INDUSTRIAL MANAGEMENT TABLE OF CONTANTS UNIT 1 INTRODUCTION TO MANAGEMENT Objectives 1.1 Definition of management 1.2 Definition of Industrial Management 1.3 Industrial Management versus Production Management 1.4 Objective of Industrial Management 1.5 Application of Industrial Management 1.6 Summary UNIT 2 – FUNCTIONS OF MANAGEMENT Objectives 2.1 Functions of management 2.2 Types of Management 2.3 Summary LP – INM 322 pg. 1 Lecture Notes By: Khotso Shai UNIT 3 - PERSONAL MANAGEMENT Objectives 3.1 Staff Management 3.2 Personnel Development 3.3 Motivation and Job Satisfaction 3.4 Stress Management 3.5 Effective Communication 3.6 Conflict Management 3.7 Summary LP – INM 322 pg. 2 Lecture Notes By: Khotso Shai UNIT 1 INTRODUCTION TO INDUSTRIAL MANAGE MENT INTRODUCTION Overview The first unit, which is to introduce students to Management and industrial management, shall closely look into definition of Management, Industrial Management and Production Management to ensure understanding by student. The module will also show the differences between the Industrial and Production Management as well as different types of management which will assist students with an understanding of the difference types Objectives Ate the end of this unit, you should be able to: • Define management • Define Industrial Management • Differentiate between Industrial and Production Management • Need for industrial Management LP – INM 322 pg. 3 Lecture Notes By: Khotso Shai Topics 1.1 Definition of Management Management is the art of getting things done through people. It is the act of coordinating the efforts of people in an organization to achieve desired goals and objectives and this can be done through the use of available resources efficiently and effectively. It is also the creation and maintenance of an internal environment in an enterprise where individual, working in groups, can perform efficiently and effectively towards attainment of group goals. Management comprises Planning, Organizing, Staffing, Leading or Directing, and Controlling an organization and this means making and effort for the purpose of accomplishing a goal. Resourcing encompass the preparation and manipulation of different types of resources in the likes of human resources, financial resources, Technological resources and Natural Resources. Organization can also be viewed as systems and therefore it becomes easier to define management as human action that includes designing and facilitating the production of useful outcome from a system. This means that one is able to manage oneself, which is a prerequisite to attempting to manage others. In management, directors and managers should have the authority and responsibility to make decisions which will help them to direct the organization. LP – INM 322 pg. 4 Lecture Notes By: Khotso Shai 1.2 Definition of Industrial Management Industrial management composed of two words. ➢ Industry and ➢ Management Industry: ➢ An industry is a group of manufacturers or businesses that produce a particular kind of goods or services. ➢ Any general business activity or commercial enterprise that can be isolated from others. Management: ➢ Management is the process where one or more persons coordinate the activities of other persons to achieve certain results. ➢ Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. Therefore, Industrial management is now a branch of engineering which facilitates creation of management system and integrates same with people and their activities to utilize the resources. Industrial management is structured approach to manage the operational activities of the organization. LP – INM 322 pg. 5 Lecture Notes By: Khotso Shai CONCEPT OF INDUSTRIAL MANAGEMENT Industrial Management is the organizational process includes strategic planning, setting objectives, managing resources, deploying the human and financial assets needed to achieve the objectives, and measuring the results. Being a management functions it also includes recording and storing facts and information for later use or for others within the organization. Need for Industrial Management ➢ To ensure maximum output with minimum cost of production. ➢ To ensure that activities of different individuals are coordinated to attain the common purpose in the factory. ➢ Goods are produced and delivered on the promised dates. ➢ Goods are manufactured in strict specification of customer’s orders. ➢ Proper accounting, reporting and controlling the operations in the factory. ➢ To prevent wastage and losses. ➢ Quality products. ➢ Utilization of full capacity of the factory. ➢ Innovation 1.3 Industrial Management versus Production Management ➢ Industrial management deals with the analysis, design and control of productive systems. A productive system is any system that produces either a product or a service. On the other hand, production management attempts to familiarize a person with concepts and techniques specific to the analysis and management of a production activity. ➢ Production management is mostly associated with managing a production environment. The design and analysis of productive system are outside its purview on the other hand, industrial management is concerned with designing system and providing expert information without actually operating the systems. Production or operations management is a subspecialty of industrial management. LP – INM 322 pg. 6 Lecture Notes By: Khotso Shai 1.4 Importance of Industrial Management Industrial management is the key function that plays a vital role in the success of organization. The results of industrial management are reflected in the serving of many interested parties of an organization such as: 1. The Consumers: The consumers benefit from higher productivity, better and reliable quality, reasonable price, satisfactory service and timely delivery of goods. 2. The Investors: The investors get higher return on investment and their investments obtain capital appreciation also. Market value of securities is governed by the earning power and asset value of the business. 3. The Community: When all business which are operating in the community are prosperous, due to industrial management, we have economic and social stability and the citizens of that community have pride and satisfaction. 4. The Suppliers: Small or large companies depend upon other companies as sources of raw materials, Components and services. We have effective cooperation, best inter communication and mutual confidence between the business buyers and their suppliers. The company and its suppliers can have enduring partnership for the satisfaction of both. 5. The Employees: The employees including the management get higher remuneration, stable employment, security of jobs, better working conditions and above all enhanced personal satisfaction through joy of achievement. High employee morale due to job satisfaction gives higher output 6. The Nation: When all industries in the national economic system demonstrate industrial management, the entire national economy will accomplish all round security and prosperity. 1.5 Objectives of Industrial Management The ultimate objective of industrial management is to produce the right quantity of right quality goods at the right time. These are attained through: LP – INM 322 pg. 7 Lecture Notes By: Khotso Shai 1. Manufacturing Costs: The unit cost of the product should be estimated carefully and every effort should be made to stick to the cost standards. For this purpose, the efforts should be made to segregate the costs into two-direct costs and variable costs. Efforts should be made for the following: i. ii. iii. iv. Reduction in the variable costs. Reduction in the fixed costs. Increase in the volume of production, so that the fixed cost maybe spread over more production resulting in the reduction in the per unit absorption. Proper allocation of fixed and overheads should be made on scientific basis. 2. Machinery and Equipment: The objectives in the area of machinery and equipment are divided into: i. ii. Selection and acquisition of machinery and equipment according to production process. Utilization of machinery and equipment. The adequacy of the existing machinery should be considered and proper additions and replacements should be made according to the requirements. Efforts should also be made to increase the utilization rate of machinery through repair maintenance and maximum occupancy of the machines. 3. Materials: The materials objectives must be prescribed in terms of units, Maluti/Rands value and space requirements. The per unit materials costs should be specified and efforts should be made to increase the inventory turnover of all types of inventories-raw materials, work-in-progress and finished goods. 4. Manpower: Manpower is an important as well as typical input in manufacturing activities. So, the objectives of the production activities are as regards manpower must be closely allied with the objectives of selection, placement, training, rewarding and utilization of manpower. Usually, these objectives are considered in LP – INM 322 pg. 8 Lecture Notes By: Khotso Shai terms of employee turnover rates, safety measurements, industrial relations, absenteeism, etc. 5. Manufacturing Services: The provision of proper and adequate services directly affects the utilization of other inputs such as men, machines and materials. Proper objectives should be set for the installation of important facilities such as power, water supply, material handling, etc. In a condensed form, it can be stated that the objectives of the manufacturing activities are-to manufacture a quality product on schedule, at the lowest possible costs, with maximum asset turnover, to achieve consumer satisfaction. This statement is closely related to the ultimate and intermediate objectives of the production function. 6. Product Quality: Generally, the product quality standards are often established by the product specifications or by the consumers. The manufacturing organization should try to translate such quality prescriptions into some measurable objectives. It should be noted that the product quality comes in conflict with the manufacturing cost objective and the manufacturing time-schedule. The maintenance of the quality should not result in increase in manufacturing costs or delay in the production. A proper balance must be maintained between quality and cost as well as quality and time-schedule 7. Manufacturing Schedule: There are many forces which compel side-tracking in the manufacturing activity. The time schedule should not be set for the shipment alone; it should be broken up into all the sub-systems like operating cycle time, inventory turnover rate, machine utilization rate, direct and indirect man-hours per unit, capacity utilization, machine and Labours idle time, set-up, repair and maintenance time, etc. Time schedule objective directly affects the cost, quality and the goodwill of the business in terms of regularity of shipment. LP – INM 322 pg. 9 Lecture Notes By: Khotso Shai 1.6 Application of Industrial Management Today also, Industrial Management find major applications in manufacturing plants and industries. In the present era of cut-throat competition at various stages of operations, an enterprise should produce goods and services keeping into consideration the requirements and satisfaction of the potential customer. The objective should be to produce goods at least costs and to the maximum satisfaction of the buyer. To meet this objective, application of Industrial Management is in following areas: 1.6.1 Design and Development – product design and development depend heavily on input from the marketing and several branch of engineering ie Plant engineering, manufacturing engineering, including production engineering. If the design of the production is not good from the production stand point, it may require costly adjustments to the production process in terms of equipment, material and man power. If the design is good, production costs may be low enough to substantially enhance a firm's profitmaking position. The key role of good and effective product design is rapidly becoming evident and firms prominent in competitive market tends to exploit details of design that reduce production costs or develop product features that allow it to appeal to a wider market. 1.6.2 Plant Layout and Material Handling - The physical arrangement of manufacturing components and the equipment for handling the material during production process has considerable effect on cost of production. The material handling system and the plant layout should be most efficient for the given situation. 1.6.3 Production Forecasting - Forecasting is necessary if the business firm is its products and services. Sufficient time must be allowed to get inputs and transform them into output at right time and right place. Forecasts can be used as an analysis of past data, consideration of current events and future developments. These forecasts become the basis for the plants and schedules for buying, manufacturing, selling and other activities of the firm. 1.6.4 Production Planning and Scheduling - In order to co-ordinate different activities and operations of an organization, a master plan of activities and a schedule of their performance is needed. Careful planning anticipates the need for people, materials and equipment so that sufficient time between LP – INM 322 pg. 10 Lecture Notes By: Khotso Shai order and delivery of goods and services is available to make necessary changes, if required. The planning and scheduling of a firm perform a coordinated effort with resources and available time in attempting to utilize the full capacity to the firm to produce. 1.6.5 Quality Control - While planning, scheduling and inventory control are responsible for providing quantity and timing of production, quality control is responsible for providing quality. Quality must be designed and manufactured into the product. Although customers may desire higher quality, they may not be willing to pay the resulting price. In such a way quality standard should be set up that will be acceptable to the customers and yet economically feasible to the product. It is a matter of finding a balance between too much and too little quality. 1.6.6 Production Control – it is very necessary in today’s highly competitive world that organization should invest its resource intelligently and carefully. A major part of these resources are utilized in production activities. Through it is the prime responsibility of production manager to control the quantity of the produced goods, proper Industrial Management avoids the situation of over-production and under-production. In case of over-production the resources which are scare in nature will be wasted and in the situation of under production organisation will be unable to meet the demand in the market. So, both the situations will adversely affect the profitability of the company. 1.6.7 Method analysis - There can be a number of ways in which some operation can be executed. Through Industrial Management we select the most efficient and economical method to perform the operation. Method analysis improves the productivity of the concern and minimizes the cost of production 1.6.8 Motivate Workers - We have to motivate workers to generate their interest work and increase their efforts. This can be done by providing them wage incentives. This will result in an increase of labour productivity. LP – INM 322 pg. 11 Lecture Notes By: Khotso Shai 1.7 Industry Organisation When we talk about management of an industry, we should be clear about what is to be managed. There are various departments in a big organisation engaged in various activities which play their own role in helping the production department meet its objectives. Even in service organisations like banks, software companies, hospitals, etc. there are various departments which have to managed through industrial management. Here we will be discussing the general organisation of a big manufacturing factory which can be modified for any service-industry also according to its needs. 1. Head of Production Department: Production head is the supreme officer of production organisation. He is called Plant manager or general manager. He is the person who is responsible for all the function of production department and all the other sub-divisions of production organisation is controlled and directed by him. LP – INM 322 pg. 12 Lecture Notes By: Khotso Shai 2. Manufacturing Department: Manufacturing department is that portion of production organization where the actual activities or operations are performed for the transformation of raw material into finished goods. The head of this department is called production manager. The prime responsibility of production manager is to ensure the production according to the predetermined plan and directions received. If the organisation is diversified, meaning producing different types of product then in such a case the manufacturing department can be further divided in various sub-manufacturing department like manufacturing unit, repairing unit, assembling unit, etc. 3. Technical Department: The primary task of technical department is to enhance the quality of finished goods by performing research and development on modern techniques of production. Technical director is the head of this department. Generally following sub-sections are included in this department: i. Development section ii. Design section iii. Research section iv. Testing section 4. Production, Planning and Control Department: The main function of this department is preparation of production plan and execution of that plan in order to achieve predetermined goals in a given period of time. This department also controls all the other department related to production. The head of this department is known as Production Controller 5. Quality Control Department: Generally, the function of quality control is performed by production planning and control department but some firms establish a separate quality control department to ensure the quality of their finished product. Quality Manager is the head of this department. He has a group of inspectors under him. This department controls the quality at various level of production. 6. Engineering Department: This department is headed by chief engineer. Maintenance of machinery of firm as well as continuous improvement in machines and tools used in production are included in LP – INM 322 pg. 13 Lecture Notes By: Khotso Shai the function of this department. Department also prepares various dies used in production. 7. Purchase Department: Generally, the purchase department works under the chief works manager. The main function of this department includes the purchase of raw material, machine tools and other necessary items used in production. This department evaluates the price and quality of purchased material at the point of purchase. Various departments send their requirement to purchase department which purchases the items at favourable price. 8. Store Department: Each firm establishes a store department headed by chief store keeper to balance the demand and supply of raw material and finished goods. Availability of required type of material of required quality in adequate quantity, adequate and safe handling, disposal of scrape, measurement of material and record of entries related to store in related books are the various functions performed by the store department. Inventory management is also performed by them. 9. Maintenance Department: Maintenance department is a main and necessary department of a manufacturing firm. Maintenance department looks after the various assets of the firm like machinery, building, vehicles, etc. Department is headed by Maintenance Manger. 10. Security Department: This department is responsible for security in the industry. Department is headed by Security Director. Department formulates the security related rules and execute the rules at all the level in the concern. In case of any accident, investigation and analysis is done by this department and department also prepares necessary documents. LP – INM 322 pg. 14 Lecture Notes By: Khotso Shai 1.8 Summary We have discussed Management, Industrial Management and the difference between the Industrial and Production Management. I believe from what has been stated above, you have gained a lot of information which will assist you in the future. Questions: 1. 2. 3. 4. 5. 6. 7. 8. Define Industrial Management and explain its concept. How is Industrial Management different from Production Management? How is an industry organised? What are the principles of industrial management in an organisation? What are the various objectives of industrial management? Why is industrial management necessary? What are the application areas of industrial management? Describe clearly the various functions of industrial management in a modern organisation. 9. What are the responsibilities of a person associated with industrial management? 10. What is the importance of industrial management? LP – INM 322 pg. 15 Lecture Notes By: Khotso Shai UNIT II - MANAGEMENT FUNCTIONS Objectives General Learning Objectives: to understand the roles of all levels of management for efficient and effective operations of the organization Specific Objective • Meaning of management – its principles and functions • Different management skills – Technical, Interpersonal (Human), Conceptual, Diagnostic and Political Skill • State functions of management – Planning, Organizing, Coordinating, Activating and Controlling. • Showing which functions are important and relevant under the required Managerial Skills • Understand and Describe all planning functions of a Manager/Supervisor • Explain the need for effective work plan • Understand the planning process • State the benefits of planning • Types of plans • Problems associated with plans • Understand and describe all the controlling functions of a Manager/Supervisor • Explain and discuss the controlling process • Explain the interrelationship of control with other managerial functions. • Discuss what is being controlled • Discuss the Types of control LP – INM 322 pg. 16 Lecture Notes By: Khotso Shai 3.0 MANAGEMENT FUNCTIONS 3.1 INTRODUCTION Let us first understand “what is management”. The management may be called an art as well as a science. It is an art in the sense that management means coordinating and getting work done through others. On the other hand, it is a science in the sense that management techniques are susceptible to measurement and factual determination. Management is an executive function and does not frame policies. It only implements/executes the policies laid down by the administration. Therefore, the main functions of management are executive and largely governing. The various functions of management include planning, organising, motivation, directing, coordination and control all functions. The management provides new ideas and vision to the organizations. It provides stability to the enterprise by changing and modifying the resource in accordance with the changing environment of the society. So, management meet the challenge of change. Let us now consider administration. Administration is supreme master of the industry and is needed for controlling any enterprise. Administration makes policies and decides the goals/targets to be achieved. It coordinates finance, production and distribution. An administrator organises his own work and that of his subordinates. He delegates responsibility and authority and measures, evaluates and control position activities. Finally let us define an organisation. Organisation is a framework of management. This is a group of persons or a system. The organisation is concerned with the building, developing and maintaining of a structure of working relationship in order to accomplish the objectives of the enterprise. So, we can say that, “Management carries out the policies of administration through the framework of the organisation.” The aim of this chapter is to discuss the functions and principles of management and also discuss various management tools. LP – INM 322 pg. 17 Lecture Notes By: Khotso Shai 3.2 IMPORTANCE OF MANAGEMENT No enterprise can be run without management. The importance of management can be understood as under: 1. Management guides and controls the activities of man-power for the optimum utilization of company resources, such as men, materials, money, machines, methods etc. 2. Management creates a vital, dynamic and life-giving force to the enterprise. 3. Management coordinates activities of different departments in an enterprise and establishes team-spirit among the different persons. 4. Management provides new ideas and vision to the organisation to do better. 5. Management tackles business problems and provides a tool for the best way of doing things. 6. It is by management only that we can meet the challenges of change 7. Management provides stability to the enterprise by changing and modifying the resources in accordance with the changing environment of the society 8. Management helps personality development. Thereby it raises efficiency and productivity 3.3 CHARACTERISTICS OF MANAGEMENT 1. Management is goal oriented. It achieves the organizational goals through coordination of the efforts of the personnel. 2. Management. works as a catalyst to produce goods using labour materials and capital. 3. Management is a distinct process comprising of functions such as planning, organising, staffing, directing and controlling. 4. Management represents a system of authority-a hierarchy of command and control. Managers at different levels possess varying degrees of authority. 5. Management harmonises the individual's goals with the organizational goals to minimizes conflicts in the organisation. 6. Management is an art because it requires actual work to be done through other people LP – INM 322 pg. 18 Lecture Notes By: Khotso Shai 3.4 OBJECTIVE OF MANAGEMENT Managerial objectives are the intended goals which prescribe definite scope and suggest direction to the efforts of a manager. They should be clearly defined, properly communicated and reasonably attainable. Further, these objectives should not be conflicting with the overall organizational goals. Managerial objectives may be classified as; • General Objectives • Specific Objectives 3.4.1 General objectives ▪ ▪ ▪ ▪ ▪ ▪ Nature of business Continuous supply of capital Growth of firm Increasing production and productivity Economic objective (e.g., profit). Social objectives (e.g., to offer goods of superior quality and services to the society at reasonable rates, to provide workers with fair wages and incentives and to pay taxes honestly, etc.). ▪ Human. objectives (e.g., to understand the needs of subordinates, to motivate them and to boost their morale). 3.4.2 Specific Objectives ▪ Nature of goods to be produced or services to be rendered. ▪ Type of Customers (e.g. rich, poor, individuals, business houses, Government, etc. ▪ Market standing (e.g., local, national or international). ▪ Product diversification, if required. LP – INM 322 pg. 19 Lecture Notes By: Khotso Shai 3.5 MANAGEMENT SKILLS All managers must have five critical skills: technical skill, interpersonal skill, conceptual skill, diagnostic skill and political skill. 3.5.1 Technical Skill Technical skill involves understanding and demonstrating proficiency in a particular workplace activity. It is essential for a manager to know which technical skill should be employed in a particular work situation. Technical skills are things such as using a computer word processing program, creating a budget, operating a piece of machinery, or preparing a presentation. The technical skills used will differ in each level of management. First-level managers may engage in the actual operations of the organization. they need to have an understanding of how production and service occur in the organization in order to direct and evaluate line employees. Additionally, first line managers, needs skill in scheduling workers and preparing budgets. Middle managers use more technical skill related to planning and organizing, and top managers need to have skill to understand the complex financial working of the organization. 3.5.2 Interpersonal Skill Interpersonal skill involves human relations, or the manager’s ability to interact effectively with organizational members. Communication is a critical part of interpersonal skill. communicating skill is the ability to pass on information to others. Improper, insufficient and poorly expressed information/instruction can create confusion and annoyance. A manager with excellent technical skill but poor interpersonal skill is unlikely to succeed in their job. This skill is critical at all levels of management. Motivation is also a part of interpersonal skill. Motivating skill inspires people to do what the manager wants them to do. Another interpersonal skill is the leadership. It enables a manager to lead people working under him. It is the ability to inspire confidence and trust in the subordinates in order to have maximum cooperation from them for getting the work done. LP – INM 322 pg. 20 Lecture Notes By: Khotso Shai 3.5.3 Conceptual Skill Conceptual skill is a manager's ability to see the organization as a whole, i.e., as a complete entity. It involves understanding how organizational units work together and how the organization fits into its competitive environment. Conceptual skill is crucial for top managers, whose ability ii to see “the big picture” can have major repercussions on the success of the business. However. conceptual skill is still necessary for middle and supervisory managers, who must use this skill to envision. For example, how work units and teams are best organized. Decision making skill is a part of conceptual skill. It is the ability of a person to take timely and accurate decisions. This requires mental ability and presence of mind. Organization skill help to select and assign different people to different works. There is always a right person for the right job. 3.5.4 Diagnostic Skill Diagnostic skill is used to investigate problems, decide on a remedy and implement a solution. Diagnostic skill involves other skills-technical, interpersonal, conceptual and political. For instance, to determine the root cause of a problem, a manager may need to speak with many organizational members or understand a variety of informational documents. The difference in the use of diagnostic skill across the three levels of management is primarily due to the types of problems that must be addressed at each level. For example, first-level managers may deal primarily with issues of motivation and discipline, such as determining why a particular employee's performance is flagging and how to improve it. Middle managers are likely to deal with issues related to larger work units, such as a plant or sales office. For instance, a middle-level manager may have to diagnose why sales in a retail location have dipped. Top managers diagnose organizationwide problems, and may address issues such as strategic position, the possibility of outsourcing tasks, or opportunities for overseas expansion of a business. LP – INM 322 pg. 21 Lecture Notes By: Khotso Shai 3.5.5 Political Skill Political Skill involves obtaining power and preventing other employees from taking away one's power. Managers must use power to achieve organizational objectives. This skill can often reach goals with less effort than others who lack political skill. Much like the other skills described, political skill cannot stand alone as a manager's skill. In particular, using political skill without appropriate levels of other skills can lead to promoting a manager's own interest rather than reaching organizational goals. Managers at all levels require political skill. Managers must avoid others taking control that they should have in their work positions. Top managers may find that they need higher levels of political skill in order to successfully operate in their environments. Interacting with competitors, suppliers, customers, shareholders, government and the public may require political skill at all levels of management. 3.6 LEVELS OF MANAGERS The term 'Levels of Management' refers to a line of demarcation between various managerial positions in an organization. The number of levels increases with the size of the business and work force increases and vice versa. The level of management determines a chain of command, the -amount of authority and status enjoyed by any managerial position. The levels of management can be classified in three broad categories; 1. Top Level/ Administrative level 2. Middle level/ Executive level 3. Lower Level/Supervisory/Operative/First line managers Managers at all these levels perform different functions. The role of managers at all the three levels is summarized in fig. (1) LP – INM 322 pg. 22 Lecture Notes By: Khotso Shai Fig. 1 Levels of Management 3.6.1 Top Level of Management It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions. The role of the top management can be summarized as follows: 1. Top management lays down the objectives and broad policies of the enterprise. 2. It issues necessary instructions for preparation of department budgets, procedures, schedules, etc. 3. It prepares strategic plans and policies for the enterprise. 4. It appoints the executive for middle level, i.e., departmental managers. 5. It controls and coordinates the activities of all the departments. 6. It is also responsible for maintaining a contact with the outside world. 7. It provides guidance and direction. 8. The top management is also responsible towards the shareholders for the performance of the enterprise. LP – INM 322 pg. 23 Lecture Notes By: Khotso Shai 3.6.2 Middle Management The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as: 1. They execute the plans of the organization in accordance with the policies and directives of the top management. 2. They make plans for the sub-units of the organization. 3. They participate in employment and training of lower level management. 4. They interpret and explain policies from top level management to lower level. 5. They are responsible for coordinating the activities within the division or department. 6. They also send important reports and other important data to top level management. 7. They evaluate performance of junior managers. 8. They are also responsible for inspiring lower level managers towards better performance. 3.6.3 Lower Management Lower Level of Management is also known as supervisory/operative level of management. It consists of supervisors, foreman, section officers, superintendent, etc. Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees. In other words, they are concerned with direction and controlling function of management. Their activities include: 1. Assigning of jobs and tasks to various workers. 2. They guide and instruct workers for day to day activities. 3. They are responsible for the quality as well as quantity of production. 4. They are also entrusted with the responsibility of maintaining good industrial relations in the organization. LP – INM 322 pg. 24 Lecture Notes By: Khotso Shai 5. They communicate workers problems, suggestions and recommendatory appeals, etc. to the higher level and higher-level goals and objectives to the workers. 6. They help to solve the grievances of the workers. 7. They supervise and guide the sub-ordinates. 8. They are responsible for providing training to the workers. 9. They arrange necessary materials, machines, tools, etc. for getting the things done. 10.They prepare periodical reports about the performance of the workers. 11.They ensure discipline in the enterprise. 12.They motivate workers. 13.They are the image builders of the enterprise because they are in direct contact with the workers. It therefore obvious that at all levels of management including that of a supervisor involves manpower (human resources), materials, money, methods, machinery and morale. The relative importance of each of these management activities depends on the managers position in the management hierarchy. LP – INM 322 pg. 25 Lecture Notes By: Khotso Shai 3.7 FUNCTIONS OF MANAGEMENT Organizations/institutions always strive for their survival through success. Their successes are measured through achievement of their goals/aims/objectives. Organization differ in size and in services they provide. No matter how small or large an organization is, it needs leadership and direction for its smooth running. The role played by management are planning, organising, activating/coordinating, controlling and more importantly leading people into a functioning, Productive and unified organization. • Planning: means choosing appropriate organizational goals and courses of action to best achieve those goal. • Organising: Organising is the process by which the structure and allocation of jobs is determined. • Activating: means motivating, coordinating and energizing individuals and groups to work together to achieve organizational goals. • Controlling: Controlling is the process that measures current performance and guides it towards some predetermined goal. LP – INM 322 pg. 26 Lecture Notes By: Khotso Shai Following are the basic elements in various functions of management. 1. Forecasting ▪ Forecasting is a necessary preliminary to planning. ▪ Forecasting estimates the future work or what should be done in future; for example, with regards to sales or production or any other aspect of business activities. ▪ Forecasting begins with the sales forecast and is followed by production forecast and forecasts for costs, finance, purchase, profit or loss, etc. 2. Planning ▪ Planning all aspects of production, selling, etc., are essential in order to minimize intangibles. ▪ Planning is a process by which a manager anticipates the future and discovers alternative courses of action open to him. ▪ Planning is a rational, economic, systematic way of making decisions today which will affect the future, e.g. what will be done in future, who will do it and where it will be done. ▪ In fact, every managerial act is some type of planning. ▪ Without proper planning, the activities of an enterprise may become confused, haphazard and ineffective. For example, if a refrigerator making concern does not plan in advance-how many refrigerators and of what capacities are to be made before the summer starts and thus it does not procure necessary materials, tools, supplies and personnel in time, it cannot reach the production targets and hence may not run profitably. ▪ Prior planning is very essential for utilizing the available facilities/resources (men, materials, machines, methods, money etc.) to the best of advantage. LP – INM 322 pg. 27 Lecture Notes By: Khotso Shai There are six steps involved when planning; a) Establishing a realist target. b) Use of the 5W’s and 1H “triggers” (What? Who? Where? Why? How?) c) Sequence the activity in the order in which they should occur d) Communicate your plan to those who will be involved in it or affected by it. e) Implement your plan f) Check the progress against the plan to make sure that your original target is being achieved. 2.1 Benefits of Planning ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ 2.2 Provides direction Encourage managers to think ahead Formally allocate resources Requires a formal statement of what to be achieved Provides, in writing information for successors Seeks to prevent problems Allows managers at all levels to see how their departments or divisions fit into the total organizational plan Allows employees to provide inputs, thus making them part of the organisation. Motivates by providing challenging and realistic goals for employees Leads to more profitable organizational performance Leads to better coordination of organizational efforts Problems Associated with Planning ➢ ➢ ➢ ➢ ➢ LP – INM 322 Untrained planner Lack of follow through Lack of upper, middle or lower management support Lack of communications Lack of time, (too busy putting out fire) pg. 28 Lecture Notes By: Khotso Shai 2.3 Types of Plans a) Long term plans: it often referred to as strategic plans because they should describe the organizational strategy. Long term plane typically reflects forward thinking of five or more years. Because of the uncertainty of the future events this plans describes a general direction rather than activities. Long term plans are often beyond the scope of the production planner’s activities. In large organizations upper level managers are usually responsible for long term planning. b) Medium term plans: it is often called business plans. It reflects forward thinking of two to five years. They are more specific than long term plans, because there is less uncertainty. c) Short term plans: these reflect forward thinking of less than two years into the future. Over this period of time the amount of uncertainty is typically reduced to a level of that monthly sales can be projected, production figures can be planned and appropriate orders can be placed with suppliers and distributors. Some short-term plans are called schedules are details plans that rarely projected more than six months into the future. They are often single use plans in that they commit labour, time and/or materials for use in the day to day activities of the organisation. d) Contingency plans: these are types of plans that does not fit in the time -horizon category. This is because of the uncertainty involved in the making decisions for the future, and alternative course of action should be considered. Contingency plans are an alternative course of action that may be taken if an activity does not produce the unexpected results. LP – INM 322 pg. 29 Lecture Notes By: Khotso Shai 3. Organizing ▪ Organising is the process by which the structure and allocation of jobs is determined ▪ Organising involves determining activities required to achieve the established company objectives, grouping these activities in a logical basis for handling by subordinate (persons), managers and finally, assigning persons to the job designed. In carrying out the above, the manager will delegate necessary authority to his subordinates (persons). They, in turn, will take the necessary responsibility. ▪ Organising means, organising people, materials, jobs, time, etc., and establishing a framework in which responsibilities are defined and authorities are laid down. 4. Staffing ▪ Staffing is the process by which managers select, train, promote and retire their subordinates. ▪ Staffing involves the developing and placing of qualified people in the various jobs in the organisation. ▪ Staffing is a continuous process. The aim is to have appropriate persons to move into vacated positions or positions newly created in the enterprise. 5. Directing ▪ Directing is the process by which actual performance of subordinates is guided towards common goals of the enterprise. ▪ Directing involves motivating, guiding and supervising subordinates towards company objectives. ▪ Directing thus includes: ▪ Giving instructions to subordinates. ▪ Guiding the sub-ordinates to do the work. ▪ Supervising the subordinates to make certain that the work done by them as per the plans established. LP – INM 322 pg. 30 Lecture Notes By: Khotso Shai ▪ Directing involves functions such (a) Leadership, (b) Communication, (c) Motivation, and (d) Supervision a) i. ii. Leadership is the quality of the behaviour of the persons (Managers) whereby they inspire confidence and trust in their subordinates, get maximum cooperation from them and guide their activities in organized effort. Leadership is more than personal ability and skill. b) i. ii. iii. iv. Communication Communicating is the process by which ideas are transmitted, received and understood by others for the purpose of effecting desired results. Communication may be verbal or written orders, reports, instruction etc. A manager communicates to his subordinates as what they should do. An ineffective communication leads to confusion, misunderstanding, dissatisfaction and sometimes even strikes. c) i. Leadership Motivation Motivating means inspiring the subordinates to do a work or to achieve company objectives effectively and efficiently. (d) Supervision ▪ Supervision is necessary in order that, (i) the work is going on as per the plan established, and (ii) the workers are doing as they were directed to do. 6. Coordinating ▪ Coordinating means achieving harmony of individual effort towards the accomplishment of company objectives. LP – INM 322 pg. 31 Lecture Notes By: Khotso Shai ▪ Ineffective coordination between different functions of a business enterprise (such as production, sales, administration, etc.) can ruin the enterprise. ▪ Coordination involves making plans that coordinate the activities of subordinates, regulate their activities on the job and regulate their communications. ▪ Besides other factors, informal relationships within an organization also tend to facilitate co-ordination, because workers who like each other outside the factory, prefer to work together on the job also. 7. Controlling ▪ ▪ (i) (ii) ▪ ▪ ▪ ▪ (i) (ii) (iii) LP – INM 322 Controlling is an aspect of supervisor’s job that ensures that his plans are carried out according to plan. Controlling is the process that measures current performance and guides it towards some predetermined goal. Controlling involves: the monitoring of programme activities to make sure that end objectives are being met the initiation of corrective action as required to over-come problems, if any, hindering the accomplishment of objectives. Checks and examinations are required on a periodic basis to ensure that the things are proceeding as per plans established. Controlling is necessary to ensure that orders are not misunderstood, rules are not violated and objectives have not been unknowingly shifted. Control means control of persons and other things. Controlling is a continuous process which measures the progress of operations, compares, verifies their conformity with the predetermined plan and takes corrective action, if required. Hence, we can say that controlling process Sets standards, Measures job performance, and Takes corrective action, if required. pg. 32 Lecture Notes By: Khotso Shai 7.1 What is being Controlled Supervisors have responsibility of exercising control over all the activities in their departments and these includes; ➢ Time – exercising control over time is a critical element in keeping work schedule on track. Work starts and finish on time, exercise proper control on workers arriving late or leaving early before the shift ends or if they break for lunch early or taking longer than expected. ➢ Behaviour – this means providing employees with standard against which their actions can be compared. ➢ Materials and Equipment – using material wisely with minimum lose and equipment or machinery effectively is vital for the success and making profit for the company. Supervisors are the people closely involved in the day to day operations and therefore she/he is the one who will that materials is not wasted or machinery is operated and working properly. Their responsibility is to ensure that controls are in place to prevent waste and improper use of material and machinery. They have to come up with action plan where usage is not good that might include training, corrective actions and Standard Operating Procedure (SOP’s) where necessary. ➢ Process – sometimes the process of converting inputs to outputs is flawed or perhaps the flow of work is insufficient. Work is not moving through the organizations in a smooth flow, it is bottlenecked or slow at one or more stations. When this kind of problems occurs in the productions line, we expect a supervisor to examine the satiation and provide a solution for more efficient methods to follow. ➢ Cost – money expended to produce a goods or services must be must be controlled if an organisation wants to have profit. How to spend money profitably is vital. ➢ Quality and Quantity – the supervisors greatest concerns are to meet the quantity and quality standards sets in order to produce or provide the services. If there are too many defective goods produced or service LP – INM 322 pg. 33 Lecture Notes By: Khotso Shai rendered that requires repeat calls, then the unit/department and ultimately the company will not be profitable. 7.2 Types of controls Some controls can be implemented before productions, some during production and others after productions. Hence there are three types of controls; ➢ Pre-controls: these are controls that are in place before the product is produced or services is provided. They are preventive in nature and that means their purpose is to prevent problems before they could occur rather than correcting problems. Another example of pre-controls is the maintenance activities performed to keep machines in good working condition. ➢ Concurrent controls - this controls are used to identify and correct problems during productions ➢ Feedback controls or post-controls - are exercised after product is manufactured or services is provided. These controls are directed at the results of the process and are primarily implemented through reporting and feedback. When a supervisor is receiving a report from the quality control on the number of rejects from a given period, the supervisor is exercising feedback controls. Information given after the product is manufactured or service is provided provides a basis of feedback. Did we meet or exceeds the goals? do we have customer complaint? Are we within budget? These are questions answered through post-controls. LP – INM 322 pg. 34 Lecture Notes By: Khotso Shai 8. Decision Making ▪ Decision making is the process by which a course of action is chosen from available alternatives for the purpose of achieving desired results. ▪ An outstanding quality of a successful manager is his ability to make sound and logical decisions. ▪ Management decisions range from establishing consumer operational development needs to the selection of a preferred system design configuration to many other aspects of business enterprise. The following are the main types of decisions every organization need to take: 1. Programmed and non-programmed decisions: Programmed decisions are concerned with the problems of repetitive nature or routine type matters. A standard procedure is followed for tackling such problems. These decisions are taken generally by lower level managers. Decisions of this type may pertain to e.g. purchase of raw material, granting leave to an employee and supply of goods and implements to the employees, etc. Non-programmed decisions relate to difficult situations for which there is no easy solution. These matters are very important for the organisation. For example, opening of a new branch of the organisation or a large number of employees absenting from the organisation or introducing new product in the market, etc., are the decisions which are normally taken at the higher level. 2. Routine and strategic decisions: Routine decisions are related to the general functioning of the organisation. They do not require much evaluation and analysis and can be taken quickly. Ample powers are delegated to lower ranks to take these decisions within the broad policy structure of the organisation. Strategic decisions are important which affect objectives, organizational goals and other important policy matters. These decisions usually involve huge investments or funds. These are non-repetitive in nature and are taken after careful analysis and evaluation of many alternatives. These decisions are taken at the higher level of management. LP – INM 322 pg. 35 Lecture Notes By: Khotso Shai 3. Tactical (Policy) and operational decisions: Decisions pertaining to various policy matters of the organisation are policy decisions. These are taken by the top management and have long term impact on the functioning of the concern. For example, decisions regarding location of plant, volume of production and channels of distribution (Tactical) policies, etc. are policy decisions. Operating decisions relate to day-to-day functioning or operations of business. Middle and lower level managers take these decisions. An example may be taken to distinguish these decisions. Decisions concerning payment of bonus to employees are a policy decision. On the other hand, if bonus is to be given to the employees, calculation of bonus in respect of each employee is an operating decision. 4. Organizational and personal decisions: When an individual takes decision as an executive in the official capacity, it is known as organizational decision. If decision is taken by the executive in the personal capacity (thereby affecting his personal life), it is known as personal decision. Sometimes these decisions may affect functioning of the organisation also. For example, if an executive leaves the organisation, it may affect the organisation. The authority of taking organizational decisions may be delegated, whereas personal decisions cannot be delegated. 5. Major and minor decisions: Another classification of decisions is major and minor. Decision pertaining to purchase of new factory premises is a major decision. Major decisions are taken by top management. Purchase of office stationery is a minor decision which can be taken by office superintendent. 6. Individual and group decisions: When the decision is taken by a single individual, it is known as individual decision. Usually routine type decisions are taken by individuals within the broad policy framework of the organisation. Group decisions are taken by group of individuals constituted in the form of a standing committee. Generally, very important and pertinent matters for the organisation are referred to this committee. The main aim in taking group decisions LP – INM 322 pg. 36 Lecture Notes By: Khotso Shai is the involvement of maximum number of individuals in the process of decision-making. 8.2Problem Solving and Decision Making 8.2.1 Approach to Decision making and Problem solving A leader is expected to get the job done. To do so, he or she must learn to plan, analyze situations, identify and solve problems (or potential problems), make decisions, and set realistic and attainable goals for the unit. These are the thinking or creative requirements of leadership and they set direction. These actions provide vision, purpose, and goal definition. They are your eyes to the future, and they are crucial to developing a disciplined, cohesive, and effective organization. Decision-making and problemsolving are basic ingredients of leadership. More than anything else, the ability to make sound, timely decisions separates a leader from a non-leader. It is the responsibility of leaders to make high quality decisions that are accepted and executed in a timely fashion. Leaders must be able to reason under the most critical conditions and decide quickly what action to take. If they delay or avoid making a decision, this indecisiveness may create hesitancy, loss of confidence, and confusion within the unit, and may cause the task to fail. Since leaders are frequently faced with unexpected circumstances, it is important to be flexible — leaders must be able to react promptly to each situation. Then, when circumstances dictate a change in plans, prompt reaction builds confidence in them. As a leader, you will make decisions involving not only yourself, but the morale and welfare of others. Some decisions, such as when to take a break or where to hold a meeting, are simple decisions which have little effect on others. Other decisions are often more complex and may have a significant impact on many people. Therefore, having a decision making, problem-solving process can be a helpful tool. Such a process can help you to solve these different types of situations. LP – INM 322 pg. 37 Lecture Notes By: Khotso Shai Within business and the military today, leaders at all levels use some form of a decision-making, problem-solving process. There are at least several different approaches (or models) for decision-making and problem solving. We will present three such approaches: The first, and most common, is the seven-step problemsolving, decision-making process; the second is a more complex problem-solving 8.2.2 Seven steps problem solving, Decision making process Having a logical thought process helps ensure that you will not neglect key factors that could influence the problem, and ultimately your decision. In fact, you should always apply a clear, logical thought process to all leadership situations that you encounter. The seven-step process is an excellent tool that can guide you in solving problems and making those sound and timely decisions. The seven steps are: 1. Identify (recognize/define) the problem. 2. Gather information (facts/assumptions). 3. Develop courses of action (solutions). 4. Analyze and compare courses of action (alternatives/solutions). 5. Make a decision; select the best course of action (solution). 6. Make a plan. 7. Implement the plan (assess the results). LP – INM 322 pg. 38 Lecture Notes By: Khotso Shai Fig. 8.1 Fishbourne Identify the Problem Being able to accurately identify the nature of a problem is a crucial undertaking. All leadership problems, whether they involve a work-related situation or a counseling session, are exploratory in nature — that is, leaders do not always identify the right cause of a problem or develop the best plan. In fact, two of the most common errors of leaders are identifying the wrong problem and identifying the wrong causes of a problem. Plus, the tendency for leaders to make mental errors increases as their levels of stress increase. We all make mistakes. If leaders are given false information, it may lead them to incorrect problem identification and to incorrect assumptions about the causes of a problem. Then, if leaders fail to determine the true source of a problem, they may develop an inadequate plan. Learn to identify the real problems. Consider all angles. Learn to seek only accurate information that leads to the real causes of a problem. To ensure that information is accurate, question its validity. In other words, leaders must take what accurate information they have, use their best judgment, and make educated LP – INM 322 pg. 39 Lecture Notes By: Khotso Shai assumptions about the causes of a problem. Then, they must consider the courses of action that will be most likely to succeed. Even though leaders may use the right problem-solving process, incorrect problem identification can lead to the wrong decision. It is a fallacy to think that using a correct formula or set of steps will lead you to the real problem and to a successful course of action. Your values, character, knowledge, and way of thinking have a direct and vital impact on the problems you identify as important. These inner qualities affect how you view, gather, and analyze information bearing on the identified problem. Gather Information In this step, leaders must gather all available information that pertains to or can influence the situation (identified problem) from sources such as higher, lateral, and subordinate levels of command as well as from applicable outside agencies. Although some of the information may not bear on the problem at hand, it must be available for leaders to consider when developing and analyzing courses of action. The amount of available time in a leadership situation can be a limiting factor on how much time a leader spends performing the various steps of the problem-solving, decision making process. If time is extremely limited, this is the only step that leaders may omit so they can quickly think through the remaining steps. Develop Courses of Action With the problem identified and available information gathered, you are now ready to develop possible courses of action. Keep an open mind throughout this step and be prepared to anticipate change. “Sixty percent (of good problemsolving) is the ability to anticipate; 40 percent . . . is the ability to improvise, to reject a preconceived idea . . . , and to rule by action instead of acting by rules.” (S.L.A. Marshall) Think of as many “what-ifs” as you can and prepare for them — do not be surprised. The laws of probability are strongly in favor of surprise. Develop courses of actions to counteract events that might hinder accomplishment of your mission. Conducting “brainstorming” sessions is a good technique to use when there is difficulty in developing courses of action. Brainstorming is a creative technique that encourages several people to suggest as many solutions to a problem LP – INM 322 pg. 40 Lecture Notes By: Khotso Shai as possible. Generally, you want to have at least two or three possible courses of action — more if the situation dictates and time permits. Analyze and Compare Courses of Action The next step is to determine which course of action will best solve the problem. Therefore, leaders should develop as many advantages and disadvantages for each course of action as possible. Then, they must objectively and logically analyze the advantages and disadvantages of each one against the advantages and disadvantages of the others. It is another fallacy to think that the course of action with the most advantages or the fewest disadvantages is the one that you should recommend or use. In most cases that may be true, but by weighing the importance of each advantage and disadvantage, there may be times when the “best” course of action has fewer advantages (all critical to mission accomplishment) and one or more disadvantages than another choice (but most are insignificant). Up to this point in the problem-solving, decision-making process, leaders should have involved subordinates to research the problem, gather information, and develop and analyze the various courses of action. Subordinates are more likely to support a plan or decision if they took part in its development. This technique will pay off in terms of increased interest, higher morale, and better efficiency by team members. Make a Decision After you have carefully analyzed the possible courses of action using all available information, consider your intuitions and emotions. The decision-making process is not a purely objective, mathematical formula. The human mind does not work that way, especially under stress. Instead, the mind is both rational and intuitive, and since the decision-making process is a thought process, it is also both rational and intuitive. Your intuition is that aspect of your mind that tells you what “feels” right or wrong. Your intuition flows from your instincts and experience. However, never make the mistake of making decisions guided totally by emotions or intuitions and immediately doing what “feels” right. This is a prescription for disaster. Follow the problem-solving process as rationally and objectively as possible. Gather information; then develop, analyze, and compare courses of action. Consider your intuition or hunches, emotions, and values. Try to identify a “best” course of action that is logical and likely to succeed and that also LP – INM 322 pg. 41 Lecture Notes By: Khotso Shai “feels” right in terms of your intuition, values, and character. Finally, make your decision, make a plan, and take action. Make a Plan Make a plan that includes who would do what, when, where, how, and why. Be as specific as time permits, but do not leave out vital information that could prevent mission accomplishment. Plus, ensure that you specify the what, when, where, how and why for all personnel or elements under your authority. Finally, include contingencies in your plan that address possible unexpected situations or actions. Develop these contingencies based on the assumptions made when you identified the problem and gathered available information. As you did when developing the courses of action, be prepared to anticipate change. The ability to make appropriate changes in decisions and plans requires a certain flexibility of mind — a crucial trait of a good problem-solver, decisionmaker, and planner. Implement the Plan Once the decision and plan are made, it is time to act. In this final step, you must put the plan into action, then evaluate it to ensure that the desired results are being achieved. Evaluation is often a neglected step in the decision-making process. The key to evaluation is to seek feedback constantly on how your plan is doing. Get feedback from subordinates. Go to the point of the action and determine first hand if the plan is working or not. If not, determine why not and take immediate action to correct the plan. Mental flexibility is vital. 8.2.3 Four (4) Methods of Decision Making According to Patterson, Grenny, McMillan, and Switzler, there’s four common ways of making decisions: ▪ ▪ ▪ ▪ Command – decisions are made with no involvement. Consult – invite input from others. Vote – discuss options and then call for a vote. Consensus – talk until everyone agrees to one decision. LP – INM 322 pg. 42 Lecture Notes By: Khotso Shai 1. Command Style Decision Making According to Patterson, Grenny, McMillan and Switzler, command is when there’s no involvement: “Let’s start with decisions that are made with no involvement whatsoever. This happens in one of two ways. Either outside forces place demands on us (demands that leave us no wiggle room), or we turn decisions over to others and then follow their lead. We don’t care enough to be involved – let someone else do the work.” 2. Consult Style Decision Making According to Patterson, Grenny, McMillan and Switzler, consult is when you ask for input: “Consulting is a process whereby decision makers invite others to influence them before they make their choice. You can consult with experts, a representative population, or even everyone who wants to offer an opinion. Consulting can be an efficient way of gaining ideas and support without bogging down the decision-making process. At least not too much. Wise leaders, parents, and even couples frequently make decisions in this way. They gather ideas, evaluate options, make a choice, and then inform the broader population.” 3. Vote Style Decision Making Patterson, Grenny, McMillan and Switzler, suggest only using a vote when team members agree to support whatever decision is made: “Voting is best suited to situations where efficiency is the highest value – and you’re selecting from a number of good options. Members of the team realize they may not get their first choice, but frankly they don’t want to waste time talking the issue to death. They may discuss options for a while and then call for a vote. When facing several decent options, voting is a great time saver but should never be used when team members don’t agree to support whatever decision is made. In these cases, consensus is required.” LP – INM 322 pg. 43 Lecture Notes By: Khotso Shai 4. Consensus Style Decision Making Patterson, Grenny, McMillan and Switzler, suggest using consensus when there’s high stakes or you need everyone to fully support the final decision: This method can be both a great blessing and a frustrating curse. Consensus means that you talk until everyone honestly agrees to one decision. This method can produce tremendous unity and high-quality decisions. If misapplied, it can also be a horrible waste of time. It should only be used with (1) high-stakes and complex issues or (2) issues where everyone absolutely must support the final choice. 9.0 PERSONAL QUALITIES Why are supervisor skills important? These proficiencies are essential because they set the tone for the workplace. If someone is a good supervisor, they can perform their job more efficiently and gain more respect from their peers and subordinates. It can be challenging to learn all of the skills needed to be an effective leader, but a few key items should be noted. A “supervisor” is anyone who directs and is responsible for the work of others. This person is familiar with the daily work their staff and receives direction from those who make bigger decisions for the company. Overall, they need to be able to: ▪ ▪ ▪ ▪ Communicate well with diverse groups in and out of the organization Utilize problem-solving skills, creativity, and critical thinking Demonstrate qualities like empathy, support, and concern Be able to develop their employees based on their individual strengths There are 15 essential skills for supervisors that they need to possess in order to do their job as successfully as possible. Excellent Communication Communication skills are one of the most important assets a good supervisor should have. They need to assign projects clearly and communicate important information to staff regularly. Transparency is important, and supervisors should strive to keep an open door for employees to approach them with their needs or issues. LP – INM 322 pg. 44 Lecture Notes By: Khotso Shai Conflict Resolution Conflict can happen in the workplace. A good manager recognizes this and creates an effective method of minimizing conflict and dealing with it when it takes place. Being a good listener and mediator is also important in tricky situations. Strong Leadership The supervisor should serve as an example to their staff. They must assert leadership and make their employees want to follow them as they take their organization through normal business changes. A strong leader will encourage their team and lead the way to success. Critical Thinking There are many tasks that a supervisor needs to deal with that require excellent critical thinking skills. With a high-level position comes more responsibilities, and more decisions to be made. Critical thinking skills make the decision process easier. Time Management Time management is essential in a business with deadlines and deliverables. Being able to juggle timelines and meet goals regularly means supervisors must have both the awareness of when things need to be complete and how much time it takes to do them – plus getting their team to work on the same timeline as well. Priority Management Managers must also be able to structure the workload to ensure all projects are given the correct amount of priority, and that high priority projects are finished first. They need to be familiar with all company goals in order to determine which projects are the most important. LP – INM 322 pg. 45 Lecture Notes By: Khotso Shai Diversity Awareness Diversity is extremely important in organizations today. A great manager recognizes this and encourages their company to continue working on company diversity and inclusion (D&I). The supervisor may even decide to to join the team that works on D&I in order to help with the initiative more. Problem Solving When issues in the workplace arise, supervisors should use their skills to handle them. Great problem-solving skills help a manager assess the situation at hand and develop an effective plan on how to tackle it. Guiding Workloads Supervisors need to guide the overall work of their employees. Their view of work must be broader than that of their employees. Being an effective supervisor means understanding the bigger picture, and adjusting work to accommodate that. They must give direction and carry it out purposefully, plan the workflow and give active direction to staff members. Workload Organization Constantly changing priorities in the office mean that a supervisor needs to continually organize the work. They need to take into account the demands placed on the employees when they are organizing the workload. They should also recognize the employees’ needs and listen to feedback when making work and organizational decisions. Staff Development A large role of a supervisor is developing personnel. Thorough and strategic employee development is essential for a happy and satisfied staff, so supervisors should get to know their subordinates’ strengths and ambitions so they can help them grow as a valuable asset within the company. They should have a plan for the employee’s development, and set goals for how they can work on their weaknesses and contribute to projects where they are likely to succeed. Managing Performance LP – INM 322 pg. 46 Lecture Notes By: Khotso Shai The supervisor is responsible for managing employee performance. They should continually coach direct reports on how to achieve their individual potential and set appropriate expectations. Managers should look at future projects and determine how well the employee should perform, and manage them accordingly. On occasion, there may be performance problems with a member of the team. In this situation, the supervisor must calmly approach the issue and discuss a plan to overcome it. Interpersonal Skills Developing and maintaining good relationships with other departments is also vital. The supervisor wants to ensure both their employees and the organization meet their goals, so they should recognize the importance of working together cohesively. Openness to Advice The supervisor should look to their peers for advice and guidance when they are faced with a problem that is outside of their expertise. Issues can be assuaged successfully when they have a mentor in their organization or field who is willing to offer advice when requested. Willingness to Learn A last trait that supervisors should have is the willingness to learn and grow. While their team is learning, they too should be developing themselves in their careers and trying to learn as much as they can about both their subject matter and about supervising their employees in the best way possible. Conclusion With these essential skills, managers can effectively solve any supervisory issues they may encounter, and prepare for future situations that require the oversight of a knowledgeable and dedicated supervisor. The Importance of Communication within Organizations: Communication can be defined as the exchange of an information, thought and emotion between individuals or groups; in other words, communication plays a fundamental role in balancing individual and organizational objectives. Communication is the activity of conveying information. The communication LP – INM 322 pg. 47 Lecture Notes By: Khotso Shai process is complete once the receiver has understood the message of the sender. Feedback is critical to effective communication between parties. Communication within organizations is classified into two groups as formal and informal. The types of formal communication are “up to down”, “down to up”, “horizontal” and “cross” communication. Effective Communication is significant for managers in the organizations so as to perform the basic functions of management, i.e., Planning, Organizing, Leading and Controlling. Communication helps managers to perform their jobs and responsibilities. Communication serves as a foundation for planning. All the essential information must be communicated to the managers who in-turn must communicate the plans so as to implement them. Organizing also requires effective communication with others about their job task. Similarly, leaders as managers must communicate effectively with their subordinates so as to achieve the team goals. Controlling is not possible without written and oral communication. Managers devote a great part of their time in communication. They generally devote approximately 6 hours per day in communicating. They spend great time on face to face or telephonic communication with their superiors, subordinates, colleagues, customers or suppliers. Managers also use Written Communication in form of letters, reports or memos wherever oral communication is not feasible. Thus, we can say that “effective communication is a building block of successful organizations”. In other words, communication acts as organizational blood. The importance of communication in an organization can be summarized as follows: ➢ Communication promotes motivation by informing and clarifying the employees about the task to be done, the manner they are performing the task, and how to improve their performance if it is not up to the mark. ➢ Communication is a source of information to the organizational members for decision-making process as it helps identifying and assessing alternative course of actions. ➢ Communication also plays a crucial role in altering individual’s attitudes, i.e., a well-informed individual will have better attitude than a less-informed individual. Organizational magazines, journals, meetings and various other LP – INM 322 pg. 48 Lecture Notes By: Khotso Shai forms of oral and written communication help in molding employee’s attitudes. ➢ Communication also helps in socializing. In today’s life the only presence of another individual foster communication. It is also said that one cannot survive without communication. ➢ As discussed earlier, communication also assists in controlling process. It helps controlling organizational member’s behaviour in various ways. There are various levels of hierarchy and certain principles and guidelines that employees must follow in an organization. They must comply with organizational policies, perform their job role efficiently and communicate any work problem and grievance to their superiors. Thus, communication helps in controlling function of management. An effective and efficient communication system requires managerial proficiency in delivering and receiving messages. A manager must discover various barriers to communication, analyze the reasons for their occurrence and take preventive steps to avoid those barriers. Thus, the primary responsibility of a manager is to develop and maintain an effective communication system in the organization. LP – INM 322 pg. 49 Lecture Notes By: Khotso Shai UNIT III – EMPLOYMENT, DEVELOPMENT. 4.0 MOTIVATION TRAINING AND STAFFING Definition: The staffing function can be viewed as consisting of a series of steps that managers perform to provide the organization with the right people in the right positions. The staffing process: 8 steps 1. Human resource planning: The purpose of human resource planning is to ensure that the personnel need of the organization will be met. (Patient/therapist ratio), (bed per staff)… 2. Recruitment: They may accomplish it through newspaper and professional journal advertisements, employment agencies. 3. Selection: The selection process involves evaluating the candidates and choosing the one whose credentials match job requirements. 4. Introduction and orientation: This step integrates the selected employee into the organization (orientation to all organizational policies such as leave, standard precautions, organizational chart and communication). 5. Training and development: (attendance to lectures, BCLS certification, training with specialized staff, post grad. education...) 6. Performance appraisal. (punctuality, number of sick leave days, teamwork, knowledge to organizational work, response to supervisor corrections, efficiency and efficacy, respect of organizational rules etc…) 7. Employment decisions ▪ Rewards, ▪ Promotion ▪ Demotion LP – INM 322 pg. 50 Lecture Notes By: Khotso Shai 8. Separation 4.0.1 Human Resource Sources of applicants: ▪ There are 2 sources of applicants, internal and external. ➢ Internal sources are the employees of the organizations which have policies of promoting from within. This has a positive impact on the organizational members and the internal working environment as there is chance for improving the position. ➢ A second potential source for candidates is of outside the organization. Organizations can develop programs using on-visits to colleges, schools or classified adverts. LP – INM 322 pg. 51 Lecture Notes By: Khotso Shai 4.0.2 Recruitment and 3. Selection ▪ The different procedural steps involved in the selection process are: ➢ Job description: A job description is a combination of short statements that describe both the work to be performed and the essential requirements of the particular jobs. (i) Able to… (ii) Is required to… (iii) Should have the knowledge of… (iv) Is skilled in… (v) Has experience of… The job description includes: ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Job title. Department in which the job exists. Work to be performed by the new employee. Job responsibilities. Machines, tools and processes (equipment and tasks) to be handled. Relation with other jobs. Qualification and experience required. Physical activities. Working conditions. Application form: An application blank or form is the most universal mechanism used to screen (select) the applicants to be called for interview and other tests for selection purposes. LP – INM 322 pg. 52 Lecture Notes By: Khotso Shai Employment tests: Very often considerable training and money is expended upon an employee when it is discovered that he is unsuited to do the job for which he was employed. For this reason, and in order to avoid the recurrence of such a situation, employment tests are, sometimes, considered an essential part of the selection program. An employment test measures selected psychological factors such as ability to reason, capacity for learning, physical or motor abilities etc. Characteristics of employment tests are as follows: A test should be designed on the basis of a sound job analysis program. The test should be reliable (an applicant if tested even second or third time under the same condition should achieve the same score = test-retest). The test should be valid (highly specific to the objective it intends to measure and to the particular business situation i.e. physical therapy technician, therapist, senior staff). Types of employment tests: ▪ ▪ ▪ ▪ ▪ Achievement tests. Intelligence tests (maths, problem solving…) Interest tests (general knowledge…). Motor tests (fine and gross motor…driving,..). Personality tests (psychological assessment). 4.0.3 Interviewing An interview is a conversation directed to a definite purpose between an applicant and the interviewer and a much of the interaction between these two is carried on by gestures, postures, facial expressions and other communicative behavior. LP – INM 322 pg. 53 Lecture Notes By: Khotso Shai One can evaluate the general appearance, looks, nervousity or tension or carelessness, flexibility, … It is in the interview that both the prospective employee and employer get the chance to learn and know about each other. Postures LP – INM 322 pg. 54 Lecture Notes By: Khotso Shai Purpose of interview: ▪ To find the most suitable candidate for the job. (the best for that job). ▪ To view and appraise the applicant in totality. (to evaluate completely the person and not just from the written tests). ▪ To study the applicants motivational and emotional pattern. (mental and emotional quotient, capability to solve problem, oversensitivity, ……motivation to work = for the money, temporarily or committed). ▪ To explore the applicant innate abilities (hidden skills). ▪ To study the impact of the applicant’s personality upon others. Types of interviews: ▪ Guided interview: A list of questions is prepared based on an analysis of the job specifications. This type of interview measures the personality traits as self – reliance, emotional stability, ability to get along with others, willingness to shoulder responsibility etc. what to do to treat or evaluate a CVA, a complex case,… what is the important aspect in work,…) ▪ Unguided interview: It is not directed by the interviewer, instead the applicant talks about what he chooses. Unguided interview is more often used in situation other than employment, e.g. counseling, handling grievances etc. i.e. what to do if a drive or oil pump leaks or computer screen went blank, what are the strength of the candidate…. Physical examination: ▪ Physical examination or medical check-up has to be carried out for the freshly recruited people. As it denotes the physical wellbeing of an employee. ▪ Physical examination has at least three objectives: ➢ To confirm the applicant’s ability to meet the job requirements. ➢ It serves to protect the organization against the unwarranted claims under Workman’s Compensation Act or against law suits for damages. It helps to prevent communicable diseases entering the organization. The physical examination should be done by a qualified expert appointed by the organization to certify whether the candidate is physically fit to meet the requirements of the job. LP – INM 322 pg. 55 Lecture Notes By: Khotso Shai 4.2 MOTIVATION AND MORALE The term motivation is derived from the Latin word 'emovere' which means 'to move'. Motivation is the complex of psychological forces. Motivation is something that moves a person into action and inspires him to continue in the course of action already initiate. There are different definitions of motivation. Stanley Vanace opinion is that 'motivation implies any motion or desire which so conditioned one's will that the individual is propelled into action'. Dale and Beach felt motivation as 'a willingness to expend energy to achieve a goal or reward'. Shartte understood motivation as 'a reported urge or tension to move in a given direction or to achieve certain goals'. Objectives of Motivation The objectives of motivation put forth by psychologists and sociologists are the means of answering two basic questions concerning human behaviour i.e., why an individual is impelled to act and what determines the direction of his actions. According to prominent Psychologists and Sociologists, who attempted to evaluate the human behaviour in different contexts. a) According to Skinner motivation objectively exists to make an individual learn what may regarded as positive behaviour i.e. desirable behaviour. b) Abraham Maslow observes that the objective of motivation is always to create a need for an individual. It is just like the process of lower needs being satisfied and the higher needs gradually emerging (Hierarchy or Needs). c) Frederick Herzberg felt that the important objective of motivation is to provide opportunities to become a better expert on one's job, to handle more demanding assignments, to control one's own work rather than be supervised. d) Mclelland opined that the objective of motivation is to create a strong desire in an individual, where he derives a special kind of joy in successfully attaining an objective in accomplishing a task. in facing up to a challenge rather than monetary or other rewards. e) Victor Wroom thinks that motivation should work as a means of communication for increasing positive values in the employees. Obviously, the objectives of motivation are to increase efficiency by good performance. LP – INM 322 pg. 56 Lecture Notes By: Khotso Shai Motives are abundant and divergent. There is no single strategy that will motivate the employees forever and everywhere. The motives for individuals to work are numerous. Types of Motivation There are basically two types of motivation: a) Negative motivation, and b) Positive motivation. Negative Motivation The traditional form of motivation emphasises more on authority. This approach consists of forcing people to work by threatening to fire them if they do not. It believes that man is inherently lazy, pleasure seeking, despises work. To prevent him from doing so, there must be close supervision. This approach further assumes that employees' performance would be increased by fear, which causes the people to act in a certain way. Because they are afraid of the consequences like, lay-off, demotions, and dismissals. This approach paid off fairly well in the early days of the industrial revolution when workers and their families were so close to starvation. Imposition of punishment frequently results in frustration among those punished, leading to the development of maladaptive behaviour. The negative motivation also creates a hostile state of mind and unfavourable attitude to the job. The approach of negative motivation had proved to be ineffective as the employees were responding to them perversely. In recent years, however, people have begun to expect more from their jobs than sheer punishment. Positive Motivation The behavioural approach is much sophisticated than traditional approach which recognizes the importance of positive aspects of motivation. Positive motivation involves the possibility of increased motive satisfaction. Positive motivation is a process of attempting to influence others to do their best, and thereby adopting good human relations. It seeks to create an environment which will make the individual talent flourish and encourages informal communications positively. Positive motivation is generally based on rewards. The positive motivation may be extrinsic or intrinsic. The extrinsic motivators can be enjoyed after completion of work. The intrinsic factors are those which occur at LP – INM 322 pg. 57 Lecture Notes By: Khotso Shai the time of performance of work. Since positive motivation appears to be more workable, now let us discuss the role of some positive motivators, which promote efficiency. Motivators which promotes Efficiency The exact nature and extent of motivator would depend upon the internal and external factors prevailing in a given organisation. Some of the important motivators which can promote efficiency are: i) ii) iii) iv) v) vi) vii) viii) ix) Job Enlargement Job Enrichment Delegation of authority Job Security Status and pride Participation Congenial work environment Flexible hours Good health insurance and benefits Job Enlargement and Job Enrichment If the additional responsibilities to enhance variety are of a horizontal nature, it is termed job enlargement while if the additional responsibilities are of vertical nature involving delegation and decentralization the process is termed job enrichment. Job enrichment can be ensured provided the work is meaningful, a worker has knowledge of the work and the worker is entrusted with the responsibility through proper delegation. According to Hippo, job autonomy can be secured if the following are given: (1) setting one's own work schedule and work breaks; (2) varying work place; (3) changing duties with others; (4) making crisis decisions in problem situations rather than relying on the boss; and (5) making one's own quality checks, etc. It is obvious that the most important condition for achieving better work performance from employees is LP – INM 322 pg. 58 Lecture Notes By: Khotso Shai to give them interesting worthwhile, challenging, and responsible job, to ensure that the employees are not frustrated by meaningless, disinteresting and purposeless tasks, fundamental rethinking of both the process and purpose of management is necessary. Koontz and O'Donnell have suggested the following to ensure job enrichment: (a) giving workers more latitude in deciding about such things as work methods, sequence, and pace or by letting them make decisions about accepting or rejecting materials; (b) encouraging participation of subordinates and interaction between workers; (c) giving workers a feeling of personal responsibility for their tasks; (d) taking steps to make sure that people can see how their tasks contribute to a finished product and the welfare of the enterprise; (e) giving people feedback on their job performance preferably before their supervisors get it; and (f) involving workers in analysis and change of physical aspects of work environment such as layout of office or plan, temperature, lighting and cleanliness. Delegation of Authority A very common technique being advocated for motivating employees is delegation of authority. Delegation of the rights and obligations to execute a given task very often proves to be a strong motivating force. Job Security Job security is one of the good promoters of organizational efficiency and economy. The employees feel responsible and committed to the work as long as their job security is ensured. They would be more attached with the organisation and its day-to-day / activities. LP – INM 322 pg. 59 Lecture Notes By: Khotso Shai Status and Pride Status and pride are linked with the organizational set-up. Age of the organisation and its reputation in the society will also motivate the employee. Employees working in the well reputed organizational will be motivated better than the employees of other institutions. They feel proud of their employment in the organisation. Participation Participation is an individual's mental and emotional involvement in a group situation that encourages him to contribute to group goals and to share responsibility for them. Employees' participation yields their personal commitment and involvement in accomplishing organizational goals. It also produces flow of communication for informal work force. Self-guidance and monitoring in the employees may be expected. Produce high degree of mutual respect and trust among organizational members. A high degree of confidence is shown in subordinates which facilitates interpersonal process. Congenial Work Environment Motivation is some form of exchange between the individual and his work environment. The congenial work environment gives to the individual sets of preference or values; which constitute the goals towards which the instinctual drives are expressed. Further, ' the work environment is the source of norms of behaviour which draws the lines between good and bad, right and wrong, legitimate and illegitimate. Delegating of Authority As a leader, delegating is important because you can’t—and shouldn’t—do everything yourself. Delegating empowers your team, builds trust, and assists with professional development. And for leaders, it helps you learn how to identify who is best suited to tackle tasks or projects. Of course, delegating tasks can lighten your workload, and also, delegating does much more than just get stuff off your plate. For one, the people who work for you will be able to develop new skills and gain knowledge, which prepares them for more responsibility in the future. LP – INM 322 pg. 60 Lecture Notes By: Khotso Shai “Delegation can also be a clear sign that you respect your subordinates’ abilities and that you trust their discretion,” Williams writes. “Employees who feel that they are trusted and respected tend to have a higher level of commitment to their work, their organization, and, especially, their managers.” Why Managers Fail to Delegate While the benefits of delegating are obvious and plentiful, many managers still fail to delegate effectively. The reality is that there are several myths and misconceptions about delegating that can make some leaders wary of handing off work to others. ▪ They think delegating is just passing off work to someone else – Managers often mistake delegation for passing off work, so they don’t do it, and they wind up wasting their time as well as the company’s time and resources. Delegation can be a chance to make workloads more manageable, but more than that, it can provide really valuable teaching opportunities for your employees ▪ They think they can do it better – the self-enhancement effect, which is a manager’s tendency to evaluate a work product more highly the more involved he/she is in its production. The faith in supervision effect, which is when people have a tendency to think work performed under the control of a supervisor is better than work performed without as much supervision ▪ ▪ They’re nervous about letting go – Letting go can be challenging, but accepting that you can’t do everything yourself is important. ▪ ▪ They’re worried delegating will take longer than just doing the work – Another common barrier to delegation is that it can take longer to teach someone else how to do a task than to just do it yourself. And while that might be true the first time you delegate the task, over time, the amount of time you have to dedicate to that task decreases because you won’t have to be involved with it at all. ▪ ▪ Lack of trust – some supervisors do not trust their subordinate’s ability to do anything beyond routine assignments. LP – INM 322 pg. 61 Lecture Notes By: Khotso Shai 4.3 TRAINING AND DEVELOPMENT Training is the formal and systematic modification of behaviour through learning which occurs as a result of education, instruction, development and planned experience.” (Armstrong, 2001: 543) Development is any learning activity, which is directed towards future, needs rather than present needs, and which is concerned more with career growth than immediate performance. Nature of Training and Development: In simple terms, training and development refer to the imparting of specific skills, abilities and knowledge to an employee. A formal definition of training and development is - it is any attempt to improve current or future employee performance by increasing an employee’s ability to perform through learning, usually by changing the employee’s attitude or increasing his or her skills and knowledge. The need for training and development is determined by the employee’s performance deficiency, computed as follows: Learning Dimension Training ➢ Who Non-Managers ➢ What Development Managers ➢ Why Technical/Mechanical/Electrical Theoretical/Conceptual and others Ideas Specific job-related information General knowledge ➢ When Short term Long term To bring the distinction among training, education and development into sharp focus, it may be stated that the training is offered to operatives, whereas developmental programmes are meant for employees, their grades notwithstanding. ➢ Training and Development Methods It is indeed the responsibility of the senior management of any company to understand not only the apparent but also the ‘hidden’ needs of their employees. LP – INM 322 pg. 62 Lecture Notes By: Khotso Shai Generally speaking, of modern Organization, there are two major types of trainings: ▪ On-Job training ▪ Off-Job Training The primary difference between both the types is that, in case of on-job training, employee learning takes place at his actual place and while doing his actual job. Whereas the off-job training is conducted at a remote location which is away from employee’s normal working environment. On job training becomes more important when objective is to build economies around high productivity. On job trainings are usually more common in larger firms due to their large internal structures i.e. in case of large firms, probability of employee mobility within the internal boundaries of the firm, increases to some extent, and on-job training plays its vital part by developing the required level of skills for the employees. Different Methods of On-the-Job Training LP – INM 322 pg. 63 Lecture Notes By: Khotso Shai Off-the-Job Training Methods Training provided away from the workplace is called off the job training. The working environment is duplicated and is used for training. Hence this method is also called as vestibule training. Generally, this type of training is followed for the new employees who has zero knowledge on the working environment and the doesn’t have the skills for the current job. Also, when large number of employees need to be trained, off the job training method is the best option. LP – INM 322 pg. 64 Lecture Notes By: Khotso Shai Importance of Training and Development: Training and development programmes, as was pointed out earlier, help remove performance deficiencies in employees. This is particularly true when – a) The deficiency is caused by a lack of ability rather than a lack of motivation to perform, b) The individuals involved have the aptitude and motivation need to learn to do the job better, and c) Supervisors and peers are supportive of the desired behaviors. There is greater stability, flexibility and capacity for growth in an organization. Training contributes to employs contribute to the stay with the organization. Growth renders stability to the workforce. Further, trained employees tend to stay with the organization. They seldom leave the company. Training makes the employees versatile in operations. All-rounder can be transferred to any job. Flexibility is therefore ensured. Growth indicates prosperity, which is reflected in increased profits from year to year. Who else but well-trained employees can contribute to the prosperity of an enterprise? The purpose of training The aim of training is to help the organisation achieve its purpose by adding value to its key resource – the people it employs. The purpose of training is to: ▪ ▪ ▪ ▪ ▪ To increase productivity and quality To promote versatility and adaptability to new methods To reduce the number of accidents To reduce labour turnover To increase job satisfaction displaying itself in lower labour turn-over and less absenteeism ▪ To increase efficiency When does the need for training arise? ▪ ▪ ▪ ▪ ▪ ▪ The installation of new equipment or techniques A change in working methods or products produced A realization that performance is inadequate Labour shortage, necessitating the upgrading of some employees A desire to reduce the amount of scrap and to improve quality An increase in the number of accidents LP – INM 322 pg. 65 Lecture Notes By: Khotso Shai ▪ Promotion or transfer of individual employees. ▪ Ensures availability of necessary skills and there could be a pool of talent from which to promote from. Advantages of training 1. Leads to improved profitability and/or more positive attitudes toward profits orientation. 2. Improves the job knowledge and skills at all levels of the organization. 3. Improves the morale of the workforce. 4. Helps people identify with organizational goals. 5. Helps create a better corporate image. 6. Fasters authentically, openness and trust. 7. Improves the relationship between boss and subordinate. 8. Aids in organizational development. 9. Learns from the trainee. 10.Helps prepare guidelines for work. 11.Aids in understanding and carrying out organizational policies. 12.Provides information for future needs in all areas of the organization. 13.Organization gets more effective decision-making and problem solving. 14.Aids in development for promotion from within. 15.Aids in developing leadership skill, motivation, loyalty, better attitudes, and other aspects that successful workers and managers usually display. 16.Aids in increasing productivity and/or quality of work. 17.Helps keep costs down in many areas, e.g. production, personnel. Administration, etc. 18.Develops a sense of responsibility to the organization for being competent and knowledgeable. 19.Improves labor-management relations. 20.Reduces outside consulting costs by utilizing competent internal consulting. Disadvantages of training 1. Can be a financial drain on resources; expensive development and testing, expensive to operate? 2. Often takes people away from their job for varying periods of time; 3. Equips staff to leave for a better job 4. Bad habits passed on 5. Narrow experience LP – INM 322 pg. 66 Lecture Notes By: Khotso Shai Purposes of Performance Appraisal Performance appraisal has become a term used for a variety of activities through which organizations seek to assess employees and develop their competence, improve performance, and allocate rewards (Fletcher, 2001). Grote (2002) identified the following purposes of performance appraisal: ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ Providing feedback to employees about their performance. Facilitating decisions concerning pay increases, promotions, layoffs. Encouraging performance improvement. Setting and measuring goals. Determining individual and organizational training and development needs. Confirming that good hiring decisions are being made. Provide legal support for personnel decisions. Improving overall organizational performance (pp. 4-5). Benefits of Performance Appraisal Widespread attention has been given in recent years to the function of the formal appraisal process because of the idea that a well designed and implemented appraisal system can create many benefits for organizations. Mohrman, ResnickWest and Lawler (1989) found that the appraisal process can: ➢ provide a managerial instrument for goal setting and performance planning with employees, ➢ improve employee motivation and productivity, ➢ encourage interaction concerning employee growth and development, ➢ make available a basis for wage and salary changes, and e) generate information for a variety of human resource decisions. Murphy and Cleveland (1995) defined four ways in which performance appraisal can help organizations. First, performance appraisal can improve organizational decisions including reward allocation, promotions, layoffs and transfers. Second, performance appraisal can improve individual career decisions and decisions about where to focus one’s time and effort. Individual employees must make many decisions concerning their present and future roles in an organization. They must decide how, or if, they will develop future strengths and what sort of career goals they should pursue. Performance appraisal can provide accurate, timely and detailed feedback to assist in the quality of these decisions. LP – INM 322 pg. 67 Lecture Notes By: Khotso Shai A third way that Murphy and Cleveland (1995) suggest that performance appraisal can assist organizations is by providing a set of tools for evaluating the effectiveness of current or planned ways of operating. Finally, performance appraisal can impact employees’ views of and commitment to their organization. The quality of performance appraisal and feedback has a role in the perceptions of the fairness, legitimacy, and rationality of a wide range of organizational practices. Oberg (1972) noted that appraisals can help encourage supervisors to observe their employees more closely and to do a better job of managing them. None of these four benefits will automatically accrue to an organization due to the mere presence of a performance appraisal system (Murphy & Cleveland). However, an organization that does a good job at performance appraisal may incur some or all of these benefits. Challenges of Performance Appraisal Supervisors and employees generally have ambivalent attitudes, at best, toward performance appraisal (Cederblom & Pemerl, 2002). Although most would recognize the perceived benefit, in principle, of documenting, communicating, and setting goals in areas of performance, many are also frustrated concerning the actual benefit received from performance appraisal in their organizations. The benefits and rewards of performance appraisal appear to be often overstated (Longenecker & Nykodym, 1996). Nickols (2007) suggests that “the typical performance appraisal system devours staggering amounts of time and energy, depresses and demotivates people, destroys trust and teamwork and, adding insult to injury, it delivers little demonstrable value at great cost” (p. 13). The findings of several studies addressing the challenges of performance appraisal and the consequences of performance appraisal that is not done well are summarized below. Oberg (1972) mentions several pitfalls that are common to performance appraisal systems: a) b) c) d) e) They demand too much from supervisors, Standards and ratings vary widely and sometimes unfairly, Personal values and bias can replace organizational standards, Employees may not know how they are rated due to lack of communication, The validity of ratings is reduced by supervisory resistance to give the ratings - particularly negative ratings, LP – INM 322 pg. 68 Lecture Notes By: Khotso Shai f) Negative feedback can demotivate employees, and g) They interfere with the more constructive coaching relationship that should exist between superiors and their employees. LP – INM 322 pg. 69 Lecture Notes By: Khotso Shai UNIT IV -FINANCE AND ACCOUNTING What Are Capital Expenditures – CapEx? Capital expenditures, commonly known as CapEx, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, an industrial plant, technology, or equipment. CapEx is often used to undertake new projects or investments by the firm. Making capital expenditures on fixed assets can include everything from repairing a roof to building, to purchasing a piece of equipment, to building a brand-new factory. This type of financial outlay is also made by companies to maintain or increase the scope of their operations. Put differently, CapEx is any type of expense that a company capitalizes, or shows on its balance sheet as an investment, rather than on its income statement as an expenditure. The Formula for CapEx Is CapEx = ΔPP&E + Current Depreciation where: CapEx = Capital expenditures ΔPP&E = Change in property, plant, and equipment Capital Expenditures vs. Operating Expenditures (Expenses): An Overview In financial accounting capital expenditures (CapEx) and operating expenditures (expenses) (OPEX) are two categories of business expenses. However, there are distinct differences between the two, including their respective tax treatments. Capital expenditures comprise major purchases that will be used in the future. Operating expenditures (expenses) represent day-to-day costs that are necessary to keep a business running. LP – INM 322 pg. 70 Lecture Notes By: Khotso Shai Capital Expenditures Capital expenditures consist of the funds that companies use to purchase major physical goods or services that the company will use for more than one year. A company might incur CapEx to increase or improve its fixed assets, for example. Fixed assets are treated as noncurrent assets from an accounting standpoint, which means that they will not be consumed in the first year. Capital expenditures can include: ▪ ▪ ▪ ▪ Plant and equipment purchase Building expansion and improvements Hardware purchases, such as computers Vehicles to transport goods The type of industry in which a company operates largely determines the nature of its capital expenditures. The asset purchased can be a new item or something that improves the productive life of a previously purchased asset. The capital expenditure is recorded as an asset on the balance sheet under the property, plant, and equipment (PP&E) section. However, it's also recorded on the cash flow statement under investing activities because it's a cash outlay for that accounting period. Once the asset is being used, it is depreciated over time to spread the cost of the asset over its useful life. In other words, each year, a portion of the fixed asset is being used up. Depreciation represents the degree of wear and tear on a fixed asset; companies may deduct the amount of depreciation on their annual tax return. Capital expenditures are often depreciated over 5 to 10 years, but in the case of real estate, they may be depreciated over more than two decades. Operating Expenses Operating expenditures are the ordinary and necessary expenses (O&NE) that a company spends to operate its business each day. Operating expenditures can include: ▪ Rent ▪ Utilities ▪ Salaries and pension plan contributions LP – INM 322 pg. 71 Lecture Notes By: Khotso Shai ▪ Any expense that falls under selling, general, and administrative expense (SG&A) on the income statement ▪ Research and development (R&D) ▪ Property taxes ▪ Business travel Because operating expenses make up the bulk of a company's ongoing costs, management typically looks for ways to reduce its OPEX without causing a critical drop in quality or production output. In contrast to CapEx, operating expenses are fully tax-deductible in the year they are made. An item that normally would classify as a capital expenditure may be considered an operating expense if the company chooses to lease it instead of buying it. This can be an attractive accounting option if the company has limited cash flow and wants to be able to deduct the total cost of an item in a tax year. Key Differences vs. CapEx and OPEX Funds that fall under capital expenditures are for major purchases that will be used in the future. The life of these purchases extends beyond the current accounting period in which they were purchased. Because these costs can be recovered only over time through depreciation, companies usually prepare a capital expense budget apart from OPEX. Operating expenses represent the day-to-day expenses necessary to run a business. Because these are short-term costs that are used up in the same accounting period in which they were purchased, it makes sense for them to have a separate budget. What Is a Cash Flow Statement? The statement of cash flows, or the cash flow statement, is a financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company. The cash flow statement (CFS) measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses. The cash flow statement complements the balance sheet and income statement and is a mandatory part of a company's financial reports since 1987. LP – INM 322 pg. 72 Lecture Notes By: Khotso Shai The aim of a cash flow statement should be to assist users: ▪ to assess the company's ability to generate positive cash flows in the future ▪ to assess its ability to meet its obligations to service loans, pay dividends etc ▪ to assess the reasons for differences between reported and related cash flows ▪ to assess the effect on its finances of major transactions in the year. The statement therefore shows changes in cash and cash equivalents rather than working capital. The Difference Between Fixed and Variable Assets A fixed asset is a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income. Fixed assets are not expected to be consumed or converted into cash within a year. Fixed assets most commonly appear on the balance sheet as property, plant, and equipment (PP&E). They are also referred to as capital assets. Variable assets, on the other hand, refer to equipment, inventory and accounts receivable. The accounts receivable refers to those current assets that report the amount of money that the customers owe the business for the services or goods that have been provided on credit terms. Variable and Fixed Cost in Accounting Fixed costs are predetermined expenses that remain the same throughout a specific period. These overhead costs do not vary with output or how the business is performing. To determine your fixed costs, consider the expenses you would incur if you temporarily closed your business. You would still continue to pay for rent, insurance and other overhead expenses. Some examples of fixed costs include: ▪ ▪ ▪ ▪ ▪ Rent Telephone and internet costs Insurance Employee Salaries Loan Payments LP – INM 322 pg. 73 Lecture Notes By: Khotso Shai Any small business owner will have certain fixed costs regardless of whether or not there is any business activity. Since they stay the same throughout the financial year, fixed costs are easier to budget. They are also less controllable than variable costs because they’re not related to operations or volume. Variable costs, however, change over a specified period and are associated directly to the business activity. These are based on the business performance and the volume of services the business generates. Some examples of variable costs include: ▪ ▪ ▪ ▪ Direct labor Commissions Taxes Operational expenses Since they are changing continuously and the amount you spend on them differs from month-to-month, variable expenses are harder to monitor and control. They can decrease or increase rapidly, cut your profit margins and result in a steep loss or a whirlwind profit for the business. LP – INM 322 pg. 74 Lecture Notes By: Khotso Shai UNIT V: THE WORKING ENVIRONMENT (BUSINESS AND ITS ENVIRONMENT NATURE OF BUSINESS (ENTERPRISE) Business may be understood as the organized efforts of enterprise to supply consumers with goods and services for a profit. Businesses vary in size, as measured by the number of employees or by sales volume. But all businesses share the same purpose: to earn profits. The purpose of business goes beyond earning profit. There are: ➢ ➢ ➢ ➢ ➢ It is an important institution in society. Be it for the supply of goods and services Creation of job opportunities Offer of better quality of life Contributing to the economic growth of the country. Hence, it is understood that the role of business is crucial. Society cannot do without business. It needs no emphasis that business needs society as much. Business Today Modern business is dynamic. If there is any single word that can best describe today’s business, it is change. This change makes the companies spend substantially on Research and development (R & D) to survive in the market. Mass production and mass marketing are the norms followed by business enterprises. The number of companies with an annual turnover of M100 000.00 each was few in the 1960’s – 70’s. The figure has gone up by hundreds these days. Today’s business is characterized by diversification, which may be: Concentric Diversification - It refers to the process of adding new, but relates products or services. Horizontal Diversification - Adding new, unrelated products or services for present customers is called horizontal Diversification. Conglomerate Diversification - It refers to adding new and unrelated products or services. LP – INM 322 pg. 75 Lecture Notes By: Khotso Shai Going international is yet another trend followed by modern enterprise houses. Enterprise houses are exposed to global competition, which argues well for consumers. Also occupying a major role is science in the global economic scenario. Business in the 21st Century Large organizations, with a large workforce will not exist. They will be ‘Mini’ organizations. Business during the 21st century will be knowledge-based; tomorrow’s manager needs not spend his time on file pushing and paper-shuffling. Information technology will take care of most of that work. Organizations will become flat. Linear relationship between the boss and manger and authority flowing downwards and obedience upward will disappear. Employees will have no definite jobs. Most of the jobs will last for two to five years. Remuneration will depend on one’s contribution to organization. Business Goals: Profit – Making profit is the primary goal of any business enterprise. Growth – Business should grow in all directions over a period of time. Power – Business houses have vast resources at its command. These resources confer enormous economic and political power. Employee satisfaction and development – Business is people. Caring for employee satisfaction and providing for their development has been one of the objectives of enlightened business enterprises. Quality Products and Services – Persistent quality of products earns brand loyalty, a vital ingredient of success. Market Leadership – To earn a niche for oneself in the market, innovation is the key factor. Challenging – Business offers vast scope and poses formidable challenges. Joy of creation – It is through business strategies new ideas and innovations are given a shape and are converted into useful products and services. LP – INM 322 pg. 76 Lecture Notes By: Khotso Shai Service to society – Business is a part of society and has several obligations towards it. Business Environment Environment refers to all external forces, which have a bearing on the functioning of business. Environment factors “are largely if not totally, external and beyond the control of individual industrial enterprises and their managements. The business environment poses threats to a firm or offers immense opportunities for potential market exploitation. Types of Environment Environment includes such factors as socio-economic, technological, supplier, competitor and the government. There are two more factors, which exercise considerable influence on business. They are physical or natural environment and global environment. ➢ Technological Environment Technology is understood as the systematic application of scientific or other organized knowledge to practical tasks. Technology changes fast and to keep pace with it, businessmen should be ever alert to adopt changed technology in their businesses. ➢ Economic Environment There is close relationship between business and its economic environment. Business obtains all its needed inputs from the economic environment and it absorbs the output of business units. ➢ Political Environment It refers to the influence exerted by the three political institutions viz., legislature executive and the judiciary in shaping, directing, developing and controlling business activities. A stable and dynamic political environment is indispensable for business growth. LP – INM 322 pg. 77 Lecture Notes By: Khotso Shai ➢ Natural Environment Business, an economic pursuit of man, continues to be dictated by nature. To what extend business depends on nature and what is the relationship between the two constitutes an interesting study. ➢ Global or international Environment Thanks to liberalization, Lesotho companies are forces to view business issues from a global perspective. Business responses and managerial practices must be fine-tuned to survive in the global environment. Social and culture Environment It refers to people’s attitude to work and wealth; role of family, marriage, religion and education; ethical issues and social responsiveness of business. Environment – Business Relations Business is the product of the technological, political-legal, economic, social – cultural, global and natural factors amidst which it functions. Three features are common to this web of relationship between business and its environment. ▪ There is symbolic relationship between business and its environment and among the environmental factors. In other words, business is influenced by its environment and in turn, to certain degree, it will influence the external forces. Similarly, political-legal environment influences economic environment and vice versa. The same relationship between other environment factors too. ▪ These environmental forces are dynamic. They keep on changing as years roll by, so does business. ▪ The third feature is that a particular business firm, by itself, may not be in a position to change its environment. But along with other firms, business will be in a position to mould the environment in its favor. LP – INM 322 pg. 78 Lecture Notes By: Khotso Shai Importance of Environmental Study The benefits of environmental study are as follows; ▪ Development of broad strategies and long-term policies of the firm. ▪ Development of action plans to deal with technological advancements. ▪ To foresee the impact of socio-economic changes at the national and international levels on the firm’s stability. ▪ Analysis of competitor’s strategies and formulation of effective countermeasures. ▪ To keep oneself dynamic LP – INM 322 pg. 79 Lecture Notes By: Khotso Shai