazine, etc.
c) Educational institutions: New employees can be recruited from colleges
and universities. Employment circulars are sent to various educational
institutions to invite potential candidates / students to apply.
d) Employment agencies: Employment agencies maintain a detailed record of job
seekers and refer the candidate with appropriate qualification to the required
employers.
Decruitment – It is a labor supply controlling approach commonly applied when
it becomes necessary to reduce the organization’s surplus labour force.
Methods of Decruitment
 Attrition – not filling openings created
 Early retirement – retiring older employees before their normal retirement
date providing incentives.
 Firing – permanent involuntary termination of employment.
 Lay off – temporary involuntary termination of employment (may last
few months or years).
 Reduced workweeks – having employees work fewer hours per week or
perform their jobs on part time basis.
5.4. Selection
Specific objective:
 After completing this lesson you are expected to be able to describe and
understand the selection process.
What is selection?
 It is the process of
deciding which candidates out of the pool of applicants have the abilities,
skills, and characteristics that adequately match the job demands.
 The role of
recruitment is to locate job candidates.
 The role of
selection is to evaluate each candidate and pick the best one for the
position available.
The selection process
 Selection is considered as a negative process because more will be turned
away than hired. The process usually follows the following stages:
i. Conducting a screening interviews

- A brief interview is conducted to screen the potential applicants who would be
eligible to fill out the application blank.
ii. Completing a Blank application form :
- The application blank is a personal history questionnaire.
- It provides information about the applicant’s schooling,
qualification, experience, special abilities, attitudes, tastes and
performances, etc.
iii. Administration of psychological tests.
- Psychological tests are systematic procedures for sampling human
behavior.
- They are designed to measure mental alertness, achievement,
special aptitude, etc of the candidate.
Eg. (a) Read the statement given in the bracket and state which one is heaviest. (A is
lighter than D, B is heavier than D, A is heavier than C)
(b) Write as many words as you can, beginning with D. (in 2 minutes.)
iv. Conducting Evaluation interviews

 Evaluation interview attempts to make a careful assessment of the
candidate’s qualifications for the particular task (Job).
 The purpose of interview is to have a good overview of the
candidate’s strengths and weaknesses for the position.
v. Background investigation
- It is the verification of information obtained from the candidate’s
blank application form, selection interview, and the resume.
- It is a reference check on the employee.
vi. Arrangement for physical examination
 Checking the candidate’s health condition is essential before placing him
in a particular job.
 His physical fitness should be assured.
vii. Placement
 The candidate may submit a fitness–certificate after the medical
examination is over.
 It is the final step of the selection process.
 Employment letter specifying the place of work, gross payment, hours of
work, etc. is given to the candidate.
5.5. Induction and Orientation
Definition : It is the introduction of a new employee to his/her job and the

organization.
Objectives of Orientation/ Induction:

- To reduce the initial anxiety
- To familiarize new employees with the job, the work unit and the
organization as a whole
- To facilitate the outsider-insider transitions
- To familiarize the employee with the goals and his/her new co-
workers
- To introduce the employee with the relevant policies, rules and
regulations.
5.6. Training and Development
Definition :
- Training is a part of staffing whose purpose is to aid employees in
improving performance.
- It is a learning process that involves acquisition of skills, concepts,
rules or attitudes to increase the performance of employees.
- It is a continuous process.
The following are some of the factors that should be considered when planning
training programmes:
1. Training must be based on organizational and individual needs.

2. Training should address problems that need to be solved
3. Training programs should be based on sound theories of learning
4. Training must be evaluated and modifications in training programmes
must be made whenever necessary.
Purposes of Training include:

 Improving the quantity of output
 Improving the quality of output
 Lowering cost of waste and maintenance
 Lowering the number of accidents
 Lowering staff turnover and absenteeism
 Increasing job satisfaction.
Methods of Training
The methods of training can be classified into two broad categories, namely, on-
the-job training and off-the-job training.
I. On-the-job training
- It is letting the employees learn while doing.

- The employee is shown to perform the jobs and allowed to do under
the supervisor’s supervision.
- The following are the common approaches used in arranging on-the-
job training.
a. Coaching – Refers to the assignment of a specific person to act as either an

instructor or resource person for the trainee. The task of the instructor or
resource person include the following:
- demonstrate the task operations
- answer questions
- provide guidance in developing understanding on the part of the
trainee.
b. Apprenticeship : It is a methodology of allowing the trainee to learn and
practice by performing the actual task on the job(frequently used to train
personal in some skilled trades – electrician, mechanics, tailors, carpenters
etc.).
c. Job rotation (cross training): It is a process of training employees by
rotating them through a series of related tasks. Here, the individual is made
to learn several different jobs within a work unit or department.
d. Vestibule training :Equipment and procedures similar to those used in
the actual job are set up in a special working area (vestibule school).The
trainee is then taught in this school how to use the machinery and perform
the required job.
e. Self-improvement programs : Refer to acquiring knowledge through
additional reading and self-improvement programs.
II. Off the job training
It is training conducted away from the actual work setting.

Common methods of off the job training include the following :
a. Lecture and classroom instruction: useful for teaching the factual

material, concepts, principles, theories, and their application to job situation.
It is an effective means of imparting the information and knowledge quickly
to a large group members with limited knowledge or no knowledge of the
subject being taught.
b. The conference method: It is a training method where participants are
required to pool their ideas, viewpoints, suggestions and discuss them at
conferences. It is ideal for analyzing problems and issues concerning
organizations and their members.
c. Group discussion :It is a method of training where the members are
requested to present papers and discuss about the papers in a common
platform.
d. Role playing (psychodrama, social-drama): It is a type of training where
the trainees act out a given role as they would be performing in a stage play.
The role players are informed about the situation and of the roles they are
expected to play.
e. Case studies: It is a method of training where the trainees are given cases
and are given to identify basic problem and suggest solution.
f. Programmed instruction: It is a method which involves breaking
information into meaningful information and rearranging them in a proper
sequence to form a learning package. It consists of three functions: -
 Presenting questions, facts, or problems to the learner
 Allowing the trainee to respond
 Providing the necessary feedback on the accuracy of his answer.
g. T-group training (sensitivity training) : It is a process in which several
individuals work together for several days for the purpose of building self-
awareness, understanding of group processes and greater understanding of
interpersonal relationships.
Personnel Development:
 It is the sum total of all activities designed for the purpose of
improving, expanding and reviewing the knowledge, skill abilities and
attitudes of employees.
5.7. Performance Appraisal
Job performance: - Refers to the degree of accomplishment of task that makes an

individual’s job.It is measured in terms of results. Performance appraisal is the
process of determining and communicating to an employee how he is
performing the job. It is periodic and impartial .
Benefits of performance appraisal

 Assists managers to observe their subordinates more closely and
do a better job coaching.
 Motivates employees by providing feedback on job performance.
 Achieves better operational results - improved work performance.
 Identifies development needs .
 Provides back up of data for making decisions about employee
compensation.
 Reduces favoritism in making managerial decisions about
employees.
Transfer, Promotion, Demotion and Separation
 Transfer: is a movement of an employee from one job, section,

department staff, place or position to other place where salary, status, and
responsibility are the same. It is movement from one job to the other.
 Promotion: Moving an employee to a job involving higher pay,
status, and thus higher performance requirements.
 Demotion: Shift of an employee to a lower position in the
hierarchy, salary, and responsibility due to inefficiency and incompetence to
fulfill assigned tasks. It causes frustration and leads to a defensive or even

aggressive behavior.
 Separation: Refers to those factors that bring the termination or
ceasing of the relationship between the organization and the employee. It
may result due to:
- resignation
- lay - off It can be either voluntary or involuntary.
- discharges
- retirement
Chapter Six
Leadership Managerial Function
Objectives
After completing this chapter you will be able to:

 Understand the concept of leadership
 Describe what a leader does in organizations
 Explain various theories of leadership
 Explain the various styles of leadership
6.1. An overview of leadership

Definition : Leadership is defined as the process of influencing group activities
toward the accomplishment of goals in a given situation.
- In this context the leader is viewed as the person in the group who is
capable of influencing group activities with regard to goal formation and goal
accomplishment.
6.2. Theories of leadership
- The theories of leadership are classified into three categories .

- These theories are shown graphically here under.
Trait theory
Leadershi
p Behavioral Theory
Situation Theory
6.2.1. The Trait Theory of Leadership
 Trait leadership refers to what characteristics the leader possesses.

 What are traits?
 Traits are inborn and inherent personal qualities of
individuals.
 The “Trait Theory” therefore believes that leaders possess certain
inborn traits which are inherited rather than acquired.
 The followers of this traditional theory believe that managers or
leaders are born not made.
 The following are some of the traits that are shared by most
successful leaders, according to the trait theory.
a) Intelligence : Leaders tend to have somewhat higher intelligence than
their followers
b) Social maturity and breadth : Leaders tend to be emotionally mature and
have a broad interest range. They have high frustration tolerance.
c) Inner motivation and achievement drive : Leaders want to achieve
things; when they achieve one thing, they seek out another.
d) Human relation attitudes: Leaders develop a healthy respect for people

and realize that to accomplish tasks, they must be considerate of others.
Criticisms of Trait Theory.

Trait theory is severely criticized on the following grounds.
1. The list of personality traits is painfully long and exhaustive.
Nevertheless, no consistent pattern/patterns have been found.
2. Researchers often disagree over which traits are the most important
for an effective leader. There is no universal list of traits for successful
leaders.
3. Leaders cannot be markedely different from their followers.
Extremes in personality are not usually associated with leadership.
4. It is difficult to define traits. When posed with the question of
defining a trait, executives often come out with a bewildering variety of
explanations.
5. It is often difficult to measure traits. The measurement tools
employed to quantify traits are open to doubt. For example, some of the
psychological attributes such as intelligence, initiative, etc. can not be
observed but can only be inferred from the behavior.
6. How much of a trait a person should have remains a puzzling
question.
7. Effective leadership is not a function of traits alone. There are
various significant situational factors that determine leadership behavior.
8. Leadership skills usually vary according to the type of work a
person performs in the organization. A leader may employ three different
types of skills at different levels in the organization: technical, human and
conceptual skills.
6.2.2. The Behavioral Theory of Leadership
As indicated above, trait theory seeks to explain leadership on the basis of what
leaders are. Behavioral theory however attempts to describe leadership in terms
of what leaders do. According to this theory, leadership is shown by a person’s
acts more than by his traits. Some of the major studies which focused on
behavioral leadership theories include the following:
a) The Michigan Studies

After studying numerous industrial situations the Michigan University
researchers identified two leadership styles which include:
 Employee-centered, and
 Production-centered task oriented.
- Production-centered / Task-oriented leadership style: emphasizes more
on the technical aspects of job, work standard, close supervision, considering
employees as tools in the production process.
- Employee-oriented / people centered / leadership style: focuses more on
treating subordinates as human beings, encouraging them in goal setting, and
shows concern for their well being.
- The Michigan research prescribed employee-oriented style of leadership
to increase productivity.
- They contended that supervisory controls and production–centered
leadership style will be frustrating to the employees; affects their morale
leading to unsatisfactory performance on the job.
b) The Ohio State University studies:
- The Ohio State University studies identified two leadership behaviors,
which include:
 Initiating structure, and
 Consideration
i. Initiating structure (IS) refers to the extent to which
the leaders structure and define the activities of subordinates so that
organizational goals are accomplished.
ii. Consideration on the other hand, refers to the ability

of the leader to establish rapport, mutual respect and two-way
communication with employees. The leader is friendly, approachable, and
listens to the problems of employees and allows them to suggest.
The relationship of these two leadership dimensions is plotted in the following

figure.
High High consideration High consideration

low structure High structure
Consideration
2 3
Low consideration Low consideration
Low structure High structure
Low 1 4
Low High
Initiating structure
- The Ohio State University researchers hypothesized that the most effective
leadership style would be the one that gave high concern for both
consideration and structure.
- Thus, a high consideration and high structure style was associated with
high performance and employee satisfaction.
- Some studies however, revealed that this style resulted in excessive
absenteeism, low employee satisfaction and poor performance.
6.3. The Situational / Contingency theory of leadership
- According to the advocates of this leadership theory, leadership is a

complex social and interpersonal process; and to understand it fully we need
to see the situation in which a leader operates.
- The contingency theory of leadership stresses that no single leadership
style is effective in all situations.
- Thus, an effective leader must be flexible enough to adapt to the

differences among subordinates and situations.
6.4. Leadership Styles
What is a leadership style?

 Leadership style is the behavior exhibited by a leader during supervision
of subordinates.
 There are different leadership styles.
Positive versus Negative Leadership Styles

 Positive leadership styles give emphasis to praise and recognition,
monetary rewards, increase in security, and addition of responsibility.
 Negative leadership styles on the other hand emphasize penalties, loss of
jobs, suspension, and public reprimands / critics
The commonly known and/or practiced leadership styles are: Autocratic,
Democratic and Free-rein.
I. Autocratic / Authoritative/ Directive style

 An autocratic leader centralizes power and decision-making in him-self
and exercises complete control over the subordinates.
 Such a leader usually shows high concern for the task and low concern for
the people.
 Rigidity and/or inflexibility characterize such a leader.
 The common characteristics of autocratic leaders include the following:
i) The leader is highly conscious of his/her position.
ii) He/she has little trust and faith in subordinates.
iii) The leader believes that pay is just a reward for working and the only
reward that will motivate employees.
iv) Orders are issued to be carried out with no questions allowed and no
explanations.
v) Subordinates are expected to do what they are told.

vi) Production is good when the leader is present, but poor in the leader’s
absence.
II. Democratic / Participative leadership style

 The leader shows high concern for both task and people.
 A manager with this style usually shares decisions with the group,
encourages participation and supports the task efforts of subordinates.
 Democratic leadership has the following characteristics:
 Decision making is shared by the leader and the group.
 If forced to make a decision alone, the leader explains
his/her reason to the group.
 Objective criticism and praise is given.
 New ideas / change proposed by a group are respected.
 Develops a feeling of responsibility within the group.
 Increases the quality of work and productivity.
 The group feels successful.
III. Free–rein / Laissez-faire

 The leader shows a low concern for both people and
work.
 A manager with this style gives full decision-making
authority to the group and shows little interest in the work process or its
results. Free– rein /Laissez- faire leadership style has the following major
characteristics:
 The leader does not set goals to the group.
 Decisions are made by who-ever in the group
willing to do it.
 Individuals may have little interest in their
work.
 Morale and teamwork are generally low.

 Usually, productivity is low and work is
sloppy (messy).
The following figures demonstrate the features of the leadership styles described
above:
L L L
Autocratic Participative
Free – Rein
Qualities of an Effective Leader
Some authorities in the field, point out that an effective leader is required to
possess the following basic qualities.
a) Ability to understand human behavior. A leader should be able to
understand employees’ needs and problems so as to make them work with
willingness and enthusiasm.
b) Social skill. An effective leader should and know the strengths and
weaknesses of people working with him/her. If he/she is helpful, friendly,
encourages others to succeed, and appreciates the group members’
viewpoints, people will certainly cooperate with him/her and work their
level best towards the achievement of the organizational goals.
c) Teaching ability (being model). The best way to lead is guiding
practically. A leader should not be in a position to push his subordinates
from behind.
d) Readiness to accept responsibility / criticisms and to take appropriate
corrective measures – An effective leader or manager should understand that
error is human but repeat is a mistake. What so ever a leader tries to be

systematic, mistakes are created but he should be able to take remedial
measures and take control over the situation.
e) Emotional stability and fairness – The effective leader poses resolutions
indiscriminately after gathering sufficient information and investigating the
possible causes. Moreover, he is relatively free from bias and prejudice and
takes consistent actions.
6.4. Motivation
6.4.1. Meaning of Motivation

The ward motivation comes from the Latin word movere, which means to move.
Motivation is therefore an inspiration process which impels the members of the
team, to pull their weight effectively, to give their loyalty to the group, to carry
out properly the tasks that they have accepted and generally to play an effective
part in the job that the group has undertaken. It is the process of indoctrinating
employees with unity of purpose and the need to maintain harmonious
relationship among people.
6.4.1. Characteristics of motivation
Motivation comprises the following three common characteristics.

a) It is concerned with what activates human behaviors.
b) Motivation is also concerned with what directs this behavior toward a
particular goal.
c) The third characteristic is that motivation is concerned with how this
behavior is sustained.
Motivation is usually analyzed using the following causative sequence:
Achievement
Need Drives / Motives
of goals
In motivation, needs produce motives, which lead to accomplishment of goals.

Needs are usually caused by deficiencies which can be either physical or
psychological. For example, a physical need arises when an individual goes
without sleep for 48 hours; a psychological need on the other hand exists when
an individual is left without friends or companions.
Motive: is an inner force within an individual that drives him toward goal
oriented action. It activates or moves a person to act or behave in a certain way.
For example, lack of sleep (the need) activates the physical changes of fatigue
(the motive), which produces sleep (the action). Goal achievement satisfies the
need and reduces the motive. Nevertheless, other needs which are usually
satisfied by the same sequence of events arise.
A motivated employee respects his job and working hours, is happy with his job,
considers organizational goal achievement as personal goal achievement
resulting in a sense of proprietorship and hard working, improves his efficiency
and effectiveness, develops a sense of responsibility and belongingness, etc.
Therefore, motivation of employees should be exercised continuously.
Lack of motivation, results in absenteeism, high labour turnover, boredom,

reduced efficiency and effectiveness, loss of discipline, lack of initiative,
improper handling of customers, negligence, etc.
6.4.1. Theories of Motivation Focusing on Needs

The process of motivation usually follows a decision-making and/ or problem
solving approach. The following are the common steps followed in the
motivation process.
i. Identification of the basic necessity for motivation
ii. Identification of possible methods of motivation
iii. Selection of the best motivating tool
iv. Making follow-up, evaluating the result .
Maslow’s Hierarchy of Needs
Maslow tried to provide an explanation about motivation by classifying human

needs in hierarchy and the theory of human motivation that links these needs to
general behavior.The basic concepts of Maslow’s motivation theory include the
following:
 Needs form hierarchy: lower level needs must at least be partly
satisfied before higher level needs emerge.
 Higher level needs can be satisfied in many more ways than can be
lower level needs.
 A satisfied need is not a motivator. If a lower level need is
satisfied, a higher level need emerges.
 People seek growth: people want to move up the hierarchy of
needs.
 Adult motives are complex. Maslow’s hierarchy of needs can be
demonstrated as follows.
Self-actualization
Needs
Esteem
Needs
Social/ love
Needs
Safety
Needs
Physiological
Needs
i) Physiological needs- they are biological needs required to preserve human life
(- food, water, clothing and shelter).
ii) Safety needs – they include protection from physiological dangers (fire, accident), job
or economic security (benefits, health, insurance), smooth working atmosphere, etc.
iii) Social / love needs – people want to belong, to associate, to gain acceptance from
associates, to give and receive friendship and affection.
iv) Esteem needs– they include those for self-confidence, achievement, etc.
v) Self-actualization needs – are the needs for realizing one’s potentialities, for
continued self-development, for being creative in the broadest sense of that term. Self
– fulfilling people are rare individuals who are close to living up to their full potential
with high achievement. Self-actualization is the desire to become what one is capable
of becoming. A musician must make music, a poet must write, a general must win
battles, an artist must paint, a teacher must teach if he is to be ultimately happy. What
a man CAN be he MUST be.
6.6. Communication
6.6.1. Definition:
- Communication is the transfer of information from one person
(sender) to another (receiver) to achieve goals.
- Management is concerned with getting things done with and through
others.
- However, success of an enterprise is mainly dependent on the way the
things are communicated to the employees and to the concerned parties.
Thus, communication involves a systematic and continuous process of telling,
listening and understanding.
- Communication can also be defined as the process of meaningful
interaction among human beings and it is the act of making one’s ideas and
opinions known to others.
6.6.2. The Communication Process
To be an effective communicator a manager should understand the basic

framework of communication process.
- The basic elements of the communication process include the
following:
i. Sender / Communicator:
- The sender or source of message initiates the communication.
Communication within an enterprise acts as a coordinating force and links
the separate departments together.
- Each of the communicators involved in the process of
communication has a message, an idea or information to transmit to others.
ii. Encoding
- Encoding takes place when the sender translates the information into a
common language which reflects the idea to be transmitted in a series of
symbols. The encoding action produces message.
iii. The Message
- The message is the encoded information sent by the sender to the
receiver.
- The message can be expressed in verbal or non-verbal manner
depending upon the purpose of the communication.
- What is important is however, the message sent by the communicator
should be clear and precise.
iv. The Medium
- The medium (channel) of communication exists between the sender
and the receiver.
- The media includes: speaking, writing, signaling, gesturing, physical,
contacting, etc.
- The media is the carrier of the message sent by the communicator.
v. The Receiver
- For communication to happen, at least two people are required; the

communicator and the receiver.
- In order for the communication to be effective, the sender should take
into account the receiver’s decoding abilities, understanding capacity.
vi. Decoding
- Decoding refers to the process by which the receiver translates the
message into the terms that are meaningful to him.
- It is the receiver’s interpretation of the message.
- It involves the mental process of asking “What does this mean to me?”
And “What should I do about it?”
- Decoding helps to understand the problem .
vii. Feed-back
- Feed-back refers to the response of the receiver to the sender.
- Feed-back helps to decrease the potential and probability of distortion
between the intended and the received message.
Organizational Communication
i) Formal Communication – is the type of communication
that follows prescribed channels of communication, through the organization,
typically the chain of command or scalar chain.
- It is the official pattern of communication, designed,
approved and recognized by the organization structure.
It includes:
(a) Upward communication (information about subordinates’ performance,
feedback on organization practice, opinion, complaints, etc.) which flows
to superiors.
(b) Horizontal communication – communication between people or work
units at the same level of organizational hierarchy.
(c) Diagonal communication – Communication that takes place between
work units or people at different levels of organization hierarchy.
ii) Informal communication

- It is one aspect of organizational communication, that is not designed
and recognized by management.
- It includes informal discussion of employees about promotions, salary
increment, demotions, etc. in the form of rumors and gossips.
Oral and Written Communication

Two methods of communicating a message may be oral and written.
a) Oral communication includes: speeches,
formal group discussion, and grapevine.
- Primary advantages of oral
communication include, speed and immediate feed-back.
- Disadvantages of oral
communication on the other hand are that the message may be
distorted, and recording it is very difficult and costly.
b) Written Communication: is permanent,

tangible and verifiable.
- Record is maintained and both the sender and the receiver have
access to the records. Example of written communication include:
memorandum, bulletin boards, forms, letters, etc.
- Limitation of written communication: - It is time consuming; and it
doesn’t possess built- in feed-back mechanism.
Barriers to Communication
Many a time managers say something and the subordinates understand different
thing. Thus, distortion is occurred due to some barrier to communication. Some
of the common barriers are discussed here under.
 Filtering – some studies show that about 75 percent of
communication can be lost in its downward flow from the top to the bottom
of an organization levels. There is also a situation where the sender himself

filters information, in the absence of openness. Thus, filtering of information
is experienced when the sender or receiver tries to alter communication in his
favor. The point is that information is commonly distorted as it descends
from the top to the bottom.
 Selective perception – The receiver may selectively perceive the
message based on the organizational requirements; the employees’ needs,
characteristics and back ground; etc.
 Emotions – How the receiver feels at the time of receipt of the
information influences effectively how he interprets the information.
 Language – Difference of semantics can create communication
problem. On the other hand, a word spoken in anger can have an entirely
different meaning from the same word spoken in friendliness. For example,
the statement “All right, I will show you how to do the work”; can be said
with various voices and can be interpreted in different ways.
 Time pressure – When a manager or employee is placed under
severe time constraints, it can create communication problem.
Overcoming the Barriers to Communication

In order to make communication effective, managers must attempt to remove
barriers. There are no prescribed techniques or ways of overcoming
communication barriers. However, it is essential to give due consideration to the
following points while communicating within the organization.
a) Feed-back –One common way of overcoming barriers to communication

is to have a feed-back. Thus, the communicator should check whether the
receiver has understood the message either by asking questions or devising
other mechanisms that facilitate adequate feedback.
b) Simplifying language – Effective communication is achieved when a
message is both received and understood. Managers are therefore required to
avoid complicated jargons, and use a simple language that subordinates can
easily understand.
c) Watch non-verbal cues – Many a time, action speaks louder than words.
Therefore, particularly in the case of oral communication, the sender should
observe the actions of the receivers and find whether they go along with the
understanding.
d) Listen carefully- Communication problems can arise because of poor
listening. Good listening removes communication barriers.
Chapter Seven
Controlling Managerial Function
7.1. An overview of Controlling

- Controlling is the process of regulating work activity in accordance
with predetermined plans as to ensure the accomplishment of organizational
objectives, and if necessary take corrective actions.
- It is accomplished by comparing actual performance to predetermined

standards or objectives and then taking action to correct any deviations from
the standard.
- Controlling exists at every management level.
- It involves keeping the organizational activities and functions on the
right track and aligned with plans and goals.
7.2. Features of Controlling

The following are the common features of controlling:
- Controlling is an end function – It is essentially a check-up measure.
Without a sound and effective controlling mechanism, a management process
is incomplete and wasteful.
- Controlling is a continuous process – As long as the organization
exists, controlling continues to exist.
- Controlling guides behavior – Controlling system helps in guiding
and integrating employees’ behavior towards broader organizational goals.
- Controlling is a pervasive function – It is essential at all levels of the
organization.
- Controlling allows the organization to cope with uncertainty – It
directs the organization to modify its product/service to meet the
requirements of the customers, when deemed necessary.
- Controlling prevents crises – If a manager knows what is going on, he
can easily solve any potential problem before it turns into crises.
- Controlling standardizes outputs – Products/services can be
standardized in terms of quality and quantity through the use of effective
controlling mechanisms.
- Controlling appraises employees’ performance – Proper and effective
controlling can provide the manger with objective information about
employees’ performance.
- Controlling updates plans – Controlling allows the manager to

compare what is happening with what was planned, and update the plans.
- Controlling protects an organization’s asserts – It can help in
protecting assets from waste or under-utilization.
- Control is the final link in the functional chain of management; and
it is essential to maintain the efficiency and effectiveness of an organization.
The Controlling Process

- The process of controlling involves the following stages:
(i) Establishment of standards
(ii) Measurement of performance
(iii) Comparison of performance
with standards
(iv) Corrective action
i. Establishment of standards
- Controlling basically starts by setting standards.
- A standard is the level of expected performance for a given goal.
- Standards are performance targets that establish desired
performance levels, motivate performance, and serve as benchmarks against
which to assess actual performance. Thus, they are the criteria for judging
results,
The following are some of the elements of standards.

a. Physical standards – include the quality of product,
number of customers, clients, etc.
b. Monetary standards – are standards expressed in terms
of money. They include: selling costs, material costs, sales revenue, gross
profit, net profit, etc.
c. Time standards – refer to the speed with which the job is
to be done.

For example, fixing the deadline within which the job is to be performed or
completed, etc.
- Standards should allow for flexibility and base on
past experiences.
- Setting standards for every operation is an
indispensable or inescapable task of management.
ii. Measurement of performance

- The step in the controlling process that follows the setting of standards
is the measurement of performance.
- The common techniques used in measurement of performance include
the following:
a) Personal observation – A
manager/supervisor is able to judge output by observing the pace of his
workers.
- The drawback of this technique is that
it is time consuming and accuracy cannot be assured.
b) Sampling –To have a check on all of the items
produced is a formidable task.
- Picking certain samples for supervision therefore eases the task of the
manger.
- However, because one pick might not represent all the others, if errors
are found at the first sample, another sample should be picked to check the
outcome before making a decision on the work.
c) Written/oral report: Performance
measurement data or information is required to be reported to the concerned
immediate manager.

iii. Comparison of performance with standards

- After the standards are set and performance is measured accurately,
the immediate next step is to compare and see if there is any deviation
between the two.
- Thus, comparison establishes the difference between standards and
actual performances.
- If deviations are found, the management is required to study the cause,
effect, size, etc. of deviation, and report the findings so that corrective steps
can be taken. A deviation is usually the difference between standards and
performances.
- Actual performance results and standards may not conform exactly.
As a result, the manager is required to set limits on the acceptable degree of
deviation from standards. Thus, the manager must set control tolerance.
Control tolerance is the variation from the standard that is acceptable to the
manager.
iv. Corrective Action

- Corrective action is a step essentially concerned with correcting
unfavorable deviation from planned performance.
- We can say that the control process is incomplete and/or meaningless
if immediate corrective action is not taken.
- For example, when production is lagging behind by the requirements
of one-week, then immediate action would be to increase the production to
cater the needs of the customers.
7.3. Types of Controls

- Types of controls include: historical (feedback), concurrent and
predictive.

Historical Control / Feedback Control

- Historical / feedback controls are post-action controls focusing on the
end results of the process.
- A feedback control provides information for a manager to examine
and apply to future activities that are similar to the present one.
- The purpose is to help prevent mistake in the future.
Concurrent Control
- Concurrent (real time) control is a controlling technique which
immediately considers and analyzes a problem to take the necessary
corrective measures before any major damage is done.
- It is carried out while an activity is taking place.
- Concurrent controls usually assist in guaranteeing that the plan will be
carried out at the specified times and under required conditions by making
adjustments.
Predictive Control / Feed-forward Control

- Predictive control / feed-forward control is a controlling system that
anticipates problems that the management may encounter in the future.
- Cash budget is a typical example of this type of control where the
finance manger is in a position to estimate the next year’s flow of cash.
- A notable characteristic of predictive control or “feed-forward” control
is that, it anticipates problems and permits action to be taken before a
problem occurs.
7.4. Making controls effective

- Controls are effective if they do what they where designed to do and
do not create organizational problems.
- The following are the requirements of effective controls systems:

 Controls must be understandable

- Managers must have a thorough knowledge of the control tools to be
used, before operating.
- They must first understand the usefulness of the control devices before
they use them.
 Control must be flexible
- A control system should be as flexible as possible in order to
adjust in a rapidly changing and widely fluctuating organizational
environment.
- Standards and plans on which controls are based frequently
need modification or revision when underlying circumstances change.
 Controls must be economical
- Control should be worth its cost.
- Control systems become economical if
appropriately tailored to the job/task, and the size of the organization.
 Control must be objective
- For effective performance,
controls must be objective and clearly quantifiable and verifiable.
- Thus, effective control system
calls for objective, accurate, suitable and definite standards or plans.
- Controls should provide useful
and understandable information.
- An effective control system
provides information to the right people who can use them in correcting
deviations and fostering growth.
- An effective control system must
also have the characteristics of supplying the information in the required
form for the purpose of analysis.
 Control should be
forward looking

- An effective control
system is always aiming at future. It looks forward through planning. Thus,
planning and control are inseparable.
 Control should be selective

- Every organization has certain key determinants of efficiency and
effectiveness. Management is therefore required to concentrate on certain
control points or areas which are key to organization’s success.
 Controls should reflect the organization structure and
needs
- Organizational structure clarifies the roles of people
in organization, and control systems reflects as to who is responsible for
what.
- The control system should be the best that suits the
organizational structure.
 Control should lead to corrective action
- Discovering deviations in the
performance of operations is not enough.
- Thus, an effective control system must
lead to appropriate and corrective action.
- It should identify where the problems
are and who are responsible for the problems created.
- Control system is also required to
suggest the ways of improving the performance.
- Then, evaluating and implementing
these suggestions is the task of the management.


Int. To MGT

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Int. To MGT

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St.

After completing this chapter the student is expected to:

1.1. MEANING AND DEFINTION OF MANAGEMENT

Management is defined by different authorities in different ways. The following

iii. Management is the art of securing maximum results with a minimum of

Why do the definitions of management differ?

Authorities agree that it is impossible to provide a single universally accpeted

Precise Definition of Management

Though management is defined in various ways as mentioned earlier, the

“Management is the process of planning, organizing, directing and controlling to

Planning – is determining courses of actions that will be gone for, in order to

Organizing – refers to integrating resources to their best efficiency and

Controlling – refers to ensuring whether objectives are efficiently and effectively

Effectiveness – doing the right thing.

1.2. SIGNIFICNACE OF MANAGEMENT

Basically, an organization is a group of two or more persons that exists and

1.3. IS MANAGEMENT A SCIENCE OR AN ART?

developed with reference to the general truths underlying the management

Like all other practices management is an art. It is knowhow, it is the application

 Designing major strategies;

Middle – level Management

 Acting as intermediary between top and operating level management;

employees and resources.

Specific functions of first line managers include the following:

1.5. Functional and General Managers

General Managers usually coordinate two or more departments and hold

1.6. Managerial Roles

Beside the functional approach of management the other approach to study

officials and community leaders because of their formal authority, superiority

aside information rather they pass it to peers. The type of information to

3) Decision making/Decisional role

organization will expend its resources according to the priorities of

1.7. Managerial Skills

and the practices followed. All managers are accountable for

1.9. Basic Management Functions

Length of time and scope of planning:

1. Assembling the resources necessary to achieve the organization’s

Organizing is therefore concerned with developing the structure to reach these

It involves motivating and encouraging employees, to participate in the

Controlling deals with:

2.2. The Early Management Pioneers

The following are some of the early management pioneers who

Robert Owen (1771-1858)

Charles Babbage (1792-1871)

 He stressed the importance of division of labour on the basis of

Henry Robinson Towne (1844-1924)

Thus, he wanted to see these three people in a single person-called

2.3. Forerunners of Modern Management

Some of these factors were:

In an effort to address these problems, Taylor built the body of principles

2. Henry Fayol (1841-1925)

Henry Fayol divided the activities of industrial organization in to six

Fayol further developed fourteen principles of management, which will

3. Henry Laurence Gantt (1861-1919)

4. Frank and Lillian Gilbereth (1868-1924 and 1878-1972)

5. Max Weber (1864-1920)

He emphasized the strict adherence of rules and regulations in an

6. George Elton Mayo (1880-1949)

2.3. Approaches to management thought

2.3.1 Classical Management Theories

(i) Scientific Management: This perspective of classical approach to

Frederick Winslow Taylor was the founder of the scientific management

the application of scientific methods to the solution of managerial and