Management Principles and

Application
By: Dr. Rohini Baghel
Classical Approach
• Management is a process consisting of interrelated functions performed to
achieve the desired goals.
• From the experience of managers in different organisations; principles or
guidelines can be derived.
• These principles are basic truths which can be applied in different
organisations to improve managerial efficiency.
• Managers can be developed through formal education and training.
• People are motivated mainly by incentives and penalties. Therefore
managers use and control economic rewards.
• Theoretical research into management helps to develop a body of
knowledge which is necessary to improve the art of management .
• There should be no conflict between individuals and the organisation. In
case of conflict interested of the organisation should prevail.
• Classical approach is based on three main pillars
• Bureaucracy
• Scientific management
• Administrative Theory
Bureaucracy- Max Weber
• Max Weber (1864-1920), a German social scientist, analysed the
formation and administration of public bureaucracies. Which happen
to be the oldest form of organization.
• The Max Weber Theory of Bureaucracy proposes that all business
tasks must be divided among the employees. The basis for the
division of tasks should be competencies and functional
specializations. In this way, the workers will be well aware of their
role and worth in the organization and what is expected of them.
Max Weber listed six major principles of the bureaucratic form as follows:

• A formal hierarchical structure – In a bureaucratic organization, each level controls the

level below it. Also, the level above it controls it. A formal hierarchy is the basis of central
planning and centralized decision-making.
• Rules-based Management – The organization uses rules to exert control. Therefore, the
lower levels seamlessly execute the decisions made at higher levels.
• Functional Specialty organization – Specialists do the work. Also, the organization divides
employees into units based on the type of work they do or the skills they possess.
• Up-focused or In-focused Mission – If the mission of the organization is to serve the
stockholders, board, or any other agency that empowered it, then it is up-focused. On the
other hand, if the mission is to serve the organization itself and those within it (like
generating profits, etc.), then it is in-focused.
• Impersonal – Bureaucratic organizations treat all employees equally. They also treat all
customers equally and do not allow individual differences to influence them.
• Employment-based on Technical Qualifications – Selection as well as the promotion of
employees is based on technical qualifications and skills.
 Advantages of Bureaucracy
• Specialisation
• Structure
• Rationality
• Predictability
Disadvantages of Bureaucracy
• Bureaucracy is characterised by a large amount of red tape,
paperwork, many desks, certain office culture and slow bureaucratic
communication due to its many hierarchical layers.
• This is the system’s biggest disadvantage of a bureaucratic
organization. It is also unfortunate that employees remain fairly
distanced from each other and the organisation, making them less
loyal.
• Bureaucracy is also extremely dependent on regulatory and policy
compliance.
Scientific Management – F.W. Taylor
• Frederick Winslow Taylor (1856- 1915) is regarded as the “ father of
scientific management”. He was a brilliant engineer and
management scientist in the USA.
• Develop a true science for each element of a worker’s job to replace
the old- rule –of- thumb method
• Job specialization or division of labour
• Scientific selection, training and development of workers
• Close co- operation between management and workers
• Maximum output in place of restricted output
Functional foremanship
• According to Taylor, one supervisor cannot be an expert in all aspects
of work supervision. He suggested the system of functional
foremanship in which eight supervisions supervise a worker’s job.
Four of them are concerned with the planning of work in the factory
office and the other four are involved in the execution of the work at
the shop floor. The eight foremen and their respective duties are
given below.
• Instruction Card Clerk: This instructor gives instructions to workers regarding their
work.
• Route Clerk: His role was to mention the route of production
• Time and Cost Clerk: His role was to arrange the time and costs sheet
• Disciplinarian: His role was to maintain discipline in the production facility and in
the factory

• These four role comes under the planning supervisor

• The other four persons who work under the production supervisor are:
• Speed Boss: Maints the time record for the job assigned to the worker. Checks if
the job is completed timely.
• Gang Boss: The main responsibility of this person is to keep machines in a ready
state for work.
• Repair boss: He takes the responsibility to keep machines and tools in proper
working condition.
• Inspector: The responsibility of quality of work is taken care by this inspector.
Administrative Theory – Henri Fayol
• As organizations grew and became more complex, need for
systematic understanding of the overall management process was
felt. Managers became more concerned with management of
organizations than with improving the efficiency of individual jobs.
They tried to identify the functions of a manager with emphasis on
co-ordination of resources towards the achievement of the stated
objectives. The stream of the classical approach is known as
administrative theory or functional approach or management
process approach.
 Fayol classified all business activities into six categories

• Technical (Manufacturing or production of products)

• Commercial (Buying, selling and exchange)
• Financial (Search for and optimum use of capital)
• Accounting (Recording including statistics)
• Security (Protection of persons and property )
• Managerial (Planning. Organising , Commanding & Co-ordinating,
Controlling)
 Management Principles (Fayol)
• Division of work
• Authority and responsibility
• Discipline
• Unity of command
• Unity of direction
• Subordination of individual to general interests
• Remuneration of personnel
• Centralization
• Scalar chain
• Order
• Equity
• Stability of tenure of personnel
• Initiative
• Esprit de corps
Neo Classical approach
• The Neoclassical approach was developed many years ago because it was
believed that the classical theory did not achieve complete production efficiency
and workplace harmony. Managers still observe the frustrations and difficulties
because people always do not prefer to follow estimated or rational patterns of
behavior.
• Hence, there was a greater interest in assisting managers to deal more effectively
with the “people side” of the organization. The neo-classical approach reflects a
slight modification over the classical approach.

• The neoclassical approach identifies the importance of physiological and social

aspects of workers as an individual and their relationships within and among the
group of the organization. The Neoclassical Theory gained importance specifically
in the rise of the “Hawthorne Experiment” at Western Electric Company by the
father of human relation management named Elton Mayo from 1924 to 1932.
Features
• Business Organizations are identified as a social system.
• Human factors are regarded as the most important elements in the
organization.
• The theory revealed the importance of social and psychological
factors in determining the worker's productivity and satisfaction.
• The management aims to develop social and leadership skills along
with technical skills. It must be done for the welfare of the workers
and the organization.
• Morale and productivity work together in an organization.
NeoClassical Theory of Organizations
• Generally speaking, an organization is a social system. Further, it has several
interacting parts.
• An informal organization exists within every formal organization. More
importantly, the two affect each other.
• Human beings are interdependent. Hence, the organization can predict its
behavior if it looks at the social and psychological factors.
• Motivation is a highly complex process. Several socio-psychological factors
operate together to motivate people at work.
• Human beings do not always act rationally. In fact, the most irrational behavior is
when they seek rewards from work.
• Typically, organizational goals conflict with every individual’s goals. Therefore, a
reconciliation of these goals is important.
• Another important aspect of the functioning of an organization is teamwork.
However, organizations need to work towards this.
Hawthorne Experiments
• The Hawthorne Effect is when subjects of an experimental study
attempt to change or improve their behavior simply because it is
being evaluated or studied. The term was coined during experiments
that took place at Western Electric's factory in the Hawthorne suburb
of Chicago in the late 1920s and early 1930s.
Human Relations approach
• Human Relations Theory focuses specifically on the individuals needs
and resultant behaviors of individuals and groups. It takes an
interpersonal approach to managing human beings. It presents the
organization is made up of formal and informal elements.
• The formal elements of an organization are its structure. The
informal aspects of the organization include the interactions
between individuals. In this way, the organization is a type of social
system.
• This system should be managed to create individual job satisfaction
and the resultant motivation of the individual.
• Notably, much emphasis is placed on how individuals interact within
groups and the result group behavior and performance.
• Human Relations approach
• The Individual
• The work group
• The leader
• The work environment
Behavioural science approach
• Behavioral Science Theory combines elements of psychology,
sociology, and anthropology to provide a scientific basis for
understanding employee behavior. It examines why employees are
motivated by specific factors, such as social needs, conflicts, and self-
actualization. It recognizes individuality and the need for managers
to be sociable.
• The behavioral approach is unique from the human relations theory
in that it emphasizes leadership as a determining factor in
management success.
• It presents an increased focus on group relationships and group
behavior in organizational effectiveness.
Objectives
• An organization is a socio-technical system
• The interpersonal or group behavior of people in the organization is
influenced by a wide range of factors.
• The goals of the organization are to be harmonized with an
understanding of the human needs
• Multitude of attitudes, perceptions, and values are prevalent
amongst employees and these characterize their behavior and
influence their performance
• As a result, some degree of conflict is inevitable in the organization
and not necessarily undesirable.
Indian ethos
• Ethos is a set of beliefs, ideas etc about social behaviour and
relationships of a person or group
• Indian ethos in management refers to the values and practices that
the culture of India (Bharatheeya sanskriti) can contribute to service
leadership and management
• Indian ethos refers to the principles of self management and
governance of society entity or a system by wisdom as revealed and
brought- forth by great scriptures like veda, gita, Mahabharata etc.
 Needs
• Maintain holistic universe
• Motivation
• Welfare
• Unique work culture
• Self development
• Establishes value system
Roles
• Create strong relations
• Inwards Consideration :- Indian ethos focuses on if a person is good
then the whole world is good.
• Avoids unethical aspects
• Balanced values
• Improves quality
• Improves the performance
• Helps to problem solving
• Develops self reliability
Management lessons from Bhagavat gita
• Leadership is not only about power but an ability to empower others
Guides Pandavas through their tough time
Reminded Pandavas of their duty and their objectives of life
Guidance
Motivation
Support
• Every Organization needs a leader like Krishna of Mahabharata
A great leader quality
Organise
Strategies
Manage people efficiently (Tata, Infosys)
• Strategy means utilizing the right tool (or person) at the right time.
it’s not about having the best people, materials, system or process
Its about using them : at the right time, In the right way.
“ During war, Abhimanyu and Ghatokacha both died, however, they
served a greater purpose. Lord Krishna wanted Ghatokacha to fight
with karna, so in order to stop Ghatokacha, karna had no option but to
use his only Shakti astra which he had kept to use on Arjuna”.
• A good mentor is worth an entire army
• Supreme army without an efficient leader.
A mentor or leader who could guide you through all kinds of
problems.
Either have my large Narayani sena
Or have me on your side but I will not pick arms in the war
• Transform the weakness into strength
• Share the responsibilities
• Learn the art of teamwork
• Take calculated risks
• Have effective vision
• Strategy
• Decision making – it is the art to take right decision at the right time.
 Management lessons to learn from
Ramayana
• Importance of ethics and values
• Clear vision and goals
• Leadership
• Motivation
• Effective communication
• Time management
Unit-2 (Planning)
• Planning is important in all walks of life. Be it personal or professional
areas, effective planning is necessary for achieving goals. Planning is the
determination of a future course of action to achieve the desired result. It
is the process of thinking before acting.
• Planning is the process of deciding in advance what is to be done, who is to
do it, how it is to be done and when it is to be done.
• Planning is identified as the first managerial function. Planning creates the
blueprint for all other managerial functions. The manager must plan before
he starts organizing, staffing, directing or controlling.
• Planning is selecting information and making assumptions regarding the
future to formulate activities necessary to achieve organizational
objectives.
 Nature and features of planning
• Intellectual activity
• Involves decision making
• Forward looking
• Goal oriented
• Precondition to other function
• Based on time frame
• Continuous and dynamic process
 Importance of planning
• Objective Centred
• Reduce uncertainty
• Helps in coordination
• Brings efficiency
• Helps in setting standards for control
• Improve the motivation & moral
Principles of planning
• Principle of contribution to objective
• Principle of pervasiveness of planning:- Planning must pervades all
levels of management.
• Principle of limiting factor
• Principle of flexibility
• Planning of navigational change
• Principle of efficiency
 Planning process
• Setting objectives
• Collecting information & forecasting
• Developing planning premises
• Identifying & evaluating alternatives
• Selecting a plan
• Formulating derivative plan
• Appraisal and review
 Types of plans
• Based on focus
• Strategic plans
• Operation plans
• Tactical plans
• Contingency planning
Based on Time Horizon
• Short Term plans
• Long Term plans
Based on Usage
• Single use plans
• Standing plans
• Standing plans Single use plans
• Objectives Programmes
• Policies Budgets
• Strategies Schedules
• Procedures Projects
• Rules
Setting Organisational Objectives
• Definition :- “Objectives are the goals, aims or puroses that
organisations wish to achieve over varying periods of time.”
• Every organisation must carefully formulate its objectives, the
objectives must be set at all levels (top, middle and lower level). At
the top level, he management must define the mission, strategies
and key result areas. The middle level manager set departmental or
divisional objectives. While the lower level management deals with
operational objectives as well as employee’s individual objectives. At
any level of management, the objectives must be clear and verifiable.
• Company Objectives (Profits, social responsibility etc)
• Divisional Objectives (Objectives of an operating , division or
subsidiary)
• Departmental objectives (Objectives of production, sales, finance,
etc.)
• Employee Objectives (Individual objectives of the people working in
the enterprise.)
 Nature of Objectives
• Objectives are basic plans
• Objectives are multiple
• Objectives arranged in a hierarchy
• Objectives vary in time span
• Objectives may be general or specific
 Needs & Importance of objectives
• Sense of mission
• Unified planning
• Individual motivation
• Basic of control
• Voluntary coordination
 Essentials of valid objectives
• Objectives must be clear and specific
• Objectives must be result- oriented
• Objectives should be balanced
• Objectives must be realistic not idealistic
• Objectives should be challenging
• Objectives must be acceptable
 Factors Influencing the Objectives
• Environmental factors
• Internal resources
• Vision and value system of the top management
• Power play between various groups
Management by objectives
• In brief, the system of management by objectives can be described as
a process whereby the and subordinate manager of an organisation
jointly identify its common goals, define each individual’s major areas
of responsibility in terms of results expected of him, and use these
measures as guides for operating the unit and assessing the
contribution of each of its members.
 Characteristics of MBO
• Goal orientation
• Participation
• Key result areas
• Systems approach
• Optimisation of resources
• Operational
• Comprehensive
Objectives of MBO
• To relate individual performance to organisational goals;
• To clarify both the job to be done and expectations of
accomplishment.
• To enhance communications between superior and subordinates;
• To serve as a basis for judgments about salary and promotion;
• To serve as device for organisational control and integration.
Process of MBO
• Goal – setting
(Defining overall corporate objectives, Formulating departmental or
unit objectives, Establishing individual targets)
• Developing action plans
• Implementing plans
• Periodic reviews
• Appraising overall performance
 Advantages of MBO
• Improved planning
• Coordination
• Motivation and commitment
• Executive development
• Organisational change and development
 Limitation
• Failure to teach the philosophy
• Difficulty in goals setting
• Emphasis on short term goals
• Inflexibility
• Time consuming and expensive
Strategic Planning
• Strategies are formulated at three different levels of management –
corporate, business and functional levels
• Corporate level (Board of Directors and chief executive )
• Business level ( Departmental / divisional level)
• Functional level (Finance/marketing/ etc.)
• Corporate Strategy:- At the corporate level, strategic decisions relate
to the choice of direction that a firm will adopt to achieve its long-
term objectives. Corporate level strategies are basically concerning
the product market scope, acquisition and allocation of resources.
• What is our business (the products and services the firm will offer)
• Who are our customers (market scope)
• What do we want (basic goals e,g market share)
• Stability strategy
• Growth strategy
• Retreat strategy
• Combination strategy
• Business level :- A company operates through businesses. Therefore,
business level strategies are formulated to implement corporate
strategy. A strategic business unit is an operating division of a
company which serves as a distinct product market segment or a well
defined set of customers or a geographical area.
• Functional Strategy:- Every SBU functions through functions i.e.
finance, marketing production and personnel. Therefore, functional
strategies are formulated to implement SBU strategy. Functional
strategy lays down objectives for a specific functional area, allocates
resources among different operations with in that functional area,
and coordinates various functions for making optimal contribution to
the achievement of business and corporate level objectives.
Concept & Nature of Strategic planning
• Strategic planning involves formulation of strategies at different
levels in order to achieve overall objectives of the organisation.
• Strategic planning is the process of deciding on the objectives of the
organisation, on changes in these objectives, on the resources used
to attain these objectives and on the policies that will govern the
acquisition, use and disposition of these resources.
Salient features of strategic planning
• Strategic planning identifies the basic mission and goals of the
organisation.
• It is long term in nature and provides a framework for operational
planning and day to day decision making.
• It is a top management activity
• It is based on forecasted opportunities and threats in the
environment and analysis of firm’s strengths and weaknesses.
• It provides direction for the activities of the organisation so as to
achieve long term objectives.
 Importance of strategy planning
• Helps in facing environment challenges
• Provides direction
• Optimum utilization of resources
• Facilitates co-ordination and control
• Competitive strength
• Business level strategies
• Cost leadership strategy :- Maintaining tight control over cost
• Controlling costs of R & D.
• Investing in latest cost saving technologies of production
• Differentiation strategy :- this strategy involves using product
differentiation to gain a competitive advantage over the other firms.
The product may be differentiated on the basis of quality , features,
design , uses, services, performance , durability, innovativeness,
technology used etc.
• Focus Strategy
• Focus low cost
• Focus differentiation strategy
• Integrated low cost
Environmental Analysis and Diagnosis
• The aggregate of all the forces, factors and institutions which are
external to and beyond the control of an individual business
enterprise but which exercise a significant influence on the
functioning and growth of individual enterprises.
• Business environment refers to “ the total of all things external to
firms and industries which affect their organisation and operation.
• Business environment encompasses the aggregate or set of
conditions, economic, social, political or institutional in which
business operations are conducted.
 Components of business environment
• Internal environment
• Culture
• Mission and objectives
• Top management structure
• Power structure
• Company image and brand
• Human and other resource
• External Environment
• Micro and Marco Environment
• Micro (Customer, Competitors, Suppliers, Marketing Intermediaries,
fanciers, publics, worker and trade union)
• Marco Environment (Political and legal environment, social and
economic environment, technological and physical environment)
• SWOT analysis (Strength, weakness, opportunity, threat)
• WOTS (weakness, opportunity, threats, strength)
Decision making (Lesson- 11)
• Decision – making is the process of choosing a course of action from
among alternatives to achieve a desired goal. It consists of activities a
manager performs to come to a conclusion.
• Decision making is a process of selection from a set of alternative
courses of action which is thought to fulfil the objective of the
decision problem more satisfactorily than others.
 Characteristics
• 1. Mental and Intellectual Process
• 2. It is a Process
• 3. It is a Best Selected Alternative
• 4. Decision-Making Might be Positive or Negative
• 5. Continuous and Dynamic Process
• 6. It is a Human and Social Process
• 7. It is n Art and Science, Both
• Decision making environment

• Managers make problem-solving decisions under three different conditions: certainty, risk, and
uncertainty. All managers make decisions under each condition, but risk and uncertainty are
common to the more complex and unstructured problems faced by top managers.
• Decisions are made under the condition of certainty when the manager has perfect knowledge of
all the information needed to make a decision. This condition is ideal for problem solving. The
challenge is simply to study the alternatives and choose the best solution.
• When problems tend to arise on a regular basis, a manager may address them through standard or
prepared responses called programmed decisions. These solutions are already available from past
experiences and are appropriate for the problem at hand. A good example is the decision to
reorder inventory automatically when stock falls below a determined level. Today, an increasing
number of programmed decisions are being assisted or handled by computers using
decision-support software.
• Structured problems are familiar, straightforward, and clear with respect to the information needed
to resolve them. A manager can often anticipate these problems and plan to prevent or solve them.
For example, personnel problems are common in regard to pay raises, promotions, vacation
requests, and committee assignments, as examples. Proactive managers can plan processes for
handling these complaints effectively before they even occur.
• Risk
• In a risk environment, the manager lacks complete information. This
condition is more difficult. A manager may understand the problem
and the alternatives, but has no guarantee how each solution will
work. Risk is a fairly common decision condition for managers.
• When new and unfamiliar problems arise, nonprogrammed decisions
are specifically designer to the situations at hand. The information
requirements for defining and resolving nonroutine problems are
typically high. Although computer support may assist in information
processing, the decision will most likely involve human judgment.
Most problems faced by higher-level managers demand
nonprogrammed decisions. This fact explains why the demands on a
manager's conceptual skills increase as he or she moves into higher
levels of managerial responsibility.
• Uncertainty
• When information is so poor that managers can't even assign
probabilities to the likely outcomes of alternatives, the manager is
making a decision in an uncertain environment. This condition is the
most difficult for a manager. A decision under uncertainty is when
there are many unknowns and no possibility of knowing what could
occur in the future to alter the outcome of a decision. We feel
uncertainty about a situation when we can't predict with complete
confidence what the outcomes of our actions will be.
 Types of Managerial decisions
• Programmed decisions
• Non- programmed decisions
• Strategic decisions
• Administrative decisions
• Routine or operating decisions
• Individual and group decision
 Process of Rational Decision- making
• Identify the problem
• Diagnose the problem
• Discover Alternative course of action
• Evaluate the Alternative
• Choose the best alternative
• Implement and follow up
Management Information System
• MIS is the use of information technology, people, and business processes
to record, store and process data to produce information that decision
makers can use to make day to day decisions. The full form of MIS is
Management Information Systems. The purpose of MIS is to extract data
from varied sources and derive insights that drive business growth.
• People – people who use the information system
• Data – the data that the information system records
• Business Procedures – procedures put in place on how to record, store and
analyze data
• Hardware – these include servers, workstations, networking equipment,
printers, etc.
• Software – these are programs used to handle the data. These include
programs such as spreadsheet programs, database software, etc.
Component of MIS
• Information providing system:- This type of MIS provides information
in the form of summary reports and expectation report. The former
provide an overview of performance and the latter indicate
deviations from the desired performance.
• Transaction processing system:- In this system day-to- day
transactions are processed to generate data.
• Decision support system:- This category of MIS helps managers in
decision making by providing relevant information.
Unit-3 Concept, process and principles of
Organising – an overview
• Organising is the process of identifying and grouping the work to be performed,
defining and delegating responsibility and authority, and establishing a pattern of
relationships for the purpose of enabling people to work most effectively
together in accomplishing objectives.
• Natures and characteristics of organisation
• Group of person
• Common objectives
• Division of work
• Cooperative efforts
• Communication
• Central authority
• Rules and regulations
• Purpose and importance of organising
• Facilitates of administration
• Encourage growth and diversification
• Optimum use of new technology
• Stimulates innovation and creativity
• Encourage good human relations
• Foster coordination
• Steps in the process of organising
• Identification of activities
• Grouping activities
• Assignment of duties
• Delegation of authority
• Principles of organising
• Unity of objectives
• Functional specialisation
• Scalar chain
• Delegation of authority
• Functional definition
• Unity of command
• Balance
• Unity of direction
• Flexibility
• Organising and division of labour
• division of labour, the separation of a work process into a number of
tasks, with each task performed by a separate person or group of
persons. It is most often applied to systems of mass production and
is one of the basic organizing principles of the assembly line.
• Benefits of division of labour
• Division of labour is beneficial for the producers, worker as well as
the consumers
• Benefits to the producers
• Specialization of workforce
• Lower operating costs
• Increase in productivity
• Higher profits
• Helps in inventions
• Foster cooperation
• Benefits to the workers
• Skill development
• Better employment opportunities
• Lesser training time
• Benefits to consumers
• Lower prices of goods
• Better quality
• Span of management
• Definition: The Span of Management refers to the number of
subordinates who can be managed efficiently by a superior. Simply,
the manager having the group of subordinates who report him
directly is called as the span of management.
• Span of management refers to the number of subordinates that a
manager can efficiently handle. It is the determining factor for the
nature and structure of an organisation.
 Factors determining span of management
• Capacity of the superior
• Nature of work
• Clarity of plans
• Communication and control techniques
Chapter- 13 Delegation and Decentralisation
of Authority
• Authority :- Authority is the legitimate right of a superior to command and
required his subordinates to perform certain activities.
• The right to give orders and the power to exact obedience. A manager’s
authority is his privilege to take decisions and the power to enforce those
decisions. Authority also involves the right to use organisational resources.
• Applied to the managerial job, authority is the power to command others,
to act or not to act in a manner deemed by the possessor of the authority
to further enterprise or departmental purpose.
• Authority, in simple words, is the right way of commanding subordinates,
issuing orders and instructions, and exacting obedience from the team. It is
also the right of the manager to make decisions. Also, to act or not to act
depends on how he perceives the objectives of the organization.
• Authority is the power to make decisions which guide the action of others.
Delegation of authority contributes to the creation of an organisation. No
single person is in a position to discharge all the duties in an organisation.
In order to finish the work in time, there is a need to delegate authority
and follow the principles of division of labour. Delegation permits a person
to extend his influence beyond the limits of his own personal time, energy
and knowledge.
• In practice, managers perform mostly the same functions as they are all
concerned with getting the work done through people irrespective of the
type of organisation in which they are working.
• Authority means a special permission which is obtained by a person from
his higher officer and on the basis of that a person gets the rights to do the
work in the organisation. It is positional and comes with the territory. It is
key to managerial functions. No any person can perform his duties with full
responsibility, without authority.
• (a) It is the legitimate right of an individual.
• (b) It allows the position holder to decide things.
• (c) It implies the capacity to get compliance.
• (d) It is exercised to influence the behavior of subordinates in a
certain manners.
• (e) It flows from top to bottom in the organisation.
• (f) It is supreme coordinating force because it binds together
different individuals working in the organisation.
• (g) It is used to achieve organisational objectives.
• (h) It is differentiated from power. Power is the capacity to influence
others’ while authority is the right to influence others.
• Authority includes the following elements:
• (i) Use of Power – It is regarded as power. In other word where there is an
authority, there is a power on the basis of which the authorized person
issues the orders and instruction to other persons under his control.
• (ii) Influential Personality – If the power are delegated to a person of
influential personality, he will make the effective use of these power, easily
because the subordinates accept his orders easily.
• (iii) Performance – An important element of authority is that the
performance of power of authority is necessary. Such performance may
take place in different manners such as, in writing, with the request and
issuing orders etc.
• (iv) Effective Leadership – The person possessing authority must be an
effective leader so that he may direct his subordinates and in turn his
subordinates should follow his directions.
• (v) To influence the subordinates – For effective performance of authority,
it is necessary the person possessing authority must have of the quality
influence his subordinates so that they may accept and follow his orders.
• Responsibility
• Responsibility refers to an obligation to do something. It is the duty
of the subordinate to perform organisational tasks, functions or
activities assigned to him. Authority and responsibility go side by side.
When authority is delegated then some responsibility for getting the
assigned task is also fixed. One can delegate authority but not
responsibility.
• “By responsibility we mean the work or duties assigned to a person
by virtue of his position in the organisation. It refers to the mental
and physical activities which must be performed to carry out a task
or duty. That means every person who performs any kind of mental
or physical effort as an assigned task has responsibility. —Allen
• (i) Responsibility comes from superior-subordinate relationship.
• (ii) It always flows upward from juniors to seniors.
• (iii) It arises from duty assigned.
• (iv) It cannot be delegated.
• (v) It is the obligation to complete the job as per instructions.
Responsibility may be continuing obligation or it may be discharged
by accomplishing single task. Responsibility is a personal attribute.
No person can shift his responsibility by delegating his authority to
others.
• Accountability
• Accountability in management refers to having obligations to others
in your organization. These obligations involve specific actions that
you complete in order to fulfill your role as a manager and a member
of an organization. This practice also helps in providing guidance and
mentorship to your employee
• Line authority
• The chain of command within an organization that confers the power
to order subordinates to perform a task within their job description.
• Line Authority is the authority to direct the activities of the people in
a manager’s own department.
• As a chain of command
• As a chain of communication
• As a carrier of accountability
• Staff Authority relationship
• Staff authority refers to the right to advice on improving the
effectiveness for line employees in performing their duties. Staff
personnel are generally independent employees who do not report
to line managers, and they can be external staff who are temporarily
employed to perform a particular task.
• Functional Authority relationship
• Functional authority is the right that is delegated to an individual or a
department to control specified processes, practices, policies, or
other matters about activities undertaken by persons in other
departments. It is delegated by their common superior to a staff
specialist or a manager in another department.
Delegation of Authority
• The delegation of authority refers to the division of labor and
decision-making responsibility to an individual that reports to a
leader or manager. It is the organizational process of a manager
dividing their own work among all their people.
• Importance of Delegation
• Delegation relieves the manager from heavy workload
• Delegation leads to better decision
• Delegation speeds up decision- making
• Delegation helps to improve the motivation and morale of
subordinates
• Delegation creates a formal organisation structure
• Delegation facilities training of subordination
• Process of delegation
• Assignment of duties
• Granting of authority
• Creation of an obligation
• Principles of delegation
• Functional definition
• Delegation by result expected
• Unity of command
• Authority level principles
• Clarity of delegation
• Centralisation of Authority
• Centralized authority is where one person at the top makes all the
decisions, and employees are expected to carry out instructions as
they flow down in the organization. The centralized definition means
to bring to a central point or under single control. The decision-
making powers are concentrated among a few individuals at the top.
In a centralized organization, the decision-making function is retained
at the head office, while all the other offices receive instructions
from the main office. The executives and specialists who make these
critical decisions are based in the head office. The centralized power
definition refers to a government where power is concentrated in a
single authority. Only one source is recognized in such a system, and
thus, energy is usually vested within the central authority.
• Decentralisation of authority
• Decentralization of authority involves a system within an organization
in which the top, middle, and lower levels of management
participate in decision-making. Decentralized organizations are
characterized by dispersion of authority for decision-making at all
levels of leadership within the organization.
Lesson- 14 Organisation design
• Classical approach:- The classical theory of organisation design was
shaped by taylor, fayol and weber. This approach focuses on the
formal organisation structure that improves efficiency. It focuses on
the structural and technical elements of the organisation. Thus it
aims to build an organisation structure with well defined authority
responsibility relationship.
 Factors affecting organisational design in
classical approach
• Hierarchy
• Scalar principle
• Unity of command
• Division of labour
• Balance between centralisation and decentralisation
• Contingency approach
• The contingency approach, often called the Situational Approach is based
upon the premise that all management is essentially situational in nature.
All decisions by managers will be affected (if not controlled) by the
contingencies of a given situation.
• There is no one good way to address any decision. Contingencies arise
from various environmental factors. As such, managers must take into
account these contingencies when making decisions that affect the
organization.
• Environment
• Size of the organisation
• Technology
• People
• Strategy
Lesson- 15 Departmentalization
• Departmentalization is defined as the process of grouping individual
jobs into departments.
• It involves grouping of activities and employees into departments so
as to achieve the organisational objectives.
• The grouping into departments of work activities that are SIMILAR
and LOGICALLY connected.
• Top Managers
• Set objectives
• Scan environment
• Plan and make decisions.
• Middle Managers
• Report to top management
• Oversee first- line managers
• Develop and implement activities
• Allocate resources
• First –line managers
• Report to middle managers
• Supervise employees
• Coordinate activities
• Are involved in day –to-day operations
 Importance
• Specialization
• Expansion
• Autonomy
• Fixation of responsibility
• Appraisal
• Management development
• Administrative control
Types of departmentalization
Functional Departmentalization
• A form of departmentalization in which individuals engaged in one
functional activity , such as marketing or finance, are grouped into
one unit.
• Under functional departmentalization each major function is
organised as a separate department.
• for example:- production, sales, financing and personnel are basic
functions in a manufacturing enterprises. On other hand in a retail
store buying, selling and finance are the major function
Functional departmentalization
 Advantages
• Make supervision easier
• Efficient use of resource
• Optimum utilisation of manpower
• Increase managerial efficiency
• Facilities delegation of authority
• Eliminates duplication of efforts
• Lower cost
• Promotes control and coordination with in a department
 Disadvantages
• Difficult to get quick decision
• Harder to determine accountability
• Too much emphasis on specialization
• May lead to conflicts
• Coordination problem
• Delay in decision making
Suitability
• It is most suitable when the size of the organization is small, has a
diversified activities and operation require a high degree of specialization
and offers a limited line of products.
• Territorial / geographical department
• Territorial organization is especially attractive to large scale firms or rather
enterprise whose activities are physically or geographically dispersed.
• All the activities of given area of operation are grouped into zone, division ,
branches.
• This structure is suitable for large scale organization or whose activities are
physically or geographically spread.
• This structure is most often used in sales & in production.
 Advantages
• Place emphasis on local market & problem
• Take advantage of economic of local operations
• Place responsibility at lower level
• Better face to face communication with local interest
• Improve coordination in a region
 Disadvantages
• Require more person with general manager abilities.
• Increase problem of top management control
• Require good calibre managers
• Increase problem of control
Departmentation by customer
• Customer based departmentation is basically market oriented in
which department are created around the market served or around
marketing channel.
 Choosing a basis for departmentation
• Specialisation
• Coordination
• Control
• Attention