Module – 3 Management and Organisation

Management
Management is art of getting things done by an organised group people or individuals in
systematic manner, by effectively utilising the available resources to achieve the predetermined
goals or objectives.
Features of management
Continuous process: Management is a continuous process consisting of a series of functions
like planning, organising, directing, staffing, and controlling. All the managers perform these
functions regularly. Management does not stop anywhere. It continues without breaks and
exists as long as organisation exists.

Goal Oriented: Management is a Goal Oriented Process Each and every organisation is
established to achieve certain goals. Every business enterprise has different set of goals
depending upon the nature of organization

Group activity: Management is a group activity as group of people are involved in managerial
activities. The management functions cannot be performed in isolation.

Aims at max profit & min risk: The entire business runs on nothing but its profit there is no
different opinion rather than to maximize profit and minimize risk

Based on certain principles: Management is based on certain principles; Henry Fayol has
suggested fourteen principles of management based on which management functions.

Importance of management
Management helps in achieving group goals: Management is required not for itself but for
achieving the goals of the organisation. The task of a manager is to give a common direction
to the individual effort in achieving the overall goal of the organisation.

Management increases efficiency: The aim of a manager is to reduce costs and increase
productivity through better planning, organising, directing, staffing and controlling the
activities of the organisation

Management creates a dynamic organisation: All organisations have to function in an

environment which is constantly changing. It is generally seen that individuals in an
organisation resist change as it often means moving from a familiar, secure environment into a
newer and more challenging one. Management helps people adapt to these changes so that the
organisation is able to maintain its competitive edge.

Management helps in achieving personal objectives: A manager motivates and leads his team
in such a manner that individual members are able to achieve personal goals while contributing
to the overall organisational objective. Through motivation and leadership, the management
helps individuals to develop team spirit, cooperation and commitment to group success.
Functions of management

Planning: determining in advance what is to be done and who is to do it. This implies setting goals in
advance and developing a way of achieving them efficiently and effectively. Planning is process of
deciding in advance what to do, how to do it, when to do it and where to do, it bridges the gap from
where we are to where we want to go.

Organising is the process of defining and grouping the activities of the enterprise and
establishing authority relationships among them. Deals with assigning duties, grouping tasks,
establishing authority and allocating resources required to carry out a specific plan.

• Involves Identification of activities.

• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.

Staffing: is finding the right people for the right job. A very important aspect of management
is to make sure that the right people with the right qualifications are available at the right
places and times to accomplish the goals of the organisation. This is also known as the human
resource function and it involves activities such as recruitment, selection, placement and
training of personnel.

• Manpower Planning
• Recruitment, Selection & Placement.
• Training & Development.
• Remuneration.
• Performance Appraisal.
• Promotions & Transfer
Directing involves leading, influencing and motivating employees to perform the tasks
assigned to them. One of the most important function of management.

• Supervision- implies overseeing the work of subordinates by their superiors. It is the

act of watching & directing work & workers.
• Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
• Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.
• Communications- is the process of passing information, experience, opinion etc from
one person to another. It is a bridge of understanding.

Controlling is the management function of monitoring organisational performance towards

the attainment of organisational goals, the task of controlling involves establishing standards
of performance, measuring current performance, comparing this with established standards
and taking corrective action where any deviation is found.

Planning
Planning is process of deciding in advance what to do, how to do it, when to do it and where
to do, it bridges the gap from where we are to where we want to go.

Objectives of planning
Reduces uncertainty: future is uncertain, planning may convert the uncertainty into certainty.
Can limit the occurrence of future contingent events which are uncertain in nature and tries to
minimizes them.

Anticipates unpredictable contingencies: planning helps in forecasting the future

unpredictable contingencies, anticipation helps to formulate better plans to overcome the
future uncertain events

Cooperation and coordination: planning can bring cooperation and coordination between
various sections of the organisation; the rivalries and conflicts can be avoided between
various departments and teams.

Achieves the predetermined goals: planning facilitates to achieve the goals and objectives of
the organisation in the most efficient and systematic manner. Timely achievement of
objectives can be possible only through effective planning alone.

Efficient utilization of resources: planning helps in effective and efficient utilization of

available recourse to achieve the objectives of the organisation. Which facilitates economies
of scale in operations of the organisation
Planning process
Setting Objectives: The first and foremost step is setting objectives. Every organisation must
have certain objectives. Objectives may be set for the entire organisation and each department
or unit within the organisation. Objectives or goals specify what the organisation wants to
achieve

Developing Premises: Planning is concerned with the future which is uncertain and every
planner is using conjecture about what might happen in future. Therefore, the manager is
required to make certain assumptions about the future. These assumptions are called
premises.

Identifying alternative courses of action: There may be many ways to act and achieve
objectives. All the alternative courses of action should be identified.

Evaluating alternative courses: The next step is to weigh the pros and cons of each
alternative. Each course will have many variables which have to be weighed against each
other. The positive and negative aspects of each proposal need to be evaluated in the light of
the objective to be achieved.

Selecting the best alternative: This is the real point of decision making. The best plan has to
be adopted and implemented. The ideal plan, of course, would be the most feasible, profitable
and with least negative consequences

Implementation of the plan: This is the step where other managerial functions also come into
the picture. The step is concerned with putting the plan into action.
Follow-up action: To see whether plans are being implemented and activities are performed
according to schedule is also part of the planning process. Monitoring the plans is equally
important to ensure that objectives are achieved.

Decision making
Decision making is the core activity of planning, decision making is an action in which an
individual or an organisation selects one position or action from several alternatives.

Process of decision making

Identification of a problem: the first step is to visualise the problem clearly. It is said that a
problem is half solved when its identified properly.

Diagnosing the problem: once the problem is identified or defined, the next step is to
diagnose and examine the problem.

Analysis of the problem: analysis of the problem is as important as it diagnosing the problem,
the problem should be studied and analysed to find the feasible solutions

Collection of information: necessary data should be collected from all possible sources that is
both from internal and external environment. The data should be accurate and UpToDate

Identification of alternative courses of action: various alternatives have to be taken into

consideration.
Evaluation of alternatives: based on the standard criteria identified alternatives has to be
evaluated to find out the most suitable alternative

Choice of best alternative: after critical evaluation of alternatives courses of action, the best
feasible alternative should be selected

Conversation of decision into action: the selected decision must be converted into action, for
an effective implementation decision has to be communicated to each and every department
in the organisation

Progressive review: feedback is necessary due to changes in internal and external

environment, certain revisions and modifications are necessary in order to ensure that
decisions are implemented as per the requirements of the ever-changing business
environment.

Strategy

Strategy is an action that managers take to attain one or more of the organization’s goals.
Strategy can also be defined as “A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed
strategic planning process”.

Strategy formulation it's a process by which an organisation chooses the most appropriate
course of action to achieve the set goals or objectives

Steps in strategy formulation

Establishing Organizational Objectives: This involves establishing long-term goals of
an organization. Strategic decisions can be taken once the organizational objectives are
determined.

Analysis of Organizational Environment: This involves SWOT analysis, meaning identifying

the company’s strengths and weaknesses and keeping vigilance over competitors’ actions to
understand opportunities and threats.
Strengths and weaknesses are internal factors which the company has control over.
Opportunities and threats, on the other hand, are external factors over which the company has
no control. A successful organization builds on its strengths, overcomes its weakness, identifies
new opportunities and protects against external threats.

Forming quantitative goals: Defining targets so as to meet the company’s short-term and long-
term objectives. Example, 30% increase in revenue this year of a company.

Objectives in context with divisional plans: This involves setting up targets for every
department so that they work in coherence with the organization as a whole.

Performance Analysis: This is done to estimate the degree of variation between the actual and
the standard performance of an organization.
Selection of Strategy: This is the final step of strategy formulation. It involves evaluation of
the alternatives and selection of the best strategy amongst them to be the strategy of the
organization

Levels of strategy formulation

There are three levels of strategy formulation
used in an organization

Corporate level strategy: This level outlines

what you want to achieve: growth, stability,
acquisition or retrenchment. It focuses on
what business you are going to enter the
market.

Business level strategy: This level answers the

question of how you are going to compete. It
plays a role in those organization which have smaller units of business and each is considered
as the strategic business unit (SBU).

Functional level strategy: This level concentrates on how an organization is going to grow. It
defines daily actions including allocation of resources to deliver corporate and business level
strategies.

Organizing
Organising is the process of identifying and grouping the work to be performed, defining and
delegating responsibility and authority, and establishing relationships for the purpose of
enabling people to work most effectively together in accomplishing objectives.

Importance of organizing
Benefits of specialisation: Organising leads to a systematic allocation of jobs amongst the work
force. This reduces the workload as well as enhances productivity because of the specific
workers performing a specific job on a regular basis. Repetitive performance of a particular
task allows a worker to gain experience in that area and leads to specialisation.
Clarity in working relationships: The establishment of working relationships clarifies lines of
communication and specifies who is to report to whom. This removes ambiguity in transfer of
information and instructions. It helps in creating a hierarchical order thereby enabling the
fixation of responsibility and specification of the extent of authority to be exercised by an
individual.
Optimum utilization of resources: Organising leads to the proper usage of all material, financial
and human resources. The proper assignment of jobs avoids overlapping of work and also
makes possible the best use of resources. Avoidance of duplication of work helps in preventing
confusion and minimising the wastage of resources and efforts.
Adaptation to change: The process of organising allows a business enterprise to accommodate
changes in the business environment. It allows the organisation structure to be suitably
modified and the revision of inter-relationships amongst managerial levels to pave the way for
a smooth transition. It also provides much needed stability to the enterprise as it can then
continue to survive and grow in spite of changes.
Effective administration: Organising provides a clear description of jobs and related duties.
This helps to avoid confusion and duplication. Clarity in working relationships enables proper
execution of work. Management of an enterprise thereby becomes easy and this brings
effectiveness in administration.
Development of personnel: Organising stimulates creativity amongst the managers. Effective
delegation allows the managers to reduce their workload by assigning routine jobs to their
subordinates
Process of organising
Identification and division of work: The first step in the process of organising involves
identifying and dividing the work that has to be done in accordance with previously determined
plans. The work is divided into manageable activities so that duplication can be avoided and
the burden of work can be shared among the employees.
Departmentalisation: Once work has been divided into small and manageable activities then
those activities which are similar in nature are grouped together. Such sets facilitate
specialisation. This grouping process is called departmentalisation. Departments can be created
using several criteria as a basis.
Assignment of duties: It is necessary to define the work of different job positions and
accordingly allocate work to various employees. Once departments have been formed, each of
them is placed under the charge of an individual. Jobs are then allocated to the members of
each department in accordance to their skills and competencies.
Establishing reporting relationships: Merely allocating work is not enough. Each individual
should also know who he has to take orders from and to whom he is accountable. The
establishment of such clear relationships helps to create a hierarchal structure and helps in
coordination amongst various departments.

Delegation
Delegation refers to the downward transfer of authority from a superior to a subordinate,
Delegation of authority merely means the granting of authority to subordinates to operate
within prescribed limits
Elements of Delegation
Authority: Authority refers to the right of an individual to command his subordinates and to
take action within the scope of his position

Responsibility: Responsibility is the obligation of a subordinate to properly perform the

assigned duty. It arises from a superior–subordinate relationship because the subordinate is
bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards
i.e., a subordinate will always be responsible to his superior.

Accountability: Delegation of authority, undoubtedly empowers an employee to act for his

superior but the superior would still be accountable for the outcome. Accountability is the
answers that we hold for the actions that we do.
Importance of delegation
Effective management: By empowering the employees, the managers are able to function more
efficiently as they get more time to concentrate on important matters. Freedom from doing
routine work provides them with opportunities to excel in new areas.

Employee development: As a result of delegation, employees get more opportunities to utilise

their talent and this may give rise to latent abilities in them. It allows them to develop those
skills which will enable them to perform complex tasks and assume those responsibilities which
will improve their career prospects.

Motivation to employees: Delegation helps in developing the talents of the employees. It also
has psychological benefits. When a superior entrusts a subordinate with a task, it is not merely
the sharing of work but involves trust on the superior’s part and commitment on the part of the
subordinate. Responsibility for work builds the self-esteem of an employee and improves his
confidence. He feels encouraged and tries to improve his performance further.

Facilitation of growth: Delegation helps in the expansion of an organisation by providing a

ready workforce to take up leading positions in new ventures. Trained and experienced
employees are able to play significant roles in the launch of new projects by replicating the
work ethos they have absorbed from existing units, in the newly set up branches.

Basis of management hierarchy: Delegation of authority establishes superior-subordinate

relationships, which are the basis of hierarchy of management. It is the degree and flow of
authority which determines who has to report to whom. The extent of delegated authority also
decides the power that each job position enjoys in the organisation.

Better coordination: The elements of delegation, namely authority, responsibility and

accountability help to define the powers, duties and answerability related to the various
positions in an organisation. This helps to avoid overlapping of duties and duplication of effort
as it gives a clear picture of the work being done at various levels. Such clarity in reporting
relationships help in developing and maintaining effective coordination amongst the
departments, levels and functions of management. Thus, delegation is a key element in
effective organising.

Decentralisation
An organisation is centralised when decision-making authority is retained by higher
management levels whereas it is decentralised when such authority and decision-making power
is distributed between all the levels of management (Top level, middle level & lower-level
management) in an organisation.

Importance of decentralisation
Develops initiative among subordinates: Decentralisation helps to promote self-reliance and
confidence amongst the subordinates. This is because when lower managerial levels are given
freedom to take their own decisions they learn to depend on their own judgment. It also keeps
them in a state wherein they are constantly challenged and have to develop solutions for the
various problems they encounter. A decentralisation policy helps to identify those executives
who have the necessary potential to become dynamic leaders

Develops managerial talent for the future: Formal training plays an important part in equipping
subordinates with skills that help them rise in the organisation but equally important is the
experience gained by handling assignments independently. Decentralisation gives them a
chance to prove their abilities and creates a reservoir of qualified manpower who can be
considered to fill up more challenging positions through promotions. It also helps to identify
those who may not be successful in assuming greater responsibility. Thus, it is a means of
management education as well as an opportunity for trained manpower to use its talent in real
life situations.

Quick decision making: The management hierarchy can be looked upon as a chain of
communication. In centralised organisation because every decision is taken by the top
management the flow of information is slow as it has to traverse many levels. Response also
takes time. This reduces the speed of decision making and makes it difficult for an enterprise
to adapt to dynamic operating conditions.

Relief to top management: Decentralisation diminishes the amount of direct supervision

exercised by a superior over the activities of a subordinate because they are given the freedom
to act and decide albeit within the limits set by the superior. Also, personal supervision is
generally replaced by other forms of control such as return on investment etc. Decentralisation
also leaves the top management with more time which they can devote to important policy
decisions rather than occupying their time with both policy as well as operational decisions. In
fact, decentralisation is greatest when checking required on decisions taken by lower levels of
management is least

Facilitates growth: Decentralisation awards greater autonomy to the lower levels of

management as well as divisional or departmental heads. This allows them to function in a
manner best suited to their department and fosters a sense of competition amongst the
departments. Consequently, with each department doing its best in a bid to outdo the other, the
productivity levels increase and the organisation is able to generate more returns which can be
used for expansion purposes

Better control: Decentralisation makes it possible to evaluate performance at each level and the
departments can be individually held accountable for their results. The extent of achievement
of organisational objectives as well as the contribution of each department in meeting the
overall objectives can be ascertained. Feedback from all levels helps to analyse variances and
improve operations. In decentralisation, one of the challenges is the accountability of
performance. In response to this challenge, better control systems are being evolved such as
the balance score card and management information system. Decentralisation compels the
management to innovative performance measurement systems.
Types of organisations

Formal organisation Informal organisation

It is an organisation in which job of each It is an organisation formed within the

member is clearly defined. Authority | formal organisation as a network of
responsibility | accountability is fixed interpersonal relationship

It is formed deliberately in an It is formed spontaneously

organised manner without any planning

To achieve the organisational goals To establish the cultural values

Directed by Rules and regulations Directed by Moral values & beliefs

Hierarchy of leadership is followed All the individuals are equal

(Note: Different types of organisational structures refer assignment 2)