U-2,3 Bba Admins

BBA(FT) 1st Year
Subject- Principles Of Business Administration

Unit-2
Planning and decision making processes, Forecasting
Meaning
A plan may be defined as detailed course of action designed today to do something tomorrow.
Thus, planning is an intellectual attempt by a manager to anticipate the future for better
organisational performance. Planning is a primary management function which every
organisation has to undertake irrespective of its size, nature and origin. Planning is deciding in
advance what is to be done. When a manager plans, he projects a course of action, for the future,
attempting to achieve a consistent, coordinated structure of operations aimed at the desired
results.
Planning is the first as well as most crucial function of management and is considered as a
foundation to all other functions of management. It is symbolic to ‘looking ahead’ as is a process
of chalking out future plan of action to be followed. In simple sense, it is an act or process of
making plans such as – objectives, policies, procedures and strategies.
Definitions
Koontz and O’Donnell – “Planning is deciding in advance what to do, when to do, how to do
and who is to do it. It is bridging the gap from where we are to where we want to go.”
Louis A. Allen – “Management planning involves the development of forecasts, objectives,
policies, programmes, procedures, schedules and budgets.”
Nature of planning
1. Primary of Planning:
The functions of management include planning, organising, staffing, directing and controlling.
Eminent writers may add other new ones to these functions or those which have not been
included in these functions. Anyway, writers unanimously accept that planning is the primary
function of all the other functions. The reason is that the manager wants to achieve the pre-
determined objectives in a better way.
2. Planning Contributes to Objectives:
There is a close connection between objectives and planning. Planning is based on the objectives.
If there is no link between planning and objectives, the former will only be a mental exercise and
of no use. Planning contributes to the attainment of objectives.
3. Planning an Intellectual Activity:
Planning includes the selection of the best alternative available and thinking before selection of
the best alternative. It involves the ability to foresee mishaps in future which might affect the
smooth functioning of an organisation. So, planning is an intellectual activity.
4. Planning Results in Higher Efficiency:
Planning efficiency is measured in terms of input and output ratios. Planning leads to maximum
output with minimum expenditure. This input and output relationship is not only determined by
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money, labour hours and production units but also by the degree of satisfaction available to the
individual as well as the group. The high degree of human satisfaction motivates the workers to
produce more within the specified time.
5. Planning is a Continuous Process:
Planning does not come to an end with the establishment of a business concern. Planning in other
functions is also required. After the establishment of a business concern, certain decisions are
taken. Planning is necessary to implement the decisions. A number of decisions are taken during
the life time of the business concern. So, planning is necessary throughout the running of the
business concern as a continuous process.
6. Planning is Flexible:
While planning, any one of the available alternatives is selected. Planning selects the best
alternative based on certain assumptions. If the assumptions are proved wrong, the selected
alternative tends to be an incorrect one. There is a possibility of a dead log in the functions of the
management. Planning has one more alternative to suit future situations.
7. Unity and Consistency:

Every department manager resorts to planning at different times. The planning is related to the
achievement of objectives. In other words, managerial actions of different managers are unified
in order to achieve the objectives. Policies and procedures of the organisation provide a basis for
the consistency of executive behaviour and action in matters of planning.
8. Planning is Common to All:
Planning work is done by every person who is working in a business unit. He may be a managing
director or a foreman.
Being of a higher place, the planning for a managing director is to frame the policies and
procedures to be adopted. Being at a lower place, planning for a foreman is to allocate the work
to his subordinates. So, planning is common to all.
9. Basis for All Managerial Functions:
Planning is found at all levels of management. Top management looks after strategic planning.
Middle management looks after administrative planning and the lower level management looks
after operational planning.
10. Getting Co-Ordination:
Planning co-ordinates various business activities. Without planning, nothing can be co-ordinated.
Types of Plans:
• Objectives
Objectives are the ends toward which the activity of an organization is aimed.
Strategy
A strategy is a comprehensive plan to achieve the organisational objectives.
• Goals
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Goals represent the rate at which objectives of an organization are achieved. Goals quantify the
objective with a time frame.
• Policies
Policies are general statements which guide or channel thinking in decision making of
subordinates. Policies delimit an area within which a decision is to be made and assure that the
decision will be consistent with and contribute to objectives. Policies tend to predecide issues,
and avoid repeated analysis. Polices are based on analysis and once pronounced avoid repeated
analysis.
•Procedures
Procedures are plans and they establish a method of handling activities. They specify a
chronological sequence of required actions.
• Rules
A rule is the simplest type of plan. A rule requires that a specific and definite action be taken or
not taken with respect to a situation.
• Programs
A program is a complex of policies, procedures, rules, task assignments assembled to carry out a
given course of action. A program is supported by necessary capital and operating budgets.
• Budgets
A budget is a plan. It is a statement of expected results expressed in numerical terms.
Advantages/Importance of Planning
1. Planning Provides Direction

All efforts are pointed toward the desired result and an effective sequence of efforts is
accomplished. Unproductive work is minimized. The usefulness of the achievement is given
importance. Planning distinguishes between action and accomplishment.
2. Facilitates Decision Making
Planning helps the manager to visualize future possibilities and to evaluate key fields for possible
change . Thus it helps to make decisions by analyzing future and selecting the most viable
preposition alternative .
3. Basis for Control
Planning facilitates existence of certain planned goals and standard of performance.It provides
basis of controlling .We cannot think of an effective system of controlling without existence of
well thought out plans.
Planning provides pre-determined goals against which actual performance is compared.In fact,
planning and controlling are the two sides of a same coin. If planning is root, controlling is the
fruit.
4. Goal Oriented
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The act of putting thoughts down on the paper provides the planner guidance and a drive to
achieve. Planning reduces random activity overlapping efforts and irrelevant action.
5. Better Utilization
Many managers point out that planning provides for a greater utilization of the available facilities
and resources of an enterprise.
It leads to elimination of wasteful activities. Reduces overlapping of activities .
6. Encourages Innovation
In the process of planning, managers have the opportunities of suggesting ways and means of
improving performance.
Planning is basically a decision making function which involves creative thinking and
imagination that ultimately leads to innovation of methods and operations for growth and
prosperity of the enterprise.
7. Reduces Uncertainties
Business is full of uncertainties. There are risks of various types due to uncertainties. Planning
helps in reducing uncertainties of future as it involves anticipation of future events.
Although future cannot be predicted with cent percent accuracy but planning helps management
to anticipate future and prepare for risks by necessary provisions to meet unexpected turn of
events.Therefore with the help of planning, uncertainties can be forecasted which helps in
preparing standbys as a result, uncertainties are minimized to a great extent.
8. Co ordination
Planning revolves around organizational goals. All activities are directed towards common
goals. There is an integrated effort throughout the enterprise in various departments and groups
and leads to better co-ordination.
It helps in finding out problems of work performance and aims at rectifying the same.
Limitations of Planning:
1. Rigidity
Planning has tendency to make administration inflexible.
Planning implies prior determination of policies, procedures and programmes and a strict
adherence to them in all circumstances. There is no scope for individual freedom.
The development of employees is highly doubted because of which management might have
faced lot of difficulties in future.
Planning therefore introduces in elasticity and discourages individual initiative and
experimentation.
2. Time Consuming
Planning is a time consuming process because it involves collection of information, it’s analysis
and interpretation thereof. This entire process takes a lot of time specially where there are a
number of alternatives available.
Therefore planning is not suitable during emergency or crisis when quick decisions are required.
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3. Planning Reduces Creativity
Under planning all the activities connected with the attainment of objectives of the organisation
are pre-determined. Consequently, everybody works as they have been directed to do and as it
has been made clear in the plans.Therefore, it checks their incisiveness. It means that they do not
think about appropriate ways of discovering new alternatives.
4. Planning Involves Huge Costs
Planning is a small work but its process is really big. Planning becomes meaningful only after
traversing a long path. It takes a lot of time to cover this path. During this entire period the
managers remain busy in collecting a lot of information and analyzing it. In this way, when so
many people remain busy in the same activity, the organization is bound to face huge costs.
5. Lack of Accuracy
There is lack of proper accuracy in planning. Because planning is based on future & future is
always uncertain & unpredictable. In the absence of reliable data & accurate prediction, there is
chance of business loss and failure. Thus planning may be inaccurate.
6. Planning does not Guarantee Success
Sometimes the managers think that planning solves all their problems. Such thinking makes them
neglect their real work and the adverse effect of such an attitude has to be faced by the
organisation .In this way, planning offers the managers a false sense of security and makes them
careless. Hence, we can say that mere planning does not ensure success; rather efforts have to be
made for it.
7. Psychological Barriers
Psychological Barriers are also creating great difficulties in course of making business plans. In
every organization upper level managers give the priority to present events in comparison to
future events because present is more certain & beneficial to organization rather than future.
But on the other hand we know that planning relates to forecasting of future events in advance
manner. Hence, how can it possible that managers will give important to present. On the whole
we can say that there is conflict in manager’s mind about planning due to psychological
differences.
Steps in Planning Process

1. Setting objective: The first step in planning is setting objective as they specify what the
organisation wants to achieve.
2. Developing premises: Assumptions made for future are called premises. Premises must
be same for all i.e. they should be using the same assumptions.
3. Identifying alternative course of action: once the objective are set, assumptions are
made the next step is to find out alternative courses of action.
4. Evaluating alternative courses: The positive and negative aspects of each proposal are
evaluated in the light of objective.
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5. Setting an alternative: The ideal plan would be the most feasible, profitable and with
least negative consequences.
6. Implement the plan: Required resources are acquired to put the plan into action.
7. Follow up action: plans are monitored to ensure that objective is achieved
Barriers to Effective Planning

1. Incompetent Leadership Skills
The team of planners is led by the leader in the first place, and it is the main onus and
responsibility of the leader to make every planning and strategy of the firm successful. The
leader should be innovative, should come with a wealth of experience and knowledge, provide
strategic inputs, and should be able to lead his team amidst stringent work schedules
and environment. If the leader lacks any of the attributes mentioned above or work qualities, it
will surely act as the Barriers to Planning affecting the productivity levels of the firm on a long
term basis.
2. Excess levels of Distractions
When the distractions at the workplace become quite excessive, it results in the Barriers to
Planning. For instance, if the leader is delegating too many tasks at one given point or is
discussing two or more topics that are not related to each other at all, it results in complete chaos
doing the planning taking a backseat. It is always advisable for the leader to take some time out
pondering over the aspects of proper delegation, planning, organization of the tasks, and make
the work environment healthy and productive for his team members.
3. No Systems in Place
Even if the team has done a thorough amount of research and study on the subject manner and
the work-related tasks along with the prim and proper attention to the aspects of planning, but if
the systems are not in place, there will be various Barriers to Planning, specifically to its
implementation. The IT infrastructure, office internet facilities, delegation and recordings of the
tasks, and other such systems are very much required and that too in an efficient manner for the
planning to result in the accomplishment of the desired business goals and objectives.
4. Limited Manpower Resources
Some of the features and strategies of planning require the huge support of manpower to attain
the aims and objectives of planning. For instance, if the firm wants to meet the requirement of
1,000 deliveries of shirts to the client and the entire plan has been chalked out with an assurance
of delivery. But if there is a lack or limited access to the manpower resources, it will act as the
Barriers to Planning. The firm needs to keep its manpower motivated and happy; else planning
will go in vain.
5. Limited Resources and Funding
To accomplish the aims and objectives of the firm, having required resources such as finances,
manpower, office space, machinery, and others are a mandate. Of all, having stable and ongoing
finances is a must as then all of the other resources can be taken care of.However, the absence of
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any resources can result in the Barriers to Planning with the goals and objectives of the firm
taking a backseat.
6. Impractical Business Strategies
For the planning to be goal-oriented and effective, it is very much mandatory that the business
strategies that are being planned and panned out for its application need to have a rationale. If the
strategies are impractical without having a long term vision or do not consider the needs
and demands of the target market in a relevant fashion; there will be a lot of Barriers to Planning.
Top management of the firm and the team leader needs to have a practical approach and think
over the strategies that are measurable, scalable, and attainable.
7. Opposition to Change
Some of the outcomes of strategic planning and management result in the changes in the
structure of the organization, the hierarchy of the management, changes, and development in the
job responsibilities, and transfer of employees to other branches or offices of the firm. And when
the employees of the firm get aware of the changes that are going to take place shortly, they
resist and oppose the same resulting as one of the Barriers to Planning.
8. Lack of Motivation
When there is lack of motivation within the team, it results in the Barriers to Planning.
Motivation can arise out of various reasons such as low pay packages, office politics, and lack of
relevant and challenging tasks to the employees. Hence, it is the main responsibility of the
management of the firm to keep its employees and workforce motivated in order to accomplish
its goals and objectives that are planned and envisioned.
9. Complex Working Environment
When the environment of the firm is quite complex owing to the product and services that are
too technical, there are various Barriers to Planning. And there is a top-up of the dynamic nature
of the market as well that makes the situation even more difficult and confusing. In such cases, it
is the main responsibility of the management of the firm to ease out the working environment
through various strategic measures that instil the level of comfort in the minds and perspective of
the employees.
Conclusion
Even though there are various Barriers to Planning and the overall management aspects of the
firm, if the top management of the firm is firm on its ethics, aims, and objectives owing to the
wealth of experience and market know-how, it can seamlessly resolve the issues.
 Decision Making-Concept & Process,Coordination

Decision making refers to making choices among alternative courses of action—which may also
include inaction. A decision is an act of selection or choice of one action from several
alternatives.
Decision-making can be defined as the process of selecting a right and effective course of action
from two or more alternatives for the purpose of achieving a desired result. Decision-making is
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the essence of management. All matters relating to planning, organising, direction, co-ordination
and control are settled by the managers through decisions which are executed into practice by the
operators of the enterprise. Objectives, goals, strategies, policies and organisational designs are
all to be decided upon in order to regulate the performance of the business. The entire managerial
process is based on decisions. Decisions are needed both for tackling the problems as well as for
taking maximum advantages of the opportunities available. Correct decisions reduce
complexities, uncertainties and diversities of the organisational environments.
Definitions
According to P. F. Drucker – “Whatever a manager does he does through making decisions.”
According to George Terry -“as the selection of one behaviour alternative from two or more
possible alternatives.”
Importance of Decision-Making:
None of the managerial functions of planning, directing, controlling, coordinating etc. can be
conducted without the process of decision making. It is a vital part of management.
Decision making is also a pervasive function. All the staff and employees must make decisions
to carry out their jobs.
Decisions also help us evaluate the management and the managers of a firm. If the decisions
taken were correct and yielded positive results, we can attest to the skill and knowledge of
a manager. And the opposite is also true.
The process of decision making evaluated every alternative before selecting the best one. No
alternative is unexamined. This ensures that we are taking the best possible step for the firm.
It also helps with better utilization of resources. The manager has to decide the best way to
allocate all available resources and factors of production.
Decision making process follows rational thought and logic. It is not an unscientific random
process. Hence it will also help increase the efficiency of the firm.
Steps of the Decision Making Process

The following are the seven key steps of the decision making process.
1. Identify the decision- The first step in making the right decision is recognizing the
problem or opportunity and deciding to address it. Determine why this decision will make
a difference to your customers or fellow employees.
2. Gather information- Next, it’s time to gather information so that you can make a
decision based on facts and data. This requires making a value judgment, determining
what information is relevant to the decision at hand, along with how you can get it. Ask
yourself what you need to know in order to make the right decision, then actively seek
out anyone who needs to be involved.
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3. Identify alternatives-Once you have a clear understanding of the issue, it’s time to
identify the various solutions at your disposal. It’s likely that you have many different
options when it comes to making your decision, so it is important to come up with a
range of options. This helps you determine which course of action is the best way to
achieve your objective.
4. Weigh the evidence- In this step, you’ll need to “evaluate for feasibility, acceptability
and desirability” to know which alternative is best, according to management experts Phil
Higson and Anthony Sturgess. Managers need to be able to weigh pros and cons, then
select the option that has the highest chances of success. It may be helpful to seek out a
trusted second opinion to gain a new perspective on the issue at hand.
5. Choose among alternatives- When it’s time to make your decision, be sure that you
understand the risks involved with your chosen route. You may also choose a
combination of alternatives now that you fully grasp all relevant information and
potential risks.
6. Take action-Next, you’ll need to create a plan for implementation. This involves
identifying what resources are required and gaining support from employees and
stakeholders. Getting others onboard with your decision is a key component of executing
your plan effectively, so be prepared to address any questions or concerns that may arise.
7. Review your decision- An often-overlooked but important step in the decision making
process is evaluating your decision for effectiveness. Ask yourself what you did well and
what can be improved next time.
 Forecasting-Need&Technquies
Forecasting is a process of making predictions about the future course of a business or
a company based on trend analysis and past and present data.So essentially data is collected and
studied about the business, and analysis is done to forecast future scenarios that are likely to
occur. Hence forecasting is an important tool in the process of business planning.
Forecasts are usually done by managers (at different levels, Statisticians, experts, economists,
consultants etc. They involve a lot of data collecting (both past and present) and
data analysis.There is also the use of scientific techniques and methods. But at the end of the day,
forecasting is not an exact science. There is always some guessing and observations involved.
This is when the experience and knowledge of these experts come into play.
 Important features or characteristics of forecasting
 Forecasting is strictly concerned with future events only.
 It analysis the probability of a future event or transaction occurring or happening.
 It involves analysis of data from the past and the present.
 Forecasting uses scientific techniques and methods to make such forecasts
 But it also involves certain guesswork and observations.
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Steps in Forecasting
1. Identifying and Understanding the Structure
There are almost indefinite factors that can affect the future of a business. Identifying all these
factors is neither possible nor desirable. So to make an accurate forecast, the managers have to
identify the factors on which to focus. So internal and external factors must be studied to identify
the strategic factors of the business.
2. Forecasting the future
Now that the foundation is laid the next step is to make an accurate and scientific forecast. This
involves both scientific tools and techniques and also professional judgment and observations.
The forecast is not a foolproof plan, only a guiding map for the future.
3. Analysis of Deviations
No forecast will be completely accurate. The differences or deviations from the forecasts should
be analyzed and studied. This will help in making more accurate forecasts in the future.
4. Adapting the Forecasts Procedure
In forecasting, the skill and professional judgement required are gained by experiences and
practice. The forecast process is fine-tuned with every cycle. So we can learn from our mistakes
and shortcomings and keep improving on the forecasting procedures.
Techniques of Forecasting
1. Historical Analogy Method:
Under this method, forecast in regard to a particular situation is based on some analogous
conditions elsewhere in the past. The economic situation of a country can be predicted by
making comparison with the advanced countries at a particular stage through which the country
is presently passing. Likewise, changes in the norms of business behavior in terms of attitude of
the workers against inequality, find similarities in various countries at various stages of the
history of industrial growth. Thus, this method gives a broad indication about the future events of
general nature.
2. Survey Method:
Surveys can be conducted to gather information on the intentions of the concerned people. For
example, information may be collected through surveys about the probable expenditure of
consumers on various items. Both quantitative and qualitative information may be collected by
this method.On the basis of such surveys, demand for various products can be projected. Survey
method is suitable for forecasting demand—both of existing and new products. To limit the cost
and time, the survey may be restricted to a sample from the prospective consumers.
3. Opinion Poll:
Opinion poll is conducted to assess the opinion of the experienced persons and experts in the
particular field whose views carry a lot of weight. For example, opinion polls are very popular to
predict the outcome of elections in many countries including India. Similarly, an opinion poll of
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the sales representatives, wholesalers or marketing experts may be helpful in formulating
demand projections.
If opinion polls give widely divergent views, the experts may be called for discussion and
explanation of why they are holding a particular view. They may be asked to comment on the
views of the others, to revise their views in the context of the opposite views, and consensus may
emerge. Then, it becomes the estimate of future events.
4. Business Barometers:
A barometer is used to measure the atmospheric pressure. In the same way, index numbers are
used to measure the state of an economy between two or more periods. These index numbers are
the device to study the trends, seasonal fluctuations, cyclical movements, and irregular
fluctuations.These index numbers, when used in combination with one another, provide
indications as to the direction in which the economy is proceeding. Thus, with the business
activity index numbers, it becomes easy to forecast the future course of action.
5. Time Series Analysis:
Time series analysis involves decomposition of historical series into its various components, viz.
trend, seasonal variances, cyclical variations, and random variances. When the various
components of a time series are separated, the variation of a particular situation, the subject
under study, can be known over the period of time and projection can be made about the future.
A trend can be known over the period of time which may be true for the future also. However,
time series analysis should be used as a basis for forecasting when data are available for a long
period of time and tendencies disclosed by the trend and seasonal factors are fairly clear and
stable.
6. Regression Analysis:
Regression analysis is meant to disclose the relative movements of two or more inter-related
series. It is used to estimate the changes in one variable as a result of specified changes in other
variable or variables. In economic and business situations, a number of factors affect a business
activity simultaneously.
Regression analysis helps in isolating the effects of such factors to a great extent. For example, if
we know that there is a positive relationship between advertising expenditure and volume of
sales or between sales and profit, it is possible to have estimate of the sales on the basis of
advertising, or of the profit on the basis of projected sales, provided other things remain the
same.
7. Input-Output Analysis:
According to this method, a forecast of output is based on given input if relationship between
input and output is known. Similarly, input requirement can be forecast on the basis of final
output with a given input-output relationship. The basis of this technique is that the various
sectors of economy are interrelated and such inter-relationships are well-established.For
example, coal requirement of the country can be predicted on the basis of its usage rate in
various sectors like industry, transport, household, etc. and how the various sectors behave in
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future. This technique yields sector-wise forecasts and is extensively used in forecasting business
events as the data required for its application are easily obtained.
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Unit-3
Organisation structure, Coordination, Group Dynamics, Delegation Line and
relationship
Concept of Organisation Structure:

The organising process ultimately results in the creation of an organisation structure. An
organisation structure is the structural framework of all positions in a set-up.
Each position has a set of tasks, responsibilities, and authority. Each task is inter-related, and the
collective performance of all tasks by different position holders enables the achievement of
organisational goals.
Thus, an organisation structure refers to a network of authority and responsibility relationships
by showing who reports to whom and for what in a set-up to facilitate realisation of common
goals.
An organisation structure is a mix of vertical and horizontal positions. Horizontal positions arise
on account of assignment of activities among various departments.
Vertical positions arise on account of delegation of authority among employees, from higher
levels to lower levels. Generally, an organisation structure has a pyramid shape, with less
position on the upper side and more positions on the lower side.
 Characteristics of Organisation Structure:

1. Network of activities:
The first and foremost feature of an organisation structure is that it is a network of well-defined
activities. These activities are arranged in a logical manner so that the performance of one
activity facilitates the performance of other activities. This network of activities creates
responsibility centres in an organisation.
2. Authority-responsibility Relationships:
Authority is a core constituent of organisation. Authority brings in responsibility with its self.
Thus, creation of authority – responsibility relationships among various positions is a must.
3. Differentiation and Integration:
Differentiation is the extent to which tasks are divided into sub-tasks and performed by
individuals with specialised skills. Integration is the extent to which various parts of the
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organisation cooperate and interact with each other because of interdependence of the tasks.
Interdependence may be pooled, sequential and reciprocal.
4. Formalism:
To balance between differentiation and integration of people and activities, formal and defined
structure in relation to decision making, communication and control is a must. Formalisation is
introduced through line of authority, unity of command, span of control, etc.
 Elements of Organisation Structure:

While designing an organisation structure, the managers must keep six elements in consideration.
1. Work specialisation:
It is there since Adam Smith published Wealth of Nations. In work specialisation, a job is broken
down into different steps and each step is completed by a separate individual. While preparing
Chocolate Candies, one only hots up the raw Chocolate, the next’s man puts hot stuff n dyes, the
third person puts into fridge, the fourth person brings it out from the fridge and the dyes, the fifth
person starts wrapping, and the next person puts then into boxes.
However, of late the trend is towards broadening the scope of robs and reduced work
specialisation. Examples include Hallmark and Ford Australia. As an alternative to job design,
managers have five alternative approaches – job rotation, (moving employees from one job to
another), job enlargement (giving employees more tasks to perform), job enrichment (increasing
the number of activities and also control over the job), job characteristics approach (jobs
diagnosed and improved along skill variety, task identity, task significance, autonomy and
feedback), and work-teams (to design the work systems).
2. Departmentation:
Departmentation refers to grouping the jobs on some logical arrangements. Each organisation
shall have its own specific way of classifying and grouping work activities.
3. Establishing Reporting Relationships:
Who to report whom is an important question and it involves deciding about chain of command
and the span of management. The chain of command is the continuous line of authority from the
top level to the lowest levels in the organisation.
Chain of command involves two principles of management, i.e., unity of command (each person
having one boss only) and the scalar principle (someone to be finally responsible as clear line of
authority is drawn).
Equally important is to decide how many people will report to one manager. It may be narrow or
wide.
4. Distributing Authority:
Authority is the right to do something due to formal position. Distribution of authority involves
addressing two issues – delegation of authority and centralisation-decentralisation.
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Delegation involves assigning a part of managerial job by a manager to his subordinate(s), and
the requisite authority and the delegate becomes accountable to the delegator.
The second issue is centralisation (retaining power and authority in the hands of top-level
managers) and decentralisation (distribution of authority to middle and lower-level mangers).
Again, we shall discuss about the two concepts in detail later on.
5. Coordinating Mechanisms:
The process of linking up the activities of the various departments of the organisation is a must
to achieve organisational objectives. Coordination is essential because every department is
dependent on the others for information resources.
Interdependence may be pooled (the lowest level of interdependence – their output is simply
pooled), sequential (out put of one department becomes the input for another in a sequence), and
reciprocal (when activities flow both ways).
Coordination can be achieved through managerial hierarchy, rules and procedures liaison roles
and integrating departments of late electronic coordination has become important.
6. Differentiating between positions:
The last element is distinguishing between line and staff positions. A line position means one
who is in direct chain of command and is responsible for achievement of organisational goals,
whereas a staff position is meant to provide guidance, expert advice, and support to line officials.
 Factors Affecting Organisation Structure:

Organisation structure is created as a means to achieve goals and objectives of an enterprise.
Since objectives of different enterprises tend to be different, they cannot afford to adopt just one
topical organisation structure, and yet work efficiently.
Thus, structure of an organisation needs to be tailor-made than merely adopting the so-called
‘typical structure’. What kind of organisation structure is best suited to an enterprise depends
upon a number of considerations; the more important ones are given below:
1. Strategy:
Organisation structure to be used for an enterprise is the direct result of objectives to be achieved
which are derived from strategy. Organization structure of a manufacturing concern with assured
market will be different from that of another concern operating under highly competitive
situation.
In the later case, organization structure will be market-oriented whereas organization structure in
the former case will basically be production-oriented.
Structure follows strategy:
If the growth strategy is followed, it will need flexible, fluid and instantly adaptable organisation.
An organisation following differentiation strategy must innovate and add R&D to its
organisation structure. To follow cost- leadership strategy the structure has to be stable and cost
efficient.
2. Nature of activities:
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Organization structure of a trading concern is different from that of an educational institution for
the simple reason that activities of the two organizations are different.
3. Size and Life cycle:
Larger the organisation it tends to have more work specialisation, horizontal and vertical
differentiation, and rules and regulations. Organisation structure would be different at birth,
youth, and midlife and maturity stages.
4. Culture:
Culture refers to a system of shared beliefs and values. A strong organisation culture means rules
and regulations can be substituted by organisation culture. Stronger the culture, the structure can
be predictable, orderly and consistent with no written documentation.
5. Technology:
Organisation structure of an enterprise using sophisticated capital- intensive mass-production
technology will be different from the enterprise using labour- intensive small-scale production
technology.
More routine the technology, the structure will be more standardised and mechanistic. The
structures will be organic if the organisation follows non-routine technology.
6. Environment:
Organisation structure of an enterprise operating in the midst of a highly dynamic environment
organic will be different from the enterprise operating in a stable environment mechanistic.
Organisations operating in stable environment can gainfully employ a highly formalised
structure.
7. People:
People-structure relationship is important. A good organisation structure provides people with
the supportive structures to attain organisational and individual objectives.
 Importance of Organisation Structure:

1. Removes doubts in authority relationships:
Organisation structure allocates authority and responsibility, and thereby, enables people to
know who is responsible for what and to whom in the organisation. People know who is to direct
whom for what results. This removes confusion, friction and conflict among people.
2. Stimulates creativity and initiative:
Organisation structure stimulates creative thinking and initiative among organisational members
by providing them requisite authority to perform their assigned tasks. Authority provides right to
decision-making to its holder who feels motivated to take initiative in increasing and improving
his work performance.
3. Ensures optimum utilisation of resources:
Allocation of resources is the core activity of organisation structure. Proper allocation of
resources helps in proper utilisation also. Division of work and specialisation are the tools used
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by organisation to attain the objective of optimum utilisation of human efforts and physical
resources.
4. Reaping benefits of technology improvements:
A sound organisation structure is flexible enough to accommodate changes in the work
technology. Improved work technology modifies pattern of authority-responsibility relationships
and helps in improving work performance of employees.
5. Encourages growth of the enterprise:
Organisation structure provides the framework within which an enterprise functions. A sound
organisation structure has the capacity to handle increased level of activity. This helps in the
expansion and growth of an enterprise.
6. Facilitates management process:
Organisation structure is a mechanism through which manager’s plan, allocates, direct,
coordinate and control the activities of people. No activity remains unattended and work is
assigned to people in accordance with their skills, aptitude, level of commitment, etc. This
facilitates smooth operation of the management process which results in attaining enterprise
goals.
 Formal and Informal Organisation:

Performance of the organising function provides a compact framework to an enterprise. This
compact framework is called formal organisation structure, or simply, formal organisation.
The existence and operation of formal organisation permits people to interact with each other at a
personal and social level. This personal and social interaction is called informal organisation.
The nature and character of formal and information organisation is briefly discussed below:
 Formal Organisation:
A formal organisation, is a consciously planned a deliberately designed entity. It is based on
superior-subordinate relationships which are created by assignment of work and delegation of
authority.
It is through this formal relationship that members communicate with each other and perform
their assigned duties. Thus, a formal organisation functions within set boundaries and is capable
of being disciplined and controlled.
 Informal Organisation:
When people work together in a formal relationship of superior and subordinate, they come in
contact with each other. This interaction provides them an opportunity to know each other and
develop personal and social relations.
These social groups and their associated behaviour in called the informal organisation. These
personal and social relations become the basis of informal organisation.
Thus, informal organisation may be defined as a network of personal and social relations, arising
out of communication and behavioural tendencies in the course of functioning of a formal
structure of organisation.
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 Formal vs. Informal Organisation:
Basis Formal Organisation Informal Organisation
1. Formation Formal Relationship that is

personal and social in
nature.
2. Purpose / objective Legally Constituted It arises naturally and

rationally designed and spontaneously and is
consciously planned. an integral dimension
of formal organisation
3. Relationship It is meant for achieving Its purpose is to satisfy

specific goals. It is meant social and personal
to engage in production of needs of employees.
goods and/or performing
service required by
society.
4. Rationality It has a high degree of It is influenced by

rationality and leaves no social, personal and
scope for personal, social emotional factors.
and emotional factors.
5. Communication Line of authority and Communication takes

formal relationship place through personal
become channel of and social
communication. relationship.
6. Leadership Based on formal authority Based on competence

and position in of individual and
organisation. group acceptance.
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7. Boundaries It operates within set It has no set

boundaries. boundaries; rather it
operates in different
directions.
8. Nature It is normative and It is realistic reflecting

idealistic in nature. actual functioning. +
notes
9. Systems and It operates through It operates through

procedures predetermined systems group norms, values
and procedures. and standards
 Coordination
 Meaning
Coordination is the function of management which ensures that different departments and groups
work in sync. Therefore, there is unity of action among the employees, groups, and departments.
It also brings harmony in carrying out the different tasks and activities to achieve the
organization’s objectives efficiently. Coordination is an important aspect of any group effort.
When an individual is working, there is no need for coordination.
Therefore, we can say that the coordination function is an orderly arrangement of efforts
providing unity of action in pursuance of a common goal. In an organization, all the departments
must operate a part of a cohesive unit to optimize performance. Coordination implies
synchronization of various efforts of different departments to reduce conflict. Multiple
departments usually perform the work for which an organization exists.
The purpose of organising, division of work, departmentation, span of management,

centralisation and decentralisation, delegation of authority and organisation structure is to
optimally achieve the organisational goals. This is possible if departments of the organisation are
co-ordinated in a unified direction.
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Definitions
Mooney and Reiley – ‘Coordination is an orderly arrangement of group efforts to provide unity
of action in the pursuit of common goals. ‘
Charles Worth – ‘Coordination is the integration of several parts into an orderly hole to achieve
the purpose of understanding. ‘
 Features/Nature of Coordination:
1. Group effort:
Coordination integrates the efforts of individuals and departments to make them work as a group.
The group works to maximise group goals as well as organisational goals. It ensures that
individuals work as a group to promote their individual and organisational goals.
2. Unity of action:
Every individual and department has his own perspective or way of achieving the organisational
goals. Coordination ensures unity of action amongst individual and departmental activities. It
ensures that activities of each individual, group and department are headed towards the common
goal. All activities should be performed within the framework of policies, procedures etc.
3. Common goal:
Each individual and department strives to maximise its goal. Maximisation of departmental goals
at the cost of organisational goals can be harmful for the organisation. Coordination maintains
balance amongst individual, departmental and organisational goals. It ensures that resources and
tasks are assigned to individuals and departments in a manner that working of one department
promotes the working of other departments.
All individuals, groups and departments should have a common purpose, that is, achieve the
organisational goals. Sales department, for example, may want to increase expenditure on
advertisement to increase sales. Finance department, however, may not release funds for
advertisement to control financial costs. Coordination harmonizes conflicting departmental goals
towards a common goal, that is, goal of the organisation.
4. Continuous process:
Coordination is not a one-time attempt to integrate the individual goals. It is a continuous process
that keeps going as long as the organisation survives.
5. Managerial responsibility:
Co-ordination is the responsibility of every manager at every level for every operative function
(production, finance, personnel and sales). All managers continuously coordinate the efforts of
people of their respective departments.
6.Essence of management:
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Coordination is not a separate function of management. It is required for every managerial

function. Managers coordinate human and non-human resources, internal and external
organisational environment, while carrying out the managerial functions of planning, organising,
staffing, directing and controlling. Coordination is, thus, the ‘essence of management.’
7. Synthesis of efforts:
Coordination integrates and synthesizes the efforts of people of all departments at all levels
towards common organisational goals. It also synthesizes the organisational resources (physical,
human and financial) to collectively contribute to organisational goals.
8. Necessary obligation:
Coordination is not something that managers may or may not strive for. All managers (also non-
managers) must direct their efforts towards a common goal, considering this as their necessary
obligation. It is an inevitable area of management.
9. Deliberate effort:
Coordination is not a spontaneous effort of managers. Managers make deliberate efforts to
coordinate the departmental activities.
 Important features of coordination:

 It is essential for group efforts and not for individual efforts.
 It is a continuous and dynamic process.
 Coordination emphasizes the unity of efforts
 Helps in the integration of functions
 It is the responsibility of every manager in the organization.
 It should be based on personal contact,mutual confidence, good human relations and
above all on the continuity principles.
 It should aim at morale boosting of the workers.
 Group dynamics
The team “Group Dynamics” is concerned with the interactions and forces among group
members in an organisation. In other words “Group-dynamics is concerned with the formation
and structure of groups and the way they affect individual members, other groups and the
organisation.”
Group dynamics refer to the adjustive changes that take place in the group structure as a result of
changes in any part of it.
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As Kurt Lewin puts it, “a change in a part brings change throughout the entire system
analogous to the change witnessed in an electrical or magnetic field.” The adjustive changes may
take place in the process of interpersonal behaviour or intragroup behaviour.
Interpersonal behaviour is governed by interpersonal needs. What a member wants to contribute,
what he can contribute to the group cause and the extent to which he will interact with the other
members of the group will depend upon factors such as his physique, mental abilities and
intelligence, aptitude, interest and personality.
Intergroup behaviour consists of interactions between the various groups and depends upon
factors like the knowledge of the task, objectives and interdependence. When the groups know
their job and the objectives behind it, they are likely to perform better.
Group dynamics deals with the attitudes and behavioral patterns of a group. Group dynamics
concern how groups are formed, what is their structure and which processes are followed in their
functioning. Thus, it is concerned with the interactions and forces operating between groups.
Group dynamics is relevant to groups of all kinds – both formal and informal.
Group Dynamics – 4 Important Characteristics

(i) Group dynamics describes how a group should be organised and operated. This includes
pattern of leadership and cooperation.
(ii) Group dynamics consists of a set of techniques such as role playing, brainstorming, group
therapy, sensitivity training etc.
(iii) Group dynamics deals with internal nature of groups, their formation, structure and process,
and the way they affect individual members, other groups and the organisation as a whole.
(iv) Group dynamics refers to changes which take place within groups and is concerned with the
interaction and forces obtained between group members in a social setting.
 Importance of Group Dynamism

1. Firstly, a group can influence the way the members think. The members are always
influenced by the interactions of other members in the group. A group with a good leader
performs better as compared to a group with a weak leader.
2. The group can give the effect of synergy, that is, if the group consists of positive thinkers
then its output is more than double every time.
3. Group dynamism can furthermore give job satisfaction to the members.
4. The group can also infuse the team spirit among the members.
5. Even the attitude, insights & ideas of members depend on group dynamism. For example,
negative thinkers convert to positive thinkers with the help of the facilitator.
6. Also, if the group works as a cohesive group, the cooperation and convergence can result
in maximization of productivity
7. Furthermore, group dynamism can reduce labor unrest. Lastly, it reduces labor turnover
due to emotional attachment among the group members.
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 Group Development
As applied to group development, group dynamics is concerned with why and how groups
develop. There are several theories as to why groups develop. A classic theory, developed by
George Homans, suggests that groups develop based on activities, interactions, and sentiments.
Basically, the theory means that when individuals share common activities, they will have more
interaction and will develop attitudes (positive or negative) toward each other. The major
element in this theory is the interaction of the individuals involved.
Group dynamics as related to development concerns not only why groups form but also how.
The most common framework for examining the "how" of group formation was developed by
Bruce Tuckman in the 1960s. In essence, the steps in group formation imply that groups do not
usually perform at maximum effectiveness when they are first established. They encounter
several stages of development as they strive to become productive and effective. Most groups
experience the same developmental stages with similar conflicts and resolutions.
According to Tuckman's theory, there are five stages of group development: forming, storming,
norming, performing, and adjourning. During these stages group members must address several
issues and the way in which these issues are resolved determines whether the group will succeed
in accomplishing its tasks.
1.Forming- This stage is usually characterized by some confusion and uncertainty. The major
goals of the group have not been established. The nature of the task or leadership of the group
has not been determined (Luthans, 2005). Thus, forming is an orientation period when members
get to know one another and share expectations about the group. Members learn the purpose of
the group as well as the rules to be followed. The forming stage should not be rushed because
trust and openness must be developed. These feelings strengthen in later stages of development.
Individuals are often confused during this stage because roles are not clear and there may not be
a strong leader.
2. Storming- In this stage, the group is likely to see the highest level of disagreement and
conflict. Members often challenge group goals and struggle for power. Individuals often vie for
the leadership position during this stage of development. This can be a positive experience for all
groups if members can achieve cohesiveness through resolution. Members often voice concern
and criticism in this phase. If members are not able to resolve the conflict, then the group will
often disband or continue in existence but will remain ineffective and never advance to the other
stages.
3. Norming- This stage is characterized by the recognition of individual differences and shared
expectations. Hopefully, at this stage the group members will begin to develop a feeling of group
cohesion and identity. Cooperative effort should begin to yield results. Responsibilities are
divided among members and the group decides how it will evaluate progress.
4. Performing- Performing, occurs when the group has matured and attains a feeling of
cohesiveness. During this stage of development, individuals accept one another and conflict is
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resolved through group discussion. Members of the group make decisions through a rational
process that is focused on relevant goals rather than emotional issues.
5. Adjourning- Not all groups experience this stage of development because it is characterized
by the disbandment of the group. Some groups are relatively permanent (Luthans, 2005).
Reasons that groups disband vary, with common reasons being the accomplishment of the task or
individuals deciding to go their own ways. Members of the group often experience feelings of
closure and sadness as they prepare to leave.
 Delegation Line and relationship

 Delegation of Authority
Delegation of Authority means division of authority and powers downwards to the
subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of
authority can be defined as subdivision and sub-allocation of powers to the subordinates in order
to achieve effective results.The process of delegation enables a person to assign work task to his
subordinate and give them necessary authority to accomplish it successfully. It helps in
completing the work in time, reduces the workload of managers and motivates and develops
subordinates.
“Authority is delegated when enterprise discretion is vested in a subordinate by a superior.” –
Koontz and O’Donnell
“Delegation is the dynamics of management; it is the process a manager follows in dividing the
work assigned to him so that he performs that part which only he, because of his unique
organisational placement, can perform effectively, and so that he can get others to help him with
what remains.” – Louis A. Allen
 Nature of Delegation of Authority

1. Delegation is a process – Managers delegate tasks to subordinates in a sequential order of
steps.
2. On-going process – Delegation is a continuous process. Managers continue to delegate tasks
and get them delegated by their superiors to achieve the organisational goals.
3. It is an art, not science – When delegator delegates to subordinates, it does not necessarily
mean that subordinates will perform those tasks well. There is no cause and effect relationship
between the task assigned and their actual performance. Delegation is, thus, not a science. It is
the art of how and what manager delegates to subordinates.
4. Delegation of authority and not accountability – Managers can only delegate work and
authority to perform that work to subordinates. Delegation does not mean that managers are not
accountable to their superiors for the task assigned to subordinates. They remain accountable for
the tasks assigned to subordinates and are answerable to their superiors for its performance.
5. It has different forms – Delegation can take different forms. It can be downward, upward or
lateral.
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Delegation can take three forms:

1. Top to Bottom Delegation:
The process of delegation where superiors delegate workload to subordinates is top to bottom
delegation.
2. Bottom to Top Delegation:
This form of delegation recognises the importance of informal groups in the formal organisation
structures. The force of attraction of group members is so strong that if they have to obey the
superior or group members, they may choose the latter. Managers have to be careful in issuing
orders/directions to subordinates to carry out the delegated tasks.
They should motivate subordinates as members of the group and not individual members.
According to Allen, “to the extent that the manager convinces the members of the group that
their needs, his own, and those of the company coincide, he can motivate them to produce
according to the standards he sets.”
3. Lateral Delegation:
When managers delegate authority to subordinates in the hierarchy, subordinates further delegate
the tasks informally to people at the same level in other units. For example, if general manager of
sales department asks sales manager to compile the figures of sales and sales personnel for the
month of January, the sales manager will seek the assistance of finance manager and personnel
manager. Thus, authority and responsibility delegated to sales manager is shared by him with
managers of other departments working at the same level. This is a form of lateral delegation.
Peer groups in this case come together and carry out the task as a team.
 Process of Delegation of Authority:

(a) Determination of the Results Expected of the Subordinate:
While planning to delegate authority, first of all, the superior has to make a determination of
what results (i.e. how much performance and of what quality), could be expected of the
subordinate who is to be delegated authority.
This step naturally requires an estimate of the apparent competence of the subordinate.
Delegation of authority, without due regard to the competence of the subordinate, in all good
possibility, would lead to poor delegation incapable of yielding the desired results.
(b) Assignment of Duties/Tasks /Job to the Subordinate:
In view of the competence of the subordinate, duties or tasks or job is assigned to him. The
duties assigned to the subordinate might concern some specific job or certain functions or a
certain target to be attained.
(c) Delegation of Authority to the Subordinate:
As the next logical sequence in the process of delegation, necessary authority is granted or
delegated to the subordinate to enable the subordinate perform the assigned work effectively and
without interruption.
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(d) Fixation of Responsibility on the Subordinate:
Delegation of authority would remain not only incomplete but also ineffective, unless and until,
the subordinate to whom authority is delegated is made answerable to the superior (who
delegates authority to the former) for the proper and efficient discharge of the assigned work. As
per this step i.e. the final step of delegation, responsibility is fixed on the subordinate.
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Unit-4
Motivation, Leadership, Communication and Organisational behaviour, staffing ,H.R.D.
 Meaning of Motivation
Motivation may be defined as a planned managerial process, which stimulates people to work to
the best of their capabilities, by providing them with motives, which are based on their
unfulfilled needs.
Motivation is an inspiration that helps to use the employees’ knowledge and skill for the growth
and development of the organization. It is an act of persuading the people who work in the
organization. It is defines as the psychological process that hell to increase the will to do work. It
is the process of inspiring people from which the people can use their ability. It is an important
function of management. The employees who are engaged in the organization must be
motivated. Without motivation, their ability and skill can’t be used properly. Every employee has
the capacity to do work. It is the process that helps the employee to explore their talent.
“The concept of motivation is mainly psychological. It relates to those factors or forces operating
with the individual employee or subordinate which impel him to act or not to act in certain
ways.”–Delton e. McFarland
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“Motivation means a process of stimulating people to action to accomplish desired goods.” —
William G. Scott
 Features of Motivation
1. Motivation is a personal and internal feeling:
Motivation is a psychological phenomenon which generates within an individual.
2. Motivation is need based:
If there are no needs of an individual, the process of motivation fails. It is a behavioural concept
that directs human behaviour towards certain goals.
3. Motivation is a continuous process:
Because human wants are unlimited, therefore motivation is an ongoing process
4. Motivation may be positive or negative:
A positive motivation promotes incentives to people while a negative motivation threatens the
enforcement of disincentives.
5. Motivation is a planned process:
People differ in their approach, to respond to the process of motivation; as no two individuals
could be motivated in an exactly similar manner. Accordingly, motivation is a psychological
concept and a complex process.
 Importance of motivation
1. Proper utilization of production factor: Motivation is the mechanism which is used to
stimulate the employees. Stimulated employees are ready to use the production factor properly
and efficiently. So it results in increase in production and productivity.
2. Willingness and interest creation: Motivation stimulates the employees in an organization.
It influences the willingness of employees to work hard and help to present better performance. It
is a process that acts according to desire of employees and increases the willingness and interest
of employees to do work.
3. High productivity: When the employees are fully motivated there is better performance. It
results high production and productivity increment.
4. Organizational goals: The machine, equipment, money cannot be effectively used when the
employees are not motivated to do the work in an organization to the maximum extent.so it helps
to achieve the organizational goals.
5. Readiness for change: Changes are required in every organization. Such changes may be in
technology, environment etc. when the changes are introduced in the organization there is
tendency to resist them by the employee or hesitate to accept the change. Motivated employees
are already made ready to accept the change.
6. Efficiency in work: Motivated employees perform their duties according to the goals of the
organization. They perform work efficiently and timely and increase the efficiency
7. Reduce absenteeism: Motivated employees don’t want to be absent frequently. In other
words, Motivated employees stay in the organization more and non Motivated employees are
careless for the organizational goals.
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8. Employees’ satisfaction: Employee’s satisfaction is an important aspect for the managerial
point of view. Employees may be motivated by fulfilling their needs and giving satisfaction in
their work. In short motivated employees are always satisfied.
9. Fewer disputes and strikes: disputes and strikes are harmful for organizational activities.
When the employees are not motivates they are dissatisfies which creates disputes in the
organization.
10. Better human relation: all employees must be treated as human beings by the organization.
Motivation I mainly related to behave the human beings.
 Motivation Theories
Motivation is a state-of-mind, filled with energy and enthusiasm, which drives a person to work
in a certain way to achieve desired goals. Motivation is a force which pushes a person to work
with high level of commitment and focus even if things are against him. Motivation translates
into a certain kind of human behaviour.
It is important to ensure that every team member in an organization is motivated. Various
psychologists have studied human behaviour and have formalized their findings in the form
various motivation theories. These motivation theories provide great understanding on how
people behave and what motivates them.
Motivation is a huge field of study. There are many theories of motivation. Some of the famous
motivation theories include the following:
1. Maslow’s hierarchy of needs
Abraham Maslow postulated that a person will be motivated when his needs are fulfilled. The
need starts from the lowest level basic needs and keeps moving up as a lower level need is
fulfilled. Below is the hierarchy of needs:
Physiological: Physical survival necessities such as food, water, and shelter.
Safety: Protection from threats, deprivation, and other dangers.
Social (belongingness and love): The need for association, affiliation, friendship, and so on.
Self-esteem: The need for respect and recognition.
Self-actualization: The opportunity for personal development, learning, and
fun/creative/challenging work. Self-actualization is the highest level need to which a human
being can aspire.
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The leader will have to understand the specific need of every individual in the team and
accordingly work to help fulfil their needs.
2. Alderfer’s ERG Theory
Is based on Maslows Hierchy of needs; recategorizes Maslows categories of needs into three
simpler and broader groups:
Existence needs – need for material and energy exchange; basic physiological and safety needs
Relatedness needs – transactions with human environment, process of sharing or mutuality;
need for interpersonal relationships and attention; is about equivalent to Maslows social needs
and part of the esteem needs
Growth needs – people make creative or productive efforts for themselves; need for personal
growth and self-development; part of Maslows esteem needs and self-fulfillment needs
On contrast to Maslow, here more than one level of needs can be relevant at the same time.
There is no hierarchy; people may for instance work to fulfill their personal growth needs,
whereas not al relatedness needs are fulfilled
3. Hertzberg’s two factor theory
There are some factors that result in satisfaction and some factors that just prevent
dissatisfaction. According to Herzberg, the opposite of Satisfaction is No Satisfaction and the
opposite of Dissatisfaction is No Dissatisfaction.
Motivators – factors that really motivate people, also called satisfiers, provide intrinsic
motivation
Examples for Motivators: recognition, growth and career development opportunities,
responsibility, autonomy, self-fulfillment
Hygiene factors – dissatisfiers; their absence would demotivate people, but their presence not
necessarily improves motivation; essentially describe the environment, little effect on positive
job attitudes
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Examples for Hygiene factors: salary, work conditions, relationships with superios and peers,
company policy
4. McClelland’s theory of needs
McClelland affirms that we all have three motivating drivers, and it does not depend on our
gender or age. One of these drives will be dominant in our behaviour. The dominant drive
depends on our life experiences.
The three motivators are:
Achievement: a need to accomplish and demonstrate own competence People with a high need
for achievement prefer tasks that provide for personal responsibility and results based on their
own efforts. They also prefer quick acknowledgement of their progress.
Affiliation: a need for love, belonging and social acceptance People with a high need for
affiliation are motivated by being liked and accepted by others. They tend to participate in social
gatherings and may be uncomfortable with conflict.
Power: a need for control own work or the work of others People with a high need for power
desire situations in which they exercise power and influence over others. They aspire for
positions with status and authority and tend to be more concerned about their level of influence
than about effective work performance.
5. Vroom’s theory of expectancy
Victor Vroom stated that people will be highly productive and motivated if two conditions are
met:
1) People believe it is likely that their efforts will lead to successful results.
2) Those people also believe they will be rewarded for their success.
People will be motivated to exert a high level of effort when they believe there are relationships
between the efforts they put forth, the performance they achieve, and the outcomes/ rewards they
receive.
6. McGregor’s theory X and theory Y
Douglas McGregor formulated two distinct views of human being based on participation of
workers. The first is basically negative, labelled as Theory X, and the other is basically positive,
labelled as Theory Y. Both kinds of people exist. Based on their nature they need to be managed
accordingly.
Theory X: The traditional view of the work force holds that workers are inherently lazy, self-
centred, and lacking ambition. Therefore, an appropriate management style is strong, top-down
control.
Theory Y: This view postulates that workers are inherently motivated and eager to accept
responsibility. An appropriate management style is to focus on creating a productive work
environment coupled with positive rewards and reinforcement.
Conclusion
Motivation is the state of mind which pushes all human being to perform things with the highest
spirit and with positivity. The leader will have to ensure that every individual in the team and the
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organization is motivated. The various motivation theories helps in understanding what will
motivate people.
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Leadership- Concept and Leadership Styles, Leadership Theories
Leadership is an important element of the directing function of management. Wherever, there is
an organized group of people working towards a common goal, some type of leadership becomes
essential. Leadership is the ability to build up confidence and zeal among people and to create an
urge in them to be led. To be a successful leader, a manager must possess the qualities of
foresight, drive, initiative, self-confidence and personal integrity. Different situations may
demand different types of leadership.
Leaders and their leadership skills play an important role in the growth of any organization.
Leadership refers to the process of influencing the behaviour of people in a manner that they
strive willingly and enthusiastically towards the achievement of group objectives.A leader should
have the ability to maintain good interpersonal relations with the followers or subordinates and
motivate them to help in achieving the organizational objectives.
According to Livingston – ‘Leadership is the ability to awaken the desire to follow a common
objective’.
According to C.I. Bernard – ‘Leadership is the quality of behaviour of the individuals whereby
they guide people or their activities in organised efforts’.
 Features of Leadership
Influence the behaviour of others: Leadership is an ability of an individual to influence
the behavior of other employees in the organization to achieve a common purpose or goal so that
they are willingly co-operating with each other for the fulfillment of the same.
Inter-personal process: It is an interpersonal process between the leader and the followers. The
relationship between the leader and the followers decides how efficiently and effectively the
targets of the organization would be met.
Attainment of common organizational goals: The purpose of leadership is to guide the people
in an organization to work towards the attainment of common organizational goals. The leader
brings the people and their efforts together to achieve common goals.
Continuous process: Leadership is a continuous process. A leader has to guide his employees
every time and also monitor them in order to make sure that their efforts are going in the same
direction and that they are not deviating from their goals.
Group process: It is a group process that involves two or more people together interacting with
each other. A leader cannot lead without the followers.
Dependent on the situation: It is situation bound as it all depends upon tackling the situations
present. Thus, there is no single best style of leadership.
 Importance of Leadership:
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Initiating Action: Leadership starts from the very beginning, even before the work actually starts.
A leader is a person who communicates the policies and plans to the subordinates to start the
work.
Providing Motivation: A leader motivates the employees by giving them financial and non-
financial incentives and gets the work done efficiently. Motivation is the driving force in an
individual’s life.
Providing guidance: A leader not only supervises the employees but also guides them in their
work. He instructs the subordinates on how to perform their work effectively so that their efforts
don’t get wasted.
Creating confidence: A leader acknowledges the efforts of the employees, explains to them their
role clearly and guides them to achieve their goals. He also resolves the complaints and problems
of the employees, thereby building confidence in them regarding the organization.
Building work environment: A good leader should maintain personal contacts with the
employees and should hear their problems and solve them. He always listens to the point of view
of the employees and in case of disagreement persuades them to agree with him by giving
suitable clarifications. In case of conflicts, he handles them carefully and does not allow it to
adversely affect the entity. A positive and efficient work environment helps in stable growth of
the organization.
Co-ordination: A leader reconciles the personal interests of the employees with the
organizational goals and achieves co-ordination in the entity.
Creating Successors: A leader trains his subordinates in such a manner that they can succeed him
in future easily in his absence. He creates more leaders.
Induces change: A leader persuades, clarifies and inspires employees to accept any change in the
organization without much resistance and discontentment. He makes sure that employees don’t
feel insecure about the changes.
 Process or Techniques of Effective Leadership:

1. The leader should consult the group in framing the policies and lines of action and in initiating
any radical change therein.
2. He should attempt to develop voluntary co-operation from his subordinates in realizing
common objectives.
3. He should exercise authority whenever necessary to implement the policies. He should give
clear, complete and intelligible instructions to his subordinates.
4. He should build-up confidence and zeal in his followers.
5. He should listen to his subordinates properly and appreciate their feelings.
6. He should communicate effectively.
7. He should follow the principle of motivation.
 Qualities of a Leader
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Personality: A pleasing personality always attracts people. A leader should also friendly and yet
authoritative so that he inspires people to work hard like him.
Knowledge: A subordinate looks up to his leader for any suggestion that he needs. A good leader
should thus possess adequate knowledge and competence in order to influence the subordinates.
Integrity: A leader needs to possess a high level of integrity and honesty. He should have a fair
outlook and should base his judgment on the facts and logic. He should be objective and not
biased.
Initiative: A good leader takes initiative to grab the opportunities and not wait for them and use
them to the advantage of the organization.
Communication skills: A leader needs to be a good communicator so that he can explain his
ideas, policies, and procedures clearly to the people. He not only needs to be a good speaker but
also a good listener, counsellor, and persuader.
Motivation skills: A leader needs to be an effective motivator who understands the needs of the
people and motivates them by satisfying those needs.
Self-confidence and Will Power: A leader needs to have a high level of self-confidence and
immense will-power and should not lose it even in the worst situations, else employees will not
believe in him.
Intelligence: A leader needs to be intelligent enough to analyze the pros and cons of a situation
and take a decision accordingly. He also needs to have a vision and fore-sightedness so that he
can predict the future impact of the decisions taken by him.
Decisiveness: A leader has to be decisive in managing his work and should be firm on the
decisions are taken by him.
Social skills: A leader should possess empathy towards others. He should also be a humanist who
also helps the people with their personal problems. He also needs to possess a sense of
responsibility and accountability because with great authority comes great responsibility.
 Leadership Styles
Autocratic leadership style: It refers to a leadership style where the leader takes all the decisions
by himself.
Democratic leadership style: It refers to a style where the leader consults its subordinates before
taking the final decision.
Laissez-faire or Free-rein leadership style: It refers to a style where the leader gives his
subordinates complete freedom to take the decisions.
 Leadership Theories
The six main leadership theories are:
The great man theory
The trait theory
The behavioral theory
The transactional theory or management theory
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The transformational theory or relationship theory
The situational theory
 The great man theory
The great man theory of leadership states that excellent leaders are born, not developed. A
popular concept in the 19th century, this theory states that leadership is an inherent quality. This
type of leader often possesses the natural attributes of intelligence, courage, confidence, intuition
and charm, among others.
 The trait theory
The trait theory of leadership states that certain natural qualities tend to create good leaders.
Having certain qualities does not necessarily mean someone has strong leadership skills,
however. Some leaders may be excellent listeners or communicators, but not every listener or
communicator makes an excellent leader.
 The behavioral theory
The behavioral theory of leadership focuses on how a person’s environment, not natural abilities,
forms him or her into a leader. One of the key concepts of behavioral theory is conditioning.
Conditioning states that a person will be more likely to act or lead in a certain style as a result of
environmental responses to behavior.
 The transactional theory or management theory
The transactional theory of leadership, also called the management theory, studies leadership as a
system of rewards and penalties. It views effective leadership as results-focused and hierarchical.
Transactional leaders prioritize order and structure over creativity.
 The transformational theory or relationship theory
The transformational theory of leadership, also called the relationship theory, studies effective
leadership as the result of a positive relationship between leaders and team members.
Transformational leaders motivate and inspire through their enthusiasm and passion. They are a
model for their teams, and they hold themselves to the same standard they expect of others.
 The situational theory
The situational theory of leadership does not relate to a certain type of leader or claim that any
one style is best. Instead, situational theory argues that the best kind of leader is one who is able
to adapt her style based on the situation. They may respond to a situation by commanding,
coaching, persuading, participating, delegating or however they think is necessary. Situational
leaders are defined by their flexibility.
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 Staffing
Meaning
Staffing is a managerial function which involves obtaining, utilising and retaining, qualified and
competent personnel to fill all positions of an organisation, from top to operative echelon. In
finer terms, staffing is placing the right person at the right job. It aims at employing, deploying
and monitoring a competent and contented staff, i.e. daily wage earners, contract employees,
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consultants, regular employees, etc., to undertake various managerial and non-managerial
activities in an organisation.
According to Koontz and O’Donnell, “The managerial function of staffing involves managing
the organisation structure through proper and effective selection, appraisal and development of
personnel to fill the roles designed into the structure.”
According to S. Benjamin– “The process involved in identifying, assessing, placing, evaluating
and directing individuals at work.”
 Nature of Staffing
i. People-oriented – Staffing deals with efficient utilization of human resources in an
organization. It promotes and stimulates every employee to make his full contribution for
achieving desired objective of the organization.
ii. Development-oriented – It is concerned with developing potentialities of personnel in the
organization. It develops their personality, interests, and skills. It enables employees to get
maximum satisfaction from their work. It assists employees to realize their full potential. It
provides opportunities to employees for their advancement through training, job education, etc.
iii. Pervasive function – Staffing is required in every organization. It is a major sub-system in the
total management system that can be applied to both profit making and non-profit making
organizations. It is required at all levels of organization for all types of employees.
iv. Continuous function – Staffing is a continuous and never-ending process. It requires constant
alertness and awareness of human relations and their importance in every operation.
v. Human objectives – It develops potentialities of employees so that they can derive maximum
satisfaction from their work. It creates an atmosphere where employees willingly cooperate for
the attainment of desired organizational goals.
vi. Individuals as well as group-oriented – Staffing is concerned with employees both as
individuals and as group in attaining goals. It establishes proper organizational structure to
satisfy individual needs and group efforts. It integrates individual and group goals in such a
manner that the employees feel a sense of involvement towards the organization.
vii. Developing cordial working environment – It develops a cordial environment in the
enterprise where each employee contributes his best for the achievement of organizational goals.
It provides a very comfortable physical and psychological working environment.
viii. Interdisciplinary nature – Staffing has its roots in social sciences. It uses concepts drawn
from various disciplines such as psychology, sociology, anthropology, and management. It has
also borrowed principles from behavioural sciences. It is a science of human engineering.
ix. Integral part of general management – Staffing is an integral part of the general
management. It is very much a part of every line manager’s responsibility. Every member of the
management group (from top to bottom) must be an effective personnel administrator. It renders
service to other functional areas of management.
x. Science as well as art – Staffing is a science of human engineering. It is an organized body of
knowledge consisting of principles and techniques. It is also an art as it involves skills to deal
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with people. It is one of the creative arts as it handles employees and solves their problems
systematically. It is a philosophy of management as it believes in the dignity and worth of human
beings.
Staffing has three aspects:
1. Recruitment – Recruitment is a positives process which aims to attract larger number of
people with desirable profile to apply for positions vacant in the organisation. Higher the number
of applicants, greater is the possibility of finding a suitable employee.
2. Selection – Selection is a negative process which scrutinizes the applications received and
selects only those who are most suitable for the vacant position. Recruitment invites applications
but selection rejects applications.
3. Training – Training is another positive process which upgrades the knowledge and skills of
employees and enhances the ability to perform better.
 Importance of Staffing
 It helps in the finding out efficient and effective workforce, to fill different posts in the
organisation.
 It improves organisation’s performance and productivity by appointing the right person at
the right job.
 It facilitates in identifying the staffing requirements of the organisation in future.
 It ensures continuous survival and growth of the organisation, by way of succession
planning for executives.
 It develops personnel to take up top managerial positions of the organisation.
 It ensures training and development of the people working in the organisation.
 It assists the organisation in making the optimum use of human resources.
Therefore, staffing increases employee morale and job satisfaction. Further, it helps the top
management in ascertaining the manpower requirement resulting from a promotion, transfer,
employee turnover, retirement, etc. of the existing employees.
 Process of Staffing
Staffing process stresses on equipping the organisation with an exact number of people, and that
too at the right time and place, which will help the organisation to attain its objectives
effectively. The staffing process involves a series of steps, discussed as under:
1. Manpower Planning: Popularly known as human resource planning, it is the process of
forecasting the firm’s demand for and supply of competent workforce, in the adequate
number in future.
2. Recruitment: It entails seeking, stimulating and obtaining, as many applications as
possible from the eligible and competent candidates.
3. Selection: It is the decisive step of the staffing process, which involves differentiating
between applicants, so as to identify and choose the candidate who best fulfils the
qualifications and requirements of the vacant position.
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4. Placement: The allocation of rank and responsibility to selected candidate, is known as
Placement.
5. Orientation and Induction: After the placement, the next step is to provide the new
employee with the information they require for functioning comfortably and efficiently in
an organisation. Induction is the process of introducing the new joinees to the job and the
organisation as well.
6. Training and Development: In this step, the new joinees undergo training to acquire
specific skills. Development implies learning opportunities, designed by the organisation,
to ensure the growth of employees.
7. Performance Appraisal: A rational assessment and evaluation of employee’s
performance against clear-cut benchmarks.
8. Career Management: Career Management is a process in which the individual
understand and learns new skills and interests and use them for the betterment of the
organisation and self.
9. Compensation: Compensation refers to the consideration which an individual gains, in
return for his/her contribution to the organisation.
Staffing process recognises the significance of each person employed by the organisation, as the
work of every individual, keeps the organisation going. So, acquiring a good staff is a tough task,
because the success of the organisation depends on it and so, the process should be performed
attentively.
Further, the top executives of the organisation should be aware of the national labour laws,
which applies to the organisation. Moreover, the organisation should be clear on how many
employees, it is going to recruit, for carrying out various activities of the organization.
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Human Resource Development (HRD)
Human resource refers to the talents and energies of people that are available to an organization
as potential contributors to the creation and realization of the organization’s mission, vision,
values, and goals.
Development refers to a process of active learning from experience-leading to systematic and
purposeful development of the whole person, body, mind, and spirit. Thus, HRD is the integrated
use of training, organizational and career development efforts to improve individual, group, and
organizational effectiveness.
According to South Pacific Commission ‘human resource development is equipping people with
relevant skills to have a healthy and satisfying life’.
According to Watkins, ‘human resource development is fostering long-term work related
learning capacity at individual, group and organizational level’.
 Features of HRD:
1. Systematic approach:
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HRD is a systematic and planned approach through which the efficiency of employees is
improved. The future goals and objectives are set by the entire organization, which are well
planned at individual and organizational levels.
2. Continuous process:
HRD is a continuous process for the development of all types of skills of employees such as
technical, managerial, behavioural, and conceptual. Till the retirement of an employee
sharpening of all these skills is required.
3. Multi-disciplinary subject:
HRD is a Multi-disciplinary subject which draws inputs from behavioural science, engineering,
commerce, management, economics, medicine, etc.
4. All-pervasive:
HRD is an essential subject everywhere, be it a manufacturing organization or service sector
industry.
5. Techniques:
HRD embodies with techniques and processes such as performance appraisal, training,
management development, career planning, counselling, workers’ participation and quality
circles.
 Scope of HRD:
Human resource management (HRM) deals with procurement, development, compensation,
maintenance and utilization of human resources. HRD deals with efficient utilization of human
resources and it is a part of HRM.
Human resource being a systematic process for bringing the desired changes in the behaviour of
employees involves the following areas:
1. Recruitment and selection of employees for meeting the present and future requirements of an
organization.
2. Performance appraisal of the employees in order to understand their capabilities and
improving them through additional training.
3. Offering the employees’ performance counselling and performance interviews from the
superiors.
4. Career planning and development programmes for the employees.
5. Development of employees through succession planning.
6. Workers’ participation and formation of quality circles.
7. Employee learning through group dynamics and empowerment.
8. Learning through job rotation and job enrichment.
9. Learning through social and religious interactions and programmes.
10. Development of employees through managerial and behavioural skills.
 Objectives of HRD:
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The prime objective of human resource development is to facilitate an organizational
environment in which the people come first. The other objectives of HRD are as follows:
1. Equity:
Recognizing every employee at par irrespective of caste, creed, religion and language, can create
a very good environment in an organization. HRD must ensure that the organization creates a
culture and provides equal opportunities to all employees in matters of career planning,
promotion, quality of work life, training and development.
2. Employability:
Employability means the ability, skills, and competencies of an individual to seek gainful
employment anywhere. So, HRD should aim at improving the skills of employees in order to
motivate them to work with effectiveness.
3. Adaptability:
Continuous training that develops the professional skills of employees plays an important role in
HRD. This can help the employees to adapt themselves to organizational change that takes place
on a continuous basis.
 HRD Functions:
HRD functions include the following:
1. Employee training and development,
2. Career planning and development,
3. Succession planning,
4. Performance appraisal,
5. Employee’s participation in management,
6. Quality circles,
7. Organization change and organization development.
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Unit-5
Management control Process and Techniques, Conflict Management, Dynamics of Change
Control is a primary goal-oriented function of management in an organisation. It is a process of

comparing the actual performance with the set standards of the company to ensure that activities
are performed according to the plans and if not then taking corrective action..
Managers at all levels of management Top, Middle & Lower – need to perform controlling
function to keep control over activities in their areas. Therefore, controlling is very much
important in an educational institution, military, hospital, & a club as in any business
organization.
According to Ricky W Griffin- “Controlling function leads to goal achievement. An organisation
without effective control is not likely to reach its goals.”
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According to Koontz & O’Donnell- “The management function of control is the measurement
and correction of the performance of subordinates in order to make sure those enterprise
objectives and plans devised to attain them are accomplished.”
 Features of Controlling
 An effective control system has the following features:
 It helps in achieving organizational goals.
 Facilitates optimum utilization of resources.
 It evaluates the accuracy of the standard.
 It also sets discipline and order.
 Motivates the employees and boosts employee morale.
 Ensures future planning by revising standards.
 Improves overall performance of an organization.
 It also minimises errors.
Controlling and planning are interrelated for controlling gives an important input into the next
planning cycle. Controlling is a backwards-looking function which brings the management cycle
back to the planning function. Planning is a forward-looking process as it deals with the forecasts
about the future conditions.
 Importance of Controlling
1. Accomplishing Organizational Goals
The controlling function is an accomplishment of measures that further makes progress towards
the organizational goals & brings to light the deviations, & indicates corrective action. Therefore
it helps in guiding the organizational goals which can be achieved by performing a controlling
function.
2. Judging Accuracy of Standards
A good control system enables management to verify whether the standards set are accurate &
objective. The efficient control system also helps in keeping careful and progress check on the
changes which help in taking the major place in the organization & in the environment and also
helps to review & revise the standards in light of such changes.
3. Making efficient use of Resources
Another important function of controlling is that in this, each activity is performed in such
manner so an in accordance with predetermined standards & norms so as to ensure that the
resources are used in the most effective & efficient manner for the further availability of
resources.
4. Improving Employee Motivation
Another important function is that controlling help in accommodating a good control system
which ensures that each employee knows well in advance what they expect & what are the
standards of performance on the basis of which they will be appraised. Therefore it helps in
motivating and increasing their potential so to make them & helps them to give better
performance.
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5. Ensuring Order & Discipline
Controlling creates an atmosphere of order & discipline in the organization which helps to
minimize dishonest behavior on the part of the employees. It keeps a close check on the activities
of employees and the company can be able to track and find out the dishonest employees by
using computer monitoring as a part of their control system.
6. Facilitating Coordination in Action
The last important function of controlling is that each department & employee is governed by
such pre-determined standards and goals which are well versed and coordinated with one
another. This ensures that overall organizational objectives are accomplished in an overall
manner.
 Performance Standards
Performance expectations are the basis for appraising employee performance. Written
performance standards let you compare the employee's performance with mutually understood
expectations and minimize ambiguity in providing feedback.
Standards identify a baseline for measuring performance. From performance standards,
supervisors can provide specific feedback describing the gap between expected and actual
performance.
 Characteristics of Performance Standards
Standards describe the conditions that must exist before the performance can be rated
satisfactory. A performance standard should:
 Be realistic, in other words, attainable by any qualified, competent, and fully trained
person who has the authority and resources to achieve the desired result.
 Describe the conditions that exist when performance meets expectations.
 Be expressed in terms of quantity, quality, time, cost, effect, manner of performance, or
method of doing.
 Be measurable, with specified methods of gathering performance data and measuring
performance against standards.
 Guiding Principles
Effective performance standards:
 Serve as an objective basis for communicating about performance.
 Enable the employee to differentiate between acceptable and unacceptable results.
 Increase job satisfaction because employees know when tasks are performed well.
 Inform new employees of your expectations about job performance.
 Encourage an open and trusting relationship with employees.
There are many effective ways to monitor and verify performance, the most common of which
are:
 Direct observation.
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 Specific work results (tangible evidence that can be reviewed without the employee being
present).
 Reports and records, such as attendance, safety, inventory, financial records, etc.
 Commendations or constructive or critical comments received about the employee's
work.
 Process of Controlling
Control process involves the following steps as shown in the figure:
1. Establishing standards: This means setting up of the target which needs to be achieved
to meet organisational goals eventually. Standards indicate the criteria of performance.
Control standards are categorized as quantitative and qualitative standards. Quantitative
standards are expressed in terms of money. Qualitative standards, on the other hand,
includes intangible items.
2. Measurement of actual performance: The actual performance of the employee is

measured against the target. With the increasing levels of management, the measurement
of performance becomes difficult.
3. Comparison of actual performance with the standard: This compares the degree of
difference between the actual performance and the standard.
4. Taking corrective actions: It is initiated by the manager who corrects any defects in
actual performance.
Controlling process thus regulates companies’ activities so that actual performance
conforms to the standard plan. An effective control system enables managers to avoid
circumstances which cause the company’s loss.
 Advantages of Controlling
 Saves time and energy
 Allows managers to concentrate on important tasks. This allows better utilization of
the managerial resource.
 Helps in timely corrective action to be taken by the manager.
 Managers can delegate tasks so routinely chores can be completed by subordinates.
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 Techniques of Control
1. Statistical Control Reports:
These types of reports are prepared and used in large organisations. Reports are prepared in
quantitative terms. Then, the variations from standards are easily measured. In this way, control
is exercised by the management. A periodical report of sales volume is an example of statistical
control reports.
2. Personal Observation:
Using this technique, the manager personally observes the operations in the work place. The
manager corrects the operations whenever the need arises. This is the oldest method of control.
Employees work cautiously to get better performance. The reason is that they are personally
observed by their supervisor.
Personal observation is a time-consuming technique and the supervisor does not have enough
time to afford personal observation. Personal observation technique is disliked by the honest and
efficient employee. The observer may be biased in performance evaluation.
3. Cost Accounting and Cost Control:
Profit of any business depends upon the cost incurred to run a business. Profit is maximised by
reducing the cost of operation or production, so, the business concern gives much importance to
the cost accounting and cost control. Management uses a number of systems for determining the
cost of products and services. The cost accounting procedures and methods differ from one
industry to another according to the nature of industry. They are used for effective cost control
and cost reduction.
4. Break-Even Analysis:
It is otherwise called as – ‘cost volume profit analysis.’ It analyses relationship among cost of
production, volume of production, volume of sales and profits. Here, total costs are divided into
two i.e., fixed cost and variable cost. Fixed cost will never change according to the changes in
the volume of production. Variable cost varies according to the volume of production. This
analysis helps in determining the volume of production or sales and the total cost which is equal
to the revenue.
The excess of revenue over total cost is termed as profit. The point at which sales is equal to the
total cost is known as ‘Break Even Point’ (BEP). In other words, the break-even point is the
point at which there is no profit or loss.
5. Special Control Reports:
This report may or may not contain statistical data. Using this technique, a particular operation is
investigated at a specified time for a particular purpose. This is done according to the
requirements of management but not in regular basis. The deviations from standards are paid
additional attention and corrective action is taken. Handling complaints of damage is an example
of this type of control technique.
6. Management Audit:
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Management audit is an independent process. It aims at pointing out the inefficiency in the
performance of management functions such as planning, organising, staffing, directing,
controlling and suggesting possible improvements. It helps the management to handle the
operations in an effective manner. Management audit is not a compulsory audit and not enforced
by law.
7. Managerial Statistics:
Using the managerial statistics technique, the manager compares the past results with current
results in order to know the causes for changes. These are very useful to the management in
planning and decision-making for the future. According to Kenit O. Hauson, “Managerial
statistics deal with data and methods which are useful to management executives in planning and
controlling of organisation activities.”
8. Performance Evaluation and Review Technique (PERT):
This technique is used to solve the problem which crops up once or a few times. It is not useful
in tackling the problems which come up continuously. The PERT was developed by Booz, Allen
and Hamilton. They used this technique in Polaris Submarine Project under the sponsorship of
U.S. Navy. The PERT technique is very useful for construction projects, publication of books
etc.
9. Critical Path Method (CPM):
This technique also follows the principle of PERT. The technique concentrates on cost rather
than duration. CPM assumes that duration of every activity is constant. Time estimate is made
for each activity. CPM technique was developed by a group of employees of DU de Nemours
Company.
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 Conflict Management, Dynamics of Change
Conflicts are natural in all walks of daily life – both at workplace and home. Thus, conflict is
ever present and both charming and maddening. But conflict is a complex and big subject. There
are many sources of conflict. Conflict occurs when individuals or groups are not obtaining what
they need or want and are seeking their own self-interest.
Sometimes the individual is not aware of the need and unconsciously starts to act out. Other
times, the individual is very aware of what he or she wants and actively works at achieving the
goal. It would be better to identify conflict at an early stage and come to an understanding.
The concept of conflict is controversial. Psychologists and sociologists have given different
meanings. It is being defined as a process by few, an obstructive behavior, and goal
incompatibility by others. Conflict can be expressed as:
Conflict is a process, where perception (real or otherwise) leads to disruption of desirable state of
harmony and stability in an interdependent world.
Conflict management is the principle that all conflicts cannot necessarily be resolved, but
learning how to manage conflicts can decrease the odds of non-productive escalation. Conflict
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management involves acquiring skills related to conflict resolution, self-awareness about conflict
modes, conflict communication skills, and establishing a structure for management of conflict in
your environment.’ All members of every organisation need to have ways of keeping conflict to
a minimum – and of solving problems caused by conflict, before conflict becomes a major
obstacle to your work.
 Characteristics of Conflict:
1. Conflict is a Process:
Conflict occurs in ‘layers’. First layer is always misunderstanding. The other layers are
differences of values, differences of viewpoint, differences of interest, and interpersonal
differences. It is also called a process because it begins with one party perceiving the other to
oppose or negatively affect its interests and ends with competing, collaborating, compromising
or avoiding.
2. Conflict is Inevitable:
Conflict exists everywhere. No two persons are the same. Hence they may have individual
differences. And the differences may be because of values or otherwise, lead to conflict.
Although inevitable, conflict can be minimized, diverted and/or resolved. Conflict develops
because we are dealing with people’s lives, jobs, children, pride, self-concept, ego and sense of
mission. Conflict is inevitable and often good, for example, good teams always go through a
“form, storm, norm and perform” period.
3. Conflict is a Normal Part of Life:
Individuals, groups, and organisations have unlimited needs and different values but limited
resources. Thus, this incompatibility is bound to lead to conflicts. The conflict is not a problem,
but if it is poorly managed then it becomes a problem.
4. Perception:
It must be perceived by the parties to it, otherwise it does not exist. In interpersonal interaction,
perception is more important than reality. What we perceive and think affects our behaviour,
attitudes, and communication.
5. Opposition:
One party to the conflict must be perceiving or doing something the other party does not like or
want.
6. Interdependence and Interaction:
There must be some kind of real or perceived interdependence. Without interdependence there
can be no interaction. Conflict occurs only when some kind of interaction takes place.
7. Everyone is inflicted with Conflict:
Conflict may occur within an individual, between two or more individuals, groups or between
organisations.
8. Conflict is not Unidimensional:
It comes into different ways in accordance with degree of seriousness and capacity. At times, it
may improve even a difficult situation.
44
BBA(FT) 1st Year
 Types of Conflict:
 On the basis of involvement:
Conflicts may be intrapersonal (conflict with self), interpersonal (between two persons) and
organisational. Organizational conflict, whether real or perceived, is of two types -
intraorganizational and interorganizational. Interorganizational conflict occurs between two or
more organizations.
Different businesses competing against each other are a good example of interorganizational
conflict. Intraorganizational conflict is the conflict within an organization, and can be examined
based upon level (e.g. department, work team, individual), and can be classified as interpersonal,
intragroup and intergroup.
Interpersonal conflict-once again-whether it is substantive or affective, refers to conflict between
two or more individuals (not representing the group of which they are a part of) of the same or
different group at the same or different level, in an organization.
Interpersonal conflict can be divided into intergroup and intergroup conflict. While the
former— intragroup-occurs between members of a group (or between subgroups within a
group), intergroup-occurs between groups or units in an organization.
 On the basis of Scope:
Conflicts may be substantive and Affective.
A substantive conflict is associated with the job, not individuals, while an affective conflict is
drawn from emotions. Substantive conflicts may be over the facts of a situation, the method or
means of achieving a solution to the problem, ends or goals, and values. Thus it includes task
conflict and process conflict in its scope.
Procedural conflicts can include disagreements about factors such as meeting dates and times,
individual task assignments, group organization and leadership, and methods of resolving
disagreements. Unresolved procedural conflicts can prevent work on collaborative projects.
Substantive conflict can enhance collaborative decision-making. Substantive conflict is also
called performance, task, issue, or active conflict.
On the other hand, an affective conflict (also called as relationship or opposite of agreeable
conflict) deals with interpersonal relationships or incompatibilities and centres on emotions and
frustration between parties.
Affective conflicts can be very destructive to the organisation, if remains unresolved.
Relationship conflict comes under the scope of affective conflicts. An affective conflict is nearly
always disruptive to collaborative decision-making. The conflict causes members to be negative,
irritable, suspicious, and resentful.
For example, when collaborators disagree on the recognition and solution to a task problem
because of personal prejudices (e.g. prejudices stemming from strong social, political, economic,
racial, religious, ethnic, philosophical, or interpersonal biases) they are seldom able to focus on
the task.
45
BBA(FT) 1st Year

The two concepts are related to each other. If one could make a distinction between good and
bad conflict, substantive would be good and affective conflict would be bad. Substantive conflict
deals with disagreements among group members about the content of the tasks being performed
or the performance itself.
 On the basis of Results:
Conflict can be Constructive or Destructive, creative or restricting, and positive or negative.
Destructive conflicts are also known as dysfunctional conflicts, because such conflicts prevent a
group from attaining its goals.
Conflict is destructive when it takes attention away from other important activities, undermines
morale or self-concept, polarises people and groups, reduces cooperation, increases or sharpens
difference, and leads to irresponsible and harmful behaviour, such as fighting, name-calling.
On the other hand, constructive conflicts are also known as functional conflicts, because they
support the group goals and help in improving performance. Conflict is constructive when it
results in clarification of important problems and issues, results in solutions to problems,
involves people in resolving issues important to them, causes authentic communication, helps
release emotion, anxiety, and stress, builds cooperation among people through learning more
about each other; joining in resolving the conflict, and helps individuals develop understanding
and skills.
 On the basis of Sharing by Groups:
Conflicts may be Distributive and Integrative.
Distributive conflict is approached as a distribution of a fixed amount of positive outcomes or
resources, where one side will end up winning and the other losing, even if they do win some
concessions.
On the other hand, integrative – Groups utilizing the integrative model see conflict as a chance to
integrate the needs and concerns of both groups and make the best outcome possible. This type
of conflict has a greater emphasis on compromise than the distributive conflict. It has been found
that the integrative conflict results in consistently better task related outcomes than the
distributive conflict.
 On the basis of Strategy:
Conflicts may be competitive and cooperative.
Competitive conflict is accumulative.
Competitive conflict is characterized by fear, which is one of the important ingredients in a
conflict becoming irrational. If one is personally invested in the outcome, this too leads to
irrational conclusions, especially if issues of self-esteem, whether personal or national, are
involved.
Competitive conflict can either begin by, or be rationalized by, conflicts of ideology or principle.
Even more, when the desire to win overtakes any specific reason for the conflict, irrationally
develops.
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BBA(FT) 1st Year

In a cooperative situation the goals are so linked that everybody ‘sinks or swims’ together, while
in the competitive situation if one swims, the other must sink. A cooperative approach aligns
with the process of interest-based or integrative bargaining, which leads parties to seek win-win
solutions. Disputants that work cooperatively to negotiate a solution are more likely to develop a
relationship of trust and come up with mutually beneficial options for settlement.
 On the basis of Rights and Interests:
Conflict of rights means where people are granted certain rights by law or by contract or by
previous agreement or by established practice. If such a right is denied, it will lead to conflict.
Such a conflict is settled by legal decision or arbitration, not negotiation.
On the other hand conflict of interests means where a person or group demands certain
privileges, but there is no law or right in existence. Such a dispute can be settled only through
negotiation or collective bargaining.
 Stages of Conflict:
A manager must know various stages of conflict to handle it. The solution to conflict becomes
easy before it becomes serious, if he knows of the real issue behind the conflict and how the
conflict developed. Normally a conflict passes through the following stages:
a. People recognise lack of resources, diversity of language or culture. Sensitiveness may
possibly result in conflict.
b. If there are serious differences between two or among more than two groups, the latent
conflict in a competitive situation may turn out into conflict.
c. An incident may trigger a latent conflict into an open conflict
d. Once a problem has been solved, the potential for conflict still remains in the aftermath. In fact
the potential is bigger than before, if one party perceives that the resolution has resulted into win-
lose situation.
 Causes/ Reasons/Sources of Conflicts:
1. Cognitive (Recognition and Understanding) Dissonance (Difference of opinion):
It is a conflict between convergent (ability to narrow the number of possible solutions to a
problem by applying logic and knowledge) and divergent thinking (thinking outwards instead of
inward).
2. Status:
Status is a state, condition, or situation. When there is a need for status and a “wrong” person is
promoted.
3. Incongruence:
A party is required to engage in an activity that is incongruent with his or her needs or interests.
4. Incompatibility:
A party holds behavioural preferences like attitudes, values, skills, goals, and perceptions, the
satisfaction of which is incompatible with another person’s implementation of his or her
preferences. Economics: Insufficient remuneration to employees.
5. Stress:
47
BBA(FT) 1st Year

Conflicts from stress from external sources; i.e., functional or dysfunctional situations.
Poor or Inadequate Organisational Structure and Lack of Teamwork.
6. Seeking Power:
Often a conflict for power struggle takes place when everyone wants to be a leader and nobody
wants to be a follower.
7. Weak Leadership:
Conflict is bound to result if someone of less stature leads a more qualified and experienced
worker.
8. Arbitrary interpretation and application of rules and policies:
Lack of transparency and openness creates dissatisfaction among the affected people.
9. Differing viewpoints among colleagues about each other:
In case of joint action two parties may have partially exclusive behavioural preferences.
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BBA(FT) 1st Year

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

7. Unity and Consistency:

Subject- Principles Of Business Administration

1. Planning Provides Direction

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Steps in Planning Process

Subject- Principles Of Business Administration

Barriers to Effective Planning

Subject- Principles Of Business Administration

 Decision Making-Concept & Process,Coordination

Subject- Principles Of Business Administration

Steps of the Decision Making Process

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Concept of Organisation Structure:

 Characteristics of Organisation Structure:

Subject- Principles Of Business Administration

 Elements of Organisation Structure:

Subject- Principles Of Business Administration

 Factors Affecting Organisation Structure:

Subject- Principles Of Business Administration

 Importance of Organisation Structure:

Subject- Principles Of Business Administration

 Formal and Informal Organisation:

Subject- Principles Of Business Administration

Basis Formal Organisation Informal Organisation

1. Formation Formal Relationship that is

2. Purpose / objective Legally Constituted It arises naturally and

3. Relationship It is meant for achieving Its purpose is to satisfy

4. Rationality It has a high degree of It is influenced by

5. Communication Line of authority and Communication takes

6. Leadership Based on formal authority Based on competence

Subject- Principles Of Business Administration

7. Boundaries It operates within set It has no set

8. Nature It is normative and It is realistic reflecting

9. Systems and It operates through It operates through

The purpose of organising, division of work, departmentation, span of management,

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Coordination is not a separate function of management. It is required for every managerial

 Important features of coordination:

Subject- Principles Of Business Administration

Group Dynamics – 4 Important Characteristics

 Importance of Group Dynamism

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

 Delegation Line and relationship

 Nature of Delegation of Authority

Subject- Principles Of Business Administration

Delegation can take three forms:

 Process of Delegation of Authority:

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration

Subject- Principles Of Business Administration