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• Management : On expanding : Manage – men – tactfully Manage – Men – technology Manage – men – as team Manage – competencies Manage – objectives (MBO) Manage – men and things (resources – physical, inanimate) MANAGE – f ( RISKS, REWARDS) Competencies = f (SKATE) (Men/Women- no discrimination) Norway will have by 2007, 40% women in all fields, in govt orgs, in corporates and also in NGOs. This is now made as a law.
• When it comes to manage people, it is said that ―people are enigmatic.‖ • Thus, Management is enigmatic. • Harold Koontz described the present state of management theory as a ―jungle.‖ There can be lots of ambiguity and there will be no recipe book
• MANAGEMENT IS A FUNCTION OF : M = f(RESULTS, FEEDBACK, RESULTS……) MANAGING THE INTERNAL AND EXTERNAL ENVIRONS IN THE BIO-ECOSYSTEMS, THROUGH VARIOUS EFFECTIVE AND EFFICIENT PROCESSES, WITH THE OBJECTIVE OF ACHIEVING LAID DOWN EXPECTED RESULTS.
the moon. stars. going on the moon. .All is PEOPLE RESOURCE MANAGEMENT • Why? Get into discussion mode: Who Created all that is around us: Except the sun. air. sky. technological advancements and moving towards civilization is all done my people. and the first human being and the first animals/insects Thereafter the development of clones. ocean. artificial insemination.
‖ .Definition of “Management” • By Griffin: ―A set of management functions directed at the efficient and effective utilization of resources in the pursuit of organization goals.
efficiently accomplish selected aims. • By Koontz and Weihrich: ―Management is the process of designing and maintaining an environment in which individuals working together in groups.Definition….contd….‖ .
organs can be described and defined only through their functions .Peter F. Drucker-Father of Modern Management • Management is an organ.
• The difference between Management Principles and Management Functions: • ―What should I do (principles) to ensure that I do my job (functions) with effectiveness and efficiency.‖ • Principles are strategies / processes which enable the individual to do their functions better to achieve laid down goals and objectives • GOALS – qualitative achievements • Objectives – could have a mix of quantitative and qualitative .
organizing.Terry & Franklin… • Management is a distinct process consisting of activities of planning.‖ . performed to determine and accomplish stated objectives with the use of human beings and other resources. and controlling. actuating.
• Describe how to classify managers in organizations.LEARNING OUTLINE Follow this Learning Outline as you read and study this chapter. 1–10 . • Explain why efficiency and effectiveness are important to management. Who Are Managers? • Explain how managers differ from non-managerial employees. What Is Management? • Define management.
• Explain why customer service and innovation are important to the manager’s job. • Discuss the changes that are impacting managers’ jobs.L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter. • Describe Katz’s three essential managerial skills and how the importance of these skills changes depending on managerial level. • Explain Mintzberg’s managerial roles. What Do Managers Do? • Describe the four functions of management. 1–11 .
• Describe the rewards and challenges of being a manager. • Discuss why an understanding of management is important. • Explain how the concept of an organization is changing. What Is An Organization? • Describe the characteristics of an organization. Why Study Management? • Explain the universality of management concept.L E A R N I N G O U T L I N E (cont’d) Follow this Learning Outline as you read and study this chapter. 1–12 .
someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals changing nature of organizations and work has blurred the clear lines of distinction between managers and non-managerial employees 1–13 .Who Are Managers? • Manager Someone who coordinates and oversees the work of other people so that organizational goals can be accomplished.
• Middle Managers Individuals who manage the work of first-line managers. • Top Managers Individuals who are responsible for making organization-wide decisions and establishing plans and goals that affect the entire organization. 1–14 .Classifying Managers • First-line Managers Individuals who manage the work of non-managerial employees.
Exhibit 1–1 Managerial Levels 1–15 .
What Is Management?
• Managerial Concerns
―Doing things right‖ – Getting the most output for the least inputs ―Doing the right things‖ – Attaining organizational goals
Exhibit 1–2 Effectiveness and Efficiency in Management
What Do Managers Do?
• Functional Approach
Defining goals, establishing strategies to achieve goals, developing plans to integrate and coordinate activities.
Arranging and structuring work to accomplish organizational goals. Working with and through people to accomplish goals.
Monitoring, comparing, and correcting work.
Exhibit 1–3 Management Functions 1–19 .
spokesperson Disturbance handler. negotiator Informational roles Decisional roles 1–20 . leader. liaison Monitor. disseminator.What Do Managers Do? (cont’d) • Management Roles Approach (Mintzberg) Interpersonal roles Figurehead. resource allocator.
Mintzberg's Ten Management Roles Mintzberg's Management Roles 21 .
In this light. inspiration. Liaison: Describes the information and communication obligations of a manager. legal and ceremonial obligations. Leader: Duties are at the heart of the manager-subordinate relationship and include structuring and motivating subordinates. promoting and encouraging their development. One must network and engage in information exchange to gain access to knowledge bases. the manager is seen as a symbol of status and authority. overseeing their progress. Mintzberg's Management Roles 22 .Mintzberg's Ten Management Roles Figurehead: All social. and balancing effectiveness.
Disseminator: Highlights factual or value based external views into the organization and to subordinates.Mintzberg's Ten Management Roles Monitor: Duties include assessing internal operations. This requires both filtering and delegation skills. a department's success and the problems and opportunities which may arise. Spokesman: Serves in a PR capacity by informing and lobbying others to keep key stakeholders updated about the operations of the organization Mintzberg's Management Roles 23 . All the information gained in this capacity must be stored and maintained.
Mintzberg's Management Roles 24 .Mintzberg's Ten Management Roles Entrepreneur: Roles encourage managers to create improvement projects and work to delegate. empower and supervise teams in the development process. Negotiator: Is a specific task which is integral for the spokesman. material and personnel resources. Disturbance handler: A generalist role that takes charge when an organisation is unexpectedly upset or transformed and requires calming and support. Resource Allocator: Describes the responsibility of allocating and overseeing financial. figurehead and resource allocator roles.
What Managers Actually Do (Mintzberg) • Interaction with others with the organization with the external context of the organization • Reflection thoughtful thinking • Action practical doing 1–25 .
What Do Managers Do? (cont’d) • Skills Approach Technical skills Knowledge and proficiency in a specific field The ability to work well with other people The ability to think and conceptualize about abstract and complex situations concerning the organization Human skills Conceptual skills 1–26 .
Exhibit 1–5 Skills Needed at Different Management Levels 1–27 .
October 30.ama. 1–28 . found on AMA Web site (www. March/April 2000.Exhibit 1–6 Conceptual Skills • Using information to solve business problems • Identifying of opportunities for innovation • Recognizing problem areas and implementing solutions • Selecting critical information from masses of data • Understanding of business uses of technology • Understanding of organization‘s business model Source: Based on American Management Association Survey of Managerial Skills and Competencies.org). 2002.
ama. 2002.org). written and/or graphic formats Source: Based on American Management Association Survey of Managerial Skills and Competencies. found on AMA Web site (www. peers. 1–29 . and subordinates • Listening and asking questions • Presentation skills. spoken format • Presentation skills. March/April 2000. October 30.Exhibit 1–6 Communication Skills • Ability to transform ideas into words and actions • Credibility among colleagues.
March/April 2000. found on AMA Web site (www. October 30.org). 1–30 .ama. 2002.Exhibit 1–6 Effectiveness Skills • Contributing to corporate mission/departmental objectives • Customer focus • Multitasking: working at multiple tasks in parallel • Negotiating skills • Project management • Reviewing operations and implementing improvements Source: Based on American Management Association Survey of Managerial Skills and Competencies.
October 30. March/April 2000.Exhibit 1–6 Effectiveness Skills (cont’d) • Setting and maintaining performance standards internally and externally • Setting priorities for attention and activity • Time management Source: Based on American Management Association Survey of Managerial Skills and Competencies. found on AMA Web site (www. 2002.ama. 1–31 .org).
1–32 . March/April 2000. found on AMA Web site (www.Exhibit 1–6 Interpersonal Skills (cont’d) • Coaching and mentoring skills • Diversity skills: working with diverse people and cultures • Networking within the organization • Networking outside the organization • Working in teams. cooperation and commitment Source: Based on American Management Association Survey of Managerial Skills and Competencies. 2002. October 30.ama.org).
Exhibit 1–7 Management Skills and Management Function Matrix 1–33 .
1–34 . exploring new territory. • Innovation Doing things differently. Consistent high quality customer service is essential for survival.How The Manager’s Job Is Changing • The Increasing Importance of Customers Customers: the reason that organizations exist Managing customer relationships is the responsibility of all managers and employees. and taking risks Managers should encourage employees to be aware of and act on opportunities for innovation.
Exhibit 1–8 Changes Impacting the Manager’s Job 1–35 .
What Is An Organization? • An Organization Defined A deliberate arrangement of people to accomplish some specific purpose (that individuals independently could not accomplish alone). • Common Characteristics of Organizations Have a distinct purpose (goal) Composed of people Have a deliberate structure 1–36 .
Exhibit 1–9 Characteristics of Organizations 1–37 .
Exhibit 1–10 The Changing Organization 1–38 .
exciting and creative opportunities for meaningful and fulfilling work.Why Study Management? • The Value of Studying Management The universality of management Good management is needed in all organizations. Successful managers receive significant monetary rewards for their efforts. Rewards and challenges of being a manager Management offers challenging. 1–39 . The reality of work Employees either manage or are managed.
Exhibit 1–11 Universal Need for Management
Exhibit 1–12 Rewards and Challenges of Being A Manager
Terms to Know
• • • • • • • • • • • manager first-line managers middle managers top managers management efficiency effectiveness planning organizing leading controlling • • • • • • • • • management roles interpersonal roles informational roles decisional roles technical skills human skills conceptual skills organization universality of management
PRINCIPLES AND PRACTICES OF MANAGEMENT
- Effective utilisation of resources - Development of resources - Incorporate innovations -Integrating varied interest groups - Stability in the society
HISTORY OF MANAGEMENT THOUGHT
• No attention paid before 20th century
Lowly profession compared to bankers and lawyers Treatment of management as an art or science confused people Belief that managers are born and not made
.EVOLUTION OF MANAGEMENT THOUGHTS • Growing competition and complexity of managing large business organisations gave a push to the development of management concepts and principles.
EVOLUTION OF MANAGEMENT THOUGHTS • Competion gave rise to factors like Technology innovations Obsolescence Increase in capital investment Freedom at national and international markets .
EVOLUTION OF MANAGEMENT THOUGHTS . • Complexity came because of Increase in the size of business organisations High degree of division of labour and specialisation Pressure of various conflicting groups Socially oriented business controls by government ..contd….
anthropologists. sociologist. mathematicians and management practitioners—studied organisations and its processes . • All these have demanded the efficiency in management process which cannot come by trial and error methods but by developing and applying sound management concepts and principles • Economists. psychologists .• EVOLUTION OF MANAGEMENT THOUGHTS contd…..
.EMERGENCE OF MANAGEMENT THOUGHTS • This all led to the emergence of a variety of orientations or approaches in management. • One approach or thought was an extention /improvement over the previous one.
DEFINITIONS • PRODUCTION ORIENTED • DECISION ORIENTED • PEOPLE ORIENTED • FUNCTION ORIENTED .
PRODUCTION ORIENTED DEFINITION • TAYLOR : ―Management is the art of knowing what you want to do and then seeing that it is done in the best and cheapest way‖ .
PRODUCTION ORIENTED DEFINITION • Features Aim/Goal Results Efficiency Shortcomings: It does not specify how these objectives can be achieved. .
DECISION ORIENTED DEFINITION • Stanley Vance : ―Management is simply the process of decision-making and control over the action of human-beings for the expressed purpose of attaining pre-determined goals‖. .
DECISION ORIENTED DEFINITION • It implies: Main activity of a manager is decision making Control Goals Shortcoming: The process or activities where decisionmaking is involved is not provided .
PEOPLE ORIENTED DEFINITION • L.Apply :―Management is accomplishment of results through the efforts of other people‖ • Koontz : ―It is the art of getting things done through and with people in formally organised groups‖ .
PEOPLE ORIENTED DEFINITION • Features Existence of objectives Working with and through people Shortcomings: It does not specify the functions or activities involved in the process of getting things done by or with the cooperation of other people .
cooperative human efforts‖ .FUNCTION ORIENTED DEFINITION • Mac Farland :―Management is a process by which managers create. maintain and operate purposive organisations through systematic. coordinated. direct.
FUNCTION ORIENTED DEFINITION • Features Existence of objectives Organised activities Relation among resources Working with and through people Decision making .
accomplish their aims effectively and efficiently.“Management is the process of designing and maintaining an environment in which individuals.” . working together in groups.
creating profits • Effectiveness and efficiency .This definition implies the following: • A process • Universal application • Applicable to all managerial levels • Common aim.
ROBBINS MARY COULTER PowerPoint Presentation by Charlie Cook The University of West Alabama .The Evolution of Management Theory ninth edition STEPHEN P.
Scientific Management Theory • Evolution of Modern Management Began in the industrial revolution in the late 19th century as: Managers of organizations began seeking ways to better satisfy customer needs. . Social problems developed in the large groups of workers employed under the factory system. Managers began to focus on increasing the efficiency of the worker-task mix. Large-scale mechanized manufacturing began to supplanting small-scale craft production in the ways in which goods were produced.
Evolution of Management Theory .
. Production—each worker specialized in one step.Job Specialization and the Division of Labor • Adam Smith (18th century economist) Observed that firms manufactured pins in one of two different ways: Craft-style—each worker did all steps. Realized that job specialization resulted in much higher efficiency and productivity Breaking down the total job allowed for the division of labor in which workers became very skilled at their specific tasks.
F. . Taylor sought to reduce the time a worker spent on each task by optimizing the way the task was done. Taylor and Scientific Management • Scientific Management The systematic study of the relationships between people and tasks for the purpose of redesigning the work process for higher efficiency.W. Defined by Frederick Taylor in the late 1800’s to replace informal rule of thumb knowledge.
Fredrick Taylor • The credit of systematic study and practice of management goes to FWT. very well known as FATHER OF SCIENTIFIC MANAGEMENT • Experiments of Taylor …… .
he found that individual workers had their own notions about work and different workers performed the same task in different ways • He realized that greater output was possible on the part of the workers but most of them were engaged in what he called ‗systematic soldiering.Midvale experience • At Midvale Steel Company.‘ • The solution: the first task of management was to know what constituted a proper day‘s work • He conducted time studies at Midvale Steel Company which proved of immense use to him .
5 tons to 47. By a systematic resting time and improved methods average productivity was raised from 12.15 to USD 1. this reduced dramatically • The earnings of the crew increased from USD1.85 per man per day.Bethlehem Experiments – PigIron Handling • Taylor was hired by the Bethlehem Steel Company to increase the output of one of the larger machine shops which had been a serious production bottleneck • Conclusion: Periodic rests enabled a worker to produce more than continuous work. .5 tons per day. • Taylor began selecting workers and training them in handling pig-iron • The original crew was 75.
They should heartily cooperate with the men so as to ensure performance of work in accordance with the principles of the science which have been developed d. There should be almost equal division of work and responsibility between management and workmen Taylor. Under four heads : They should develop a science for each element of man‘s work which replaces the old rule of thumb method b. . directing and organizing work. SO THAT EACH INDIVIDUAL COULD WORK AT HIS BEST EFFICIENCY AND COULD BE COMPENSATED ACCORDINGLY. teach and develop the workmen c. They should scientifically select and then train. wanted that management should take the responsibility of planning. HE DEEMED IT ESSENTIAL TO SEPARATE THE PLANNING OF WORK FROM ITS EXECUTION.Taylor’s prescription for Manager’s responsibilities • a.
this is called as ACCOUNTABILITY • High Pay for success • Loss in case of failure • Separation of planning from doing – the most valuable insights of TAYLOR • Functional foremanship .Taylor’s Management Principles • Large. defined task • Standard conditions – skill sets and tool sets to be made available with authority along with clear cut objectives and expectations. daily.
Problems with Scientific Management • Managers frequently implemented only the increased output side of Taylor’s plan. Workers ended up distrusting the Scientific Management method. dull. .” Management responded with increased use of machines and conveyors belts. Workers did not share in the increased output. • Workers could purposely “under-perform. • Specialized jobs became very boring.
heating. Time and motion studies Breaking up each job action into its components. • Also studied worker-related fatigue problems caused by lighting. Reorganizing each job action to be more efficient. Finding better ways to perform the action. . and the design of tools and machines.Frank and Lillian Gilbreth • Refined Taylor’s work and made many improvements to the methodologies of time and motion studies.
Frank and Lillian Gilbreth Frank Gilbreth – engineer. pioneered Scientific Methods in bricklaying. – Member of Taylor Society (SAM) Lillian Gilbreth – engineer/industrial psychologist (PhD). . stress and fatigue Together 12 Children – Cheaper by the Dozen Time and motion studies – Breaking up each job action into its components (Therblig). – Finding better ways to perform the action. – Reorganizing each job action to be more efficient.
.Administrative Management Theory • Administrative Management The study of how to create an organizational structure that leads to high efficiency and effectiveness. • Max Weber Developed the concept of bureaucracy as a formal system of organization and administration designed to ensure efficiency and effectiveness.
Weber’s Principles of Bureaucracy .
standard operating procedures (SOPs). and norms guide the firm’s operations. • Positions in the firm should be held based on performance. • Lines of authority should be clearly identified such that workers know who reports to who. • Rules. . not social contacts.Weber’s Five Principles of Bureaucracy • Authority is the power to hold people accountable for their actions. • Position duties are clearly identified so that people know what is expected of them.
Fayol noted jobs can have too much specialization leading to poor quality and worker dissatisfaction.Fayol’s Principles of Management • Division of Labor: allows for job specialization. • Authority and Responsibility Fayol included both formal and informal authority resulting from special expertise. . • Unity of Command Employees should have only one boss.
. • Unity of Direction A single plan of action to guide the organization. • Centralization The degree to which authority rests at the top of the organization.Fayol’s Principles of Management (cont’d) • Line of Authority A clear chain of command from top to bottom of the firm.
• Order The arrangement of employees where they will be of the most value to the organization and to provide career opportunities. or else this will be like A SQUARE PEG IN A ROUND HOLE. competency specific. • Initiative The fostering of creativity and innovation by encouraging employees to act on their own.Fayol’s Principles of Management (cont’d) • Equity The provision of justice and the fair and impartial treatment of all employees. . Right man in the right place. man should fit the job and not the other way round.
. respectful employees are necessary for the organization to function.Fayol’s Principles of Management (cont’d) • Discipline Obedient. applied. • Stability of Tenure of Personnel Long-term employment is important for the development of skills that improve the organization’s performance. • Remuneration of Personnel An equitable uniform payment system that motivates contributes to organizational success.
shared enthusiasm foster devotion to the common cause (organization). UNION IS STRENGTH. team work. • Esprit de corps Comradeship. cohesiveness among the members .Fayol’s Principles of Management (cont’d) • Subordination of Individual Interest to the Common Interest The interest of the organization takes precedence over that of the individual employee.
Dividing them into: PLANNING. COMMAND. COORDINATION AND CONTROL .‖ • The latter was regarded as functions of management.Fayol’s Elements of Management • Fayol made a distinction between ―General Principles of Management‖ and ―elements of Management. ORGANIZATION.
continuity. flexibility and provision as the broad features of a good plan of action • A GOOD PLAN IS A PRECIOUS MANAGERIAL INSTRUMENT • A GOOL PLAN ALSO HAS TO BE IMPLEMENTABLE .Planning • Planning : most important and difficult managerial function. • Planning meant ―looking ahead‖ and to foresee – both to assess the future and make provision for it • He considered – unity.
‖ • Fayol concerned himself both with structure and process. personnel. authority. listing 16 managerial duties and emphasizing the necessity for clear objectives. capital. raw materials. decisions and task . tools.ORGANIZING • Means : ―to organize a business is to provide it with everything useful to its functioning.
COMMAND/DIRECTION • After the organization is formed. it is the mission of command to set it going. • For every manager. rests on certain personal qualities and knowledge of general principles of management . according to Fayol. the object of command is to get the optimum return from all employees of his unit in the interest of the whole concern • The art of command.
COORDINATION • • 1. 2. Every dept works in harmony with the rest Divisions or sub-divisions in each dept are precisely informed as to the share they must take in the commercial task and the reciprocal aid they are to afford one another The working schedule of the various departments and sub-divisions thereof is constantly attuned to circumstances 3. . in a well coordinated enterprise the following facts are to be observed. To coordinate is to harmonize all the activities of a concern so as to facilitate its working and its success According to him.
people and actions .CONTROL/MEASUREMENT AND FEEDBACK • According to Fayol. • It operates on everything – resources (things). the instruction issued and the principles established • Its object is to point out weaknesses and errors in order to rectify them and prevent recurrence. control consists in verifying whether everything occurs in conformity with the plan adopted.
Key principles of Mgmt of FAYOL • Unity of command • Unity of direction • Responsibility equal to authority and • Scalar Chain .
.Behavioral Management Theory • Behavioral Management The study of how managers should behave to motivate employees and encourage them to perform at high levels and be committed to the achievement of organizational goals. Focuses on the way a manager should personally manage to motivate employees.
If workers have relevant knowledge of the task.Behavioral Management • Mary Parker Follett An influential leader in early managerial theory Held a horizontal view of power and authority in organizations Suggested workers help in analyzing their jobs for improvements—the worker knows the best way to improve the job. then they should control the task. .
• Taylor ignored the human side of the work. . Follett argued: Organizations are an interdependence of people. People have own interests but also share common goals which should be the basis of conflict resolution. • Use of power/coercion creates conflict.Mary Parker Follett • Mary Parker Follett: The ―Humanizing‖ of Management and focus on collaboration. People will defer to the facts of a situation for authority.
The Hawthorne Studies: New Direction The ―Hawthorne Experiments‖ were a series of studies into worker productivity performed at the Cicero plant beginning in 1924 and ceasing in 1932. Finding: No relationship ―Hawthorne effect‖ or "halo effect― – Researcher affects outcome (bias) . initially conducted by the National Research Council and later by Western Electric and Harvard University Illumination Studies. 1924 -1927: Does Use of Electric Lights Increase Productivity? Hypothesis: Increased illumination is correlated with higher productivity.
.2nd Hawthorne Experiment Relay Assembly Test Room Experiments. Productivity and worker satisfaction increase when conditions are improved and made worse. 1927-1929 Harvard research team set up experiment with 5 females from Relay Assembly area to test impact of incentives and work conditions on worker fatigue There is no conclusive evidence that these affected fatigue or productivity.
by maintaining a piece-rate incentive system and varying work conditions • Productivity increased by about 15% and researchers concluded that productivity was affected by non-pay considerations • Conclusion: social dynamics were the basis • of worker performance. 1928 – 1930 Relationship between work conditions and productivity.3rd Hawthorne Experiment • Mica-Splitting Test group. .
21. Western Electric implemented a plant-wide survey of employees to record their concerns and grievances. . 1928-1931 1. norms and groups matter to workers. From 1928 to 1930. • 2. that work takes place in a social context in which work and non-work considerations are important.000 employees were interviewed.Hawthorne Interviews • Plant-wide Interview program. Data supported the research conclusion that work improved when supervisors began to pay attention to employees.
Why? Work group established a work ―norm‖ – a shared expectation about how much work should be performed in a day and stuck to it.Hawthorne : Final Experiment Bank Wiring Observation group. The conclusion: informal groups operate in the work environment to manage behavior. 1931-1932 The final test studying 14 male workers in the Bank Wiring factory to study the dynamics of the group when incentive pay was introduced. regardless of pay. . There was no effect.
motivators. leading to "Human Relations" approach and. "Organization Behavior" approach: Engineering approach subordinated to social sciences Managers = leaders. Mayo‘s views lead to the construction of manager as a leader. communicators At one time major contributors to Management theory worked on Hawthorne experiments.“Human Relations” approach (to 1950‘s). later.Importance Changed perspective in management from Taylor‘s engineering approach to a social sciences approach.Hawthorne Experiments . Elton Mayo . .
and considerably influenced the ―human relations movement.George Elton Mayo (1880-1949) • He has been called the founder of the ―human relations school.‖ • Experiments conducted in the Hawthorne Plant of the Western Electric Company in Chicago – from 1927 to 1932.‖ • He became famous on account of the Hawthorne experiments • These experiments had a significant impact on management thought. .
Hawthorne studies – three general phases • Test Room Studies : the object being to assess the effect of single variables upon employee performance. They were experimental in nature • Interviewing Studies: these were largely concerned with improving employee attitudes and were psychological in nature • Observations Studies: these were undertaken to understand and describe the factors influencing the informal organization of work groups and were sociological in nature .
work without pauses and shorter working hours.TEST ROOM STUDIES • Illumination Experiments: Two test groups – varied effects of lighting on output vs. there could be other variables • Relay Assembly Test Room Experiments: This study was made to discover the anomalies of the previous experiments. piece-work. After 12 week study. Numerous variables were put into action – room conditions. Conclusion that environmental factors like lighting may not be the only factor. pauses during work. no change situation. the results were that in both the groups the output increased. the output went up to a record level .
• Interviewing studies: An interview program of thousands of workers was conducted with the object of finding out the attitude of the employees towards their job. Merely giving a person an opportunity to talk and air his grievance has a beneficial effect on his morale b. They are often symptoms of more deep-seated disturbances c. working conditions and supervision The interviewing program revealed the following points: a. Workers are influenced in their demands by experience both inside and outside the factory d. Complaints are not necessarily objective statements of facts. Worker is satisfied or dissatisfied not in terms of any objective frame of reference but rather in terms of how he regards his social status in the firm and what he feels he is entitled to in the way of rewards .
Observational studies • The Bank Wiring Observation Group Study constituted the last phase of Hawthorne studies • It was conducted to investigate the social pattern of a group of fourteen workers and their associated supervisors • The main point of difference between this study and the earlier test room studies was that no experimental changes were planned but efforts were directed to study the group in its customary functioning • This study revealed that there existed a GROUP NORM in terms of which the behavior of different individuals was in some sense being regulated .
and nobody attempted to attain official production targets • Those who attempted to exceed became targets of social disapproval. MANAGEMENT AND LEVEL OF PRODUCTION • THESE STUDIES FURTHER REAFFIRMED THE IMPORTANCE OF INFORMAL GROUP IN THE MOTIVATION OF WORKERS. verbally or physically • This study showed the importance of informal. social group in business organization • A member of such a group cared more for the opinion of the group rather than for financial incentives of the management • IT WAS THE GROUP THAT DECIDED HIS ATTITUDE TO WORK. . but had apparently been evolved by workmen themselves • The group had various social pressures to see that the workers did not exceed the group output norm.• This group was restricting the output on account of various forms of social pressures • The group had for itself a standard of a day‘s work which was not imposed upon them.
Complaints as symptoms . Environmental factors not the sole factors affecting productivity 2. Importance of Informal group 5. Importance of total work situation 6. Importance of recognition. Worker is not an economic man (not purely motivated by money alone) 3. Security and Morale 4.CONCLUSIONS OF HAWTHORNE STUDIES 1.
leadership and authority.Mary Parker Follett-famed political and social philosopher • Her main contributions: Was formulation of principles of human association and organization. Her ideas are as under: . especially in terms of industry The basis of her philosophy was that one cannot separate work from human beings Business is a series of interrelationships between people Follett pleaded that there is a great need to recognize the motivating desires of the individual and the group She said that the basic problem of any organization was that of harmonizing and coordinating the group efforts to achieve the most efficient effort towards completing a task She talked about power.
if used constructively their results are god and if used destructively their results are bad • She suggested that conflicts can be harnessed to the service of the group much as an engineer uses friction .Conflicts • Follett said that conflicts have a constructive role to play in an organization. difference of opinion.‖ • Conflicts are neither good or bad. of interests. • Conflicts are not ―warfares‖ but the ―appearance of difference.
Three ways to resolve conflicts • Domination (victory of one side over the other. Follett did not advance this method.e. i. It resolves conflicts for good • FOR DETAILS ATTEND A CONFLICT MANAGEMENT CLASS . willingly or unwillingly. This method is still commonly unsatisfactory) • Integration (best way to resolve conflicts. for a compromise there must be a mid-point between the needs and desires of both parties on which they agree.e. because of use of force beyond a certain point lessens energies and self-respect) • Compromise (This is better than Domination. both sides surrender some part of what they are demanding. i. bringing about unity of conflict in which both sides se a way out which will satisfy their real needs.. it means combination of what is best in all view points.
Follett’s views on Leadership • It is the role of the leader to educate and train • The leader is responsible for integrative unity • The great leader is one who is able to integrate the experience of all and use it for a common purpose • Leadership is not the product of position but of knowledge .
Follett’s views on Authority and Responsibility • Authority belongs to the job and stays with the job • An executive decision is an movement in a process • Authority and responsibility go with function .
and central control meant synthesis rather than domination from the center • The four principles of organization at which she finally arrived at provided for the need of four kinds of coordination as the basis of good management: .Follett’s views on Co-ordination • CONTROL . Follett. meant fact control rather than human control.
goals and purposes can be easily stated and understood through direct personal contact and communication • Coordination should be achieved in early stages of planning and policy-making. It would be easier to secure the willing enthusiastic adherence of all concerned to any new principles and policy if they have participated from the beginning. ideals. For this principle – Follett had suggested cross relations between heads of departments instead of up and down the line through the chief executive .4 principles of coordination • Coordination by direct contact of the responsible people concerned. Ideas.
• In coordination all factors in a situation are reciprocally related • Coordination is a continuous process. It means that coordination should be left to chance and it is the duty of the coordinator to strive for it constantly so that the efforts of the group are directed towards achieving the common goals .
According to her. 2. S/he must be loyal to company S/he must inform the public what are good practices and standards (today it is called Corporate Governance) and S/he must try to extend the boundaries of knowledge in his/her profession and then pass on his/her extra knowledge for the benefit of all. . b. Management can develop as a profession on two bases: Its recognition as a function of or service to the community Application of an accepted and proven body of knowledge and principles Managers can become professional by working for long hours and thus getting satisfaction from work. a professional manager has three main jobs: 1. 3.Follett on PROFESSIONAL MANAGEMENT • a.
esteem. and selfactualization levels. and prefer to be directed Most people have little capacity for creativity in solving organizational problems Motivation occurs only at the psychological and safety levels Most people must be closely controlled and often coerced to achieve organizational objectives THEORY Y Work is as natural as play. have little desire for responsibility. if the conditions are favorable Self-control is often indispensable in achieving organizational goals The capacity for creativity in solving organizational problems is widely distributed in the population Motivation occurs at the social. McGregor-(19061964. a social psychologist) THEORY X Work is inherently distasteful to most people Most people are not ambitious. as well as physiological and security levels People can be self-directed and creative at work if properly motivated 115 .Douglas M.
Chris Argyris’ ImmaturityMaturity model Immaturity Maturity Passive Active Dependence Independence Behave in a few ways Capable of behaving in many ways Erratic shallow interests Deeper and stronger interests Short-time perspective Long-time perspective (past and future) Subordinates position Lack of awareness of self Equal or superordinate position Awareness and control over self 116 .
It increases human skills and output too • Chain of command (Hierarchy of authority) • Unity of direction – Leaders must define and direct the work of those under them • Span of control – administrative efficiency is increased if there is a limit to the number of people a leader or supervisor can control .Argyris’ – 4 principles of organization • Task specialization – Individuals should concentrate on a narrow range of task.
a group experience designed to provide maximum possible opportunity to the individuals to expose their behavior.‖ . experiment with new behavior and develop an everlasting awareness and acceptance of self and others.Definition T-Group • T-Group is …. give and receive feedback.
• He focused on different styles of leadership 1–119 .Rensis Likert • New pattern of Management • Comparison among high performance manager with Low performance managers • High producing managers are employee centered. Their main attention was on building effective work group with high performance goals • They found that better result can be achieved through different motivational techniques.
Contd. • System 1 – Exploitative autocrat – no confidence on subordinates • System 2 – Benevolent autocrat – Some confidence on subordinates • System 3 – Participative – substantial confidence • System 4 – Full confidence 1–120 .
Blackett and his group to logically solve war problems • This theory has two sides : Management Science and operations management 1–121 . • It was developed during world war II by P. S.Quantitative management approach • This theory is more applied in decision making and for economic effectiveness. M.
modeling. Operations management—techniques to analyze all aspects of the production system.Management Science Theory • An approach to management that uses rigorous quantitative techniques to maximize the use of organizational resources. . Quantitative management—utilizes linear programming. Management Information Systems (MIS)— provides information about the organization. Total Quality Management (TQM)—focuses on improving quality throughout an organization. simulation systems.
1–123 . determining the minimum and maximum re-order level of inventory etc.Operational management • Less mathematical and more of the nature of applied management science • Many firms use this technique to manage their inventories like : calculating EOQ.
• Bernard suggested that executives should encourage informal organizations within the formal organizations with a view to encourage good communication. • He divided organization into formal and informal type. principles and techniques. Bernard developed anew approach to management and categorized all organizations as a cooperative system • According to Bernard.Social systems approach • Chester I. • Limitation of this approach is that it overlooks many managerial concepts. a formal organization comprised people willing to work for a common goal and they were able to communicate with each other. 1–124 .
Systems Approach – Ludwig Von Bertalanffy .
Organizational Environment Theory • Organizational Environment The set of forces and conditions that operate beyond an organization’s boundaries but affect a manager’s ability to acquire and utilize resources. .
Conversion: the processing of inputs into goods and services. Output: the release of finished goods into the environment. Inputs: the acquisition of external resources. .The Open-Systems View • Open System A system that takes resources for its external environment and converts them into goods and services that are then sent back to that environment for purchase by customers.
The Organization as an Open System .
Often undergoes entropy and loses its ability to control itself.Other System Considerations • Closed system A system that is self-contained and thus not affected by changes occurring in its external environment. . and fails. • Synergy Performance that results when individuals and departments coordinate their actions Performance gains of the whole surpass the sum of the performance of the individual components.
” • Organizing (and other) decisions that match the demands of the environment provide adaptation.Contingency Approach • There is no “one best way. .
The environment impacts the firm and managers must be flexible to react to environmental changes. managers must find ways to coordinate different departments to respond quickly and effectively. In rapidly changing organizational environments. . Assumes there is no one best way to manage.Contingency Theory • Contingency Theory The idea that the organizational structures and control systems manager choose depend on—are contingent on—characteristics of the external environment in which the organization operates.
Contingency Theory of Organizational Design .
(Theory X) Employees are closely monitored and managed. . (Theory Y) Tasks and roles are left ambiguous to encourage employees to react quickly to changing environment. • Organic structure Authority is decentralized throughout the organization.Mechanistic and Organic Structures • Mechanistic Structure Authority is centralized at the top. Can be very efficient in a stable environment.
Essential features of a good form of business organization Easy formation Extent of liability Ease in raising capital Stability Efficient and effective management Business secrecy Freedom from state regulations Tax liability Relationship between employer and employee Transferability of shares .
Business organizations are broadly classified as follows : Private Ownership • Sloe proprietorship • Partnership • Joint Hindu Family Business • Joint stock company (Public and Private) • Cooperative Undertaking Joint Ownership Public Ownership • Joint stock company or company ownership • Cooperative society or cooperative ownership • Departmental Enterprises • Public corporations • Government Companies .
but is usually to organize and manage and takes all the profits or responsibility for losses‖.Sole Proprietorship James Stephenson says ― A sole trader is a person who carries on business exclusively by and for himself. manages the business himself by employing persons for his help and alone bears all the gain and risks of the business . Therefore a sole trader is a person who sets up the business with his own resources. He is not only the owner of the capital of the undertaking.
Characteristics of Sole Proprietorship • No registration required • Individual initiative • Unlimited liability • Used for small business or by Professionals • No Separate Legal Entity • Management and control • Secrecy • Owners and business exist together • Limited area of operation 138 .
Advantages of Sole Proprietorship • Easy formation • Flexibility • Quick decisions • Secrecy • Personal Touch • Direct relationship between effort and reward • Independent way of life • Minimum Govt regulations 139 .
Disadvantages of Sole Proprietorship • Limited funds • Limited managerial talent • Lack of continuity • Unlimited liability • Limited Opportunities • Uncertainty 140 .
1932 Section 4 – Partnership is the relation between persons who have agreed to share profits of business carried on by all or any of them acting for all • • Unlimited Liability Registration not Compulsory 141 . 1956 No partnership consisting of more than 20 persons shall be formed Indian Partnership Act.Characteristics of Partnership • • Section 11 of Companies Act.
Existence of business Plurality of persons Contract Sharing of profits Agency .
control and management Maintenance of secrecy Protection of minority right Adaptability and flexibility .Advantages of Partnership Easy formation Greater financial resources Better managerial talent Personal touch Relationship between ownership.
) Lack of prompt and united management Unlimited liability Lesser public confidence Restriction on transfer of interest Liability after retirement continues . insolvency. retirement etc.Disadvantages of Partnership Limited finances Dishonesty of partners Unstable life (death. insanity.
Contents of a partnership deed Name of the partnership firm Name of the partners. power and duties of different partner Name of authorized signatory Arbitration clause in case of any dispute . Permanent address of the partnership Duration of the partnership Nature of business Rights. extent of the contribution of each partner and proportion in which profits and losses are to be divided among the partners.
Distinction between Partnership and sole proprietorship Method of formation No of owners Financial resources Spread of risk and liability Management and control Decision making Secrecy .
But two are different from each other when we consider the legal aspects. Like partnership it is owned by a group of person who are the members of joint Hindu family. Thus even a minor become partner in the business Position of females : Females are restricted in JHF while in partnership both the gender enjoy same level HUF and Karta . Legal aspect : Partnership firm is the result of an agreement where as JHF results from the operation laws of succession etc.Joint Hindu Family Joint Hindu family is a unique feature of indian business scene.
. with a distinctive name and a common seal.Joint stock Company The company act 1956 define Company as an artificial person registered under law. having capital divided into shares of small fixed denominations which are transferable. carrying limited liability and having a perpetual succession.
A joint stock company comes into existence only when it has been registered after completion of all formalities required by the Indian Companies Act. grows.Just like an individual. who takes birth. enters into relationships and dies. enters into relationships and dies. grows.Being an artificial person. a joint stock company takes birth. Artificial person . 1956. .Characteristics of Joint stock Company Legal formation . a joint stock company has its own separate existence independent of its members. Separate legal entity .
It is not affected by the death. the liability of a member is limited to the extent of the value of shares held by him. on which the company's seal is put and is duly signed by any official of the company. insolvency or retirement of any of its members. Democratic management .In a joint stock company. Perpetual existence . Limited liability .Any document. become binding on the company. lunacy.Characteristics of Joint stock Company Common seal .
Advantages of Joint Stock Company Large financial resources Limited Liability Professional management Large-scale production Contribution to society Research and Development Ready transferability of shares Taxation relief .
1956 Special Features of Company a) Company is a Separate Legal Entity b) It can sue and be sued in its own name c) The liability of the shareholders are limited to the extent of their shareholdings d) Company is distinct from its shareholders e) It can hold property in its own name 152 .Company • Governing Act – Companies Act.
Limitations of Joint Stock Company Difficult to form Excessive government control Delay in policy decisions Concentration of economic power and wealth in few hands Conflicting interest Neglect of minority Lack of personal touch .
Types of Companies On the • Private Ltd basis of • Public Ltd ownership • Government On the • Indian basis of • Foreign Nationality .
Acceptance of deposits from person other than its shareholders and directors PUBLIC COMPANY Which is not * private Governing Laws Companies Act. Transfer of shares Invitation of public to subscribe its debenture.Numbers of members to 50 2. 1956 SEBI Act. 155 . shares etc. 1956 Companies Act. 3. 1992 and allied laws.Types of Companies in India DESCRIPTIONS Definition PRIVATE COMPANY Which by its article restricts: 1 .
Types of Companies in India DESCRIPTIONS Incorporation Time Minimum No. If company is listed then through stock exchange(s) 2 3 156 .000/- INR 5. of shareholders Minimum Paid up Capital Transferability of Shares Minimum No. of Directors PRIVATE COMPANY 2 to 3 weeks PUBLIC COMPANY 2 to 3 weeks 2 (Two) 7 (Seven) 50 (Fifty) No limit INR 1. of Shareholders Maximum No.000/- Restricted Freely.00.00.
If paid up capital < Rs.Types of Companies in India DESCRIPTIONS Whether a Foreigner can be Director Whole Time Director (WTD) / Managing Director (WTMD): Appointment WTD / WTMD: Remuneration Foreigner as WTM D / WTD PRIVATE COMPANY Yes Yes PUBLIC COMPANY Appointment not compulsory and No restriction on appointment Appointment : Not compulsory.5 Crs No restriction As per schedule XIII. If paid up capital => Rs. Compulsory. 5 Cr. otherwise permission of Central Government . No restriction With the approval of Central Government 157 .
Types of Companies in India
DESCRIPTIONS Loan to Director etc. Contracts with Director etc. PRIVATE COMPANY
With the previous approval of Central Government
With the consent of Board, If paid up capital of the company is (One) 1 Cr. or more, approval of Central Govt. is necessary
Loan, Investment & Guarantee by the company
In these companies the Government (either state or central government or both) holds a majority share capital i.e., not less than 51%. However, companies having less than 51% share holding by the government can also be called Government companies provided control and management lies with the government. Examples of government companies are: Mahanagar Telephone Nigam Limited, Bharat Heavy Electricals Limited.
a multi-national company is one which is registered as a company in one country but carries on business in a number of other countries by setting up factories, branches or subsidiary units. Such a company may produce goods or arrange services in one or more countries and sell these in the same or other countries. You might have heard about many Multinational Companies (MNCs) running business in India, like Philips, Siemens, Hyundai,Coca Cola, Nestle, Sony, McDonald‘s, Citi Bank, Good Year, etc.
(iii) Centralized Control: The branches and subsidiary units of an MNC operating in different countries are controlled from the headquarters of the company in the home country. . the profits earned. and also the value of assets held by a multinational companies are generally very large. which lay down broad policies to be pursued. (ii) Large size: The volume of sales. marketing and other facilities in several countries.Features of MNCs (i) International Operations: Multinational Companies generally have production.
Advantages of Multinational Companies Investment of Foreign capita Generation of employment Use of advanced technology Growth of ancillary units Increase in exports and inflow of foreign exchange Healthy competition .
under certain conditions. The legal definition of a holding company varies with the legal system.Holding Company Type of business organization that allows a firm (called parent) and its directors to control or influence other firms (called subsidiaries). . Some require holding of a majority (80 percent) or the entire (100 percent) voting shares of the subsidiary whereas other require as little as five percent. to benefit from tax consolidation. and ease of divestiture. sharing of operating losses. This arrangement makes venturing outside one's core industry possible and.
When a holding company owns a controlling interest in another company. then it is said to be a "mixed" holding company or a holding-operating company. If the parent company also engages in its own business operations. that company is said to be a wholly-owned subsidiary of the parent company. Holding companies whose subsidiaries engage in unrelated lines of business are called conglomerates. If the parent owns all of the voting stock of another company. the holding company is called the parent company and the controlled company is called the subsidiary.Holding Company Holding companies and the companies they control have a parent-subsidiary relationship. . A holding company is said to be a "pure" holding company if it exists solely for the purpose of owning stock in other companies and does not engage in business operations separate from its subsidiaries.
the parent-subsidiary relationship of holding companies and their subsidiaries allows for decentralized management. . From a management point of view. the parent company must own at least 80 percent of the voting stock in another company in order to be able to file a consolidated tax return. For tax purposes. shares of stock in the subsidiary company are held as assets on the books of the parent company and can be used as collateral for additional debt financing. it is usually possible to obtain control of another company with less investment than would be required in a merger or consolidation.Advantages of Holding Company From a financial point of view.
A cooperative organization means voluntary association of persons joining together on equal basis for the fulfillment of their economic and other interests. A cooperative society is a society which has its objects the promotion of the economic interests of its members in accordance with cooperative principles as per Indian Cooperative Societies act 1912 .Co-operative Organisation The word cooperative means living together and working together.
Characteristics of cooperative organization Voluntary association Open membership – Open for all and the minimum no is 10 and maximum no limit Equal Voting rights Democratic control and management Service motto Disposal of surplus Finance Cash trading State control .
Types of cooperatives Consumer cooperatives Producer‘s or industrial cooperative Cooperative marketing societies Cooperative housing societies Cooperative credit societies Cooperative milk society Multi purpose Co-operative society .
Charitable Organization Trust Society (seven or more) - Section 25 Company It can do business and earn any amount of profits. but the distribution of profits cannot be made to Shareholders / trustee 169 .
Regulatory Bodies in India Foreign Investment Promotion Board (FIPB) Reserve Bank of India (RBI) Security Exchange Board of India (SEBI) Registrar of Companies (RoC) Trade Mark Registry (TMR) Director General of Foreign Trade (DGFT) 170 .
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