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ABFM MODULE – A INTRODUCTION:-

Chapter 1: BASICS OF MANGEMENT Management is necessary for making our life or any task or
venture we undertake, including any industrial, business or
*All about Basic of Management?
service activity, successful.
All of us are aware that the modern-day Banking has
become a significant component of the Indian Financial
System because of the increasingly important role played by
banks in the economic development of the country.
In fact, the role of the entire financial sector for optimum
allocation and utilisation of financial resources has been
continuously growing.
It is therefore, very important for bankers to understand
the process of management and the functions performed by
managers along with their importance.
This understanding shall help the bankers face the short-
term, as also the long-term, challenges being faced by them
and shall also help the banking system become stronger and
more and more resilient, which is highly important for
growth with financial stability and for protecting the
interests of the investors and customers.
DEFINITION OF MANAGEMENT:-
The term ‘Management’ could be defined in a variety of
ways. It could be referring to the persons running an
organisation collectively, who are responsible for decision
making.
The Cambridge Dictionary refers to Management as ‘the ‘The Principles of Scientific Management’, published in the
activity or job of being in charge of a company, year 1911, as the most influential management book of the
organization, department, or team of employees. twentieth century.
We could even say that the three components of Scientific management, also known as ‘Taylorism’, is a
management refer to their organising skills, their skills as an management theory which was used for analysing and
entrepreneur and getting the best out of their team synthesizing workflows with the main objective of
members. improvement of economic efficiency and labour
The skills for organising would obviously include the productivity.
traditional skills, principles and the techniques of Several parts of the theory, relating to industrial
management which have evolved over a period of time and engineering and management, are still relevant.
are continuously evolving. To quote Henri Fayol, “To manage is to forecast and plan, to
Henri Fayol, widely acknowledged as the founder of modern organize, to command, to coordinate and to control. To
management methods, was an early management writer foresee and plan means examining the future and drawing
who was instrumental in contributing immensely to ‘formal up the plan of action. To organize means building up the
organisation theory’. dual structure, material and human, of the undertaking.
The theory propounded by Henri Fayol included the six To command means binding together, unifying and
types of organisational activities, which also included harmonizing all activity and effort. To control means seeing
management. that everything occurs in conformity with established rule
It also explained the various functions and principles of and expressed demand”.
management. (Henri Fayol (1916) cited in: Russell C. Swans burg (1996)
His contemporary, Frederick Winslow Taylor, introduced Management and Leadership for Nurse Managers, p. 1)
methods to improve the industrial efficiency. Peter Drucker, the famous Management Guru, in his book
In 2001, the Fellows of the Academy of Management, New Management: tasks, responsibilities, practices.
York voted Taylor’s book Heinemann,1973 has written that ‘Frederick W. Taylor was
the first man in recorded history who deemed work
deserving of systematic observation and study.
On Taylor’s ‘scientific management’ rests, above all, the You solve a problem and a new problem crops up.
tremendous surge of affluence in the last seventy-five years A manager is supposed to deal with multiple problems at
which has lifted the working masses in the developed the same time, each of which could be at a different
countries well above any level recorded, even for the well- resolution stage.
to-do. Taylor, though the Isaac Newton (or perhaps the
Archimedes) of the science of work, laid only first The complexity of management has laid down the
foundations, however. Not much has been added to them foundation of breaking down each activity into various
since - even though he has been dead all of sixty years.” parts or sub – activities so that we can understand the
complete significance of each activity.
Management is not common sense alone but a discipline,
This is the reason for division of management tasks into
a culture and an art and science at the same time. It different elements: planning, organising, staffing, directing
represents people, and their achievements or failures and controlling.
denote the effectiveness of management or
mismanagement of the organisation’s affairs. Although all these elements are inter-connected, each of
these can be analysed as a sub-process and each element
THE MANAGEMENT PROCESS:- contributes to the success of an organisation, irrespective of
Productivity is very important in any business organisation, its size-big or small; type of ownership-public or private;
and there is a continuous demand on the people at the constitution-sole proprietor, partnership, company; or type
helm of affairs to increase productivity for increasing profits of organisation-industrial, business, service, non-profit.
to meet the expectations of the stakeholders and the FUNCTIONS OF MANAGEMENT:
society. The process of management involves multiple
actions performed in a series to achieve the objectives of The functions of management are multifarious and
the business enterprise. encompass each and every activity of an organisation.
The process of management can be classified as a social The responsibility of a manager may differ based on his
process as it involves relationships and co-operation hierarchy level in an organisation but nevertheless, he or
between people and their team effort. And this process is a she is responsible for planning, for directing and leading the
continuous process as developments on various fronts, viz. workers and other staff, and for monitoring and controlling
performances at work, through proper governance and risk
economic, social, political, regulatory etc. are taking place management.
all the time.
Organising:-
Planning
Organising is another important function performed by
management of an organisation and deals with the
Controlling Organising
organisational structuring and arranging the resources of
Functions of
Management
the organisation, viz. the people employed by the
Directing
organisation, the materials, capital and technology used for
Leadership/
Motivation/
Communicat
Staffing achieving the objectives of the enterprise.
ion/
Supervision
Organising involves taking decisions about division of work,
Planning:- allocation of responsibility and authority and task
coordination.
Planning involves taking a call on future and deciding about
it, in line with the objectives of the organisation. Organising becomes a more and more complex function,
and more and more important, with the business growth.
This involves setting of goals, determining the objectives of
Building an effective and formal organisation structure
the organisation and selecting the future course of action
assumes greater significance when the business grows, as
required to be taken for accomplishing the objectives of the
this involves defining, classifying, arranging and
organisation.
coordinating the different types of work activities,
When you plan, you decide in advance about what needs to performed by the organisation.
be done, when and where it needs to be done, how it shall
Thus, the organising function is highly dynamic. It also
be done and who would be doing it.
involves the following areas:-
The activities of a business entity get the desired direction
a) Task Management –
with planning. Planning helps the managers to manage
changes. Planning helps managers to review and monitor What is to be done? Who will do it? How the grouping of
the progress made for achieving the business objectives and tasks shall be done?
take the necessary corrective measures if the progress b) The Reporting Structure – Who shall be reporting to
made is considered unsatisfactory. whom?
Planning is a fundamental function to be performed by c) Decision Making – Who shall make the decisions?
management and has considerable influence on all other
functions of management. At what level, decisions shall be made?
Staffing:- managers of an organisation, forms the very foundation of
A successful organisation needs to have suitable human its success.
capital for achieving its objectives, a function made easy by (b) Motivation:-
staffing. A manager’s function includes inspiring, encouraging and
The major staffing activities include recruitment, selection, urging them to take the action, required for achieving the
training, development and motivation of the various objectives of an organisation.
categories of employees and fixation of their compensation This process is known as motivation and also involves
and reviewing it from time to time. providing the desired stimulus to otherwise indifferent
Staffing also takes care of promotions, job rotations, job people.
enrichment, transfers, termination and retirement Healthy, congenial and pleasant surroundings, along with
activities. incentives for performing, have to be provided by an
Directing:- effective manager for achieving business goals.
Directing covers the functions of guiding and supervising (c) Communication:-
the activities performed by subordinates. It is not enough Communication is the very back bone of how effectively a
to recruit and place people on jobs. manager performs. It is very important that instructions
They have also to be directed towards the achievement of flow speedily and clearly from top to bottom, and
organisational goals. information and suggestions flow from lower levels to top
speedily and without any hindrance. Everyone in an
This function comprises of the following four important organisation has to be on the same page to translate ideas
elements: into action. Effective two-way communication is the very
(a) Leadership:- basis of transfer of thoughts and facts.
The process of leading a team involves influencing a Effective communicators have always been in a position to
person’s or group’s actions to meet the pre-defined and strike a chord with their subordinates and perform as per
desired objectives. A manager has to play an important role the expectations of the top management.
in getting the assigned work done from the people being Without effective communication, managers shall not be
managed by him. The quality of leadership, displayed by able to accomplish much.
(d) Supervision:- This also involves variance analysis and taking remedial
Continuous monitoring and supervision of work, assigned to measures for achieving the planned targets.
the subordinates, is also important for any organisation. Thus, controlling would necessarily involve course
Telling the subordinates about what they are required to do correction measures and alteration of plans, wherever
may not always be sufficient. deviations are observed.
For getting any work done, it is equally important that there Controlling involves the following four steps:-
is adequate supervision too. (a) Establishing performance standards;
The activities of the subordinates need to be watched and (b) Measurement of actual performance,
supervised to ensure proper quality of goods manufactured,
to deliver quality services and to achieve the targets laid (c) Comparison of actual performance against the
down by the top management. established standards
Supervision helps in ensuring that subordinates perform (d) Taking corrective actions to achieve the desired
their functions properly and do their work in time and as objectives.
per the laid down norms and standards. Active participation by managers, in all the above functions,
Controlling:- is desirable to achieve the business goals of an organisation.
Proper controls are required to ensure that actions taken by Since all the above functions of management are
the management help in achievement of organisational interrelated, managers must take a holistic view and use a
goals. combination of the above management functions to solve
the challenges and problems faced by them for meeting
An effective controlling function will always be preceded by their business goals.
proper planning.
IMPORTANCE OF MANAGEMENT:-
It is very important that the activities undertaken by the
management remain on the right track and are in line with All businesses need proper direction for achieving the
the plans, targets and objectives of the organisation. objectives for which they are established. This function is
performed by Management. Let us take the example of a
The control function deals with monitoring and measuring manufacturing company. All planning, organising, staffing,
of performances of people and comparing them with the co-ordination, control revolves around the manufacturing
pre-decided standards and projections. activity. Funds are raised with the ultimate object of
producing quality goods meeting the requirements of the (ii) by achieving higher coordination;
customers, for capturing market share and for adding value (iii) by creating an environment of mutual respect and trust;
for the stakeholders. (iv) by increasing motivation levels; and
An efficient and effective management shall make the (v) by effective supervision.
realisation of this objective possible.
e) Development of various resources:-
Thus, we may zero in on the following points, which
highlight the importance of management: Management helps in all round development of various
resources, viz. human resources, machines, materials and
a) Effective Change Management Tool:- capital, at the disposal of the business entity.
An efficient management works as an effective change f) Contributes towards better organisation:-
management tool and helps the transition of an
organisation from good to great. Management helps better structuring of the organisation by
properly defining the authority and responsibility of
b) Helps achieve group goals:- employees at various levels, and by ensuring the right job fit
Management helps an organisation plan and continuously for the employees.
adjust with the ever-changing external business g) Proper Direction to the organization:-
environment. It also helps improvement of the quality of
decisions taken and improves control over the functioning Management provides proper direction to the organisation
of various departments of the business unit, thereby to achieve its goals and the laid down roadmap.
making achievement of group goals possible. h) Integration of various interests:-
c) Optimum utilisation of resources:- Integration of the interests of various groups, in an
Proper management and efficient allocation of resources organisation, is an important role played by management.
helps efficient and optimum utilisation of scarce resources. i) Management of fluctuations:-
d) Improved functioning of business:- Management of ups and downs, caused by business cycles
Management helps a business function effectively and other external factors, is an important function of
management.
(i) by improving the understanding, ability and morale of
the human capital employed in the business;
j) Innovation:- Harold Koontz, an eminent Management Expert, has even
Creativity and innovation on the part of management of an coined the term ‘the management theory jungle’ for the
enterprise play an important role in the growth of the various management approaches.
organisation. This helps the organisation to stay ahead of its The various management thoughts can be classified as
competition. under:-
k) Inculcation of team spirit:- Classical or Traditional School:-
Management helps inculcation of team spirit among The classical school believes in the use of technology for
different departments of an organisation by improving increasing efficiency of the employees, and lays down more
coordination. emphasis on the organisation, looks at the organisation as a
l) Problem solving:- machine and the employees as its parts, who are important
only as a means of production.
Effective management acts as a friend, philosopher and
guide to the employees and helps them to better their The salient features of the classical or traditional school
performance, by supporting them to solve their day-to-day include:-
problems in a proactive manner. (a) Having an integrated and centralised system
m) Helps Employee Growth:- (b) Greater emphasis on production
Introduction of latest management techniques, new (c) Concentration on errors and their rectification
production methods, new service delivery systems, new (d) Assuming employees’ continuity irrespective of
training methodologies and new team building techniques organisational changes
help employee growth to a large extent.
(e) Based on an accounting model and
MANAGEMENT THOUGHTS & APPROACHES:-
(f) Giving equal weightage to different types of jobs and
Management Practitioners and Academicians have been employees.
contributing to the theory and practice of management for
more than a century now and have come out with a variety Neoclassical or Behavioural School:-
of approaches to management, based on intensive research This school is an extended version of the traditional school
and analysis. and developed because of the weaknesses observed in the
classical theory.
The behavioural thought process attempted to solve the
problems faced by the classical theorists. Self-actualization needs
This school of thought propounded the influence of human

Self-esteem needs
actions on the very existence of an organisation.
An organisation, according to this theory, comprises of both Love and Belongingness needs
formal and informal forms of organization, a fact which was

Safety needs
overlooked by the Classical theorists.
This School of Thought had the following salient features:- Physiological needs
a) Focus on motivation.
b) Different persons get motivated diversely for satisfying
their specific needs.
The theory can be summarized as follows:-
c) For efficiency measurement, communication is a critical
Human beings have wants and desires which influence their
input.
behaviour. Only unsatisfied needs influence behaviour,
d) For organizational performance, team-work is essential. satisfied needs do not.
e) The thought has two different perspectives, viz. Human Since needs are many, they are arranged in order of
Relations perspective and Psychological perspective. importance, from the basic to the complex.
This school of thought was also the originator of Maslow’s The person advances to the next level of needs only after
hierarchy of needs, Douglas McGregor’s X and Y Theory and the lower-level need is at least minimally satisfied.
Motivation-Hygiene Theory.
The further the progress up the hierarchy, the more
Notes :- MASLOW’S HEIRARCHY OF NEEDS:- individuality, humanness and psychological health a person
will exhibit.
DOUGLAS MCGREGOR’S X AND Y THEORY gave an insight
into the two aspects of human behaviour.
Theory X stated that humans do not work without close
supervision, while Theory Y propounded that humans love
to work and there is no need of coercing them to work for People have capacity to exercise imagination and creativity.
achieving organisational goals. People are not by nature passive or resistant to
Theory X Assumptions:- organizational needs. They have become so as a result of
The average human being is inherently lazy by nature and experience in organisations.
desires to work as little as possible. He dislikes the work MOTIVATION-HYGIENETHEORY, also known as Two-Factor
and will like to avoid it, if he can. Theory or Satisfier- Dissatisfier Theory of Motivation and
He avoids accepting responsibility and prefers to be led or behaviour, was the brainchild of Fredrick Herzberg, a
directed by some other. psychologist and behavioural scientist.
He is self-centred and indifferent to organizational needs. Frederick Herzberg’s two -factor theory, aka intrinsic/extrinsic
motivation, concludes that certain factors in the workplace
He has little ambition, dislikes responsibility, prefers to be result in job satisfaction, but if absent, lead to dissatisfaction.
led but wants security.
The factors that motivate people can change over their
He is not very intelligent and lacks creativity in solving lifetime, but “respect for me as a person” is one of the top
organizational problems. motivating factors at any stage of life.
He, by nature, resists change of any type. He distinguished between:-
Theory Y Assumptions:- Motivation:- (e.g., challenging work, recognition,
Work is as natural as play, provided the work responsibility) which give positive satisfaction, and
environment is favourable. Work may act as a source Hygiene factors:- (e.g., status, job security, salary and fringe
of satisfaction or punishment. An average man is not benefits) that do not motivate if present, but, if absent,
really against doing work. result in demotivation.
People can be self-directed and creative at work if they are Quantitative School or Management Science:-
motivated properly.
the Quantitative School of Management developed mainly
Self-control on the part of people is useful for achieving after World War II and emphasises use of mathematical and
organizational goal. External control and threats of statistical models for finding solutions to managerial
punishment alone do not bring out efforts towards problems. The scientific management techniques, laid down
organizational objectives.
by Fredrick Winslow Taylor, also helped in laying down the The main objective of the research undertaken by the
foundations of this approach. systems school was to understand the external
Management is studied as science under this approach, environment and conditions faced by an organisation and
with special emphasis on operations and management finding ways of handling such conditions. The open system
information systems. approach is important because of the interaction between
an organisation and the outside forces and the outside
The main characteristics of the quantitative approach to influence impacting the actions taken by the organisation.
management include:-
For example, a bank provides financial services and
a) Creation of models, theories and hypotheses. products to its customers and the customers react by liking
b) Collection of empirical data. or rejecting the product.
c) Development of mathematical and statistical models. The Contingency School of Management:-
d) Data analysis. This school of management thought was an offshoot of the
e) Experimenting in controlled environment. scientific, behavioural and systems approaches to
management, and stated that there cannot be a unique way
f) Testing with changes in variables. of managing an organisation and which can be labelled as
g) Development of various instruments. the best way to manage or lead a business. The best or the
h) Development of quantitative techniques. optimal way shall always depend or be contingent on the
internal and external environment.
The System School of Management:-
In other words, there cannot be a standard solution to
This school of management thought was propounded by various business situations faced by the management.
Daniel Katz, an American Psychologist, and Ludwig Von
Bertillon, an Australian Biologist. They advocated the Each leader might deal with the same situation in different
concept of management being an open system, which is ways, depending on his/her leadership style.
required to interact with the environment constantly for Studies on the behaviour of leaders were conducted in
getting resources, which are both valuable and limited. 1950’s by researchers in Ohio State University and
University of Chicago (University of Michigan Survey
Research Centre).
The findings of scholars from both universities, though The contingency school of management thought is criticised
similar, were given different names, which is detailed for being reactive and for failure to be proactive and for not
below:- providing some standard principles and procedures to be
S. No. Ohio State University S.No. University of Chicago applied in specific situations. This approach can turn out to
Findings Findings be expensive in terms of money and time and development
1. Consideration leader 1. Relation-oriented of a proper theory of management principles becomes
behaviour: behaviour: almost impossible.
The Contemporary School of Management:-
(a) Believes in building (a) Encourages social
good rapport with interactions Management theory continues to advance because of
subordinates and having constant evolution of business practices and management
good interpersonal (b) Involves mutual techniques, especially in the wake of technological
relationship. respect and trust advancements.
Further, continuous research is giving rise to new
(b) Shows support and (c) Empowers people
approaches to management. The concepts of ‘Total quality
concern for people.
management’ and ‘Learning organization’ are quite relevant
2. Initiating structure leader 2. Task-oriented
behaviour: behaviour: in this context.
Total Quality Management:-
(a) Believes in proper (a) Defines structure
Total Quality Management focuses on the management of
structure for planning, and business goals
an organisation for delivering high quality goods and
scheduling and aligning
different roles, with the (b) Emphasises services to its customers. The approach originated in Japan
task completion and planning after the Second World War.
attainment of business (c) Defines priorities The four main elements of this approach are:-
goals in mind.
1- Employee involvement:-
(d) Has a model for
rewarding and A high degree of involvement of employees is instrumental
punishing the in preventing quality issues, before they occur.
contingency school of
management
2- Customer focus:- Total Quality Management:-
To improve quality, an organisation needs to focus fully on 1- Consistency of purpose:-
the requirements of its customers, and understand their A consistency of purpose should be created for improving
business and what they want, with the objective of services and products.
delivering products and services suitable to them.
2- Adoption of the new philosophy:-
3- Standardisation:-
The Organisation should adopt the new Total Quality
It is very important to use the industry standards as Management philosophy.
benchmarks for comparison with competitors and for
evaluating your own performance. 3- Ceasing dependence on inspection:-
Comparison of your own performance with your The organisation should stop depending on inspection for
competitors, especially those who perform similar functions achieving quality.
or processes more effectively and efficiently, can certainly 4- Stopping lowest bid system:-
help improve on the organisation’s functions or processes. The practice of considering price as the criteria for awarding
4- Continuous Monitoring:- business contracts should be abolished and the total cost
There should be continuous thrust on monitoring and should be minimised by having a lower number of suppliers.
changing for the better, so as to achieve improvement in all 5- Introduction of all-round improvement:-
the areas of an organization. Constant improvement in the planning, production and
Deming, Juran and Crosby were three main contributors to service process should be introduced and be made a
the Total Quality Management approach. perpetual process.
William Edwards Deming considered the quality of people 6- Instituting On-the-job training:-
more important than the quality of products and accorded Modern on-the-job training methods should be established.
greater importance to how efficiently the management
planned, implemented and improved the projects. 7- Instituting leadership:-
He laid down the following fourteen principles of The culture of leadership should be adopted and initiated.
8- Driving out fear:- Learning Organisation:-
The organisation should drive out fear by improving two- The present-day organisations face continuous
way communication. environmental and technological changes.
9-Breaking down barriers:- An organisation cannot survive if it does not adapt itself to
Barriers between staff areas and departments should be the dynamic competitive environment, which continues to
removed to improve co-ordination. be the biggest challenge faced by any organisation, which
wants to grow.
10- Eliminating exhortations:-
A learning organisation may be defined as an organisation
The workforce should not be given any targets or slogans or where all the employees take part in identifying and solving
exhorted to achieve production levels, without devising the problems which it faces, and which permits the
new methods. organisation to continuously enhance its capacity to grow
11- Eliminating arbitrary numerical targets:- and learn, so as to achieve the organisational goals.
Fixing arbitrary production quotas for the workforce and Thus, a learning organisation shall be organised from the
numerical targets for the management, should be avoided. angle of problem-solving and not from the perspective of
12- Permitting pride of workmanship:- efficiency and shall have a structure which is based on
teamwork, employees who are empowered and shall have
The barriers to the pride of workmanship, as well as the an open information system.
annual rating or merit system, should be removed with
emphasis on improvement in quality. The major contributor to this school of thought, Peter
Senge, has defined Learning Organisations in his book,
13- Encouraging education:-
The Fifth Discipline:-
A vigorous program of knowledge, education and self-
improvement for everyone, in the organisation, should be The Art & Practice of Learning Organization as
instituted. ‘organizations where people continually expand their
capacity to create the results, they truly desire, where new
14- Action for achieving transformation:- and expansive patterns of thinking are nurtured, where
Action should be initiated by the management for collective aspiration is set free, and where people are
accomplishing the transformation by involving everyone by continually learning to see the whole together.’
conducting Seminars and through other means.
Learning Organisations was introduced in the 90’s and was To quote Senge:-
seen as a new concept which advocated the adaptive and “Understanding the difference between hearing what
generative learning, with thrust on out of the box thinking someone said, and truly understanding what they said, and
and finding the best solutions to problems jointly with other understanding the gap between what happened and what
employees. we perceived happening, requires reflection.
The five disciplines of a learning organisation are:- In a non-reflective environment, we take what we see as
1- Personal Mastery:- truth.”
This is considered as the cornerstone of a learning 4- Team learning:-
organisation which involves developing a capacity to According to Senge, humility is the very basis of team
achieve personal goals by creating an environment learning. The Team Members have to be ever willing to
conducive to the growth of an employee’s personal vision, reflect and consider views of other people and should
which further leads to a shared vision. always be prepared to forget their personal biases for
2- Shared vision:- creating a collaborative work environment.
This can be made possible when you trust people and 5- Systems Thinking:-
collaborate, instead of only complying instructions of The idea of ‘systems thinking’ envisages that everything is
higher-ups. Business Leaders work together with employees interrelated and interconnected.
to achieve a joint vision. They create an environment where
employees feel that they are participating in the growth of We cannot act as a disjointed set of personal silos.
the organisation and where management encourages We need to look at the whole picture and understand how
employees to take risk. each part is connected. In his book, The Fifth Discipline,
3- Mental Models:- Senge has stated that
A mental model assists us in developing our understanding “Systems thinking is a sensibility—for the subtle
about the impact of the assumptions and generalisations, interconnectedness that gives living systems their unique
deeply ingrained in our minds, on our interactions with character.”
people, and the decisions taken by us.
A learning organisation is important because:- ways of differentiating and sustaining competitive
a) It always tries to find improved and innovative ways of advantages, and the manner in which products or services
doing things and staying ahead of the competition. are provided.
b) The effectiveness and efficiency of a learning The management of a business entity shall be able to
organisation is very high. perform better if it understands the business model
followed by the organisation.
c) A learning organisation has higher productivity and
output. A business model covers the important operational
characteristics and key structural features of the business.
d) A learning organisation helps in enhancing the image of While the simplest business model shall be a model which
the company. helps the management to sell the goods or services at a
MANAGEMENT CHALLENGES & OPPORTUNITIES:- profit, such models may or may not work.
Management faces a lot of challenges for achieving the Hence, a variety of other much more complicated business
business objectives and also gets a lot of opportunities, models are in vogue.
which need to be properly evaluated in a time bound Some of the other possible business models are:-
manner.
A- Solution Providing or Consulting Services Model:-
Several issues which are faced by the management include:-
Under this model, the business may provide consulting
a) Which business model to adopt? services which help improve the client’s operations.
b) How to manage the information explosion? IBM has used this model.
c) How to manage the changes taking place every now and B- Profit Pyramid Model:-
then?
Under this model, the customers are provided low-priced
d) How to face the threat of globalisation? products initially and gradually they are moved to
e) How to manage the impact of environmental sustainability? expensive products, where the business earns higher
Business Models:- profits. General Motors followed this model.
Business models are based on the type of clients to be

served, the product offerings, the revenue earning model,
C- Multi-component Systems Model:- Southwest Airlines, Wal-Mart and Dell have been using this
Such models have been used by companies like Gillette and model.
HP. Gillette sold the cheaper razors at no-profit no-loss H- Blockbuster model:-
basis and made money on High-end razor blades. This model is typically used by industries which are having
HP has done it with its printers and ink cartridges, where the protection under patent laws, like pharma and film
once a customer buys the printer, he also becomes industry, where profits depend on a few items and are
dependent on HP for cartridges. driven by star appeal.
D- Advertisement Model:- I- Profit multiplier model:-
These models offer the basic product free and make money This model involves developing concepts which may or may
through advertising. YouTube, Google etc. are live not be profitable but are used for driving other products
examples. through synergy.
E- Switchboard Model:- The management looks at the whole picture in such cases.
This model allows a firm to acts as an intermediary for For example, Walt Disney used cartoon characters for
connecting multiple sellers with multiple buyers. developing theme parks, merchandise, and licensing
opportunities, which gave them huge profits.
eBay, Amazon, Flipkart are businesses which have used this
model successfully. J- Entrepreneurial model:-
F- Time Model:- This model deals with offering specialized products or

services to clients which are not attractive to large
This model depends on how fast research and development competitors but have potential of fast growth.
happens. A business which pioneers some new idea shall be
successful initially, till other competitors join the There are so many cases today where big companies like
bandwagon. Tata’s have acquired smaller players with potential, e.g.,
1MG was acquired by Tata’s.
G- Efficiency model:-
K- De Facto industry standard model:-
A business following this model just waits for the market to
mature with standardisation of the product and enters with Free products, under this model, may be offered at a very
low-cost and low-margin products with mass appeal. low cost to increase the market share and for saturating the
market to make everybody talk about the product as a great
brand and industry standard. Subsequently, the users are The issues pertaining to privacy of individuals, states and
offered high-end and high-margin products. businesses, shall also need to be addressed, as far as
Microsoft indulged into this strategy. possible, with the help of technology.
These business models invariably involve the optimisation The pace of digitization and the rate of information
of profits by using optimum product mix. explosion is going to continue increasing with the passage
of time and business entities shall have to adjust and
A variety of techniques are used for this purpose. realign themselves with the changes brought about by the
Information Explosion:- increasing information explosion.
The modern-day world is witnessing an unprecedented Managing the Change:-
digital revolution, which has resulted in the explosion of “There is nothing permanent except change” is said by
information at a scale hitherto unknown. Heraclitus, a Greek philosopher who lived 2500 years ago.
The function of data storage and retrieval is becoming more The saying is still relevant and shall continue to be so for all
and more challenging day by day and the task of processing times.
and analysing the data, for social and economic gains, is “Even though we have been quite successful over the past
also becoming more and more difficult and technical. 20 years, we must look ahead and understand that there is
Organisations, which are in a position to exploit the a new and very strong trend happening in the banking
opportunities offered by technological innovations, have world that is totally different from almost everything that
been able to meet these emerging challenges. Such a we have seen before.”
capability also gives them an edge over the businesses who — Márcio de Andrade Schettino, Director, Itaú Unibanco
are not in a position to do so.
Management is also about managing change, because the
The flip side is that this digital gap can also give rise to business environment is not static and keeps changing all
inequalities which shall have to be bridged with the use of the time.
appropriate dissemination of digital technology.
The foremost challenge, faced by the management in this
There is also scope for deliberate spread of misinformation regard, relates to resistance for change from people.
and disinformation by such people who lag behind because
of various reasons and do not make efforts to improve their Generally, when people are well settled in their job, they do
capabilities. not want to come out of their comfort zones.
They do not want to:- — Datuk Abdul Farid Alias, Group President and CEO,
(a) learn new techniques of management; Maybank, Malaysia
(b) adapt to new technologies; and Technology is changing the world and is impacting
businesses. A business, which wants to grow and stay
(c) undergo trainings and hone their skills. relevant, has to keep evolving and changing with times and
And this is where the manager’s role becomes challenging. stay up-to-date with technology. Look at the way the car
Whenever changes are happening in an organisation, the industry is changing. The focus on diesel and petrol vehicles
managers have to ensure that the change is smooth and is changing and Electric vehicles are going to take over soon.
does not affect the productivity and profitability. There is a move towards driverless cars to bring down the
New Products & Services:- rate of accidents.
In any organisation, a continuous customer feedback There are advances in surgery, and robots are being
mechanism and research play an important role in the increasingly used to conduct surgery with increased
development of new products and services. precision.
Introduction of new products and services might be In case of banks, fintech is changing the role and relevance
necessitated because of several reasons, like lack of of banking, and new business models are being combined
demand, changes in consumption patterns, change in with technology, which is going to enhance the capabilities
customers’ expectations, technological innovations, of banks but, at the same time, is going to cause a lot of
competition, change in government or regulatory disruption.
regulations etc. There is a race to enhance customer satisfaction with the
It is very important for the management to ensure that new help of technology and to make the whole banking
products are developed carefully, and tested properly, experience simple, convenient and transparent.
before these are launched. The management has a vital role to play in managing these
Technological Changes:- changes.
“We live in a time where there is an inflection point in
customer behaviour. If we do not get our innovation
programs right, we will become irrelevant very quickly.”
Employee Management:- Impact of Globalization:-
“A manager sets objectives, organizes, motivates, and Globalisation has brought many changes in the world.
communicates, sets yardsticks, and measures, to develop It has created lot of opportunities for business entities.
people.” – Peter Drucker
More or less, the whole world has become a single market
Human capital has become very vital for any organisation in and businesses are finding new opportunities to grow their
today’s scenario because lot of investment takes place in business, to increase their exports, to source raw materials,
training an employee. to enter into business collaborations and joint ventures,
Because of the changes in the loyalty patterns these days, borrow from international markets at cheaper rates, and
especially in India, lot of importance needs to be given to set up subsidiaries abroad.
employee management. Co-operation at international level is increasing.
Therefore, the main challenge before the management is to This, however, is also impacting the environment due to the
create an environment, where employees love to work and following reasons:-
give their best, where performance is rewarded, where the
organisational objectives are achieved, and employees Increase in Transport of Goods:-
develop a bond of loyalty. This has resulted in increased emissions, destruction of
Globalization and Environmental Sustainability:- habitat and harmful effects on various species.
“We are moving toward a global economy. One way of Economic Specialisation:-
approaching that is to pull the covers over your head.” Although globalisation has helped nations in specialising,
Another is to say:- this has also resulted in overuse of natural resources,
reduction in forest cover and loss of habitat.
“It may be more complicated - but that’s the world I am
going to live in, I might as well be good at it.” - Phil Condit, Reduced Biodiversity:-
Former Chairman and CEO of Boeing. Climate changes, introduction of invasive species, reduction
“Without environmental sustainability, economic stability of forest cover and loss of habitat, greenhouse gas
and social cohesion cannot be achieved.” - Phil Harding emissions, acidification of oceans have all contributed to
the reduction of biodiversity around the globe.
The world today has become more and more aware about GOAL 5: GENDER EQUALITY:-
the threat to environment. This adds to the responsibility Gender equality is not only a fundamental human right, but
and accountability of management. a necessary foundation for a peaceful, prosperous and
Impact of Environmental Sustainability:- sustainable world.
The global challenges faced by us include poverty, GOAL 6: CLEAN WATER AND SANITATION:-
inequality, climate change, environmental degradation, Clean, accessible water for all is an essential part of the
peace and justice. world, we want to live in.
Because of these issues, environmental sustainability has GOAL 7: AFFORDABLE AND CLEAN ENERGY:-
emerged as a hot topic in the 22nd century and the United
Nations has fixed the following sustainable development Energy is central to nearly every major challenge and
goals, which are the blueprint to achieve a better and more opportunity.
sustainable future for all:- GOAL 8: DECENT WORK AND ECONOMIC GROWTH:-
GOAL 1: NO POVERTY:- Sustainable economic growth will require societies to create
Economic growth must be inclusive to provide sustainable the conditions that allow people to have quality jobs.
jobs and promote equality. GOAL 9: INDUSTRY, INNOVATION, AND INFRASTRUCTURE:-
GOAL 2: ZERO HUNGER:- Investments in infrastructure are crucial to achieving
The food and agriculture sector offers key solutions for sustainable development.
development and is central for hunger and poverty GOAL 10: REDUCED INEQUALITIES:-
eradication. To reduce inequalities, policies should be universal in
GOAL 3: GOOD HEALTH AND WELL-BEING:- principle, paying attention to the needs of disadvantaged
Ensuring healthy lives and promoting the well-being for all and marginalized populations.
at all ages is essential to sustainable development. GOAL 11: SUSTAINABLE CITIES AND COMMUNITIES:-
GOAL 4: QUALITY EDUCATION:- There needs to be a future in which cities provide
Obtaining a quality education is the foundation to opportunities for all, with access to basic services, energy,
improving people’s lives and sustainable development. housing, transportation and more.
GOAL 12: RESPONSIBLE CONSUMPTION AND PRODUCTION:- This will definitely impact the decision making, as also the
Responsible Production and Consumption. types of businesses undertaken by any business
organisation.
GOAL 13: CLIMATE ACTION:-
INTRODUCTION TO STRATEGIC MANAGEMENT:-
Climate change is a global challenge that affects everyone,
everywhere. Introduction:-
GOAL 14: LIFE BELOW WATER:- Banking industry is the backbone of the financial sector.
Careful management of this essential global resource is a The Indian Banking industry has witnessed several stages of
key feature of a sustainable future. growth over time.
GOAL 15: LIFE ON LAND:- The growth has been exponential since nationalization of
banks, liberalization of the Indian economy in the early
Sustainably manage forests, combat desertification, halt 1990’s and the entry of Private Sector Banks.
and reverse land degradation, halt biodiversity loss.
The private sector banks, from the beginning, had adopted
GOAL 16: PEACE, JUSTICE, AND STRONG INSTITUTIONS:- a technology driven model and have been quite aggressive.
Access to justice for all, and building effective, accountable Due to this, over time, the monopolistic hold of the public
institutions at all levels. sector banks in the financial space underwent some
GOAL 17: PARTNERSHIPS:- changes.
Revitalize the global partnership for sustainable This is borne out by the fact that the share of Public Sector
development. Banks (PSBs) in total advances, as well as in deposits, has
been declining since 2010-11, while Private Sector Banks
(Source: have been improving their share.
https://www.un.org/sustainabledevelopment/sustainable-
development-goals) In 2020-21, PSBs constituted 59.9% of the total assets of
Scheduled Commercial Banks (SCBs).
The present-day management is faced with the challenge of
maintaining a balance between the environmental Private Sector Banks 32.8%, Foreign Banks 6.5%, and Small
sustainability expectations and its business goals. Finance Banks 0.8% of the total assets of the SCBs.
(Source:-RBI Report on Trends & Progress of Banking in ----------------------
India dated 28th December,2021) 1 https://2012books.lardbucket.org/books/management-
The growth of the banking industry has been driven by principles-v1.0/s09-01-strategic-management-inthe-p-
different strategies adopted by them, based on existing and .html#:~:text=%E2%80%9Cis%20the%20process%20by%20w
emerging situations. hich,Sanders%2C%20W.%20G.%20(2009).&text=Others%20
Strategic Management has been, is and will continue to be a have%20described%20strategy%20as,1978.
key driver for shaping banking operations. 3http://dspace.mit.edu/bitstream/handle/1721.1/2031/SW
Strategic Management Defined:- P-1396-09362356.pdf?sequence=1
“Strategic management is defined as the process by which a Strategy is the pattern of decisions in a company that
firm manages the formulation and implementation of its determines or reveals its objectives, purposes or goals and
strategy1” (Carpenter, M. A., & Sanders, W. G. (2009). plans for achieving those goals, and defines the range of
business the company is to pursue, the kind of economic
The word strategy comes from the Greek word, strategus, and human organization it is or intends to be, and the
meaning the “General’s views”. nature of the economic and noneconomic contribution it
In the words of Andrews(𝟏𝟗𝟖𝟎)𝟐 , “corporate strategy is the intends to make to its shareholders, employees, customers,
pattern of decisions in a company that determines and and communities. This definition links strategy to such
reveals its objectives, purposes, or goals, produces the activities as setting objectives, determining policies, and the
principal policies and plans for achieving those goals, and formation of action plans.
defines the range of business the company is to pursue, the A study of the definitions given above shows that a strategy
kind of economic and human organization it is or intends to combines explicit statements and implicit beliefs and
be, and the nature of the economic and non-economic understandings in and around an organization about3:
contribution it intends to make to its shareholders,
employees, customers, and communities... Mission:-
[It] defines the businesses in which a company will Its core purpose (mission) and how, if at all, its mission will
compete, preferably in a way that focuses resources to (or must) change in future.
convey distinctive competences into competitive
advantages.”
Vision:- Alfred Chandler Jr. suggests strategy as:-
An image of its future direction and what it intends to “The determination of the basic long-term goals and
achieve. objectives of an enterprise, and the adoption of the courses
Clientele:- of action and the allocation of resources necessary for
carrying out these goals”.
Its scope, meaning, thereby, its main clientele now and
those in the future (and consequently the potential Porter relates strategy to the success of a company
clienteles that are and will remain outside its scope). “obtaining a competitive position or series of competitive
position that lead to superior and sustainable financial
Resources:- performance”.
The resources and competences that create value for its To conclude, we may say that Strategic Management
clientele and how these will (or must) change to maintain involves those decisions and actions of the management
and enhance the future value created. that determine the long-term performance of a business
Present and Future:- entity.
The foundations of its present competitive standing and The various elements of strategic management include
future sustainability. scanning of the external and internal environment,
Hambrick and Fredrickson define strategy as “the central, formulation of long-term strategic plans, implementation of
integrated, externally oriented concept of how a firm will strategy and the evaluation and control process.
achieve its objectives.” A strategy, then, encompasses the Difference between Plan and Strategy:-
pattern of organizational actions that have been taken and Quite often, the words “plan” and “strategy” are used
those that are to be taken by an organization, in pursuing its interchangeably. However, there are significant
objectives.
differences between these terms.
Strategy outlines the means by which a firm intends to
create unique value for customers and other important A plan is an arrangement, a pattern, a programme, or a
stakeholders. scheme for a definite purpose.
A plan is very concrete in nature and does not allow for
deviation.
If “Plan A” doesn’t work, you don’t alter “Plan A” and try For example, even though SBI Funds Management Limited,
again. Rather, you move to “Plan B;” which may be totally the Asset Management Company for SBI Mutual Fund, was
different. a major competitor in mutual fund business, it was not
3 https://us.sagepub.com/sites/default/files/upm- likely to achieve its challenging objective of achieving the
assets/47001_book_item_47001.pdf number one position in the Indian Mutual Fund Industry, by
significantly increasing the assets under its management
A plan is most useful when staying well organized and on- and its net profits in 2021, without making a major change
track is the highest priority. A plan provides a coherent in strategy.
framework from which to build and a sure direction to
follow, with intermittent milestones to pass, to reach an The Management gave importance to investment and risk
end goal. management and decided to increase its presence by
opening new branches and by having a robust marketing
A strategy, on the other hand, is a blueprint, layout, design, strategy, increasing use of technology, and improving
or idea used to accomplish a specific goal. A strategy is very performance of funds managed by the company.
flexible and open for adaptation and change when needed.
A typical business entity normally considers three different
Strategy is most useful when creativity, collaboration, and types of strategies, as under: -
innovation are of the utmost importance. A strategy
encourages openness and debate from every side of the a) Corporate strategy of a company covers the overall
equation. A strategy embraces questions and out-of-the- direction followed by the company.
box, effective answers. A strategy allows for a natural flow It would spell out the general attitude of the company
of thought and continual momentum that builds, till success towards growing and managing its different business lines,
is reached. products and services.
Strategies:- A corporate strategy may be classified under the three
The strategy followed by a business entity can be equated different categories of stability, growth, and retrenchment.
with a master plan, which contains details as to how the TCS, for example, followed a corporate strategy of
mission and business goals of the entity shall be achieved. retrenchment by selling its marginally profitable Tata EX
The purpose of the strategy of the organization is Accounting Software business and concentrating on its
maximizing the competitive advantages and, at the same highly successful consultancy business.
time, minimizing the competitive disadvantages.
b) Business strategy would normally be prepared at the Another example is the marketing function. Demand may
level of the business unit or at the level of product or be created by spending huge amounts on advertising and
service and it normally highlights the improvement in the creating awareness about the distinct advantage of using
specific industry or market ranking of the business entity’s the advertised products.
products or services produced or delivered by that business In practice, a business entity may use all the three types of
unit. strategies at the same time.
A business strategy could be competitive or cooperatives. Elements of Strategic Management:-
Under a competitive strategy, a company might try to
differentiate its services whereas, a company following a Strategic management :has the following four basic
cooperative strategy may form an alliance with other elements:
companies to extend its reach to global markets and get a
competitive advantage.
Environmental Strategy Strategy
Strategy
For instance, Intel, which manufactures computer Scanning (The
context) Formulation
Implementat Evaluation
ion & Control
microprocessors, has allied with Microsoft to differentiate
itself from AMD, its main competitor.
c) Functional strategy refers to the approach adopted by
functional areas for achieving the objectives of the business
unit and the company by maximizing the productivity of The Context (Environmental Scanning):-
available resources. This refers to monitoring, evaluation and dissemination of
It involves the development and fostering a distinctive information received from the internal and external
capability to create a competitive advantage. environments.
For example, the functions of research and development The information is provided to the key people in the
and technology may turn out to be the prime contributors organisation with the overall objective of identifying both
to the functional strategy. internal as well as external strategic factors, which can
impact the future of the organisation.
Certain companies do not spend much on research and
grow just by imitating and improving the products launched SWOT Analysis is one of the easiest ways of conducting
by their competitors. environment scanning.
The acronym SWOT refers the Strengths, Weaknesses, evaluate and select corporate, business and functional
Opportunities, and Threats, applicable to a specific strategies to pursue.
organisation. Creating vision is the essential act of leadership.
Strengths and Weaknesses form part of the internal The vision must relate to the expectations of its customers,
environment of an organisation and could cover the while being grand enough and imaginative enough to fuel
organisation structure, the resources available to an the employees’ spirit.
organisation and the overall organisational culture.
The vision gives the organization its energy. The vision
The core competencies of an organisation depend on its usually requires a “leap of faith” and an “act of courage”.
strengths.
A vision is an optimistic, inspiring picture that brings with it
The internal environment can usually be controlled by the the responsibility to make it happen.
top management in the short run.
A vision is a dream of greatness! Vision is a simple
The Opportunities and Threats form part of external factors statement or understanding of what the firm will be in the
and are generally outside the ambit of the top future.
management’s short-term control.
A vision is forward looking and identifies the desired long-
These factors could be general, as well as specific factors. term status.
The general factors generally impact the entire economy or
an industry whereas the specific factors might impact a A vision statement should answer the basic question,
specific industry or an organisation. “What do we want to become?” A clear vision provides the
The internal and external environmental factors form the foundation for developing a comprehensive mission
context within which an organisation exists. statement.
The Strategy Formulation:- Many organizations have both a vision and a mission
statement, but the vision statement should be established
Strategy formulation requires, on the basis of information first and foremost.
gathered from situation analysis, to set strategic direction
through business mission and vision statements, and Ideally, vision statement should be short, preferably one
establish strategic objectives to reach there, and generate, sentence, and as many managers as possible should
contribute to developing the statement.
The mission statement is usually depicted as the starting Maps and provide navigation and make it
point in the strategic planning process. and communication. universally accessible
Google is also branching into and useful.
The mission statement spells out the underlying motivation
other areas as well, as the
for being in business in the first place - the contribution to
famous Google cars that operate
society that the firm aspires to make. on their own.
Admission statement is called a statement of purpose, a This is part of Google’s vision of a
statement of philosophy, a statement of beliefs, a future where cars drive
statement of business principles, or a statement “defining themselves and people can
our business,”. participate in more productive
activities during their commute.
A mission statement reveals what an organization wants to The site Google+ is part of
be and whom it wants to serve. Google’s vision for social media,
Organizational mission statements should include ten which is integrated in the phones
components:- and all other aspects of life.
Google Chrome browser is part
customers, products or services, markets, technology, of the company’s vision of a
concern for survival, growth and profitability, philosophy, more open market for Web
self-concept, concern for public image, and concern for browser add-ons.
employees. The innovative company has
even started a new venture
The Visions and Missions of some renowned entities are as
called Calico, which is focused on
under:-
creating a healthier future for all
ENTITY VISION MISSION mankind.
SBI Be the Bank of choice for a Committed to The Titan We create elevating experiences We will do this
transforming India providing simple, Company for the people we touch and through a pioneering
responsive, and Limited significantly impact the world we spirit and a caring,
innovative financial work in. value-driven culture
solutions that fosters
Google Google’s Android phones offers To organize the innovation, drives
its users free access to Google world’s information performance, and
ensures the highest While strategy formulation is the process of deciding what
global standards in to do, strategy implementation is the process of performing
everything we do. all the activities necessary to do what has been formulated.
Aditya To be a premium global To deliver superior
Strategy Evaluation and Control:-
Birla conglomerate with a clear focus value to our
Group on each of the businesses. customers, Strategy evaluation is a logical step to obtain feedback from
shareholders, strategy’s performance and taking corrective actions, if
employees, and needed, in the light of constant external and internal
society at large. changes. Strategy evaluation is needed because success
To position PNB as the ‘Most Creating Value for all today does not guarantee success tomorrow.
PNB Preferred Bank’ for customers, its customers,
the ‘Best Place to Work In’ for Investors and Phases of Strategic Management:-
employees and a ‘Benchmark of Employees for being General Electric, one of the pioneers of strategic
Excellence’ for the industry. the first choice for all management, and the Boston Consulting Group, followed
stakeholders. by various industry experts and academicians, have been
instrumental in developing the concepts and techniques of
strategic management.
Strategy Implementation:-
From being followed by big corporations in the beginning,
Successful strategies are dependent on effective various concepts and practices of strategic management are
implementation. Strategy implementation is the fine art of now used by almost all organisations.
detailing:- what all is to be done, when various tasks are to
A business entity normally develops its strategy in the
be performed, where are they to be performed, how they
following four phases:-
are to be performed and who will perform.
Basic Budgetary Planning:-
Strategy implementation is the process of executing the
strategy - of taking the actions that put the strategy into Generally, business entities conduct the basic exercise of
effect and ensure that organizational decisions are budgeting or financial planning on annual basis.
consistent with it. This is an area where all managers, especially the Sales
Managers, are involved for providing their views on the
changes in the business environment, and propose the next Externally Oriented (Strategic) Planning:-
year’s budget. In certain cases, because of ineffective five-year plans
In this exercise, normally not much analysis is conducted involving a lot of internal politics, the top management
and the source of data is confined to internal sources, to a takes steps to control the entire strategic planning process
large extent. by taking external help.
Although this planning exercise takes a lot of time, yet it is, To be better prepared for a quick response to the dynamism
at best, an elementary form of strategic management. prevailing in the markets, the work of strategic planning is
Forecast-based Planning:- withdrawn from the managers at a lower level and is
centralized at the apex level.
The usefulness of annual budgets is limited from the long-
term perspective. This has prompted managers to go in for Assistance from outside consultants is sought, wherever
a model for a long-term. So, a project having a term longer sophistication and innovation for gathering information and
than a year may be considered. for projecting future trends, is required.
This necessitates the compilation of long-term The approach is top-down and strategic planning is
environmental data in addition to the information available entrusted to key managers of the organization, led by top
internally, soas to enable the managers to prepare plans for in-house planning experts.
more than one year. The process involves formulation of a formal strategy by top
Extrapolation techniques may be used here for predicting. executives and implementation by lower-level managers.
However, this phase also needs lot of management time to The plan is typically prepared for a five-year period, with
ensure preparation of forecasts in a scientific manner. the help of external consultants but the bare minimum
The flip side of this type of planning is the competition contribution of lower-level managers.
among managers to get a larger funds allocation for their
area of operation.
Lot of time is spent on meetings for providing justifications
for assumptions and for evaluating proposals with a period
ranging from three to five years.
Strategic Management:- Benefits of Strategic Management:-
As mentioned above, General Electric is considered as one Strategic management deals with performance and growth
of the pioneers of strategic planning. over the long term.
During the 1980s, they started migrating towards strategic While certain companies may do very well in the short
management and by the 1990s, all other global corporations term, consistence in performance, over a long period, may
and business entities started implementing the concept. prove to be difficult for them.
With increasing research in this area, the idea of involving If we compare the original 1917 list of top 100 companies in
managers at all levels and all departments and groups was the Forbes list with today’s list, we find that only 13
mooted to develop an integrated strategic plan to achieve companies have survived till date.
the primary business goals. So, it can be safely concluded that satisfying only the
The implementation, evaluation, and control of strategic present needs of people satisfactorily is not sufficient.
plans were accorded due importance at this juncture and A business entity also needs to be pro-active and keep
the plans also started factoring contingencies with the changing as per the strategic needs of the company and to
appreciation of the fact that perfect planning or forecast is meet the requirements of new markets.
not possible.
Strategic management helps business entities to out-
So instead of an annual plan, strategic plans for longer term perform the entities that do not do so.
of five years were introduced with continuous review at
shorter intervals. The right strategy impacts a business entity’s performance
positively.
The information on strategic planning was made available
to all the managers, workers and employees at various Strategic planning continues to attain more and more
levels of the business entity, with the help of local area importance because of the ever-changing business
networks and intranets. External Consultants, to help to environment.
develop strategic plans, came into picture. For example, the changing technology has forced well-
The strategic management, therefore, became more broad- established companies like Kodak to change their business
based, although the role of top management was slightly focus.
diluted because planning now no longer remained a top-
down approach and became more and more interactive.
The three most important benefits of strategic management planning to be the most used management tool which
are as under:- topped the list of 25 most popular management tools-used
a) The management gets a clearer sense of strategic vision by 48% of respondents.
of the business entity. Strategic planning, the process of determining what a
b) Management is able to clearly focus on strategically business should become and how it can best achieve that
important issues, faced by the entity. goal, is particularly effective at identifying new
opportunities for growth and in ensuring that all managers
c) The dynamic environment can be better understood by have the same goals.
management.
Other highly-ranked strategic management tools were
The Importance of Strategic Management:- mission and vision statements (used by 32% of
Strategic management continues to be patronised by big respondents), core competencies (30%), scenario and
corporates. In banking and finance industry too, strategic contingency planning (19%), and strategic alliances (25%).
planning is given a lot of importance. (Sourcehttps://www.bain.com/insights/management-tools-
Research into dynamic strategy thinking, that is, strategy and-trends-2017)
formulation and implementation, has become one of the A study by Joyce, Noria, and Roberson, of 200 firms in
main focuses of academia and industry. 50sub-industries, found that without exception, companies
This is because, with the accelerating dynamics of that outperformed their industry peers, excelled at what we
competition, the key to competitiveness no longer lies in call the four primary management practices—strategy,
employing strategies that have been successful in the past execution, culture, and structure. (Source:
or emulating the strategies of successful competitors: https://hbr.org/2003/07/what-really-works)
real competitive advantage results from a constant process We may, therefore, conclude that strategic management is
of developing and implementing new strategies that will crucial for the success of an organisation in the long-term
differentiate the organization from the rest of the industry and may mark the difference between a successful and an
in which it operates. unsuccessful organisation.
It, therefore, hinges on strategic thinking.

Bain & Company’s 2017 Management Tools and Trends
survey of 1,268 global executives revealed strategic
BUSINESS ENVIRONMENT ANALYSIS:- Effective managers must understand their external
A business does not operate in isolation and, to succeed, environment well and have to remain prepared for any
the management must understand the environment in eventualities and contingencies.
which it operates. This is one of the most important ‘mantras’ for success.
We live in a pluralistic society and a dynamic world, where
things are changing all the time and, at any point of time,
anything can happen.
Take the case of Russia-Ukraine war.
It is impacting all countries and a lot of businesses across
the globe.
However, a war or acts of God like earthquake, terror
attacks, floods etc.
are exceptions, but in the normal course too, there are
other uncertainties, like technological changes and
advancements, the ecological and social environment, the
regulatory changes, political, social, cultural, and
demographical changes, which can impact the performance
of a business.
The operating environment of a company like suppliers,
customers, competitors etc.
may also change.
It is, therefore, imperative that a manager is able to
analyse, understand and appreciate the business
environment in which the organisation operates.
As mentioned earlier, a SWOT Analysis helps a lot in such
situations.
ABFM MODULE - A INTRODUCTION:-
Chapter 2: PLANNING We are involved in various activities in our life, some of
which are routine activities but some are such that their
results have important bearing on us. Such activities are
*All about Planning? often not carried out it a casual way but in a carefully
decided manner.
In other words, we may say that we have planned these
activities.
If an activity is well planned, the probability of achieving the
desired results increases.
In business organisations also, the important activities are
well planned to increase the likelihood of achieving the set
goals.
FUNDAMENTALS OF PLANNING:-
Planning is the process of engaging in thoughtful discussion
before undertaking a task, which entails engaging in in-
depth contemplation about that task and going into all the
details meticulously to be ready with an execution and
implementation plan, to save both effort and time.
Planning involves doing an objective analysis of future
requirements, to facilitate the modification of ongoing
activities considering the objective that has been set.
It involves research that is done deliberately and
consciously to formulate the design and the orderly series
of actions, through which it is anticipated to succeed in
accomplishing goals.
During the planning, each possibility, both present and STEPS IN PLANNING:-
future, that is even remotely connected to the goals, will be The process of planning consists of the following steps:
taken into consideration.
Opportunity Analysis:-
The planning process also incorporates consideration of
every conceivable risk, including losses, defections, and so Opportunity analysis entails analysing the opportunity,
on. being aware of the opportunity, and basing the
development of the business plans on this opportunity.
It engages deeply in various activities to give directions,
prescribe methods, evolve procedures, and transform This exercise also involves comprehending the existing
activities, to decide to accomplish the business goals in an circumstances of the available opportunity and having a
efficient and effective manner. general understanding of its future prospects.
The process of planning is based not only on the finances, Objective Establishment:-
time frame, infrastructure, and resources, but also since Without knowing the objective, it is impossible to develop a
decisions and particular or directional plans, which might be strategy for its accomplishment.
strategical , tactical, or operational, are made based on Objectives are, therefore, the initial step in the planning
those considerations. process, which is typically a political endeavour.
Planning covers Developing Planning Premises:-

The collection of future forecasting-derived assumptions is
• What is to be done? known as the planning premises determination.
• Where it is to be done? The predicting must be based on a realistic assessment of
• How it is to be done? the environment in which the plans are to be executed, as
• When it is to be done? well as a creative understanding of the surroundings.
• Who will execute? The premises must be constantly monitored and upgraded.
The premises cover the following areas:
i. Forecasting
ii. Basic Policies
iii. Existing Plans.
Alternatives Identification:- which plan can best assist in the accomplishment of the
The process of determining the availability of various means business objectives.
to attain goals is referred to as “identifying alternative The stage is called “selecting the best alternative.”
means.” At this juncture, the question that must be resolved is
It is essential to make a written record of the total number whether the initial plan is superior or whether the alternate
of alternatives available, that should initially be narrowed strategy is going to be effective.
down to the most enticing and satisfying options, through a Formulating Derivative Plan:
preliminary examination, based on one’s trials, experiences,
and study. The time required to formulate derivative plans, i.e., sub
plans or secondary plans, includes the time needed to
Evaluating Alternatives:- implement the plan in accordance with the decision, which
Following the discovery of additional methods and an would comprise the procedures below:
examination of both their strong and weak points, the  Development of the new policies and procedures
planner should assess the alternative methods.
 Coordination of the activities of the derivative plans
Because there is such a wide variety of options and a wide  Working in accordance with the targets of the main plan
range of possible outcomes, this task is not an easy one.
Follow-up and Reviewing the Plan:
When comparing the various approaches, the use of
Planning is a continuous process for ensuring attainment of
statistical methods and computers proves to be extremely
business objectives.
beneficial.
It is very important for a business entity to continuously
One of the processes might be less desirable or effective
monitor the implementation of the plans and keep
compared to the others, while another might be more
adjusting and amending the plans as required.
suited to the immediate goal.
Planning is, in its most fundamental sense, the
It’s possible that one of the processes would be very
administration of all the functions associated to the work
profitable, but the other would be extremely expensive.
on which you spend your valuable time, engaging in in-
Selecting the Best Alternative:- depth deliberation.
At this stage, the plan is to be adopted, and the numerous
options are to be evaluated, so that it can be determined
Provides Direction:-
BASICS OF PLANNING
The clear objective of the plan is to provide the directions
Planning: A process of fixing objectives where efforts should be channelled in as efficient a manner
and finding ways of accomplishing them as possible, to achieve the desired results.
Objectives: Specific targets a business The objectives of the organizations are defined in
wants to achieve unpretentious and clear terms while communicating the
established plan.
IMPORTANCE OF PLANNING:
Guidelines are the process of what to do. Planning plays a
Helps Goal Creation
Provides Direction
vital role in discharging the function.
Tackles Uncertainty Tackles Uncertainty:-
Discards overlapping and wasteful activities
Promotes Innovative Ideas

The planning process makes predictions with the help of
Facilitates Decision Making
existing information.
Controlling If it anticipates some risk or the possibilities of the losses in
future, then it avoids the risk and creates another path to
Planning is one of the most important pillars of
attain the anticipated goals.
management and helps an organisation to achieve its laid
down objectives. Planning always envisions the future and as the future is
uncertain, it accommodates all anticipations of the future
The following points highlight the importance of planning:
functions and accepts them by assigning appropriate
Helps Goal Creation:- weightage to all such functions, so as to reduce the
Planning involves the process of the achieving actual goals possibility of high risks.
and so it makes a business goal oriented. Discards overlapping and wasteful activities:-
The fact that everyone clearly knows about his/her goals, As already discussed, the purpose of the planning is to
helps the achievement of goals in an effective manner. execute the future tasks in as efficient a manner as possible.
Thus, planning becomes the very basis of all other So, the questions - what, how, why, where, when are
management functions. addressed in advance and the chaos, which might occur at a
later stage, is taken care of.
Best decision-making planning always helps to prevent the Without a concrete objective build upon a plan, a business
unwanted risk and overlapping and helps avoiding will not be able to investigate where it went wrong and will
duplication of efforts and wastage of resources. not be able to take the right action and endorse its success.
Promotes Innovative Ideas:- A SMART goal is a carefully planned, clear and track able
In today’s world, markets are becoming more and more objective.
dynamic every day. SMART is an acronym that stands for Specific, Measurable,
As such, out-of-the-box ideas are needed for managing the Achievable, Realistic, and Timely.
operations of the enterprise, to beat the competition. Defining these parameters as they pertain to your goal
An enterprise’s need to search for a new product may not helps ensure that your objectives are attainable within a
be necessary but the idea of separate management certain time frame.
operations might result in a lot of cost savings. ADVANTAGES AND DISADVANTAGES OF PLANNING:-
Decision Making Facilitation:- In today’s dynamic world, short-term planning may not be
Planning is a vital part in the decision-making process. enough for any organisation, aspiring for growth.
It acts as a guide for efficient and valid decision making, Arbitrary actions rarely result in progress.
whenever a manager must take a decision. An organisation which does not plan properly and
With the help of planning, a manager can give a deep scientifically, would be vulnerable to the ever-changing
thought to all processes and predict the future scope. environment.
Controlling:- Effective planning, therefore, helps an organisation to face

such situations in an efficacious manner.
To facilitate the functions of coordination and control,
planning plays a vital role. Advantages of Planning:-
The extension of the planning process is considered as The main advantages of planning are as follows:
control, due to the interdependence of the controlling on Coordination of Various Activities:
the plan and vice-versa. The coordination of efforts of various functionaries and
departments of a business entity to achieve the goals, set
out in the plan, is facilitated by planning.
When actions are planned with specific results in mind and Adaptability:
centred on those plans, the level of success experienced by The process of objective determination involves the
such actions considerably increases. establishment of principles for the purpose of identifying
Optimisation of Resources: individual advantages within the organisation as well as the
Planning enables managers to determine which activities fundamental variables found outside the organisation that
have the maximum demand for resources, and further helps need to be investigated.
them in the optimum allocation of these resources to the When things start to change, the viability of the guiding
areas that will provide the maximum possible return on principles is dependent on how well these can adjust to the
investment. new environment.
Inspirations and Responsibilities: Basic advantages of the planning process:
People are unable to reach a consensus when they do not a) Planning reduces uncertainty.
have well-defined goals for themselves and do not have a b) Planning is focused on objectives.
concept of what is commonly expected of them. c) Planning facilitates control.
Planning lessens the likelihood of risk and outlines the d) Planning encourages creativity and innovation.
accomplishments that are commonly anticipated of e) Planning anticipates problems and copes with change.
everyone. f) Planning works with the board by destinations.
g) Planning limits vulnerabilities.
Individuals are compelled to work for a goal that they are h) Planning works with co-appointment.
familiar with and can comprehend and relate to. i) Planning works on worker’s moral.
Establishment of Execution Principles: j) Planning helps in accomplishing economies.
The planning process is distinguished by mile positions, k) Planning works with controlling.
which are used to mark progress along the way to the l) Planning gives the upper hand to the managers.
intended result. m) Planning empowers development.
The milestones serve as a reference point for determining Disadvantages of Planning:

whether things are moving as planned and, if not, when There is not an iota of doubt that planning is beneficial to
adjustments are necessary. an organisation but planning also has the potential to be
detrimental to an organisation if it is not carried out as what, even if their experience demonstrates that the
intended. arrangement is not working.
Some of disadvantages of planning are as under: They will continue to devote their time and resources to
Forestalls Activity: activities that are not adequate rather than bringing issues
to the attention of higher heads so that changes can be
It is possible that managers will become so immersed in the made.
process of planning and getting ready for every possibility,
that they won’t have time to put their plans into action. Hinders Innovativeness:
It is sometimes referred to as “death by plan.” People working for the organisation may get the impression
that they are required to carry out the activities outlined in
Lack of Concern: the plans because only that is expected of them and, how
If an Organisation has solid systems in place, its managers well they complete the systematic tasks assigned to them is
may be led to believe that they are aware of the path the what matters.
Organisation will take and how it will accomplish its They might be prevented from engaging in invention, drive,
objectives. and learning via trial and error.
Because of this, it is possible that they won’t be able to Achieving goals requires not just careful planning but also
monitor the system’s progress or recognise shifts in the consistent progress, and the planning process in any
external circumstances. organisation, if not executed well, might stifle creative
Planning is not a one-and-done kind of process, as was thoughts.
established earlier in our discussions. Basic Disadvantages of the planning process:
Plans ought to be subject to continuous modification, as a) The process of planning takes a significant amount of
they are carried out in the real world. time.
Forestalls Adaptability: b) The planning process may result in lack of trustworthy
Even though well-laid plans have the potential to encourage data.
adaptability, sometimes the opposite occurs. c) The process of planning could end up being very
Middle and lower-level supervisors may have the mentality expensive.
that they are required to stick to an arrangement no matter d)The act of planning results in rigidity.
e) Planning is an exercise in fighting against change as the Depending on the circumstances, these goals may or may
environment in which an organisation operates is ever- not produce the desired outcomes, and there is always the
changing and dynamic. risk of incurring losses.
F) Planning could give a false impression of the MANAGEMENT BY OBJECTIVES:
organisation’s strength. The phrase “management by objective” (BO) was coined by
g) The plan may be adapted to fit the interests of individual Peter F. Ducker and first appeared in his book “The Practice
participants rather than the goals of the overall endeavour. of Management,” which was published in 1954.
h) Inter-departmental rivalries may impact the effectiveness Management by Objectives is the term given to the process
of planning. that is used for goal planning and the establishment of clear
i) Human errors can result in bad planning. parameters for those goals (MBO).
J) The role that possibility plays in planning could be The MBO technique, in its most fundamental form, refers to
exaggerated. a procedure that involves the management and the
employees working together to jointly establish, record,
k) Problems associated with under or over fixation of and then monitor the goals for a particular period of time.
targets could always crop up.
Although it is a theoretical framework for management, it
l) An erroneous impression, that everything is well, might has recently been fashionable due to the necessity for
be created giving a false sense of security to the management consultants to base their work on the need to
management. manage a business and the goals of that business.
m) A rapidly changing environment may make planning The goals of MBO are adapted to match the requirements
harder. of today’s organisations, which are expanding their work
n) A manager’s daily work schedule may be affected by his spaces to accommodate their expanding workforces.
involvement in planning process.
During the planning process, goals are formed from the
organisation’s mission and vision.
Establish goals and desired outcomes for Engineer, with the target of completing the infrastructure of
each subordinate in a conference a housing project within the next twelve months.
between the management and the
The individual goals in this case must align with the
concerned subordinate.
organizational goal of accomplishing the subdivision’s
Set performance standards.
MBO Assess performance achieved against targets and need to be coordinated to work with the overall
process: goals set for the employee through organizational goals which are managed and supervised by
frequent performance review meetings the process called Management by Objectives.
between the manager and the An individual personal goal is a piece of a puzzle that needs
subordinate. to be fitted with the other pieces of the puzzle to make it a
Identify reasons for shortfall and give complete puzzle, which is the organisational goal.
feed-back for improvement.
Establish new goals and new strategies Managers need to sit down to write down their goals
for the coming year. periodically and should continue to monitor the goals
closely to track progress.
This is also important because, in modern-day
Key Concepts of Management by Objectives: organisations, achievement of goals is normally linked with
Planning is the central idea behind the ‘Management by performance incentives and rewards.
Objectives’ and it implies that an Organisation and the Management by Objective in Practice:
people, who make up that Organisation, aren’t just The five steps that make up the management by objectives
responding to incidents and issues; rather, they are being technique are as follows:
pro-active and are taking preventative measures.
i. The first thing to do is either establish or alter the
Employees are allowed to define measurable personal goals organisational goals for the whole company.
in accordance with the corporate goal, to fulfil the criteria
of ‘Management by Objectives’. The company’s mission and vision should serve as the basis
for developing this comprehensive overview.
Example:
ii. The second step is to communicate to employees the
The Housing Division of an Infrastructure Company might goals and priorities of the organisation.
assign the Civil Engineering Sub-Division, headed by a Chief
In 1981, George T. Doran used the acronym SMART to Some Other Steps Included in Management by Objectives:
express the concept. Organizational Goal:
This acronym stands for “specific, measurable, acceptable, Not only is establishing goals essential to the
realistic, and time bound.” accomplishment of any organization’s mission but doing so
iii. The third step is to encourage participation from the also serves several other purposes.
staff members in the process of setting individual goals. The process of goal setting requires participation from a
After sharing the goals of the organisation with the wide variety of managers in a variety of roles.
employees from the top down, the employees should be The supervisors decide on the organization’s provisional
encouraged to help them set their own goals to achieve the goals after making an interpretation and carrying out an
larger organization’s goals. evaluation of what the organisation is capable of and ought
This will help ensure that the goals of the organisation are to accomplish in each amount of time.
met. Employee Objectives:
Because of this, the employees have greater empowerment, Managers can begin working with their subordinates to
which increases their level of motivation. establish their individual goals once employees are
iv. The monitoring of the progress made by the staff informed about the common goals, planning, and strategies
members is the focus of the fourth step. that should be followed.
We have to determine how well we have met the It will be a face-to-face conversation in which the
managers’ and employees’ needs by measuring the subordinates will tell the managers about their goals,
performance of both groups; which is one of the most including which goals they can accomplish within a certain
important parts and a key component of management by amount of time and with what resources.
objective. They could talk about some ideas that are still in the
V. The fifth step is to evaluate and then reward the progress brainstorming stage regarding the goals that the
that employees have made. organisation or department might find feasible.
This step is based on the honest feedback given by each Monitoring Performance and Progress:
worker regarding what was accomplished and what was not It is essential to manage from an objective point of view to
accomplished. increase the effectiveness of the manager; however, it is
also necessary to keep a close eye on the performance and Limitations of Management by Objectives:
development of each individual employee in the a) The management by objectives approach frequently
organisation. disregards the culture of the organisation as it exists today
Evaluation of Performance: as well as its working conditions.
Within the confines of the Management by Objectives, b) Goals and targets receive a greater amount of attention.
performance reviews are carried out with the participation When managers forget about participation, employees’
of the relevant managers. willingness to contribute, and the value of MBOs for
Feedbacks: management’s professional growth, they put constant
Because it enables employees to track and improve their pressure on workers to achieve their objectives.
actions, the very important step in the management by c) As a potential driver of success, managers will frequently
objectives process is to give feedback continuously on the place a greater emphasis on goal setting than they will on
objectives and results. issues pertaining to operations.
This is because management by objectives is based on the d) The MBO approach does not place a strong emphasis on
idea that goals should be broken down into measurable the significance of the environment in which objectives are
components. formulated.
Continuous feedback is typically supplemented by formal The context encompasses everything from the availability of
evaluation meetings on a regular basis. resources and their efficiency to the buy-in associated with
At these meetings, superiors and subordinates can discuss the leadership and the stakeholders.
the progress that has been made toward the objectives, e) As a final point to consider, many managers have the
which ultimately results in a great deal of feedback. habit of viewing management by objectives as a
Appraisal: comprehensive system that, once implemented, can
address any and all management concerns.
The performance review consists of the regular examination
of the accomplishments of staff members as part of Overdependence can bring problems into the MBO system
Management by Objectives. that the system is not prepared to deal with, and it
discourages any potential positive impact that could be
made on the issues that the system is supposed to deal g) An emphasis on the most important aspects of the
with. results.
Advantages of MBO: Disadvantages of MBO:
a) It provides a means for determining one’s goals and a) The process of setting goals can be time-consuming,
planning to achieve those goals. which means that both the managers and the employees
If you don’t have a clear idea of what you want to have less time to get their actual work done.
accomplish, you won’t ever be able to get there. b) The MBO programme requires elaborate written goals,
b) Planning enables one to behave in a proactive manner careful communication of goals, and detailed performance
and to approach the accomplishment of goals in a appraisals, all of which contribute to an increase in the
disciplined manner. amount of paperwork an organisation generates.
c) It also gives you the ability to plan for unforeseen c) To achieve success, it is necessary for all of the employees
circumstances and limitations that could make planning to work together.
more difficult. d) Goals can become out of date and put a damper on
The reason why goals are measurable is that they can be employees’ ability to take initiative and be creative.
evaluated and modified in an easy manner. e) Too much multi-tasking can result in inefficiencies.
d) The process of MBOs also enables the preparation of f) The inability of the subordinate to feel at ease.
contingency plans and strategies for overcoming g) Inflexibility.
roadblocks, which may be obstacles to the plan.
h) It might make the workers’ lives more difficult and
e) Objectives should be measurable so that progress can be frustrating.
monitored and altered as necessary.
i) MBO is an approach based on rewards and sanctions.
If goals are effectively set, managed, and accomplished,
organisations have the potential to improve their overall j) MBO, sometimes, might lack appreciation by the
efficiency, thereby conserving resources and boosting employees and workers.
employee morale. PLAN COMPONENTS:
f) A more effective use of the available resources For an organisation to achieve the goals, Planning is
essential.
The key components of Planning include: The information can also be utilised to conduct an
i. Objectives/ Goals operational environment analysis and to establish
organisational goals.
ii. Policies/ Overviews
The results of environmental analysis can be used to
iii. Procedures/ Directions/ Rules evaluate the state of the Organisation at the present time
iv. Programs/ Methods as well as to make projections about the future.
v. Budgets/Funding Advantages of the Environmental Analysis:
vi. Time Schedule. a) Contributes to the accomplishment of goals
vii. Core values/ Mission/ Vision b) Identifies and analyses potential dangers
viii. SWOT Analysis. c) Helps understand the developments in the commercial
ix. Management. environment
Environmental Analysis: d) Creates awareness of impending dangers of every

prospective opportunity
“Environmental Analysis” refers to the process of examining
all of the factors, both internal and external, that have an e) Makes predictions about the future
impact on the performance of the organisation. f) Helps recognition of potential dangers and potential
This can be done both systematically and qualitatively. benefits
The opportunity and the threats, that are external to the Environmental Analysis Steps:
organisation, are portrayed by the external components, i. Identifying
whereas the strength and the vulnerability of the business ii. Scanning
entity are shown by the internal components.
iii. Analysing
The information gleaned from conducting an environmental
analysis is what strategic planners use when trying to make iv. Forecasting
predictions about future trends. PESTLE Analysis:
It is an indispensable resource for the development of
business strategies and plans.
It is a method for evaluating the business environment and PESTEL analysis involves three steps:
the potential impact that it could have on the performance 1. Identify the relevance of each of the PESTEL factors to the
of the organisation. firm
The acronym PESTLE refers to the following six internal 2. Identify and categorize the information for each factor
factors that can have an impact on your company:
3. Analyze the data and draw conclusions
a) Political
Advantages of PESTLE analysis:
b) Economic
a) Cost effectiveness
c) Social
b) Easy framework
d) Technological
c) Deep understanding
e) Legal, and
d) Development alertness
f) Environmental.
e) Opportunities exploitation
Political Factors:
Economic
Factors Political factors reflect such elements as the stability in the
political environment.
Techno- PESTLE Socio-
logical Cultural This is especially critical for companies entering new
Factors
ANALYSIS Factors
markets.
Politico-
Legal
The banking sector looks all powerful — but it’s susceptible
Factors
to a bigger giant: the government.
These factors have a significant and profound impact on Government laws affect the state of the banking sector.
business, and may also have varied implications on the
The government can intervene in the matters of banking
business over a brief or an extended period of time.
whenever they want to, leaving the industry susceptible to
These factors may also impact changes, both positive and political influence.
negative, as well as any others and might also result in
positive or negative changes in credit ratings.
This includes corruption amongst political parties, or Cultural influences, such as buying behaviours and
specific legislative laws such as labour laws, trade necessities, affect how people see and use banking options.
restrictions, tariffs, and political stability. People turn to banks for advice and assistance for loans
Economic Factors: related to business, home, and education.
Economic factors have a direct impact on the potential Consumers seek information from bank staff regarding
attractiveness of various strategies. saving accounts, bank related credit cards, investments, and
For example, if interest rates rise, then funds needed for more.
capital expansion become costlier or unavailable. Consumers desire a seamless banking experience.
Macroeconomic factors will have short- and long-term And technology is developing to allow consumers to buy
effects on the success of their strategies. products easier, without requiring assistance directly from
Economic factors include inflation rates, interest rates, banks.
tariffs, growth rates of the local and foreign national Technological Factors:
economies, exchange rates, unemployment, and availability
of critical labour. Technological forces play a key role.
The banking industry and the economy are closely tied. The Internet is changing the very nature of opportunities
and threats by altering the life cycles of products, increasing
How income flows, whether the economy is prospering or the speed of distribution, creating new products and
barely surviving during times of recession, affects how services, erasing reach of traditional geographic markets,
much capital banks can access. and changing the historical trade-off between production
Spending habits, and the reasons behind them, determine standardization and flexibility.
when customers borrow or deposit funds at banks. Technology may lower production costs and/or improve
Socio-cultural Factors: quality; create product and service innovations; reduce
The socio-cultural factors vary from country to country. communication costs and increase remote working; and
alter distribution.
These may include local languages, dominant religions,
leisure time, age, lifespan demographics, attitudes toward In short, these factors may change the face of the business
consumerism, environmentalism, and the roles of men and landscape.
women.
Environmental Factors: Such boundaries are required for customers in the allocated
Environmental factors now go beyond access to raw country and for international users.
materials. Internal Environment Analysis:
Today these factors may include the firm’s footprint on its The internal environment of a company can be classified
respective environments. into the following broad categories, based on its resources
With the use of technology — particularly with mobile and assets:
banking apps — the use for paper is being reduced. a) Physical resources like plant and machinery, technology,
Additionally, the need to drive directly to a branch to etc.;
handle affairs is minimized as well. b) Financial resources;
Many issues are taken care of through mobile apps and c) Distribution network;
online banking services. d) Possession of strategic assets, such as access to raw
Consumers can apply for credit cards online, buy gift material, locational advantage, regulatory protection, etc.;
cheques and gift cards online, and have many of their e) Network/contacts with outside organizations (suppliers,
banking questions answered online or on phone by chat customers, government, distributors, etc.);
bots.
f) Intangibles, like brand equity, goodwill, reputation, etc.;
All these measures help in reducing individual
environmental footprints. g) Human resources-profile, skill, managerial competencies;
and organizational structure and administrative system,
Legal Factors: culture and values, and employee motivation/relationship.
Legal factors reflect the laws and regulations relevant to the In the case of a bank, this would be in the form of its branch
region and the organization. and IT infrastructure, availability of capital, strategic
These factors include whether or not the rule of law is well- advantages like strength in a particular geographical region,
established, how they change, and the costs of regulatory its brand equity and goodwill and, of course, the quality and
compliance. quantity of its human resources.
The banking industry follows strict laws regarding privacy,
consumers and trade.
An internal environment analysis is a tool that allows for a There are many tools available to assist in making the
comprehensive review of all aspects of a company’s decision about which framework to use, and each tool has
operations, internal guidance, and mission. the potential to have its own value, as well as being the tool
This review is done in order to identify opportunities and that is most effective for a particular purpose.
threats. Internal Analysis tools:
This internal analysis, which is initiated by the management GAP Analysis:
of the company, is an attempt to identify the areas of risk The Gap Analysis is a tool for conducting assessments that
and opportunity in the business. gives organisations the ability to analyse and identify
An organization’s capabilities, resources, and competitive internal weaknesses as well as performance deficiencies.
advantages are examined in depth as part of an internal It is easier to come up with a series of steps to bridge the
analysis, which reveals both the organization’s strengths gaps between the various scenarios when you have a tool
and its weaknesses in these areas. that helps you distinguish and comprehend the differences
After the project is finished, the organisation should have a between them.
crystal clear idea of the areas in which it excels, the areas in It is very easy to understand and put into practice, and it is
which it is doing well, as well as the areas in which it helpful to compare the current position of the organisation
currently lacks and has gaps. to its projected position in the future.
The analysis equips management with the knowledge Strategy Evaluation:
necessary to make the most of the opportunities, strengths,
and expertise offered by the organisation. The process of analysing the outcomes brought about by
the execution of a strategic plan is referred to as strategy
This enables the management to develop strategies that evaluation.
mitigate threats and compensate for vulnerabilities and
drawbacks that have been identified. In the process of carrying out the evaluation, it is very
useful and helpful to check that everybody understands the
You will be convinced that you are making effective and business strategy and works well with it.
efficient use of your resources, time, human capital, and
focus if the business strategy is based on the actual findings
rather than on your imagination or assumptions, and if this
is the case, you will be persuaded that you are.
SWOT Analysis: Weaknesses:
SWOT stand for The next step is to determine the areas in which you need
 Strengths to improve.
 Weaknesses To do this, think about the things that are challenging for
 Opportunities you to acquire; for example, when you must work hard to
 Threats achieve something that you want but you don’t feel
The SWOT analysis is a useful model for conducting confident about it.
evaluations because it takes into account both internal and Take a moment to reflect on your organization’s advantages
external factors simultaneously. and give some serious thought to the opposite of the
It is especially helpful to conduct a SWOT analysis to obtain questions on the SWOT template.
a comprehensive overview of a company, its products, its Opportunities:
brand, or a new project at any stage in the project life cycle. The term “opportunity” refers to any factor that has the
The SWOT diagram not only helps you think about all the potential to confer competitive advantages to the
potential processes, opportunities, and threats that may Organisation.
have an effect on the performance of your Organisation, Your capabilities have the potential to improve the
but it also gives you access to think about your situation, which increases the likelihood that a favourable
organization’s eternal strengths and weaknesses. outcome will result from the situation.
Strengths: You need to focus your attention on the more
Give yourself some time to reflect on what you did well, advantageous opportunities that are available to you right
what tasks that were within your comfort zone that was away and give them careful consideration.
good, and any instance in which you exceeded expectations These do not have to be game-changing in any way.
or achieved great outputs.
The competitiveness of your company can be improved by
This will help you recognise your strengths. even relatively minor benefits.
Your strong points are your excellent areas; in other words,
you do something noticeably better than everyone else, and
as a result, people praise you for
Threats: Therefore, it is a projection of variables such as the current
In terms of threats that are looming large over an trend in population, the political and economic climate, the
Organisation, one factor to consider is the potential for cost of production, advertising policy, the availability of
harm that could be caused to the Organisation. labour, material, and electricity, and many other conditions.
The act of planning is a process that entails a number of
Threats can be thought of as either processes or activities processes, some of which are as follows:
that have the potential to have a negative effect on an
Organisation. i. The presumption that action is required.
You will need to overcome these obstacles to achieve your ii. The gathering of the significant pieces of information.
targets. iii. Establishing goals and objectives
Fixation of Objectives: iv. The evaluation of other actions versus the planning of
The process of planning begins with the establishment of the premises
objectives, which is a crucial step. v. An analysis of the procedure or routine that underlies
This requires establishing goals for the organisation as a such acts
whole, and then establishing individual goals for each vi. The selection of an alternate plan
subordinate work unit. vii. The actual execution of the plan
The results that are to be accomplished are defined by the Even though nothing in the foreseeable future may be
objectives, which also point out where the primary certain, planning aids the certain imagination that was
emphasis should be placed and what should be developed for the purpose of formulating a plan.
accomplished by the network of strategies, policies,
procedures, rules, budgets, and programmes. Planning is always for the future that cannot be foretold.
The term “forecast” refers to making a prediction about the
The goals of subordinate departments receive direction future, either about what will happen or about what will
from and are subject to the authority of the organisation’s not happen; this prediction will not always be true but will
overarching goals. sometimes provide accurate outcomes.
Planning Premises and Constraints: It is anticipated that the quality of fixed variables will serve
The planning principles that serve as the basis for the as the basis for the planning premises, and the expectation
activity of planning are referred to as premises. is that it will generally be made for the following:
a) The anticipated level of interest in the products. Various techniques of decision making are utilised in the
b) Possible production volume. process of settling on a specific plan of action.
c) Anticipated expenses as well as an estimate of the price Criteria for evaluating Alternatives:
at which the product might be sold. *The main criteria for evaluating alternatives are:
d) The availability of labour, primary materials, and other *Cost, Profitability, and Break-even Point
resources. *Market, Sales potential, Competitive reaction
e) Government economic policy. *Ability to meet corporate objectives
f) The preference of customers for patterns that are always *Strengths and weaknesses
shifting.
*Timing
g) The impact of emerging technologies on established
production procedures. *Intuition about success
h) The source of the available funds. selecting the Alternative:
Evaluation of Alternative Courses of Action: i) It entails determining the numerous alternatives for
achieving the objectives that have been picked on the basis
Evaluating the various possible courses of action which shall of the current circumstances.
help the achievement of an organisation’s goals is done
primarily with the intention of choosing the course of action ii) It entails determining the many alternatives for achieving
that will prove to be the most fruitful and easily achievable. business goals in order to produce the various possible
paths of action.
The methods of decision making are utilised in the process
of picking a certain plan of action, and it is important that iii) This pertains to the process, the strategy, the policies,
some of these methods be taken into consideration. and the methods.
The purpose of conducting an analysis of the various iv) A decision may be made to implement a different course
potential courses of action is to determine which of the of action into the production environment rather than
potential courses of action will be most effective in bringing adopting new technology.
about the desired changes within the organisation.
v) These processes involve analysing each and every point As you continue to work through the process of putting the
at each level as well as evaluating each and every possible idea into action, it will act as a guide or a roadmap for you.
course of action. CONTINGENCY PLANNING:
vi) It also forecasts what will occur in the future with regard Contingency plans can be defined as alternative plans that
to the implementation of the technology at every level of can be put into effect if certain key events do not occur as
the process. expected.
vii) Evaluation is done using the techniques and technology Regardless of a firm’s strategies being formulated,
that are utilised during the planning process. implemented and evaluated, unforeseen events could make
viii) These provide the genuine definition of the word plan. the strategy unsuitable.
Finalization of the Plan: The contingency plan minimises the risk associated with
this final phase of the vision phase develops project such unforeseen unpredictable events.
planning that will give “process-in-focus” performance The contingency plans are referred to as “Plan B” because
improvement. they always work as an alternative course of action if things
However, this is by no means the least important phase. do not go as planned.
When you are putting the finishing touches on an action A contingency plan is also defined as an action of designing
plan, you might find it beneficial to examine the following to assist the company in responding to an event that may or
information regarding these responsibilities: may not occur.
*What are the necessary steps? The term “contingency planning” refers to more than
preparing for major catastrophes and natural disasters.
*Who exactly is going to undertake the work?
It can also put you in a position where you are susceptible
*How much longer will it take to complete the work? to more prevalent concerns, such as the loss of data, staff,
*Where exactly will all of the action take place? clients, or commercial relationships.
*How exactly will the work be completed? Contingency planning is a response to risk faced by an
Utilize the action plan so that your project strategy can be organisation; however, in certain circumstances, it may be
organised. safer or more cost-effective to deal with it in other ways
and to avoid risk, such as by investing in new equipment or physically present, people working remotely, or a
to share the risk by purchasing an insurance policy. combination of the two.
Alternatively, one can choose not to formally plan for It is essential to ensure that the contingency plan is
certain low priorities risk but to manage the risk when it adequate for its intended use in order to reduce the risk of
does occur. the company’s failure to continue operating in the event
The COVID-19 epidemic illustrated how quickly entire that unanticipated circumstances take place.
organisations may change how they work, such as The following points should be included for each potential
everybody working from home all of a sudden. risk:
Contingency Planning begins with the identification of both a) Landscape
beneficial and unfavourable events that could possibly b) Trigger
derail a strategy or strategies.
c) An overview of the feedback
It involves the following:
d) Make people aware of it.
*Specifying trigger points.
e) Important responsibilities
*Estimating when contingent events are likely to occur.
f) Timeline.
*Assessing the impact of each contingent event.
FORECASTING AND DECISION MAKING:
*Estimating the potential benefit or harm of each
contingent event. Forecasting:
*Developing alternate plans. The process of predicting or estimating the future based on
the evidence from the past and the present is referred to as
*Being sure that the contingency plans are compatible with forecasting.
current strategy and that they are financially feasible.
The scope of forecasts may be comprehensive or limited.
When you are formulating your backup plan, you need to
keep this information in mind. *The process of forecasting gives knowledge about the
possible occurrences of the future as well as the
It is necessary for contingency planning to function properly implications those events will have for the business.
in any workplace setting, whether there are people
It is not possible for forecasting to lessen the complexities *Evaluation of variances in order to monitor performance
and unpredictability of the future. Disadvantages of long-term forecasting:
Having said so, it boosts the management’s confidence in The following are some of the drawbacks of making long-
their ability to make a decisive essential decision. term forecasts:
*Managers at different levels may be given the *The unpredictable nature of the economy
responsibility of making forecasts, or external or internal
economists and statisticians may be employed for the task. *The absence of historical knowledge
*Prediction serves as the foundation for premises. *The deficiency of the appropriate range of technologies
*Since forecasting makes use of a wide variety of methods, *The limits imposed by silent data on excel
another name for the discipline is statistical analysis. Medium Term Forecasts:
Types of Forecasts: For making relatively minor strategic decisions pertaining to
Long Term Forecasts: the functioning of the firm, projections over the medium
term are generated.
Forecasting for the long term typically covers a period of
time ranging from three to five years. They play a crucial role in the operational budgeting as well
as the business budgeting, and the budget of the firm is
It gives an overarching perspective of the company’s formed based on these projections.
monetary requirements as well as the availability of the
investable surplus in the foreseeable future. Short Term Forecasts:
Advantages of long-term forecasting: The term “short term forecasting” refers to planning that is
done for a period that is relatively brief, with the planning
The following are some advantages of making long-term period being less than one year and the duration ranging
forecasts: from one to six months.
*Improved asset management Advantages of short-term forecasting:
*Systematic leveraging and deleveraging The following are some advantages of making short-term
*Multiplication of earnings through the maintenance of forecasts:
cash reserves
a) reduced need for both time and money to complete the The manager and forecaster should, therefore, identify the
project strategic factors that materially bear upon the forecasts in
b) Assessing the current state of the company’s finances hand.
c) conducting a performance scenario analysis in order to It calls for analysing the internal and external factors and
take preventative action discovering relations between them.
Disadvantages of short- term forecasting: Knowing the trend of each of them is of great help in
forecasting.
Short-term forecasting has the following disadvantages:
Estimating future Course of Business:
a) The technology has a very high starting price tag due to
its complexity. Having prepared the ground and structure on which to base
different estimates, the next step is to make rational
b) The payable account and the receiver account are both forecasts.
quite difficult to understand.
Those responsible for forecasting make use of statistical and
c) Precision down to the granular level is required other techniques while projecting future business.
d) Late decision owing to limited collaboration The experience, clairvoyance and participation of
Forecasting process and its elements: management are important determinants of the quality of
Different situations will have different steps and elements forecasts.
of forecasting process. Analysis of Deviations in previous forecasts:
However, some of the common steps in most of the We should thoroughly analyse the major deviations from
situations may be mentioned as under: past predictions and find reasons for the same.
Identifying and Developing the Structure: It should be used to refine the existing procedure of
Factors affecting future events are so complex and forecasting to improve the quality of our present forecasts.
innumerable that it is neither feasible nor desirable to study Decision Making:
and discover all of them. Actual selection of one course of action, from among
several alternatives, is called decision-making. Decision-
making is considered to one of the most prominent This helps the organisation to decide on the kind of analysis
functions of the management. and research required to arrive at a conclusion, depending
Decision-making is not confined to planning alone but also on its importance.
embraces other aspects of management like organising, Decision Making by Groups:
staffing, controlling etc. Whenever a group of people makes decisions, the process
Because of several constraints faced by the organisation, becomes more comprehensive compared to the way
the management must consider several alternatives and decisions are made by individuals.
choose the one that is expected to be most appropriate for Whether a particular decision is to be made by an individual
achieving the goals. or a group depends on the policy of the organisation and
Decision making is regarded as part of the planning process thinking of top management.
as it involves selection from among various alternatives. Before the task is assigned to a group to decide on a
Decision-making is a rational process and, to have a high particular matter, the exact scope of the group’s authority
degree of effectiveness, should be based on systematic to make that decision should be clearly spelt out.
analysis of all the relevant facts and not based on just Advantages of Group Decisions:
intuition.
Decision making by groups, generally, results in the
Decision making plays an important role in enhancing the following advantages:
efficiency of the organisation as decisions relating to future
course of action, are taken in advance. Thorough evaluation:
Hierarchy of Decision makers: When a group is involved, the alternatives are evaluated
more thoroughly compared to that when individuals take
The importance of various decisions, required to be taken in decisions.
an organisation, is not equal.
This increases the probability of decisions being better and
Generally, the top management concentrates on crucial and practical.
strategic decisions and formulating broad policies.
Decisions, relating to routine matters are normally
delegated to middle and lower-level management.
Implement of decisions is easier: No-participation or domination: Sometimes, one or more
As the feeling of involvement is more widespread, it is not members in the group may shirk their responsibility
taken as an imposed decision and so, implementation is resulting in lack of contribution by them.
easier. Also, if one group member is of dominating nature, the
Enhanced team spirit: views of others do not get reflected in the result.
The members of an organization, which involves groups in Various Conditions for Decision-Making:
decision making, are better motivated and have a better The conditions prevailing for decision making may be
sense of unity of purpose amongst them, as they make different for different organisations.
decisions collectively. Even for the same organisation, the conditions may not
Disadvantages of Group Decisions: remain same all the time.
Some of the disadvantages of group decisions may be as These situations may be classified broadly into three
mentioned below: scenarios, as under:
Time consuming and costly: Certainty:
As many persons are involved and they have to consulted, if the decision maker knows exactly what is going to
the process becomes time consuming and prompt decision happen, it is the condition of certainty, and he is able to
is difficult to come by. precisely forecast the outcome.
Also, the cost involved in the process may be more as a However, such conditions can be rarely expected to exist, in
number of meetings are to be held more and more data real business environment.
from different sources is be collected. Risk:
Disagreements and indecisions: When information is available only partially or it is
Different persons in the group may have their own different insufficient to estimate the outcome precisely, the decision
point of view, resulting in conflicts and blame-games. is to be taken under the conditions of risk.
Unanimous decisions are difficult and sometimes, the group In real life, managerial decisions are mostly made under risk
is not able to take any decision. conditions.
As the outcome is not certain, a probability is assigned to Principle of Definition
each estimated outcome. Correct identification of issues involved goes a long way is
When a probability estimate is assigned to expected arriving at a better decision.
outcome based on the past experience, it is called objective It is, therefore, important to be aware of the exact
probability, and if it is assigned on the basis of intuition, it is problems.
called subjective probability.
After the exact problems have been correctly identified and
Various methods can be used in assigning probabilities to defined, the work of the decision maker becomes easier.
various expected outcomes.
Principle of Evidence:
Uncertainty:
Whenever a decision is based on evidence, it is likely to be
When the decision maker feels that probabilities for various better compared to decisions taken on the details which are
estimated outcomes cannot be assigned, it is called the not backed by evidence.
situation of uncertainty.
Principle of Identity:
In such a situation, there is no way of measuring the
likelihood attached to each estimate. In a decision-making process, it is important to consider,
with an open mind, the viewpoints of all the people
Principles of Decision Making: involved, before taking a final decision.
The effectiveness of the process of decision making mainly
relies on quality of data available, analytical, and
judgmental skills and experience of the decision makers.
However, there are a few principles which, if followed by
the decision makers, will be helpful in enhancing the
probability of the decision being correct.
These principles of decision making can be summarised as
under:
ABFM MODULE - A INTRODUCTION AND FUNDAMENTALS OF ORGANISING:
Chapter 3: ORGANISING Planning is the first step in the process of managing an
organisation, and the second step is organising, which is the
function of management that comes after planning.
*All about Organising?
Organising entails assigning tasks, grouping tasks into
departments, and assigning authority with adequate
responsibility, as well as allocating resources within an
organisation to achieve common goals.
Organising is the process of establishing or organising
effective authority relationships between selected tasks,
individuals, and workplaces to group work together in an
efficient manner, as well as the process of separating work
into sections and departments.
It is one of the most crucial functions of management. If
managerial planning is concerned with establishing what
tasks should be performed, then organising is concerned
with determining how those tasks should be performed.
As a result, the subsequent action that a manager must take
after establishing objectives and developing a strategy that
is feasible, is to organise individuals and teams to carry out
the plan.
In a nutshell, organising entails grouping activities and
resources in a way that makes sense. Classical closed
systems and open systems are the two primary
classifications that can be used to classify various strategies
for the division and coordination of work activities as well
as the distribution of resources.
The process of organising and management is the act of IMPORTANCE OF ORGANISATION:
establishing methodical applications for available resources The various departments of the organisation need to
within a system. Organising Capabilities Management is the communicate and coordinate with one another, and one of
capacity to develop systematic use of resources inside the the most significant ways to do this, is by organising.
system and organising skills are very necessary for Structured relationships connect all of the different
management. The term “organisation” is used to describe functions and positions in the organisation.
the final product of the organising process.
It outlines the channels and channels that can be used for
Any manager needs to have a fundamental grasp of communication between the various participants.
organisation as it is an essential topic for comprehending
the inner workings of any firm or organisation in general, The management is helped in many different ways by an all-
and it is also a component of the fundamental knowledge encompassing approach to organisation. Organising brings
that every manager should have. together a variety of resources to work towards a shared
goal. The most important factors considered in organising
The way labour is subdivided, and the way coordination is are as under:
guaranteed between the various tasks and the persons
conducting them independently, are both referred to as the Efficiency in Administration:
“design” of the organisation. Efficiency in administration can be achieved by collapsing
In addition, the design of organisations tries to consider the jobs that are comparable and linked into a single area of
that exist between the activities that people perform expertise, which brings together formerly separate
interdependencies daily (also known as processes). departments.
Processes are the de-facto levers that are used to achieve It leads to integration of efforts and coherence in the work
organisational efficiency and effectiveness. by establishing coordination among the various
departments.
In conclusion, the design of an organisation needs to
consider how individuals and groups make their decisions. An efficient administration describes the activities that
This is since organising, and decision-making are two core distinct departments engage in and the authority
activities that are integral to managerial work and that connections between those activities and the departments
complement one another. themselves inside the organisational structure.
It serves as the management’s mechanism for directing and Creating Transparency:
controlling the numerous activities carried out by the The tasks, activities, duties and responsibilities that are
enterprise as a whole. expected of workers in each position are detailed in a
Resource Optimization: written document known as the job description. This
Organising ensures that each worker in the organisation has document specifies in great detail what is expected of
a role and job that are a good fit for them. This helps to workers in each position.
reduce misunderstanding and delays, as well as duplication The personnel are assigned their appropriate levels of
of labour and overlap of effort, both of which can be power and responsibility by the organisation. This
avoided as a result of doing this. contributes to the organisation’s attainment of clarity and
Gaining Expertise: transparency.
The process of creating groups and subdividing various Expansion and Development:
activities and jobs based on the principle of the division of When resources are utilised to their full potential and there
labour is referred to as the division of labour process. It is an appropriate division of labour between departments
enables the completion of the most work in the shortest and personnel, management is able to increase its strength
amount of time while maintaining the benefit of and carry out a greater number of operations. In such
experience. situations, it is easy for organisations to rise to the occasion
Promoting Effective Communication: and extend their operations in a methodical and organised
fashion.
Organising is an essential technique of fostering
collaboration and communication among the many STAGES IN ORGANISING PROCESS:
departments that make up an organisation. There are five stages in the organising process, which are as
Structured relationships connect all of the different follows:
functions and positions in the organisation. It outlines the i. Defining and reviewing the plans and objectives of the
channels and channels that can be used for communication company.
between the various participants. ii. Determining the work activities needed to accomplish the
objectives
iii. Categorising and grouping essential work activities into Delegating tasks and responsibilities to employees and
manageable units providing them with the authority they need to successfully
iv. Assigning activities and delegating authority carry out these responsibilities and tasks is another aspect
of organising a business.
v. Designing a hierarchy of relationships
Delegating responsibilities and assigning the appropriate
THE ORGANISING PROCESS: level of power are two essential components of an effective
The process of organising, much like the process of organisation.
planning, ought to be carefully designed and carried out. In general, the process of organisation can be broken down
The process entails determining what tasks must be into five stages, which are as follows:
completed in order to achieve the laid down objectives,
delegating those tasks to specific individuals, and then Review of plans and objectives:
organising those specific individuals into a decision-making To accomplish one’s goals, one must first complete one
framework, also known as an organisational structure. ‘specified tasks. The plans formulated by the management
determine the activities that are required to achieve the
An organisation is the end result of the organising process. objectives of the organisation.
An organisation is a whole that consists of integrated pieces The initial step for managers should be to review the plans,
that work together in harmony to carry out duties in order and they should continue to do so even after the plans have
to achieve goals in a manner that is both effective and been modified and new goals established.
efficient. Determining the work activities needed to accomplish the
If an organising process successfully conducted, the end objectives:
result should be a working atmosphere in which every Determining the work activities for achieving the laid down
member of the team is aware of their respective tasks. In objectives is not that daunting a task as it could initially
the event that the process of organising is not managed appear to be to some managers.
well, the outcomes may cause confusion, frustration, a loss Managers need to simply compile a list and conduct an in-
of efficiency, and a reduction in effective output. depth analysis of all of the tasks and activities that must be
The ability of a manager to organise the work of all of his or completed to realise the organisation’s objectives.
her employees is one of the most important functions of
management. The management duty of organising is both
one of the most difficult and one of the most crucial tasks.
Categorising and grouping essential work activities into will be exported, the number of foreign buyers that will
manageable units: need to be coordinated, etc.
A manager might choose to group activities using one of The first step in the process of organising an organisation is
these four departmentalization models: functional, to calculate the complete amount of work that needs to be
geographic, product, or customer. done.
Assigning activities and delegating authority: Classifying Activities:
Managers delegate particular duties and responsibilities to A single person cannot be made responsible for managing
particular employees. In addition to this, they grant the all of the activities of a medium or large organisation. As
authority (right) to each individual to carry out the such, the total work is broken down into smaller units and
responsibilities that have been given to them. distributed among the workers and employees in
Designing a hierarchy of relationships: accordance with their skills and capabilities and also in
accordance with their aptitude.
It is the responsibility of a manager to analyse the vertical
(decision making) and horizontal (coordinating) Assigning of Duties:
relationships that exist throughout the organisation. After analysing and classifying all the tasks that take place
The manager should then use organisational charts to draw in specific departments, the employees who work in those
the relationships between the different departments. departments are given only one job within that department
that is tailored to their particular set of skills, capabilities,
The Process of organising also includes: and abilities.
Determining Objectives: A document known as a “Job Description” that explicitly
A goal in mind is typically behind the formation of a new defines an employee’s duties and responsibilities is used to
organisation. This objective will be accomplished through assign those duties and responsibilities to the employee and
the completion of the various projects or activities that give them to the employee.
have been planned by the organisation. PRINCIPLES OF ORGANISING:
For instance, if the organisation is interested in exporting Organising principles represent the truths of a fundamental
goods, it must first determine the nature and type of goods nature that underpin the management function. These
that will be exported, the sources from which the raw principles are generalisations that can be applied in any
materials will be obtained, the countries to which the goods
situation. They have engaged in the process of organisation. • Scalar principle
They are a never-ending process, and each manager is Another way of looking at the principles of Organising:
responsible for carrying them out.
Work Specialization:
The activities of an organisation are categorised into a
number of different units, and then authority and Work specialisation refers to the degree to which tasks
responsibility are assigned to each of those units in within an organisation are broken up into distinct jobs. This
accordance with the organising principles. concept is synonymous with the term “division of labour.”
Every worker receives instruction on how to carry out the
Organising principles serve as guidelines for the organising particular responsibilities that are associated with their
process. particular function.
The essential principles are given below: The scope of specialisation is quite expansive; for instance,
• Principle of objectives operating a particular piece of machinery in an assembly
• Principle of specialization line at a factory. The groups are organised in a manner
based on the members’ shared abilities.
• Principle of coordination
The tasks or jobs themselves are typically on the smaller
• Principle of authority side, but employees are able to complete them effectively
• Principle of responsibility because they have specialised in the area.
• Principle of Span of control Many businesses are moving away from the principle of
• Principle of balance specialisation despite the obvious benefits that come with
it. This is due to the fact that excessive specialisation results
• Principle of continuity in employees being isolated from one another and reduces
• Principle of unity of direction their ability to perform routine tasks.
• Principle of unity of command In addition to this, it results in the organisation becoming
dependent on its members.
• Principle of exception
As a result, businesses are developing new job processes,
• Principle of simplicity
expanding existing ones, and fostering job rotation among
• Principle of efficiency
their employees in order to lessen their reliance on Even in the most laid-back of office settings, it is a useful
employees possessing specific skills. instrument for businesses to use to keep order and
Authority: distribute responsibility among employees. The purpose of
establishing a chain of command is to ensure that everyone
The legitimate power that is delegated to managers so that is aware of who they should report to as well as the
they may make decisions, issue orders, and allocate responsibilities that are expected at their level.
resources on behalf of the organisation in order to
accomplish the goals of the organisation is referred to as The concepts of responsibility and accountability are
authority. enforced through a chain of command. The two guiding
principles that underpin it are the Scalar Principle and the
The exercise of authority falls under the purview of the
organisational structure and is an integral component of the Unity of Command:
manager’s duties and responsibilities. The chain of According to the principle of unity of command, each
command starts at the very top and works its way down. worker should have just one manager, supervisor, or other
The roles or positions at the very top of the hierarchy are reporting authority to whom he or she is directly
the ones that are given the most formal authority, as accountable for work-related matters.
opposed to those at the very bottom of the hierarchy. This is done to eliminate the possibility of the employee
The manager’s job role determines the scope of his or her being placed in a state of confusion as a result of receiving
authority as well as the level of authority that comes with demands or priorities from multiple supervisors that are in
it. The authority of the manager is recognised as the formal direct opposition to one another.
and legitimate right to issue orders, so subordinates obey There are, however, exceptions to the chain of command
the manager’s orders. that can be made under exceptional conditions for
Chain of Command: particular tasks if they are necessary.
When developing a strong organisational structure, the However, for the most part and in order to ensure effective
chain of command is an essential concept to keep in mind. It outcomes, organisations should adhere to this principle to a
is the continuous chain of authority that, in the end, significant extent. According to the scalar principle, there
connects every individual with the most senior position in ought to be a transparent chain of command that extends
the organisation, with a managerial position serving as the from the position of supreme authority at the very top of
connecting link at each successive level in between. the organisation to each and every person working there,
connecting all of the managers working at the various responsibility for the successful completion of the delegated
levels. duties.
It involves a concept known as a gang plank, which allows a Employees are then empowered to contribute their own
subordinate to contact a superior or his superior in an ideas and to perform their duties in the most effective
emergency using a method that contradicts the hierarchy of manners when they are given the authority to delegate
control. However, the immediate superiors need to be tasks to others.
briefed on the situation as soon as possible. Span of Control:
Delegation: The number of workers who are under a manager’s
Delegation is yet another significant idea that is intimately supervision is referred to as their “span of control,” which is
connected to the concept of authority. The act of delegating also sometimes referred to as their “span of management.”
responsibilities or authority at work to other people, such It refers to the number of people who report directly to a
as workers or subordinates, is known as delegation. manager and are accountable for the boss’s actions.
When managers are unable to delegate, they end up doing Understanding an organisation’s organisational design as
all of the job themselves and underutilizing their well as the dynamics of its working groups requires a solid
employees. grasp of the concept of span of control.
The capacity to effectively delegate tasks is essential to Within the same company, the breadth of control might
succeeding in a managing role. When a superior gives shift from one department to another depending on the
discretionary power to a subordinate, this is known as circumstances.
delegating authority to the subordinate. The act of passing The range might be either broad or specific. When a
on one’s responsibilities and responsibilities to one’s manager has a high number of people reporting to him,
subordinates is known as delegation. No matter how high there is said to be a wide span of influence over the
up in the organisational structure they are, superiors or organisation. Greater independence is afforded by this kind
managers cannot assign authority if they do not themselves of organisational structure.
possess that authority.
A manager is said to have a restricted range of authority
The process of delegation includes the creation of desired when there are fewer direct reporters under their
outcomes, the assignment of tasks, the delegation of supervision.
authority for performing these tasks, and the exaction of
The ability for managers to spend more time with their • Centralised and Decentralised Organisation
direct subordinates, as well as the promotion of
Centralised Organisation:
professional growth and advancement, are both benefits of
narrow spans. A centralised business structure is one in which key
decisions, such as those on resource allocation, are made by
TYPES OF ORGANISATIONS: a single individual, and that individual also provides the
Setting strategic goals within a business is a necessary step primary strategic direction for the company.
that should not be ignored. The strategic goals of a Most small firms are run in a centralised manner, in which
company address all areas of the business, such as deciding
the business owner is responsible for making all essential
which markets to operate , what products and services to choices concerning products, services, strategic direction,
offer clients, and how to find and keep outstanding and other crucial areas.
employees.
On the other hand, the size of an Organisation is not
Setting strategic goals for the organisation and ensuring
necessary for it to be centralised.
that all business operations contribute toward meeting
those goals are the responsibilities of the management of Advantages of Centralised Organisation:
the organisation. Organisations that are centralised have greater clarity in
When a company has determined its strategic objectives, their decision-making processes, more efficient
the next step is to put those objectives into action. implementation of policies and projects, and greater control
Communication and the provision of plans that direct the over the organisation’s overall strategic direction.
activities of those in the organisation are required for the Centralised organisations typically provide less possibilities
organisation to realise its strategic goals and put those goals for staff members to respond, and they run a greater
into action. Based on the nature of authority and its flow, danger of being rigid as a result. These are two of the key
the basic types of organisations may be classified as follows: disadvantages of centralised organisations.
(1) Centralised and decentralized organisation Disadvantages of Centralised Organisation:
(2) Line and Staff Organisation Many times, centralised organisational systems are less
responsive to the localised demands that are applied from
(3) Functional Organisation the outside. Employees who are not provided the
(4) Committee Organisation
opportunity to participate in the decision-making process • Improvement in the morale of employees –
may also feel disenfranchised as a result of this factor. The ability of a business to recruit, train, and keep highly
Decentralized Organisation: motivated workers is critical to that organisation’s long-
Most of the time, centralised organisational structures are term success. One strategy for boosting employee morale is
less responsive to locally focused environmental challenges. to give workers more say in the decisions that affect them.
Additionally, it may be discouraging to employees if they • Link between compensation and Responsibility –
are not given the opportunity to participate in the decision- There is generally a correlation between increased
making process. prospects for advancement and a matching increase in
Advantages of Decentralised Organisation: compensation. When working for a decentralised company,
A decentralised management structure offers a variety of a pay raise will frequently be accompanied by an increase in
benefits as follows: the duties associated with learning new skills, having
additional decision-making authority, and supervising other
• Fast decision making and response times – employees.
It is critical that decisions be taken and put into action in a • A more effective utilisation of lower and middle
timely way. It is essential for enterprises, if they wish to management –
maintain their competitive edge, to seize chances that are
consistent with the overall strategic direction of the firm. In order to achieve success in an organisation, a great
number of tasks need to be completed.
• An improved capacity to expand the company –
Lower and middle management are frequently relied upon
It is essential for businesses to always investigate new by decentralised companies to carry out a significant
avenues through which they may supply their clients with portion of their responsibilities.
the products and services they require.
As a result, managers can develop significant knowledge
• Skilled and/or specialised management – and competence in a variety of fields.
Organisations have a responsibility to make investments in Disadvantages of Decentralised Organisation:
the training of highly skilled workers who can make
decisions that are in the best interest of the organisation • Difficulties in coordinating activities –
and will assist it in achieving its objectives. It is essential for an organisation to be working toward a
unified objective. Because decision-making is delegated in a
decentralised organisation, it is frequently difficult to • Self-cantered ways of functioning –
ensure that all divisions of the company are working in a It is not uncommon for individual divisions within an
consistent manner to achieve the organisation’s strategic organisation to be measured on the success of the division
goals. This is one of the challenges that comes with having a rather than the performance of the entire firm.
decentralised organisation.
This is due to the fact that each department or division
• Increase in administrative costs due to duplication of tends to be self-centred and acts as its own fiefdom.
efforts –
It is feasible for division managers in a decentralised
Decentralised organisations are more likely to engage in organisation to give priority to the goals of their division
duplication of efforts, which leads to inefficiency as well as rather than the goals of the company.
an increase in costs, because similar decisions and activities
need to be carried out across all divisions of an The leaders of decentralised organisations have the
organisation. responsibility of ensuring that the organisation's goals
continue to be the top priority for the accomplishment of all
• Inconsistency in operations – divisions.
When autonomy is distributed throughout an organisation, Significant level of dependence on the divisional or
as it is in decentralised organisations, division managers department managers:-
may be tempted to customise or alter the operations of
their division in an effort to maximise productivity and Because divisions within decentralised organisations have a
serve the best interest of the division. high level of autonomy, the division may become
operationally isolated from other divisions within the
This can lead to inconsistency in operations. Within the organisation, focusing solely on the priorities of the
context of this structure, it is essential to make certain that division.
the time saving measures used by one department of the
company do not interfere with or otherwise interrupt the If the managers of a division or department do not have a
work of another department located within the diverse range of experience or talents, the division may be
organisation. at a disadvantage since it will have restricted access to
other areas of expertise. -
Line and Staff Organisation: W. Taylor, and others who pioneered new administrative
In the context of management, the term "line-staff strategies in the late 1800s and early 1900s.
organisation" refers to the method by which authorities According to these hypotheses, the authority to make
(such as managers) formulate objectives and instructions, decisions is distributed throughout a hierarchical
which are subsequently carried out by employees and other organisation.
workers. Lines of authority serve as the foundation for all
A large and complicated business may use a line-staff interactions that take place between individuals,
organisational structure in an effort to increase their level organisations, and divisions.
of adaptability without giving up their managerial authority. Most of the time, tasks are carried out in accordance with
Line and staff organisation is a modification of line particular functions, and power is exercised in a hierarchical
organisation that is more complicated than line fashion.
organisation. Line organisation is the foundation of line and A small number of executives or managers make decisions
staff organisation. in an organisation that is highly centralised and those
In accordance with this administrative organisation, special decisions are then implemented further down the chain.
and auxiliary activities are linked to the command line by However, as an organisation expands in both scope and
assigning staff supervisors and staff specialists attached to complexity, it becomes increasingly important for
the line authority. This allows the activities to be managed management to maintain a flexible approach to the degree
in accordance with this administrative structure. to which central coordination and control are exercised.
Line executives always hold the authority of command, and The goal of the line-staff organisation principle is to
the primary responsibilities of staff supervisors are to guide, maintain a cohesive command structure while allowing for
advise, and counsel line executives. some degree of flexibility within the hierarchical lines of
A member of the workforce, the Private Secretary to the authority.
Managing Director acts in the capacity of staff executive. Features of Line and Staff Organisation:
Formal organisations were characterised as collective (i) There are two different kinds of staff members:
enterprises characterised by a clear division of labour and a. Staff Assistants like Personal Assistants to the Managing
authority according to the classical theory of organisation, Director and Secretary to the Marketing Manager.
which was associated with Henry Fayol, Frederick
b. Staff Supervisor-Operations Control Manager, Quality executives by staff is one way in which the job is divided
Controller, and PRO Positions between line and staff.
(ii) Line and Staff Organisation is a form of line organisation The line executive can focus on the implementation of
that has been compromised. It is more intricate than just a plans, which frees them from the need to divide their
line concern. attention among several different areas.
(iii) Within the line and staff organisation, work is Professional counsel:
segmented and specialised in accordance with individual The line and staff organisation are responsible for providing
needs. the line executive with access to expert advice whenever it
(iv) The entirety of the organisation is broken up into a is required.
variety of functional divisions, each of which has staff Staff specialists can handle the planning and investigation
specialists assigned to it. work that is associated with a variety of issues, which frees
(v) The characteristics of specialisation make it possible to up line officers to focus on carrying out the plans instead.
achieve efficiency in one's work. Benefits of Specialisation:
(vi) There are two different channels through which One of the many advantages of specialisation is that it
authority might flow simultaneously in a company or allows the firm to be segmented into parts and functional
organisation: regions.
a. Line Authority This is accomplished by the partition of the entire concern
b. Staff Authority into two distinct sorts of authority. In this way, all officers
(vii) The line executive retains control of the commanding or officials can focus their attention solely on their assigned
role, while staff members are limited to advisory roles. sector.
Advantages of Line and Staff Organisation: Improvement in coordination:
Providing relief to line of executives: Through specialisation, line and staff organisation can
provide superior decision making, while authority remains
In an organisation structured along lines of both line and with only a few people.
staff, the advice and counselling that is given to line
As a result of this feature, each official can concentrate on Unity of action:
their own domain, which contributes to improved work Unity of action comes about as a direct outcome of having
coordination. unified control.
Benefits of Research and Development: coordination inside a concern, control and its successful
The advice of specialised staff members allows line implementation can take place. Every single official who has
executives more time to execute plans and make productive a position of line or staff authority is given the autonomy to
decisions that are helpful for a concern. make choices on their own. This serves as an efficient
This opens a lot of doors for the line executive in terms of control mechanism for the entirety of the organisation.
bringing new ideas to the table and conducting research in Disadvantages of Line and Staff organisation:
those specific areas. The existence of specialists on staff A fundamental misunderstanding:
makes this accomplishment feasible.
There is a simultaneous flow of two different authorities in
Training: an organisation structured along line and staff lines.
Because of the existence of staff specialists, the line officials Because of this, there is a lot of confusion between the two.
can receive expert advice and get trained on the job. As Because of this, the workers are unable to comprehend who
such, line executives can take proper and informed the controlling power in their midst actually is. As a result,
decisions. the issue of comprehension may present a barrier to
In and of itself, this serves as a learning environment for efficient operations.
them. Lack of reliable guidance:
Balanced decisions: The staff's experience and guidance become second nature
The level of specialisation that can be attained by line to the line official. There are situations when the staff
personnel is one component that contributes to the specialist may provide line executive advice resulting in
achievement of coordination. Because of this relationship, incorrect decisions. The smooth operation of the business
the line official will always be able to make decisions that may be hampered because of this.
are more reasonable and fairer. Conflicts between line and staff:
Line and staff are two different authorities that are both
flowing at the same time. Conflicts between line and staff
might arise. The factors such as designations and prestige deal with the difficulties of the business at various levels.
influence attitudes that are related to their relation might This organisation is something that we can call a functional
be stressful for employees' thoughts. department organisation.
Because of this, there is less coordination, which makes it The functional authority continues to be delegated only to
more difficult for a business to function effectively. the functional direction provided by the individual
Expensive: departments.
To keep costs in line with staff concerns, the concerns have It contributes to the preservation of quality as well as
to keep the high remuneration of staff expert employees. uniformity in the performance of a variety of functions
This ends up being expensive for a company that has limited across the entire company.
financial resources. FW Taylor was the one who initially proposed the idea of a
Assumption of authority: functional organisation and advocated for the placement of
knowledge able individuals in key roles.
Although the power of concern lies with the line official, the
staff does not like this arrangement because they are the Illustratively, the functional heads and marketing directors
ones who are more involved in mental work. in a functional organisation are responsible for providing
direction to subordinate employees throughout the
Staff steals the show: organisation in their respective fields.
In a line and staff concern, the higher returns are thought to This indicates that subordinates receive commands from
be the result of the expert staff advice and counseling. multiple specialists, who serve as managers above them in
The officials on the line are upset and concerned about the the organisational chart.
situation and their dissatisfaction sometimes creates Features of Functional Organisation:
problems. It is critical to the achievement of productive
results that line officials feel satisfied in their jobs. a) All the activities of a functional organisation are broken
down into their respective functions, which include
Functional Organisation functions like operations, finance, marketing, and personal
A functional organisation is segregated within the company relations.
so that specialists can maintain their positions at the b) A more complex form of administrative organisation than
highest levels. It is an organisation that we can define as a the other two.
system in which functional departments are developed to
c) There are three different authorities: line, staff, and Cost-Effectiveness:
function. When combined, specialisation and standardisation make it
d) Each functional area is assigned to functional specialists possible to achieve maximum output at the lowest possible
who are vested with the authority to make all decisions cost.
pertaining to that function anytime that function is carried Expansion:
out anywhere within the organisation.
The expert knowledge of the functional manager makes for
e) The principle of unity of command does not apply to such greater control and monitoring of the business.
an organisation because it already has a line structure in
place for that purpose. Disadvantages of Functional Organisation:
Advantages of Functional Organisation: Confusion:
Specialisation: The functional system is difficult to put into operation,

particularly when it is carried out at low levels. This is
A better division of labour takes place, which leads to the especially true when it is carried out at higher levels.
specialisation of functions and the profit that follows from Because of this, coordination becomes more challenging.
that specialisation.
Lack of coordination:
Efficient Control:
When a worker is controlled not by one person but by a
The management control process is made more huge number of people, disciplinary control becomes weak.
straightforward by separating the mental processes from As a result, there is no cohesive command structure.
the manual functions.
Difficulty in determining accountability:
The authority is kept within defined bounds using checks
and balances. It is possible that specialists will be called to Due to the existence of many authorities, determining
evaluate the work of several departments. blame can be challenging.
Efficiency: Conflicts:
The fact that each function is responsible for a constrained It's possible for members of the supervisory staff with equal
number of other tasks contributes to the overall positions to have disagreements with one another.
improvement in efficiency. On some topics, they could have different opinions.
Expensive: Advantages of committee organisation:
It is expensive for a company to maintain a staff of Improved Quality of Decisions:
specialists of the highest degree. One of the most significant benefits of using a committee
Committee Organisation: organisation is the improved quality of decisions. Members
A group of individuals who have come together to solve with expertise and experience gleaned from a wide range of
issues that are experienced by the organisation as a whole domains come together in this space.
form what is known as a committee organisation. They arrive at the best decision for resolving the difficult
Individuals are provided with the option to discuss the issues by first collecting the ideas of a collective group and
difficulties they have in committee through this approach. then analysing those suggestions.
The term "committee various forms of knowledge and who Establishing goals, plans, and policies:
have organisation" refers to a group of individuals who
possess been properly organised to address the challenges Every organisation is started with specific goals in mind, and
faced by the organisation. to reach those goals, it is necessary to establish goals as
well as plans and policies. The committee serves as the
A committee can assist in the gathering of collective ideas organisational structure that underpins the goal-setting
and information, as well as the accurate analysis of these process.
items, which can assist in the making of sound managerial
decisions and the resolution of challenging situations. In addition to this, it offers recommendations and
information that can be used to formulate strategies and
Throughout the course of operations, the company may policies to accomplish the goals that have been set.
face a variety of challenges; to address these challenges, the
management establishes committees by recruiting Participatory Management:
members from the relevant functional areas. The arrangement of work into committees assures that
And the management makes judgments and finds solutions competent people will take part in management activities.
to the issues based on the facts and ideas that are offered In this setting, each member has the opportunity to
by the members of the committee. contribute their thoughts, ideas, and opinions to the
process of making decisions. In the process of decision
making, the democratic procedure is taken into
consideration.
Decrease Prejudice and Conflicts: significant prior expertise and are recognised authorities in
The committee helps enable the development of ties among their respective disciplines.
members and their interaction with the line management, In addition, committees are comprised of knowledgeable
which in turn helps reduce prejudices and conflicts. people from the highest levels of management. They reach
They contribute to the authorities' ability to keep in close their decision after having an in-depth debate and analysing
communication with one another and share information the potential consequences of several different decisions.
with one another. Sharing of Authority:
As a result, the likelihood of making biased decisions or During the inquiry and research that is being carried out,
errors in judgement is reduced. In a similar vein, the some of the authority that is held by the top management is
development of reciprocal ties among members contributes being distributed among the members of the committee. If
to the resolution of conflicts that arise among them. they stay inside the boundaries of the designated area,
Dealing with Complicated Problems: committee members are free to carry out their duties
autonomously.
The arrangement of problems into committees makes it
easier to deal with complicated and tough sorts of issues. In In the committee, each member carries the same amount of
certain circumstances, during an organisation's functioning, weight in terms of authority. As a result, decisions made at
a great number of difficult or crucial challenges may the executive level receive the assistance and consensus of
surface. all the members of the relevant committees.
It is far more difficult for those in line of authority, or even Disadvantages of committee organisation:
upper management, to address difficulties of this nature. In Creating Conflict:
situations like these, committees are formed by collecting The presence of more heads in a committee increases the
specialists from the relevant fields in order to make it likelihood of conflict.
simpler to find methodical solutions to the challenges at
hand. In certain circumstances, the organisation of the committee
contributes to the confusion and contention that exists
Commitment to Implementation: during the decision-making process.
To handle complicated and challenging issues, a committee There is a possibility that the ideas held by one member are
is established. All the committee's members have in direct opposition to those held by other members.
Delay in Decisions: Lack of Secrecy:
Committee members take extra time to discuss various It is difficult to keep the secrecy of internal matters in the
aspects of a problem. This causes the decision-making structure of the committee, which makes it difficult to
process to be delayed. preserve the committee's credibility.
Discussion take up a significant amount of the members of The issues are dissected in detail by each member of the
the committee's time. committee, and in the course of doing so, they learn more
The management might have to shoulder an additional about the workings of the organisation as a whole. As a
financial burden if the decision is delayed. result, there is a greater chance that the organisation's
secret plans and strategies will become public.
The Possibility of Diversion:
Distribution of Responsibilities:
The conversation that is taking place within the committee
may in some instances be redirected to another topic. Most members of the committee are concerned about the
Within the allotted amount of time, the members of the process of decision making. It is possible that the committee
committee are unable to arrive at any kind of decision when will make an incorrect judgement in certain circumstances;
faced with a scenario like this. but, in such a scenario, no one member will assume
personal responsibility for the incorrect decision made on
They will need to get together more than once to reach a behalf of the committee. Everyone on the committee is
satisfactory conclusion. eager to pass on their responsibilities to the other members
The Shifting Tendency: of the group.
The tendency to delegate decision making to several Division of Accountability:
committees is a standard operating procedure in many In a committee-based organisation, no one is held
organisations. When leaders are unable to conclude responsible for the decisions that are reached by a
regarding significant issues, they frequently defer the committee.
decision-making process to a committee.
This results in a split in accountability. The decision reached
This attitude of line executives hinders the initiative and by a committee is referred to as "one's decision" because it
inventiveness of their employees, which in turn has a affects everyone equally. If there is even the slightest error
detrimental effect on the performance of the firm. in the way decisions are made, there is a possibility that the
company will experience difficulties.
No one is willing to accept the whole blame for the error This structure will be the outcome of organising the process.
that was made by the entire committee, and this is the The term "formal organisational structure" refers to this
situation we find ourselves in. kind of structure.
ORGANISATION STRUCTURE: The formal organisational structure describes in detail the
There are, broadly, two types of Organisation Structures: functions that should be carried out by everyone, the
authority that should be delegated to everyone, the
1. Formal Organisation Structure responsibilities that should be assigned to each individual,
2. Informal Organisation Structure the superior-subordinate relationship, and the designation
that should be given to each person within the organisation.
Formal Organisation Goals and Objectives
The managers purposefully craft this structure to facilitate
(Open/Overt) Policies and Procedures
the achievement of their organisation's objectives.
Job Descriptions
Financial Resources Salient Features of Formal Organisation:
Authority Structures a. The act of consciously structuring anything results in the
Channels of Communication formation of an official and formal organisational structure.
Products and Services
b. The accomplishment of the organisational goals is
Informal Beliefs and Assumptions intended to serve as the motivation for the formal
Organisation(Hidden/Covert) Perceptions and Attitudes organisation structure.
Values c. A formal organisational structure delegates distinct
Feelings-Joy, Fear, Anger, responsibilities to each individual member of the group.
Hatred etc.
d. In a formal organisation, each member is given a specific
Group Norms
amount of authority or decision-making power, depending
on the nature of the organisation.
Formal Organisation: e. The establishment of hierarchical connections between
As a result of the planning process, managers create an superiors and subordinates is a direct consequence of a
organisational structure to achieve methodical work and formal organisational structure.
effective utilization of resources.
f. The organisation's formal organisational structure serves Placement of a greater emphasis on work:
as the backbone of its hierarchical communication network. Work takes precedence over personal connections in the
Advantages of Formal Organisation: formal organisational structure, which prioritizes
Organised Tasks: productivity above camaraderie.
When an organisation has a formal organisational structure, Disadvantages of Formal Organisation:

its operations are more organised and run more efficiently. Postponing an Action:
Successful Completion of Organisational Objectives: When scalar chains and chains of command verbs are
To accomplish the goals of the organisation, a formal followed, the formal structure is pushed back.
organisational structure must be developed. Does not consider the employees' social requirements:
Avoidance of duplication of functions: The fact that the formal organisational structure does not
Work is typically parcelled out in a methodical fashion give emphasis to the psychological and social needs of the
across several departments and personnel within an official employees may contribute to a decline in the employees'
organisational structure. morale, which in turn may lead to a fall in productivity.
As a result, there is no opportunity for labour to be Placement of exclusive emphasis on work:

performed in a redundant or overlapping manner. Only the task itself is given value by formal organisational
Harmony: structures; human relations, creativity, ability, and other
such things are disregarded.
The formal organisational structure enables the different
departments to coordinate their work, which is a positive Informal Organisation:
outcome. Within the formal organisational structure, different job
Establishing One's Place in the Chain of Command: responsibilities are delegated to different individuals.
Individuals create some social and friendly groups within
The superior-subordinate relationship, often known as who the organisation because of the interactions that take place
reports to whom, is delineated in an unmistakable manner between them while working in various employment
by the formal organisational structure. positions.
One more structure exists within the company and is Under an informal structure, it is impossible to determine
referred to as the informal organisational structure. This the origin of information because any individual can contact
structure is formed by a network of social and friendly any other member of the organisation.
groups. The formal organisation structure is necessary for the
Unofficial organisational structures spring into existence on existence of informal organisational structures.
their own, and the primary purpose of these structures is to Advantages of Informal Organisation:
facilitate the attainment of psychological fulfilment.
Effective and Rapid Communication:
Because the people working in various job positions interact
with each other to build the informal structure, the Because the informal structure does not adhere to a
presence of the informal structure is dependent on the hierarchical chain, there is the potential for communication
existence of the formal structure. This is because the job to be disseminated quickly.
positions are formed in the formal structure. Satisfies societal requirements:
If there is no formal structure, then there won't be any job Informal communication gives the psychological and social
positions, which means there won't be any people working needs of the employees the necessary consideration they
in those job positions and there won't be any informal need, which in turn encourages those individuals.
organisation. Correct response:
Features of Informal Organisation: The highest-level managers can learn the actual input that
The managers don't have to make any conscious efforts to their employees have on the numerous policies and
construct the unofficial organisational structure; rather, it strategies thanks to the informal structure.
just happens naturally. Utilisation of informal organisation as a strategic tool:
Employees often build their own informal organisational The following are some of the ways in which informal
structures to achieve greater psychological fulfilment. organisation has the potential to be more advantageous
An informal organisational structure does not have a than the formal organisation:
predetermined chain of command or set way for a) The information gleaned from the informal group can be
information to flow through it. used in order to win the support of the employees and
enhance their level of performance.
b) Grapevine can swiftly communicate significant ORGANISATION CHARTS AND MANUALS:
information to one another. Organisation chart is a vital instrument for conveying
c) Through collaboration with informal groups, managers information about the working relationships inside a
can effectively exploit both official and informal company. It is a diagrammatic form that illustrates the
organisations for their own purposes. primary functions and how those functions are related to
Disadvantages of Informal Organisation: one another, as well as the formal channels of power and
the degree of authority held by each manager in charge of a
Engage in Rumour-Spreading: related function.
According to the results of a survey, around seventy percent According to the definition provided by George R. Terry, an
of the information that is disseminated through the organisation chart is a "graphical form” that illustrates the
informal organisational structure is rumour, which might essential components of an organisation. These
lead employees in the wrong direction. components include key functions and the relationships
No Organised Tasks: that are associated with them, channels of supervision, and
An organisation's need for structure to run efficiently the degree to which each employee is in charge.
cannot be met by an informal organisational structure. In larger firms, organisation charts are frequently
Potential to have unfavourable effects: accompanied with organisation manuals to provide further
context.
If the informal organisation disagrees with the decisions
and changes made by management, it will be extremely Organisation manuals are limited to being in the form of
challenging to put such decisions into action inside the brief notes and can only include departmental charts to
organisation. illustrate the activities of each department and their
relationship to the operations of other departments.
Placement of a greater emphasis on individual interests: Manuals for organisations may, on the other hand, also
When compared to the satisfying of organisational include sections that define the responsibilities and
interests, the informal structure places a greater emphasis authority of specific roles, as well as the procedures that
on the fulfilment of individual interests. must be followed when carrying out the various functions.
Obviously, the only context in which this makes sense is one Vertical chart, also known as top-down chart depicts the
in which a high degree of control is not just desirable but level of organisation as a hierarchical pyramid with a line of
also feasible. command that descends from the highest level to the
This is usually case with several departments of the lowest. In this chart, the position that holds the highest
government. ranking is displayed at the top
In a nutshell, the Organisation Manual is a pamphlet that level, while the position that holds the lowest ranking is
outlines all of the specifics of the organisation, including its displayed at the lower level.
goals and policies, authority, functions, tasks, and Horizontal Chart or left to right chart:
responsibilities of each unit, as well as all of the information The levels of organisation are shown going from left to right
related to it. in this diagram. The chain of command is broken up into
Copies of organisation manuals should be made available horizontal sections.
for review inside each department and division, in addition Reading progresses from most difficult to least difficult as
to being kept with the top managers who oversee the one moves from left to right.
organisation.
The horizontal chart has many benefits, including the
Organisation charts can be divided into two parts: following:
Master Charts: • It is written in the standard reading order, which moves
This chart displays the entirety of the formal organisation from left to right.
structure. ● Has a clear mental picture of the different organisational
Supplementary Charts: levels. Simplifies the process of understanding how formal
Supplementary charts provide an in-depth look at the authority and responsibility are distributed throughout an
linkages, authorities, and responsibilities that exist inside a organisation.
particular department or significant component of an ● Provides an indication of the relative length of the formal
organisation's specified area of responsibility. authority chain.
Organisation charts can also be classified into the following Circular Chart:
three types based on how organisation charts are prepared: A circular form can be used to display a variety of jobs or
Vertical chart or Top-down chart: functions that are held inside an organisation. A concentric
or circular chart illustrates the vertex by placing it at the The organisation manual can be broken up into the
centre of a series of concentric circles. following four sections:
Locations that are regarded as having approximately the i. Policy Manual
same level of significance can be found on concentric circles ii. Operational Manual
that are the same distance from the centre.
iii. Organisational Manual
Channels of formal power are represented visually by lines
connecting various blocks of functions or positions. Its iv. Rules and Regulations Manual
primary deficiency is that it frequently causes confusion. Advantages of Organisation Chart and Manual:
Meaning of Organisation Manual Management Tool:
There is a possibility that organisation charts will not offer Both the Organisation Chart and the Organisation Manual
all of the facts that are often wanted and required to contain information about the structure, positions, and
comprehend a company. authorities inside the organisation.
However, an organisation manual adds to the information As a result, an organisation chart and manual are regarded
that is provided in an organisation chart by providing more as essential components of an effective management tool.
data and serving as a supplement. Avoidance of Overlapping and Duplicate Activities:
A compact book that contains information about the aims The organisation chart and manual are prepared after
of the organisation, the authority and responsibilities of careful analysis of the jobs and positions requirements in
various positions, as well as the processes and procedures the organisation.
that are to be followed is called an organisation manual.
Manuals can be drafted for the entirety of an organisation As a result, this ensures that all activities are covered
or for certain divisions within that organisation. properly by various positions, and they will bring out very
easily the organisational weaknesses.
Information such as organisational goals and policies, job
descriptions of important employees, organisational As a result, they contribute to the reduction of overlapping
procedures, methods, and rules are all included in the authority and responsibility, as well as redundant labour.
organisation manual. Resolution of Organisational Conflicts:
An Organisation Chart and Manual Both clearly show William H. Newman, the celebrated Management Author,
Positions, Authority Relationships, and Procedures as a saw quite some time back that "the sanctity of printed
result, they serve as an easily accessible resource for words tends towards inflexibility and increased difficulty."
resolving organisational problems. Take, for instance,
promotions.
Training Guides:
A Partially Completed Picture:
The organisation chart and manual both serve to evolve the
work that is expected of employees in the organisation. As a The organisational chart and manual only show a portion of
result, they have the potential to serve as a method of on the full picture of how the organisation operates. They only
the-job training. depict official ties and operating procedures.
Reference to Outsiders: To exert more effective control over the actions of the
organisation's members, managers need tobe familiar not
Because the organisational manual and chart clearly only with formal but also with informal patterns of
indicate the position, authority, and responsibility, interaction.
outsiders who are unfamiliar with the organisation may
know very easily with whom they must interact for a Inadequate Description:
particular work task because the manual and chart provide An organisational chart just illustrates the reporting
this information in a clear and concise manner. linkages, or who is responsible for what. The figure does not
Disadvantages of Organisation Chart and Manual: reveal the precise proportion of authority and responsibility
that each person holds.
Rigidity:
As a result, the Organisation chart offers an inaccurate
The organisational functioning is made more rigid with the representation of authority.
help of charts and manuals. While the organisation chart
and manual are being produced, there are several changes Potential for Psychological Issues:
that take place within the organisation. The organisation chart may result in potential psychological
As a result, the incorporation of modifications requires issues for employees working for the organisation. Because
some time. In addition, written papers have the power to the chart places individuals in either a higher or lower
move others to make changes. position, respectively.
Therefore, a feeling of superiority or inferiority may arise, Organisational culture is also referred to as corporate
which may be counterproductive to the development of culture.
team spirit. It is possible that those at lower levels of an The organisational culture is one of the things that is the
organisation won't be happy with the chart being most difficult to change because it is unique to each
maintained. company and is comprised of both written and unwritten
rules that have been developed over the course of time.
Advantages of Organisation Manual:
(i) Because it contains rules, regulations, and a variety of
instructions, the organisation manuals make it possible for
employees to quickly learn the various procedures and Innovative
practices. Aggressive
Detail-
(ii) Because both instructions and policies are laid out in an Oriented
understandable manner, making decisions is both simple Organisational culture Result-

and expedient. Profile Oriented
People/Team
oriented
Disadvantages of Organisation Manual:
Stable
(i) Preparation of an Organisation Manual requires a
significant financial investment and a lot of time.
(ii) There is very little room for initiative and discretion on
the part of individuals when there are predetermined rules,
The underlying beliefs, assumptions, values, and modes of
regulations, and other factors.
interaction that contribute to the one-of-a-kind social and
THE ORGANISATION CULTURE: psychological environment of an organisation are what
The values, attitudes, beliefs, and behaviours that make up what is known as the "organisational culture."
characterise and contribute to an organisation's one-of-a Every organisation has a company culture, regardless of
kind social and emotional work environment are referred to whether this culture was intentionally cultivated.
as the organisation's culture. Types of Organisational Culture:
There are primarily four distinct cultures that can be found The Hierarchy Culture:
within an organisation. These are as follows: This culture is characterised by its emphasis on hierarchy
The Clan Culture: and control. The atmosphere at work is very formal, and
This culture has its foundation in working together. there are stringent protocols established by the institution
Members have a lot in common with one another and have to provide direction.
the perception that they are part of a large family that is A culture that places an emphasis on productivity and
very involved in activities. predictability is conducive to leadership because it requires
The organisation is held together by its commitments and organised coordination and monitoring.
traditions, and leadership takes the form of mentoring for AUTHORITY AND RESPONSIBILITY:
its members. In the context of a specific job, function, or situation, the
The Adhocracy Culture: term "authority" refers to the formal, institutional, or legal
This culture is characterised by a high level of energy and power that gives the holder of that job, function, or position
inventiveness. It is expected of leaders to be innovative and the ability to successfully carry out the responsibilities
entrepreneurial, and employees are actively encouraged to associated with that job, function, or position.
take calculated risks. A subordinate's duty is known as responsibility, and it is
Experimentation, with an emphasis on individual ingenuity delegated to them by his or her superior.
and freedom, is the primary means by which the Authority:
organisation maintains its cohesion. a) A superior has the legal right to issue commands to those
The Culture of the Market: under his or her supervision.
This culture is founded upon the competitive nature of the b) The position of the boss within the organisation is the
market and the pursuit of tangible success. The focus is on primary factor that, in most cases, determines who has
achieving the goals, and the leaders are known to be strict authority.
and demanding. The organisation's members are all c) A superior can give his subordinate the authority to do
working toward the same objective, which is to achieve an something under his supervision.
edge over all of their competitors. Market share and
profitability are the primary factors that determine value. d) The chain of command moves from superior to
subordinate in a downward direction.
e) Authority can be defined as the legitimate power that an It is possible to delegate authority, but responsibility cannot
individual or group possesses over other individuals. be passed on to another party. The chain of command
Responsibility: moves downward.
a) A subordinate is obliged to his or her superior authority It is always possible for a superior to delegate some of his
to complete the tasks that have been delegated to them. authority to his subordinates, but he cannot absolve himself
of the responsibility or obligation to carry out his duties.
b) Responsibility is an outcome of the superior-subordinate
relationship, in which the subordinate accepts the The individual's superior is the one to whom responsibility
obligation to carry out the responsibilities that have been is owed. As a result, a subordinate cannot get out of his
delegated to him. responsibilities by passing some of their authority down to
another subordinate.
c) The subordinate cannot delegate this responsibility to
anyone else. Because responsibility is never transferred horizontally, it
can never be delegated.
d) The chain of responsibility moves from the subordinate
to the superior position in an ascending order. The relationship between authority and responsibility is
very close. Equal treatment ought to be given to both. A
It means making a moral commitment to complete the work subordinate will only be accountable for the responsibility
that has been allotted. associated with the authority that has been delegated to
Relationship between Authority and Responsibility: him.
A superior has the authority, or the right, to give orders and Sources of Authority:
instructions to his subordinates in order to get things done. The various sources of authority are listed below:
This right is known as "authority."
Legitimate Authority:
The term "responsibility" refers to the responsibilities that
are placed on a person because of the delegation of This type of power typically originates from the status quo
authority. and the cultural system of obligations that govern our rights
and responsibilities. As a result, the “position" is accepted
The obligation that rests on the shoulders of the by the people as being "legitimate."
subordinate to carry out the duty to the best of his or her
ability is another aspect of responsibility. It results from the The social institution of private property is the primary
hierarchical structure of superiors and subordinates. contributor to the formation of the status of a private
company. In the realm of politics, this right derives from the university professors can wield significant influence over
political system known as representative government. the people around them.
Coerciveness: Referent Authority:
It is based on the ability of one person to instil fear in The recognition of a person's faith as a leader who is held in
another person and is founded on the subordinate's high esteem, admiration, and often imitation by those who
expectation that punishment will be met for not agreeing or are subordinate to them is the foundation upon which
complying with superior orders or beliefs. It is derived from referent power is built.
the ability of one person to instil fear in another person. Characteristic of Authority:
Rewarding Authority: Some of characteristics of authority are as follows:
When compared to the power of coercion, the power of Foundation for getting things done:
reward is more desirable. This results from the fact that
some individuals possess the ability to reward you. Within an organisation, authority serves as the foundation
Purchasing positioning, which has low position power, upon which the work can be completed.
might be able to use considerable influence from their It is the right to influence the actions and behaviours of
ability to either speed up or delay the delivery of an others within an organisation, as well as the performance of
essential spare part. In a similar vein, professors at certain activities, with the intention of achieving
universities have significant power to award you, as they predetermined goals.
can award or withhold higher grades. Permitting Company Legitimacy:
paid vacations is another example of awards.
Authority is recognised because it possesses some
Expertise: legitimacy, which means that it is accorded the right to
This refers to the power that comes from having ensure its own safe performance by other people.
knowledge, abilities, and expertise in a particular field. A right of this kind may be recognised by law or in a formal
Because superiors are in possession of this knowledge, setting, or it may have historical backing.
subordinates strive to acquire it and carry out their
instructions. Authenticity as measured by conventional or generally
recognised criteria.
Due to the high regard in which their specialised knowledge
is held, professionals such as doctors, lawyers, and
Based on the position or office that he holds within the • The person who is doing the work is the one who is
organisation, a manager is granted the authority to exert responsible for, or obligated to fulfil, operating
some level of influence over the actions of the people who responsibility.
report to him. Ultimate Responsibility:
Decision making: • The manager is ultimately responsible for fulfilling his or
The ability to make decisions is a prerequisite for holding her final task, which is to see to it that the work is carried
power. out effectively by the staff members.
When a manager evaluates the performance of his • The manager, who is ultimately responsible because he or
subordinates in relation to the flow of activities, he may she is the one who ensures that the work gets done, bears
decide to issue directives to his employees instructing them the ultimate accountability.
to act in a particular manner or prohibiting them from KEY ISSUES IN ORGANISATION STRUCTURE:
acting in that manner.
When businesses strive to enhance and better manage their
Subjectivity in Implementation: day-to-day operations, overcoming organisational
Even though authority is partially objective, its exercise is challenges can be a difficult obstacle for some of them to
heavily influenced by subjective factors such as the surmount.
personality of the manager who is empowered to exercise Recognising that there is a problem and pinpointing its
authority, in the context of a subordinate or group of origin is the first stage in the process of finding solutions to
subordinates, are major influences on how authority is challenges that arise inside an organisation.
exercised.
It takes time to discover where the problems are coming
Forms of Responsibility: from and create appropriate remedies for each problem,
There are two forms of responsibility: but it is a crucial step for any organisation that wants to
Operating responsibility: grow and grow in a healthy way.
• Individuals are held accountable for their own actions in Any organisation that wants to grow must take this step.
the workplace through the concept of “operating
responsibility.”
Important Issues in Organisational Structure: When a company has high productivity, it suggests that they
Turnover: are hitting their production quotas, their business
operations are running smoothly, and they are fulfilling all
A problem that arises in an organisation when a significant orders within the allotted time frame. Losses in productivity
number of workers quit their jobs on a regular basis is could be experienced by an organisation for the following
referred to as having a high turnover rate. reasons:
To make up for this, a company has to continually bring in *There are not enough people on the teams.
new employees to replace those positions. This could tie up
resources at the organisation and cause delays in the *The workers either get disinterested in their work or
workflows at the company. The following are some become distracted.
potential causes of high turnover rates: *Alterations in structure and practice made suddenly might
* Employees are unhappy with management and the be disorienting.
officials that represent them in leadership roles. * The difficulty of one's task might be increased by factors
* They are unhappy with their employment and do not such as unachievable deadlines and ineffective
believe it provides any satisfaction to them. management.
* Members of the staff are underpaid and seek increased Process Management:
recompense for the work that they do. Process management is a tool that managers use to
* Employees are under the impression that their employer guarantee that their teams are adhering to industry
does not pay attention to their opinions, ideas, or problems. standards so that they may accomplish their task in a timely
and effective manner.
* The employees of the team do not see any opportunities
for advancement inside the organisation. The manager is responsible for establishing norms and
guidelines, selecting which practices are to be kept, and
Productivity: determining which practices do not offer value. It is possible
Productivity is measured by the amount of work that is for managers to put up procedures that are difficult to
successfully completed by personnel while adhering to the understand and complicated, which can lead to poor
established timeline. process management.
* The leadership of the company is rigid and pays no most essential components of a prosperous business.
attention to the opinions of its workers. Customers who are pleased with the products or services
* The task that their teams are responsible for and the they receive are more likely to return for additional
resources they require to complete it are not well business and make additional purchases.
understood by managers. Customers could be upset with a company either because
Role Specification: the workers who serve them deliver bad customer service
or because the product itself does not meet their
The process of employing the individual who is the most expectations.
competent for a position and then giving that job to the
employee who is the most fit for the role is called role Retraining personnel to give the highest level of customer
specification. service possible and engaging customers through polls,
social media, and other research methods may be one
A deficiency in the quality of the role specification can cause approach to addressing the problem of low customer
disruptions in the workflow, decreases in efficiency, and satisfaction that arises within an organisation.
barriers in communication between members of the team.
Problems with role specifications may occur due to the Innovation:
following reasons: Innovation is the process by which generate new ideas and
a) There is a possibility that managers will act in a biased grow their product and service businesses offerings. An
manner towards or against persons. organisation that is not just forward-thinking but also
receptive to new possibilities, one that stays current with
b) A hiring manager will not put in the effort to conduct a technological advances, would be one that rises to the to of
comprehensive interview with a candidate' its field. Because of the following factors, organisations
c) It's possible that leadership doesn't fully comprehend the experience less innovation and become more stagnant:
capabilities and unique characteristics of their team. a) They have a culture at their organisation that does not
d) There is a risk that nepotism will result in an unqualified encourage employees to be creative.
new hire. b) The organisation continues to employ archaic business
Customer satisfaction and relationships: strategies that stifle rather than foster innovation.
The satisfaction of one's clientele and the quality of the Teamwork:
relationships one cultivates with those clients is among the
Teamwork requires members of an organisation to Changes could be made to the organisation's structure,
cooperate with one another toward the accomplishment of strategy, rules, processes, technology, or culture as part of
a certain objective. this process.
Productivity and revenue can both be increased through The process of utilising change to bring about a successful
effective teamwork, which also makes it simpler for resolution is referred to as organisational change
everyone to complete their assigned tasks. management, and it typically involves three primary steps:
When members of a team have contrasting personality planning, implementation, and follow-up.
traits, it can be difficult to maintain effective teamwork The need for organisational transformation is driven by a
within a company. variety of variables. The following are some of the most
a) There are certain people who give significantly more to typical ones that managers are confronted with:
initiatives than others. a) New management at the helm of the business entity or in
b) Certain employees receive preferential treatment from other areas or departments within the organisation
their managers. b) Alterations to the organisational structure of teams
c) The organisation suffers from ineffective lines of c) The introduction of innovative technologies
communication. d) The adoption of novel business models
ORGANISATIONAL CHANGE: There are three primary categories of organisational
The term "organisational change" refers to the actions that changes, which are as follows:
are taken by a company or business to modify a significant Developmental Change:
aspect of their organisation.
Any modification to an organisation that results in an
These aspects may include the company's culture, the improvement to the processes and procedures that have
underlying technologies or infrastructure that it makes use already been established.
of to function, or their internal procedures.
Changes during Transition:
The transition of an organisation from one state to another
is what is meant by the term "organisational change." This type of change moves an organisation away from its
Alterations to an organisation can take on a variety of existing state and into a new state to address a problem,
forms.
such as implementing a merger and acquisition or change may have on the project is the responsibility of
automating a task or process. project managers as well as senior executives who oversee
Examples of this type of change include merging and change control.
acquiring other companies or automating a task or process. Included on the list of facets of the project that require
Transformational changes: specific attention from specialists in change control are the
following:
Such changes refer to the transformation of an
organisation's culture and way of doing business that is Scope:
both drastic and fundamental in nature. Change requests should be examined to determine how
When undergoing transformative change, it is possible that they will affect the scope of the project.
the final effect will not be known. For instance, a company This evaluation should take place with regard to the scope
might branch out into whole new product categories or of the project.
market niches. Timing:
Management of Change: When evaluating change requests, it is important to
A methodical and systematic strategy for addressing the consider how such requests will affect the overall timing of
transition or change of an organisation's objectives, the project.
procedures, or technologies, is referred to as "change Costing:
management."
Change requests need to be examined to establish how they
The goal of change management is to put into action tactics will affect the overall cost of the project. Since the cost of
that will bring about change, control change, and assist labour is often the single highest expense associated with a
individuals in becoming accustomed to change. project, rushing through the completion of project activities
The evaluation of each change request in terms of its can result in significant and immediate shifts in the total
potential effect on the project is an essential part of project cost of the endeavour.
management, and thus plays an important part in change Evaluation of Change Requests Regarding Quality:
management.
Change requests should be examined to determine how
Examining how a change in one part of the project may they will affect the overall quality of the project once it is
affect other parts of the project as well as the impact that finished. An acceleration of the project timetable in
particular has the potential to impair quality, as does the The act of rejecting or battling against modifications or
rapid completion of work, which can lead to flaws. changes that affect the status quo is what we mean when
we talk about change resistance.
Human Resources: This resistance may show itself in a single worker or

permeate the entire workplace.
In the area of human resources, change requests should be
assessed to see whether or not there is a requirement for A lack of readiness to adjust one's behaviour in response to
additional or specialised labour. changing conditions can be defined as resistance to change.
It can be done in an indirect or direct manner, organised or
When the timeline of the project needs to be adjusted, the on a personal level.
project manager runs the risk of losing valuable resources
for use on other tasks. Employees may come to the realisation that they do not like
or desire change and protest it publicly, which can be a very
Communications: disruptive action.
Change requests that have been approved should, in the There is a clear indication of resistance to change in
appropriate amount of time, be notified to the relevant functions such as:
stakeholders.
• Denunciation or Fault Finding
Risk:
• Nit-picking over tiny details
Change requests need to be assessed in order to determine • Offensive or Insulting remarks
the risks that are posed by the requests. Even very • Absence in meetings
insignificant alterations might have a cascading effect on • Dishonouring commitments
the project and increase the danger of logistical, financial, • Continuous arguments
or even physical complications. • Disruptive behaviour
Recovery: Approaches to Change Management:
If the scope of the project changes, it may be necessary to The implementation and operation of change management
re-evaluate the procurement of supplies and contract is a process that is ongoing and requires a significant
personnel. amount of time, knowledge, devotion, and effort.
Resistance to Change:
Because it involves the participation of people or Lewin used the transition from solid to liquid to a block of
employees of the organisation, these people may also be ice to illustrate the concept of structural or organisational
affected by the changes that are being made. change.
An organisation must first determine why it needs changes Their model consists of three primary phases, which are
and how it will benefit from the changes before adopting Unfreeze, Change, and Refreeze, which are discussed in
one of the many effective and popular techniques or detail as under:
models for change management. Unfreeze:
The following is a list of some of the most effective According to Lewin's methodology, the process of
techniques and methods for putting change management transformation begins with the preparation of the change.
into action: This stage is the first in the process.
Lewin's Change Management Model: This indicates that the organisation must be prepared not
Kurt Lewin (1890-1947) was a social psychologist whose only for the possibility of change but also for the fact that
extensive work covered studies of leadership styles and change is both significant and essential.
their effects, work on group decision-making, the It is crucial to get over this phase because most people all
development of force field theory, the over the world tend to fight change, and it is also essential
unfreeze/change/refreeze change management model, the to get past the status quo.
action research approach to research, and the group
dynamics approach to training, especially in the form of Making people realise why there is a need to change the
existing method and how change can offer benefits is the
T-Groups. (Source: https://www. bl.uk/people/kurt-lewin). most important thing that can be done here.
The change management model developed by Lewin is one In addition, the transfer required an organisation to
of the most widely used and successful models available to investigate its history and conduct an in-depth analysis of it.
us today, making it possible for us to gain an understanding
of both structural and organisational change. Change:
Kurt Lewin conceived of and initially constructed this model The true transformation or change happens during this step
in the 1940s, which continues to be still applicable. of the process. This process can take some time to complete
because people typically need some time to adjust to new
happenings, advancements, and changes in their One of the few models that has managed to remain
environment. relevant even as others have come and gone out of style is
At this point, strong leadership and assurance are essential the McKinsey 7-S Framework or Model.
because they not only point the process in the right path It was developed by consultants working for McKinsey&
but also make it simpler for the individuals or workers who Company in the late 1970s, and it has seven stages, or
are participating in the process. phases, for managing change.
The successful completion of this phase relies heavily on The Seven Stages of the model:
clear communication as well as precise scheduling. Strategy:
Refreeze: A company's strategy is the game plan it devises to
At this stage, the people in the company or organisation overcome its rivals and achieve its objectives.
have shown that they are willing to accept, embrace, and According to McKinsey's 7-S framework, this is the first
work to put the change into effect. stage of change, and it involves the development of a step-
As a result, the firm or organisation starts returning to its by-step procedure or future plan.
previous state. Structure:
Because of this, the stage is referred to as the recycling Structure is the stage or characteristic of this model that
stage. pertains to the division of the organisation or the structure
This is the point in time when workers and processes begin it follows.
to re-freeze, and things start getting back to the normal Systems:
speed and routine that they were previously in.
This stage is related to the manner in which the day-to-day
To make sure that changes are always harnessed and put activities are carried out in order to complete a task, and it
into action even after the goal has been accomplished, this focuses on how the task is carried out.
phase requires the assistance of the people.
Values that are shared:
The employees gradually feel more at ease and confident
about the adjustments that have been implemented Shared values are the fundamental or primary principles
because of the sense of stability that has been established. that an organisation bases its operations and decisions on in
order to function effectively.
McKinsey 7S Model:
c) This model considers all components to be important and
equally worthy of being addressed, and as a result, it does
not omit any aspect that may be of significance in some
contexts.
Style: d) Additionally, this model provides a directional factor for
The term "style" refers to the manner in which changes in organisational change.
leadership and organisational structure are accepted or put Disadvantages of the model:
into effect.
a) The fact that every component is connected to and
Staff: dependent upon every other component means that the
The term "staff" can refer to either the workforce as a failure of any one component results in the failure of the
whole or individual employees, as we as their individual entire model; this is the most significant drawback of this
capacities for work. model.
Skills: b) When compared to the other models, this one is more
The employees of the organisation possess a variety of skills complicated, and it does not place an emphasis on the
in addition to their core competencies, which are described differences between them.
here. c) There have been more instances of failure experienced by
Advantages of the model: organisations that have used this model, and this can also
be one of the negatives that are associated with it.
a) This model provides a variety of approaches and
strategies for understanding an organisation and gaining a Kotter's Change Management Principles:
profound comprehension of the functioning of the The Change Management Principle developed by Kotter is
organisation. widely regarded as one of the most influential and
b) This model integrates both the emotional and the influential principles in the world. John P. Kotter, a
practical aspects of change, which is something that is professor at Harvard Business School and author of several
important to do in order to create ways to enable books on the topic of change management, is the brains
employees to deal with transition in an easier manner. behind the formulation of this theory.
His theory of change management is structured in eight To get things moving or to empower action, one needs to
phases, with each phase concentrating on a key principle get support, remove the roadblocks, and implement
that addresses people's reactions to change. feedback in a constructive way.
This is necessary to get things moving or to empower
action.
Stages of Kotter's model:

A rising sense of urgency:
Creating a sense of urgency among the people is the focus Concentrating on goals for the near term:
of this step. The goal is to encourage people to act and A good strategy for achieving success without feeling too
move closer to achieving their goals. much pressure is to concentrate on short-term objectives
Putting together the team: while also breaking down the larger objective into more
manageable sub-goals.
In this stage of Kotter's theory of change management, you
are going to make sure that you have the right people on Not giving up:
the team by choosing individuals with a diverse set of It is essential to refrain from giving up during the process of
abilities, levels of knowledge, and levels of commitment. change management, no matter how challenging the
This part of the process involves getting the vision right by circumstances may appear. Perseverance is the most
not only considering the strategy, but also considering important factor in achieving success.
creativity, emotional connection, and goals. Adapting to new circumstances:
Communicating: In addition to effectively managing change, one of the most
Kotter's theory on the management of change places a important things to do is to reinforce it and incorporate it
significant emphasis on communication with individuals into the culture of the workplace.
concerning the change itself and the necessity for it. Advantages of Kotter's Model:
Getting things off the ground: ●This is a model that can be followed in a step-by-step
fashion and is simple to implement.
● Instead of attempting to alter oneself in response to the ADKAR Model:
change, the focus here is on embracing it and preparing for The ADKAR model or theory of change is a goal-oriented
it. tool or model that enables various change management
Disadvantages of Kotter's Model: teams to concentrate on the steps or activities that are
*Because this is a model that can be followed step-by-step, directly related to the goals it wants to achieve.
there is no other step that needs to be completed to get to This makes it possible for change management to be more
one. effective. The mode produces cumulative and sequential
*The entire process described in this model can be very results, both in terms of the goals achieved and the results
time consuming. the are defined by using the model.
Nudge Theory: When using this model, one must obtain each result or
outcome in a specific order for the change to be able to be
Nudge Theory, also known simply as "nudge," is a concept maintained and implemented.
that has applications in the fields of behavioural science,
economics, and political theory. This means that the order in which each result or outcome
is obtained is very important. Change managers can use
However, it is also applicable to the process of change models to identify various gaps or gaps in the process of
management in organisations and businesses. American change management in order to provide efficient training to
Legal Scholar Cass R. Sunstein and American Economist employees. This is possible thanks to the use of models.
Richard H. Thaler deserve the lion's share of the credit for
developing this theory. ADKAR model basically stands for:
The essence of this principle consists of gently nudging or a) Consciousness - regarding the requirement and
pushing someone, as well as and motivating them to make prerequisite for change
a change. b) A strong desire to both be a part of and contribute to the
The Nudge Theory is helpful not only in locating and process of change
comprehending existing influences, but also in providing an c) Knowledge - how to effect this transformation
explanation for those influences, with the goal of either d) Capability - the ability to integrate change on a consistent
removing them entirely or modifying them to the point basis
where they allow for the achievement of positive outcomes.
e) Reinforcement, both to maintain its current position and something that occurs to people, even if they are unaware
to add additional support later. of it happening to them, even though on the one hand the
Advantages of ADKAR Model: transition is something that occurs from the inside out.
The model provides the capability of identifying the reasons The model centres on three primary steps, which are
why the changes that have been made are not working and described in the following order:
why the desired results are not being obtained and *End, give up and let go
evaluating those reasons. *Neutral Zone
Using the model, one is able to dissect the changes into *New beginning
their component parts, and then pinpoint the area in which
the transformation may not be as successful as originally
envisioned. Kubler-Ross Five Stage Model:
It provides both a business and a people-oriented After conducting research on death and dying,
perspective on the changing environment. ElizabethKubler-Ross came up with the idea for the Five
Bridges' Transition Model: Stage Model that she later named after herself.
The Bridges' transition model was developed by William This model is also known as the grief model because it
Bridges, an American author, speaker, and organisational discusses the various emotional states and stages that
consultant (Source: https://en.wikipedia.org/wiki/William people go through when they become aware that their time
Bridges). The theory was brought to the attention of the on earth is ending.
general public after it was published in the book "Managing The model is adaptable to a variety of other aspects of life,
Transitions." including but not limited to the loss of a job or a shift in
This approach, model, or theory is distinguished by the fact one's line of work and conditions of a lesser severity.
that it concentrates on progression rather than modification The model, which assists in comprehending and coping with
and, as a result, remains static. one's own personal trauma, has gained widespread
Although there is often only a fine line between the two, it acceptance all over the world.
is essential to be aware of the distinction between change The Kubler-Ross model can be broken down into several
and transformation. Change is distinct stages, which are as follows:
Denial: Depression:
When people are unable to accept the news about their When someone realises that their attempts at bargaining
diagnosis, they are said to be in the first stage of the model, are fruitless, it can cause them to experience feelings of
which is called denial. depression and a loss of confidence.
Because of their incapacity to process information, some At this point, the individual is no longer bothered by
people develop what is like a buffer or hedge around anything and has entered a state of mind that is both
themselves. depressing and hopeless.
During this stage, one may experience tremors as well as a Depression can be viewed or identified in a variety of ways,
feeling of numbness. This is since everyone is fighting the and some of these ways include having low energy, not
change and does not want to believe what is taking place. committing to anything, having low motivation, and not
Anger: having any enthusiasm or joy in any form.
After carefully processing the information, one's initial Acceptance:

reaction is frequently one of anger. When a person realises Acceptance of what is occurring and the beginning of
that the change will in fact influence them, their initial state resigning oneself to it can eventually occur when a person
of denial transitions into anger. realises that being depressed or fighting change serves no
During this stage, the individual begins looking for someone purpose and that there is no point in doing either.
else to blame for their situation. People approach this stage in their lives in a variety of
Anger can be channelled in a variety of different ways different ways.
depending on the person. Others, meanwhile, may come to the conclusion that they
Bargaining: have no other options available to them and may, as a
result, give up trying to improve their circumstances and
Bargaining is involved in the subsequent stage or stage in instead give in to the predetermined outcomes of their
order to obtain the optimal answer to the problem or lives.
problem that has been presented.
CONFLICT DYNAMICS:
People engage in bargaining as a means of warding off the
worst-case scenario and as a natural response to limit their To have a full comprehension of what is meant by the
exposure to excessive change. phrase "dynamics of conflict," one must first comprehend
what each individual word means. There are two primary *Positive attitude.
ways that the term "conflict" can be defined. *Setting the priority levels.
The argument that different stages of the conflict process *Being patient.
fundamentally alter the environment in which interactions
between actors take place is what is meant by the concept *Understanding others' body language.
of conflict dynamics at the core of a stage. Conflict Resolution Strategies:
Conflict Management: The following is a list of the top five strategies for conflict
The process of resolving conflicts through conflict resolution:
management aims to achieve a balance between minimising
the potential for negative outcomes and maximising the Refrain from Ignoring the Conflict:
potential for positive outcomes.
If you're the type of person who prefers to avoid
This essential management ability entails negotiating, confrontation, the thought of burying your head in the sand
thinking creatively, and using a range of different strategies and acting as if a problem doesn't exist in the hopes that it
according to the context of the interaction. will go away on its own may make you feel like giving in to
The goal of conflict management is to improve learning and temptation.
group outcomes, such as an organization's efficiency or Although this does occur on occasion, the reality is that in
performance in a given environment. most cases, doing so will make the problem even more
Some Examples of Skills needed for conflict management severe.
are given below: Conflicts that are ignored have a propensity to worsen over
*Clear and effective communication- Communication skills time and resurface at inopportune times; therefore,
are one of the most important skills you need to have for whenever you recognise it, your team should take a side
conflict management because they are the key to and the conflict should be resolved as soon as you recognise
successfully resolving conflicts. it.
*Listening attentively Explain the nature of the issue:
*Engaging in the practice of empathy.
*Problem solving.
It is imperative that you gather all the relevant information After both parties have had the opportunity to discuss the
if you are tasked with mediating a dispute between two current situation, it is time to determine what sort of
members of your team. solution might be satisfactory, as well as the steps that
Find out what the real issue is by having a discussion with need to be taken to arrive at that solution.
everyone who is affected by it. In an ideal world, by this point, both parties will understand
How does everyone else make sense of what's going on the position of the other, and in many cases, the conflict
here? can only be resolved through civilised and honest
conversation.
Are the requirements going unfulfilled?
In any case, if the circumstance calls for further resolution,
What does each party consider to be an acceptable way to you will be required to negotiate with the other party and
resolve the conflict? assist them in developing an appropriate solution.
Make sure that all the parties involved are aware that you This stage may require some time and effort on both
are acting as an impartial mediator and assure them that parties' parts because it requires them to put aside their
they can feel free to discuss sensitive information with you. differences and preferences to locate some ground they can
Organise a meeting between the various parties involved: work on together (which may include accepting the fact
After you have had the opportunity to speak with each of that they will not get everything they want out of the
the parties involved separately, you should then bring them situation).
all together in a meeting so that they can resolve their The next step is to collaborate with both parties to produce
differences in an atmosphere that is impartial. a detailed plan of action that will lead to a resolution of the
Now is the time to generate ideas, pay attention to what issue.
others have to say, and be willing to consider a wide range Maintain vigilance and follow up on the situation regarding
of points of view. the conflict:
The objective is to figure out what the issue is, what part Even though the problem has been pinpointed and
everyone is playing in the disagreement, and what kinds of addressed, this does not mean that the problem will vanish
solutions might be available. completely.
Identify a solution: As a manager, it is your duty to check in with both sides of
the conflict to ascertain whether the issue has been
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outlined are being carried out in order to find a solution.
ABFM MODULE- A
If everything seems to be going smoothly, just keep in mind
Chapter: 4 STAFFING
that it is important to take a step back and assess the
situation on a regular basis to determine whether things are
truly going smoothly or if there is still tension that can be
*All about Staffing?
resolved.
This is a prerequisite for conflict resolution.
If it is obvious that the solution was not working or was not
the appropriate solution for the situation, make sure that a
dialogue is continued with both parties to adjust
expectations, identify alternative solutions, and create
solutions that are positive and healthy.
INTRODUCTION: developing the said personnel, in addition to maintaining and
increasing the competence and performance of said
People working in an organization play a vital role in achieving
personnel".
its goals or objectives.
In other words, the process of locating, analyzing, placing,
It is not only the number of people which matters but also
cultivating, and reviewing persons for employment
their skill level and motivation. Proper recruitment and
opportunities may be referred to as staffing. The process of
training policies of the organization play an important role in
staffing an organisation entails determining the manpower
ensuring that right quality of people in right number are put
requirements of the business and then providing it with
for carrying out a particular type of assignment.
sufficient and competent individuals at all its levels.
Appropriate career development policies should also be
Staffing therefore encompasses activities such as personnel
adopted to tackle the problem of attrition of skilled staff. The
planning, procurement (also known as selection and
effective administration of human resources is the foundation
placement), training and development, performance
of the managerial function of staffing.
evaluation, and compensation of workers.
A method or procedure, such as recruiting, selection,
Managers are responsible for building an organization through
placement, training, and development, giving remuneration,
the process of recruiting, selection, and development of
etc., are all examples of activities that fall under the purview
individuals as capable employees.
of effective human resource management.
This process is known as staffing. The process of staffing plays
The process of recruiting and training suitable individuals to
an important part in the planning of human resources.
fill the available jobs in a company is an important part of
staffing. It guarantees that the organization is making the greatest
possible use of its human resources.
One definition of this process is as follows:
May also be noted that the hiring process is the most
"It entails making an estimate of the quantity and type of
important part of any other managerial role.
personnel that will be required, as well as recruiting and
It is beneficial to an enterprise's efforts to keep a workforce at * Staffing is a function that is used in many different contexts.
a decent level. It is the responsibility of managers at every level of
management to carry it out.
FUNCTIONS OF STAFFING:
The process of management includes staffing as one of its
The primary functions of the staffing are:
essential components.
* Obtaining qualified individuals for various job positions
It is possible to define it as the process of recruiting and
inside the organization is the primary objective of the staffing
cultivating the necessary personnel to fill the available roles in
function, which has several other responsibilities as well.
an organization's numerous departments.
* The process of staffing ensures that the most qualified
This is so because when it comes to effective and efficient
candidates are selected for open positions, which results in
management of the business, every business entity is
greater levels of both productivity and performance.
extremely concerned with the quality of the people available
* It contributes to the promotion of the most effective and to them.
efficient usage of human resources in a variety of ways.
According to Peter Ducker, "man, of all the resources
* The successful recruitment of the right person raises the accessible to man can grow and develop."
level of job satisfaction and morale experienced by workers.
It is concerned with the recruitment, selection, placement,
* The process of staffing serves to guarantee that human utilization, and development of an organization’s staff
resources are used more effectively. members.
* It secures the organization's continued existence as well as OBJECTIVES OF STAFFING:
its continued expansion using development managers.
The important objectives of staffing are:
* Proper people can be placed in the right jobs with the help
* To get the appropriate employees for the appropriate
of staffing services.
positions.
* To educate and cultivate the available human resources.
* To design policies for personnel matters, such as transfer, This means that the focus is on maximizing the potential of
promotion, and other related work. the employees working for the organization.
* To effectively shape the available human resources and to Their interests, personality, and talents will all mature as a
motivate those resources toward better levels of result of this.
performance.
It makes it possible for workers to derive the greatest possible
* To create a positive and productive working connection satisfaction from their employment.
between employers and employees as well as between
Employees are given the tools they need to reach their full
different groups of employees.
potential as a result.
* To ensure that the demands of the workers are met to the
Employees are given the opportunity to enhance their careers
workers' satisfaction so that they will become dedicated and
through various educational and training programmers
loyal to the organization.
provided by the company.
* To keep positive human interactions in place in order to
An all-pervasive function:
foster strong morale among the workforces.
Staffing is essential to the operation of every business. It is a
NATURE OF STAFFING:
significant component of the overall management system that
Concentrated on Individuals: has the capability of being implemented in both for-profit and
not-for-profit businesses. It is necessary for all personnel at all
The process of Staffing is concerned with the effective
levels of the business, regardless of their type.
utilization of an organization’s Human Resources. It
encourages and incentivizes each worker to contribute to the An ongoing procedure:
fullest extent possible toward the accomplishment of the
The process of hiring new employees is an ongoing one that
organization's goals and objectives.
never comes to a conclusion. It involves constant vigilance and
Oriented Towards Development: an acute awareness of the significance of human relations in
every aspect of the operation.
efforts to the accomplishment of organizational goals. It
makes for an atmosphere that is not just physically but also
mentally pleasant to be in while at work.
Human objectives:
Its multidisciplinary character:
This helps employees reach their full potential so that they
Staffing is a field that originated in the social sciences. It
can experience the greatest amount of satisfaction from the
incorporates theories and ideas derived from a variety of
work that they do.
academic fields, including sociology, anthropology,
It fosters an environment in which workers are willing to management, and psychology.
collaborate voluntarily toward the accomplishment of the
In addition to this, it has taken some ideas from the
organization’s stated objectives.
behavioral sciences. It might be thought of as the science of
Focused on both individuals and groups to achieve goals: "human engineering."
Staffing is concerned with employees in both their individual An essential component of general management:
and group capacities in order to achieve goals.
The hiring and firing of employees are essential components
It creates the appropriate organizational framework to meet of general management.
the requirements of both individual efforts and collective
It is an essential aspect of the responsibilities of each line
endeavors.
manager. Effective people administration skills are required of
It does this by combining the pursuit of individual goals with each member of the management group, from the most
those of the group in such a way that the employees senior member on down.
experience a sense of involvement with the organization.
It is helpful to other functional areas of management and
Creating an environment conducive to productive work: provides support for them.
It creates an environment conducive to productive work A blend of art and science:
inside the firm, one in which every worker puts his or her best
The process of hiring new employees is grounded in the field Planning determines not only what work is to be done but
of human engineering. also when, how, and by whom it is to be done.
It can be thought of as an organized body of knowledge that is In a similar manner, the organizing process involves the
made up of principles and methods. It is also an art because it preparation of an organizational structure chart.
requires the ability to interact with different types of
On the other hand, in the process of staffing, competent
individuals.
people are picked and provided training while keeping in mind
Because it handles employees and finds solutions to their the importance of the role, and this process does not simply
problems in a methodical manner, it is considered one of the involve doing paperwork. All the operations that are carried
creative arts. It is considered a management philosophy out to complete this task involve dealing with human beings
because of its emphasis on the dignity and worth of individual in some capacity, whether it is recruitment, selection, training,
human beings. promotion, etc.
Salient Features of Staffing: Distinct Managerial Function:
The following facts clearly bring out the salient features of The fact that staffing is seen as a separate managerial job is
staffing as a function of management: the second significant aspect of this process.
Involvement with Human Beings: A separate management function indicates that rather than
being a significant component of another function, it is in fact
The interaction that staffing has with living individuals is the
a significant function on its own.
first and most crucial important aspect of staffing.
The other categories of managerial functions, such as
This indicates that, in contrast to planning and organizing, it is
planning, organizing, leading, and controlling, all include
not merely a matter of filling out paperwork, but rather
staffing as one of its subcategories.
entails the nomination of qualified individuals to a variety of
jobs. A short while ago, several management specialists believed it
to be a component of organizing.
However, in modern times, it is acknowledged as a significant Associated to Social Responsibility:
part of management thanks to the findings of several distinct
Since staffing involves human beings, it is important to
research projects.
remember that man is a social animal.
The social responsibility that comes along with this role is
A Necessary Activity at All Managerial Levels: born out of the fact that it is related to human beings. For
managers to fulfill this role, they need to exercise caution and
The process of staffing is critical at every administrative level.
maintain objectivity while they move through the various
For instance, appointing the General Manager is one of the
ancillary functions, such as recruitment, selection, promotion,
ways in which the Board of Directors fulfils its responsibility
and so on.
for staffing.
Impact of Internal and External Environment:
The staffing role is carried out by the General Manager, who is
responsible for appointing departmental managers; The enterprise's internal and external environments both
departmental managers, in turn, are responsible for carrying have an impact on the performance of the personnel
out this function by appointing their subordinates. department.
It is imperative that this point be made clear: the creation of a The promotion policy, the demotion policy, the transfer
separate personnel department does not absolve the policy, and so on is all examples of employee-related policies
responsible managers of their duty to perform this vitally that are part of the enterprise's internal environment.
important function.
If the vacant roles are going to be filled up by promotion as a
The establishment of this department was done with the matter of company policy, then the employees who are
intention of assisting managers of all levels in the currently working for the company will have the possibility to
performance of the staffing responsibilities that are assigned attain higher posts, while persons who come from outside the
to them. It is essential to emphasize the fact that the company will only be appointed to lower posts.
managers in charge are ultimately responsible for the hiring
decisions that are made.
When viewed in this light, the function of staffing is indeed The more people that apply for a job, the better your chances
impacted by the internal policy of the business. are of finding an applicant who meets your requirements.
The policies of the government and the educational
environment are two components of the external
environment that the firm is subject to.
Selection:
It's possible for the government to make it their official policy
that employees of specific businesses should only be recruited Selection is a procedure that eliminates candidates by
through job exchanges. carefully reviewing their applications and choosing those who
are the best fit for the open position.
The organization of specialized training camps is one way that
educational institutions can contribute to the growth and The selection process is different from the recruitment
development of their workforce. process in that it rejects applications.
In this manner, the external environment has an impact, as Training:

well, on the function of staffing. Training is another constructive activity that improves the
FACETS OF STAFFING: employees' knowledge and abilities, as well as their capacity
to do their jobs more effectively.
There are three primary facets of staffing, which are as
follows: The processes of recruitment, selection, and training are
followed by organizations to ensure that all positions in the
Recruitment:
organizational hierarchy are filled with people who are
Recruitment is a positive process that seeks to attract a bigger competent and talented in their respective fields. On the
number of people with ideal profiles to apply for positions other hand, the nature of the corporate environment affects
that are empty in the business. the manner in which these operations are carried out.
The organization's goal with recruitment is to fill positions as SIGNIFICANCE OF STAFFING:
quickly as possible.
Finding the appropriate candidates for open positions in an Recognizes Competent Staff:
organization’s hierarchy is the responsibility of the staffing
The process of determining the number of workers needed to
department.
fill positions in an organizational structure and assigning those
Because the human resource is what propels a company to positions to the appropriate individuals is referred to as
greater heights, it is imperative for management to ensure "staffing."
that they have the appropriate kind of personnel in place.
It makes certain that only those individuals with the necessary
This is the most fundamental and important job of skills are hired.
management.
For instance, the HR Head of your Company identifies the
In the past, "staffing" meant appointing individuals to get departments that are facing shortage of staff at various levels
things done. However, as a result of the rapid changes that and then works toward finding people who are suitable for
have taken place in the corporate environment, “staffing" has those departments.
taken on a higher role as a management function.
Enhancement of Overall Performance:
Staffing must appoint people who not only have the
When businesses put the right people in charge of the right
specialized knowledge but also the appropriate attitude,
jobs, they are able to use their physical resources in the most
aptitude, commitment, and sense of loyalty for the
effective way possible, which ultimately results in increased
organization in order to keep up with the continuously
productivity, enhanced efficiency, and enhanced
advancing technology, changing human behavior, and growing
performance.
size of the business.
For instance, in the interest of achieving the best possible
This is required in order for staffing to be effective. The caliber
outcomes, the Purchase Department should only appoint
of an organization’s workforce is directly proportional to the
persons who have integrity, understand the material and
company's level of success.
capital goods acquisition procedures and have knowledge
Thus, staffing is an important managerial function and its about the industry and the Suppliers.
significance can be further explained as under:
Ongoing Capability for Survival and Development: Increases Job Satisfaction and Contributes to a Positive
Morale:
Training and development programmers for employees that
are done correctly keep managers up to date on the changes Staffing recognizes the value of its employees' contributions
that have occurred in the business environment. and expresses gratitude and appreciation for those
contributions through ongoing performance reviews and
The continuity of the business's survival and expansion can be
evaluations.
ensured by conducting succession planning for managerial
positions. The contentment and morale of the workforce are maintained
in this way.
For instance, whenever there is a change in the systems,
procedures and the technology used by the Company or the For instance, after the financial year is closed, a company
organization is restructured, staff needs to be trained and might plan evaluations for each individual employee in order
educated so that they are aware of the modifications and are to select an "employee of the year." This not only rewards the
able to incorporate them into their working. hard-working employee with a sense of satisfaction but also
encourages others to work even more diligently.
The Optimal Employment of the Available Human Resources:
You might also notice that the Managing Director of your
The needs of the workforce are determined during the staffing
company was a Junior Manager at one point in his/her career.
process, and appointments of individuals are planned
As an appreciation of her/his hard work, she/he has been
accordingly.
elevated to this position.
This ensures that there are sufficient personnel available to
It is necessary for the success and growth of an organization
avoid underutilization of workers or disruptions to work
that positions in the organizational structures be filled at the
caused by inadequate staffing levels.
right time with the right number and the right kind of people
For instance, if there are enough teachers working in each to be a successful and growing organization.
department, then each individual class will have a teacher
People who aren't qualified to do their jobs will cause a waste
assigned to it.
of resources, time, energy, and effort.
Appointing individuals who have the necessary knowledge The current organization structure, as well as any plans for the
and experience is necessary to make the most efficient use of structure, will determine the number and types of managers
resources, accomplish the highest possible level of needed. Using the management inventory, a comparison is
productivity, and produce products or provide services of a made between the needs for managers and the available
high quality. talent.
Training should be provided to workers to enable them to According to the findings of this investigation, both external
adjust to shifting conditions in the workplace. and internal sources are used in the procedures of
recruitment, selection, placement, promotion, and
It is necessary to provide suitable compensations and
termination.
incentives for reaching one's goals to maintain full
employment. A performance review, a strategy for one's career, as well as
training and development opportunities for managers are also
SYSTEM APPROACH TO STAFFING:
vital components of staffing.
A method based on an open system is required for staffing. It
As the model demonstrates, staffing has an impact on both
is carried out within the company, which, in turn, is linked to
leading and controlling.
the environment outside the company.
For instance, managers who have received adequate training
For this reason, it is necessary to take into consideration the
are able to cultivate an atmosphere in which members of the
internal factors of the company, which include the personnel
workforce can simultaneously achieve both the enterprise's
policies, the organizational climate, and the reward system.
goals and their own personal objectives by cooperating in
The total management system is related to the managerial groups.
function of staffing that is performed by managers. In
In other words, having the appropriate number of staff makes
particular, enterprise plans end up serving as the foundation
leading easier.
for organization plans, both of which are essential in order to
accomplish the enterprise's objectives.
In a similar manner, choosing quality managers influences This can be accomplished by modifying a structure so that it
controlling, for instance, by preventing a large number of either expands or contracts.
undesirable deviations from developing into major issues.
Even though it has been emphasized here how important it is
The external environment is also something that cannot be to determine the number of managers that are required, it is
ignored; high technology calls for managers who possess a abundantly clear that numbers are only one part of the
high level of education, training, and expertise. It is possible picture. Specifically, it is necessary to determine the
that an organization will not be able to expand at the desired qualifications for each individual position in order to select
rate if it is unable to satisfy the demand for managers of this the managers who are the most suited to their roles.
type.
A detailed analysis of this kind is necessary in order to satisfy
Factors Affecting the Requirement of Quantum and Types of the requirements for the managerial position.
Managers:
RECRUITMENT:
The number of managers that are required in an organization
Staffing refers to the process of hiring individuals who are the
is dependent not only on the size of the business but also on
most qualified for a job whereas recruiting is the process of
the complexity of the organization structure, the plans for
finding potential applicants for a job and encouraging them to
expansion, and the rate of turnover among managerial
apply for the vacant post.
personnel.
Recruiting and staffing are two different processes but are
There is no regulation that governs the relationship between
often used interchangeably.
the number of managers and the total number of staff
members. The process of recruitment and staffing is what constitutes the
method by which companies find employees to fill open
It is possible to modify a structure so that the number of
positions.
managers in a given instance will increase or decrease
regardless of the size of an operation by either expanding or Recruitment takes place at a variety of stages throughout a
contracting the delegation of authority. company's existence, although it is at its most intense when a
new business is launched or when an existing business * Checking references
undertakes expansion or new directions.
* Making an offer of employment
The procedure starts with extensive planning that occurs
* Hiring candidates
behind closed doors and continues with the recruitment,
interviewing, and selection of staff members. There are a few * On boarding of candidates
different paths that can be taken by small businesses during Types of Recruitment:
the process of recruitment and staffing.
Internal Recruiting:
The following is a rundown of the primary stages involved in
The process of filling open positions within a company with
the recruitment process:
current staff members from that organization is known as
* Determining the need for hiring internal recruiting.
* Conceiving a recruitment strategy Retained Recruiting:
* Drafting a job description When a company engages a recruiting firm, they can do so in
* Publicizing the position numerous different ways; one of the most prevalent ways is
retained recruiting.
* Recruiting candidates for the position
When an organization hires a recruiting firm to fill a vacant
* Examining applications
position, the organization is responsible for paying an upfront
* Conducting a phone interview or initial screening fee to the recruiting firm.
* Conducting interviews Up to the point that the post is filled, the company is
responsible for locating potential candidates. In addition, the
* Evaluating candidates
organization commits to forming an exclusive partnership
* Conducting a background check with the company.
* Making a decision
In other words, companies are unable to use multiple The purpose of outplacement recruiting is to equip people
recruiting agencies for the purpose of filling the same vacancy. who have lost their jobs with the tools necessary to locate
new employment or pursue other lines of work.
Contingency Recruiting:
Reverse Recruiting:
This type of recruiting, like retained recruiting, requires the
assistance of an outside firm. This is a procedure in which an employee is urged to seek
employment with a new business that offers a better fit for
In contrast to retained recruiting, contingency hiring does not
their skill set.
require an upfront payment. Instead, the recruitment
company is only compensated when one of the candidates This process refers to the practice of encouraging an employee
they represent is offered and accepts a position within an to seek employment with a different organization. Workers
organization. who need assistance with this procedure can take advantage
of our Reverse Recruiting service, which offers reviewing of
Recruiting for Staffing Agencies:
resumes, holding mock interviews, and providing in-depth
Staffing recruiters are employed by staffing agencies. Staffing explanations of various job roles and responsibilities.
and recruiting involve pairing skilled job seekers with open
Method for Conducting Successful Recruitment Procedure:
positions that meet their qualifications.
When it comes to producing high-quality personnel on a
In addition, most of the jobs that staffing companies fill are
consistent basis, recruitment is a sophisticated process that
either temporary or only available for a limited time.
demands significant research, comprehensive processes, and
Outplacement Recruiting: finesse. Keeping this in mind, the following are the three most
When it comes to recruitment, outplacement is a type of important pieces of advice for successful recruitment:
advantage that is often sponsored by employers and assists Search within your organization before looking outside:
former employees in making the transition into new jobs.
There is a significant probability that the most qualified
individual for the post is already employed by your company.
Candidates from within your company are already aware with All of these are important avenues through which we can
your company's culture and goals, and they contribute to grow our recruitment network.
achieving those goals.
Hire the person already excelling in similar jobs:
It is reasonable to anticipate that, given their history of
Several Management Gurus and Experts are of the view that
accomplishments inside your organization, they will continue
we should hire a person who is the sure thing and has already
to be successful in their new role.
made a name in similar jobs.
Contact applicants considered passive:
To put it another way, a history of success is the single best
There is a good probability that the person who would be predictor of future achievement.
perfect for your open position is not currently seeking for a
SELECTION:
new job and will not react to the advertisement that you post
on the job board. Why? Because it is most likely that they are The phase of the staffing process known as selection is the
working somewhere else already. component of the hiring procedure that entails selecting an
employee to hire from a shortlist of exceptional applicants
After all, there might not be any reason that your competitors
who have been reduced.
should not also be interested in hiring your perfect applicant.
Therefore, if you want to be successful in recruiting, you need Throughout the process of recruiting, there are multiple
to hunt for elite talent outside of your current candidate pool. opportunities for selection to take place.
It is crucial to create contacts with local university business Manager’s shortlist the applicants to be contacted based on
schools (or other relevant departments), checking social the credentials of their applications and decide about the
media sites like LinkedIn for strong resumes from applicants applicants who are to be called for interviews, and ultimately
who might not be explicitly looking for a new job, encouraging which applicants to be hired for available positions.
your employees to suggest people they know or are linked to,
If you have a good understanding of the many levels of
and encouraging your employees to attend industry
selection and what to look for at each level, you will be better
conferences and participating in professional organizations.
able to choose the right job candidates for your company's Examining the Applications:
long-term success. Once the applications have been received, a special screening
The Selection Process: committee examines them in order to select potential
candidates from among the applications who will then be
It is necessary for an organization to develop its own selection
contacted to schedule interviews.
procedures because each company has its own standards. and
requirements. Candidates could be chosen based on specific criteria such as
their qualifications, previous work experience, and so on.
Nevertheless, the most important steps are as follows:
Employment Tests:
Preliminary Interview:
For a company to determine whether or not an individual is
This is a very generic and basic interview that is held to
qualified for a certain job, the company must first evaluate
exclude the candidates who are utterly unfit to work in the
the individual's abilities.
organization.
This is accomplished by the administration of numerous job
The purpose of this interview is to determine who will move
exams, including IQ tests, aptitude tests, competence tests,
on to the next stage of the interview process. As a result, the
personality tests, and so on.
company now has access to a pool of applicants who could be
suitable for open positions in the company. Formal Interview:
Taking Applications: The fifth and last stage of the selection process is the
employee interview.
Candidates for open positions submit their resumes and cover
letters to the business in order to be considered for This stage is the next step in the selection process.
employment.
Interviews for jobs are conducted to determine in great depth
The application provides the interviewers with information a candidate's skill set and whether they have the capacity to
about the candidates, such as their biographical data, their
work in the business.
work experience, their hobbies and interests.
The purpose of an employment interview is to determine Employers can determine whether or not any of the potential
whether the candidate is suitable for the position, as well as applicants are physically and psychologically fit to undertake
to provide the candidate with information regarding the work the tasks associated with their professions with the help of
profile and the responsibilities that would be expected of the medical examination.
potential employee. Interviews are an essential part of the
There would be fewer incidents of absenteeism, accidents,
hiring process because they help employers choose the most
and employee turnover if there is an effective system of
qualified candidates for open positions.
medical check-ups in place. Additionally, the health standards
Verification of References: of the employees will be greater.
The individual who provides a possible employees reference is Final Selection and Appointment:
also a very important source of information, so we must check
This is the last phase in the selection process, and it consists of
with them.
a letter announcing the final selection and appointment.
The referee will be able to provide information regarding the
An appointment letter is delivered or emailed to the
individual’s capabilities, experience in the prior firms,
employee to advise his selection for the job once the
leadership, and managerial skills, and more.
candidate has demonstrated that they are qualified for the
The Human Resources department is responsible for position by passing all written tests, interviews, and medical
maintaining the confidentiality of the information provided by examinations. The terms of employment, including working
the referee. hours, remuneration, and leave benefits, are listed in their
entirety in the letter of appointment.
Medical Tests:
It is common practice to hire workers on a conditional basis or
The seventh and final step in the selection process is the
on probation, with the understanding that they will be hired
medical examination, which is another highly essential part of
permanently or confirmed in service if the company is
the procedure.
satisfied with their performance.
Importance of the Selection Process: The training process shapes the way people think and
ultimately leads to improved work performance from those
* The expansion and success of the company are directly
individuals.
attributable to the careful selection and placement of staff. In
a similar vein, the capabilities of the company's workforce are Importance of Training:
the only real measure of how successful the company can be.
Training is necessary for the growth and success of a
* The rapid accomplishment of company goals is directly company.
attributable to the recruitment of workers who are talented
It is beneficial to the organization’s employees as well as the
and skilled.
employers of that organization.
* Industrial accidents will substantially fall in numbers when
If an employee receives adequate training, he or she will
the right technical staff is engaged for the right jobs.
become more effective and productive over time.
* People's levels of job satisfaction, as well as the quantity
The following are the primary reasons why training is
and quality of their output, tend to rise when they find
provided:
employment in fields in which they excel since this leads to
more personal fulfillment. * Training is provided to new candidates that join an
organization.
* People that are content with their jobs frequently tend to
have good morale and motivation to do better. Through this training, they become acquainted with the
mission and vision of the organization, as well as the laws and
TRAINING:
regulations, and the working circumstances.
The staff will participate in training following the completion
* The current staff members receive training to update their
of the orientation.
skills and expand their knowledge base.
Training is the process of increasing the skills, capacities, and
* Training is provided to accommodate for any updates or
knowledge of workers so that they are better suited to
alterations that may be made to the technology to keep up
perform certain job duties.
with those changes.
Examples of this include the purchase of new machinery, As a result, there will be a reduction in the amount of time
alterations to the manufacturing process, and the installation and effort that is wasted.
of computers. Training is provided to employees on how to
Reduction in the number of accidents:
use updated machinery and methods of doing job.
Employees who lack the knowledge and abilities necessary to
* When advancement in one's career and getting promotions
perform their duties are more likely to make mistakes. When
become priorities, training is provided to employees to get
a person has received additional training, there is a decreased
them ready to share the responsibilities that come with
likelihood of them being involved in an accident while on the
working at a higher level.
job, and they also become more proficient.
The benefits of training can be summed up as:
Increased Promotion Chances:
The following are some benefits that can be attributed to
Training helps employees improve their abilities and
training:
effectiveness, which increases their chances of being
Boosts Employee Morale: promoted.
Training helps employees achieve job stability and job Employees, thus, develop into something of value for the
satisfaction, which in turn boosts employee morale. When an organization.
employee's needs are met and his or her morale is high, that
Increased productivity:
individual will make a greater contribution to the overall
performance of the firm, and employee absenteeism and Training helps employees become more productive and
turnover will be reduced. efficient, which is one of the many benefits of employee
education.
Decreased requirement for supervision:
Employees that have received adequate training demonstrate
An employee who has received adequate training will be
both quantity and quality in their work.
familiar with his duties and details of his work and will require
less oversight. If staff is given the appropriate training, there will be less
waste of time, money, and other resources.
Types of Training: Workshops, seminars, conferences, and other similar events
are all examples of non-work-related training opportunities.
On-the-job Training:
A system like this is expensive, but it is effective if and only if
This type of training refers to the methods that are used to
a big number of people need to be trained in a relatively short
instruct workers while they are performing their regular
amount of time.
duties at an organization.
Off the job training is also known as vestibule training, which
The training method is straightforward and efficient in terms
means that the employees are trained in a different place
of cost.
(which could be a vestibule consisting of a corridor, an
By utilizing such a training strategy, it is possible for entrance, a reception room, or something else) where the
employees who are neither fully nor partially adept to receive actual working conditions are mimicked.
adequate instruction.
RETENTION AND DEVELOPMENT:
The personnel receive their training using real-world scenarios
Practices that contribute to retention arise in every area of
from the workplace. “Learning by doing" is the guiding
HR, and all positions within an organization will need to
principle behind this type of instruction.
collaborate with one another to develop and implement
On-the-job training can take many forms, such as job rotation, retention plans that incorporate multiple facets.
mentoring, and even temporary promotions, among other
It is possible that depending on the circumstances, both
things.
broad-based and focused techniques, and even a combination
Off-the-job Training: of the two, may be appropriate.
Training that takes place a setting that is not the employee's Effective Practices in Retention:
normal place of employment Training that takes place in a
It is possible that effective practices in a variety of areas can
setting that is not the employee's normal place of
be especially potent in assisting an organization in achieving
employment is referred to as "off the job training.” It is
its retention goals. These areas include the following:
typically utilized if new workers are hired.
Hiring: Compensation and rewards:
Practices regarding talent acquisition can have a significant Even though pay levels and job satisfaction are only moderate
impact on turnover, and a significant body of research predictors of whether an employee would leave an
indicates that one way to reduce turnover among newly hired organization, a business has three options available to it in
employees is to give applicants an accurate preview of the order to retain its workforce:
work they will be doing as part of the recruitment process.
* Establishing the company as the industry leader in terms of
Possibilities of Socializing: salary and awards.
New employees have a rather high rate of turnover. New * Using a person-based compensation structure to allow for
employees have a greater chance of remaining with an the customization of rewards to specific requirements.
organization if they are exposed to socialization practices,
* Making an obvious connection between retention and
which are often given as part of an integrated on boarding
rewards (e.g., tying vacation hours to seniority, offering
and integration programmed.
retention bonuses or stock options to longer-term employees,
These practices consist of shared as well as individualized or linking defined benefit plan pay-outs to years of service).
learning experiences, official and informal events that assist
Fair Supervision:
individuals get to know one another, and the assignment of
more experienced employees as role models for new Fair treatment by a supervisor is the single most critical factor
employees in the company. in determining whether an employee will remain in their
position, according to several studies. Because of this, a
Training and development:
corporation can decide to concentrate on improving its
Employees who are not provided with the opportunity to supervisory and management practices as well as its
regularly upgrade their skill sets are more likely to leave a communication abilities.
company that does not provide these possibilities.
Employee involvement: Typically, there are three sources where a corporation can
obtain the data required to assist it in selecting which
Involved and engaged employees are content with their jobs,
comprehensive strategy to put into action:
love their work and the organization in which they are
employed, believe that their job is significant, take pride in * Research on employee retention can give useful insights on
their company, and believe that their employer values the the major factors that contribute to employee turnover.
contributions that they make. Access to the most recent findings from research on employee
turnover and retention can be gained through participation at
According to the findings of one study, employees who were
conferences and membership in professional associations like
highly engaged in their work had a probability of quitting that
SHRM.
was five times lower than employees who were not engaged
in their work. * The term "effective practices" refers to the techniques that
other organizations are implementing and determining to be
Strategies used in Retention and Development:
either effective or ineffective.
Comprehensive Strategies:
* Benchmarking surveys can provide information on how a
To address the overall retention rates, wide ranging tactics are company compares to competitors on areas such as wages,
directed either at the entire organization or at major perks, bonus schemes, and other similar topics.
subsystems, and they can either target the entire organization
Strategies Directed at Retention:
or big subsystems.
Data from numerous important sources, such as
Examples of this include implementing changes to the hiring
organizational exit interviews, post-leave interviews, stay
process that incorporate criteria linked to employee
interviews, employee focus groups, predicted turnover
retention, enhancing the quality of the working environment,
studies, and other qualitative studies are used as the
and increasing base salaries based on market rates.
foundation for targeted tactics.
An organization can use this information to determine more
precisely where a problem occurs and to design plans that are
highly relevant and linked to address the issue by following Laying the groundwork:
the steps outlined in this article.
The information that an organization requires to evaluate the
For instance, if a significant number of female professionals magnitude of its problem and to assist in shaping the
are leaving the organization, the organization could conduct retention measures that are executed as a reaction can be
research on the most common reasons that women give for obtained if the following actions are followed together to give
leaving a company and develop strategies to specifically deal the desired results:
with this group of workers.
Determining whether employee turnover is a problem:
This would be the case if female professionals are leaving in
You can accomplish this step by doing a turnover analysis,
significant numbers.
benchmarking, and a needs assessment (both external and
When it comes to the effective and efficient administration of internal).
an employee retention strategy, people managers play a
Creating a plan to improve retention:
crucial role. It is essential to the success of the programmed to
have a management team that is informed about employee After analyzing the turnover analysis, benchmarking data, and
motivation, retention methods, benchmarking, and best needs assessment, an action plan for retention employees
practices. should be prepared.
Implementation: This step involves determining whether broad-based or

tailored techniques should be implemented (or whether a
When it comes to the effective and efficient administration of
combination of both should be used).
an employee retention strategy, people managers play a
crucial role. Carrying out a plan for customer retention:
It is essential to the success of the programmed to have a This includes putting into action the techniques that have
management team that is informed about employee been determined to be suitable for the particular issue.
motivation, retention methods, benchmarking, and best
practices.
Examining the results: The data are split down by industry, geographic region, sector,
and other categories as well.
After putting the strategy into action, you should evaluate the
results to determine the extent of the impact in comparison to Internal benchmarking:
the expense.
With this type of benchmarking, a company monitors its
Benchmarking: employee turnover rate over the course of a given period of
time. Indicative of the existence of a potential issue is an
When getting ready to put in place a strategy for retaining
upward trend in the rate, whether it be generally or within
employees, the first step that should not be skipped is the
certain demographics.
establishment of appropriate benchmarks, both external and
internal. Dealing with Common Problems:
Comparative analysis with other organizations: Programs designed to keep current employees on board come
with their fair share of the usual challenges encountered in
Is a turnover rate of 15% per year too high? It is not possible
strategic endeavors.
to provide a satisfactory response to this question in isolation.
When trying to determine whether employee turnover is a These are the following:
problem for a business, benchmarking and needs assessments
Absence of support from senior management:
can provide valuable information that can help with the
determination. It is doubtful that supervisory staff will concentrate on issues
relating to people if top leadership does not convey to
The process of comparing a company's turnover rates to those
managers and supervisors the message that employees are
of its industry as well as its competitors is known as external
essential to the long-term survival of the organization, and if
benchmarking. These numbers show annual and monthly quit
this message is not communicated.
rates expressed as a percentage of total employment for all
non-farm employment in the United States. If senior management does not take an active role in the
process of employee retention and does not accept primary
responsibility for it, managers and employees will continue to
be in the dark regarding the genuine value that employees Benefits of Knowledge Management:
bring to senior management as well as the organization as a
There are a variety of unique reasons why companies would
whole.
like to employ the most effective strategies for knowledge
If senior management does not take an active role in the management within their organization.
process of employee retention and does not accept primary
According to various KM theories, some of these causes
responsibility for it, managers and employees will continue to
include the following:
be in the dark regarding the genuine value that employees
bring to senior management as well as the organization as a * Making knowledge accessible in order to support the
whole. development of products and services that are more
innovative
The impression that participating in the programme entails a
lot of pointless “busywork": * Shorter development cycles
It is possible that managers may dismiss efforts to improve * Managing creative endeavors and educational growth
employee satisfaction as "nice" or "simply busywork" if the * Getting the most out of the experience and knowledge of
company as a whole isn't committed to the initiative and staff members
doesn't have a clear grasp of how it contributes to the
* Facilitating employees' access to pertinent concepts that are
organization’s long-term success.
necessary for them to perform their jobs in a satisfactory
KNOWLEDGE AND LEARNING MANAGEMENT: manner.
Knowledge Management is such an essential concept, that the * Problem Solving
term has even been given its own acronym, which is KM for
* Management of both physical assets and intellectual
short. The processes of generating, exchanging, utilizing, and
property
managing information and knowledge inside an organization
are collectively referred to as "knowledge management."
Additionally, there is a connection between knowledge This paradigm, which comes under the heading of the SECI
management and various technologies. Some examples of Model for Knowledge Management, was established by
these technologies are as follows: Monaca and Takeuchi.
* Software designed for group work that includes features Learning Management Systems and the SECI Model:
such as threaded conversations and the ability to share
Socialization:
documents
The initial component of knowledge management is known as
* Workflow management systems
socializing. The use of a learning management system or
* Content management systems eLearning in conjunction with socialization is highly beneficial.
True knowledge management requires that there be a
* Software for organizing and arranging schedules
constant flow of information and knowledge amongst
* Software for electronic forms of communication employees, and this flow should not be restricted in any way.
E-learning, also known as learning management system, is The utilization of chat rooms and the opportunity for
what paves the way for a solid foundation of knowledge employees to communicate with one another while they are
management. This is because these systems enable businesses studying are two features that are made possible, thankfully,
to develop individualized education and training by learning management systems (LMS).
programmers. A good many of the technologies described Externalization:
above can communicate with one another.
Within the context of the business theory of knowledge
There is a model of KM that has been formally specified, and it management, we may observe several distinct manifestations
consists of four different parts. These aspects are referred to of the concept of externalization taking place. One approach is
as socialization, combination, externalization, and to connect the material covered in online learning courses to
internalization, respectively. events that are taking place in actual workplaces.
For instance, workers can participate in training and then be They should be taught essential skills in a manner that enables
directly asked to apply what they've learned to their jobs them to immediately put those skills to use in their work.
outside of the context of a virtual learning environment.
Some other methods to be kept in mind while using a learning
Testing the employees' expertise is yet another method for management system to implement knowledge management
integrating externalization into the process. include:
Then, based on how well individuals do their jobs, * Determining the success of training that was delivered using
externalization can be utilized as a method to develop new a learning management system by using metrics to measure
forms of training and learning. that success. When it is possible, we should use numbers that
are specific and concrete.
Combination:
* The participation of managers is one of the most important
The combination component of the knowledge management
aspects of a training and development strategy that is based
theory has many potential applications in the world of
on the principles of knowledge management. In the end, it is
business. These applications can be carried out in a variety of
going to be the managers who are going to be responsible for
different ways.
determining whether employees are successfully meeting key
One approach to achieving this goal is to make use, in the performance metrics.
process of regularly updating and streamlining training, of
* The fact that managers are not entirely clear how to get the
both the feedback of employees and the input of subject
most out of a learning management system is one of the most
matter experts.
significant issues that arise in the context of knowledge
Internalization: management and learning management systems. Managers
The ultimate purpose of utilizing a learning management and other leaders in an organization need to have a solid
system is for employees to internalize the information that understanding of how to maximize the benefits gained from
they have gained. the implementation of a learning management system.
* If you get the impression that your company is not putting well as to justify salary raises and incentives, as well as
the principles of knowledge management into practice in an choices regarding employment termination. They can be
efficient and measurable manner, you may wish to examine carried out at any time, but annually, semi-annually, or
the training content to determine whether it is applicable and quarterly are the most common intervals for doing so.
practical.
How Performance Appraisals Work:
PERFORMANCE APPRAISAL:
Employees can advance their careers using performance
An employee's work and contributions to the organization are reviews, which are often developed by the departments of
evaluated on a regular basis as part of a process called a Human Resources (HR).
performance evaluation.
They offer feedback to employees regarding the performance
Companies conduct performance reviews to ascertain which of their work responsibilities. It ensures that employees are
individuals have made the most significant contributions to managing and fulfilling the goals that are required of them,
the expansion of the firm, evaluate the level of progress and it provides them with direction on how to accomplish
made, and recognize the efforts of high-achieving personnel. those goals if they fall short of meeting them.
The phrase "performance appraisal" refers to the periodic Performance reviews assist in the decision-making process
examination of an employee's contribution to a company in regarding the distribution of financial resources within an
terms of both job performance and overall contribution. An organization.
employee's abilities, achievements, and growth or lack
This is necessary since most businesses only have a finite
thereof, depending on the results are analyses during a
amount of money available from which to pay out incentives
performance assessment, which is also known as annual
like pay raises and bonuses.
review, performance review or evaluation, or employee
appraisal. They give a method for businesses to discover which
individuals have contributed the most to the growth of the
Performance reviews are used by businesses to provide
firm.
employees with comprehensive feedback on their work, as
This enables the business to appropriately reward the Self-evaluation is when individual employees evaluate their
employees who have demonstrated the highest levels of own behavior and performance on the job.
performance.
Peer assessment is a rating of an individual's performance
Appraisals of an employee's performance not only help given by their workgroup or other co-workers.
employees and their managers create a plan for employee
360-degree feedback assessment incorporates comments
development that may include additional training and
from the participant, as well as those of their supervisor and
increased responsibilities, but they also help employees, and
peers.
their managers identify ways in which an employee may
improve and advance in their career. Negotiated appraisal is a more recent trend that involves a
mediator and aims to minimize the adversarial aspect of
In an ideal situation, the performance review should not be
performance reviews by allowing the subject to present first.
the only moment during the course of the year when
This is done to moderate the impact of performance
managers and employees discuss about the contributions
evaluations on employees.
made by the individual. Regular communication helps to
ensure that everyone is on the same page, fosters the Also places an emphasis on the positive aspects of the
development of stronger connections between employees individual before offering any constructive criticism.
and managers, and reduces the stress associated with annual When there are disagreements between subordinates and
reviews. supervisors, this structure is often helpful in mediating those
Types of Performance Appraisals: disagreements.
Most performance reviews are conducted from the top down, Objectives of Performance Appraisals:
which means that managers evaluate their employees without It is common practice to refer to the primary purpose of the
receiving any feedback from those being evaluated. However, employee performance appraisal as a comparison of the
there are also several other types: actual performance of the employee to the standard
performance that has been established by the organization.
Nevertheless, the employee performance appraisal system on a consistent basis for the advantage of the company.
accomplishes several additional significant goals, some of However, each method has its own advantages as well as its
which are listed below for your perusal: own disadvantages.
* The performance appraisal system is responsible for The following is a list of positives and downsides associated
maintaining the records that are needed to establish the with performance reviews.
employee's compensation and the structure of their salary
Advantages:
structure.
* It makes it easier for managers to determine which staff
* It is quite helpful to discover the strengths and limitations of
member deserves promotions and which should be let go
the employees, as this assists in assigning the appropriate
because of their lack of productivity. .
individual to the appropriate position.
* It is useful information for the company to consider when
* It gives one access to the potential that already exists inside
determining the employee's salary.
them for future expansion and development.
The records of the employee's performance review can also
* It provides the essential feedback regarding the
be used to make decisions regarding additional perks and
performance of the employee as well contribution to the
allowances, and these decisions can be based not only on the
development of the organization.
employee's performance but also on the employee's
* It provides the HR department with direction regarding the additional efforts.
training requirements of the staff members.
* Particular measures can be adopted in order to foster the
* It shapes the employees approach to their work and instills a growth of the staff members.
sense of responsibility for their work.
* The employee's areas of weakness will be brought to light
Advantages and Disadvantages of Performance Appraisal: through the performance review process, providing the
organization with the information it needs to design and
The employee performance appraisal system is an essential
implement an appropriate training programmed. The
component of the HR functions, and it is put to effective use
performance review also makes recommendations regarding * Aspects like as one's attitude, capabilities, and level of
the improvements that should be made to the selection initiative are exceedingly nebulous and challenging to
process so that better staff may be hired. evaluate.
* An employee's performance can be effectively * There are times when the managers who carry out the
communicated to management through the use of a performance appraisal do not have the necessary
performance review as it is an efficient method. qualifications to make an accurate evaluation of the
employees' capabilities. As a result, it results in the acquisition
It is a method for providing feedback to employees regarding
of irrelevant data and the failure of performance evaluation.
how well they are performing their job responsibilities.
Performance Appraisal and Career Strategy:
* The feedback received on one's performance might serve as
a source of inspiration and drive. It paints a picture of the The practice of evaluating an individual's performance on the
employee's efficiency and inspires the individual to better job in order to arrive at objective conclusions regarding
their own performance in the workplace. human resource management is known as performance
appraisal. In this process, the performance of an employee on
Disadvantages:
the job is formally evaluated, feedback is provided to the
* The elements that are used to evaluate an employee's employee, and a conclusion is made regarding whether or not
performance have a direct and decisive impact on the and how the performance may be improved.
performance appraisal. The failure of performance evaluation
The process of evaluating someone's performance might take
can be caused by the application of elements that are
place in either a formal or an informal setting.
inaccurate or inappropriate to the situation.
A manager may provide an employee with an informal
* When evaluating someone's performance, it's possible to
assessment by commenting on how well or how poorly a
gloss over important aspects that are ultimately accountable
specific job was performed either while the employee is
for that performance.
performing the job or soon after the employee has completed
the job. It is carried out on a daily basis in its entirety.
On a regular schedule, formal evaluations are carried out The quality of the control measures that are utilized, such as
either year or twice yearly. defining standards, gathering information, and taking
remedial action, is directly related to the efficiency of an
It is used primarily for the following four purposes:
evaluation of performance.
* To inform employees how their current performance is
Because performance is measured across multiple
being formally rated;
dimensions, the methods used to evaluate it must take into
* To determine which employees are eligible for merit raises; account the many facets of a given work.
* To determine which employees need additional training; The evaluation of performance can either focus on the
and behaviors’ of the employee or the results of their work.
* To determine which employees should be considered for Graphic rating scales and behaviorally anchored rating scales
promotion. are two major evaluation methods that fall under the genre of
Formal appraisal can be done using one of these four primary behavior-oriented assessment methods.
methods: Both the manager's performance in achieving goals and plans,
* The evaluation of subordinates by a superior; as well as his performance in his role as a manager, should be
evaluated as part of the performance review.
* The evaluation of subordinates by a group of superiors;
The evaluation of a manager's effectiveness as a manager
* The evaluation of a colleague by a group of peers; and
ought to be an additional component of the system that
* The evaluation of bosses by subordinates. compares performance to objectively measurable goals.
All feedback control methods are embodied in an evaluation When evaluating a person's performance, it is necessary to
of the employee's performance appraisal system. Information take into account both their strong points and their
regarding employees, their performance on the job, and the problematic areas. The process of identifying one's interests
outcomes of the task can be obtained by managers through and skills serves as the basis for developing a professional
the use of this system. strategy.
There are a few steps involved in developing a plan for one's Past-Oriented Methods:
professional life.
Rating Scales:
These include the construction of a personal profile, the
Rating scales consists of several numerical scales representing
formulation of long-range personal and professional goals, an
job related performance criterions such as dependability,
analysis of the risks and opportunities posed by the
initiative, output, attendance, attitude, etc.
environment, the identification of personal strengths and
weaknesses, the development of strategic career alternatives, Each scale ranges from excellent to poor. The total numerical
consistency testing and strategic choice, the development of scores are computed and final conclusions are derived.
short-range career objectives and action plans, the Advantages - Adaptability, easy to use, low cost, every type of
development of contingency plans, the implementation of job can be evaluated, large number of employees covered, no
career plans, and the monitoring of progress. formal training required.
Methods of Performance Appraisal: Trait Analysis:
Numerous methods have been devised to measure the Under this method, checklist of statements of traits of
quantity and quality of performance. employee in the form of Yes or No based questions is
prepared. Here the rater only does the reporting or checking
Each of the methods is effective in a relative manner for
and HR department does the actual evaluation.
various organizations.
Advantages economy, ease of administration, limited training
Broadly, all methods of appraisals can be divided into two
required, standardization. Disadvantages - Raters biases, use
different categories.
of improper weights by HR, does not allow rater to give
* Past-Oriented Methods relative ratings.
* Future-Oriented Methods Forced Choice Method:
The series of statements arranged in the blocks of two or
more are given and the rater indicates which statement is true
or false. The rater is forced to make a choice. HR department Confidential Records:
does actual assessment.
Mostly used by government departments, and in older
Advantages - Absence of personal biases because of forced organizations where the concept of self-assessment is not
choice. encouraged. Here the report is given in the form of Annual
Confidential Report (ACR) and may record ratings with respect
Disadvantages - Statements may be wrongly framed.
to following items; attendance, self-expression, team work,
Forced Distribution Method: leadership, initiative, technical ability, reasoning ability,
Here employees are clustered around a high point on a rating originality and resourcefulness, etc. The system is highly
scale. Rater is compelled to distribute the employees on all secretive and confidential. Feedback to the assessed is given
points on the scale. only in case of an adverse entry.
It is assumed that the performance is conformed to normal Rather negative in impact as the ratings are highly subjective
distribution. Assumption of normal distribution, unrealistic, and can be manipulated to suit an occasion.
errors of central tendency may occur. Pen portrait:
Critical Incidents Method: The assessor pictures in writing about the assessed, regarding
The approach is focused on certain critical behaviors of his qualities and performance as well as his potential. Armies
employees that make all the difference in the performance. use this method in evaluating cadets.
Supervisors as and when they occur record such incidents. Future-Oriented Methods:
Advantages - Evaluations are based on actual job behaviors, Management by Objectives:
ratings are supported by descriptions, feedback is easy,
A concept popular till recently and introduced by the
reduces recent biases, chances of subordinate improvement
management Guru, Peter Drunker, where performance is
are high.
rated against the achievement of objectives stated by the
Disadvantages - Negative incidents can be prioritized, management. MBO process goes as under.
forgetting the positive ones, overly close supervision.
* Establish goals and desired outcomes for each subordinate * The use of situational exercises (such as an in-basket
in a conference between the management and the concerned exercise, management games, role-playing. critical incident
subordinate. and leaderless group discussion, etc.),
* Set performance standards. Evaluators are drawn from experienced managers with proven
ability at different levels of management,
* Assess performance achieved against goals set for the
employee through frequent performance review meetings * They evaluate all employees, both individually and
between the manager and the subordinate. collectively and each candidate is given one of the four
categories: more than acceptable, less than acceptable and
* Identify reasons for shortfall and give feed-back for
unacceptable.
improvement.
* A summary report is prepared by the members and a
* Establish new goals and new strategies for the coming year.
feedback on a face-to-face basis is administered to all the
Assessment Centre Approach Method: candidates who ask for it.
Under this method, many evaluators join together to judge Assessment Centre Approach Procedure:
employee performance in several situations with the use of a
First, a leadership group is established, each member
variety of criteria. It is used mostly to help select employees
supporting a predefined position, but the group must arrive at
for the first level (the lowest) supervisory positions.
consensus. Then a task force is used with an appointed leader,
Assessments are made to determine employee potential for
who decides on a course of action. Simulation games and in-
the purposes of promotion.
basket exercises are used to test organizational and planning
The assessment is generally done with the help of a couple of abilities.
employees and involves a paper-and-pencil test, interviews
Oral report is made by the candidate, which tests the
and situational exercises. Some of the other features of this
communication skills and insights into the present position.
system are:
Personal interviews and projective tests are used to assess
work motivation, career orientation and dependence on
others. Paper and pencil tests measure intellectual ability. To 70%) of this group assigns it to the same cluster as the
make Assessment Centre Programmer successful, it is previous group did.
necessary that heavy emphasis is placed on clear statement of
* Scale of Incidents: This second group is generally asked to
goals. The obtaining of top management commitment, job
rate on a given scale, the behavior described in the incident as
analysis, assessor training and programmed audit and
to how effectively or ineffectively it represents performance
evaluation.
on the appropriate dimension.
Behaviorally Anchored Rating Scales (BARS)
* Develop Final Instrument: A subset of incidents (usually 6 or
This is a modern appraisal technique which supports the claim 7 per cluster) is used as 'Behavior anchors' for the
that it provides better, more equitable appraisals as performance dimensions.
compared to other techniques. The procedure for BARS is
The BARS technique has advantages like - More accurate
usually five stepped as under:
judgment, establishes clear standards, provides good
* Generate Critical Incidents: Persons with knowledge of the feedback to the people being appraised, make the dimensions
job to be appraised (job holders/ supervisors) are asked to more independent of each other and it provides
describe specific illustrations (critical incidents) of effective independence to the rater.
and ineffective performance behavior.
Key Result Areas (KRAS):
* Develop Performance Dimensions: The people then divide
In the context of Performance Management process, the role
the incidents into smaller set (say 5 or 10) of performance
of Key Result/Responsibility Areas (KRAs) is very important.
dimensions. Each cluster is then defined clearly.
Key Result Areas are set of activities derived out of short term
* Reallocate Incidents: These critical incidents are then objectives. KRAS refer to general areas of outcomes or
reallocated to any group of people who also know the job. outputs for which the department's role is responsible.
They are given the cluster's definitions and asked to redesign
The Individual Performance and Development Plan has two
each incident to the dimension it best describes. Typically, a
component parts, the Performance Plan and its related
critical incident is retained if some percentage (generally 50 to
Individual Development Plan.
The Performance Plan is constructed by the manager and distribution of resources that are beneficial for the
employee together, focusing on priority-setting for the employee's tasks, and any other activities that contribute to
performance management cycle and, working co-operatively the employee's growth are all included in human resource
through a four-step process: development.
* Agreeing upon Key Results Areas It is essential for both the on boarding of new employees and
the continuation of their employment that the HR department
* Agreeing upon Performance Objectives
follows certain procedures.
* Agreeing upon Key Performance Indicators and their
Employees cannot achieve their goals without the appropriate
associated Performance Targets
training. Employees will become stale and unmotivated if they
* Agreeing upon Action Plans are not given opportunities to gain new skills and advance
KRAS refer to general areas of outcomes or outputs for which their career and personal development.
the sector/department is responsible. Benefits of Human Resource Development:
HUMAN RESOURCE DEVELOPMENT: The development of an organization's human resources is
The purpose of human resource development is to enhance generally seen as the most important factor in achieving
the efficiency of individuals, groups, and organizations higher levels of profitability, greater productivity, and
through the coordinated implementation of various training, improved relations. Appropriate human resource
organization, and career advancement initiatives. Through development confers an infinite number of benefits.
carefully orchestrated learning experiences, HRD helps The following are some of the most important advantages:
individuals in companies acquire the fundamental skills
* Human Resource Development, sometimes known as HRD,
necessary to accomplish their current responsibilities as well
helps people become more capable. The workforce receives
as those that will be created in the future.
new skills, knowledge, and attitudes as a result of HRD's
The training of an individual after he or she has been hired, efforts.
the provision of opportunities to learn new skills, the
* People are able to become more engaged to their jobs when * It also helps to collect data on employee programmers and
an adequate HRD programmer is implemented. It is necessary policies that are helpful and objective, which further
to have a reliable performance appraisal system in order to facilitates better planning for human resources.
evaluate individuals according to their level of achievement.
Types of Human Resource Development:
* With the assistance of human resource development, a
The process of developing an organization's human resources
culture of trust and respect can be established in a given
typically starts as soon as an employee is hired and continues
setting.
for as long as that employee is employed by the organization.
* With the assistance of HRD, an accepting attitude toward
HRD can take many forms, such as on-the-job training or work
change can be developed. The employees discovered that
shadowing, classroom education or education obtained
they had improved capabilities in terms of being able to solve
online, opportunities for professional development and
problems.
growth, and training to ensure compliance with laws and
* It contributes to the overall improvement of the employees' regulations.
progress. The organization’s sense of teamwork is also
* Learning the facets of a work while actually performing the
boosted by HRD's efforts.
tasks associated with that employment is what is meant by
* Additionally, it assists in the development of a "efficiency "on-the-job training." On-the-job training may be required for
culture" within the firm. It results in an increase in the a worker even though they are familiar with the fundamental
efficiency of the organization. Both the utilization of the requirements of their position. This training may cover
available resources and the accomplishment of the set specifics such as which forms to use, where materials are
objectives are improved. housed, and how to access the computer systems.
* It encourages greater participation from staff members. * Another related method is "work shadowing", in which an
When they do a good job, workers have a employee watches another employee perform the duties of
their job in order to acquire the necessary abilities.
* Sense of pride and a sense of having accomplished
something.
Another type of growth is intellectual or professional growth, By looking beyond the labels and making an effort to better
which can take the form of attending classes at a university or grasp the situation, managers can sidestep this trap.
certification programmed, as well as job-specific trainings and
The top five best practices for working well with employees of
seminars that focus on how to perform one's job more
varying ages in the workplace are as
effectively.
Do not make any assumptions:
A significant amount of capital is put out by a variety of
businesses in the form of substantial investments in the form Do not make any assumptions: It's been said that
of training and development opportunities for their staff millennialism are adept with technology. Employers can count
members. on baby boomers to be devoted employees. Gen Errs are
cynical. Traditionalists are known for their thriftiness. Maybe
Even though a significant portion of this training is now
if you were retired, you would also be doing the same thing.
offered virtually, for example, through webinars and online
One person cannot be responsible for starting a trend! Even
courses due to the proliferation of online learning, it is still
though members of the baby boomer generation, may have a
very common practice to conduct trainings in person or to
statistically greater tendency to remain in their positions for
attend training seminars or conferences with other
longer periods of time than millennial, this does not mean
professionals in the field.
that your baby boomer employee is not a flight risk. It is not
Managing Different Generations: necessary to assume that every millennial you know fits this
basic profile simply because they are a member of this
The human repercussions of these stereotypes include
generation.
misunderstandings between millennial and their bosses,
which results in people viewing each other differently than Let us look at an example. A millennial works in the
they actually are. These misunderstandings can be avoided. technology industry. On paper, it is reasonable to assume that
The economic repercussions include millennia’s leaving their the millennial possesses a certain level of technical prowess
jobs out of a sense of frustration at being misunderstood. because of the work that he or she does. However, if the
person does not use Face book or Integra, people will assume
that he or she is technically incapable. In a nutshell: Never Ensuring regular review of your own biases:
make any assumptions.
Given how pervasively generational stereotypes are used, we
Avoid using labels: may probably be excused for falling for the hype.
Nevertheless, overcoming preconceived notions is not as easy
Even if your intentions are good, using generational
as one might think it would be. Even if we are aware of our
designations puts you at danger of alienating co-workers. This
generational biases, we may still have the tendency to pass
is true even if you have good intentions.
judgment on others around us in an unconscious manner. For
For instance, Mr. X is employed by a technology start-up that instance, a baby boomer working in a Public Sector
only recently filled a position in the marketing department Undertaking, complained to HR about a young co-worker who
with a millennial. Mr. X, in the course of extending a warm constantly had headphones in while they were at work.
welcome to the newest member of the team, stated that due
He characterized the co-worker as a millennial who "always
to the fact that the new employee is a millennial, she may
needed to be connected outside of work and didn't know how
bring a fresh viewpoint to the work that the team is currently
to converse socially face-to-face." The actual facts however
performing. He meant to offer praise to the new employee,
were different as the millennial stated that he finds that
but inadvertently insulted a generation X marketer who
listening to classical music helps him concentrate on his work.
worked for the company and who afterwards lodged a formal
So in this case, the more experienced worker has to
complaint. With his action Mr. X hinted that past generations
understand that he may have been applying his own
were not as innovative as millennially by making the
unconscious prejudice to his colleague, despite the fact that
statement that millennial are innovative.
he did not completely understand him.
It would not have been exclusive if he had merely eliminated
Focus on the people around you rather than the trends:
the generational designations from the equation before
making the statement. Once you understand how inaccurate generational
stereotypes are, you will start to become aware of how much
content there is on the internet pertaining to this topic.
It is a waste of time to read articles with headings like "How Managing Diversity:
to Manage Millennial" and "What Millennial REALLY Want,"
The workforce is becoming increasingly diverse in terms of
because these articles continue to reinforce broad
generations represented. The workforce is growing
assumptions. Ignore those people.
increasingly diverse in terms of age, with members of
Please hold off on clicking. Stay away from other people. generations ranging from the seasoned Baby Boomers who
Refrain from giving in to the desire to buy books or sign up for have years of expertise to the fresh-faced Generation Z
seminars that exaggerate generational stereotypes in the members who are always connected.
workplace. Also, resist giving in to the urge to buy
Companies routinely engage employees from as many as four
publications that highlight distinctions between generations in
different generations in today's world, and it should come as
the workplace. People's motivation to write about it will
no surprise that each generation has its own distinct
decrease in direct proportion to our collective lack of interest
mannerisms, requirements, objectives, and characteristics
in the topic.
that should be taken into consideration by employers.
Instead, communicate with the other people on your team
Employing a staff that spans many generations comes with a
and your co-workers. Ask them how to handle them if you
number of advantages, despite the fact that managing a
want to know how to handle them. Talking to them about it is
workforce that covers such a wide range of ages presents its
the best way to find out what it is that they truly want. When
fair share of obstacles.
it comes to trying to understand the people in your life, there
is no replacement for just asking them questions. Advantages of generation diversity:
Acknowledge and celebrate the differences that exist Problem-solving:

throughout each generation: Having a multigenerational workforce can be quite
The generation gaps are a hard reality and need to be advantageous when it comes to identifying potential solutions
acknowledged and embraced gracefully. and new methods of handling day-to-day concerns. This is due
to the fact that each generation has a different approach to
problem-solving, and as a result, each generation has a their staff members the chance to learn from one another.
different perspective on how problems should be solved. Employees not only benefit from the acquisition of new
knowledge and abilities as a result of this, but also see
Understanding diverse audiences:
improvements in the way they collaborate with one another.
Each generation has its own distinct characteristics, which can
Healthy Industrial Relations:
be a real advantage to your company. Employing people that
belong to each of these generations allows you to gain a We can define industrial relations as the relations and
deeper understanding of the various demographic groups that interactions that take place within an industry. particularly
you are aiming to communicate with. between the labor and management, as a direct result of their
combined attitudes and approaches with regard to the
Occasions for educational growth:
management of the affairs of the industry, for the purpose of
Learning opportunities are presented to all employees, not improving relations between the management and the
just the younger workers, when there is generational diversity workers, and also improve the industrial environment and the
in the workplace. economy as a whole.
Employees of different generations might teach one another The term "industrial relations" also refers to the interaction
new ways of thinking about things and ways of conducting that exists between workers and management, which can
business that are more effective. either directly or indirectly be traced back to the relationship
For instance, a worker who is more proficient with technology between unions and employers.
may be aware of a quicker way for a Baby Boomer to handle a Industrial relations has become one of the most delicate and
laborious physical activity at their place of employment. complex problems of modern industrial society. Industrial
Mentorship: progress is impossible without cooperation of labours and
harmonious relationships. Therefore, it is in the interest of all
An atmosphere with employees of varying ages is ideal for
to create and maintain good relations between employees
fostering mentoring relationships. Many businesses make the
(labor) and employers (management).
decision to launch a mentorship programmer in order to give
Concept of Industrial Relations: understanding, and goodwill. and acknowledgement of
dignity.
The term 'Industrial Relations' comprises of two terms:
'Industry' and ‘Relations”. “Industry” refers to "any productive When there is widespread growth and wealth, there is
activity in which an individual (or a group of individuals) is typically harmony in industrial relations. During times of
(are) engaged". By "relations" we mean "the relationships economic prosperity, there is a general uptick in employment
that exist within the industry between the employer and his levels, salary growth, and a general improvement in worker
workmen.” The term industrial relations explain the happiness. However, when a recession is present, there is a
relationship between employees and management which decrease in salaries as well as a fall in the employment level.
stems directly or indirectly from union-employer relationship. These unfavorable economic conditions poison otherwise
Industrial relations are the relationships between employees positive labor relations. As a result, business cycles are also a
and employers within the organizational settings. The field of factor in whether or not there are strong industrial relations.
industrial relations looks at the relationship between
The following are some of the areas that fall under the
management and workers, particularly groups of workers
purview of industrial relations:
represented by a union.
* The relationship between employees and their superiors or
Industrial relations are basically the interactions between
supervisors, as well as the relationship amongst employees
employers, employees and the government. And the
themselves.
institutions and associations through which such interactions
are mediated. * Collective ties between various labor unions and the
management of an organization. The term for this dynamic is
To summarized, the management and the trade union both
"union-management relations."
need to approach the building of good industrial relations
with a positive attitude if they want to see it succeed. Healthy * Collective relations among employers' associations, labor
industrial relations require a number of important unions, and the government.
characteristics to be present, including mutual respect,
Management of Change: each and every member of it, will be affected in some way,
shape, or form by the change. However, if you have effective
Managing change means managing the conversation between
change management, you will be able to persuade everyone
the people leading the change effort and those who are
to adjust to and accept your new method of operation.
expected to implement the new strategies, managing the
organizational context in which change can occur, and The following points and strategies can help for better
managing the emotional connections that are essential for management of change within a workplace.
any transformation.
Gaining an Understanding of the Change Process:
Management of change involves managing the interaction
There is no such thing as a cookie-cutter approach to
between the people who are leading the change effort and
transformation. On the other hand, the vast majority of those
those who are expected to implement the new strategies. It
that are successful adhere to the processes that make up the
also involves managing the organizational context in which
change management process. Each and every change process
changes can take place and managing the emotional bonds
has a starting point, denoted by "Point A," as well as a
that are essential for any transition.
destination point (Point B).
Theories from a wide range of fields, such as psychology,
The change process consists of everything that takes place
behavioral science, engineering, and systems thinking, are
between the two points mentioned above. It entails a number
included into change management. In addition, there is a
of processes, most of which are categorized as belonging to
diverse selection of models from which to select. For instance,
one of three stages: preparation, execution, and subsequent
Lewis’s Change Management Model divides the process of
action. The following are the events that take place
change into three main stages that are known as "unfreeze-
throughout each phase:
change-refreeze," whereas Katter’s 8-Step Change Model
offers a more thorough guide through the process of change. Preparation:
The notion that change never occurs in a vacuum is It is the responsibility of the change manager to get both the
fundamental to every single theory put forward to explain organization and its workers ready for the transition. In order
how to control it. The entirety of the organization, including to do this, it is necessary to explain to the staff members the
long-term goal that must be accomplished as well as the Formulating a Strategy:
strategy that will be used to get there.
Once you have an understanding of the reason for the shift,
Implementation: the next step is to devise a plan. This plan should inched a
high level overview of the reasons for change, describe the
It is the responsibility of the change manager to ensure that
scope of the project, sent the main stakeholders, organise a
changes are carried out in a manner that is consistent with the
team, and present a thorough roadmap of the tasks that will
long-term goals of the organization. Follow-through: It is the
be required to finish the project.
responsibility of the change manager to make certain that the
change is sustainable and that it is incorporated into the It is much simpler to explain the change to the members of
culture and practices of the organization. your exam when you already have a clear strategy in place,
and it is also much simpler to track progress toward important
Acquiring an Awareness of the Drivers of Change:
milestones and targets when you already have a defined plan.
In order for managers to successfully manage change, they Clarity of Communication:
must first understand why it is required. If you don't do this, it
Your ability to communicate in a way that is both clear and
will be impossible for you to design a strategy that addresses
focused is one of the most effective weapons at your disposal
fundamental issues and pressing challenges like the following:
when it comes to guiding both your company and your staff
* Which pressures are driving the shift that is occurring? through a period of considerable change. In end, you we need
* Are these pressures from within, such as the introduction of to be competent of explaining change to two audiences that
new leadership? couldn't be more different from one another.
* Are these pressures from the outside world, such as the The first category includes all of your staff members and other
creation of new technology, a shift in your business, or the members of your team. These personnel need to understand
appearance of a new competitor? not just why the change is necessary but also how their job
responsibilities will be affected by the change. You also need
to acknowledge the significance of listening to their issues so
that you can alleviate any worries that they may have.
Be Ready to Overcome Obstacles: * The sixth step entails considering and evaluating your
alternatives.
No matter how well prepared you are for the possibility of
change, there is no guarantee that everything will go The seventh step is to taking action.
according to plan. You must ensure that you are prepared for
Stress Management:
a variety of possible outcomes.
The term "stress management" refers to a wide range of
Formulating Career Strategy:
treatments and psychotherapies that are aimed at regulating
The following is a rundown of the seven steps that make up the degree of stress experienced by a person, particularly the
the construction of the career strategy: level of chronic stress, typically with the intention and the
goal of enhancing day-to-day functioning.
* A career development plan (CDP) is a list of long and short-
term goals that employees set for themselves in either their There are a wide variety of mental and physical symptoms
current role or pre-emotively for their future job. The first that can be brought on by stress, and these symptoms can
step is to do an in-depth analysis of your values, strengths, change depending on the person and the circumstances.
and motivators. These can involve a general deterioration in one's physical
condition in addition to feelings of depression.
* Creating a plan for one's professional life is analogous to
erecting a structure. In today's modern world. Effective stress management is
considered to be one of the most important factors in leading
* The second step is to be aware of your advantages.
a happy and successful life. The demands of life are frequently
* Conduct research into the many possibilities and make the numerous and can be tough to manage; however.
most of the opportunities that present themselves is the third
There are a variety of techniques to deal with anxiety and
step.
preserve overall well-being that can be learned through stress
* Developing Expertise is the fourth step. management.
* The fifth step is developing a network.
The levels of stress can be easily measured by utilizing a ABFM MODULE – A
variety of physiological tests that are quite similar to those
Chapter 5: DIRECTING
that are used in polygraph examinations, despite the common
misconception that stress is a personal experience.
There are many different models of stress management, and *All about Directing?
each of these models offers a unique explanation of the
mechanisms that can be used to control stress. A significant
amount of additional research is required in order to gain a
better understanding of which mechanisms truly operate and
are efficient in practice.
INTRODUCTION: All-encompassing function:
The management functions in an organisation broadly involve, Direction is present at every level of an organisation when
in varying degree, functions of planning, organizing , staffing, there is a hierarchy of superiors and subordinates.
directing and controlling.
This means that guidance is always present.
Directing is an important function as people, working in the
Every manager is responsible for supplying his staff with
organisation, are guided, motivated, counselled, supervised,
direction and inspiration.
and led towards the achievement of organisation's goals
through the practice of directing, which can be thought of as Constantly occurring activity:
either a process or an instruction of tactics. It is considered a continuous function since it continues even
It is called a directing process when the process lasts after new managers or employees have been hired or
throughout the entirety of the company's existence, meaning removed from their positions within the firm.
that it is an ongoing part of the continuous managerial Descending order of hierarchical Structure:
process.
The process of guiding flows down from higher levels of
CHARACTERISTICS OF DIRECTING: management to lower levels of management.
The following is a list of the primary characteristics of the Every manager is responsible for performing this role for his
process of directing: or her own immediate subordinate.
The initiator of action: The human factor:
In order to fulfil their responsibilities inside the organisation, As a result of the fact that every worker is unique and
managers are responsible for functions such as planning, responds in a manner that is specific to the circumstances in
staffing, organising, and controlling, in addition to guiding. which they find themselves, it is essential for managers to
While other verbs prepare the ground for action, "directing" handle problems in an appropriate manner.
actually gets things moving.
Therefore, directing is a crucial role since it ensures that the ELEMENTS OF DIRECTING:
work is completed by the employees, and contributes to the
* Directing has following four main elements:
expansion of the firm.
* Leadership
IMPORTANCE OF DIRECTING:
* Motivation
There is evidence that leadership, as a notion, dates back
thousands of years. * Communication
Management science, on the other hand, didn't come into * Supervision

existence until the 20th century. LEADERSHIP:
It was sparked by the rise of enormous companies and the The term "leadership" refers to both a set of behaviours and a
necessity to provide order and consistency in their operations. set of attributes that can be acquired through training and
The process of management and leadership are not at all development respectively.
similar, despite what the vast majority of people believe to be Leadership is the process of inspiring other people to work
the case. toward a common goal and organising their resources to make
Leadership is not magical nor mysterious, nor does it require that objective a reality.
remarkable talent or charisma on the part of its followers. It has been stated by Keith Davis that “The capacity to
Leadership is neither the prerogative of a select few nor of convince other people to eagerly pursue predetermined goals
anyone who can lead better than management or their is an essential leadership skill.
successors. The human element is what ultimately holds a group together
Complex businesses can become hopelessly unorganised in and drives its members to achieve their objectives."
the absence of capable management, which poses a risk to the The ability to mould the actions of others is essential to
companies' very existence. effective leadership.
It can also be seen as the capacity to exert influence over a Leadership is Important Because it:
group in order to bring about the desired outcome.
Begins or starts the action:
It is necessary to have leaders in order to generate visions of
The responsibility of instruction is the activity that determines
the future and to motivate people of an organisation to
where each subordinate's workday actually begins.
accomplish those ambitions.
It is from this role that action is taken, and subordinates
Traits Attributable to Effective Leaders:
comprehend their work and perform it in accordance with the
* It is a procedure involving multiple people in which a instructions that have been provided.
manager influences and directs employees toward the
No matter what plans are developed, they won't be able to be
accomplishment of predetermined objectives.
put into action until after the real work has begun.
* It is a reference to some of the characteristics that are
At this point, the guidance can be of great use.
inherent in a person, such as their intelligence, maturity level,
and personality. Coordinates efforts:
* It is a procedure that involves more than one person Directing subordinates at work enables supervisors to advise,
interacting with each other and combining their efforts. motivate, and instruct them to do their assigned tasks.
* A leader is engaging in the activity of attempting to shape Every single person's contribution is necessary if we are going
the behaviour of the group in order to facilitate the to be successful in achieving our aims.
accomplishment of the company's aim. Only by following the instructions will each department's
* Leadership is dependent on one's position. There is no single efforts be able to be linked and linked to the efforts of the
model of leadership that is superior to all others. It is entirely other departments.
dependent on how the circumstance is managed. The integration of efforts is going to bring about efficiency and
uniformity in the way that concerns are handled.
Provides motivation: of all of the aforementioned qualities in order to preserve the
standards of performance.
Having a sense of direction is beneficial to the achievement of
one's goals. Adapts to changing circumstances:
The purpose of a manager is to improve the performance of It is inherent to human nature to display a consistent level of
their subordinates by providing incentives or compensation, resistance to change.
whether this would be monetary or non-monetary, and this
The ability to a lets a company withstand the planned growth
can act as a morale booster for their subordinates as well as
and become the market leader despite the constantly.
help in development.
shifting environment.
A manager uses the element of motivation here.
That is the directing function that is utilised in order to
Helps maintain equilibrium:
accomplish the changes that are produced in the
Stability and balance, which become highly crucial for the environment, both inside and outside.
long-term sustainability of demand may be brought about by
It is the responsibility of the management to explain the
the management with the assistance of four instruments or
context and specifics of the adjustments to the employees
elements of direction function:
under their supervision.
* A strategic combination of compelling leadership qualities
It aids in explanation, facilitates easy customization, and
* Communication that is clear and concise ensures the seamless operation of an organisation.
* Strict oversight For instance, if a company goes from using handlooms to
power looms, this represents a significant transition in the
* Efficient and effective motivation
technology used in the manufacturing process.
As the index of an organization's rate of growth, sustainability
The factors that have resulted from this include less
is of the utmost significance; hence, a manager can make use
manpower and more machinery.
Makes effective use of available resources: When it comes to carrying out a strategy, leadership can be
demonstrated through the provision of direction and advice to
The clarification of each subordinate's position in relation to
subordinates by higher-ups.
the work is aided by guidance regarding financial matters.
Representative of the Organisation:
The only way that resources may be used effectively is if there
is a minimal amount of waste, duplication of efforts, overlap The leader or manager of the business is the enterprise's
of performance, etc. representative and is responsible for doing things like
representing the concern at meetings, conferences, and other
When a manager uses his talents in
events.
Supervision, guiding, directing, and motivation in order to
The leader is responsible for conveying to the general public
motivate subordinates, the function of subordinates becomes
the reasons why the enterprise should be supported.
clearer as a result.
The leader of a department also serves as its representative
Leadership Roles and Responsibilities:
because he is in charge of the department.
The functions and responsibilities of a leader are as follows:
Helping Integration and Reconciliation of Personal Goals with
Direction at all levels: Business Goals:
The ability to effectively lead others is a skill that is essential A person who possesses leadership abilities contributes to the
in all facets of management. process of reconciling or integrating the personal aspirations
At the highest possible level, it is critical to secure cooperation of employees with the aims of the business.
in the process of formulating plans and policies. The goal of a leader is to direct the activities of their followers
It is necessary for the understanding and execution of plans toward the achievement of shared goals, and they do this by
and programmes developed by the top management at the coordinating those efforts.
intermediate and lower levels of the organisation.
This is only possible if the leader is able to exert enough After listening to the employees complaints, you should make
influence to win over the other party's cooperation and an effort to find solutions.
convince them of the necessity of achieving the goals.
Leadership Qualities:
Garners support:
A leader possesses many different attributes, which combine
A leader is someone who manages others and, in addition to to make him appealing to followers and effective in their
that, he is someone who encourages the support and work.
collaboration of subordinates and entertains them.
The following characteristics are necessary for a person to be
He is able to do this because of his intelligence, maturity, and considered a good leader:
experience, which are the factors that contribute to successful
Outward Look:
outcomes.
A leader is expected to have a physically appealing
A leader is someone who not only follows but also suggests
appearance.
and carries out his organisation's ideas and programmes.
Both physical and mental fortitude are essential qualities in a
Acts as Friend, Philosopher and Guide:
successful leader.
A good leader should have these three characteristics.
Vision and foresight:
He can also be a friend to his subordinates by being open and
In order to continue to be effective as a leader, one must be
honest about his emotions, ideas, and desires with them.
able to show that they are looking into the future.
He can play the role of a philosopher by drawing on his
It is necessary for him to visualise the scenarios before he can
intellect and life experiences to provide direction to the
create logical programmes.
employees in times of crisis.
Intelligence:
Sometimes, he will also play the part of a counsellor, both
from the perspective of providing therapy and of finding A leader needs to be intelligent enough to explore difficult
solutions to problems. situations and challenges.
In a nutshell, the scenario calls for a leader who is analytical Sense of responsibility:
and can balance the benefits and drawbacks of several
Having a sense of accountability and responsibility toward
options.
one's work is highly crucial if one wishes to feel as though
Because of this, having a mature mindset and thinking they have made an influence.
positively are highly crucial.
Only when a leader feels a feeling of responsibility toward the
Capabilities in Communication: accomplishment of corporate goals is he able to truly
maximise the talents of those under his command.
The capacity to communicate plays an important role in
clearly communicating the policies and processes, terms and Only when they are able to motivate themselves and insist on
conditions, and other relevant information. contributing to their greatest talents can a leader effectively
motivate their followers to do their finest work.
It is highly useful in convincing people and stimulating them in
an accurate and efficient manner. Self-confidence and the ability to exert one's will:
Objective: These are the next two qualities on this list.
A leader is required to have an objective approach that is free Self-assurance is necessary in order to win the trust of
from bias and does not represent his favour for a specific subordinates.
individual.
It is expected of him to be dependable and to face challenges
Instead, a leader should form his judgement and make with full determination.
decisions based on facts and reasoning.
Humanist:
Knowledge of work:
A leader must have the ability to be present at all times since
In order to gain the faith and confidence of his subordinates, a he deals with people on a daily basis and has direct
leader needs to have a thorough understanding of the job that interaction with them.
is performed by those under his or her supervision.
When a leader is dealing with the personal issues of his One way to characterise leadership models is, as guides that
subordinates, he needs to exercise extreme caution and focus. indicate various leadership behaviours that should be applied
in a particular context or place.
For this reason, it is essential to treat human beings on the
basis of humanitarian concerns in order to establish an The leadership model is utilised in order to provide a helpful
atmosphere that is favourable to growth. methodology and structure for defining management
practices that are suitable to the work style and personality of
Compassion:
the individual.
There is an old adage that goes, "Put yourself in the shoes of
Explanation of the leadership model in broad terms can be
those around you."
broken down into the following groups:
This is of the utmost importance since only after this can
Authoritarian Leadership:
judgement and fairness be considered.
A leader has the ability to set results and enforce expectations
A leader is required to have an understanding of the issues
through the use of authoritarian leadership methods.
and complaints that are brought up by employees, as well as
to maintain a close eye on the requirements and goals that It's possible to have success with a one-man show in
are set forward by employees. circumstances where one leader is the most knowledgeable
member of the team.
It contributes to the improvement of human interactions as
well as personal contacts with the workers. Creativity would suffer as a result of limited input from the
team if this method is implemented, despite the fact that it is
Leadership Models:
effective in a short period of time.
A leadership model that is grounded in theory and serves as a
Leadership methods based on authoritarianism are utilised
theoretical framework for how to best manage personnel.
whenever the members of a team require guidance.
This hints, in general, at a similar approach to responding to
the demands of employees and the business, an approach
that has been demonstrated to be useful in that model.
Advantages of the authoritarian leadership style: * The utilisation of this model significantly contributes to an
increase in the employee turnover rate.
The authoritarian leadership style has a number of benefits ,
including the following: Participative Leadership:
* It is possible to cut down on the amount of time needed to The democratic ideal can be traced back to the origins of the
reach an important conclusion. participative leadership style.
* It is possible to clear the command chain and punctuate. The most important thing is to have everyone on the team
involved in the decision-making process.
* The amount of repetition that occurs during the execution of
the plans can be reduced. Therefore, members of the team feel satiated and encouraged
to contribute to the cause.
* Implementing an authoritarian paradigm of leadership lead
to the production of consistent results. In most cases, the leader has the final say when it comes to
the decision-making process.
Disadvantages of the authoritarian leadership style:
If members of a group continue to have divergent opinions,
The following are some of the drawbacks of adopting an
however, it is possible that reaching a decision will take more
authoritarian style of leadership:
time.
* Management style that is overly authoritarian might
Advantages of the participative leadership style:
provoke discontent among workers.
Participative leadership has many benefits, including the
* By utilising this paradigm, you run the risk of stifling the
following:
originality and innovation of your workforce.
* The inspiration of workers and the gratification they got
* It is detrimental to the coordination and cooperation of the
from their jobs rose.
group.
* It allows for a more efficient utilisation of the employees'
* The amount of input from the group stands severely cut
creative potential.
back.
* The use of participative leadership approaches assists in the Despite this, friction among the members of the team might
development of powerful teams. cause the group to break apart and go in a different direction,
which can result in a lack of inspiration and low morale.
* It is possible to achieve high levels of productivity.
Advantages of the delegative leadership style:
Disadvantages of the authoritarian leadership style:
The benefits of adopting a leadership style based
The following are some of the drawbacks of adopting an
authoritarian style of leadership: on delegation are as follows:
* The process of making decisions takes some time. * Employees with more experience are eligible for perks that
are determined by their level of experience and credentials.
* Leaders are more inclined to apologise to their employees
than employees themselves. * The originality of the concepts and the inventiveness are
very much appreciated.
* There would on occasion be problems with communication.
* A productive working atmosphere that is the result of
* Because of the openness with which information is shared,
leadership that emphasises delegation.
potential security problems may emerge.
Disadvantages of the delegative leadership style:
* If staff lack the necessary skills, poor decisions may be
made. The following are some disadvantages of adopting a
delegative style of leadership:
Delegative Leadership:
* There is a lack of clarity regarding command accountability.
Delegative leadership is a representative leadership style that
focuses on delegating initiative to team members and the * The representative leadership struggled to adjust to the
style is also known as "laissez-faire leadership." changes that were occurring.
This strategy has the potential to be successful provided the
members of the team are knowledgeable, willing to accept
responsibility, and like the opportunity to work on their own.
Transactional Leadership: * Employees have the ability to choose their own reward
system. The utilisation of this model results in the production
Transactions between a leader and his followers, including
of a system that is simple for managers to put into action and
incentives, admonition, and other commutations, are utilised
straightforward for workers to adhere to.
by the transactional leadership model to accomplish the goal
of getting the work done. Disadvantages of the transactional leadership style:
The leader makes sure that everyone is aware of the The following is a list of disadvantages associated with the
objectives, and everyone on the team is aware of how they transactional leadership style:
will be rewarded for meeting the requirements.
* There is a possibility of inhibiting inventiveness and
This type of giving and taking is more concerned with creativeness.
adhering to existing routines and procedures in an
* Having empathy does not add any value.
accomplished manner, as opposed to creating any radical
changes inside an organisation. * It fosters the development of more followers than leaders
among the workforce.
Advantages of the transactional leadership style:
Transformational Leadership:
Transactional leadership has a number of advantages,
including the following: In this paradigm, the leader inspires his or her followers by
providing them with a clear vision, and then the leader
* Time-bound, measurable, and detailed objectives that are
encourages and empowers the followers to work toward
within the employees reach, which have been developed by
achieving the goal.
the leaders.
The leader is also responsible for serving as an example of the
* Enhanced levels of motivation and output from staff
vision.
members.
* Transactional leadership can oust chaos in the chain of
command or at least bring it to a manageable level.
Advantages of the transformational leadership style: * The works cannot move further until the staff give their
approval.
Transactional leadership has a number of advantages,
* The transformational leadership paradigm has the potential
including the following:
to sometimes lead to a divergence of protocols and principles.
* A decrease in the number of employees who leave their jobs
MOTIVATION:
as a result of utilising this methodology.
The word "motivation" is derived from the Latin word
* A strong emphasis by the transformational leadership on the
"motive," which can be translated as "necessity,""incline," or
importance of the business vision.
"drive" within a person.
* When utilising this technique, you will see that your
People are motivated to take action so that the goal can be
employees have a good morale.
achieved.
* It uses several methods of motivation and inspiration in
It is possible that psychological factors are what drives
order to gain the support of the personnel.
people's behaviour during the course of the task they are
* This style to leadership is not one of compulsiveness. trying to accomplish.
* The transformational leadership style places a high priority Although it is uncommon to be able to directly observe the
on the interaction between parties. goals that motivate people to take certain actions, motivation
Disadvantages of the transformational leadership style: encompasses not only the factors that initially lead to the
behaviour in question but also those that guide and maintain
The following is a list of disadvantages associated with the
that behaviour over time.
transactional leadership style:
Types of Motivations:
* It is possible for leaders to lie to their employees.
It is common practice to classify the various forms of
* It's possible that you'll need continuous encouragement and
motivation into two categories - extrinsic and intrinsic:
continuous feedback.
Extrinsic Motivation (Motivation Derived from Outside This contrasts with extrinsic motivation, which involves
Sources): engaging in a behaviour in order to earn external rewards or
avoid punishments.
The motivation that originates from factors external to the
individual and typically results in positive outcomes such as Uses of Motivation:
praise, trophies, financial gain, or social recognition.
Understanding the approach to work is very important, but
Social psychological research has indicated that extrinsic there are main factors that can affect motivation in many
rewards can lead to over justification and a subsequent different ways.
reduction in intrinsic motivation.
Motivation is very important our day-to-day life because it
In one study demonstrating this effect, children who expected provides the right guidance to finish a task for all human
to be (and were)rewarded with a ribbon and a gold star for behaviours.
drawing pictures spent less time playing with the drawing
Although this is very critical, there are also other major factors
materials in subsequent observations than children who were
that can affect motivation.
assigned to an unexpected reward condition and to children
who received no extrinsic reward. * The study of motivation involves the following:
Intrinsic Motivations (Motivations That Come from Within): * Assisting people in taking action, which is very helpful.
The motivation that arises from within an individual, such as * Assisting individuals in increasing their productivity while
the desire to solve a difficult puzzle for the purpose of working toward a goal.
attaining the personal satisfaction that comes from doing so. * Inspiring people to engage in activities that are beneficial to
In other words, the motivation to engage in a behaviour arises their health.
from within the individual because it is intrinsically rewarding. * Encouraging people to take chances while guiding them
away from behaviours that are harmful or undesirable, such
as addiction.
* Assisting individuals in regaining a sense of mastery over the fact that doing so requires a significant investment of
their own lives. one's time, energy, and resources.
* Enhancing your sense of well-being and pleasure in general. Intensity:
Impact of Motivation: Intensity is a visible manifestation of the dedication and
enthusiasm with which one pursues a goal.
Anyone who has ever tried to accomplish something(like
losing 10 kilo grammes of weight or running a marathon) has As an illustration, a student might coast by making fewer
probably had the sudden realisation that the desire to do so efforts, whereas another student might study on a consistent
alone is not enough to make it happen. basis, participate actively in every discussion, and take
advantage of the resources provided by research done outside
The capacity to persevere in the face of challenges and the
the classroom.
stamina to press onward in spite of difficulties are both
prerequisites for accomplishing such a goal. While the other student pursues his educational goals with a
greater level of intensity, the first student lacks intensity in his
The following are the three primary components of
efforts.
motivation:
Alderfer's ERG Theory of Motivation:
Conformational Changes:
The ERG model was established by Clayton Alderfer, who took
This is when the choice is made to carry out a behaviour, such
Maslow's Hierarchy of Needs and turned t into a three-factor
as enrolling in a science course.
model of what motivatespeople.
Perseverance:
Existence, relatedness, and development are the
It is a persistent effort in the direction of a goal, in spite of the
Three distinct types of needs that are represented by the
presence of obstacles.
letters E, R, and G in this paradigm.
One way to demonstrate perseverance is by continuing one's
A content theory of motivation, the ERG model can be found
education by enrolling in additional science classes, despite
here.
According to Alderfer's paradigm, the three demands listed The following factors are considered to be motivational
above are what drive every single human being. factors:
Existence, which essentially refers to both a person's physical A Sense of Accomplishment:
and mental well-being, is the most tangible and motivating of
An employee's job should provide them with a sense of
Alderfer's three requirements, and it is also the need that
accomplishment.
comes first.
It will fill the employee with a sense of accomplishment for
The need for relatedness, a sense of community, and a
having accomplished something challenging but worthwhile.
healthy relationship with oneself are the next levels of
importance. Recognition:
The need for growth, which essentially refers to self- An employee's successes on the job should result in
development, fulfilment, and the feeling of realising your recognition and appreciation from his or her superiors as well
potential, is the one of Alderfer's wants in the ERG model that as from his or her peers.
is the least tangible, but it is still very important. This recognition should come from both groups.
Herzberg's Theory of Motivation: The nature of the task itself:
According to Herzberg's theory of motivation, the two factors In order to keep workers motivated, the nature of the task
known as the "Hygiene factor" and the "Motivating factor" should be interesting, varied, and present a sufficient amount
have an impact on one's level of motivation in the workplace. of a challenge.
If the hygiene factors are not present, the employee will put in
Responsibility:
less effort into their work.
Employees are required to take «ownership» of the work they
When present, motivation factors will inspire an employee to
do. They should not have the perception that they are being
put forth their best effort in their work.
subtly managed and should instead hold themselves
accountable for absolute perfection.
Promotion: Working Conditions:
There should be opportunities for promotion available to the Both the tools and the environment in which they are used
employee at all times. need to be free of hazards, and they should be easy to
understand.
Growth:
Compensation Policies:
Employees should be given the opportunity to learn new skills
through the course of their employment. The wage structure needs to be reasonable and fair.
Additionally, it should be able to compete favourably with
This can be accomplished either through training on the job or
other businesses operating in the same sector.
through more formal education.
Status:
The following are examples of factors related to hygiene:
The organisation is responsible for keeping track of the status
The policies of the Company:
of each individual employee working for the company.
The Company Policies are quite fair and clearly communicated
Working on meaningful projects can help build one's
to each and every employee. Additionally, they should be on
reputation.
par with the other competitors.
McClelland’s Needs theory of Motivation:
Supervision:
David McClelland, an American psychologist, was the one who
The supervision conducted ought to be reasonable and fair.
first proposed what is now known as the "McClelland Needs
The worker ought to be granted as much autonomy as is
Theory."
consistent with reasonable expectations.
McClelland held the belief that an individual's unique needs
Relationships:
are developed over the course of their lifetime and are shaped
There should be no tolerance for bullying or factionalism, and by the various experiences they have throughout their lives.
there should be a healthy, kind, and appropriate relationship
between peers, superiors, and subordinates.
McClelland's Needs Theory is also referred to as the Three Need for Affiliation:
Need theory and the Learned Needs Theory from time to
People who have a strong need for affiliation gain pleasure
time.
from being loved by everyone and have a tendency to avoid
McClelland has recognised three fundamentally important the anguish of being rejected.
wants that motivate people:
This trait is denoted by the acronym "n-affiliation."
the need for power, the need for affiliation, and the need for
Because humans are social animals, they enjoy interacting
achievement.
with other people and congregating in settings where they
In addition, he and his colleagues have conducted a have the sense that they are accepted by their peers.
substantial amount of study on these fundamental needs.
People who have these needs therefore enjoy maintaining
Need for Power: pleasant social ties, taking pleasure in a sense of intimacy, and
finding it rewarding to offer assistance and consolation to
What exactly is power, and why do we have a need for it?
others when they are going through difficult times.
The capacity to inspire or influence the behaviour of other
Need for Achievement:
people is the essence of power.
People who have a strong need for affiliation gain pleasure
People who have a strong desire for power often pursue
from being loved by everyone and have a tendency to avoid
leadership roles inside an organisation in the hopes of gaining
the anguish of being rejected.
more sway and authority over their fellow workers.
This trait is denoted by the acronym "n-affiliation."
They tend to be vocal, assertive, demanding, practical and
realistic rather than sentimental, and they enjoy participating Because humans are social animals, they enjoy interacting
in the debates that are going on around them. with other people and congregating in settings where they
have the sense that they are accepted by their peers.
People who have these needs therefore enjoy maintaining
pleasant social ties, taking pleasure in a sense of intimacy, and
finding it rewarding to offer assistance and consolation to Even though he has the goal of making money, he finds that
others when they are going through difficult times. the joy he derives from the execution of his work far exceeds
McClelland discovered that certain individuals have a strong the gratification he gets from the financial benefit.
need for achievement (also known as a "n-ach”) in their lives.
According to McClelland's Needs Theory, a person's degree of
He has determined that those that are successful have the efficacy and motivation is highly influenced by these three
following characteristics: fundamental needs.
* High achievers are willing to take moderate risks, also As a result, the theory proposes that these needs play a
known as a calculated risk, when carrying out the actions that significant role.
are associated with management.
Porter and Lawler's Motivation:
The idea that people with high levels of achievement are
The Porter and Lawler theory of motivation is predicated on
willing to take risks is refuted by this.
the supposition that receiving rewards can lead to a sense of
* People who strive for high achievement look for ways to fulfilment, and that sometimes performing well can result in
gain immediate feedback on the work that they perform so receiving rewards.
that they may gauge how far along the path they are.
They have a hypothesis that the correlation between
* Once the objective has been decided upon, the high performance and satisfaction is due to another variable that is
achiever throws himself wholeheartedly into the work until it rewarded in some way.
has been accomplished with flying colours.
They witness successful performance, which results in reward,
* A person who has a high demand for achievement executes which ultimately results in satisfaction.
the activity that is inherently rewarding and is not necessarily
It is a model with multiple variables that attempts to explain
accompanied by the material rewards.
the complexity of the connection that exists between
He will not be content until he has given the task he has been satisfaction, motivation, and performance.
given, his full attention and effort.
Porter and Lawler contend that performance is not necessarily "Employees who experience disparity will try to reduce it,"
a direct result of being satisfied. write Carell and Dietrich (1978).
Instead, the opposite is true because once people have "This may be done by distorting the inputs and/or results in
achieved their goals of satisfaction, they are more likely to their own minds ("cognitive distortions"), directly from the
become complacent. inputs. and/or the organisation by changing, or omitting the
results."
On the other hand, if the reward system is successful,
performance can result in a feeling of satisfaction. Vroom's Expectancy Theory of Motivation:
Equity Theory: The expectation theory of motivation, developed by Victor
Vroom, is an example of a process explanation of motivation.
John S. Adams, a behavioural psychologist, was the first
person to develop equity theory in the early 1960s. It states that an individual's expectations about the future
have an effect on the individual's level of motivation.
This theory deals with defining and measuring the relational
satisfaction of employees. According to Vroom, the specific factors that determine an
individual's level of motivation are the degree to which they
Adams recommends that workers try to strike a balance
place a high value on any reward that is associated with a
between what they give an organisation and what they
particular action (known as "Value"), the degree to which they
receive, and that they base their contentment with their own
believe that they will be able to achieve positive results as a
amount on their perceptions of an equal amount among their
direct result of the effort that they put into something(known
co-workers.
as “Expectancy”), and the degree to which they believe that
The concept of equity is based on the idea that people's achieving positive results will result in a reward (known as
actions and motivations are directed by a sense of fairness, "Belief(Instrumentality).
and that disparities in this sense of fairness in the workplace
It is essential to remember that incentives can be either
motivate people to work toward finding a solution to the
intrinsic or extrinsic in nature.
problem.
Things like money and promotions are examples of extrinsic When viewed from an individual's perspective, this indicates
motives. that a lack of motivation may be present if any one of these
variables is absent.
Intrinsic motivations come from within an individual.
If, as an individual, you discover that you are lacking
Things like a sense of accomplishment and fulfilment are
motivation in the realm of work, it is important to take a step
examples of intrinsic motivations.
back and think about the aspects that are discussed below.
These are things that come from within an individual.
It's possible that one or two of them don't meet your needs
𝐌=𝐕×𝐈×𝐄 completely.
Implications of Vroom's concept for individuals: For instance, you might not place any importance on the
According to Vroom, an individual's level of motivation is the internal or external gratifications that come with the work
result of various factors, including the following: that you are now performing.
Valence: In a similar vein, you may just assume that you are unable to
accomplish a result that would result in the receipt of a
the extent to which individuals place importance on the
reward for your efforts.
opportunities for rewards that are related with the specific
results or actions in question If you evaluate your level of motivation using Vroom's
Expectancy theory, you may be able to determine the
Expectancy:
underlying factors that are contributing to your low levels of
This refers to the degree to which individuals believe that the motivation.
greater effort they put in will assist them in achieving the
In turn, this may assist you discover activities you could take
desired effects of activities, and Instrumentality:
to get it back to its previous state.
It refers to the degree to which individuals have faith that the
You might, as always, require the assistance of other people in
rewards will materialise for them if they attain the desired
order to regain your motivation.
outcomes or behaviours.
It would probably be beneficial for you to discuss your ideas This may imply that the individuals who make up your teams
with a colleague, a friend, or even your line manager. need to be given the authority to accomplish things on their
own, and it may also imply that they require help in order to
Implications of Vroom's Theory for Leaders and Organisations:
do so.
The Vroom model serves to make it abundantly evident that
It also indicates that the system in which you are requesting
in order for leaders or organisations to:
that they operate is not one that is predisposed to work
Make available to people the kinds of rewards they care against them.
about:
Make sure to give out the incentives that were promised
It is possible that these are intrinsic qualities that are included when they were earned:
into satisfying position descriptions, that they are recognition,
Trust is of the utmost importance here.
that they are new opportunities, or that they are money
rewards. In order to be reliable in this setting, you will need to fulfil the
In point of fact, they could be an extremely diverse array of outcomes, both implicit and explicit, as well as the rewards
things. that you have committed to providing.
The key is to come up with appropriate incentives for the If you don't follow through with this, there will be a breach in
people under your command. confidence.
Individuals should be given goals that are within their reach: When individuals' faith in you is violated, your recommended
rewards will no longer be effective in motivating them.
It is not required that the goals you establish for yourself be
simple. Self Determination Theory:
However, it is imperative that ti members of your team have Self-determination is a belief that each person possesses the
the ability to accomplish these goals. capacity to choose their own path in life and take
responsibility for managing their own affairs.
This quality is very important in terms of a person's Deci and Ryan first presented their concepts in their book
psychological health and well-being. titled Self-Determination and Intrinsic Motivation in Human
Behaviour, which was published in 1985.
People have the experience of regaining control over their
lives and the choices they make when they practice self- They came up with a theory about what motivates people,
determination. and it suggested that people are driven by a desire to improve
themselves and find satisfaction in their lives.
It also has an effect on people's levels of motivation; in fact,
people feel more motivated to pick up any flavour when they COMMUNICATION:
have the impression that what they do will have a better
Communication refers to the process of providing an
effect on the outcome of the situation.
unmistakable answer to the agonising division that exists
The conviction that one should be responsible for one's own between oneself and others, as well as between one's private
actions has proven to be beneficial in a variety of domains, and public spheres of experience.
including education, work, parenting, physical activity, and
Communication refers, in its most fundamental sense, to the
health.
act of conveying meaning from one individual to another by
According to the findings of various pieces of research, having using a shared set of symbols.
a high level of self-determination can increase one's chances
Since the time of the ancient Greeks, academics have been
of succeeding in many different aspects of life.
interested in the study of communication as a subject.
In self-determination theory, one of the most important
However, prior to the modern era, the topic was typically
concepts is that of intrinsic motivation, which refers to the act
considered to be a part of other fields of study and was
of engaging in behaviours for the sake of the rewards that
regarded as a natural process that was inherent to each.
result from those behaviours.
I.A.Richards, an English literary critic and writer, offered the
The work of psychologists Edward Deci and Richard Ryan was
first and in some ways still one of the best definitions of
the foundation for the development of self determination
theory.
communication as a distinct aspect of human endeavour in Whom exactly?
1928.
Which results exactly?
He stated, "Communication takes place when one mind so
In the late 1940s, two American mathematicians named
acts upon its environment that another mind is influenced,
Claude Shannon and Warren Weaver came up with one of the
and in that other mind an experience occurs which is like the
most fruitful schematic models of communication systems,
experience in the first mind, and is caused in part by that
which they proposed as an answer to Lasswell's question.
experience."
This answer was proposed as an attempt to find an answer to
This definition remains one of the best definitions of
Lasswell's question.
communication as a discrete aspect of human endeavour.
Although it is not the only model of the communication
The advancement of science and technology, which, by their
process and it is not universally accepted, the simplicity of his
very nature, has drawn attention to humans as
model, the clarity of its presentation, and the expansiveness
communicative beings, has been a major driving force behind
of its surface proved to be appealing to many students of
the recent surge in interest in communication.
communication across a wide range of disciplines.
Communication Models:
The model, as it was first conceived, was made up of five
Linear Model: components, all of which were arranged in a sequential
fashion:
According to the American political scientist Harold Dwight
Lasswell, a handy way to describe an act of communication is * The origin of the information
to answer the following questions in order:
* Its transmission
Who?
* The transmission channel .
What Does It Say?
* The receiver; and
In what Channel?
* The destination
Dynamic Model: * Principles of ethical organizational communication
Other models of communication processes have been * Culture within the organisation
developed in order to cater to the requirements of students of
* Methods of conflict resolution
communication whose interests differ from those of
quantitatively oriented theorists such as Shannon, Weaver, The act of transferring information from one location, person,
and Wiener. or group to another is what we mean when we talk about
communication.
This was done in order to meet the requirements of students
of communication. There is always (at least) one sender involved in a
communication.
The art of dynamic communication is one that is always
developing, and it consists of the capabilities of interacting It doesn't matter what the circumstance is, having strong
consciously and responding thoughtfully to others. communication skills is absolutely necessaryfor success.
As soon as you get past the initial stage of mastering the According to Martha Maddox, author of an article titled
fundamentals, everything else can be taught, practised, and "Communication Skills Required by First-Line Managers,"
improved over the course of a lifetime. "Effective communication is the glue that binds people
together regardless of language, race, or ethnic background"
If you put in enough effort to hone these skills, they will
(Maddox, 1990).
eventually become ingrained in your personality.
When there is a breakdown in communication, disorder and
Concept of Communication:
confusion are brought into a situation, and the likelihood of
Two of the most fundamental tenets of communication, failure increases dramatically.
namely that it is irreversible and that active listening should
Communication is of utmost significance within the context of
always be practised, are essential to the success of any
organisations.
business.
The unfortunate reality is that effective communication within
The other main concepts are
organisations can often be quite challenging.
Communication is only successful when both relational Communication Between Individuals:
partners involved in the communication process have an
Two people are required to carry out interpersonal
equivalent understanding of the information being
communication successfully:
exchanged.
one acts as the sender, while the other acts as the receiver.
Failure of organisations is frequently attributable to in
efficient communication. Both parties must use a shared language in order to convey
their messages, whether orally or in writing.
Levels of Communication:
Intrapersonal Communication:
In its most basic form, communication can be broken down
into five levels: Talking to oneself is what's meant by the term "intrapersonal
communication."
Communication Not Directed Toward Me:
The human capacity for self-awareness is reflected in the
Communication is a process that can take place not only with
phrases we use, such as "telling ourselves the truth” or
human beings and other human entities but also with non-
"acknowledging the truth to ourselves."
humanentities.
In the course of our daily lives, we encounter a wide variety of
Extra-personal communication refers to interactions between
situations that involve interpersonal communication.
individuals and entities that are not of the human species.
Similar to requesting assistance in finding a solution to a
The achievement of perfect coordination and comprehension
problem or engaging in self-reflection to determine whether
between human and non-human entities is required for extra-
or not you should have been engaging in that particular
personal communication to take place.
activity given the circumstances, if you are.
Sign language is utilised by one of the participants in this
You recognise that you are overweight, come to terms with
communication, while the other participant uses oral
the fact, and then choose to devise a diet plan for yourself;
communication.
similarly, if you need to forgive someone, you must first have
a conversation with yourself about the situation; etc.
Organisational Communication: number of available options for internal and external
communication.
Communication becomes the organisation's lifeblood when it
comes to people interacting with one another in a business These fasts are designed to assist individuals from different
setting that is based on teams. parts of the world in cooperating with one another.
It's possible for communication within an organisation to filter Communication in Organisations:
in any one of three directions:
Organisational communication is a broad field that includes all
up, down, or horizontally. forms of communication that allow businesses, government
agencies, and non-profit organisations to function, grow,
Companies are dependent not only on their internal
connect with stakeholders, and contribute to society.
communications but also on their communications with the
outside world. Organisational communication is a field that includes all forms
of communication that allow these things.
Through a process known as external communication,
businesses have the opportunity to have conversations with Communication within organisations allows us to accomplish
individuals who are not employed by the company. the following:
The Field of Mass Communication: * Performing duties that are connected to particular functions
and responsibilities within the realms of sales, services, and
The means of mass communication include periodicals such as
production.
newspapers and magazines.
* Responding to new circumstances with innovative
Communication can take place either verbally or in writing
approaches at both the individual and organizational level.
frequently.
* Carry out responsibilities by upholding policies, procedures,
Intimate, e-mail, Voicemail, fax, audiotape, teleconferencing,
or regulations that support day-to-day and ongoing
videoconferencing, and closed circuittelevision are just some
operations.
of the technologies that have contributed to an increase in the
* Cultivate relationships in which "human messages are work and life; and Generation 'Y' desires to view work and
directed at people within the organisationt heir attitudes, personal life as a smooth integration without separation.
morale, satisfaction, and fulfilment," and "human messages
They can all share the same vision but the outlooks and the
are directed at people within the organisation."
ways and paths to attain success are different.
* Management's role in coordinating, planning, and
For example, communication can be quite fluid for the
controlling how operations are carried out within the
Millennials who believe in work-life integration, while the
organisation.
traditional employees can be reached through impressing on
Why Communication is Important in an Organisations: the need of their loyalty and to build inter-personal
relationships in the organisation.
Effective organizational communication contributes to
learning, teamwork, safety, innovation and quality of Further, the new workforce tends to be communicated in a
decision-making in organisations. most-concise manner by avoiding long explanations.
In an age of increased competition for talent, communication Hence, brevity in communicating with the newaged workfoce
has become a strategic tool for employee engagement, by the superiors and peers is one of the effective
satisfaction and retention. communicating model.
In fact, effective organisational communication contributes SUPERVISION:
directly to employee and organisational learning, an essential
Supervision is a Latin Word.
factor for competitive advantage.
Super means 'from the above' and vision means 'to see'.
Different generations speak different languages in terms of
expectations, what they want from work and life. In normal sense of the term, supervision means overseeing
the activities of others.
The traditional Generation's view of work being the central
focus of life; Baby Boomers' view of life with a strong work According to Vitiates - "Supervision refers to the direct and
component, Generation 'X' seeks a clear balance between immediate guidance and control of subordinates in the
performance of their task."
George R. Terry and Stephen G. Franklin have defined He helps them in their professional development by
supervision as "Supervision is guiding and directing efforts of enhancing their knowledge and skills relating to their assigned
employees and other resources to accomplish stated work jobs.
outputs."
He also acts as a motivator and mentor for the subordinates.
Supervision is the process of interaction, guidance and control
Requisite Qualities of an Effective Supervisor:
of subordinates by meeting them regularly about the
performance of their work. Effective supervision requires many desired qualities of the
supervisor.
It is intended at ensuring that the subordinates work
according to the plans and policies of the organization. Some of these are mentioned below:
Supervision may be required by legislation, regulation, supervisor result in more effective discharge of his duties and
inspection requirements, or the requirements of the achieving better results.
organisational policies and needs. Leadership qualities:
A supervisor plays two important roles: Through the leadership qualities, the supervisor can influence
* Supervisor communicates the plans, policies, decisions and the work behaviour of subordinates, and direct it towards the
strategies of management to the subordinates. attainment of organization's goals.
If there are complaints, grievances and suggestions of the Knowledge and Skills:
subordinates, he communicates the same to the The technical, human relations and conceptual skills and
management. knowledge of the
Thus, the supervisor plays the role of link between the Personal traits:
subordinates and the management.
Tact and discretion, Social skills, Technical competence,
* A supervisor also acts as a guide to the subordinates. Empathy, Honesty, Courage, Self-confidence, Communication
vskills, Teaching and guiding ability and Strong common sense
are the personal qualities of a supervisor, which go a long way subordinates and their work performance, without any
deciding how effective his supervision is. hesitation.
Degree of Supervision: Importance of Supervision:
The supervisor should be able to decide the level of Supervision is primarily concerned with overseeing or
supervision i.e. watching the performance of subordinates.
whether it should be general or close supervision. Supervision plays an important management role in the
organisational set up.
The morale and productivity of subordinates may be impacted
if the supervision is too tight. The importance of supervision can be explained as follows:
Promoting Cohesiveness of the group: Issue of Orders and Instructions:
Group cohesiveness is represented by the level of attraction A subordinate can give better performance when he knows
that each member has for the group. the work he is supposed to do.
High cohesiveness of a group tends to produce better results The supervisor makes sure that all the instructions are
as each member of the group is prepared to share properly communicated to every concerned employee.
responsibility and works towards the attainment of common
The subordinates often require guidance of supervisor and
goals.
clears their doubts and tells them how to do the job properly.
An effective supervisor can help create a more supportive,
Planning and Organizing the Work:
caring and positive working environment.
A supervisor acts as a planner and a work schedule is
Rapport with Superiors:
prepared by him, so as to ensure an even and steady flow of
Supervisor's relations with his superiors must be such that he work.
can present his views and suggestions related to his
The supervisor decides the targets for the subordinates and
determines the methods and procedures for doing the work.
Proper Assignment of Work: Provides vital link between Workers and Management:
Subordinates may feel frustrated, when their work is not A supervisor is a representative of the management when he
properly assigned. deals with his subordinates.
A supervisor makes systematic allotment of activities and He, therefore, becomes and important figure in
resources and delegate's authority to each worker in his communicating the policies of the management to workers.
group.
He also provides feed back to the management regarding
If the work is not properly assigned, some workers may have complaints, grievances and problems of subordinates.
lot of free time, whereas others may be overburdened
This results in improved communication in the organisation,
Better Utilisation of Resources: both upward and downward.
Effective supervision leads to minimum wastage as the
subordinates are constantly monitored or observed and,
therefore, they use the resources in the best possible manner.
Supervisor also monitors deviations between actual and
planned output and takes suitable corrective actions.
Improved Motivation, Discipline, and group cohesiveness:
The process of supervision and guidance of supervisor results
in better discipline of the subordinates.
While guiding the employees, the supervisor motivates the
subordinates to perform to their best capacity.
Supervisor also plays a key role in maintaining group
cohesiveness and harmony among his subordinates.
ABFM MODULE – A BASICS OF CONTROLLING:
Chapter 6: CONTROLLING Controlling is the last function of the management process

which involves other functions of planning organising, staffing
and directing.
*All about Controlling?
Within an organisation, "Controlling Process" refers to a
method that can be implemented to check whether or not
certain criteria are being met.
It entails gathering information about a system, process,
person, or group of people in a thoughtful manner, in order to
arrive at decisions that are necessary regarding each of these
entities.
When something is controlled, it is ensured that the activities
within an organisation are carried out in accordance with the
plans.
The controlling function determines the degree to which
actual performance varies from predetermined benchmarks.
It investigates the factors that led to such deviations and
makes an effort to make adjustments in accordance with
those findings.
It is essential to the success of an organisation that the
management control function is carried out in an accurate and
efficient manner.
Following the establishment of plans, management is to increased effort and labour from the employees within the
obligated to carry out a series of steps in order to guarantee organisation.
that the plans will be followed.
* Controlling ensures accurate planning for the future by
The steps that make up the basic control process are ones that reevaluating the previously establish standards.
can be followed for almost any application, including boosting
* The results of an organisation as a whole will improve as a
product quality, cutting down on waste, and expanding
result of control.
customer base.
* The exercise of control reduces the number of errors that
CHARACTERISTICS OF CONTROLLING:
occur.
The characteristics of controlling are broken down into their
ADVANTAGES OF CONTROLLING:
component parts, point by point, in order to provide a more
in-depth understanding of the concept. The management function of controlling provides the
following advantages to the organisation:
The following are the characteristics:
* Assists in accomplishing Organisational Goals:
* Controlling is beneficial to the accomplishment of
organisational goals. * Helps in minimising errors
* The procedure makes the most efficient use of the available * Making Efficient and effective use of resources:
resources. * Validates accuracy of standards:
* Controlling judges ensuring the correct application of the * Improves order and disciple and motivates staff
standard.
* Results in better coordination within the organisation
* Discipline and order are also established as a result of the
* Simplifies supervision and helps in delegation and
process.
decentralisation
* The process of controlling the employees motivates the
* Provides feedback for data improvement for future planning
employees and boosts employee morale, which, in turn, leads
LIMITATIONS OF CONTROLLING: TYPES OF CONTROL MANAGEMENT:
While providing various benefits, as mentioned above, we Broadly, the control management can be of 3 types
have to keep in mind that controlling has a few limitations
Feedback control:
also.
These controls are based on the feedback received after the
Following are the main limitations:
activity has taken place.
* It may be costly to implement, especially in smaller firms.
So, the corrective action can be taken only for carrying out
* It is difficult to compare the actual performance with the similar activity in future.
accepted standards, specially in case of standards not
Proactive control:
expressed in quantitative terms, like job satisfaction, team
spirit and employee morale etc. These are future-directed controls which anticipate problems
well in advance and the corrective action is taken accordingly.
* There is little or no control on external factors like
government policies, changes in consumer behaviour, Concurrent control:
technological changes, competition, etc. These controls are based on the real-time engagement of the
* There may be resistance from employees as they may controller as the activity is being carried out.
consider it as restricting their freedom. So, the corrective action can be taken simultaneously with
* Over-dependence on controls may lead to laxity in carrying out the activity, to take care of any deficiencies
supervision. observed.
* The operations of the organisation may slow down if the CONTROL PROCESS:
rules are implemented rigidly. The management process of control ensures that every
* The organisation may be exposed more errors and frauds if activity within an organisation working toward the company's
wrong controls are executed. desired outcomes.
The managers of an organisation can evaluate how well their This is due to the fact that the primary objective of control is
company is doing with the assistance of this process. to steer the activities of a company in the direction of those
goals.
Taking into account all of this information, they are in a
position to choose whether to adjust their plans or to carry on * It is very important for managers to communicate their
with them in their current state. organization's goals, standards, and objectives as clearly as
possible. If the members of an organisation are aware of their
Basic Elements and Steps of the Control Process:
goals, they will devote their full attention to achieving those
It is essential to the success of an organisation that the goals.
management control function is carried out in an accurate and
* In this regard, there should never be any room for
efficient manner.
employees' interpretations to vary.
Following the establishment of plans, management is
An organisation has a greater chance of succeeding if all of its
obligated to carry out a series of steps in order to guarantee
members work together to achieve shared objectives.
that the plans will be followed.
Managers are required to set goals and take action based on
The steps that make up the basic control process are ones that
those goals, and those goals can either be tangible and
can be followed for almost any application, including boosting
specific or intangible and abstract.
product quality, cutting down on waste, and expanding
customer base. Those goals are considered to be tangible which can be easily
quantified in terms of numbers.
The following procedures are included in the fundamental
control process: For instance, the achievement of a sales target of one hundred
crores of rupees within one year is an example of a concrete
The process of establishing goals and standards:
goal.
* Although the process of establishing goals and standards is
part of the planning process, it also plays a significant part in
the controlling process.
Comparing the actual performance to the predetermined Taking steps to make necessary corrections:
goals and Criteria:
Managers are obligated to take immediate corrective action
* Once managers have a clear understanding of their whenever there are gaps between actual performance and
objectives, they should measure and evaluate their actual the goals that they have set for their teams.
performance before making comparisons.
When taken promptly corrective action can not only mitigate
This step basically helps them know if their plans are working the existing damage but also prevent it from occur again in
as intended. the future.
* Once a plan has been put into action, managers are required * There are times when companies and other business
to continuously monitor and assess its effectiveness. organisations will implement corrective tions as the default in
their policies.
If things are not functioning as they should, then they should
always be prepared to take the necessary corrective actions. However, this can be a challenging task to accomplish 'n
In order to accomplish this, they must continually assess their dealing with more involved issues.
current performance in relation to the goals they have set for
* When this happens, managers are responsible for figuring
themselves.
out how severe the issue is and coming h a plan to quantify it.
* First, managers need to measure actual performance before
They could be forced to resort to extraordinary means on
they can compare it to past performance.
occasion r to solve unforeseen problems.
They can do this by measuring results in a monetary context,
Continuing to monitor the effects of corrective actions:
seeking feedback from customers, and so on.
* It is not enough for managers to simply implement
They can also hire financial experts.
corrective measures; they must also bring these measures to
When managers want to measure intangible standards like their inevitable and inevitable logical conclusion.
market reputation, industrial relations, and other such things,
Even this step requires thorough evaluation and comparison.
this can often be a difficult task to accomplish.
* Managers have an obligation to work on finding a solution either return to the originally planned course or to a course
to the problem until they do. that is more suitable.
They are obligated to stay nearby and monitor the Planning is the foundation for control because it provides the
subordinate's progress even if they delegate the responsibility entire spectrum on which control functions are based.
to someone else.
This makes planning the basis for control.
They can also refer to him on a personal level so that in the
The twin pillars of management that are planning and
future he will be able to handle similar issues on his own.
controlling cannot be separated.
RELATION BETWEEN PLANNING AND CONTROL:
These management functions are inextricably linked to one
The processes of planning and controlling are inextricably another and depend on one another.
linked to one another.
The controlling function is built on top of planning because
The objectives of the organisation are determined through the controlling requires measuring performance against standards
planning process, and the controlling process ensures that in order to analyse deviations and take corrective action.
they are met.
Planning is the foundation of the controlling function.
The planning phase determines the control process, and the
Therefore, control cannot be exercised without prior planning.
controlling phase lays a solid foundation for the planning
phase. Planning without controlling is pointless because without
controlling, it is impossible to monitor the progression of
In practice, planning and controlling are inextricably
plans and ensure that they are being carried out in the correct
intertwined and mutually reliant on one another.
manner.
Control is an aspect of planning as well as a projection of
Therefore, planning will not be successful in achieving goals if
planning.
it does not include controlling.
Whereas planning determines the course to be taken, control
monitors deviations from the course and then takes action to
The process of planning is considered thinking, while During the controlling process, the actual performance is
controlling is considered an executive function. compared to the standards that were established, and any
deviations that are found are recorded.
While planning requires imaginative and innovative thought
as well as sound judgement, controlling ensures that decisions The data gathered for the purpose of exercising control are
made during planning are translated into the actions that are also utilised in the planning process.
desired.
Planning and controlling are interconnected in the following
Therefore, planning is more of an evaluative activity, while ways:
controlling is more of a prescriptive one.
The first function that management is responsible for is
The relationship between planning and control may be planning.
explained as under:
For the purpose of putting plans into action, the other
The Planning Stage is the Originator of Control: functions, such as organising, staffing, and directing, are
organised.
During the planning phase, objectives and targets are
established. A control process is required in order to Control keeps a record of the actual performance and
successfully meet these objectives. Therefore, planning comes evaluates it in relation to predetermined standards.
before controlling.
In the event that the performance is lower than the standards
Controls help Planning Sustain for Long-Term: that were established, deviations will be determined.
The path that planning takes can be influenced by controlling. In order to enhance the performance going forward, the
appropriate corrective actions have been taken.
The act of controlling draws attention to the parts of the
process that require planning. The first step in any process should be planning, and the last
step should be control.
The control process supplies information that can be used for
planning: Both must have the other in order to function properly.
Planning and control involve looking into the future: Controlling techniques are the tools that are used to establish
control over business activities, monitor those activities, and
Both planning and control are concerned with the activities
take any necessary corrective actions.
that will take place in the future within the business.
Controlling a business effectively can be accomplished using
Planning is always done with an eye toward the future, and
any number of methods, both traditional and modern.
control also looks ahead.
The selection of the methods absolutely needs to be done in a
The only thing that can be controlled is the future; the past
strategic manner.
cannot be changed in any way.
When deciding on the approach that will be most effective,
The accomplishment of a company's objectives is the primary
the organisation needs to take into consideration:
focus of both planning and controlling Through their
combined efforts, they hope to achieve the highest possible * The Character of the Company or the type of business
output at the lowest possible cost.
* Specific Clientele or Users to Aim For
To accomplish the objectives of the organisation, methodical
* The challenges that the Organizations are currently facing
planning and well-organized controls are both necessary
components. Within the realm of management, there is a wide variety of
approaches to controlling that can be implemented.
CONTROL TECHNIQUES:
The two broad categories under which techniques of
Control techniques give managers access to the specific
controlling fall are:
information as well as the volume of data they need to
measure and monitor performance. 1. Traditional Techniques and
The information that is gathered from the various controls 2. Modern Techniques.
needs to be adapted so that it is relevant to a particular
management level, department, or operation.
Traditional Techniques: One of the advantages of utilising it is the ability to acquire
genuine and first-hand information for the analysis.
The term "traditional management techniques" suggests that
these methods have been developed and utilised by managers In the event that the operations are not performing as
for an extended period of time. expected, the managers have the ability to make adjustments
there and then.
The companies believe that these strategies are effective and
continue to use them. In addition to the benefits discussed above, it allows
employees to discuss issues or problems simultaneously.
The following is a list of the traditional methods of control
that are utilised the most frequently: Additionally, it improves the employees' overall sense of well-
being and morale.
Personal Observation:
Break-even Analysis:
It is the most time-honored and traditional approach there is
to carrying out the controlling function. This control method illustrates the relationship between cost
and volume at varying levels of production output.
The manager does this by personally observing the employees
or workers at the location of the business. The Cost, Volume, and Profit analysis is another name for this
approach.
On-the-Spot Observation is another name for this method,
and it is also known as Direct Observation. It forecasts the profits and losses that will result from changes
in the amount of output that is produced.
The employees are pressured and motivated to perform at
their highest level of productivity when they are directly The break-even point refers to the point at which the
observed. purchase price and the selling price are equal to one another.
However, a significant amount of time is required for Break-even Point Formula:
supervision when utilising this method. 𝐅𝐢𝐱𝐞𝐝 𝐂𝐨𝐬𝐭
Break Even Point = 𝐏𝐫𝐢𝐜𝐞−𝐕𝐚𝐫𝐢𝐚𝐛𝐥𝐞 𝐂𝐨𝐬𝐭
Total cost involves two types of costs, i.e. Fixed Costs and * Ratios, etc.
Variable Costs.
The aforementioned information is presented by the
Profits and Losses are affected by the proportional changes in organisation in the form of charts, graphs, tables, and so on.
both.
The data can be more easily visualised with the help of these
Under the Break-Even Analysis technique, the evaluation is reports, and the areas that require attention can be located.
based on:
As a result, it is the method for data analysis that is utilised
* Break-even Point the most and provides the most benefit.
* Angle of Incidence Budgetary Control:
* Contribution Margin The traditional control method of budgetary control is an
important component of the planning and controlling
* Margin of Safety
functions of an organisation.
Statistical Reports:
It begins with the planning of the fundamental operations and
Information is gathered by the manager so that performance continues with comparisons of that planning to the
can be evaluated across functional areas. performance that actually occurred.
The information that is gathered is then utilised for the Comparing and analysing the actual performance with the
purpose of comparison. planned performance is an integral part of the budgeting
Involved in this process is the examination of numerical process.
information in the form of: In general, the following are included among the steps in
* Averages budgeting:
* Percentages * Establishing criteria by subdividing the overarching goals of

the company into those of individual departments.
* Coefficient of determination
* A comparison of the actual performance to the budget and These are relatively new developments that offer novel
standards that were previously defined. approaches to the evaluation and management of
organizational operations.
* Determine the logical deviations from the plan and take
corrective actions after you have calculated them. Return on Investment:
* Having control over one's budget makes it easier to have Return on Investment, abbreviated as "ROI," refers to the
control over one's day-to-day activities. profit made from capital that has been invested.
Consideration must also be given to the amount of resources In order to achieve greater financial control over the
and labour that will be required to accomplish the goals. company, it is analysed.
* There is a possibility that the final budget that was The Du-Pont Method of financial analysis is another name for
formulated will turn out to be inaccurate and costly. this methodology.
The following is a list of the various types of budgets that are Calculating the rate of return on investment (ROI) allows us to
typically prepared by organisations: measure the return that was generated.
* Cash Budget Using this rate, one can better evaluate the company's current
financial situation.
* Sales Budget
ROI Formula:
* Production Budget
𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞 𝐒𝐚𝐥𝐞𝐬
* Capital Budget Return on Investment = x 𝐓𝐨𝐭𝐚𝐥 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭
𝐒𝐚𝐥𝐞𝐬
* Material Budget According to the method, there are two ways in which we can
increase our return on investment:
Modern Techniques:
* By increasing the volume of sales in a manner that is
The management literature has been expanded to include
proportionally greater than the overall investment.
contemporary control techniques.
* By lowering the total investment while maintaining the * Profitability Ratios
same level of sales volume.
* Liquidity Ratios
Therefore, we can interpret it as the utilisation of committed
* Solvency Ratios
capital for the purpose of producing returns.
* Turnover Ratios
In addition, companies need to work toward the goal of
earning a satisfactory return on investment. Responsibility Accounting:
it is useful for: It is a method of accounting in which the amount of

responsibility placed on the individual employee is taken into
* Examining the differences and similarities in terms of wealth
consideration.
between the two eras and companies.
Therefore, businesses will conduct an assessment to
* Finding areas that have a negative impact on return on
determine whether or not the employee is capable of carrying
investment
out the responsibility in accordance with the criteria that have
* Attracting investors and enhance the company's reputation. been established.
* Comparison among departments
This method of command and control works well for large
Financial Statement and Ratio Analysis: organisations that have a number of different departments.
Calculating a variety of Ratios is made easier, which in turn In general, there are four distinct categories of responsibility
contributes to better financial management of the centres:
organization.
* Revenue Centre
In order to accomplish this goal, data is compiled from the
* Cost Centre
financial statements of the companies.
* Profit Centre
The following ratios are used the most frequently:
* Investment Centre
PERT & CPM: Therefore, it is in the managers' best interest to reduce the
total amount of time and money required to complete the
The acronym CPM stands for the Critical Path Method, while
activity.
PERT refers to the Program Evaluation and Review Technique.
The effective completion of the project is the primary focus of
The management of projects and their overall quality are
this approach.
directly impacted by the application of these control
techniques. However, the execution has to be completed within the
allotted amount of time and at the predetermined cost.
Project Evaluation and Review Technique (PERT) is a
procedure through which activities of a project are Management Information System:
represented in its appropriate sequence and timing.
The Management Information System, or MIS, is essentially
It is a scheduling technique used to schedule, organize and responsible for providing information that facilitates the
integrate tasks within a project. making of sound decisions.
The critical path method (CPM) is a technique where you Managers are able to retrieve any data whenever it is
identify tasks that are necessary for project completion and required.
determine scheduling flexibilities.
It is one of the techniques for cost-effectively controlling that
A critical path in project management is the longest sequence managers have at their disposal.
of activities that must be finished on time in order for the
In addition to this, it helps manage a massive quantity of data
entire project to be complete.
and delivers information at precisely the right moment.
The amount of time spent on the activity or project and the
The information that is obtained from MIS is reliable and aids
number of steps involved are two of the most important
in the process of making decisions.
factors affecting its outcome.
MIS is comprised of two primary parts:
* The Collection of Data * Geographical scope of activities
* The Management of Data * The overarching management philosophy of a more senior
level of management
Management Audit:
* Control's goal or primary area of concentration
Auditing, whether it be Management Audit or Internal Audit,
is the process of examining how a company uses its resources. * The accessibility of methods and their ability to meet
It is started by the top level of management in order to requirements
guarantee that the management will perform effectively.
* All the associated costs
While internal audit may be a continuous affair and
* Patterns seen in industry
periodicity may depend on the size of the organisation,
management audit may be conducted at intervals decided by * The necessary personnel for the procedure
the Board of the Company which may be more than a year, * The amount of time that was spent on the entire process
say every two or three years.
* The dependability of the findings that were acquired
So we can say that after the conclusion of the financial audit,
CONTROL TECHNIQUE AND INFORMATION TECHNOLOGY:
the next step is the management audit.
In the fields of business and accounting, information
During the course of the audit, the overall management
technology controls, also known as IT controls, are 'iscrete
process will be subjected to close scrutiny.
activities carried out by individuals or systems with the
Nevertheless, it is not required of the organisations that they intention of ensuring that business goals accomplished.
necessarily perform management audits.
They are a component of the internal control system of an
Selection of the Techniques of Controlling: organization.
When choosing an appropriate method of control, managers The objectives of IT control relate to the confidentiality,
have a responsibility to take into account the following integrity, and availability of data, as well as the general
factors: management of the enterprise's IT function as a whole.
The techniques of control are listed below: If an employee quits his or her job, having this information on
hand will make it easier to fill the vacancy quickly.
Organisational Controls Techniques:
Because maintaining control of information systems will be
When a company installs significant amounts of hardware and
the top priority for the company.
software and also appoints human resources, the company
must first establish the co-ordination between the newly Management Control Techniques:
installed information system and the newly appointed human
The company may utilize management controls techniques in
resources.
order to maintain control over its information systems.
The company has now moved on to the next step, which is to Appointing an expert committee is one of the important
establish organizational control. techniques that can be used.
Fixing the responsibilities of the manager, senior managers, This committee will include a team of experts from all fields,
and every employee in the team who handles information not just the accounting and finance fields like other
systems is how this organizational control is implemented. committees do.
Every worker has a predetermined agenda that he or she is Everyone will apply their specialised knowledge and
responsible for regulating. experiences to examine the IT system of the organisation and
report back if they find any errors or fraudulent activity in it.
Who will be responsible for the actual security?
Financial Control Techniques:
Who is going to monitor the safety of the website?
One of the problematic aspects of information systems is the
Who is going to make sure the data is secure?
department whose job it is to record financial transactions
There will be a set job description in place prior to the made using information systems.
recruitment of new employees for the information systems
There is a significant possibility that the company will suffer a
department.
loss of assets in the event that any member of this team
hatches a malicious and harmful plot.
As a result, the company must implement financial control In this manner, you are responsible for conducting your own
procedures within the IT system in order to eliminate this verification of authorization.
unwelcome risk.
Budgetary Control:
The following methods can be utilised for various forms of
A budget needs to be created for any supply of money that
financial control:
will be used for a variety of projects and expenses.
Delegation of financial powers:
The time limit and the financial ceiling will be determined by
Delegation of Financial Powers means the instructions with the budget.
regard to the delegation of financial authority, issued by the
Additionally, the difference between the standardised amount
from time to time, relating to the conduct of business or sub-
of time and money and the actual amount of time and money
delegation of financial powers under such delegation.
spent will be displayed.
Authorization:
Accountability can be determined using this information.
An employee needs to be authorised before being able to
Cancellation of documents:
access the login page of a system, asset, or entry.
There is a possibility that the cancelled document or invoice
It is necessary for him to identify himself and establish that he
will be used again in the future.
has the requisite authority to access the system.
A unique sign indicating the cancellation of these documents
Unauthorized access will no longer be possible once this is
should be placed on it in order to stop it.
implemented.
Dual control:
It is very simple.
Dual control is when two employees check one asset or one
Suppose you purchase a ticket for the metro.
entry to make sure its accurate.
You will be given the plastic coin, after which you will be
Because of this, there is a lower probability of making
required to scan it in order to gain access to the metro train.
mistakes.
Input and output verification: Therefore, the environment in which data is processed today
is composed of electronic and electrical components.
Before accepting an input or output record, it needs to be
Therefore, a specialised supervisor who checks it at regular
checked for accuracy once more.
intervals is required for it.
Safekeeping:
Physical Access Controls techniques:
Each and every safe that contains the login passwords for
The term "physical access" refers to an unauthorised third
servers and information technology systems needs to be
party reaching into your database.
locked.
In recent days, you have been listening to the news about
Segregation of Duties:
scams involving banks and the internet.
The separation of duties requires that after a predetermined
This was all the result of unauthorised access being gained to
amount of time, each employee should switch roles.
the bank's database.
It is necessary for him to take on additional responsibilities
You need to create security layers so that you can thwart any
within the same IT system department.
attempts of gaining unauthorised access in the data centre.
Because of this, there will be a reduced risk of fraudulent
Logical Access Controls Techniques:
activity in the financial sector.
The malicious hacking and virus will be used to gain
Data Processing Environment Controls Techniques:
unauthorised access to the logical system.
The company ought to appoint some specialists for the control
Therefore, you should use malicious hacking and antivirus
of the data processing environment Recently, I noticed that
software to put a stop to it at any cost.
one of my electric wires was sparking.
SDLA Controls Techniques:
Because I acted quickly, I was able to save not only my
inverter but also all of the other electrical equipment that was SDLA means system development life cycle.
in the area.
It is also essential that it be controlled.
The standardisation of the system development life cycle is IT general controls (ITGC):
one way that this can be accomplished.
Controls over the Information Technology (IT) environment,
BCP Controls Techniques: computer operations, access to programmers and data, as
well as programme development and programme changes,
The abbreviation “BCP" refers to the "business continuity
are all included in ITGC.
process."
The IT Governance Council (ITGC) serves as the structure's
Maintaining control of it won't be impossible if you have a
primary pillar.
sufficient number of backups and a solid recovery strategy in
place in case the system is. They support the assertion that systems operate as intended
and that output is reliable, in addition to helping to ensure the
Application Controls Techniques:
accuracy of the data that is produced by information
If you want accurate results from your information system, technology systems.
you need to make sure that you are following the application
The following categories of controls are typically included in
controls.
ITGC:
You need to make sure that your IT system will be able to
* Control the environment, specifically the controls that are
apply all of the computer-based systems before moving
designed to mould the company's culture or set the "tone at
forward with it.
the top."
It is necessary to block unauthorized access to the recorded
* Change management procedures are controls that are
database in every computer-based system so that changes
designed to make sure those changes are authorised and that
cannot be made and data cannot be removed.
they meet the requirements of the business.
The two widely used application systems that an auditor
* Procedures for controlling the versions of source code and
needs to keep an eye on are SAP and Quick-book.
documents, which are controls designed to preserve the
The following two categories are frequently used to describe programmers' original intent.
IT controls:
* Software development life cycle standards are controls that This type of security is referred to as "physical security."
are intended to guarantee that information technology
IT application controls:
projects are managed efficiently.
Transaction processing controls, also known as "input-
* Logical access policies, standards, and processes are controls
processing-output" controls, are what are meant when
that are designed to manage access in accordance with the
someone talks about IT application controls.
requirements of the business.
By virtue of the Sarbanes-Oxley Act, controls related to
* Policies and procedures for incident management are a set
information technology have been given a greater level of
of controls designed to address errors that occur during
importance in American corporations that are publicly traded.
operational processing.
The controls of an IT application or programme are fully
* Policies and procedures for problem management are
automated, which means that they are performed
controls that are intended to identify and address the
automatically by the systems.
underlying causes of incidents
This is done to ensure that the data are processed correctly
* Policies and procedures for technical support, which help
and completely from the time they are input until they are
users work more effectively and report problems; these
output.
policies also include procedures.
These controls are different for each application because each
* Configuration of hardware and software; installation;
one serves a unique business purpose.
testing; management policies and procedures; standards.
These controls might also be able to assist in protecting the
* Disaster recovery/backup and recovery procedures, to
privacy and safety of data that is transferred between
enable processing to continue despite the presence of
applications.
unfavourable conditions.
The following are examples of different categories of IT
* Controls to ensure the information technology's physical
application controls:
safety from both individuals and environmental hazards.
* Checks for completeness are controls that ensure all records one who is accountable for the safety, accuracy, and
have been processed from the beginning to the end of the dependability of the systems that manage and report the
procedure. company's data, including its financial data.
* Validity checks are controls that ensure only valid data is Financial accounting and enterprise resource planning systems
input or processed. are integrated in the initiating, authorising, processing, and
reporting of financial data.
These checks look for errors in the data.
These systems may also be involved in Sarbanes-Oxley
* Identification: controls that make sure every user can be
compliance, to the extent that they mitigate particular
definitively and unmistakably pinned down as who they are.
financial risks.
* Authentication refers to the controls within the application
Internal Control Framework:
system that offer a method for user authentication.
The COBIT Framework, also known as the Control Objectives
* Authorization refers to the controls that ensure the
for Information Technology Framework, is a framework that
application system is only accessible to business users who
has seen widespread adoption and was developed by the IT
have been pre-approved.
Governance Institute.
* Input controls are controls that guarantee the data integrity
This framework defines a variety of ITGC and application
of information that is fed into the application system from
control objectives as well as recommended evaluation
upstream sources.
approaches.
* Forensic controls, also known as controls that ensure data is
The Chief Information Officer (CIO) of an organisation is
correct mathematically and scientifically based on inputs and
typically the person in charge of the IT department.
outputs
This individual is accountable for ensuring that efficient
IT Control and the CIO/CISO:
information technology controls are utilised.
Usually, the Chief Information Officer (CIO) or the Chief
Information Security Officer (CISO) of an organization is the
COBIT is a framework that is widely used that contains best * Information and communication
practices for the governance and management of information
* Monitoring,
and technology, and it is directed toward the organisation as a
whole. In order to accomplish the goals of financial reporting and
disclosure, it is necessary to have these components in place.
It is made up of different domains and processes.
COBIT offers comparable and detailed guidance for
The fundamental structure reveals that business requirements
information technology, while the interrelated Val IT focuses
are satisfied by IT processes, which are made possible by
on higher-level IT governance and value-for-money concerns.
particular IT activities.
The five aspects of COSO can be represented mentally as the
COBIT outlines the design considerations that need to be horizontal layers of a three-dimensional cube, and the
made by an organisation before constructing a governance objective domains of COBIT can be thought of as applying
system that is optimal for its needs. both to each one separately and to the whole.
COBIT addresses governance problems by combining the The four COBIT major domains are:
various relevant governance components into governance and
* Planning and organising
management objectives that can be managed to the necessary
capability levels. * Acquiring and implementing
COSO: * Delivering and supporting
The Committee of Sponsoring Organizations of the Tread way * Monitoring and evaluating
Commission (COSO) identifies five components of internal
control:
* Control environment,
* Risk assessment,
* Control activities,

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ABFM MODULE – A INTRODUCTION:-

This school of thought propounded the influence of human

formal and informal forms of organization, a fact which was

Business models are based on the type of clients to be

F- Time Model:- This model deals with offering specialized products or

It, therefore, hinges on strategic thinking.

Planning covers Developing Planning Premises:-

Promotes Innovative Ideas

Controlling:- Effective planning, therefore, helps an organisation to face

The milestones serve as a reference point for determining Disadvantages of Planning:

Environmental Analysis: d) Creates awareness of impending dangers of every

h) The source of the available funds. selecting the Alternative:

(1) Centralised and decentralized organisation Disadvantages of Centralised Organisation:

Advantages of Line and Staff Organisation: Improvement in coordination:

Advantages of Functional Organisation: Confusion:

Specialisation: The functional system is difficult to put into operation,

When an organisation has a formal organisational structure, Disadvantages of Formal Organisation:

As a result, there is no opportunity for labour to be Placement of exclusive emphasis on work:

understandable manner, making decisions is both simple Organisational culture Result-

Human Resources: This resistance may show itself in a single worker or

Stages of Kotter's model:

After carefully processing the information, one's initial Acceptance:

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In this manner, the external environment has an impact, as Training:

Implementation: This step involves determining whether broad-based or

Methods of Performance Appraisal: Trait Analysis:

Acknowledge and celebrate the differences that exist Problem-solving:

Management science, on the other hand, didn't come into * Supervision

Chapter 6: CONTROLLING Controlling is the last function of the management process

* Percentages * Establishing criteria by subdividing the overarching goals of

it is useful for: It is a method of accounting in which the amount of

COSO: * Delivering and supporting

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