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Principles and Practices of
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Amity Center for eLearning
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ADL 01
Amity University
Principles and Practices of Management ADL
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Contents
Chapter 1: Managers and management
i.
Introduction: Managers and management
ii.
What is an organization?
iii.
Why do organizations exist?
iv.
The nature of Management
v.
What is management?
vi.
Who are managers?
vii.
Management Functions
viii.
Management process
ix.
Managerial Roles
x.
Managerial skills
xi.
Levels of Management
xii.
Schools of management thought
Chapter 2: Management planning process
i.
Introduction: Planning
ii.
Origin and Definition
iii.
Why should managers plan?-Advantages
iv.
Approaches to planning
v.
Characteristics of Planning
vi.
Types of plans
vii.
Contemporary issues in planning
viii.
Forecasting and techniques in forecasting
Chapter 3: Organizing
i.
Introduction- Organizing
ii.
What is organizing?
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iii.
Defining organization structure
iv.
Features of an effective organization structure
v.
Organization as a process
vi.
Principles of organizing
vii.
Departmentation
viii.
Span of control
ix.
Authority and delegation of authority
Chapter 4: Staffing
i.
Meaning of Staffing
ii.
Nature of Staffing Function
iii.
Elements of staffing process
iv.
Human Resource Planning or Manpower Planning
v.
Job Analysis
vi.
Recruitment and selection
vii.
Training and Development
viii.
Performance Appraisals
ix.
Promotion and transfer
Chapter 5 : Direction
i.
What is direction?
ii.
Features of directing
iii.
Importance of directing
iv.
Principles of direction
v.
Elements of direction
vi.
Decision making
vii.
Characteristics of decision-making
viii.
Types of decisions
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ix.
The decision-making process
x.
Management by objective-concepts and features
xi.
Communication- Process
xii.
Motivation
xiii.
Importance of motivation
xiv.
Motivation process
xv.
Theories of motivation
Chapter 6 – Co-ordination and Controlling
i.
Introduction-co ordination
ii.
Definitions
iii.
Principles of co-ordination
iv.
Need for co-ordination
v.
Techniques of co-ordination
vi.
Types of co-ordination
vii.
Importance of co-ordination
viii.
Hindrances to co-ordination
ix.
Meaning of control
x.
Characteristics of Control
xi.
The elements of control
xii.
Relationship between the elements of control and information
xiii.
Process of Controlling
xiv.
Kinds of control
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Preface
This book Principles and Practice in management is an attempt to design a comprehensive
introduction to the study of management. Without management, an organization is merely a
collection of men, machines, money and material. In its absence, the resources of production
remain resources and never become production. The text offers a rich fund of contemporary
knowledge, basic concepts, and evolving theories, emerging ideas, latest techniques, everchanging procedures and practices in the field of management in a logical manner.
It is primarily a student-oriented textbook, as it satisfies the requirements of students to gain
basic knowledge of the field of ‗management‘. The subject matter is presented in a simple,
concise and interesting style. Every attempt has been made to maintain easy readability and
quick comprehension.
The book is supported by references from books, websites and video references to benefit of
readers interested in exploring the topics further. It would enable the student to gain access to
relevant information through the internet.
The organization of this book is made according to the functions of management. Managers
are the ‗coordinators‘ in the organization. They are the individuals charged with examining
the workflow, coordinating efforts, meeting goals and providing leadership. Chapter one of
the book examines managers and management. It covers management theory and practice.
Chapter two discuss planning functions in detail. Successful managers deal with foreseen
problems, and unsuccessful manager‘s struggle with unforeseen problems. The difference lies
in planning. The chapter three explores the organizational context in which managers operate.
Organizing is important to managers because it is the means which they use to align work
with resources, so that organizational plans and decisions can be made and carried out
effectively. In Chapter four, we will first define the basic human resource management
functions. Further, each of the elements in the staffing process is discussed in detail. Staffing
is the process of attracting, developing, evaluating and compensating individuals at work. In
fact
the most important duties of human resource managers are to help the organization
reach its goals through effective and efficient utilization of human resources.
Chapter five discusses directing. Direction is telling people what to do and seeing that they do
it to the best of their ability. The chapter six first describes coordinating and then controlling.
Coordination is the integration of several parts into an orderly whole to achieve the purpose of
undertaking and Controlling is the process of comparing actual performance with standards
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and taking necessary corrective action. A reading would definitely enhance student domain
knowledge in management practice.
Chapter 1
Managers and management
Chapter outline
i.
Introduction: Managers and management
ii.
What is an organization?
iii.
Why do organizations exist?
iv.
The nature of Management
v.
What is management?
vi.
Who are managers?
vii.
Management Functions
viii.
Management process
ix.
Managerial Roles
x.
Managerial skills
xi.
Levels of Management
xii.
Schools of management thought
Managers are indispensable part of organizations. They work with and through people to
accomplish the organizational tasks. They play a vital role in efficient and effective utilization
of resources. For any organization to sustain with competitive advantage it needs managers.
This chapter intends to help you understand the basic concepts and theories of management
and describes those skills and role set that makes it to become an effective manager.
What is an organization?
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Managers work in organizations. In the words of Peter Drucker, Organizations need managers
to ensure that the technical tasks of an organization are performed to convert its mission to
reality and to make people capable of joint performance by giving them common goals and
values, the right environment in which to operate, and the ongoing training so that they can
perform and respond to change.
Organizations can be defined as, ―a consciously coordinated social unit, composed of two or
more people that functions on a relatively continuous basis to achieve a common goal or set of
goals‖.
Firstly, each organization has a distinctive purpose. This is the goal or objective that the
organization hopes to accomplish. Secondly it is composed of people. Thirdly, it is
consciously created for the people, which allow coordination of work through formal
structures.
Why do organizations exist?
Organizations came into existence for satisfying the societal needs. There are four prominent
needs identified which gave way for the creation of four fundamental categories of
organizations that we witness in the present world.
All societies have, for example, a need to adapt their environments. This is adaptation need of
the society. It gave rise for production organizations. These organizations came into existence
to produce all the goods the society consumes. In addition to adaptation need all societies
have values and goals. It is goal achievement need and political organizations came into
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existence to ensure to achieve the goals of the society. Societies intend to maintain the above
needs over a period of time. This pattern maintenance need and it gave rise for socializing
organizations they are religious, cultural and educational institutions. To avoid conflicts in the
process of maintenance needs in the society‘s stability maintenance need arouse and deviance
reducing organizations came in. They are the judicial systems.
The nature of Management
The study of management is an evolving concept. Consequently there is no universal language
or theoretical clarification as to underpinning that can managers use to analyze, explain or
make any predications about management of organizations. Hence there is no one definition
to explain the concept of management. Most often management has been seen simply in
terms of getting things done through other people.
What is management?
Simply speaking management is what managers do. Management can be explained as
coordinating work activities so that they are completed efficiently and effectively with and
through other people. Efficiency refers to getting the most output from least amount of inputs
(means) and effectiveness is often described doing the right things(ends).
According to Koontz H, management is defined as art of getting things done through and
with people in formally organized groups.
Laurence A. Appley, defines management as accomplishment of results through the efforts of
other people.
Thus, Management can be broadly defined as a process of planning, organizing, staffing,
directing and controlling to accomplish organizational objectives through the coordinated use
of human and material resources.
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Characteristics of management
The various interpretations of management emphasize three things – 1. It is a systematic
process; 2. It concentrates on reaching organizational goals; 3. It reaches its goals by
reaching through and by people.
Who are managers?
Managers are people responsible for directing the efforts aimed at helping organizations
achieve their goals. A manger is someone who works with and through other people by
coordinating their work activities in order to accomplish organizational goals. A manager is
expected to coordinate various activities with individual accommodating their goals with the
organizational task while performing the functions. Major managerial activities are•
Make decisions
•
Allocate resources
•
Direct activities of others to attain goals
What do managers do? – Management Functions
Henri fayol first proposed that all mangers perform five functions viz., planning, organizing,
commanding, coordinating and controlling. In the mid 1950s the framework of management
functions includes planning, organizing, staffing, directing and controlling. The present text
book also follows this order in its chapterization. Let‘s briefly define themPlanning
A process that includes defining goals, establishing strategy, and developing plans to
coordinate activities.
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Organizing
Determining what tasks are to be done, who is to do them, how the tasks are to be grouped,
who reports to whom, and where decisions are to be made.
Staffing
It is the process of attracting, developing and evaluating individuals at work
Directing
Direction is the managerial function of guiding, motivating, leading and supervising the
subordinates to accomplish desired objectives.
Controlling
Monitoring activities to ensure they are being accomplished as planned and correcting any
significant deviations.
Management process
Management as a process refers to a series of inter- related functions, such as planning,
organizing, staffing, leading(directing)
and controlling to accomplish goals of the
organization through the inputs of various resources.
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Managerial Roles
Managers in order to carry out the functions discussed above, perform various roles in the
organization. Mintzberg‘s research into executives‘ behaviour is the identification of ten
active roles that managers must be prepared to enact. Each role derives from the position of
formal authority within the organisation and defines action, responsibility or an inter-personal,
informational or division nature.
The ten roles are discussed under three categories as
follows:
•
Interpersonal Roles – Managers actually perform several inter-personal related roles. As a
figure head managers symbolize the organization by attending ceremonies, signing legal
documents and representing the organization to the external environment. As a leader, it is
necessary for a manager to motivate subordinates and integrate the need of the subordinate
and the needs of the organization. As a liaison manger need to develop and maintain contacts
with outsiders to gain benefits for the organization.
•
Informational Roles – As a result of the interpersonal roles managers collect and disperse
information, thereby giving rise to their informational role. The informational role is actually
made up of three subroles. As a monitor, managers collect information about the organization
and its environment from all available sources.
As a disseminator, managers transmit
information to others in the organization. As a spokesperson, managers transmit information
about the organization to individuals and groups outside the organization‘s boundary.
•
Decisional Roles – The third major role managers play is the decisional role. It is purely
strategic in nature. As an entrepreneur, managers seek problem and opportunities and initiate
action in the best interests of the organization. As a disturbance handler, managers are
required to handle conflicts among people, group and between organizations or any external
party.
With the role of resource allocator, managers make best of choices to allocate
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resources within the organization. A negotiator role played by a manager allows him to
represent the organization with formal negotiations with third parties such as unions or
government agencies.
Managerial skills
A skill is an ability to translate knowledge into action that results in desired performance.
Robert L Katz identified and classified three categories of skills that are required for
managers. They are as follows:
1. Technical Skill : The ability to apply specialized knowledge or expertise. It includes the
capability to understand and use the tools, procedures, and techniques needed to do the job.
For example, accountants, engineers, etc., possess technical skills acquired through formal
education, while others like a sales person, allow skills to be learned through appropriate
training and job experience.
2. Human Skill : The ability to work with, understand, and motivate other people, both
individually and in groups. It is the capability to manage relationships. It emerges as a spirit
of trust and genuine environment in inter-personal relationships.
All good managers
ultimately to solve problems and view organizations as a whole system need to develop this
skill.
3. Conceptual Skill: The mental ability to analyze and diagnose complex situations and to deal
with abstract concepts and process complex information properly.
Although three skills are essential at each managerial level, the relative importance tends to
vary in its intensity of usage according to the level of management. For example, technical
skills are more important at lower management level where supervisors are dealing with
concrete problems. Long term decisions taken by managers need more of conceptual skill to
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understand the complexity of the situation. Human skill is required across the managerial
levels.
Levels of Management
All managers perform the various management functions but the degree of utility of the
functions differs among the managerial jobs. The differences arise because of the existence of
various levels of management in a typical organization. Level of management refers to line of
demarcation between various managerial positions. Three levels of management are: (i) Top
level management (ii) Middle level management (iii) Lower level management.
The function performed by top managers, middle managers, and lower managers, respectively
are:
TOP MANAGEMENT
Determine objectives and policies
Designs the basic operating and financial structure of an organization
Provides guidance and direction
Lays down standards of performance
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Maintains good public relations
MIDDLE MANAGEMENT
Interprets and explains the policies framed by the top
Issues detailed instruction
Participates in operating decisions
Trains other managers
LOWER MANAGEMENT
Plans day-to-day operations
Assigns jobs to workers
Provides supervision and control over work
Arranges material tools and equipment
Maintains discipline
Hierarchical-Level Differences among Managers and time spent on the management
functions
This diagram below helps us to understand how much of time a manger spends on the
different functions of management. For example the proportionate of time spent by the middle
level manager would be more in organizing and directing because they perform the role of a
liason between the top and the lower level of management.
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Schools of management thought
The art of management has ancient roots. This part of discussion helps us to understand
several view points and approaches that have shaped up managerial thinking during the past
years…
Classical Schools of Management
The classical management theory, developed during the Industrial Revolution when
new problems related to the factory system began to appear. Managers were worried
about increasing the efficiency and productivity, as the major impetus was on
manufacturing. Thus, the classical management theory developed from efforts to find the
―one best way‖ to perform and manage tasks. This school of thought is made up of two
branches: classical scientific and classical administrative, described in the following
sections.
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Classical scientific school:
The classical scientific branch arose because of the need to increase productivity and
efficiency. The classical scientific management laid emphasis on trying to find the best way to
get the most work done by examining how the work process was actually accomplished and
by scrutinizing the skills of the workforce.
The classical scientific school is propagated by various contributors, such as Frederick Taylor,
Henry Gantt, and Frank and Lillian Gilbreth.
Frederick Taylor
Frederick Taylor is known as the ―father of scientific management.‖ Taylor himself rose as a
manager from the shop-floor at Bethlehem Steel plant. He believed that organizations should
study tasks and develop precise procedures. For example, in 1898, Taylor calculated how
much iron from rail cars Bethlehem Steel plant workers could be unloading if they were using
the correct movements, tools, and steps. The result was an amazing 47.5 tons per day instead
of the mere 12.5 tons each worker had been averaging. In addition, by redesigning the shovels
the workers used, Taylor was able to increase the length of work time and therefore decrease
the number of people shoveling from 500 to 140. He also developed an incentive system that
paid workers more money for meeting the new standard. Productivity at Bethlehem Steel shot
up overnight. Due to such amazing results, many theorists followed Taylor's philosophy when
developing their own principles of management.
Fredrick Taylor‘s Scientific Management Prescriptions
•
Develop the science of work (“one best way”).
•
Emphasize an absolute adherence to work standards.
•
Scientifically select, place, and train workers
•
Apply a financial incentive system.
•
Utilize specialized functional supervision.
•
Develop and maintain friendly labor-management relations.
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Henry Gantt
Henry Gantt , was an associate of Taylor. He developed the Gantt chart. i.e a bar graph that
measuresd, planned and completed work along each stage of production, based on time
instead of quantity, volume, or weight. This visual display chart is a widely used planning and
control tool since its inception in 1910.
A sample Gantt chart is shown as follows for a classic home contractor
Frank and Lillian Gilbreth
Frank and Lillian Gilbreth, studied job motions. In Frank's early career as an apprentice
bricklayer, he was interested in standardization and method study. He watched bricklayers and
saw that some workers were slow and inefficient, while others were very productive. He
discovered that each bricklayer used a different set of motions to lay bricks. From his
observations, Frank isolated the basic movements necessary to do the job and eliminated
unnecessary motions. Workers using these movements raised their output from 1,000 to 2,700
bricks per day.
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The contribution of Gilbreth couple can be summed as follows:
Developing new standard methods for doing each job
Selecting, training, and developing workers instead of allowing them to choose their own
tasks and train themselves
Developing a spirit of cooperation between workers and management to ensure that work is
carried out in accordance with devised procedures
Dividing work between workers and management in almost equal shares, with each group
taking over the work for which it is best fitted
Classical administrative school
The classical administrative approach focuses on the total organization. The emphasis is on
the development of managerial principles rather than work methods as contrary to the
scientific school where productivity was the focal point.
Thinkers such as Max Weber, Henri Fayol, Mary Parker Follett, and Chester I. Barnard,
propagated and developed this school of thought. These theorists studied the flow of
information within an organization and emphasized the importance of understanding how an
organization operated.
Max Weber
Max Weber propagated that organizations should be managed impersonally within a formal
organizational structure, where specific rules are followed. He believed that authority should
not be based on a person's personality, instead it was part of a person's job and passed from
individual to individual as one person left and another took over. This non-personal, objective
form of organization was termed bureaucracy.
Weber believed that all bureaucracies have the following characteristics:
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A well-defined hierarchy. All positions within a bureaucracy are structured in a way that
permits the higher positions to supervise and control the lower positions. This clear chain of
command facilitates control and order throughout the organization.
Division of labor and specialization. All responsibilities in an organization are specialized so
that each employee has the necessary expertise to do a particular task.
Rules and regulations. Standard operating procedures govern all organizational activities to
provide certainty and facilitate coordination.
Impersonal relationships between managers and employees. Managers should maintain an
impersonal relationship with employees so that favoritism and personal prejudice do not
influence decisions.
Competence. Competence, not ―who you know,‖ should be the basis for all decisions made in
hiring, job assignments, and promotions in order to foster ability and merit as the primary
characteristics of a bureaucratic organization.
Records. A bureaucracy needs to maintain complete files regarding all its activities.
Henri Fayol
Henri Fayol, developed 14 principles of management based on his day to day managerial
experiences. These principles provide general guidelines on how a supervisor should organize
her department and manage her staff. Although later research has created controversy over
many of the following principles, they are still widely used in management theories.
Division of work: Division of work and specialization produces more and better work with
the same effort.
Authority and responsibility: Authority is the right to give orders and the power to exact
obedience. A manager has official authority because of her position, as well as personal
authority based on individual personality, intelligence, and experience. Authority creates
responsibility.
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Discipline: Obedience and respect within an organization are absolutely essential. Good
discipline requires managers to apply sanctions whenever violations become apparent.
Unity of command: An employee should receive orders from only one superior.
Unity of direction: Organizational activities must have one central authority and one plan of
action.
Subordination of individual interest to general interest: The interests of one employee or
group of employees are subordinate to the interests and goals of the organization.
Remuneration of personnel: Salaries — the price of services rendered by employees —
should be fair and provide satisfaction both to the employee and employer.
Centralization: The objective of centralization is the best utilization of personnel. The degree
of centralization varies according to the dynamics of each organization.
Scalar chain: A chain of authority exists from the highest organizational authority to the
lowest ranks.
Order: Organizational order for materials and personnel is essential. The right materials and
the right employees are necessary for each organizational function and activity.
Equity: In organizations, equity is a combination of kindliness and justice. Both equity and
equality of treatment should be considered when dealing with employees.
Stability of tenure of personnel: To attain the maximum productivity of personnel, a stable
work force is needed.
Initiative: Thinking out a plan and ensuring its success is an extremely strong motivator.
Zeal, energy, and initiative are desired at all levels of the organizational ladder.
Esprit de corps: Teamwork is fundamentally important to an organization. Work teams and
extensive face-to-face verbal communication encourages teamwork.
Mary Parker Follett
Mary Parker Follett stressed the importance of an organization establishing common goals
for its employees. She encouraged managers to allow employees to participate in decision
Principles and Practices of Management ADL
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making and stressed on the importance of people rather than techniques — a concept very
much before her time. As a result, she was a pioneer and often not taken seriously by
management scholars of her time.
Chester Barnard
Chester Barnard, was president of New Jersey Bell Telephone Company. He introduced the
idea of the informal organization — cliques (exclusive groups of people) that are naturally
formed within a company. He felt that these informal organizations provided necessary and
vital communication functions for the overall organization and that they could help the
organization accomplish its goals.
According to Barnard, it was important for managers to develop a sense of common purpose
and a willingness to cooperate. He developed the acceptance theory of management, which
emphasizes the willingness of employees to accept that managers have legitimate authority to
act. Barnard felt that four factors affected the willingness of employees to accept authority:
The employees must understand the communication.
The employees accept the communication as being consistent with the organization's
purposes.
The employees feel that their actions will be consistent with the needs and desires of the other
employees.
The employees feel that they are mentally and physically able to carry out the order.
Behavioral Management Theory
With the passage of time the management principles developed during the classica l
period were not useful in dealing with many management situations and could not explain
the behavior of individual employees. Classical theory had ignored employee motivation
Principles and Practices of Management ADL
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and behavior. As a result, the behavioral school was a natural outgrowth of thi s
revolutionary management experiment.
The behavioral management theory is also known as the human relations movement
because it addresses the human dimension of work. Behavioral theorists believed that a better
understanding of human behavior at work, such as motivation, conflict, expectations, and
group dynamics led to improved productivity and efficiency.
The theorists who contributed to this school viewed employees as individuals, resources, and
assets to be developed and worked with — not as machines, contrary to the past. The human
resource model can be derived to as follows:
Elton Mayo
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Elton Mayo's conducted the famous Hawthorne studies, a series of experiments that
rigorously applied classical management theory thereby revealing its shortcomings. The
Hawthorne experiments consisted of two studies conducted at the Hawthorne Works of the
Western Electric Company in Chicago from 1924 to 1932. The first study was conducted by a
group of engineers seeking to determine the relationship of lighting levels to worker
productivity. Surprisingly enough, they discovered that worker productivity increased as the
lighting levels decreased — that is, until the employees were unable to see what they were
doing, after which the performance naturally declined.
A few years later, a second group of experiments began. Harvard researchers Mayo and F. J.
Roethlisberger supervised a group of five women in a bank wiring room. They gave the
women special privileges, such as the right to leave their workstations without permission,
take rest periods, enjoy free lunches, and have variations in pay levels and workdays. This
experiment also resulted in significantly increased rates of productivity.
Thus, Mayo and Roethlisberger concluded that the increase in productivity resulted from the
supervisory arrangement rather than the changes in lighting or other associated worker
benefits. Because the experimenters became the primary supervisors of the employees, the
intense interest they displayed for the workers was the basis for the increased motivation and
resulting productivity. Essentially, the experimenters became a part of the study and
influenced its outcome. This is the origin of the term Hawthorne effect, which describes the
special attention researchers give to a study's subjects and the impact that attention has on the
study's findings.
The general conclusion from the Hawthorne studies was that human relations and the social
needs of workers are basic pillars of business management. This principle of human
motivation helped revolutionize theories and practices of management.
Abraham Maslow
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Abraham Maslow, a developed the most widely recognized need theories, a theory of
motivation based upon a consideration of human needs . His theory of human needs had three
assumptions:
Human needs are never completely satisfied.
Human behavior is purposeful and is motivated by the need for satisfaction.
Needs can be classified according to a hierarchical structure of importance, from the lowest to
highest.
Maslow broke down the needs hierarchy into five specific areas:
Selfactualization
Esteem
Social
Safety
Physiological
Need Strength
Physiological needs. Maslow grouped all physical needs necessary for maintaining basic
human well-being, such as food and drink, into this category. After the need is satisfied,
however, it is no longer is a motivator.
Safety needs. These needs include the need for basic security and stability, protection, and
freedom from fear. A normal state exists for an individual to have all these needs generally
satisfied. Otherwise, they become primary motivators.
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Belonging and love needs. After the physical and safety needs are satisfied and are no longer
motivators, the need for belonging and love emerges as a primary motivator. The individual
strives to establish meaningful relationships with significant others.
Esteem needs. An individual must develop self-confidence and wants to achieve status,
reputation, fame, and glory.
Self-actualization needs. Assuming that all the previous needs in the hierarchy are satisfied,
an individual feels a need to find himself.
Maslow's hierarchy of needs theory helped managers visualize employee motivation.
Theory X and Theory Y- Douglas McGregor
Douglas McGregor was heavily influenced by both the Hawthorne studies and Maslow. He
believed that two basic kinds of managers exist. One type, the Theory X manager, has a
negative view of employees and assumes that they are lazy, untrustworthy, and incapable of
assuming responsibility. On the other hand, the Theory Y manager assumes that employees
are not only trustworthy and capable of assuming responsibility, but also have high levels of
motivation.
An important aspect of McGregor's idea was his belief that managers who hold either set of
assumptions can create self-fulfilling prophecies — that through their behavior, these
managers create situations where subordinates act in ways that confirm the manager's original
expectations.
As a group, these theorists discovered that people worked for inner satisfaction and not
materialistic rewards, shifting the focus to the role of individuals in an organization's
performance.
Contingency School of Management
The contingency school of management is based on ―it all depends‖ approach. The
propagators of this thought believe that appropriate management actions and approaches
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depend on the situation. Managers with a contingency view use a flexible approach, draw
on a variety of theories and experiences, and evaluate many options as they solve
problems.
Contingency management recognizes that there is no one best way to manage. In the
contingency perspective, managers are faced with the task of determining which managerial
approach is likely to be most effective in a given situation. For example, the approach used to
manage a group of youth working in working in a BPO would be very different from the
approach used to manage a cabin crew for flight.
The contingency approach is highly dependent on the experience and judgment of the
manager in a given organizational environment. The above diagram shows the process flow of
contingency model.
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Systems Theory
A view of an organization as made up a number of interrelated elements, each functioning to
contribute to the purpose of the whole organization which exists in an interdependent
relationship with the external environment. It tries to solve problems within a framework of
inputs, transformation process, outputs and feedback. A system is a set of inter related parts
(made of sub systems mutually related to each other) eg., every department could be a sub
system of a manufacturing plant. The organization receives inputs from the environment and
processes the resources in the system and provides output, products and services. A systems
view concludes that if sub systems are inter-related properly, organizations can create
synergy. It means whole (outputs) is grater than the sum of parts (inputs). A closed system of
organization does not interact with the environment or they are responsive to organization‘s
environment viz., an army. An open system interacts with its environment.
A system comprises of four basic elements while functioning in its environment:
1. Input
2. Process
3. Output
4. Feedback
Inputs
(Men,
money,
technology)
etc.)
Transformation
process
(Activities and
operation)
Feedback
Quality management perspective
Output
(Goals and
profits)
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The TQM approach to management has its goals as the achievement of customer satisfaction
by providing high quality goods and services. Deming, Juran, Ishikawa are among the
pioneers to this approach of management wherein the philosophy and way of managing with
the goal of getting everyone committed to quality, continuous improvement, and the
attainment of customer satisfaction by meeting or exceeding customer expectations was the
way of attaining competitive advantage for organizations.
It has a goal setting of getting everyone committed to quality, continuous improvement and
the attainment of customer satisfaction.
TQM management practices are rooted in several assumptions:
1) Quality: it is less costly for an org to turn off quality than poorly produced products and
services.
2) People: organizational members are seen as naturally caring about the quality of the work
that they do and they are willing to make effort to improve on it too.
3) Organizations: these are the systems made up of many interdependent parts and therefore
problems faced by organizations cut across functional lines.
4) Senior management: quality and continuous improvement is the ultimate responsibility of
op management.
5) Continuous learning and improvement.
The McKinsey 7-S Framework
This framework was developed by Tom Peters, Pascale, Robert Waterman, Anthony Athos.
The research identifies seven Interdependent organizational factors for the functioning of
any effective organization. A change in any of them has a effect on the other. According to
this theory, effective managers achieve a good fit among these seven variables.
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They revealed that 7 interdependent factors in organizations which must be managed
harmoniously.
1) Strategy: the plan of actions that allocate scarce resources to org and commit it to specified
action overtime to reach goals.
2) Structure: an org design such as hierarchical levels, its divisions, and location of authority
within them.
3) Systems: procedural reports and routine processes ,such as those govern the stand and
operating procedures for handling the recitation on an org assets.
4) Staff: imp personnel groups within organizations described demographically.
5) Style: the way managers behave when pursuing organization goals.
6) Skills: the distinctive capabilities of an organization key personnel.
7) Super ordinate goals: the guiding concepts that an organization instills in a manager.
Theory Z Organizations
Given the recent success of Japanese companies, management writers have been carefully
analyzing Japanese organizations. Ouchi showed that American and Japanese firms are
essentially different along seven important dimensions:
1. length of employment
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2. mode of decision making(collective)
3. locations of responsibility
4. speed of evaluation and promotion
5. mechanism of control
6. specialization of career path
7. Nature of concern (holistic) of the employee including family.
Ouchi theory Z proposes a hybrid form of management that incorporates techniques from both
Japanese and North American management practices. It is represented in the diagram below.
In a very short time, his ideas have been well received by practicing managers. Some
companies like HP, IBM, and P&G are using it.
Source: Adapted from W. Ouchi 1981 Theory Z
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Review Questions
1. How would you define management? Discuss the various functions of
management.
2. How do required managerial skills differ in organizational hierarchy?
3. Discuss various schools of management thoughts.
4. What is bureaucracy? List its features and benefits.
5. ―The contingency approach to management is more a commonsense approach
―- elaborate.
6. Discuss the major contributions of Hawthorne studies to management.
7. Why is it important for a manager to understand the Fayol‘s principles of
Management?
Test your understanding
1. …………..Considered the ―father of scientific management.‖
a. Robert Owen
b. Walter Dill Scott
c. Frederick Taylor
d. Charles Babbage
2. ……………….school of thought upholds the process of Organizational transactions to
be documented.
a. Administrative Management
b. Bureaucratic Organization
c. Scientific management
d. Human relations thought
3. Organizational roles that involve serving as a figurehead, leader, and liaison for an
organization are called…………..
a. Interpersonal Roles
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b. Informational Roles
c. Decisional Roles
d. None
4. Organizations exist to help ……….. satisfy its needs
a. Society
b. Corporate
c. Individual
d. All the above
5. ................. is a process that includes defining goals, establishing strategy, and
developing directions to coordinate activities of the organizations.
a. Controlling
b. Coordinating
c. Leading
d. Planning
6. ............ Charts help to summarize work activities and identify those tasks that should
be performed simultaneously or sequentially.
a. Gantt
b. Specialization
c. Quality circles
d. Taylor‘s
7. Hawthorne experiments were carried out in …………
a. Rand Corporation
b. Western electric
c. Microsoft
d. IBM
8. Abraham Maslow‘s theory identifies……….. sets of basic human needs
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a. 4
b. 3
c. 2
d. 5
9. The belief that the techniques appropriate for a manager to use depend on the specific
situation is………………
a. Contingency theory
b. Systems perspective
c. Human relations
d. Scientific school
10. A view of an organization as made up a number of interrelated elements is……..
a. Modern management
b. Classical thought
c. System‘s perspective
d. Administrative school
Answer key
1. C
2. B
3. A
4. A
5. D
6. A
7. B
8. D
9. A
10. C
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Chapter 2
Management planning process
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Chapter outline
i.
Introduction: Planning
ii.
Origin and Definition
iii.
Why should managers plan?-Advantages
iv.
Approaches to planning
v.
Characteristics of Planning
vi.
Types of plans
vii.
Contemporary issues in planning
viii.
Forecasting and techniques in forecasting
Planning refers to the process of deciding what to do and how to do it. Planning occurs at
many levels, from day-to-day decisions made by individuals and families, to complex
decisions made by businesses and governments. Planning is one of those things that we all
know is good, but no one wants to take the time to do. Planning is a mammoth task. While it
may seem that planning only takes time away from running your business, operating a
business without a plan is like searching for a destination without a roadmap ahead. Outcome
of such a trip would be waste of time, resource and energy. For a business, however, the
consequences of such road less travels can even cause to bankruptcy. So, in this chapter let's
take a look as what planning really entails.
The very essence of planning for any business is to see the various opportunities and threats in
its environment for future survival and find ways to exploit and overcome the same as the
case may be.
Origin and Definition
The word "plan" originated from then Medieval Latin word planus which meant a level or flat
surface. This evolved in French into being a map or a drawing of any object made by
Principles and Practices of Management ADL
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projection upon a flat surface. In English this has become a more general sense of a scheme of
action, design or method. Planning in its current usage in business implies a consciousness of
what is happening in the business. It does not preclude creativity or instinct, but it does add a
layer of awareness that spells the difference between survival and extinction in a changing
environment.
Planning can be defined as “the process by which managers establish goals and specify
how these goals are to be attained”. It is concerned with both ends and means. Planning
therefore has two components: Establishment of goals and means for goal attainment. In the
planning as an organizational activity, mangers need to think, what has to be done? Who is
going to do it? How and when will they do it? In this activity managers analyze the past and
future of the business for its fullest exploration of business opportunities and threats to take an
action a step ahead matching the organization‘s resources and capabilities.
Planning is a process that involves defining the organization‘s goals, establishing an overall
strategy for achieving those goals, and developing a comprehensive set of plans to integrate
and coordinate organizational work.
Hence, Planning does involve:
1. an understanding of the business' history
2. an examination of the business' environment
3. an assessment of the business' mission
4. setting goals
5. a process for reaching those goals
6. a process for gathering information
7. a realization that planning is a continuing process that is constantly evolving
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Criteria for effective goals
To make sure that goal setting benefits the organization, managers must adopt certain
characteristics and guidelines. The following describes these criteria:
Goals must be specific and measurable. When possible, use quantitative terms to express
goals.
Goals should cover key result areas. Managers should identify a few key result areas that
contribute most to company performance which help the employees to understand the scope
for their performance.
Goals should be challenging but not too difficult. When goals are unrealistic, they set
employees up for failure and lead to low employee morale. However, if goals are too easy,
employees may not feel motivated. Managers must be sure that goals are determined based on
existing resources and are not beyond the team's time, equipment, and financial resources.
Goals should specify the time period over which they will be achieved. Deadlines give
team members something to work toward and help ensure continued progress.
Goals should be linked to rewards. People who attain goals should be rewarded with
something meaningful and related to the goal.
Why should managers plan?-Advantages
Planning is a detailed method, formulated beforehand, for managing all or part of a business.
It is not something that should be approached haphazardly. There are at least four reasons for
planning:
1. Planning provides direction to managers and non-managers alike. It helps the employees to
know where the organization is going / reaching and it gives guidelines for them as to what to
contribute to reach goals.
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2. Planning offsets and reduces uncertainty and change. Managers are forced to look ahead and
develop reactive and proactive responses with strategies as planning in it self cannot eliminate
the change or uncertainty.
3. Planning provides work coordination. It minimizes overlapping of activities. A well defined
planning process negates all the possible wasteful activities around the task established. Hence
it increases economic efficiency.
4. Planning facilitates control by establishing standards. Through controlling one could compare
actual performances against goals, identify significant deviations, and take any necessary
corrective action.
Steps Planning Process
Planning is ideally a process. It is futuristic, comprehensive, systematic and integrated
process. It involves an extensive decision making process where in analysis of the alternatives
leads to a choice of collective course of action.
A systematic approach to planning process consist the following steps:
Step 1
Developing
awareness of
an
the
state
present
Step 2
Establishing
outcome
statements
• Goal
planning
Step 3
Premising
• Forecasting
• Formulating
assumption
s
Step 4
Determining a
course of action
• Identifying
alternatives
• Evaluating
alternatives
• Selecting
alternatives
Step 5
Formulating
supportive plans
• Making
changes
existing plans
in
• Creating
supportive
new
plans
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1. Developing awareness state:
It is at this step that managers build the foundation on which they will develop their plans.
This foundation specifies an organization‘s current status, pinpoints its commitments,
recognizes its strengths and weaknesses, and set forth a vision of the future. It has been said –
―The further you look back, the further you can see ahead.‖
2. Establishing the outcome statements:
This involves establishing goals. Managers at various levels in the organization‘s hierarchy
set goals. Managers develop an elaborate network of organizational plans, to achieve the
overall goals of their organization.
Goal, Domain and Hybrid Planning – Goal planning involves development of action
statements to move towards the attainment of a specific goal. Whereas, domain/direction
planning involves the development of a course of action that moves an organization toward
one domain or direction. Domain planning occurs at the upper level of the organization where
managers are responsible for dealing with the external environment. Goal planning is likely
to prevail in the technical core, where there is less uncertainty about the task involved.
Hybrid planning is a third approach, where managers begin with the more general domain
planning and commit to move in a particular direction. In simple words, it is an approach
coupling the concepts of Domain and Goal planning.
Situations in which managers are likely to engage in domain planning include
a.
When there is a recognized need for flexibility;
b. When people cannot agree on goals;
c. When an organization‘s external environment is unstable / uncertain.
d. When an organization is starting up or is in a transitional period
3. Developing the premises:
Managers establish the premises, or assumptions, on which they will build their action
statements. The quality and success of any plan depends on the quality of its underlying
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assumptions. Managers collect information by scanning their organization‘s internal and
external environments. They use this information to make assumptions about the likelihood
of future events.
4. Determining a Course of Action:
This step involves evaluating alternatives and selection. It determines how an organization
will get from its current position to its desired future position. Alternatives are determined
through research, experimentation and experience.
Evaluation of the alternatives are
considered through time, cost and resource committed by the organization. It is necessary to
evaluate the alternatives in the light of how well each alternative would help the organization
to reach its goals or the desired domain. The pros and cons of each alternative must be well
examined before the choice is made. Selecting a course of action is done considering the
merits of each alternative.
5. Formulating Supportive or Derivative Plans:
After selecting the best course of action, management has to formulate secondary plans to
support the basic plan. The plans derived for departments units and activities in detailed
manner is called the derived or supportive plans.
To conclude, the successful implementation of plans depends on the co-operation of the
employees. In this view it is important for the organization to involve people at various levels
of the management in the planning activities. Plans have to be set in an atmosphere of
participation and high degree of consensus among the employees. This helps people to be self
motivated to carry on the planned course of action in attaining the organization‘s goal.
Approaches to planning
Managers follow various approaches to planning depending on the extent and intensity of the
goal, participation and delegation. They are
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(a) Top-down approach: In this approach the mission flows from the top level of management.
Authority and responsibility to the planning process is centralized in top. In most of the family
owned businesses it is followed. It is either a straight no or a very little contribution in this
approach to planning by lower level managers. In approach the success depends on the skills,
knowledge and competency of people at the top.
(b) Bottom -up approach: In this approach the lower and middle level managers are encouraged
to plan. This brings commitment to goal and resources by the employees themselves.
(c) Composite approach: Here the top management provides the guidelines for planning and set
the premises. The lower and middle level managers come up with tentative plans. It is then
debated and put in practice.
(d) Team approach: In this method the team managers are identified with specialization in
various functional areas. They do the whole exercise of planning for the organization. They
draft the plan and take approvals from the top management.
Characteristics of Planning
1. Planning is goal-oriented.
a. Planning is made to achieve desired objective of business.
b. Planning identifies the action that would lead to desired goals quickly &
economically.
c. It provides sense of direction to various activities.
2. Planning is looking ahead.
a. It requires peeping in future, analyzing it and predicting it.
b. Thus planning is based on forecasting.
3. Planning is a mental exercise involving creative thinking
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a. A manager can prepare sound plans only if he has sound judgment, foresight
and imagination.
b. Planning is always based on goals, facts and considered estimates.
4. Planning essentially involves choice among various alternatives.
a. Therefore, if there is only one possible course of action, there is no need
planning because there is no choice.
b. A manager is surrounded by various alternatives. He has to pick the best
depending upon requirements & resources of the organization.
5. Planning is the primary function of management / Primacy of Planning.
a. Planning lays foundation for other functions of management.
b. It serves as a guide for organizing, staffing, directing and controlling.
c. All the functions of management are performed within the framework of plans
laid out.
6. Planning is a Continuous Process.
a. Planning never comes into end till the enterprise exists issues, problems may
keep cropping up and they have to be tackled by planning effectively.
7. Planning is all Pervasive.
a. Planning is done at all levels of management; the scope of planning may differ
from one level to another.
b. The top level may be more concerned about planning the organization as a
whole where as the middle level may be more specific in departmental plans
and the lower level plans implementation of the same.
8. Planning is designed for efficiency.
a. Planning leads to accomplishment of objectives at the minimum possible cost.
b. It avoids wastage of resources and ensures adequate and optimum utilization of
resources.
c. Planning leads to proper utilization of men, money, materials, methods and
machines.
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9. Planning is Flexible.
a. Under changed circumstances, the original plan of action must be revised and
updated to male it more practical.
Types of plans
Three major types of plans can help managers achieve their organization's goals: strategic,
tactical, and operational. Operational plans lead to the achievement of tactical plans, which in
turn lead to the attainment of strategic plans. In addition to these three types of plans,
managers should also develop a contingency plan in case their original plans fail.
Operational plans
An operational plan is one that a manager uses to accomplish his or her job responsibilities.
Supervisors, team leaders, and facilitators develop operational plans to support tactical plans.
Operational plans can be a single-use plan or an ongoing plan.
a.
Single-use plans apply to activities that do not recur or repeat. A one-time occurrence,
such as a special sales program, is a single-use plan because it deals with the who,
what, where, how, and how much of an activity. A budget is also a single-use plan
because it predicts sources and amounts of income and how much they are used for a
specific project.
b.
Continuing or ongoing plans are usually made once and retain their value over a
period of years while undergoing periodic revisions and updates. The following are
examples of ongoing plans:
A policy provides a broad guideline for managers to follow when dealing with
important areas of decision making. Policies are general statements that explain
how a manager should attempt to handle routine management responsibilities.
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Typical human resources policies, for example, address such matters as employee
hiring, terminations, performance appraisals, pay increases, and discipline.
A procedure is a set of step-by-step directions that explains how activities or tasks
are to be carried out. Most organizations have procedures for purchasing supplies
and equipment, for example. This procedure usually begins with a supervisor
completing a purchasing requisition. The requisition is then sent to the next level
of management for approval. The approved requisition is forwarded to the
purchasing department. Depending on the amount of the request, the purchasing
department may place an order, or they may need to secure quotations and/or bids
for several vendors before placing the order. By defining the steps to be taken and
the order in which they are to be done, procedures provide a standardized way of
responding to a repetitive problem.
A rule is an explicit statement that tells an employee what he or she can and
cannot do. Rules are ―do‖ and ―don't‖ statements put into place to promote the
safety of employees and the uniform treatment and behavior of employees. For
example, rules about tardiness and absenteeism permit supervisors to make
discipline decisions rapidly and with a high degree of fairness.
Tactical plans
A tactical plan is concerned with what the lower level units within each division must do,
how they must do it, and who is in charge at each level. Tactics are the means needed to
activate a strategy and make it work. Tactical plans are concerned with shorter time frames
and narrower scopes than are strategic plans. These plans usually span one year or less
because they are considered short-term goals. Long-term goals, on the other hand, can take
several years or more to accomplish. Normally, it is the middle manager's responsibility to
take the broad strategic plan and identify specific tactical actions.
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Strategic plans
A strategic plan is an outline of steps designed with the goals of the entire organization as a
whole in mind, rather than with the goals of specific divisions or departments. It begins with
an organization's mission. Strategic plans look ahead over the next two, three, five, or even
more years to move the organization from where it currently is to where it wants to be.
Requiring multilevel involvement, these plans demand harmony among all levels of
management within the organization. Top-level management develops the directional
objectives for the entire organization, while lower levels of management develop compatible
objectives and plans to achieve them. Top management's strategic plan for the entire
organization becomes the framework and sets dimensions for the lower level planning.
Contingency plans
Intelligent and successful management depends upon a constant pursuit of adaptation,
flexibility, and mastery of changing conditions. Strong management requires a ―keeping all
options open‖ approach at all times — that's where contingency planning comes in.
Contingency planning involves identifying alternative courses of action that can be
implemented if and when the original plan proves inadequate because of changing
circumstances. Keep in mind that events beyond a manager's control may cause even the most
carefully prepared alternative future scenarios to go awry. Unexpected problems and events
frequently occur. When they do, managers may need to change their plans. Anticipating
change during the planning process is best in case things don't go as expected. Management
can then develop alternatives to the existing plan and ready them for use when and if
circumstances make these alternatives appropriate.
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Contemporary issues in planning
We conclude this chapter by addressing few contemporary issues in planning. It enhances the
capability of the manager to be effective in their approach to planning. Specifically it includes
How to plan effectively in a dynamic environment, Total quality management approach in
planning and Criticisms of planning.
When will planning be effective?
According to Koontz and O‘Donnell a cautious understanding of the following things would
lead a plan to be effective
(i)
Climate of planning. Planning is not left to chance and top level managers must ensure a
conducive environment must be crated to the smooth and systematic take of the plans in the
organization
(ii)
Participation by people. This helps to gain commitment from all the level of management.
(iii)
Communication to people. All the employees must be communicated with the goal, direction
and premise. It helps people to know what to do, when and how in the time limit.
(iv)
Monitoring of the process. With the option of flexibility and regular review process in
planning there is always a possibility to exploit the opportunities in the external environment.
(v)
Management support. Planning always moves from the values held at top level of
management.
Total Quality Management approach to the planning process
After managers have done with the five steps in the planning process and have implemented
the formalized plans, they must monitor and maintain the same. The function of controlling
Principles and Practices of Management ADL
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helps the evaluate the attainment of goals set in the planning process, but to make it effective
companies like IBM have linked their planning and controlling process by adopting Deming
Cycle. It is a Total Quality Management (TQM) process, for the purpose of continuous
learning and improvement. It helps managers to assess the effect of planned action through a
systematic review.
The cycle consists of four key stages:
1. Plan—create the plan as discussed earlier in this chapter with the process
2. Do—implement the plan.
3. Check—monitor the results of the planned course of action.
4. Act—on what was learned, modify the plan, and return to the first stage.
Criticisms of planning
It makes a lot of sense that from formalized plans every organization gains a direction. But
critics have questioned some of the basic assumptions to the process of planning. Every
manager must be precautious of these assumptions in their attempt to planning. The criticisms
are discussed in detail:
(a) Planning may create rigidity:
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New opportunities are often ignored or rejected because of the commitment to the existing
plans. Once established, policies and procedures become a part of organizations activity and
hence, no manager would like to discard the old plans in favour of new even when
circumstances demand.
(b) Plans cannot be developed for dynamic environment:
It is difficult to predict and forecast economic conditions, competitive situations and change in
government policies with any degree of accuracy. Reliability of planning efforts is open
to doubt since they are projected farther into the future where managers has no control
over environmental forces.
(c) Formal plans are costly and time consuming:
It is expensive in terms of time spent to formulate plans, the man power required to do the
planning and the resources needed to execute the plan.
(d) Planning forces managers‘ attention to a short term goal:
Planning is intellectually demanding function since managers assist on the basis of results, the
human tendency begins to discount long range plans and promote to adopt short range plans,
which put the executors on a comfortable position. But this may hamper the organization‘s
vision to sustain on a long run.
(e) Planning can let organizations to get in competency traps :
Managers in the success of implementation of the course of action, fail to analyze and
evaluate the feedback or the gap in the process for improvement. This can lead organizational
plans to fail.
Forecasting and techniques in forecasting
It is a planning tool used to predict future environmental happenings that will influence the
operations of an organization. Forecasting is a systematic attempt is made to look all the past
and present influential factors affecting the working of the organization.
Based on the
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analysis of these factors through statistical and econometric techniques a reliable calculation
is done to predict the probabilities of the future.
Planning and forecasting are closely related to each other. Planning is deciding in advance
what is to be done in the future and future is uncertain and risky. As a result, managers are
forced to make certain assumptions regarding future.
This is forecasting.
Forecasting
provides pertinent information for successful planning as it is based on systematic models and
techniques.
Essential Elements in Business Forecasting:
Research Redfield identifies four essential elements for business forecasting. They are as
follows:
1.
Developing the ground work with the known and available information about the
company‘s growth, its positioning, product lines, etc. is the first stage of investigation in the
forecasting.
2.
Against the backdrop of information collected, an estimate of future business
prospects is made by the management. The trends are projected by the management after a
detailed and close scrutiny of the information.
3.
Comparing the actual with the estimated results is a continuous process. The forecast
provides the measurement apparatus and helps in tracking down reasons for major differences
resulting in unanticipated gains or losses.
4.
The last element is refining the forecast process. As time progresses, managers should
be able to adjust the forecasting techniques to meet the changing needs of business.
Techniques of Forecasting
According to L.S.Silk, three commonly used business forecasting techniques are (1)
Deterministic Techniques; (2) Symptomatic Techniques; and (3) Systematic Techniques.
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Deterministic Techniques assume that there is a close causal connection between present and
future. These techniques are used to forecast certain elements such as capital spending,
consumer expenditure and general business conditions. The principle techniques used here
are latest information, knowledge of programs or limits, spotting the beginning of a lengthy
process and diagnosing peoples expectation.
Symptomatic Techniques are based on the points of information spotted through the
economic activity of a country‘s national and industrial indices. Based on the significant
changes in the business activity over a period of time and based on the information collected,
future trends are predicted.
Systematic approach in forecasting are derived from the economic theory. The cause and
effect relations among different economic factors which hold relevance for past, present and
future are ascertained and forecast are then constructed. Generally, there are two approaches
used in this type of forecasting. They are intuitive approach in which the analysts uses his
judgment and experience in summarizing the information collected and draws inferences in
constructing various forecasts.
The econometric approach of forecast uses econometric
models to tackle a forecasting problem. These models express the relationship among a
number of variables associated with the changes in sales volume in mathematical terms
through computers, a predictive model is developed from a theory or set of theories that will
determine general business activity. It is more effective as a method to predict future as it is
fully supported by quantitative techniques.
Economic forecasting methods
The basic aim of economic forecasting is to predict business fluctuations. There are numerous
indicators employed to measure economic activity in a nation. Gross national product (GNP)
is the most important indicator. GNP is the value of goods and services produced in the
country in a year. The following methods are employed to forecast the future GNP:
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Extrapolation: Extrapolation is a projection of current trend into the future. It is used to
forecast industry growth, population trends, national income, etc, where changes take place
slowly. Extrapolation ignores factors like sudden changes in consumer tastes and preferences,
technical innovations, change in political climate, etc.
Lead and lag method: In this method, the historic behaviour of various indicators is studied.
The purpose is to find out whether the indicating factor has regularly moved in advance of the
general business trend, or has moved simultaneously with it or has lagged behind it.
Econometrics: This is a mathematical approach in which the main variables are joined
together in a series of equation.
Sales forecasting methods
Sales forecast is a projection of the expected sales. It provides information such as how many
goods an industry should sell, to whom, at which place, and by what methods etc. various
methods are employed in sales forecasting:
Jury of executive opinion method: In this method, the views and opinions of top executives
are brought together for the purpose of constructing the sales forecasting.
Grassroots method: In this method a survey of the sales force is undertaken, their own
assessment of sales effected and pooled together by the company are put to analysis on the
basis of which the sales forecasts are developed later on. The estimates of company sales force
regarding the future prospect of company products are taken into account while constructing the
sales forecast.
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User expectation survey method: In this method, sample surveys of customer‘s expectations
are conducted in selected market areas by sales people in order to determine the sales forecast
for the product. However, this is not reliable method because quite often consumers contradict
themselves, and to remove these limitations if a large sample is selected the benefits may not
be commensurate with the costs involved.
Quantitative method: Methods like trend projection, econometric models are used to
construct sales forecasts these days.
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Review Questions
1. Define planning. What is the necessity of planning in modern organizations?
2. Planning is an all pervasive and continuous function of management- discuss.
3. Elaborate steps in planning process.
4. Planning and forecasting are intertwined-comment your views.
5. What do you mean by forecasting? Discuss its types.
6. What are the essential features of a good plan?
7. Write short notes one
(A) Tactical planning
(B) Contingency planning
(C) Policy and standing plans
Test your understanding
1. Planning is a process that involves defining the organization‘s ………
a. Goals
b. Leadership
c. Governance
d. Sales
2. ………….forecast is a projection of the expected sales.
a. Sales
b. Market growth
c. GDP
d. National income
3. ―Keeping all options open‖ approach at all times …………..
a. Contingency planning
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b. Strategic plans
c. Procedural planning
d. None
4. …………… is the process in planning done for the purpose of continuous learning and
improvement?
a. TQM
b. PCMM
c. Controlling
d. All the above
5. A …………….is an explicit statement that tells an employee what he or she can and
cannot do.
a. Procedure
b. Standard
c. Rule
d. Regulation
6. …………… approach in planning allows the lower and middle level managers to plan.
a. Top down approach
b. Horizontal planning
c. Bottom up approach
d. Judgmental planning
7. Planning is the ………….function of management
a. Supportive
b. Complementary
c. Primary
d. Secondary
8. …………method of forecasting ignores factors like sudden changes in consumer
tastes and preferences, technical innovations, change in political climate, etc.
a. Extrapolation
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b. Interpolation
c. Judgmental
d. Technical
9. Systematic approach in forecasting are derived from the
a. Economic theory
b. Inferences
c. Mathematical theory
d. All the above
10. Planning provides direction to ………………..
a. Managers and non-mangers
b. Managers only
c. Top management
d. Operations
Answer key
1. A
2. A
3. A
4. A
5. C
6. C
7. C
8. A
9. A
10. A
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Chapter 3
Organizing
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Chapter outline
i.
Introduction -Organizing
ii.
What is organizing?
iii.
Defining organization structure
iv.
Features of an effective organization structure
v.
Organization as a process
vi.
Principles of organizing
vii.
Departmentation
viii.
Span of control
ix.
Authority and delegation of authority
The term organization is used in many different ways. It is generally understood as a form or
into a whole consisting of interdependent or coordinated parts or to systematically arranging
several elements into a purposeful sequential or spatial (or both) order or structure or to
assemble required resources to attain organizational objectives.
What is organizing?
Organizing is the process by which employees, facilities and tasks are related to each other,
with a view to achieve goals. It is the way work is allocated among people. It helps in
prescribing formal relationships among people and resources, to achieve goals or desired
objectives. It also defines responsibility and authority in the process of allocating tasks among
employees. Responsibility is the obligation of a subordinate to perform the duty, as required
by the superior and authority is the formal legitimate right of a manger to make decisions,
issue orders, and allocate resources to achieve goals. The process of organizing is discussed in
detail later. Organizations can be formally created or they can be informal.
•
Formal organization: A formal organization has the feature of-
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 The official structures and systems consciously designed by organizational
members to accomplish organizational goals.
 The relatively enduring people-to-people and people-to-work interaction
patterns created to accomplish organizational goals.
•
Informal organization:
 It is a joint activity between two or more individuals not formally designed that
possibly contributes to joint results. Organized to meet the social and personal
needs/wants of organizational members.
 Here the Structure (membership), communication networks (―grapevine‖), and
relationships (behaviors and norms) do not necessarily follow those of
the formal organization.
Defining Organization as a structure
According to the theorists of classical school of thoughts, structure is essential for achieving
goals. It helps managers in understanding the tasks and activities, how it is to be done. The
writing of job descriptions, creating various positions and assigning reporting relationships
helps managers to materialize the goals planned. The whole structure takes the form of a
pyramid. Thus the term organization structure describes the organization‘s framework.
Through this framework individual efforts are coordinated. It is nothing but a chart of
relationships. It is both formal and informal network of superior-sub ordinate relationships.
Organization as a structure has the following features:
Organizational structure is a network of relationships in which the work is divided into units
and departments. This division of work is helping in bringing specialization in various
activities of concern.
Organizational structure helps in putting right men on right job which can be done by
selecting people for various departments according to their qualifications, skill and
Principles and Practices of Management ADL
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experience. This is helping in defining the jobs properly which clarifies the role of every
person.
Organization is a means of creating co- ordination among different departments of the
enterprise. It creates clear cut relationships among positions and ensures mutual co- operation
among individuals. Harmony of work is brought by higher level managers exercising their
authority over interconnected activities of lower level manager.
For smooth running of an organization, the co- ordination between authority- responsibilities
is very important. There should be co- ordination between different relationships. Clarity
should be made for having an ultimate responsibility attached to every authority.
Organization structure is helpful in defining the jobs positions. The roles to be performed by
different managers are clarified. Specialization is achieved through division of work. This all
leads to efficient and effective administration.
Where the roles and activities to be performed are clear and every person gets independence
in his working, this provides enough space to a manager to develop his talents and flourish his
knowledge. A manager gets ready for taking independent decisions which can be a road or
path to adoption of new techniques of production. This scope for bringing new changes into
the running of an enterprise is possible only through a set of organizational structure.
Process of Organizing
The following are the steps in organizing function.
Identifying the work
We organize to achieve objectives. It is therefore necessary to understand the total work
identified to reach the goal. The work must be systematically classified to each person in
the organization through a separate and distinctive task. This enables managers to
concentrate on important tasks. It would also avoid overlapping of activities. Hence efforts
would be channelized in the right way.
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Grouping the work
Division of work creates the need for co-ordination. Generally closely related activities are
group together. Departments and divisions are created based on this for manager to gain
direction.
Establishing the relationships
To secure clear compliance of organizational directives, formal relationships are specified. It
helps individuals to know what must be done, how must be done, to whom matters must be
referred and how particular jobs relate to each other.
Delegating authority
Authority is the key to the management job. Without authority a, manager ceases to be a
manager for he cannot get his wishes carried out. Creating an organization by dividing the
work into departments and positions will not be sufficient to get the results. Authority is the
capacity of a superior to make decision affecting the behavior of subordinates. It is the right to
take action and utilize organizational resources.
Providing coordinating and controlling
To ensure a harmonious and smooth working of an organisation with a number of its
divisions, department or its units, the activities in all the areas are required to be pulled
together, unified and blended so as to give them a commonness and purpose.
Principles of organizing
A principle is a basic statement that provides understanding and guidance to practice. The
important principles of organization according to Koontz can be summarized as follows:
1. The Purpose of organizing: The process of organization should facilitate the
achievement of objectives in efficient way.
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a. Principle of unity of objectives
An organization structure is effective if it as a whole, and every part of it, make
possible accomplishment of individuals in contributing toward the attainment of
enterprise objectives.
b. Principle of organizational efficiency
An organization structure is efficient if it is structured to make possible
accomplishment of enterprise objectives by people with minimum costs.
2. The cause of Organizing: The span is the major cause to execute through, by mangers.
a. Span of management Principle
There is a limit at each managerial position on the number of persons an individual can
effectively manage. But this number is not a fixed number and it will vary in
accordance with underlying variables of the situation from routine to simple task.
3. Principles in Developing the Structure of Organization: Every manager must
delegate some task or duties to subordinates, since management means getting work
done through others. Organization becomes operational through delegation only.
Delegation is a process by which a manager assigns a portion of his total work load to
others.
a. The scalar Principle
The more clear the line of authority from the ultimate authority for management in an
enterprise to every subordinate position, the more effective will be decision making
and organization communication at various levels in the organization.
b. Principle of delegation
Authority is a tool for managing to contribute to enterprise objectives. Hence authority
delegated to an individual manager should be adequate to assure his ability to
accomplish results expected of him.
c. Principle of authority and responsibility
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The responsibility of the subordinate to his superior for authority received by
delegation is absolute, and no superior can escape responsibility for the activities of
his subordinate to whom he in turn has delegated authority.
d. Principle of unity of command
The more completely an individual has a reporting relationship to a single superior, the
less the problem of conflict in instructions and the greater the feeling of personal
responsibility.
e. Authority level Principle
Maintenance of authority delegation requires that decisions within the authority
competence of an individual manager be made by him and not be referred upward in
the organization.
4. The structure of organization/ Departmentation: The primary purpose of organizing
is to provide a basic structure in the form of departmental framework.
a. Principle of division of work
It reflects the classification of the tasks and activities required for achievement of
objectives and assists their coordination through creating a system of interrelated roles;
and the more these roles are designed to fit the capabilities and motivations of people
available to fill them, the more effective and efficient an organization structure will be.
b. Principle of functional definition
The more a position or a department has clear definition of results expected, activities
to be undertaken, organization authority delegated, and authority and informational
relationships with other positions, the more adequately individual responsible can
contribute toward accomplishing enterprise objectives.
5. Principles in the Process of organizing: If the following principles are applied the
process of organizing becomes easy:
a. Principle of balance
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The application of principles or techniques must be balanced in the light of the over-all
effectiveness of the structure in meeting enterprise objectives.
b. Principle of flexibility
The task of managers is to provide for attaining objectives in the face of changing
environments. The more provisions are made for building organization flexibility, the
more adequately organization structure can fulfill its purpose.
c. Principle of leadership facilitation
The more an organization structure an authority delegation within it make possible for
various managers to design and maintain an environment for performance, the more it
will facilitate leadership abilities of managers.
Departmentation
Introduction
Departmentation is a means of dividing a large and complex organization into smaller,
flexible administrative units. It is the organization-wide division of work into various
manageable units or departments. It refers to horizontal differentiation in an organization.
Departmentation is essential because of the following reasons:
Departmentation permits an organization to take advantage of specialization.
Departmentation enables each person to know the particular part which he is expected
to play in the total activities of the company.
Departmentation facilitates communication, coordination and control contributing to
the overall organizational success.
Departmentation provides an adequate platform around which the loyalties of
organizational members may be built.
It enables a manager to locate the sources of information, skills and competence to
take certain vital managerial decisions.
Bases of Departmentation
There are several key ways in which an organization may decide to divide the work.
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 Departmentation by Function
The basic aim of functionalism is to simplify complexity by grouping all the work to be done
into major functional departments. The functional structure is the most widely used form
because of its simple logic and common sense appeal. Here activities are grouped together by
common function. It is commonly described as ‗organizing work into related bundles of skill‘.
Each functional unit has a dissimilar set of duties and responsibilities.
Features of Functional Structure:
a. Specialization by function.
b. Sub-goal emphasis.
c. Growth is always pyramidal.
d. Line staff division.
e. Functional relationship.
f. Centralization and decentralization.
g. Span of control.
A Functional structure
President
Finance
Marketing
Marketing
Research
Operations
Advertising
Sales
Human
Resources
Research and
Development
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 Departmentation by Product
Departmentation by product is adopted in the case of a multi-product enterprise. The product
structure is organized according to organizational output. The structure is divided into several
fairly autonomous units. Divisionalisation prevents neglect of certain product and
overemphasis on some. Accountability is made clear. If a product fails the department and the
manger is held responsible.
Vice President
(Production)
Manager
Automobiles
Manager
Refrigerators
Manager
Spare parts
Departmentation by Time
In some organization that works round-the-clock Departmentation is based on time. We often
notice the doctors, nurses and railway employee changing shifts on the basis of day, evening
and night.
Vice President
(Production)
Day Shift
Evening shift
Night Shift
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Departmentation by territory/ geographic divisionalization
It facilitates in adaptation to territorial differences. When companies distribute products on the
basis of territory, this way of divisioning helps organization to co ordinate activities to all
regions from the headquarters. It helps in exploiting local advantages. It also reduces transport
costs too.
A Territorial Divisional
structure
President
Western
Division
West
Eastern
Division
Northeast
Midwest
Southeast
Manitoba
Illinois
Saskatchewan
Minnesota
Alberta
Washington
British Columbia
Oregon
California
Matrix structures
In a matrix structure organizations simultaneously integrate and use two or more
organizational structures. It is a permanent organization designed to achieve specific results
by using teams of specialists from different functional areas in the organization. The entire
superstructure is both product and function-based. Matrix design is used to respond to:
- Multiple external demands
- Extensive information needs
- The need for shared resources
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A Matrix Superstructure
President
Vice President
Products
Vice President
Finance
Vice President
Marketing
Product A
Manager
Vice President
Operations
Vice President
Human Resources
Manager A
Product Line:
Product B
Manager
Authority, Responsibility,
Coordination Systems
Functional Line:
Authority, Responsibility,
Coordination Systems
Span of control
Span of control is a span of supervision which depicts the number of employees that can be
handled and controlled effectively by a single manager. According to this principle, a manager
should be able to handle what number of employees under him should be decided. This
decision can be taken by choosing either from a wide or narrow span. There are two types of
span of control:a. Wide span of control- It is one in which a manager can supervise and control
effectively a large group of persons at one time. The features of this span are:-
 Less overhead cost of supervision
 Prompt response from the employees
 Better communication
 Better supervision
 Better co-ordination
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 Suitable for repetitive jobs
According to this span, one manager can effectively and efficiently handle a large number of
subordinates at one time.
b. Narrow span of control- According to this span, the work and authority is
divided amongst many subordinates and a manager doesn't supervises and
control a very big group of people under him. The manager according to a
narrow span supervises a selected number of employees at one time. The
features are:-
 Co-ordination is difficult to be achieved.
 Communication gaps can come.
 Messages can be distorted.
 Specialization work can be achieved.
Authority
Introduction
Authority is the key to the management job. Without authority a, manager ceases to be a
manager for he cannot get his wishes carried out. Creating an organization by dividing the
work into departments and positions will not be sufficient to get the results.
What is Authority?
Authority is the capacity of a superior to make decision affecting the behavior of subordinates.
It is the right to take action and utilize organizational resources. It has the following features:
Legitimate right: Authority enables a position holder to regulate the behavior of his
subordinates in a legitimate manner.
Right to decide: Authority allows the positions holder to decide things. He has the
right to enforce decision also.
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Obtain Obedience: Authority is exercised to influence the behavior of subordinates in
a certain manner. According to Fayol, authority is the right to give orders and the
power to exact obedience.
Relationship between two persons: Authority draws curtains between two individuals.
It speaks about the relationship between two persons: one superior and the other
subordinate.
Positional: Authority is positional. It rests in the chair. With the change in position, the
authority of the individual also changes.
Result-oriented: Authority is linked with the objectives of an organization. It is used to
achieve the organizational goals.
Factors Affecting Limits of authority of a Manager
External Factors
Government rules and regulations
Collective bargaining and agreements
Dealer, supplier and customer agreements
Social beliefs, codes, habits and customs
Internal Factors
Corporate by-laws and organizational chart
Budgets
Policies, rules and procedures.
Positions descriptions
Types of Authority
Traditional authority: Traditional authority is based on the sacredness of the social
order.
Charismatic authority: This authority rests on the magical, mystical quality of
individual leaders.
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Technical authority: This is based on the technical competence and expertise of an
individual.
Legal authority: This authority originates in the formal structure of the organization.
Superior issue orders and subordinates obey them because this is the way the
organization is established.
External authority: This authority comes from source outside the organization.
Informal authority: Formal authority is granted to people in the organization
deliberately to meet certain goals.
Line authority: In line authority, a superior exercises direct command over a
subordinate.
Staff authority: Staff authority is advisory in nature. A staff officer has the authority of
ideas only.
Functional authority: Functional authority is a limited form of line authority given to
functional experts over certain specialized activities under the normal supervision of
managers belonging to other departments.
Official authority: As against personal authority which is derived from personal
qualities such as intelligence, experience, expertise, etc., official authority is derived
from manager‘s postion.
Process of Delegation of Authority
Delegation process involves four distinct stages. The process of delegation moves through
these stages. The following figure shows the stages in the process of delegation of authority.
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Four Stages in the Delegation of Authority
(A) Assignment of duties to subordinates
Before delegating, the delegator has to decide precisely the duties which are to be delegated to
the subordinate or a group of subordinates. The authority is delegated accordingly and the
subordinate is told what is expected from him. The usual practice is to list the functions to be
performed by the subordinate. If necessary, targets to be achieved by the subordinate are also
spelt out. Subordinates may be assigned tasks either in terms of activities or results. The
manager (delegator) must communicate clearly his expectations. Competent and responsible
employees may be given general guidelines about what needs to be accomplished. Their less
competent and responsible counter-parts need more specific guidelines. In brief, in the first
stage of delegation process, duties are assigned to the subordinate.
(B) Transfer of authority to perform the duty
In the second stage of delegation process, the authority is granted by the delegator to his
subordinate (delegate). Authority must be delegated strictly to perform the assigned duty. The
performance of duties suffers serious setback when required authority is not delegated along
Principles and Practices of Management ADL
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with the duty. In brief, the transfer of authority should be adequate considering the duties
assigned to the subordinate.
(C) Acceptance of the assignment
In this third stage of delegation process, the subordinate/delegate has to accept or reject the
task assigned to him in the first stage along with the authority given in the second stage. If the
delegates refuse, the delegator has to make fresh plan of delegation or may consider some
other subordinate who is capable and is willing to accept the assignment. On the other hand,
the process of delegation will move to the fourth and the last stage, if the first delegates accept
the assignment of work accompanying the authority.
(D) Creation of Obligation / Accountability / Responsibility
The fourth stage in the, delegation of authority is the creation of obligation on the part of the
subordinate to perform duties assigned to him in a satisfactory manner by using the authority
given. When subordinate accepts a task and the authority is given, an obligation is created.
He has to perform the assigned task by using the authority granted to him. A subordinate is
also responsible/accountable for completing the assigned work. He is held answerable to a
superior for the satisfactory performance of that work assigned. The delegator has to help his
subordinate as and when necessary as he is responsible to his superior/organization.
Nature of Delegation
Every manager must delegate some task or duties to subordinates, since management means
getting work done through others. Organization becomes operational through delegation only.
Delegation is a process by which a manager assigns a portion of his total work load to others.
Some of the important features of delegation may be listed thus:
Two-sided relationship: Delegation is a two-sided relationship. It is a demanding
function; it requires sacrifices from both the assignor and the assignee.
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Act of trust: Delegation is an act of trust, an expression of confidence that the
individual to whom duties are assigned will discharge them in manner which satisfies
the intention of the assignor.
Freedom to think and act: Delegation is a state of mind. Delegation means freedom of
action sufficient to get the task accomplished.
Dependency relationship: Unfortunately, delegation creates a relationship of
dependency between superior and the subordinate.
A challenging task: Delegation of authority is a courageous act. The fear of being
ultimately responsible compels many managers to indulge in under-delegation. The
obligation of a subordinate to perform the assigned duty as required by the superior.
Forward- thinking principle: Delegation, from a behavioral point of view, is the ‗most
forward-thinking principle‘. It opens a new chapter in superior subordinate
relationships.
Principles of Delegation
Principle of delegation by results: This principle suggests that work and authority
should be delegated to the lowest organizational level commensurate with the ability
of subordinates to perform. This principle has three advantages:
o Delegation by results helps the subordinates to show performance in real terms
instead of merely ‗spinning his wheels‘ with a great flurry of activity and
without showing results.
o It helps the superior to set up standards for the job which will lend themselves
as
standard of performance.
o To minimize politics in the enterprise.
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Principle of functional definition: Effective coordination demands a clear definition,
preferably in writing, of authority and responsibility for all decision and work. Clear
definition of results expected, activities to be undertaken organization authority
delegated and relationships created are vital.
Scalar principle: The scalar principle states that authority and responsibility should
flow in clear and unbroken line from top to the bottom of the organization.
Authority level principle: This principle demands that once a subordinate is assigned
some work and is given authority to do it, he should be allowed to use his judgment
and decision-making capacities in finding an appropriate way to show performance.
Principle of unity of command: The unity of command principle states that for any
given activity an employee should be made accountable to only one superior.
Principle of parity of authority and responsibility: Effective delegation requires that
the authority to utilize resources be equal to the responsibility assigned to the
subordinate. If a person is going to be responsible for an activity, the person should be
given the necessary authority to carry out that activity.
Principle of absoluteness of responsibility: Delegator is not a sage. Delegation, in no
way implies abdication. The process of delegation does not relieve the superior of any
of his authority, responsibility and accountability.
Advantages of Delegation
Superior related advantages
Subordinate related advantages
Improves behavioral climate
Advantages to organization
How to Delegate Effectively?
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Establish goals: Just as effective management can truly be said to be management by
objectives, successful delegation can also be identified as ‗delegation by objectives‘. A
person to whom work is being delegated wants to know why he is being asked to it.
Define responsibility and authority: It is always better to put it in writing the authority,
responsibility and relationships of each executive in the organization.
Motivate subordinates: Motivation is the moving force in delegation. The effective
manager should be able to motivate the subordinates and get things done.
Require completed work: The superior should put the subordinate completely on his
own once authority is delegated, and refuse him access until the subordinate has
completed the job.
Provide training: The superior should teach subordinates how to improve their job
performance.
Establish adequate Controls: Establish adequate standards against which the
subordinate can measure and evaluate his own performance. Self-control is more
effective than a system of external control imposed.
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Review questions
1. Define organizations and discuss how managers perform in organizations?
2. Describe the principles of organizations.
3. Explain authority and delegation of authority in detail.
4. What are various sources of authority?
5. Elaborately discuss the various bases of Departmentation.
Test your understanding
1. The official structures and systems consciously designed by organizational members
to accomplish organizational goals
a. Formal organization
b. Informal organization
c. Classical organization
d. All the above
2. The term organization structure describes the …………. Framework
a. Social
b. Organizational
c. Functional
d. Regional
3. One of the following is not a process of organizing……………
a. Leading
b. Division of work
c. Establishing the relationships
d. Delegating authority
4. ……………..is a means of dividing a large and complex organization into smaller,
flexible administrative units.
a. Departmentation
b. Division
Principles and Practices of Management ADL
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c. Grouping
d. Specification
5. ………………structure organizations simultaneously integrate and use two or more
organizational structures
a. Team
b. Matrix
c. Vertical
d. Virtual
6. According to …………….. Principle, a manager should be able to handle what
number of employees under him should be decided.
a. Controlling
b. Authority
c. Delegation
d. Span
7. …………….is the capacity of a superior to make decision affecting the behavior of
subordinates
a. Responsibility
b. Authority
c. Delegation
d. None
8. Delegation process involves …………..distinct stages.
a. 2
b. 3
c. 4
d. 5
9. ………………..states that for any given activity an employee should be made
accountable to only one superior.
a. Principle of unity of command
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b. Authority principle
c. Scalar chain
d. All the above
10. ………………. is an act of trust, an expression of confidence.
a. Delegation
b. Authority
c. Coordination
d. Organizing
Answer key
1. A
2. B
3. A
4. A
5. B
6. D
7. B
8. C
9. A
10. A
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Chapter 4
Staffing
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Chapter outline
i.
Meaning of Staffing
ii.
Nature of Staffing Function
iii.
Elements of staffing process
iv.
Human Resource Planning or Manpower Planning
v.
Job Analysis
vi.
Recruitment and selection
vii.
Training and Development
viii.
Performance Appraisals
ix.
Promotion and transfer
Meaning of Staffing
Staffing is the process of matching the jobs with the capable people. It is concerned with
attracting, developing and evaluating individuals at work. It involves the determination of
what personnel are needed in what quantity and of what quality. Among the various factors of
production which are used in an organization, human factor is the most important. Broadly
speaking, staffing is concerned with the management of human beings in an organization. .
For an organization to achieve its goal, it must perform the important function of staffing in
its business processes.
Nature of Staffing Function
1. Staffing is an important managerial function- Staffing function is the most
important managerial act along with planning, organizing, directing and controlling.
The operations of these four functions depend upon the manpower which is available
through staffing function.
2. Staffing is a pervasive activity- As staffing function is carried out by all mangers and
in all types of concerns where business activities are carried out.
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3. Staffing is a continuous activity- This is because staffing function continues
throughout the life of an organization due to the transfers and promotions that take
place.
4. The basis of staffing function is efficient management of personnels- Human
resources can be efficiently managed by a system or proper procedure, that is,
recruitment, selection, placement, training and development, providing remuneration,
etc.
5. Staffing helps in placing right men at the right job. It can be done effectively
through proper recruitment procedures and then finally selecting the most suitable
candidate as per the job requirements.
6. Staffing is performed by all managers depending upon the nature of business, size
of the company, qualifications and skills of managers, etc. In small companies, the top
management generally performs this function. In medium and small scale enterprise, it
is performed especially by the personnel department of that concern.
Elements of staffing process
The following elements are involved in staffing process:
Human Resource Planning or Manpower Planning
Job Analysis
Recruitment and selection
Training and Development
Performance Appraisals
These topics will be covered in detail in the following section.
I . Human Resource Planning or Manpower Planning
The first step in the staffing process is to estimate the requirement of employees. While
estimating the number and type of human resource required, the specific job need should be
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kept in mind. Essentially this is the process of getting the right number of qualified people
into the right job at the right time. It is a forward looking function. Staffing is to forecast and
determine a firm‘s future demand and supply of the right manpower in the right number. It is
only after this that HRM department can begin with the process of recruitment and selection.
Purpose of HR Planning
Effective HR
Planning
Right
people
Right
capabilities
Right
time
Right
place
Objectives of Manpower Planning
Right sizing
It is essential to hire the manpower in the right number. If organizations overdo the size of
their workforce it will carry surplus or underutilized staff. Alternatively, if there is deficiency
in the staff strength it will make it difficult or impossible to meet production or service
deadlines.
Retain talent
The HR manager should use initiatives to attract and retain qualified and skilled personnel.
Manpower Planning helps in preventing shortages arising out of poaching etc.,. There is a
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growing resistance among employees to change and move around anywhere and anytime the
organization wants, thus increasing the importance and necessity of planning ahead.
Cut costs
How to reduce the workforce while at the same time protecting the long-term interests of the
organization brings in the need for HR planning.
Succession planning
It identifies star performers or the successors in the replacement chart. Such candidates are
rolled over various jobs and assisted continuously.
The process of human resource planning
It consists of the following steps as depicted in figure below-
FIGURE 2-7 HR Planning Process
1. Environmental scanning to understand the labor supply changes:
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The process involves studying the external environment of the organization to pinpoint
opportunities and threats in planning the human resources. Challenges arise from three
important sources such as Economic Developments, Competition, work-force composition,
Political, Legal, Social and Technical changes.
2. Assessing the Internal Workforce
It is analyzing and understanding the internal environment or the capabilities of the current
Human Resource available in the organization. It includes all the information about
employees‘ knowledge, skills, and abilities. It provides information regarding the
followingWhat jobs exist now?
How many individuals are performing each job?
What are the reporting relationships of jobs?
How essential is each job?
What jobs will be needed to implement future organizational strategies?
What are the characteristics of anticipated jobs?
3. Forecasting HR Supply and Demand
Forecasting is about estimating how many employees a firm would require in future.
Forecasts are done using the information on human resource from the past and present to
identify expected future conditions. Various statistical techniques are used for forecasting.
Forecasts can be of two types
–
HR Demand (Employees needed for future)
–
HR Supply ( Employees available for the future)
4. Developing HR Strategies to manage shortages in shortage of resource and excess
of employees in the organization
II. Job analysis
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It is a process of collecting job related information like task, duties, skills, outcomes and work
environment. An important concept of Job Analysis is that the analysis is conducted of the
Job, not the person. While Job Analysis data may be collected from incumbents through
interviews, questionnaires, observations or critical incident investigations, the product of the
analysis is a description and specifications of the job, not a description of the person.
JOB DESCRIPTION indicates what all a job involves – tasks and responsibilities required
for a job. Job titles, duties, machines, tools and equipment, working conditions and hazards
form part of job description.
JOB SPECIFICATION is the capabilities that the job-holder should possess. Education,
experience, training, judgment, skills, communications skills and the like are a part of job
specification.
The process of job analysis is depicted in the following diagram-
The Process of Job Analysis
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Information collected through job analysis
Duties and Tasks The basic unit of a job is the performance of specific tasks and duties.
Information to be collected about these items may include: frequency, duration, effort, skill,
complexity, equipment, standards, etc.
Environment This may have a significant impact on the physical requirements to be able to
perform a job. The work environment may include unpleasant conditions such as offensive
odors and temperature extremes. There may also be definite risks to the incumbent such as
noxious fumes, radioactive substances, hostile and aggressive people, and dangerous
explosives.
Tools and Equipment Some duties and tasks are performed using specific equipment and
tools. Equipment may include protective clothing. These items need to be specified in a Job
Analysis.
Relationships Supervision given and received. Relationships with internal or external people.
Requirements The knowledge, skills, and abilities (KSA's) required to perform the job.
While an incumbent may have higher KSA's than those required for the job, a Job Analysis
typically only states the minimum requirements to perform the job
III. Recruitment and selection
After the organization has done Manpower planning and Job analysis, it can move for
recruitment. It is a process of searching for and obtaining as many applicants as possible
for jobs, from among whom the right candidate can be selected. Theoretically, the
recruitment process ends here but, in reality, the term is used to describe the entire process
of employee hiring.
Purpose and importance of recruitment
The general purpose of recruitment is to provide a pool of potentially qualified
candidates. Specifically, the purposes are to:
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a) Determine the present and future requirements of the firm in conjunction with its
personnel-planning and job- analysis activities.
b) Increase the pool of candidates at minimum cost.
c) Help increase the success rate of the selection process by reducing the number of visibly
under qualified or over qualified job applicants.
d) Help reduce the probability that job applicants, once recruited and selected, will leave the
organization only after a short period of time.
e) Meet the organization‘s legal and social obligations regarding the composition of its
workforce.
f) Begin identifying and preparing potential job applicants who will be appropriate
candidates.
g) Increase organizational and individual effectiveness in the short and long term.
h) Evaluate the effectiveness of various recruiting techniques and sources for all types of job
applicants.
Sources of recruitment
Every organization has the option of choosing the candidates for its recruitment sources:
internal and external sources. The sources within the organization itself (like transfer of
employees from one department to other, promotions) to fill a position are known as the
internal sources of recruitment. Recruitment candidates from all the other sources (like
outsourcing agencies etc.) are known as the external sources of recruitment.
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SOURCES OF RECRUITMENT ARE OF TWO KINDS
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Advantages
and
disadvantages
of
the
above
sources
in
simple…..
Selection
To select means to choose. It is the process of choosing individuals with qualifications needed
to fill jobs in an organization. Organizations need qualified and competent people to gain
competitive advantage. This is one of the important staffing processes. The selection process
starts where the recruitment ends. It means the very step one starts eliminating the collected
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applications matching the principle of person job fit and/ or person organization fit, the
selection starts. There are various steps involved in the selection process before the hiring
decision and it depends upon the organization in choosing the most appropriate method of
selection. The are depicted in the following1. Interviewing applicants and Administering tests to applicants
2. Conducting background investigations
3. Arranging physical examinations
4. Offer and placement
Once the applications are received the short listing begins. The short listing of the application
depends on the knowledge, skills and abilities matching with the job descriptions of the
profile opened up. The short listing can be done through administrating tests and interviews.
Ability tests are those tests to test aptitude and achievement of the applicants. Other tests
include personality tests, honesty and integrity tests.
Employment Interviews are the most common used method in hiring decisions. Interviews are
procedure designed to obtain information from a person through oral responses to oral
inquiries. There are two formats while conducting an interview process
 Unstructured or nondirective interview
 An unstructured conversational-style interview in which the interviewer
pursues points of interest as they come up in response to questions.
 Structured or directive interview
 An interview following a set sequence of questions.
Based on the above formats an interview can be
 Situational interview-
A series of job-related questions that focus on how the
candidate would behave in a given situation.
 Behavioral interview- A series of job-related questions that focus on how they reacted
to actual situations in the past.
 Job-related interview- A series of job-related questions that focus on relevant past jobrelated behaviors.
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 Stress interview - An interview in which the interviewer seeks to make the applicant
uncomfortable with occasionally rude questions that supposedly to spot sensitive
applicants and those with low or high stress tolerance.
 Puzzle questions - Recruiters for technical, finance, and other types of jobs use
questions to pose problems requiring unique (―out-of-the-box‖) solutions to see how
candidates think under pressure.
 Panel interview -
An interview in which a group of interviewers questions the
applicant.
 Mass interview - A panel interviews several candidates simultaneously.
After interviews and tests, candidates‘ background are verified and checked. On a conditional
offer the process of physical examinations are conducted.
Factors Affecting Interviews
•
First impressions
–
The tendency for interviewers to jump to conclusions and make snap
judgments about candidates during the first few minutes of the interview.
–
Negative bias: unfavorable information about an applicant influences
interviewers more than does positive information.
•
Misunderstanding the job
–
Not knowing precisely what the job entails and what sort of candidate is best
suited causes interviewers to make decisions based on incorrect stereotypes of
what a good applicant is.
•
Candidate-order error
–
An error of judgment on the part of the interviewer due to interviewing one or
more very good or very bad candidates just before the interview in question.
•
Nonverbal behavior
–
Interviewers‘ inferences of the interviewee‘s personality from the way he or
she acts in the interview have a large impact on the interviewer‘s rating of the
interviewee.
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•
Effect of personal characteristics: attractiveness, gender, race
–
Interviewers tend have a less favorable view of candidates who are:
•
Physically unattractive
•
Female
•
Of a different racial background
•
Disabled
Making the job offer
Finally on the hiring decision the formal job offer is done. A letter of offer is given by the
organization on which in return the candidates sign their acceptance of the offer.
Developing the human resources
Once the employee joins the organization, he/she has to undergo training in order to acquire
the skill sets required to perform the job. Thus, training is an effort initiated by the
organization to foster learning among its members. It tends to be narrowly focused and is
oriented towards
short-term performance concerns. Development is efforts that are
oriented more toward broadening an individual‘s skills for the future responsibilities.
Training is conducted by a systematic approach. The training needs of individuals are
identified and then training is provided. There are two methods used in training. The on job
training and the off job training.
On the Job Training -takes place in a normal working situation, using the actual tools
equipment, documents or materials that trainees will use when fully trained. On-the-job
training has a general reputation as most effective for vocational work. This can be imparted
by the following ways:
Coaching and mentoring
Job Rotation
Job instruction training
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Apprenticeship training
Orientation training
Off the Job Training -takes place away from normal work situations — implying that the
employee does not count as a directly productive worker while such training takes place. It
has the advantage that it allows people to get away from work and concentrate more
thoroughly on the training itself. It can be imparted by –
•
On-the-Job Experiences
•
Seminars and Conferences
•
Case Studies
•
Management Games
•
Role Playing
•
Behavior Modeling
It would be wise to mention here about Management Development. Management
Development is best described as the process from which managers learn and improve their
skills not only to benefit themselves but also their employing organizations. Therefore,
investment in Management Development can have a direct economic benefit to the
organization. Managers are exposed to learning opportunities whilst doing their jobs, if this
informal learning is used as a formal process then it is regarded as management development.
Performance Appraisals
It is the process of obtaining, analyzing and recording information about the relative worth of
an employee. The focus of the performance appraisal is measuring and improving the actual
performance of the employee and also the future potential of the employee. Its aim is to
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measure what an employee does. It is a systematic way of reviewing and assessing the
performance of an employee during a given period of time and planning for his future. It is a
powerful tool to calibrate, refine and reward the performance of the employee. It helps to
analyze his achievements and evaluate his contribution towards the achievements of the
overall organizational goals.
Why appraise performance?
–
Appraisals play an integral role in the employer‘s performance management
process.
–
Appraisals help in planning for correcting deficiencies and reinforce things
done correctly.
–
Appraisals, in identifying employee strengths and weaknesses, are useful for
career planning
–
Appraisals affect the employer‘s salary raise decisions.
OBJECTIVES OF APPRAISAL
 To effect promotions based on competency and performance.
 To confirm the services of probationary employees upon their completing the
probationary period satisfactorily.
 To assess the training and development need.
 To decide upon a pay raise.
 To let the employees know where they stand insofar as their performance is concerned
and to assist them with the constructive criticism and guidance for the purpose of their
development.
 To improve communication. Appraisal provides a format for dialogue between the
supervisor and the subordinate, and improves understanding of personal goals and
concerns.
 It can also be used to determine whether HR Programs such as selection, training, and
transfers have been effective or not.
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Steps in Appraising Performance
•
Defining the job and establishing standards
The first step in the process of performance appraisal is the setting up of the standards
which will be used to as the base to compare the actual performance of the employees. This
step requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives. It
is making sure that superior and subordinate agree on his or her duties and job standards.
Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization. The employees should be informed and the standards should
be clearly explained to the standards.
•
Appraising performance
Comparing your subordinate‘s actual performance to the standards that have been set; this
usually involves some type of rating form. It is a continuous process which involves
monitoring the performance throughout the year. This stage requires the careful selection of
the appropriate techniques of measurement, taking care that personal bias does not affect the
outcome of the process and providing assistance rather than interfering in an employees work.
The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set.
The result can show the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a negative deviation in
the organizational performance. It includes recalling, evaluating and analysis of data related to
the employees‘ performance.
How to measure? Actual performance of employees can be measure any of the following
methods.
o Graphic rating scales
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A scale that lists a number of traits ( such as quality and reliability) and a range of
performance values (from satisfactory – unsatisfactory) for each trait that is used to identify
the score that best describes an employee‘s level of performance for each trait.
o Alternation ranking method
In this method employees are ranked from best to worst on a particular trait, choosing highest,
then lowest, until all are ranked. The scale looks like the following-
o Paired comparison method
It is the process of ranking employees by making a chart of all possible pairs of the employees
for each trait and indicating which is the better employee of the pair designed.
o Forced distribution method
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Similar to grading on a curve; predetermined percentages of ratees are placed in various
performance categories.
o Critical incident method
Here the appraiser or the superior keeps a record of uncommonly good or undesirable
examples of an employee‘s work related behaviour and reviews it with the employee at
predetermined times.
o Narrative forms
It is a subjective way of analyzing the records of past performance and suggest areas of
improvement
o BARS- Behaviorally anchored rating scale
It is an appraisal method that uses quantified scale with specific narrative examples of good
and poor performance. Developing BARS involves the following process:
–
Generate critical incidents
–
Develop performance dimensions
–
Reallocate incidents
–
Scale the incidents
–
Develop a final instrument
o MBO- management by objectives
It involves setting specific measurable goals with each employee and then periodically
reviewing the progress made.
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Advantages and Disadvantages of
Appraisal Tools
•
Providing feedback
It is the process of discussing the subordinate‘s performance and progress, and making plans
for any development required. The result of the appraisal is communicated and discussed with
the employees on one-to-one basis. The focus of this discussion is on communication and
listening. The results, the problems and the possible solutions are discussed with the aim of
problem solving and reaching consensus. The feedback should be given with a positive
attitude as this can have an effect on the employees‘ future performance. The purpose of the
meeting should be to solve the problems faced and motivate the employees to perform better.
DECISION MAKING
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The last step of the process is to take decisions which can be taken either to improve the
performance of the employees, take the required corrective actions, or the related HR
decisions like rewards, promotions, demotions, transfers etc.
REWARDS AND RECOGNITION
After appraising the employees, it is essential for the management to recognize the efforts and
hard work put in by the employees and rewards them for their outstanding performance. This
not only boosts their morale but also motivate them to enhance their performance.
Rewards and Recognition programs are generally less expensive than base pay. Top
objectives for recognition programs include motivating high performance, reinforcing desired
behaviors and creating a positive work environment.
Recognition programs have grown over the years from informal ―thank you‘s‖ to plans with a
written strategy and more defined budget. Even small increases in supportive practices are
associated with decreased turnover and increased sales/profitability. Employees who feel that
their organization values them are more likely to value their customers. Appreciation and/or
praise are among the top three drivers of employee motivation and engagement across a
variety of industries and companies.
Organizational rewards take a number of different form including money (salary, bonuses,
incentive pay), recognition and benefits.
PROMOTIONS AND TRANSFERS - Promotions and transfers provide employees with the
opportunity to develop their skills and talents, which can contribute to their career growth and
advancement.
A Promotion is a move from the employee‘s current position into a different
position in a higher salary grade.
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A Transfer is a move to any other job in another department. A transfer can
be to a higher-grade level (a promotional transfer) or at the same level (a
lateral transfer).
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Review questions
1. Accurate appraisal of performance is difficult. In the light of this discuss the problems
involved in appraising an employee.
2. What are the various sources of recruitment? How can organizations evaluate which
source is best?
3. Explain the selection process in detail.
4. Training program is helpful to avoid employee obsolescence. Discuss.
5. What is on job training? Discuss the methods.
Test your understanding
1. Staffing is concerned with the management of ……….in an organization.
a. Human beings
b. Machines
c. Jobs
d. None
2. ………….is the method of comparing subordinate‘s actual performance to the
standards that have been set
a. Appraising performance
b. Reward management
c. Compensation management
d. Balanced scorecard
3. A series of job-related questions that focus on how the candidate would behave in a
given situation is called………..
a. Behavioral interview
b. Situational interview
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c. Stress interview
d. All the above
4. ………………. Is a method in which a group of interviewers questions the applicant
a. Panel interview
b. Situational interview
c. Behavioral interview
d. Stress interview
5. On the Job Training take place in a …………. Situation
a. Normal working
b. Class room
c. Informal setting
d. Absence of machines
6. ………………..is best described as the process from which managers learn and
improve their skills not only to benefit themselves but also their employing
organizations.
a. Management Development
b. Career development
c. Human resource planning
d. None
7. In this method a scale that lists a number of traits and a range of performance values
for each trait that is used to identify the score that best describes an employee‘s level
of performance for each trait………….
a. MBO
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b. Graphic rating scales
c. Paired comparison method
d. Alternation ranking method
8. ………………..involves setting specific measurable goals with each employee and
then periodically reviewing the progress made.
a. Graphic rating scales
b. Paired comparison method
c. Management by objectives
d. Management by exception
9. A …………..is a move from the employee‘s current position into a different position
in a higher salary grade.
a. Promotion
b. Transfer
c. Demotion
d. Exit
10. One of the following methods is not Off the Job Training…………….
a. Orientation training
b. Management Games
c. Role Playing
d. Behavior Modeling
Answer key
1. A
2. A
3. B
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4. A
5. A
6. A
7. B
8. C
9. A
10. A
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Chapter 5
Direction
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Chapter outline
i.
What is direction?
ii.
Features of directing
iii.
Importance of directing
iv.
Principles of direction
v.
Elements of direction
vi.
Decision making
vii.
Characteristics of decision-making
viii.
Types of decisions
ix.
The decision-making process
x.
Management by objective-concepts and features
xi.
Communication- Process
xii.
Motivation
xiii.
Importance of motivation
xiv.
Motivation process
xv.
Theories of motivation
WHAT IS DIRECTION?
Direction represents one of the essential functions of management because it deals with
human relations. Once the organizational plans have been laid down, the structure being
designed, and competent people brought in to fill various positions in organization, direction
starts. Direction is the managerial function of guiding, motivating, leading and supervising the
subordinates to accomplish desired objectives.
According to Dale, direction is telling people what to do and seeing that they do it to the best
of their ability. It consists of:
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Issuing orders and instructions by a superior to his subordinates (Communication)
Guiding, advising and helping subordinates in the proper methods of work
(Leadership)
Motivating them to achieve goals by providing incentives, good working environment,
etc (Motivation)
Supervising subordinates to ensure compliance with plans (Supervision)
FEATURES
It has the following features:
Deals with people: People are not primarily interested in enterprise objectives, they
have objectives of their own. Directing is, therefore, a complex function as managers have
to deal with people having diverse goals.
Seeks performance: Direction translates plans into action and makes people goaloriented. To obtain results, managers supervise the performance of subordinates and
integrate effort at various levels.
Provides a link: Direction provides an important link between different functions in
an organization. Without direction, the individual goals and organizational goals would
never intermesh.
Pervasive: Direction is performed by all managers at all levels of an organization.
However, the time spent on these activities decreases at higher levels of authority.
Dynamic and continuous: Direction is a dynamic and continuing activity of
managers. A manager has to modify the techniques of direction in order to keep pace with
changing times. It is an ongoing activity of managers.
IMPORTANCE OF DIRECTING
A few philosophers call Direction as ―Life spark of an enterprise‖. It is also called as on
actuating function of management because it is through direction that the operation of an
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enterprise actually starts. Being the central character of enterprise, it provides many benefits
to a concern which are as follows:1. It Initiates Actions – Directions is the function which is the starting point of the work
performance of subordinates. It is from this function the action takes place,
subordinates understand their jobs and do according to the instructions laid. Whatever
are plans laid, can be implemented only once the actual work starts. It is there that
direction becomes beneficial.
2. It Ingrates Efforts – Through direction, the superiors are able to guide, inspire and
instruct the subordinates to work. For this, efforts of every individual towards
accomplishment of goals are required. It is through direction the efforts of every
department can be related and integrated with others. This can be done through
persuasive leadership and effective communication. Integration of efforts bring
effectiveness and stability in a concern.
3. Means of Motivation – Direction function helps in achievement of goals. A manager
makes use of the element of motivation here to improve the performances of
subordinates. This can be done by providing incentives or compensation, whether
monetary or non – monetary, which serves as a ―Morale booster‖ to the subordinates
Motivation is also helpful for the subordinates to give the best of their abilities which
ultimately helps in growth.
4. It Provides Stability – Stability and balance in concern becomes very important for
long term sun survival in the market. This can be brought upon by the managers with
the help of four tools or elements of direction function – judicious blend of persuasive
leadership, effective communication, strict supervision and efficient motivation.
Stability is very important since that is an index of growth of an enterprise. Therefore
a manager can use of all the four traits in him so that performance standards can be
maintained.
5. Coping up with the changes – It is a human behaviour that human beings show
resistance to change. Adaptability with changing environment helps in sustaining
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planned growth and becoming a market leader. It is directing function which is of use
to meet with changes in environment, both internal as external. Effective
communication helps in coping up with the changes. It is the role of manager here to
communicate the nature and contents of changes very clearly to the subordinates. This
helps in clarifications, easy adaptations and smooth running of an enterprise. For
example, if a concern shifts from handlooms to power looms, an important change in
technique of production takes place. The resulting factors are less of manpower and
more of machinery. This can be resisted by the subordinates. The manager here can
explain that the change was in the benefit of the subordinates. Through more
mechanization, production increases and thereby the profits. Indirectly, the
subordinates are benefited out of that in form of higher remuneration.
6. Efficient Utilization of Resources – Direction finance helps in clarifying the role of
every subordinate towards his work. The resources can be utilized properly only when
wastages, duplication of efforts, overlapping of performances, etc. doesn‘t take place.
Through direction, the role of subordinates become clear as manager makes use of his
supervisory, the guidance, the instructions and motivation skill to inspire the
subordinates. This helps in maximum possible utilization of resources of men,
machine, materials and money which helps in reducing costs and increasing profits.
PRINCIPLES OF DIRECTION
Important principles of direction may be summarized thus:
1. Principle of harmony of objectives: direction function must, first of all, resolve
the conflict between individual goals and organizational objectives. A manager
must foster the sense of belonging to the organization among the individuals so
that they can identify themselves with the company. When both the interests are
integrated, contribution of subordinates to the company will be maximum.
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2. Principle of unify of command: A sound principle of direction is that the
subordinates should receive orders from one superior. Dual subordination brings
disorder confusion, chaos, and undermines the authority of a superior.
3. Principle of direct supervision: Direct supervision makes the subordinates happy
and boosts their morale. It also ensures quick feedback of necessary information.
4. Appropriate techniques: The technique used for direction should be appropriate
to the people, the task and the situation. Democratic style may work in some case
but autocratic style may produce results in certain other cases especially where
subordinates are incapable of doing things on their own.
5. Managerial communication: Two-way communication is an important part of
direction. The manager should explain the policies and practices to subordinates
and the results expected of them. The manager should encourage subordinates to
express their views.
6. Informal organization: Managers should make use of informal groups to
supplement, support and strengthen the formal structure.
7. Principle of maximum individual contribution: The manager should inspire the
subordinates in such a way that they contribute their maximum while realizing
organizational objectives.
8. Use of motivation techniques: A manager should know how to motivate and
inspire employees. Motivation leads to higher job satisfaction.
9. Principle of follow-up: Direction is concerned with ensuring that people do what
they are told to do. This requires continuous feedback.
ELEMENTS OF DIRECTION
According to William Newman the directing function of management consists of the
following elements (a) issuing orders and instruction to subordinates,
(b) follow-up of instruction
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(c) standard practices and indoctrination,
(d) explanations,
(e) consultative direction
Every instruction given by the manager in the process of directing the employees must
be reasonable, complete and clear. Hence written instructions are promoted. The order
of direction vocally discuss time and matter that had be instructed. Orders there of
executed are properly followed up to understand whether it is executed or not. The
instruction issued must promote standard practices. It half saves the time because of
simplification of the instructions. Explanations on the order that is the why part of it
must be explained by the manager giving instructions. To promote better execution of
the order a manager before serving it must discuss the order with the people involved
in it.
CHARACTERISTICS OF A GOOD ORDER
1. The order should be clear and easily understandable.
2. It should be reasonable and attainable.
3. It must be complete in all respects leaving no doubt in the minds of
subordinates as to what is expected of them.
4. It should be compatible with the overall objectives of the organisation.
5. It must indicate the time period within which it should be carried out and
completed.
6. The tone of the order should be appropriate and should stimulate ready
acceptance.
7. It should preferably be in writing. This helps in ensuring uniform actions
everywhere.
8. All orders should follow the chain of command.
Principles and Practices of Management ADL
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9. When issuing the order, the manager should explain the purpose behind- i.e.,
why it is being given.
10. The order should be regularly followed up and incorporate suggestions given
by subordinates when it is reissued.
These directed orders are supervised by the mangers.
WHAT IS DECISION MAKING?
In fact what so ever a manager does they do by decision making. A decision is a choice made
from available alternatives. Decision-making is the process by which individuals select a
course of action among several alternatives, to produce a desired result.
CHARACTERISTICES OF DECISION-MAKING
The important characteristics of decision-making are:
1. Goal-oriented: Decisions are made to achieve some goal. The
intention is to move‘ toward some desired state of affairs‘.
2. Alternatives: A decision is characterized by two activities- search and
choice. The manager searches for opportunities, to achieve at decisions
and for alternative solutions, so that action may take place. Choice
leads to decision, it is the selection of course of action needed to solve
problem.
3. Analytical-intellectual: Decision- making has both the intuitive and
deductive logic; it contains conscious and unconscious aspects. Part of
it can be learned but part of it depends upon the personal characteristics
of the decision maker.
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4. Dynamic process: Decision-making is the process by which
individuals select s course of action among several alternatives to
produce a desired result. For example, a manager may hire people
based on merit regularly and also pick up candidates recommended by
an influential party, at times. Depending on the situation requirements,
managers take suitable decisions using discretion and judgement.
5. Pervasive function: Decision-making permeates all management and
covers every part of an enterprise. The end products of a manager‘s
work are decisions and actions.
6. Continuous activity: Manager decides things on continual and regular
basis. It is not a one shot deal.
7. Commitment of time, effort and money: Decision-making implies
commitment of time, effort and money. The commitment may be for
short term or long term depending on the types of decision (e.g.
strategic, tactical or operating). Once a decision is made, the
organization moves in a specific direction, in order to achieve the goals.
8. Human and social process: Decision-making is a human and social
process involving intellectual abilities, intuition and judgement. For
example, in a labour surplus, capital-hungry country like Indian
managers cannot suddenly shut down plants, lop off divisions and
extend the golden handshake to thousands of workers, in fact of intense
competition.
9. Integral part of planning: As Koontz indicated, ‗decision making is
the core of planning‘. Both are intellectual processes, demanding
Principles and Practices of Management ADL
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discretion and judgement. Both aim at achieving goals. Both are
situational in nature. Both involve choice among alternative courses of
action.
TYPES OF DECISIONS
The quality of decision making skills is one the critical success factors for managers. So it
would be useful to understand the ways in which decisions are made.
BASIC AND ROUTINE DECISIONS
Basic decisions are unique, one-time decisions demanding large investments, creativeness and
good judgement on the part of managers. For example, decisions about launching a new
product, or buying a more advanced computer system, are non-routine decisions. They require
creativeness, intuition and good judgement, on the pat of managers. They are strategic
decisions which affect the future of an organization. As a manager progresses to higher levels,
number of basic decisions increase.
Routine decisions are repetitive in nature. They require little deliberation and generally
concerned with short-term commitments. Generally, lower-level managers look after such
decisions. For example, a supervisor can decide, whether an employee‘s absence is excused or
unexcused, on the basis of personnel policy guidelines.
PERSONAL AND ORGANISATIONAL DECISIONS
Decisions to watch television, to study or retire early are examples of personal decisions. Such
decisions are taken by managers in their individual capacity. These cannot be delegated.
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Personal decisions can ‗have an impact beyond the immediate system on whose behalf they
were made‘.
Organizational decisions are made by managers in their official or formal capacity. They are
aimed at furthering the interests of the organization.
PROGRAMMED AND UNPROGRAMMED DECISIONS
Problem solving refers to a broad set of activities that involves finding and implementing a
course of action, to correct an unsatisfactory situation. It includes not only decision-making
but also the implementation, monitoring and maintenance of the decision.
Programmed decision is fairly structured or recurs with some frequency(or both).
Non-programmed are made in response to a situation that is unique, is poorly defined and
largely unstructured and influences important consequences of the organization.
CHARACTERISTICS OF PROGRAMMED AND NON-PROGRAMMED DECISIONS
PROGRAMMED DECISIONS
NON-PROGRAMMED DECISIONS
Problems are routine and repetitive.
Problems are unique and novel.
Solutions are offered in accordance
These
with some habit, rule, or procedure.
policies or procedures to rely on.
are
no
pre-established
Each situation is different and needs
The conditions for programmed
a creative solution.
decisions are highly certain.
The
Made by lower-level people.
programmed decisions are highly
conditions
for
non-
uncertain.
Top management responsibility.
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THE DECISION-MAKING PROCESS
Awareness
Diagnose
Develop
Evaluate
Select
Implement
of
and
the
the
the
and verify
Problem
State
Alternatives
Alternatives
best
alternative
the
decision
the
Problem
FEEDBACK
Awareness of a problem: The first step in the decision-making process is recognising the
problem. Problems arise due to disparity between what is and what should be. At this stage,
the emphasis should be on defining the questions in the right way rather than finding answers
to the questions.
Diagnose and state the problem: Once manager become aware of a problem, he must state
the real problem. In order to state the true problems, the following questions should be looked
into:
What is the problem?
Which problem to solve?
What is the real cause of the problem?
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Develop the alternatives: Developing alternative solutions gurantees adequate focus and
attention on the problem. It helps managers to test the soundness of every proposal before it is
finally translated into action.
Evaluate the alternative: In this step, the decision maker tries to outline the advantages and
disadvantages of each alternative. The consequences of each alternative would be considered.
Select the best alternative: In this step, the decision maker selects the alternative that will
maximize the results in terms of existing objectives. Peter Drucker has offered four criteria,
for making the right choice among available alternatives:
The risk: the manager has to weight the risks, of each courses of action against the expected
gains.
Economy of effort: The alternative that will give the greatest output for the least inputs.
Timing: If the situation has urgency, the best alternative is the one that dramatises the decision
and if consistent effort is needed, a slow start is preferable.
Limitation of resources: Physical, financial and human resources impose a limitation on the
choice of selection.
Implement and verify the decision: After making a decision, the manager must implement it
and seek feedback regarding the effectiveness of the implemented solutions.
MANAGEMENT BY OBJECTIVE
The concept of ‗MBO‘ was first given by Peter Drucker in 1954. It can be defined as a
process whereby the superiors and the employers come together to identify common goals, the
employees set their goals to be achieved , the standards to be taken as the criteria for
measurement of performance and contribution and deciding the course of action to be
followed.
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Therefore the essence of MBO is participative goal setting, choosing course of actions and
decision-making. An important part of the MBO is the measurement and the comparison of
the employee‘s actual performance with the standards set.
Ideally, when employees
themselves have been involved with the goal setting and the choosing of the course of action
to be followed by them, they are more likely to fulfill their responsibilities.
FEATURES OF MBO
MBO emphasis participation in setting goals that is tangible, verifiable and measurable.
MBO is a dynamic system which seeks to integrate the company‘s need to achieve its goal.
MBO is a systematic and rational technique that allows management to attain maximum
results from available resources by focusing on achievable goals.
THE MBO PROCESS
6. Rewards /
Punishments
1. Define
Organization
goal
2. Define
5. Providing
Employee
Feedback
Objectives
4.
Performance
Evaluation /
Review
3. Continuous
monitoring of
performance
progress
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The principle behind MBO is to create empowered employees who have clarity of the roles
and responsibilities expected from them, understand their objectives to be achieved and thus
help in the achievement of the organizational as well as personal goals.
ADVANTAGES OF MBO
Clarity of goals – SMART goals where S stands for Specific, M for Measurable, A for
Achievable, R for Realistic and T for time-related.
Focus is on future rather than on past.
Motivated employees because there is involvement of employees in the whole process
of goal setting which results in their empowerment and thus commitment.
Better communication and co-ordination - Frequent reviews and interactions between
superiors and subordinates helps to maintain harmonious relationships within the
enterprise and also solve many problems faced during the period.
Managers can ensure that objectives of the subordinates are linked to the organization
's objectives
LIMITATIONS OF MBO
Pressure oriented
Time consuming
Increases paperwork
Goal-setting problems
Organizational problems
WHAT IS COMMUNICATION?
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Directing happens through communicating the goal. Hence a manger must be aware how to
communicate effectively. This is the most important aspect in reaching the goal.
Communication refers to the process of passing information and understanding from one
person to another. It involves exchange of facts, ideas, opinions or emotions by two or more
individual.
FEATURES OF COMMUNICATION
Two people: Communication always involves two people- a sender and a receiver
Sequential process: It involves several steps. First, the sender has idea to
communicate. Second, the idea is translated into a recognizable form. This is
called encoding. Third, receiver gets message, begins decoding.
Continuous activity: A manager must always be in touch with his subordinates,
peers and superiors in order to get things done.
Pervasive function: it is essential at all levels of management and in all areas of
business.
Transfer of meaning and understanding: Effective communication is the process of
sending a message in such a way that the message received is a close in meaning
as possible.
IMPORTANCE OF COMMUNICATION
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Communication is important because of following reasons:
Basis of action: Getting the right information to and from the correct sources is necessary
for an organization to function properly. Communication keeps the people working in
accordance with the desires of managers.
Facilities planning: Communication helps executives to interact , to strike rapport and to
communicate what is contained in the plan.
Helps to decision-making: Communication provides the right type of information to a
manager and enables him to consider the pros and cons.
Means of coordination: It is only through communication that people can attain a
common viewpoint and understanding and cooperate to achieve organizational objectives.
Improves relationship: Communication builds better relationships among employees
working in an organization.
Improves motivation and morale: Communication improves morale and motivation by
keeping people informed.
CHANNELS OF COMMUNICATION
There are two types of channels- formal and informal.
FORMAL COMMUNICATION:
Formal communication is systematic, orderly in
nature and supports the authority of superiors. There are three ways in which formal
communication can go- downward, upward and horizontal. Downward communication
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flows from higher levels to lower ones within an organization. Upward communication
consists of messages from subordinates to superiors. Lateral communication takes place
between people on the same level of the hierarchy. Diagonal communication occurs
between people who are neither in the same department nor on the same level of the
hierarchy.
INFORMAL COMMUNICATION: Communication channels that do not adhere to the
organisation‘s hierarchy is called informal communication. The best type of informal
communication is known as grapevine. Grapevine is an informal communication network
among people in an organization that is not officially not sanctioned by the organization.
BARRIERS TO COMMUNCATION
SEMANTIC BARRIERS
Semantic is the study of meaning in language. When two individuals attach different
meanings to a word, a breakdown in communication occur. The use of jargon creates a
barrier to communication.
INTERPERSONAL BARRIERS
Following are the reasons for interpersonal barriers.
Can‘t express effectively: Some people cannot communicate effectively because
they cannot use words and their personality effectively.
Filtering: Any attempt to alter and colour information to present a more favourable
impression is called filtering. Such attempts lead to message distortion and an
incorrect impression of the real situation is created.
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Credibility: Credibility is based on a person‘s competence in the subject area being
communicated, and is based on the degree of confidence in the person.
Inattention: Inattention is another barrier. It is more in the case of highly repetitive
material.
Perceptual differences: Perceptual differences-differences in past experience,
educational background, emotions, values and beliefs-also affect each person‘s
perception of a message or of words.
Jealousy: Competent individuals are viewed as a threat to the security of peers and
subordinates. Individuals try to diminish the worth of another person because they
are jealous.
Information overload: Managers are flooded with information from various
corners. The effectiveness of communication is likely to be hampered when
managers allow themselves to be inundated with bundles of data.
Emotions: Extreme emotions and jubilation of depression are likely to come in the
way of effective communication.
Time pressure: Managers are often subjected to time pressures, because decisions
must be made within specified deadlines.
STRUCTURAL BARRIERS
Structural barriers can include:
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Hierarchy: When organization grows, its structure expands, creating many
communication problems. Messages have to pass through several hierarchical
levels.
Status: Communication is also affected by status relationship in the organization.
Superiors are reluctant to discuss important problems with subordinates because
this may expose them completely.
Specialization: Different functions, special interests, and job jargon can make
people feel that they live in different worlds. The result can prevent employees
from having feelings of a united family, make understanding very difficult, and
leads to errors.
WHAT IS MOTIVATION?
One of the important duties of managers is to motivate people in the process of getting things
done for accomplishment of goals. So, in this process to bring efforts related to job
performance and satisfaction a manager must understand motivation. Motivation is the
internal condition that activates behavior and gives it direction; energizes and directs goaloriented behavior. It is a process of stimulating people to action to accomplish desired goals.
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FEATURES OF MOTIVATION
Motivation is an internal feeling: Motivation points to energetic forces within individuals that
drive them to behave in certain ways and, to environmental forces that trigger these drives.
Motivation produces goal-directed behaviour: Motivation has got a profound influence on
human behaviour, it harnesses human energy to organisational requirements.
Motivation contains system orientation: It considers those forces in individuals and their
surrounding environments that feedback to the individuals either to reinforce the intensity of
their drive and direction of this energy or to dissuade them from their cause of action and
reduce their efforts.
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Motivation can be either positive or negative: Positive motivation offers person in the form of
additional pay, incentives, praise etc., for satisfactory performance. Negative motivation
emphasizes penalties while controlling performance.
Motivation is different from job satisfaction: Motivation is the drive to satisfy a want or goal.
It is concerned with goal-directed behaviour. Satisfaction refers to the contentment
experiences when a want is satisfied.
TYPES:
Intrinsic Motivation - comes from rewards inherent to a task or activity itself. Ex – Loving
your job profile.
Extrinsic Motivation - comes from outside of the performer. Ex - Money but Coercion and
Threat of punishment are also common extrinsic motivations.
IMPORTANCE OF MOTIVATION
Motivation is a very important for an organization because of the following benefits it
provides:1. Puts human resources into action
Every concern requires physical, financial and human resources to accomplish the
goals. It is through motivation that the human resources can be utilized by making full
use of it. This can be done by building willingness in employees to work. This will
help the enterprise in securing best possible utilization of resources.
2. Improves level of efficiency of employees
The level of a subordinate or a employee does not only depend upon his qualifications
and abilities. For getting best of his work performance, the gap between ability and
willingness has to be filled which helps in improving the level of performance of
subordinates. This will result into-
Principles and Practices of Management ADL
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a. Increase in productivity,
b. Reducing cost of operations, and
c. Improving overall efficiency.
3. Leads to achievement of organizational goals
The goals of an enterprise can be achieved only when the following factors take
place:a. There is best possible utilization of resources,
b. There is a co-operative work environment ,
c. The employees are goal-directed and they act in a purposive manner,
d. Goals can be achieved if co-ordination and co-operation takes place
simultaneously which can be effectively done through motivation.
4. Builds friendly relationship
Motivation is an important factor which brings employees satisfaction. This can be
done by keeping into mind and framing an incentive plan for the benefit of the
employees. This could initiate the following things:
a. Monetary and non-monetary incentives,
b. Promotion opportunities for employees,
c. Disincentives for inefficient employees.
In order to build a cordial, friendly atmosphere in a concern, the above steps should be
taken by a manager. This would help in:
d. Effective co-operation which brings stability,
e. Industrial dispute and unrest in employees will reduce,
f. The employees will be adaptable to the changes and there will be no resistance
to the change,
g. This will help in providing a smooth and sound concern in which individual
interests will coincide with the organizational interests,
h. This will result in profit maximization through increased productivity.
5. Leads to stability of work force
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Stability of workforce is very important from the point of view of reputation and
goodwill of a concern. The employees can remain loyal to the enterprise only when
they have a feeling of participation in the management. The skills and efficiency of
employees will always be of advantage to employees as well as employees. This will
lead to a good public image in the market which will attract competent and qualified
people into a concern. As it is said, ―Old is gold‖ which suffices with the role of
motivation here, the older the people, more the experience and their adjustment into a
concern which can be of benefit to the enterprise.
Motivation Process
I
NEED DEFIENCIES
VI
II
NEED DEFIOCIENCIES
REASSESSED BY THE
EMPLOYEE
SEARCH FOR WAYS
TO SATISFY NEEDS
THE EMPLOYEE
V
III
REWARDS AND
PUNISHMENT
GOAL- DIRECT
BEHAVIOR
IV
PERFORMANCE
(EVALUATION OF GOALS
ACCOMPOLISHED)
THEORIES OF MOTIVATION
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There are here kinds of theories namely, content theories, process theories and reinforcement
theories. Content theories offer ways to profile or analyze individuals to identify the needs
that motivate their behaviour. Process theories seek to understand the thought process that
take place in the minds of people and that act to motivate their behaviour. Reinforcement
theories focus on employee learning of desired behaviours.
Knowledge of these theories help a manager in designing the reward mechanisms for the
employees.
CONTENT THEORIES
–
Theories that focus on the content of what factors (needs) motivate people.
MASLOW’S HIERARCHY OF NEEDS THEORY
Physiological needs: Physiological needs are biological needs required to preserve human life,
these needs include needs for food, clothing and shelter.
Safety needs: Once physiological needs become relatively well gratified, the safety needs
begin to manifest themselves and dominates human behaviour. Safety needs are primarily
satisfied through economic behaviour.
Social needs: When social needs become dominant, a person will strive for meaningful
relations with others.
Esteem needs: The esteem needs are concerned with self-respect, self-confidence, a feeling of
personal worth, feeling of being unique, and recognition.
Self actualisation: Self actualization is the need to maximize one‘s potential. This is related
with the development of intrinsic capabilities which lead people to seek situations that can
utilize their potential.
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ALDERFER’S ERG THEORY
Alderfer has provided an extension of Maslow‘s need hierarchy. In the sense, the theory
compresses Maslow‘s five need categories into three: existence needs, relatedness needs,
growth needs. Alderfer‘s theory claims that at a given point of time an individual can identify
more than one need that motivates him/her and there is no hierarchy or order in the need
satisfaction unlike Maslow‘s theory of satisfaction progression principle. Alderfer explains the
concept of frustration regression principle. A failure to satisfy a need will create regression—
Principles and Practices of Management ADL
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reverting to a previously satisfied need after failing to satisfy another need. The concepts are
described as follows:
Existence needs - Existence needs include all needs related to food, clothing, shelter, pay,
working conditions.
Relatedness needs – Relatedness needs include meaningful social and interpersonal
relationships
Growth needs – Growth needs involve the individual making efforts to achieve full potential.
These needs are satisfied by making productive and creative contributions.
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Maslow’s Model versus ERG Theory
The overall structure of need categories is the same. Alderfer‘s
SIMILARITIES
theory is only a reconfigured need hierarchical model. Both models
deal with movements upward in hierarchy.
ERG Theory provides a specific mechanism for downward
DIFFERENCES
movement in the hierarchy which Alderfer , in addition to
satisfaction, progression, frustration, regression can also offer if you
fail to satisfy need for certain level.
Herzberg’s Two-Factor theory
Motivators : Intrinsic conditions e.g. challenging work, recognition, responsibility, growth
possibilities which give positive satisfaction.
Hygiene factors : EXTRINSIC CONDITIONS e.g. status, job security, working conditions,
status, supervision quality, salary and fringe benefits that do not motivate if present, but, if
absent, result in demotivation.
Hygiene
Motivators
Company policy and administration
Achievement
Relationship with supervisor
Recognition
Work condition
Work itself
Salary
Responsibility
Relationship with peers
Advancement
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Personal life
McCllelland’s Need Theory
Growth
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–
The theory assumes that people‘s behavior in organizations is based on three
principal needs:
Achievement(nach) - This is the need for challenge, for personal accomplishment and success
in competitive situations.
Power (npow)- This is the need to dominate, influence and control people.
Affiliation(naff)-- This need is a social need, for companionship and support, for developing
meaningful relationships with people.
-
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Maslow -
Herzberg
Need hierarchy
Two-factor
theory
Alderfer
The work itself
–
Self actualization
High
order
needs
Esteem
Responsibility
Need for Power
Achievement
Safety
And
Need for
Achievement
Growth
Motivators
Belongingness,
Social & Love
Basic
needs
McClelland
Hygiene
factors
Recognition
Quality of inter
personal
relations
among peers,
with
supervisors,
Job security
Physiological
Relatedness
Need for
Affiliation
Existence
Working
conditions.
Salary.
McGREGOR’S THEORY X AND THEORY Y
The basic assumptions of Douglas McGregor‘s about employees are described by theory X
and Theory Y. According to the assumptions managers can motivate employees.
THEORY “X” – ASSUMPTIONS ABOUT EMPLOYEES BY THEORY X:
The average person dislikes work and will avoid it he/she can.
Therefore most people must be forced with the threat of punishment to work towards
organisational objectives.
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The average person prefers to be directed; to avoid responsibility; is relatively
unambitious, and wants security above all else.
Management is responsible for organizing the elements of productive enterprise.
THEORY “Y” -– ASSUMPTIONS ABOUT EMPLOYEES BY THEORY Y:
Effort in work is as natural as work and play.
People will apply self-control and self-direction in the pursuit of organisational
objectives, without external control or the threat of punishment.
Commitment to objectives is a function of rewards associated with their achievement.
People usually accept and often seek responsibility.
The capacity to use a high degree of imagination, ingenuity and creativity in solving
organisational problems is widely, not narrowly, distributed in the population.
PROCESS THEORIES
–
Theories that address how and why people become motivated.
ADAM’S EQUITY THEORY
When people measure the fairness of their work outcomes in comparison with others felt
inequity is a motivating state of mind. Theory states that motivation is affected by the an
individual‘s perception of the equity (―fairness‖) of the outcomes (rewards) they receive in
return for their inputs (efforts), compared to the outcomes and inputs of other people (referent
others).
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This theory is based on two assumptions about human behaviour:
1. Individuals make contributions (inputs) for which they expect certain
outcomes(rewards).
2. Individuals decide whether or not a particular exchange is satisfactory, by
comparing their inputs and outcomes to those of others.
VROOM’S EXPECTANCY THEORY
When people measure the fairness of their work outcomes in comparison with others felt
inequity is a motivating state of mind. Vroom proposes three variables to account for this Valence, Expectancy and Instrumentality.
The strength of a tendency to act in a certain way depends on the strength of an expectation
that the act will be followed by a given outcome and on the attractiveness of that outcome to
the individual.
Individual beliefs on
Work effort------performance---------work related outcomes
Managers must know three things-
 Effort–Performance Relationship
–
The probability that exerting a given amount of effort will lead to performance.
–
The belief that performing at a particular level will lead to the attainment of a
 Performance–Reward Relationship
desired outcome.
 Rewards–Personal Goals Relationship
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The degree to which organizational rewards satisfy an individual‘s goals or needs and the
attractiveness of potential rewards for the individual
It can be further explained as Expectancy is the belief that increased effort will lead to increased performance i.e. if I work
harder then this will be better. This is affected by such things as:
 Having the right resources available (e.g. raw materials, time)
 Having the right skills to do the job
 Having the necessary support to get the job done (e.g. supervisor support, or correct
information on the job)
Instrumentality is the belief that if you perform well that a valued outcome will be received
i.e. if I do a good job, there is something in it for me. This is affected by such things as:
 Clear understanding of the relationship between performance and outcomes – e.g. the
rules of the reward ‗game‘
 Trust in the people who will take the decisions on who gets what outcome
 Transparency of the process that decides who gets what outcome
Valence is the importance that the individual places upon the expected outcome. For example,
if I am mainly motivated by money, I might not value offers of additional time off.
Expectancy theory works on motivation= expectancy x valence x instrumentality as a
multiplier effect.
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REINFORCEMENT THEORY
The term reinforce means to strengthen, and is used in psychology to refer to anything
stimulus which strengthens or increases the probability of a specific response. Reinforcement
is anything that causes a given behaviour to be repeated or inhibited. For example, if you want
your dog to sit on command, you may give him a treat every time he sits for you. The dog will
eventually come to understand that sitting when told to will result in a treat. This treat is
reinforcing because he likes it and will result in him sitting when instructed to do so.
There are four types of reinforcement are used:
Positive reinforcement: It is a method of strengthening behaviour with rewards or positive
outcomes after a desired behaviour is performed. The examples above describe what is
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referred to as positive reinforcement. Think of it as adding something in order to increase a
response. The most common types of positive reinforcement or praise and rewards, and most
of us have experienced this as both the giver and receiver.
Negative reinforcement: It occurs when an unpleasant or undesirable situation is removed or
withdrawn following some behaviour. Example: Think of negative reinforcement as taking
something negative away in order to increase a response. Imagine a teenager who is nagged
by his mother to take out the garbage week after week. After complaining to his friends about
the nagging, he finally one day performs the task and to his amazement, the nagging stops.
The elimination of this negative stimulus is reinforcing and will likely increase the chances
that he will take out the garbage next week.
Extinction: Extinction is an effective method of controlling undesirable behaviour. It also
refers to non-reinforcement. It is based on the principle that if a response is not reinforced, it
will eventually disappear. When you remove something in order to decrease a behavior, this is
called extinction. You are taking something away so that a response is decreased.
Punishment: Punishment is a control device employed in organization to discourage and
reduce annoying behaviours of others. It can take either of two forms: there can be withdrawal
or termination of desirable or rewarding consequences to there can be an unpleasant
consequence after behaviour is performed. Example:
Punishment refers to adding something
aversive in order to decrease a behavior. The most common example of this is disciplining
(e.g. spanking) a child for misbehaving. The reason we do this is because the child begins to
associate being punished with the negative behavior. The punishment is not liked and
therefore to avoid it, he or she will stop behaving in that manner.
Goal setting Theory
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This theory was given by W. Locke. It states that people will perform better if they have
difficult, specific accepted performance goals or objectives.
 People will attempt to achieve those goals that they intend to achieve.
 Difficult goals result in better performance than easy goals.
 Specific goals are better than vague goals.
 People must accept goals as their own if they are to work toward
achieving them.
 People must commit to goals to achieve them.
The Goal Setting Process – In order to motivate employee‘s managers must know individual
differences, match jobs, link rewards to the effort of the employees.
• The Goal Setting Process
Personal
Values
How the
world
should be
Present
Situation
Am I
consistent
with my
values?
Goal
Setting
1. Self-set
2. Participative
3. Assigned
4. Do your best
Goal
Consequences
Characteristics
1. Difficulty
1. Performance
2. Specificity
2. Satisfaction
3. Acceptance
3. Rewards
4. Commitment
Principles and Practices of Management ADL
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Linking Management by Objectives and goal setting theory
It is a program in organizations‘ that encompasses specific goals derived for employees
through participative approach, for an explicit time period, with feedback on goal progress.
Linking MBO and Goal-Setting Theory
MBO
Goal-Setting Theory
Goal Specificity
Yes
Yes
Goal Difficulty
Yes
Yes
Feedback
Yes
Yes
Participation
Yes
No (qualified)
Principles and Practices of Management ADL
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Review questions
1. Define decision making and its steps.
2. Is MBO a important process for management? Do you agree or disagree? Discuss you
answers.
3. Elaborate the principles of directing.
4. Critically examine motivation theories.
5. Is there a single way to motivate people?
6. What are the barriers in communication?
Test your understanding
1.
a.
b.
c.
d.
The order of direction vocally discuss ………… and matter that had be instructed.
Content
Time
People
None
2. ………… is the process by which individuals select a course of action among several
alternatives, to produce a desired result.
a. Innovation
b. Decision making
c. Problem solving
d. Imagination
3. Basic decisions are ………… one-time decisions demanding large investments,
creativeness and good judgment on the part of managers.
a. Routine
b. Unique
c. Programmed
d. Un –programmed
Principles and Practices of Management ADL
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4.
a.
b.
c.
d.
The concept of ‗MBO‘ was first given by Peter Drucker in the year ………...
1956
1970
1954
1980
5. Semantic is the study of meaning in …………………….
a. Language
b. Action
c. Words
d. All the above
6. ……………….. is a process of stimulating people to action to accomplish desired
goals.
a. Leading
b. Motivation
c. Controlling
d. Planning
7. Theories that focus on what factors (needs) motivate people are ………….
a. Content
b. Contemporary
c. Process
d. All the above
8. Alderfer has provided an extension of………………...
a. Herzberg theory
b. Equity theory
c. Maslow‘s need hierarchy
Principles and Practices of Management ADL
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d. Vroom‘s theory
9. The need to dominate, influence and control people……….
a. Need for achievement
b. Need for power
c. Need for existence
d. None
10. The probability that exerting a given amount of effort will lead to performance
is………..
a. Expectancy
b. Valence
c. Motive
d. Reward
Answer key
1. B
2. B
3. B
4. C
5. A
6. B
7. A
8. C
9. A
10. A
Principles and Practices of Management ADL
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Chapter 6
CO-ORDINATION AND CONTROLLING
Principles and Practices of Management ADL
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Chapter outline
i.
Introduction-co ordination
ii.
Definitions
iii.
Principles of co-ordination
iv.
Need for co-ordination
v.
Techniques of co-ordination
vi.
Types of co-ordination
vii.
Importance of co-ordination
viii.
Hindrances to co-ordination
ix.
Meaning of control
x.
Characteristics of Control
xi.
The elements of control
xii.
Relationship between the elements of control and information
xiii.
Process of Controlling
xiv.
Kinds of control
Introduction
Coordination is considered as an essential element of administration. Co-ordination is ―the
integration, synchronisation or orderly pattern of group efforts in the institution towards the
accomplishment of common objectives, to ensure a harmonious and smooth working of an
organisation with a number of its divisions, department or its units, the activities in all the
areas are required to be pulled together, unified and blended so as to give them a
commonness and purpose.”
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Definitions
"Co-ordination is the orderly synchronisation of efforts to provide the proper amount,
timing, and directing execution resulting in harmonious and unified actions to a stated
objective"
"Co-ordination is the integration of several parts into an orderly whole to achieve the
purpose of undertaking"
"Co-ordination is the integrating process in an orderly pattern of group efforts in an
organisation toward the accomplishment of a common objective"
Synchronization and integration of activities, responsibilities, and command and
control structures to ensure that the resources are used most efficiently in pursuit of the
specified objectives. Along with organizing, monitoring, and controlling, coordinating
is one of the key functions of management.
The concept of co-ordination is much broader than that of co-operation. Both these have to go
side by side. Co-ordination is only a means to an end and not an end itself.
Principles of co-ordination
1. As the thinking function of management precedes the doing function, co-ordination
endeavour must sort at the planning stage, otherwise it becomes impossible to secure
co-ordination of activities and efforts in the execution of work.
2. There is need for importance of direct personal contact in removing misunderstanding
and conflict between departments.
3. Co-ordination is continual activity that permeates through each managerial function.
4. There should be an integration of all efforts, actions and interests toward a common
purpose. For this co-ordination call for the establishment of a reciprocal relationship
among all pertinent factors by way of balancing, blending and joining together the
factors with one another.
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Need for co-ordination
Diverse and specialized activities- Total activities of an organisation are divided into
several units and subunits on the basis of either product specialisation. Every manager
tends to concentrate his attention on activities and objectives of has own department.
Hence co-ordination is needed to prevent and discourage too much concentration on
one aspect of work.
Empire building- To exaggerate self importance and personal motive is deeply
implanted in human nature. This motive causes the individual department to be
isolated from others, thus turning it as a separate entity. So co-ordination is needed to
curb the growing tendency towards the empire building.
Personal rivalries and prejudice-Human organisation give rise in course of time to
the development of personality politics among members. Under such situation, coordination is deliberately damaged by the members of the rival group. The perceptual
conflict between line and staff positions or between personnel is a pointer to this
problem
Conflict of interests- Subordination of individual interest to general interest acts as a
bar to co-ordination. This subordination may arise from a number of causes by a
laziness, incompetence and ambition as well as lack of loyalty, integrity or initiative
on the part of employees. There is need for co-ordination to avoid conflicts or
overlapping in the work of employees or units or as organisation.
Techniques of co-ordination
Communications-Effective communication is arranged not only by building a
network of communication systems but by allowing wide participation also in the
decision making on the part of the affected persons.
Orderly plans- Standing plans like policies and procedures, standing orders and
instructions communicate the expected pattern of behaviour required for co-ordinated
Principles and Practices of Management ADL
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action. Because of checking, observation and guidance involved and supervision, it
aids much in developing co-ordinated efforts.
Supervision- Effective supervision aids in co-ordination much in developing coordinated effort by checking, observation and guidance.
Leadership-leadership provides individual motivation and persuades the group to
have identity of interests and outlook in group efforts.
Departmentation-Departmentation
arranges
for
necessary
correlation
and
interconnection of activities in an analytical manner by assigning duties and delegating
authority in different positions is the work of departmentation.
Direct contact-it permits the management members to exchange their ideas,
prejudices and problems as well as to understand each others.
Types of co-ordination
Internal co-ordination- it refers to the blending of all efforts and activities and forces
operating within an organisation or enterprise.
External co-ordination- the blending of all efforts and activities and forces operating
outside the enterprise or organisation which contribute to achieving the goals and
objective of the organisation.
Internal co-ordination
Planning- it is a well thought out course of action to be taken for realising certain
objectives through the available means, a good plan requires a perfect harmonisation
between mean and ends and this in itself is an ct of co-ordination. To reach ends all
plans include a programme mapping out the orderly course of action. To draw up an
orderly course of action, all activities and efforts are to be interlinked, and desired for
their guidance toward the desired end.
Principles and Practices of Management ADL
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Organization – organisation is set up with the primary purpose of securing coordination particularly interdepartmental and interpersonal. Departments and divisions
are established to ensure a smooth flow of work without friction, failing or delaying.
Direction – direction is concerned with making the human efforts more effective and
productive through leadership, guidance, motivation, communication and supervision.
Managers directing the efforts of employees towards a common goal. Supervision is a
cementing force for securing better performance from workers. Supervisor gives
assistance, advice or direction to obtain cohesive group efforts
Control-control ensures the realisation of planned objectives through the process of
work evaluation. The work progress is analysed and appraised in terms of quantity,
quality, time use and cost.
External co-ordination
There are 3 interesting parties-the customers, employees and the owners whose conflicting
needs and demands have to be satisfied by managers of any business.
Consumers desire an uninterrupted supply of quality goods and services at fair
process and expect a steady improvement in the quality of goods and services so as to
give them a higher standard of living.
Employees-demand fair wages ,congenial working conditions ,steady employment
satisfaction from the work as well as protection against hazards of accidents and
sickness or old age
Owners –want conservation of assets, efficient and continuous operation of business,
fair returns on the investments and accurate information on several aspects of business.
Other enterprise – an enterprise affects and is affected in turn by the activities of
other enterprises particularly those in the same line of business. An enterprise purchase
materials and services from other enterprises. Many enterprises are chained together
by their customer –buyer relationships. Non-availability of materials may lead to
forced stoppages of production on the part of some enterprise.
Principles and Practices of Management ADL
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Government regulations-the government at city, state or central level exerts potent
forces that are to be recognised by all managers. Regulatory measures of government
become so extensive that no enterprise can stay in business without becoming
thoroughly familiar with the socioeconomic trends which produce these restrictive
regulations. Compliance with various laws relating to tax, tariff, labour etc is
necessary
General business economy-enterprises must adjust themselves with the swings of the
trade cycle through economic forecasting and trend study.
Technology advances-an enterprise must secure the benefit of new technology which
is being made continually available in our society through research and interventions
.technological advances contribute significantly towards the reduction of cost and the
improvement of productivity. Without introducing new technological changes an
enterprise cannot go ahead.
Importance of co-ordination
1. Quintessence of management: in a sense, management is primarily a task of coordination of all efforts, forces and activities that affect the enterprise from within and
without it.
2. Creative force- group efforts when co-ordinated create a result greater than the sum
total of the individual and isolated. This composite effort is brought about by
executive action on human relation and leadership.
3. Unity of direction- co-ordination ensures unity if direction by way of securing
spontaneous collaboration on the part of different departments.
4. High employee morale- co-ordination tones up the general level of employee morale
and provides satisfaction.
Hindrances to co-ordination
1. The uncertainty of the future, as to the behaviour of the individual and the people.
Principles and Practices of Management ADL
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2. The lack of knowledge, experience, wisdom and character among leaders and their
confused and conflicting ideas and objectives.
3. The lack of administration skill and technique.
4. The vast number of variables involved and the incompleteness of human knowledge,
particularly with regard to men and life.
5. The lack of orderly methods of developing new ideas and programmes.
6. Size and complexity, personality and political factors.
7. Lack of leaders with wisdom and knowledge pertaining to public administration
8. The accelerated expansion of public administration of international dimension.
What is Control?
Control is an important function because it helps to check the errors and to take the corrective
action so that deviation from standards are minimized and stated goals of the organization are
achieve in desired manner.
According to modern concepts, control is a foreseeing action whereas earlier concept of
control was used only when errors were detected. Control in management means setting
standards, measuring actual performance and taking corrective action. Thus, control
comprises these three main activities. Control is defined by various authors.
According to Henri Fayol,
Control of an undertaking consists of seeing that everything is being carried out in
accordance with the plan which has been adopted, the orders which have been given, and the
principles which have been laid down. Its object is to point out mistakes in order that they
may be rectified and prevented from recurring.
Principles and Practices of Management ADL
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According to EFL Breach,
Control is checking current performance against pre-determined standards contained in the
plans, with a view to ensure adequate progress and satisfactory performance.
According to Harold Koontz,
Controlling is the measurement and correction of performance in order to make sure that
enterprise objectives and the plans devised to attain them are accomplished.
According to Stafford Beer,
Management is the profession of control.
Therefore control is the process of monitoring activities to ensure that they are being
accomplished as planned and of correcting any significant deviations.
Characteristics of Control
Control is a continuous process
Control is a management process
Control is embedded in each level of organizational hierarchy
Control is forward looking
Control is closely linked with planning
Control is a tool for achieving organizational activities
What are the steps involved in management control process?
Principles and Practices of Management ADL
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The control process assumes that performance standards exist. These are the goals created
during the planning process against performance progress measured. The exhibit explains the
steps –
Measuring the actual
performance
Comparing actual versus
standards
Taking managerial action
against deviations
Establishment of Standards - is the first step in control process. Standards
represent criteria for performance. A standard acts as reference line or a basis
of appraisal of actual performance. Standards should be set precisely and
preferable in quantitative terms. Setting standard is closely linked and is and
integral part of the planning process. Standards are used or bench marks by
Principles and Practices of Management ADL
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which performance is measured in the control operations at the planning stage,
planning is the basis of control.
Measurement of Performance - After establishing the standards, the second
step is to measure actual performance of various individuals, groups or units.
Management should not depend upon the guess that standards are being met
measurement of performance against standards should ideally be done on a
forward looking basis so that deviations may be detected in advance of their
occurrence and avoided by appropriate actions.
To determine the actual performance a manager must acquire information
about how we measure and what we measure.
Manager to measure the actual performance can collect information from
personal observation, statistical reports, oral reports and written reports. What
we measure is more important than how we measure. The selection of a wrong
criteria can result in serious dysfunctional consequences.
Comparing Performance with Standards - Appraisal of performance or
comparing of actual performance with pre-determined standards is an
important
step
in
control
process.
Comparison is easy where standards have been set in quantitative terms as in
production and marketing. In other cases, where results are intangible and
cannot be measured quantitatively direct personal observations, inspection and
reports are few methods which can be used for evaluation. The evaluation will
reveal some deviations from the set standards. The evaluator should point out
defect or deficiencies in performance and investigate the causes responsible for
these.
Principles and Practices of Management ADL
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Taking Corrective Actions - Managers should know exactly where in the
assignment of individual or group duties, the corrective action must be applied.
Managers may correct deviations by redrawing their plans or by modifying
their goals. Or they may correct deviations by exercising their organizing
functions through reassignment or clarification of duties. They may correct,
also, by additional stapling or better selection and training of subordinates.
TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE
Depending on the time at which the control is applied, Controls are of three types.
INPUT
PROCESSES
FEED
FORWARD
CONTROL
CONCURRENT
CONTROL
(Anticipates
problems)
(Corrects
problems as
they happen)
OUTPUT
FEEDBACK
CONTROL
(Corrects
problems
after they
occur)
1. Feedback Control (Historical or post-control) – It is a process of gathering
information about the completed activity, evaluating that information and
taking steps to improve similar activities in the future. Feedback Control
enables managers to use information on past performance, bring future
performance into line with the planned objectives.
2. Concurrent Control – It is also called ‗real-time‘ control. Concurrent Control
techniques immediately consider any problem and analyze it to take necessary
Principles and Practices of Management ADL
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and corrective steps before any major damage is done. It is also known by
another name ‗steering control‘ and occurs while an activity is taking place.
3. Predictive or Feedforward Control- It anticipates problems that the
management encounters in future. Predictive Control attempts to anticipate
problems or deviations from the standard, in advance of their occurrence.
RESISTANCE TO CONTROL – There is natural resistance to controls because
controls take away because controls take away a certain amount of individual freedom
Over-Control – When organizations try to control too many things, employees
perceive these as unreasonable and unacceptable and then trouble begins to
surface.
Inappropriate Controls – Often Controls are not related to the objectives of
the organization. If the wrong thing is being controlled, this will not contribute
to doing the right thing efficiently.
Unachievable standards- Unattainable standards produce negative reactions
from employees and thus this may lead to the employees quitting the company
in frustration.
Unpredictable standards – When the control system is unpredictable and
constantly changed, frustration and resentment of the control process can
result.
Organizational and Operational Control
The concept of organizational control is implicit in the bureaucratic theory of Max Weber.
Associated with this theory are such concepts as "span of control", "closeness of supervision",
and "hierarchical authority". Weber's view tends to include all levels or types of
organizational control as being the same. More recently, writers have tended to differentiate
Principles and Practices of Management ADL
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the control process between that which emphasizes the nature of the organizational or systems
design and that which deals with daily operations. To illustrate the difference, we "evaluate"
the performance of a system to see how effective and efficient the design proved to be or to
discover why it failed. In contrast, we operate and "control" the system with respect to the
daily inputs of material, information, and energy. In both instances, the elements of feedback
are present, but organizational control tends to review and evaluate the nature and
arrangement of components in the system, whereas operational control tends to adjust the
daily inputs.
The direction for organizational control comes from the goals and strategic plans of the
organization. General plans are translated into specific performance measures such as share of
the market, budgets etc.. The process of organizational control is to review and evaluate the
performance of the system against these established norms. Rewards for meeting or exceeding
standards may range from special recognition to salary increases or promotions. On the other
hand, a failure to meet expectations may signal the need to reorganize or redesign.
In organizational control, the approach used in the program of review and evaluation
depends on the reason for the evaluation — that is, is it because the system is not effective
(accomplishing its objectives)? Is the system failing to achieve an expected standard of
efficiency? Is the evaluation being conducted because of a breakdown or failure in
operations? Is it merely a periodic audit-and-review process?
When a system has failed or is in great difficulty, special diagnostic techniques may be
required to isolate the trouble areas and to identify the causes of the difficulty. It is appropriate
to investigate areas that have been troublesome before or areas where some measure of
performance can be quickly identified. For example, if an organization's output backlog builds
rapidly, it is logical to check first to see if the problem is due to such readily obtainable
Principles and Practices of Management ADL
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measures as increased demand or to a drop in available man hours. When a more detailed
analysis is necessary, a systematic procedure should be followed.
In contrast to organizational control, operational control serves to regulate the day-to-day
output relative to schedules, specifications, and costs. Is the output of product or service the
proper quality and is it available as scheduled? Are inventories of raw materials, goods-inprocess, and finished products being purchased and produced in the desired quantities? Are
the costs associated with the transformation process in line with cost estimates? Is the
information needed in the transformation process available in the right form and at the right
time? Is the energy resource being utilized efficiently?
The most difficult task of management concerns monitoring the behavior of individuals,
comparing performance to some standard, and providing rewards or punishment as indicated.
Sometimes this control over people relates entirely to their output. For example,
a manager might not be concerned with the behavior of a salesman as long as sales were as
high as expected. In other instances, close supervision of the salesman might be appropriate if
achieving customer satisfaction were one of the sales organization's main objectives.
The larger the unit, the more likely that the control characteristic will be related to some
output goal. It also follows that if it is difficult or impossible to identify the actual output of
individuals, it is better to measure the performance of the entire group. This means that
individuals' levels of motivation and the measurement of their performance become subjective
judgments made by the supervisor. Controlling output also suggests the difficulty of
controlling individuals' performance and relating this to the total system's objectives
Principles and Practices of Management ADL
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Review questions
1. Contrast between feedback control and concurrent control.
2. Explain the steps in control process.
3. Why is control important for organization? How is related to planning process?
4. Briefly explain the types of managerial control?
5. Management involves co-ordination and integration of all resources to
accomplish specific results. Explain?
6. Outline the principles and techniques of co-ordination?
7. Explain features of co-ordination?
Test your understanding
1. ..........................refers to the blending of all efforts and activities and forces operating
within an organisation or enterprise.
a. External coordination
b. Internal co-ordination
c. Both
d. None
2. Control in management means setting standards, measuring …………..and taking
corrective action.
a. Actual performance
b. Projected performance
c. Past performance
d. None
3. Control is a …………… process.
Principles and Practices of Management ADL
01
a. Separate
b. Distinct
c. Continuous
d. None
4. There are ………………basic elements in a control system.
a. One
b. Four
c. Two
d. Three
5. …………….. Is also called ‗real-time‘ control
a. Feedback
b. Concurrent
c. Feed forward
d. All
6. Co-ordination is the integrating process in an orderly pattern of group efforts in an
organisation toward the accomplishment of ................
a. Common objective
b. Primary objective
c. Shared objective
d. All
7. ……………………. is a pro ess of gatheri g i for atio a out the o pleted a tivity.
a. Feedback control
b. Concurrent control
c. Real time control
d. None
Principles and Practices of Management ADL
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8. Technique of coordination is…………….
a. Communication
b. Planning
c. Chain of command
d. Leading
9. Predictive control is also called the………..
a. Feedforward control
b. Concurrent control
c. Real time control
d. None
10. Coordination between different level of organization is……….
a. External coordination
b. Customer coordination
c. Internal coordination
d. All
Answer key
1. B
2. A
3. C
4. B
5. B
6. A
7. A
8. A
9. A
10.A
Principles and Practices of Management ADL
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References
Rao, VSP & Krishna, VH: Management –Text & Cases, Excel Books, 2002.
Schermerhorn, Hunt & Osborn: Managing Organizational Behavior, John Billy
and sons, Second Edition.
Armstrong, Michael: Human Resource Management Practice, Kogan Page 10th
edition.
Pareek, Udai: Understanding Organizational Behavior, Oxford University
Press,2004.
J.A. ,Stoner , Management , Prentice-Hall of India, New Delhi.
R.W. Griffin, Management, AITBS, New Delhi.
Koontz and O‘Donnell, Essentials of Management, Tata McGrawHill , New
Delhi.
Gary Desseler ,Management : Fundamentals, Prentice-Hall , Virginia.
Lesile W. Rue, Lloyd L. Byers, Management, Richard D. Irwin Inc., Illinois.
S. Venu, Corporate Planning, Orient Longman, Calcutta.
Principles and Practices of Management ADL
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Web sites to refer
www.managementmag.com/
www.valuebasedmanagement.net/
www.managementstudyguide.com/management_functions.htm
http://www.buzzle.com/articles/management-concepts-the-four-functions-ofmanagement.html
http://ezinearticles.com/?Functions-Of-Management&id=1200015
Websites for video references
http://www.youtube.com/watch?v=_cC2lnfGzLs
:
Planning
for
a
Non-Profit
Organization
http://www.youtube.com/watch?v=XDP26gGFVJIOrganization and Planning Skills
http://www.youtube.com/watch?v=ikRWdZOxjZs&p=B2187BF27EE3198C&playnext=
1&index=1 Overview of strategic planning
http://www.youtube.com/watch?v=RNjYsYMQ3pI&p=B2187BF27EE3198C&index=1
Planning
http://www.youtube.com/watch?v=vqByFsaIvjY&p=B2187BF27EE3198C&index=3
:
Planning
http://www.youtube.com/watch?v=sP7Q51zHp4I
:
Management:
Planning
&
Forecasting
http://www.youtube.com/watch?v=w9OlaH_etBI : Strategy - An Organizational Vision
Quest
http://www.youtube.com/watch?v=NCDlozomQiY : How to Write a Values Statement
http://www.youtube.com/watch?v=7pPlGR6OOmI : Backwords Planning
http://www.youtube.com/watch?v=2PmTP8hMGIc: Achieving Goals Using Think-PlanDo
http://www.youtube.com/watch?v=qpITGIcF520 : Be A Successful Negotiator