MANAGEMENT PRINCIPLE

MODULE-I

Introduction
Management is a universal process in all organized, social and economic activities. Wherever
there is human activity there is management. Management is a vital aspect of the economic life of
man, which is an organized group activity. A central directing and controlling agency is
indispensable for a business concern. The productive resources –material, labour, capital etc. are
entrusted to the organizing skill, administrative ability and enterprising initiative of the
management. Thus, management provides leadership to a business enterprise. Without able
managers and effective managerial leadership the resources of production remain merely
resources and never become production. Management occupies such an important place in the
modern world that the welfare of the people and the destiny of the country are very much
influenced by it.
Meaning:
Management is a technique of extracting work from others in an integrated and co-ordinated
manner for realizing the specific objectives through productive use of material resources.
Mobilising the physical, human and financial resources and planning their utilization for business
operations in such a manner as to reach the defined goals can be benefited to as management.
Definition
In the words of Henry Fayol - "To manage is to forecast and to plan, to organise, to command, to
co-ordinate and to control".
According to Peter F Drucker - "Management is a multipurpose organ that manages a business and
manages managers and manages worker and work".
In the words of Koontz and O'Donnel - "Management is defined as the creation and maintenance
of an internal environment in an enterprise where individuals working together in groups can
perform efficiently and effectively towards the attainment of group goals".
According to Wheeler - "Business management is a human activity which directs and controls the
organisation and operation of a business enterprise. Management is centred in the administrators
of managers of the firm who integrate men, material and money into an effective operating limit".
Nature or Characteristics
An analysis of the various definitions of management indicates that management has certain
characteristics. The following are the salient characteristics of management.
1. Management is a Factor of Production: Manager's primary task is to secure the productive
performance through planning, direction and control. It is expected of the management to bring
into being the desired results. Rational utilisation of available resources to maximise the profit is
the economic function of a manager. Professional manager can prove his administrative talent only
by economising the resources and enhancing profit. According to Kimball -"management is the art
of applying the economic principles that underlie the control of men and materials in the enterprise
under consideration".
2. Management also implies skill and experience in getting things done through people:
Management involves doing the job through people. The economic function of earning profitable
return cannot be performed without enlisting co-operation and securing positive response from
"people". Getting the suitable type of people to execute the operations is the significant aspect of
management.
3. Management is a process: Management is a process, function or activity. This process
continues till the objectives set by administration are actually achieved. "Management is a social
process involving co-ordination of human and material resources through the functions of
planning, organising, staffing, leading and controlling in order to accomplish stated objectives".
4. Management is a universal activity: Management is not applicable to business undertakings
only. It is applicable to political, social, religious and educational institutions also. Management is
necessary when group effort is required.
5. Management is a Science as well as an Art: Management is an art because there are definite
principles of management. It is also a science because by the application of these principles
predetermined objectives can be achieved.

6. Management is a Profession: Management is gradually becoming a profession because there

are established principles of management which are being applied in practice, and it involves
specialised training and is governed by ethical code arising out of its social obligations.
7. Management is an endeavour to achieve pre-determined objectives: Management is concerned
with directing and controlling of the various activities of the organisation to attain the
pre-determined objectives. Every managerial activity has certain objectives. In fact, management
deals particularly with the actual directing of human efforts.
8. Management is a group activity: Management comes into existence only when there is an
group activity towards a common objective. Management is always concerned with group efforts
and not individual efforts. To achieve the goals of an organisation management plans, organises,
co-ordinates, directs and controls the group effort.
9. Management is a system of authority: Authority means power to make others act in a
predetermined manner. Management formalises a standard set of rules and procedure, to be
followed by the subordinates and ensures their compliance with the rules and regulations. Since
management is a process of directing men to perform a task, authority to extract the work from
others is implied in the very concept of management.
10. Management involves decision-making: Management implies making decisions regarding the
organisation and operation of business in its different dimensions. The success or failure of an
organisation can be judged by the quality of decisions taken by the managers. Therefore, decisions
are the key to the performance of a manager.
11. Management implies good leadership: A manager must have the ability to lead and get the
desired course of action from the subordinates. According to R. C. Davis-"management is the
function of executive leadership everywhere". Management of the high order implies the capacity
of managers to influence the behaviour of their subordinates.
12. Management is dynamic and not static: The principles of management are dynamic and not
static. It has to adopt itself according to social changes.
13. Management draws ideas and concepts from various disciplines: Management is an
interdisciplinary study. It draws ideas and concepts from various disciplines like economics,
statistics, mathematics, psychology, sociology, anthropology etc.
14. Management is Goal Oriented: Management is a purposeful activity. It is concerned with the
achievement of pre-determined objectives of an organisation.
15. Management is Intangible: It cannot be seen with the eyes. It is evidenced only by the quality
of the organization and the results i.e. profits, increased productivity etc.
Management is a Science or Art?
Science may be described- "as a, systematic body of knowledge pertaining to an area of study and
contains some -general truths explaining past events or phenomena". The above definition
contains three important characteristics of science. They are:
1. It is a systematized body of knowledge and uses scientific methods for observation
2. Its principles are evolved on the basis of continued observation and experiment and
3. Its principles are exact and have universal applicability without any limitation.
Judging from the above characteristics of science, it may be observed that-
 Management is a systematized body of knowledge arid its principles have evolved on the
basis of observation.
 The kind of experimentation (as in natural sciences) cannot be accompanied in the area of
management since management deals with the human element.
 In management, it is not possible to define, analyse and measure phenomena by repeating
the same conditions over and over again to obtain a proof. The above observation puts a
limitation on management as a science. Management like other social sciences can be
called as "inexact science".
What is "Art"?
Art' refers to "the way of doing specific things; it indicates how an objective is to be achieved."
Management like any other operational activity has to be an art. Most of the managerial acts have
to be cultivated as arts of attaining mastery to secure action and results. The above definition
contains three important characteristics of art. They are-
1. Art is the application of science. It is putting principle into practice,
2. After knowing a particular art, practice is needed to reach the level of perfection.
3. It is undertaken for accomplishing an end through deliberate efforts.
Judging from the above characteristics of art, it may be observed that-
 Management while performing the activities of getting things done by others is required to
apply the knowledge of certain underlying principles which are necessary for every art.
 Management gets perfection in the art of managing only through continuous practice.
 Management implies capacity to apply accurately the knowledge to solve the problems,
toface the situation and to realise the objectives fully and timely.
The above observation makes management an art and that to a fine art.
Management is both a Science as well as an Art
Management is both a science as well as an art. The science of management provides certain
general principles which can guide the managers in their professional effort. The art of
management consists in tackling every situation in an effective manner. As a matter of fact, neither
science should be over emphasized nor art should be discounted. The science and the art of
management go together and are both mutually interdependent and complimentary.
Management is thus a science as well as an art. It can be said that-"the art of management is as old
as human history, but the science of management is an event of the recent past."

Functions of Management:
A manager is called upon to perform the following managerial functions:
 Planning
 Organising
 Staffing
 Directing
 Controlling
1. Planning: Planning is a basic managerial function. Planning helps in determining the course of
action to be followed for achieving various organisational objectives: It is a decision in advance,
what to do, when to do how to do and who will do a particular task. Planning is a process which
involves 'thinking before doing'. Planning is concerned with the mental state of a manager. He
thinks before undertaking a work. Other functions of management such as organising, staffing,
directing, co-ordinating and controlling are also undertaken after planning. Hart defines planning
as "the determination in advance of a line of action by which certain results arc to be achieved."
According to Terry, "'Planning is the selecting and relating of facts and the making and using of
assumptions regarding the future in the visualisation and formulations of proposed activities
believed necessary to achieve desired results."
Planning is a process of looking ahead. The primary object of planning is to achieve better results.
It involves the selection of organisational objectives and developing policies, procedure,
programmes, budgets and strategies. Planning is a continuous process that takes place at all levels
of management. A detailed planning is done in the beginning but the actual performance is
reviewed and suitable changes are made in plans when actual execution is done. Plans may be of
many kinds, such as short range plans, medium range plans, long range plans, standing plans,
single use plans, strategic plans, administrative plans and operational plans. The process of
Planning involves a number of steps:
 gathering information ;
 laying down objectives;
 developing planning premises;
 examining alternative courses of action
 evaluation of action patterns ;
 reviewing limitations
 implementation of plans

2. Organising
Every business enterprise needs the services of a number of persons to look after its different
aspects. The management sets up the objectives or goals to be achieved by its personnel. The
energy of every individual is channelised to achieve the enterprise objectives. The function of
organising is to arrange, guide, co-ordinate, direct and control the activities of other factors of
production, viz., men, material, money and machines so as to accomplish the objectives of the
enterprise. In the words of Koontz and O'Donnel "Organising that part of management that involve
establishing and intentional structure of roles for people in an enterprise to fill." Organisation
provides the necessary framework within which people associate for the attainment of business
objectives.
The process of organisation involves the following steps:
 To identify the work to be performed;
 To classify or group the work ;
 To assign these groups of activities or work to individuals;
 To delegate authority and fix responsibility and
 To co-ordinate these authority-responsibility relationships of various activities.

3. Staffing:
The function involves manning the positions created by organisation process. It is concerned with
human resources of an organisation. In the words of Koontz and O'Donnel, "staffing is filling, and
keeping filled, positions in the organisation structure through defining work-force requirements,
appraising, selecting, compensating and training. Thus, staffing consists of the following:
(i) Manpower planning i.e., assessing manpower requirements in terms of quantity and
quality.
(ii) recruitment, selection and training:
(iii) Placement of man power;
(iv) development, promotion, transfer and appraisal
(v) Determination of employee remuneration.
4. Directing:
Directing is concerned with carrying out the desired plans. It initiates organized and planned action
and ensures effective performance by subordinates towards the accomplishment of group
activities. Direction is called management in action. In the words of George R. Terry, "Direction is
moving to action and supplying stimulative power to the group." After planning, organising and
staffing, the manager has to guide and supervise his subordinates. According to Massie, "Directing
concerns the total manner in which a manager influences the actions of subordinates. It is the final
action of a manager in getting others to act after all preparations have been completed."
5. Controlling:
Controlling can be defined as "determining what is being accomplished, that is evaluating the
performance, if necessary, applying corrective measures so that the performance takes place
according to plans. Control is essential for achieving objectives of an enterprise. The planning of
various activities does not ensure automatic implementation of policies. Control is the process
which enables management to get its policies implemented and take corrective actions if
performance is not according to the predetermined standards. If planning is the beginning of the
management process, controlling may be said to be the final stage. If planning is looking ahead,
controlling is looking back. Control is not possible without planning and planning is meaningless
without control.
The process of controlling involves the following steps:

 Establishing standards of performance

 Measuring actual performance
 Comparing the actual performance with the standard
  Finding variances or deviations, if any and
 Taking corrective action or measures

Apart from these basic functions the managerial functions include:

Leadership: A manager has to issue orders and instructions and guide and counsel his
subordinates in their work with a view to improve their performance and achieve enterprise
objectives. Leadership is the process by which an executive or manager imaginatively
directs/guides and influences the work of others in choosing and attaining specified goals by
mediating between the individual and organisation in such a manner that both will get maximum
satisfaction.
Communication: Communication constitutes a very important function of management. u is said
to be the number one problem of management today. It is an established fact that managers spend
75 to 90 per cent of their working time in communicating with others. Communication is the
means by which the behaviour of the subordinate is modified and change is effected in their
actions.
Supervision: Supervision is another important element of directing function of management. After
issuing instructions, the manager or the supervisor has to see that the given instructions are carried
out. This is the aim of supervision. Supervision refers to the job of overseeing subordinates at work
to ensure maximum utilisation of resources to get the required and directed work done and to
correct the subordinates whenever they go wrong. Though supervision is performed at all levels of
management, the major responsibility for supervision lies with the first line of management.
Co-ordination: Co-ordination is one of the most important functions of management. It is
essential to channelise the activities of various individuals in the organisation for the achievement
of common goals. Every department or section is given a target to be achieved and they should
concentrate only on their work and should not bother about the work of other organs. It is left to the
management to see that the work of different segments is going according to pre-determined
targets and corrective measures have to be taken if there is any deviation. Co-ordination creates a
team spirit and helps in achieving goals through collective efforts. It is the orderly arrangement of
group effort to provide unity of action in the pursuit of common objectives
Levels of management
1. Top Level of Management
 It consists of board of directors, chief executive or managing director. The top management
is the ultimate source of authority and it manages goals and policies for an enterprise. It
devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows -
a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the
performance of the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are
responsible to the top management for the functioning of their department. They devote
more time to organizational and directional functions. In small organization, there is only
one layer of middle level of management but in big enterprises, there may be senior and
junior middle level management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and
directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or
department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
 h. They are also responsible for inspiring lower level managers towards better
performance.
3. Lower Level of Management
Lower level is also known as supervisory / operative level of management. It consists of
supervisors, foreman, section officers, superintendent etc. According to R.C. Davis,
“Supervisory management refers to those executives whose work has to be largely with
personal oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their activities include
-
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals
etc to the higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with
the workers.
Role of Managers
Managers perform the complex task of unifying labour and other resources to achieve
organisational goals. In this process, they deal with superiors, subordinates and factors affecting
the external and internal organisational environment. They make best use of their position to
increase organisational adaptability to environment so that organisation can survive in the era of
tough competition.
The roles of managers differ from their functions. The functions describe what managers should do
while roles describe what they actually do. In 1973, Henry Mintzberg took a study of the nature of
managerial work. He studied the activities of five under three broad headings) which managers
perform. These roles are

1. Inter-personal Roles
2. Informational Roles
3. Decisional Roles
1. Inter-personal roles: The need for these roles arises because managers constantly interact with
their superiors, peers, subordinates and the outside parties. Unless he is a role model to these
parties, he cannot be called a successful manager. The three main inter-personal roles are:

(a) Manager as the figurehead: The manager occupies an official position and performs the
duties of signing certain documents, making speeches, receiving official visitors and other duties
of legal and social nature.
(b) Manager as the leader: He looks after the interests of his subordinates and solves their
psychological and work-related problems. He lays down the goals for his followers, co-ordinates
their individual goals with the organisational goals, motivates his followers to accomplish those
goals and creates a feeling of enthusiasm, loyalty and confidence amongst them for achieving the
said goals.
(c) Manager as the liaison: The manager acts as an integrating force for different groups
(superiors and subordinates and people working at the same level) within the organisation and for
the organisation with the outside world (such as society, consumers, Government, trade unions
etc.).

2. Informational roles: An organisation deal with people within and outside the organisation. For
this, the manager keeps himself informed about the activities and happenings in the internal and
external environment. In this context, he performs the following three roles:
(a) Managers as monitors: To keep themselves well informed of the internal and external
organisational environment, managers monitor the activities of the organisation by reading
journals and periodicals. They solve the problems according to the situation. They also collect
information about their environment through liaison work and conduct tours so that organisation
works effectively within the environmental constraints.
(b) Managers as disseminators: The information that managers collect as monitors is transmitted
to members of the organisation. This is done through formal and informal interaction of managers
with their subordinates by holding meetings or by circulating notices and circulars.
(c) Managers as spokespersons: Managers act as a link between their superiors and subordinates
and also between the external and the internal organisational environment and instructions and
ordinances issued by superiors are passed to the subordinates and reactions and problems of
subordinates are communicated to the superiors. Changes in plans policies and procedures of the
organisation are also intimated to the outside world. Thus, a communication network is created by
managers between different sections of society (environment) and the organisation.
3. Decisional roles: After collecting the information from internal and external sources. Managers
use this information to solve problems in different situations. The main decisional roles performed
by managers are:
(a) Managers as entrepreneurs: Managers think of new ideas for development of the
organisation and implement them within the framework of resources. It may require changes in
products, processes, technology etc. which may not be easy to make. It is possible for managers to
do so only through innovations. Business houses are the creations of man and are expected to
continue for a long period of time. As entrepreneurs, managers ensure that the business existing
today continues to exist tomorrow and the successful businesses today continue to be successful
even tomorrow or become even more successful.

(b) Managers as disturbance handlers: Managers deal with disturbances in and outside the
organisation by reviewing the situation and making strategies to solve them. There may be
problems such as firing of employees by the superiors or demanding higher wages by the
employees or facing tough situation with the customers or suppliers which need active role of the
manager as disturbance handler to solve them.
(c) Managers as resource allocators: Managers allocate the monetary and non-monetary
resources to various activities of the organisation in the order of their priority so that organisational
goals can be achieved efficiently.
(d) Managers as negotiators: They mediate between organisation and employees. In case of
conflict, they work in the interest of both organisation and its work force:
Management School of Thought
The origin of management can be traced back to the days when man started living in groups.
History reveals that strong men organized the masses into groups according to their intelligence.
Physical and mental capabilities. Evidence of the use of the well-recognized principles of
management is to be found in the organization of public life in ancient Greece, the organization of
the Roman Catholic Church and the organization of military forces. Thus management in some
form or the other has been practiced in the various parts of the world since the dawn of civilization.
With the on set of Industrial Revolution, however, the position underwent a radical change. The
structure of industry became extremely complex. At this stage, the development of a formal theory
of management became absolutely necessary. It was against this background that the pioneers of
modern management thought laid the foundations of modem management theory and practice.

Evolution of management thought may be divided into four stages

1. Pre-scientific management period.
2. Classical Theory
(a) Scientific Management of Taylor
(b) Administrative Management of Fayol
(c) Bureaucratic Model of Max Weber
3. Neo-classical Theory or Behaviour Approach
4. Modern Theory or Systems Approach

Pre-scientific Management Period

The advent of industrial revolution in the middle of the 18th century had its impact on
management. Industrial revolution brought about a complete change in the methods of production,
tools and equipments, organization of labour and methods of raising capital. Employees went to
their work instead of receiving it, and so, the factory system, as it is known today, become a
dominant feature of the economy. Under this system, land and buildings, hired labour, and capital
are made available to the entrepreneur, who strives to combine these factors in the efficient
achievement of a particular goal. All these changes, in turn, brought about changes in the field of
management. Traditional, conventional or customary ideas of management were slowly given up
and management came to be based on scientific principles. In the words of L. F. Urwick -
"Modern management has thrown open a new branch of human knowledge, a fresh universe of
discourse". During the period following the industrial revolution, certain pioneers tried to
challenge the traditional character of management by introducing new ideas and character of
management by introducing new ideas and approaches. The notable contributors of this period are:
1. Professor Charles Babbage (UK 1729 -1871): He was a Professor of Mathematics at
Cambridge University. Prof Babbage found that manufacturers made little use of science and
mathematics, and that they (manufacturers) relied upon opinions instead of investigations and
accurate knowledge. He felt that the methods of science and mathematics could be applied to the
solution of methods in the place of guess work for the solution of business problems. He advocated
the use of accurate observations, measurement and precise knowledge for taking business
decisions. He urged the management of an enterprise, on the basis of accurate data obtained
through rigid investigation, the desirability of finding out the number of times each operation is
repeated each hour, the dividing of work into mental and physical efforts, the determining of the
precise cost for every process and the paying of a bonus to the workers in proportion to his own
efficiency and the success of enterprise.
2. James Watt Junior (UK 1796-1848 and Mathew Robinson Boulton (1770-1842): James
Watt Junior and Mathew Robinson Boulton contributed to the development of management
thought by following certain management techniques in their engineering factory at Soho in
Birmingham. They are:
 Production Planning
 Standardization of Components
 Maintenance
 Planned machine layout
 Provision of welfare for personnel
 Scheme for executive development
 Marketing Research and forecasting
  Elaborate statistical records

3. Robert Owens (UK. 1771 - 1858): Robert Owens, the promoter of co-operative and trade union
movement in England, emphasized the recognition of human element in industry. He firmly
believed that workers' performance in industry was influenced by the working conditions and
treatment of workers. He introduced new ideas of human relations – shorter working hours,
housing facilities, training of workers in hygiene, education of their children, provision of canteen
etc. Robert Owen, managed a group of textile mills in Lanark, Scotland, where he used his ideas of
human relations. Though his approach was paternalistic, he carne to be regarded as the father of
Personnel Management.

4. Henry Robinson Towne (USA 1844 -1924): H.R Towne was the president of the famous lock
manufacturing company "Yale and Town". He urged the combination of engineers and economists
as industrial managers. This combination of qualities, together with at least some skill as an
accountant, is essential to the successful management of industrial workers. He favoured
organized exchange of experience among managers and pleaded for an organized effort to pool the
great fund of accumulated knowledge in the art of workshop management.

5. Seebohm Rowntree (UK 1871- 1954): Rowntree created a public opinion on the need of
labour welfare scheme and improvement in industrial relations. The Industrial Welfare
Society, The Management Research Groups and the Oxford Lecture Conferences in the
U.K owed their origin and progress to the interest and zeal of Rowntree.

Classical Theory
Prof. Charles Babbage, James Watt Junior and Mathew Robinson Boulton, Robert Owen, Henry
Robinson Towne and Rowntree were, no doubt, pioneers of management thought. But, the impact
of their contributions on the industry as a whole was meagre. The real beginning of the science of
management did not occur until the last decade of the 19th century. During this period, stalwarts
like F.W. Taylor, H.L. Gantt, Emerson, Frank and Lillian Gilberth etc., laid the foundation of
management, which in due course, came to be known as scientific management. This epoch in the
history of management will be remembered as an era in which traditional ways of managing were
challenged, past management experience were scientifically systematized and principles of
management were distilled and propagated. The contributions of the pioneers of this age have had
a profound impact in furthering the management know-how and enriching the store of
management principles.
F.W. Taylor and Henry Fayol are generally regarded as the founders of scientific management and
administrative management and both provided the bases for science and art of management.
Features of Management in the Classical Period
 It was closely associated with the industrial revolution and the rise of large-scale
enterprise.
 Classical organization and management theory is based on contributions from a number of
sources. They are scientific management, administrative management theory, bureaucratic
model, and micro-economics and public administration.
 Management thought focused on job content division of labour, standardization,
simplification and specialization and scientific approach towards organization.

A. Taylor’s Scientific Management

Started as an apprentice machinist in Philadelphia, USA. He rose to be the chief engineer at the
Midvale Engineering Works and later on served with the Bethlehem Works where he
experimented with his ideas and made the contribution to the management theory for which he is
so well known. Frederick Winslow Taylor well-known as the founder of scientific management
was the first to recognize and emphasis the need for adopting a scientific approach to the task of
managing an enterprise. He tried to diagnose the causes of low efficiency in industry and came to
the conclusion that much of waste and inefficiency is due to the lack of order and system in the
methods of management. He found that the management was usually ignorant of the amount of
work that could be done by a worker in a day as also the best method of doing the job. As a result,
it remained largely at the mercy of the workers who deliberately shirked work. He therefore,
suggested that those responsible for management should adopt a scientific approach in their work,
and make use of "scientific method" for achieving higher efficiency. The scientific method
consists essentially of
(a) Observation
(b) Measurement
(c) Experimentation and
(d) Inference.

He advocated a thorough planning of the job by the management and emphasized the necessity of
perfect understanding and co-operation between the management and the workers both for the
enlargement of profits and the use of scientific investigation and knowledge in industrial work. He
summed up his approach in these words:
 Science, not rule of thumb
 Harmony, not discord
 Co-operation, not individualism
 Maximum output, in place of restricted output
 The development of each man to his greatest efficiency and prosperity
Elements of Scientific Management
The techniques which Taylor regarded as its essential elements or features may be classified as
under: Scientific
1.Task and Rate-setting, work improvement, etc
2. Planning the Task.
3. Vocational Selection and Training
4. Standardization (of working conditions, material equipment etc.)
5. Specialization
6. Mental Revolution:

1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic,
objective and critical examination of all the factors governing the operational efficiency of any
specified activity in order to effect improvement. Work study includes.

(a) Methods Study: The management should try to ensure that the plant is laid out in the best
manner and is equipped with the best tools and machinery. The possibilities of eliminating or
combining certain operations may be studied.
(b) Motion Study: It is a study of the movement, of an operator (or even of a machine) in
performing an operation with the purpose of eliminating useless motions.
(c) Time Study (work measurement): The basic purpose of time study is to determine the proper
time for performing the operation. Such study may be conducted after the motion study. Both time
study and motion study help in determining the best method of doing a job and the standard time
allowed for it.
(d) Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue, it
may either be beyond the workers or the workers may over strain themselves to attain it. It is
necessary, therefore, to regulate the working hours and provide for rest pauses at scientifically
determined intervals.
(e) Rate-setting: Taylor recommended the differential piece wage system, under which workers
performing the standard task within prescribed time are paid a much higher rate per unit than
inefficient workers who are not able to come up to the standard set.

2. Planning the Task: Having set the task which an average worker must strive to perform to get
wages at the higher piece-rate, necessary steps have to be taken to plan the production thoroughly
so that there is no bottlenecks and the work goes on systematically.

3. Selection and Training: Scientific Management requires a radical change in the methods and
procedures of selecting workers. It is therefore necessary to entrust the task of selection to a central
personnel department. The procedure of selection will also have to be systematised. Proper
attention has also to be devoted to the training of the workers in the correct methods of work.

4. Standardization: Standardization may be introduced in respect of the following.

(a) Tools and equipment: By standardization it is meant the process of bringing about uniformity.
The management must select and store standard tools and implements which will be nearly the best
or the best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to
result in damage to machinery.
(c) Conditions of Work: To attain standard performance, the maintenance of standard conditions of
ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
(d) Materials: The efficiency of a worker depends on the quality of materials and the method of
handling materials.
5. Specialization: Scientific management will not be complete without the introduction of
specialization. Under this plan, the two functions of 'planning' and 'doing' are separated in the
organization of the plant. The 'functional foremen' are specialists who join their heads to give
thought to the planning of the performance of operations in the workshop. Taylor suggested eight
functional foremen under his scheme of functional foremanship.
(a) The Route Clerk: To lay down the sequence of operations and instruct the workers concerned
about it.
(b) The Instruction Card Clerk: To prepare detailed instructions regarding different aspects of
work.
(c) The Time and Cost Clerk: To send all information relating to their pay to the workers and to
secure proper returns of work from them.
(d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
(e) The Gang Boss: To assemble and set up tools and machines and to teach the workers to make
all their personal motions in the quickest and best way.
(f) The Speed Boss: To ensure that machines are run at their best speeds and proper tools are used
by the workers.
(g) The Repair Boss: To ensure that each worker keeps his machine in good order and maintains
cleanliness around him and his machines.
(h) The Inspector: To show to the worker how to do the work.

6. Mental Revolution: At present, industry is divided into two groups - management and
labor. The major problem between these two groups is the division of surplus. The
management wants the maximum possible share of the surplus as profit; the workers want,
as large share in the form of wages. Taylor has in mind the enormous gain that arises from
higher productivity. Such gains can be shared both by the management and workers in the
form of increased profits and increased wages.

Contributions of Scientific Management

Chief among these are:
1. Emphasis on rational thinking on the past of management.
2. Focus on the need for better methods of industrial work through systematic study and research.
3. Emphasis on planning and control of production.
4. Development of Cost Accounting.
5. Development of incentive plans of wage payment based on systematic study of work.
6. Focus on need for a separate Personnel Department.
7. Focus on the problem of fatigue and rest in industrial work

B. Administrative Management Theory

Henry Fayol was the most important exponent of this theory. The pyramidal form, scalar principle,
unity of command, exception principle, span of control and departmentalisation are some of the
important concepts set forth by Fayol and his followers like Mooney and Reiley, Simon, Urwick,
Gullick etc. Henry Fayol (France, 1841 -1925): Henry Fayol was born in 1941 at Constantinople in
France. He graduated as a mining engineer in 1860 from the National School of Mining. After his
graduation, he joined a French Coal Mining Company as an Engineer. After a couple of years, he
was promoted as manager. He was appointed as General Manager of his company in 1888. At that
time, the company suffered heavy losses and was nearly bankrupt. Henry Fayol succeeded in
converting his company from near bankruptcy to a strong financial position and a record of profits
and dividends over a long period.
Concept of Management: Henry Fayol is considered the father of modern theory of general and
industrial management. He divided general and industrial management into six groups
1. Technical activities - Production, manufacture, adaptation.
2. Commercial activities - buying, selling and exchange.
3. Financial activities - search for and optimum use of capital.
4. Security activities - protection of property and persons.
5. Accounting activities - stock-taking, balance sheet, cost, and statistics.
6. Managerial activities - planning, organization, command, co- ordination and control

These six functions had to be performed to operate successfully any kind of business. He however,
pointed out that the last function i.e., ability to manage, was the most important for upper levels of
managers. The process of management as an ongoing managerial cycle involving planning,
organizing, directing, co-ordination, and controlling, is actually based on the analysis of general
management by Fayol. Hence, it is said that Fayol established the pattern of management thought
and practice.

Even today, management process has general recognition. Fayol's Principles of Management:
The principles of management are given below:

Fayol's Principles of Management: The principles of management are given below:

1. Division of work: Division of work or specialization alone can give maximum productivity and
efficiency. Both technical and managerial activities can be performed in the best manner only
through division of labour and specialization.
2. Authority and Responsibility: The right to give order is called authority. The obligation to
accomplish is called responsibility. Authority and Responsibility are the two sides of the
management coin. They exist together. They are complementary and mutually interdependent.
3. Discipline: The objectives, rules and regulations, the policies and procedures must be honoured
by each member of an organization. There must be clear and fair agreement on the rules and
objectives, on the policies and procedures. There must be penalties (punishment) for
non-obedience or indiscipline. No organization can work smoothly without discipline - preferably
voluntary discipline.

4. Unity of Command: In order to avoid any possible confusion and conflict, each member of an
organization must receive orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organization must work together to accomplish common
objectives.
6. Emphasis on Subordination of Personal Interest to General or Common Interest: This is also
called principle of co-operation. Each shall work for all and all for each. General or common
interest must be supreme in any joint enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the best incentive or motivator
for good performance. Exploitation of employees in any manner must be eliminated. Sound
scheme of remuneration includes adequate financial and non-financial incentives.
8. Centralization: There must be a good balance between centralization and decentralization of
authority and power. Extreme centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of command linking all
members of the organization from the top to the bottom. Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything. Order or system alone can create a
sound organization and efficient management.
11. Equity: An organization consists of a group of people involved in joint effort. Hence, equity
(i.e., justice) must be there. Without equity, we cannot have sustained and adequate joint
collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new work and demonstrate
efficiency in due course. Hence, employees and managers must have job security. Security of
income and employment is a pre-requisite of sound organization and management.
13. Esprit of Co-operation: Esprit de corps is the foundation of a sound organization. Union is
strength. But unity demands co-operation. Pride, loyalty and sense of belonging are responsible for
good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial
planning and execution of predetermined plan
C. Bureaucratic Model
Max Weber, a German Sociologist developed the bureaucratic model. His model of bureaucracy
include
 Hierarchy of authority.
 Division of labour based upon functional specialization.
 A system of rules.
 Impersonality of interpersonal relationships.
 A system of work procedures.
 Placement of employees based upon technical competence.
 Legal authority and power.

Bureaucracy provides a rigid model of an organization. It does not account for important human
elements. The features of Bureaucracy are:
 Rigidity, impersonality and higher cost of controls.
  Anxiety due to pressure of conformity to rules and procedure.
 Dependence on superior.
 Tendency to forget ultimate goals of the organization

Bureaucratic Model is preferred where change is not anticipated or where rate of change can be
predicated. It is followed in government departments and in large business organizations.
Neoclassical Theory
Neo-classical Theory is built on the base of classical theory. It modified, improved and extended
the classical theory. Classical theory concentrated on job content and management of physical
resources whereas, neoclassical theory gave greater emphasis to individual and group relationship
in the workplace. The neo- classical theory pointed out the role of psychology and sociology in the
understanding of individual and group behaviour in an organization.
Hawthorne Experiment: In 1927, a group of researchers led by Elton Mayo and Fritz
Roethlisberger of the Harvard Business School were invited to join in the studies at the Hawthorne
Works of Western Electric Company, Chicago. The experiment lasted up to 1932. The Hawthorne
Experiments brought out that the productivity of the employees is not the function of only physical
conditions of work and money wages paid to them. Productivity of employees depends heavily
upon the satisfaction of the employees in their work situation. Mayo's idea was that logical factors
were far less important than emotional factors in determining productivity efficiency.

Furthermore, of all the human factors influencing employee behaviour, the most powerful were
those emanating from the worker's participation in social groups. Thus, Mayo concluded that work
arrangements in addition to meeting the objective requirements of production must at the same
time satisfy the employee's subjective requirement of social satisfaction at his work place.

The Hawthorne experiment consists of four parts. These parts are briefly described below:

1. Illumination Experiment: This experiment was conducted to establish relationship

between output and illumination. When the intensity of light was increased, the output also
increased. The output showed an upward trend even-when the illumination was gradually
brought down to the normal level. Therefore, it was concluded that there is no consistent
 relationship between output of workers and illumination in the factory. There must be
some other factor which affected productivity.

2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only the impact
of illumination on production but also other factors like length of the working day, rest
hours, and other physical conditions. In this experiment, a small homogeneous work-group
of six girls was constituted. These girls were friendly to each other and were asked to work
in a very informal atmosphere under the supervision of a researcher. Productivity and
morale increased considerably during the period of the experiment. Productivity went on
increasing and stabilized at a high level even when all the improvements were taken away
and the pre-test conditions were reintroduced. The researchers concluded that
socio-psychological factors such as feeling of being important, recognition, attention,
participation, cohesive work-group, and non-directive supervision held the key for higher
productivity.

3. Mass Interview Programme: The objective of this programme was to make a systematic
study of the employees' attitudes which would reveal the meaning which their "working
situation" has for them. The researchers interviewed a large number of workers with regard
to their opinions on work, working conditions and supervision. Initially, a direct approach
was used whereby interviews is asked questions considered important by managers and
researchers. The researchers observed that the replies of the workmen were guarded.
Therefore, this approach was replaced by an indirect technique, where the interviewer
simply listened to what the workmen had to say. The findings confirmed the importance of
social factors at work in the total work environment.

4. Bank Wiring Test Room Experiment: This experiment was conducted by Roethlisberger
and Dickson with a view to develop a new method of observation and obtaining more exact
information about social groups within a company and also finding out the causes which
restrict output. The experiment was conducted to study a group of workers under
conditions which were as close as possible to normal. This group comprised of 14 workers.
After the experiment, the production records of this group were compared with their earlier
 production records. It was observed that the group evolved its own production norms for
each individual worker, which was made lower than those set by the management. Because
of this, workers would produce only that much, thereby defeating the incentive system.
Those workers who tried to produce more than the group norms were isolated, harassed or
punished by the group. The findings of the study are:-
(i) Each individual was restricting output.
(ii) The group had its own "unofficial" standards of performance.
(iii) Individual output remained fairly constant over a period of time.
(iv) Informal groups play an important role in the working of an organization

Elements of Behavioural Theory or Human Relation Approach: There are three elements of
behavioural theory.
1. The Individual: The neoclassical theory emphasized that individual differences must be
recognised. An individual has feelings, emotions, perception and attitude. Each person is unique.
He brings to the job situation certain attitudes, beliefs and ways of life, as well as skills. He has
certain meaning of his job, his supervision, working conditions etc. The inner world of the worker
is more important than the external reality in the determination of productivity. Thus human
relations at work determine the rise or fall in productivity. Therefore human relationists advocate
the adoption of multidimensional model of motivation which is based upon economic, individual
and social factors.

2. Work Groups: Workers are not isolated; they are social beings and should be treated as such by
management. The existence of informal organization is natural. The neo-classical theory describes
the vital effects of group psychology and behaviour on motivation and productivity.
3. Participative Management: The emergence of participative management is inevitable when
emphasis is laid on individual and work groups. Allowing labour to participate in decision making
primarily to increase productivity was a new form of supervision. Management now welcomes
worker participation in planning job contents and job operations. Neoclassical theory focuses its
attention on workers. Plant layout, machinery, tool etc., must after employee convenience and
facilities. Therefore, neoclassical approach is trying to satisfy personal security and social needs of
workers.
Modern Theory (System Approach)
The systems approach to management indicates the fourth major theory of management thought
called modern theory. Modern theory considers an organization as an adaptive system which has to
adjust to changes in its environment. An organization is now defined as a structured process in
which individuals interact for attaining objectives.
Meaning of "System": The word system is derived from the Greek word meaning to bring
together or to combine. A system is a set of interconnected and inter-related elements or
component parts to achieve certain goals. A system has three significant parts:
1. Every system is goal-oriented and it must have a purpose or objective to be attained.
2. In designing the system we must establish the necessary arrangement of components.
3. Inputs of information, material and energy are allocated for processing as per plan so -that the
outputs can achieve the objective of the system.
Characteristics of Modern Management Thought
1. The Systems Approach: An organization as a system has five basic parts -
 Input
 Process
 Output
 Feedback and
 Environment
It draws upon the environment for inputs to produce certain desirable outputs. The success of these
outputs can be judged by means of feedback. If necessary, we have to modify out mix of inputs to
produce as per changing demands.
2. Dynamic: We have a dynamic process of interaction occurring within the structure of an
organization. The equilibrium of an organization and its structure is itself dynamic or changing.
3. Multilevel and Multidimensional: Systems approach points out complex multilevel and
multidimensional character. We have both a micro and macro approach. A company is micro
within a business system. It is macro with respect to its own internal units. Within a company as a
system we have:-
 Production subsystem
 Finance subsystem
 Marketing subsystem
  Personnel subsystem.
All parts or components are interrelated. Both parts as well as the whole are equally important. At
all levels, organizations interact in many ways.
4. Multimotivated: Classical theory assumed a single objective, for instance, profit. Systems
approach recognizes that there may be several motivations behind our actions and behaviour.
Management has to compromise these multiple objectives e.g. economic objectives and social
objectives.
5. Multidisciplinary: Systems approach integrates and uses with profit ideas emerging from
different schools of thought. Management freely draws concepts and techniques from many fields
of study such as psychology, social psychology, sociology, ecology, economics, mathematics, etc.
6. Multivariable: It is assumed that there is no simple cause-effect phenomenon. An event may be
the result of so many factors which themselves are interrelated and interdependent. Some factors
are controllable, some uncontrollable. Intelligent planning and control are necessary to face these
variable factors.
7. Adaptive: The survival and growth of an organization in a dynamic environment demands
an adaptive system which can continuously adjust to changing conditions. An organization
is an open system adapting itself through the process of feedback.
8. Probabilistic: Management principles point out only probability and never the certainty
of performance and the consequent results. We have to face so many variables
simultaneously. Our forecasts are mere tendencies. Therefore, intelligent forecasting and
planning can reduce the degree of uncertainty to a considerable extent
 ORGANIZATION

INTRODUCTION AND MEANING

Organisation involves division of work among people whose efforts must be co-ordinated to
achieve specific objectives and to implement pre-determined strategies. Organisation is the
foundation upon which the whole structure of management is built. It is the backbone of
management. After the objectives of an enterprise are determined and the plan is prepared, the
next step in the management process is to organize the activities of the enterprise to execute the
plan and to attain the objectives of the enterprise. The term organisation is given a variety of
interpretations. In any case, there are two broad ways in which the term is used. In the first sense,
organisation is understood as a-dynamic process and a managerial activity which is necessary for
bringing people together and tying them together in the pursuit of common objectives. When
used in the other sense, organisation refers to the structure of relationships among positions and
jobs which is built up for the realisation of common objectives. Without organising managers
cannot function as managers. Organisation is concerned with the building, developing and
maintaining of a structure of working relationships in order to accomplish the objectives of the
enterprise. Organisation means the determination and assignment of duties to people, and also
the establishment and the maintenance of authority relationships among these grouped activities.
It is the structural framework within which the various efforts are coordinated and related to each
other. Sound organisation contributes greatly to the continuity and success of the enterprise. The
distinguished industrialist of America, Andrew Carnegie has shown his confidence in
organization by stating that: "Take away our factories, take away our trade, our avenues of
transportation, our money, leave nothing but our organisation, and in four years we shall have re-
established ourselves." That shows the significance of managerial skills and organisation.
However, good organisation structure does not by itself produce good performance. But a poor
organization structure makes good performance impossible, no matter how good the individual
may be.

DEFINITION OF ORGANISATION
• In the words of Chester I Bernard, "Organisation is a system of co-operative activities of
two or more persons."
• According to Louis A Allen, "Organisation is the process of identifying and grouping the
work to be performed, defining and delegating responsibility and authority, and
establishing relationships for the purpose of enabling people to work most effectively
together in accomplishing objectives.
• According to North Whitehead, "Organisation is the adjustment of diverse elements, so
that their mutual relationship may exhibit more pre-determined quality."

ORGANISATION STRUCTURE
An organisation structure shows the authority and responsibility relationships between the
various positions in the organisation by showing who reports to whom. Organisation involves
establishing an appropriate structure for the goal seeking activities. It is an established pattern of
relationship among the components of the organisation. March and Simon have stated that-
"Organisation structure consists simply of those aspects of pattern of behaviour in the
organisation that are relatively stable and change only slowly." The organisation is generally
shown on an organization chart. It shows the authority and responsibility while designing the
relationships between various in the organization. Organistion structure, due attention should be
given to the principles of organization.

Significance of Organisation Structure

 Properly designed organisation can help improve teamwork and productivity by
providing a framework within which the people can work together most effectively.
 Organisation structure determines the location of decision-making in the organisation.
 Sound organisation structure stimulates creative thinking and initiative among
organizational members by providing well defined patterns of authority.
 A sound organisation structure facilitates growth of enterprise by increasing its capacity
to handle increased level of authority.
 Organisation structure provides the pattern of communication and coordination.
 The organisation structure helps a member to know what his role is and how it relates to
other roles.

FORMAL AND INFORMAL ORGANISATION

The formal organisation refers to the structure of jobs and positions with clearly defined
functions and relationships as prescribed by the top management. This type of organisation is
built by the management to realise objectives of an enterprise and is bound by rules, systems and
procedures. Everybody is assigned a certain responsibility for the performance of the given task
and given the required amount of authority for carrying it out. Informal organisation, which does
not appear on the organisation chart, supplements the formal organisation in achieving
organisational goals effectively and efficiently. The working of informal groups and leaders is
not as simple as it may appear to be. Therefore, it is obligatory for every manager to study
thoroughly the working pattern of informal relationships in the organisation and to use them for
achieving organizational objectives.

Formal Organisation
Chester I Bernard defines formal organisation as -"a system of consciously coordinated activities
or forces of two or more persons. It refers to the structure of well-defined jobs, each bearing a
definite measure of authority, responsibility and accountability." The essence of formal
organisation is conscious common purpose and comes into being when persons-

(i) Are able to communicate with each other

(ii) Are willing to act and
(iii) Share a purpose.

The formal organisation is built around four key pillars. They are:
 Division of labour
 Scalar and functional processes
 Structure and
 Span of control
Thus, a formal organisation is one resulting from planning where the pattern of structure has
already been determined by the top management.

Characteristic Features of Formal Organisation

• This structure is laid down by the top management

• It prescribes the relationships amongst the people working in the organisation.
• It is consciously designed to enable the people of the organisation to work together for
accomplishing the common
• Organisation structure concentrates on what jobs to be performed and how?
• In a formal organisation, individuals are fitted into jobs and positions and work as per the
managerial decisions.
• A formal organisation is bound by rules, regulations and procedures.
• In a formal organisation, the position, authority, responsibility and accountability of each
level are clearly defined.
• Organisation structure is based on division of labour and specialisation to achieve
efficiency in operations.
• This is deliberately impersonal.
• The authority and responsibility relationships created by the organisation structure; are to
be honoured by everyone.
• In a formal organisation, coordination proceeds according to the prescribed pattern.

Advantages of Formal Organisation

• This structure concentrates on the jobs to be performed. It," therefore, makes everybody
responsible for a given task.
• It thus ensures law and order in the organisation.
• enables the people of the organisation to work together for accomplishing the common
objectives

Disadvantages
• Does not take into consideration the sentiments of organisational members.
• Does not consider the goals of the individuals. It is designed to achieve the goals of the
organisation only.
• The formal organisation is bound by rigid rules, regulations and procedures. This makes
the achievement of goals difficult.

Informal Organization

Personal attitudes, emotions, prejudices, likes, dislikes etc. an informal organisation is an

organisation which is not established by any formal authority, but arises from the personal and
social relations of the people. These relations are not developed according to procedures and
regulations laid down in the formal organisation structure; generally large formal groups give
rise to small informal or social groups. These groups may be based on same taste, language,
culture or some other factor. These groups are not pre-planned, but they develop automatically
within the organisation according to its environment.

Characteristics Features of Informal Organisation

• Informal organisation is not established by any formal authority. It is unplanned and
arises spontaneously.
• Informal organisations reflect human relationships. It arises from the personal and social
relations amongst the people working in the organisation.
• Formation of informal organisations is a natural process. It is not based on rules,
regulations and procedures. -
• The inter-relations amongst the people in an informal organisation cannot be shown in an
organisation chart.
• In the case of informal organisation, the people cut across formal channels of
communications and communicate amongst themselves.
• The membership of informal organisations is voluntary. It arises spontaneously and not
by deliberate or conscious efforts.
• Membership of informal groups can be overlapping as a person may be member of a
number of informal groups.
• Informal organisations are based on common taste, problem, language, religion, culture,
etc. it is influenced by the personal attitudes, emotions, whims, likes and dislikes etc. of
the people in the organisation.

Benefits of Informal Organisation

• It blends with the formal organisation to make it more effective.
• Many things which cannot be achieved through formal organisation can be achieved
through informal organisation.
• The presence of informal organisation in an enterprise makes the managers plan "and act
more carefully.
• Informal organisation acts as a means by which the workers achieve a sense of security
and belonging
• It has a powerful influence on productivity and job satisfaction.
• The informal leader lightens the burden of the formal manager
• It helps the group members to attain specific personal objectives.
• It is the best means of employee communication. It is very fast.
• It gives psychological satisfaction to the members.
• It serves as an agency for social control of human behavior
Difference between Formal & Informal Organization
ORGANIZATION STRUCTURE

The establishment of formal relationships among the individuals working in the organisation is
very important to make clear the lines of authority in the organisation and to coordinate the
efforts of different individuals in an efficient manner. According to the different practices of
distributing authority and responsibility among the members of the enterprise, several types of
organisation structure have been evolved. They are:
• Line organisation
• Line and Staff organisation

Line Organisation

This is the simplest and the earliest form of organisation. It is also known as "Military",
"traditional", "Scalar" or "Hierarchical" form of organisation. The line organisation represents
the structure in a direct vertical relationship through which authority flows. Under this, the line
of authority flows vertically downward from top to bottom throughout the organisation. The
quantum of authority is highest at the top and reduces at each successive level down the
hierarchy. All major decisions and orders are made by the executives at the top and handed down
to their immediate subordinates who in turn break up the orders into specific instructions for the
purpose of their execution by another set of subordinates. A direct relationship of authority an
responsibility is thus established between the superior and subordinate. The superior exercises a
direct authority over his subordinates who become entirely responsible for their performance to
their commanding superior. Thus, in the line organisation, the line of authority consists of an
uninterrupted series of authority steps and forms a hierarchical arrangement. The line of
authority not only becomes the avenue of command to operating personnel, but also provides the
channel of communication, coordination and accountability in the organisation.

Prof. Florence enunciates three principles which are necessary to realise the advantages of this
system and the non-observance of which would involve inefficiency.
 Commands should be given to subordinates through the immediate superior; there should
be no skipping of links in the chain of command.
 There should be only one chain. That is, command should be received from only on
immediate superior.
 The number of subordinates whose work is directly commanded by the superior should
be limited
FORMAT

Advantages or Merits of Line Organisation

 It is the easiest to establish and simplest to explain to the employers.
 It fixes responsibility for the performance of tasks in a definite manner upon certain
individuals.
 There is clear-cut identification of authority and responsibility relationship. Employees
are fully aware of the boundaries of their job.
 It is most economical and effective.
 It makes for unity of control thus conforming to the scalar principle of organisation.
 It ensures excellent discipline in the enterprise because every individual knows to whom
he is responsible. The subordinates are also aware of the necessity of satisfying their
superior in their own interests.
 It facilitates prompt decision-making because there is definite authority at every level.
 As all the activities relating to one department or division are managed by one executive,
there can be effective coordination of activities.
 This system is flexible or elastic, in the sense that, as each executive has sole
responsibility in his own position and sphere of work, he can easily adjust the
organisation to changing conditions.
 Under this system, responsibility and authority are clearly defined. Every member of the
organisation knows his exact position, to whom he is responsible and who are responsible
to him. Because of the clear fixation of responsibility, no person can escape from his
liability.

Disadvantages or Demerits of Line Organisation

 With growth, the line organisation makes the superiors too overloaded with work. Since
all work is done according to the wishes of one person alone, the efficiency of the whole
department will come to depend upon the qualities of management displayed by the head
 of that department. If therefore, something happens to an efficient manager, the future of
the department and of the concern as a whole would be in jeopardy.
 Being an autocratic system, it may be operated on an arbitrary, opinionated and
dictatorial basis
 Under this system, the subordinates should follow the orders of their superior without
expression their opinion on the orders. That means there is limited communication.
 There may be a good deal of nepotism and favouritism. This may result in efficient
people being left behind and inefficient people getting the higher and better posts.
 The line organisation suffers from lack of specialised skill of experts. Modern business is
so complex that it is extremely difficult for one person to carry in his head all the
necessary details about his work in this department.
 Line organisation is not suitable to big organisations because it does not provide
specialists in the structure. Many jobs require specialised knowledge to perform them.
 If superiors take a wrong decision, it would be carried out without anybody having the
courage to point out its deficiencies.
 The organisation is rigid and inflexible.
 There is concentration of authority at the top. If the top executives are not capable, then
enterprise will not be successful.

Line and Staff Organisation

In line and staff organisation, the line authority remains the same as it does in the line
organisation. Authority flows from top to bottom. The main difference is that specialists are
attached to line managers to advise them on important matters. These specialists stand ready with
their speciality to serve line mangers as and when their services are called for, to collect
information and to give help which will enable the line officials to carry out their activities
better. The staff officers do not have any power of command in the organisation as they are
employed to provide expert advice to the line officers. The combination of line organisation with
this expert staff constitutes the type of organisation known as line and staff organisation. The
'line' maintains discipline and stability; the 'staff provides expert information. The line gets out
the production, the staffs carries on the research, planning, scheduling, establishing of standards
and recording of performance. The authority by which the staff performs these functions is
delegated by the line and the performance must be acceptable to the line before action is taken.
The following figure depicts the line and staff organization

RELATIONSHIP

• The 'line' maintains discipline and stability; the 'staff provides expert information.
• The line gets out the production, the staffs carries on the research, planning, scheduling,
establishing of standards and recording of performance.
• The authority by which the staff performs these functions is delegated by the line and the
performance must be acceptable to the line before action is taken.

Types of Staff
The staff position established as a measure of support for the line managers may take the
following forms:
  Personal Staff: Here the staff official is attached as a personal assistant or adviser to the
line manager. For example, Assistant to managing director.

 Specialised Staff: Such staff acts as the fountainhead of expertise in specialised areas like
R & D, personnel, accounting etc. For example, R & D Staff.

 General Staff: This category of staff consists of a set of experts in different areas who are
meant to advise and assist the top management on matters called for expertise. For
example, financial advisor, technical advisor etc

Advantages or Merits of Line and Staff Organisation

 It brings expert knowledge to bear upon management and operating problems. Thus, the
line managers get the benefit of specialised knowledge of staff specialists at various
levels.

 The expert advice and guidance given by the staff officers to the line officers benefit the
entire organisation.

 As the staff officers look after the detailed analysis of each important managerial activity,
it relieves the line managers of the botheration of concentrating on specialized functions.
Therefore, there will be sound managerial decisions under this system.

 It makes possible the principle of undivided responsibility and authority, and at the same
time permits staff specialisation. Thus, the organisation takes advantage of functional
organization while maintaining the unity of command.
 It is based upon planned specialisation. Line and staff organisation has greater flexibility,
in the sense that new specialized activities can be added to the line activities without
disturbing the line procedure.

Disadvantages or Demerits of Line and Staff Organisation

 Unless the duties and responsibilities of the staff members are clearly indicated by charts
and manuals, there may be considerable confusion throughout the organization as to the
functions and positions of staff members with relation to the line supervisors.
 There is generally a conflict between the line and staff executives. The line managers feel
that staff specialists do not always give right type of advice, and staff officials generally
complain that their advice is not properly attended to.
 Line managers sometimes may resent the activities of staff members, feeling that prestige
and influence of line managers suffer from the presence of the specialists.
 The staff experts may be ineffective because they do not get the authority to implement
their recommendations.
This type of organisation requires the appointment of large number of staff officers or
experts in addition to the line officers. As a result, this system becomes quite expensive.
 Although expert information and advice are available, they reach the workers through the
officers and thus run the risk of misunderstanding and misinterpretation.
  Since staff managers are not accountable for the results, they may not be performing their
duties well.
 Line mangers deal with problems in a more practical manner. But staff officials who are
specialists in their fields tend to be more theoretical. This may hamper coordination in the
organisation.

Centralization Vs Decentralization

Centralization is said to be a process where the concentration of decision making is in a few

hands. All the important decision and actions at the lower level, all subjects and actions at the
lower level are subject to the approval of top management. According to Allen, “Centralization”
is the systematic and consistent reservation of authority at central points in the organization.
Under centralization, the important and key decisions are taken by the top management and the
other levels are into implementations as per the directions of top level

Decentralization is a systematic delegation of authority at all levels of management and in all of

the organization. In a decentralization concern, authority in retained by the top management for
taking major decisions and framing policies concerning the whole concern. Rest of the authority
may be delegated to the middle level and lower level of management.
As per L.D. White: “The process of transfer of administrative authority from a lower to a higher
level of government is called centralization. As per “Henry Fayol: “Everything that goes to
increase the importance of the subordinate‟s role is decentralization; everything which goes to
decrease it is centralization.”
ADVANTAGES OF DECENTRALISATION

Some of the advantages of decentralisation are discussed as under:

1. It Reduces Burden of Top Executives: Centralisation of authority over-burdens top
executives. They are left with no time for planning, etc. In decentralisation decision-making
power is delegated to the lower levels relieving top executives of some of their burden. Under
this system, top executives will retain only that work which requires their personal attention
otherwise everything is assigned to persons at appropriate levels. This will reduce the burden of
top executives and they will be able to devote more time for planning, etc.

2. It Takes Quick Decisions: Under decentralised system, decision-making powers are delegated
to the level of actual execution. Whenever there is a need for taking a decision, the concerned
executive will decide the things immediately. There is no need to make reference to the top level
for most of the work. It quickens the process of decision-making.

3. It Facilitates Diversification: With the expansion and diversification of activities there will be
a need to delegate authority at departmental level. Decentralisation gives enough authority to
persons at various levels for carrying out the required task. The centralised system of authority
will not allow diversification beyond a certain level because decision-making is reserved by one
man only. The organisation will become more and more complex with the addition of new
products and setting up of more units. Decentralised system will be more suitable for expanding
enterprises.
4. Motivation of Subordinates: Under decentralization, subordinates get opportunity for taking
decisions independently. This fulfils the human need for power, independence and
status.Subordinates will realise their importance in the organisation. They will try to put their
maximum efforts so that their performance improves. They get a chance to take initiative and to
try new ideas. The subordinates feel motivated under decentralised set-up.

5. It is Sense of Competition: Under decentralised system, different departments or units are

made separate profit centres. The employees of different departments will compete with each
other to show better results. The sense of competition will improve the performance of all
departments or segments.

6. Provides Product or Market Emphasis: Since decision-taking is scattered and goes to lower
levels of management there will be more product or market emphasis. The changing tastes and
fashions require prompt decisions. The decentralised system will respond immediately to the
changing situations. The persons concerned with marketing will take quick decisions as are
necessary under the situation.

7. Division of Risk: The enterprise is divided into a number of departments under

decentralisation. Management can experiment new ideas at one department without disturbing
others. This will reduce the risk if things go adverse. Once the experiment is successful it can be
used in other segments also. So risk element can be limited under
decentralised system.

8. Effective Control and Supervision: With the delegation of authority, span of control will be
effective. Since executives at lower levels will have the full authority to lake important decisions,
they will recommend awards or punishments as per their performance. This will improve
supervision and control

Disadvantages of Decentralisation
Decentralisation suffers from a number of drawbacks and some of these are discussed as follows:

1. Lack of Co-ordination: Under decentralisation each department, unit or section enjoys

substantial powers. They have the powers to formulate their own policies and programmes. It
becomes difficult to co-ordinate the activities of various segments. Moreover, every segment
emphasises its own work only without bothering about others. This creates more difficulties in
co-ordinating activities.

2. Difficulty in Control: Since different units work independently it becomes difficult to control
their activities. Top management will not be able to exercise effective control because it does not
remain in touch with day-to-day activities of various segments.

3. Costly: Decentralised system involves heavy overhead expenses. Every decentralized division
has to be self-sufficient for its activities like production, marketing, accounting, personnel, etc. A
number of persons will be employed to man various activities. These persons are paid higher
salaries involving huge costs. Decentralised system is suitable for large scale enterprises only.
Small-scale business units cannot afford to spend higher overhead expenses.
4. Lack of Able Managers: Decentralised system will succeed only if competent persons are
employed to manage various jobs in different segments. Competent persons are not sometimes
available as per the requirements. The system will fail if competent personnel are not available.

DELEGATION
Delegation of authority involves giving authority to various organizational positions to get things
done. All important decisions are taken at top level by Board of Directors. The execution is
entrusted to Chief Executive. The Chief Executive assigns the work to departmental managers
who in turn delegate the authority to their subordinates. Every superior delegates the authority to
subordinates for getting a particular work done. The process goes to the level where actual work
is executed.

There is a limit up to which a person can supervise the subordinates. When the number of
subordinates increases beyond it then he will have to delegate his powers to others who perform
supervision for him. A manager is not judged by the work he actually performs on his own but
the work he gets done through others. He assigns duties and authority to his subordinates and
ensures the achievement of desired organisational goals.
DEFINITIONS

• O.S. Hiner says "Delegation takes place when one person gives another the right to
perform work on his behalf and in his name, and the second person accepts a
corresponding duty or obligation to do what is required of him."
• Douglas C. Basil. Opens, "Delegation refers to a manager's ability to share his burden
with others. It consists of granting authority or the right to decision-making in certain
defined areas and charging subordinates with responsibility for carrying through an
assigned task."

CHARACTERISTICS OF DELEGATION

Delegation is the assignment of authority to subordinates in a defined area and making them
responsible for the results. Delegation has the following characteristics:

 Delegation takes place when a manager grants some of his powers to subordinates.
 Delegation occurs only when the person delegating the authority himself has that
authority i.e. a manager must possess what he wants to delegate.
 Only a part of authority is delegated to subordinates.
 A manager delegating authority can reduce, enhance or take it back. He exercises full
control over the activities of the subordinates even after delegation.
 It is only the authority which is delegated and not the responsibility. A manager cannot
abdicate responsibility by delegating authority to subordinates.

ELEMENTS OF DELEGATION

Delegation involves following three elements:

1. Assignment of Duties: The first step in delegation is the assignment of work or duty to the
subordinate i.e. delegation of authority. The superior asks his subordinate to perform a particular
task in a given period of time. It is the description of the role assigned to the subordinate. Duties
in terms of functions or tasks to be performed constitute the basis of delegation process.
2. Grant of Authority: The grant of authority is the second element of delegation. The delegator
grants authority to the subordinates so that the assigned task is accomplished. The delegation of
responsibility with authority is meaningless. The subordinate can only accomplish the work
when he has the authority required for completing that task. Authority is derived from
responsibility. It is the power, to order or command, delegated from superior, to enable the
subordinate to discharge his responsibility. The superior may transfer it to enable the subordinate
to complete his assigned work properly. There should be a balance between authority and
responsibility. The superior should delegate sufficient authority to do the assigned work.

3. Creation of Accountability: Accountability is the obligation of a subordinate to perform the

duties assigned to him. The delegation creates an obligation on the subordinate to accomplish the
task assigned to him by the superior. When a work is assigned and authority is delegated then the
accountability is the by-product of this process. The authority is transferred so that a particular
work is completed as desired. This means that delegator has to ensure the completion of assigned
work. Authority flows downward whereas accountability flows upward. The downward flow of
authority and upward flow of accountability must have parity at each position of management
hierarchy. The subordinate should be made accountable to only one superior. Single
accountability improves work and discipline.

PRINCIPLE OF DELEGATION

The following are the principles of delegation:

1. Principle of Functional Definition: The related or similar activities should be grouped
together according to enterprise function. When the definition of a position is clear then
delegation of authority becomes simple. In the words of Koontz and O'Donnell, "the more a
position or a department has clear definitions or results expected, activities to be undertaken,
organisation authority delegated and authority and informational relationships with other
positions understood, the more adequately the individuals responsible can contribute toward
accomplishing enterprise objectives." It is very difficult to define a job and the authority required
to accomplish it. If the superior is not clear about the results expected then it becomes all the
more difficult. It should be clear who should do what so that right amount of authority is
delegated. Dual subordination results in conflicts, division of loyalty and lack of personal
responsibility for results.

2. Principle of Unity of Command: The basic management principle is that of unity of

command. This principle states that a subordinate should report only to single superior. This will
give a sense of personal responsibility. Although it is possible for a subordinate to receive orders
from more superiors and report to them but it creates more problems and difficulties. An
obligation is essentially personal and authority delegation by more than one person to an
individual is likely to result in conflicts in both authority and responsibility. This principle is also
useful in the classification of authority-responsibility relationships.

3. Principle of Delegation by Results Expected: The delegation of authority should be based on

the basis of results expected. The authority should be sufficient to achieve the desired results. If
the authority is insufficient then results will not be achieved. So there should be a balance
between the results expected and the authority required.

4. Principle of Absoluteness of Responsibility: The responsibility of a subordinate, once he has

accepted the work, is absolute to his superior. The responsibility of the superior does not
decrease once he has delegated authority. A person can delegate authority and not responsibility.
He will remain accountable for the work even if it is delegated to the subordinate. So the
responsibility of superior and subordinate remains absolute.

5. Principle of Parity of Authority and Responsibility: Since authority has the right to carryout
assignments and responsibility is the obligation to accomplish it, there should be a balance
between the both. The responsibility should bear logical relationship with authority delegated.
The subordinate should not be burdened with high performance responsibility with delegating
enough authority. Sometimes the authority is delegated but the concerned person is not made
accountable for its proper use. This will be a case of poor management. The parity between
authority and responsibility will be essential for achieving efficiency.

6. Authority Level Principle: The principle of decision-making should remain at the level at
which authority is delegated. The managers delegate authority to subordinates but have the
temptation to make decisions for them. They should allow the subordinates to take their own
decisions as per the authority delegated to them. The delegation of authority will be effective
only when it is clear and understandable to subordinates. The subordinates should know the area
of their decision-making and should avoid the temptation of referring things to higher ups. In the
words of Koontz and O'Donnell, the authority level principle would be "maintenance of intended
delegation requires that decisions within the authority competence of individuals be made by
them and not be referred upward in the organisation structure."
7. Scalar Principle: The scalar principle refers to the chain of direct authority relationships from
superior to subordinates throughout the organisation. The ultimate authority must rest
somewhere. Subordinates must know to whom they should refer the matter if it is beyond their
authority. The clearer the line of authority from top manager to every subordinate the more
effective will be responsible decision-making."

TYPES OF DELEGATION

Delegation may be of the following types:

1. General or Specific Delegation: When authority is given to perform general managerial
functions like planning, organising, directing etc., the subordinate managers perform these
functions and enjoy the authority required to carry out these responsibilities. The chief executive
exercises overall control and guides the subordinates from time to time. The specific delegation
may relate to a particular function or an assigned task. The authority delegated to the production
manager for carrying out this function will be a specific delegation. Various departmental
managers get specific authority to undertake their departmental duties.

2. Formal or Informal Delegation: Formal delegation of authority is the part of organizational

structure. Whenever a task is assigned to a person then the required authority is also given to
him. This type of delegation is part of the normal functioning of the organisation. Every person is
automatically given authority as per his duties. When production manager gets powers to
increase production then it is a formal delegation of authority.

Informal delegation does not arise due to position but according to circumstances. A person may
undertake a particular task not because he has been assigned it but it is necessary to do his
normal work.

3. Lateral Delegation: When a person is delegated an authority to accomplish a task, he may

need the assistance of a number of persons. It may take time to formally get assistance from
these persons. He may indirectly contact the persons to get their help for taking up the work by
cutting short time of formal delegation. When the authority is delegated informally it is called
lateral delegation.
DEPARTMENTATION

Departmentation is the process of grouping various activities into separate units of departments.
A department is a distinct section of the business establishment concerned with a particular
group of business activities of like nature. The actual number of departments in which a business
house can be divided depends upon the size of establishment and its nature. A big business
enterprise will, usually, have more departments as compared to a small one. In the words of
Allen, "Departmentation is a means of dividing a large and monolithic functional organisation
into smaller, flexible, administrative units."

NEED AND SIGNIFICANCE OF DEPARTMENTS

 It increases the efficiency of the enterprise since various activities are grouped into
workable units.
 It renders the task of fixation of accountability for results very easy since activities are
well defined and responsibilities are clearly laid.
 It provides for fixation of standards for performance appraisal and thus ensures effective
control.
 It creates opportunities for the departmental heads to take initiative and thus develop
managerial facilities.

METHODS OR BASIS OF DEPARTMENTATION

The following are the basis of dividing responsibility within an organisation structure:
1. Functional Departmentation
2. Product-wise Departmentation
3. Territorial or Geographical Departmentation
4. Customer-wise Departmentation
5. Process or Equipment-wise Departmentation

Functional Departmentation

• It refers to grouping the activities of an enterprise on the basis of functions such as

production, sales, purchase, finance, personnel, etc.
• The actual number of departments in which an enterprise can be divided depends upon
the size of establishment and its nature
Advantages
• It is a very simple, natural and logical way of grouping activities.
• It promotes specialisation and expertise in various functional areas and experts can be
employed.
• It facilitates co-ordination both within the function and at the inter-departmental level.
• It generates a high degree of centralisation at the top level

Disadvantages
• It may lead to internal frictions among the various departmental heads as one department
may ignore the interest of the other.
 • In functional departmentation, employees are experts of their areas of function only. This
hinders the development of all-round managers.
• Sometime leads to excessive centralisation

Departmentation by Products

• In product departmentation, every major product is organized as a separate department.

• Each department looks after the production, sales and financing of one product.
• Product departmentation is useful when the expansion, diversification, manufacturing and
marketing characteristics of each product are primarily significant.
• many large companies are diversifying in different fields and they prefer product
departmentation.
• For example, a big company with a diversified product line may have three product
divisions, one each for plastics, chemicals, and metals

Advantages
• Product departmentation focuses individual attention to each product line which
facilitates the expansion and diversification of the products.
• It ensures full use of specialized production facilities. Personal skill and specialized
knowledge of the production managers can be fully utilized.
 • The production managers can be held accountable for the profitability of each product.
Each product division is semi-autonomous and contains different functions. So, product
departmentation provides an excellent training facility for the top managers.
• The performance of each product division and its contribution to total results can be
easily evaluated.
• It is more flexible and adaptable to change.

Disadvantages
• It creates the problem of effective control over the product divisions by the top managers.
• Each production manager asserts his autonomy disregarding the interests of the
organisation.
• The advantages of centralization of certain activities like financing, and accounting are
not available.
• There is duplication of physical facilities and functions. Each product division maintains
its own specialized personnel due to which operating costs may be high.
• There may be under-utilization of plant capacity when the demand for a particular
product is not adequate.

Departmentation by Territory

• Territorial or geographical departmentation is specially useful to large -scale enterprises

whose activities are widely dispersed.
 • Banks, insurance companies, transport companies, distribution agencies etc, are some
examples of such enterprises, where all the activities of a given area of operations are
grouped into zones, branches, divisions etc.
• As it is not possible for one functional manager to manage efficiently such widely spread
activities. This makes it necessary to appoint regional managers for different regions.
Advantages
• Every regional manager can specialize himself in the peculiar problems of his region.
• It facilitates the expansion of business to various regions.
• It helps in achieving the benefits of local operations.
• There is better co-ordination of activities in a locality through setting up regional
divisions.
• It provides adequate autonomy to each regional manager and opportunity to train him as
he looks after the entire operation of a unit.
Disadvantages
• It requires more managers with general managerial abilities. Such managers may not be
always available.
• There may be conflict between the regional managers.
• Co-ordination and control of different branches from the head office become less
effective.
• Owing to duplication of physical facilities, costs of operation are usually high.
• There is multiplication of personnel, accounting and other services at the regional level.

Departmentation by Customers

• In such method of departmentation, the activities are grouped according to the type of
customers.
• For example, a large cloth store may be divided into wholesale, retail, and export
divisions. This type of departmentation is useful for the enterprises which sell a product
or service to a number of clearly defined customer groups.
 • For instance, a large readymade garment store may have a separate department each for
men, women, and children.
• A bank may have separate loan departments for large-scale and small- scale businessmen.

Advantages
• Special attention can be given to the particular tastes and preferences of each type of
customer.
• Different types of customers can be satisfied, easily through specialized staff. Customers‟
satisfaction enhances the goodwill and sale of the enterprise.
• The benefits of specialization can be gained.
• The enterprise may acquire intimate knowledge of the needs of each category of
customers.

Disadvantages
• Co-ordination between sales and other functions becomes difficult because this method
can be followed only in marketing division.
• There may be under-utilization of facilities and manpower in some departments,
particularly during the period of low demand.
• It may lead to duplication of activities and heavy overheads,
• The managers of customer departments may put pressures for special benefits and
facilities.

Departmentation by Process or Equipment

• In such type or departmentation the activities are grouped on the basis of production
processes involved or equipment used.
 • This is generally used in manufacturing and distribution enterprises and at lower levels of
organisation.
• For instance, a textile mill may be organised into ginning, spinning, weaving, dyeing and
finishing departments.
• Similarly, a printing press may have composing, proof reading, printing and binding
departments.
• Such departmentation may also be employed in engineering and oil industries.

SPAN OF MANAGEMENT
Span management also known as span of control refers to the number of subordinates managed
by a superior. The term span' literally means the space between two supports of a structure, e.g.,
the space between two pillars of a bridge. The space between the two pillars should neither be
too large nor too small. If it is too large the bridge may collapse; and it too small, It will enhance
its cost.

"When applied to management, 'span' refers to the number of subordinates a manager or

supervisor can supervise, manage or control effectively and efficiently. Obviously, if the number
of subordinates placed under one manager is too large, it will become difficult to effectively
control them and the desired results cannot be achieved. On the other hand, if the number is too
small, the time, energy and abilities of the supervisor are not utilised fully and the task may not
be accomplished. Span of supervision, therefore, refers to the optimum number of subordinates
that a manager or supervisor can manage or control effectively. In the words of Spriegal, “Span
of control means the number of people reporting directly to an authority. The principle of span of
control implies that no single executive should have more people looking to him for guidance
and leadership than he can reasonably be expected to serve."

DETERMINING THE PROPER SPAN

Very often the question is asked as to how many subordinates a supervisor can manage
effectively. There cannot be a definite answer to this question because the ideal number may be
different under different situations depending upon the time, knowledge, energy and abilities of
the supervisor. However, this question has been attempted by various management experts and
even they are not unanimous over this point.

The idea of limited span developed from experience. Although the concept of span of control
was discussed by Henri Fayol, but Sir Ian Hamilton is usually given credit for developing this
concept. Sir Ian Hamilton was in favour of a narrow span consisting of not more than six
subordinates working under a manager to get the work accomplished.

V.A. Graicunos published a famous paper in 1933. He analysed subordinate-superior relationship

in terms of a mathematical formula. The formula was based on the theory that the complexities
of management increase geometrically as the number of subordinates increases arithmetically.

Graicunos identified three types of subordinate-superior relationship:

 Direct Single Relationship arising from the direct and individual interaction of the
superior with his subordinate. Thus, if a supervisor has four subordinates, there would be
four direct single relationships.
 Direct Group Relationships arising between the superior and the subordinate in all
possible combinations, such as A to B with C, and A to C with B.
 Cross Relationships arising from mutual relationships among subordinates for working
under the same superior.

What is Work Specialization?

The process of job specialization is to split up the process of work into individual tasks that is
necessary for the organization or business and that cannot be handled by one person.
Definition of job specialization, in other words, it is actually a division of labour wherein it is
realized that by giving more emphasis on the scope of activities, productivity increases.
Hence, once the recruitment process is initiated everyone would be looking out for the positions
advertised which indicates the specialization they are experts in.
Job specialization is particularly necessary for larger organization where the manufacturing
sector would require a different category of work in individual production unit to be done by the
workers.
Besides, if the job gets complicated then it needs to be broken down to simpler process so that
each task can be handled by people expert in that work.
Division of labour is an inescapable component of the advanced industrial system. It is the
advantages and disadvantages of labour in the accompanying ways.
Advantages
1.Defined skill set:
When we say advantages it is seen that it can be visualized during the early stages of one‟s
career. When one is in search of a job, having a specific skill set could help one to land a job. As
jobs are nowadays becoming more specific having that specialized skill set, it helps one to
acquire those skills through training or through experience.
2.Upward growth:
Having a specific skill or being specialized in that work would also bring growth in that division.
They get chances to move up the ladder and gain more expertise in that specialization. Each
specialization has its own uniqueness depending on the weightage and the depth of knowledge.
3. Good package:
A job specialization means a person is knowing how to do that work and complete it. Companies
are ready to pay if they find that person is really expert in that work as there is no one to replace
them.
So if you want to be paid then get to know the market trend and specialize in those fields where
you would get paid well.
4. Defines quality and excellence:
When a company declares employing specialists for their tasks it means that they take care of the
type and quality of work being executed.
It ultimately brings excellence to the work done. In other words, it can be said that each
department would be proud of their special skill set with them.
5. Brings in trust:
There is a general understanding among customers that having specialists to carry out services
means that their work is done without flaw. Besides that, they also know that there would be
quality in the work executed. This is the way specialists are renowned that brings trust in their
name.
6. Proud of their work:
Specialists are those who have a specific skill set and if those skills sets are rare to be found then
generally those people are really proud of their specialization.
They take pride in their work and often execute with care and respect. They often show their
pride in the job they do as there is no one who could replace them.
7. Increases productivity:
It is generally found that allowing work to be done by people who are expert in that field would
have fewer errors. As correcting errors not only takes time and resource, it also reduces
productivity. Thereby training is provided to make employee specialized in that work.
Hence, having a person who can do the work without flaws will eventually bring out more output
which directly leads to more productivity.
Disadvantages of Work Specialization:
The following mentioned are few limitations and cons of work specialization.
1. Becomes outdated:
This is often experienced during mid-career life. When a new trend is set in and the business
changes to adapt them, the jobs carrying out those tasks become outdated.
Like for instance, there were demands of „skilled typists‟ in any organization during the earlier
period. But with the advent of personal computers and laptops, this job profile is losing its shine.
2. Mastering one skill set:
Having mastered one skill and having gained experience in only that field of work would
eventually hinder career growth. This becomes even difficult when the job becomes leaner
throughout the job market.
3. Omitted from managerial positions:
As you keep focusing on doing the specialized job you would eventually be sidelined when a
position of managerial is required for.
Specializing in doing a particular set of tasks, people would not make you as their choice for a
managerial post as those tasks wouldn‟t have an impact on the business.
4. Gets boring:
As you are aware that specialized work allows a person to concentrate on one aspect of work and
day after day they perform the same work. With time, this work does not pose any challenging
assignments and becomes boring. When the job becomes boring, it leads to dissatisfaction and
loses interest.
5. Cannot multitask:
Sometimes, being specialized in one work does not allow one to perform multitasking jobs. As
they would have been concentrating and functioning in only one aspect of the work, they would
find it difficult to multitask.
If they were trained from the beginning then these categories of people cannot be allowed for
multitasking work assignments.
6. Restrictions to apply:
If there is a vacancy in another section or department where the job profile would pay better,
these candidates who are specialized would be restricted from filling in those posts. As they are
said to working for that specialization, vacancies that might arise cannot be taken up by them.
7. Company suffers:
If the company is performing well due to the expert working in that category, his/her absence
would definitely create a vacuum. This absence is sure to affect the performance and the
company suffers in due course of time.
8. Limited skill set:
As the word says, specialized work means having a specific skill set. If we look closer we
would realize that the skill set is focused and hence looks small. The other category of people
who work with the non-skill set would be having more skill sets than specialized people.
Unity of Command
Unity of Command means getting orders/ command from only one supervisor.

Fayol has stated “As soon as two superiors impose their authority over the same person or
department, uneasiness makes itself felt. Dual command is a perpetual source of conflict.”

This principle states that an individual should get orders from a single superior so that he does
not get confused and can discharge his duties effectively.
This principle advocates that only one boss should give order to an individual so that he can
understand what to do and can perform systematically with greater efficiency. If more than one
boss will instruct an individual, he will certainly get confused about his responsibility and will
not be able to perform even a single activity because he faces the dilemma of “whom should he
follow?”

In case of more than one boss, problem of ego clash between the bosses arises because every
superior wants his orders to be executed by his subordinate. This problem of ego clash also
causes conflicting situation in the organization, which hampers the organization growth.

Positive impacts of this principle:

 Prevents dual subordination;
 Easy to fix responsibility to an individual;
 Harmonious and cordial relation among the management and the employees; and
 Performance of the employees will increase.
Consequences of violation of this principle:
 Reduces efficiency of subordinates;
 Creates confused situation for the subordinates;
 Subordinates can easily escape from their responsibility and duties;
 Ego clash between managers;
 Overlapping of orders and instructions; and
 Hard to maintain discipline in the organization.
What Is Organizational Culture?
Organizational culture is defined as the underlying beliefs, assumptions, values and ways of
interacting that contribute to the unique social and psychological environment of an organization.
Organizational Culture Definition And Characteristics
Organizational culture includes an organization‟s expectations, experiences, philosophy, as well
as the values that guide member behavior, and is expressed in member self-image, inner
workings, interactions with the outside world, and future expectations. Culture is based on shared
attitudes, beliefs, customs, and written and unwritten rules that have been developed over time
and are considered valid (The Business Dictionary).
Culture also includes the organization‟s vision, values, norms, systems, symbols, language,
assumptions, beliefs, and habits (Needle, 2004).
Simply stated, organizational culture is “the way things are done around here” (Deal & Kennedy,
2000).
While the above definitions of culture express how the construct plays out in the workplace,
other definitions stress employee behavioral components, and how organizational culture directly
influences the behaviors of employees within an organization.
Under this set of definitions, organizational culture is a set of shared assumptions that guide what
happens in organizations by defining appropriate behavior for various situations (Ravasi &
Schultz, 2006). Organizational culture affects the way people and groups interact with each
other, with clients, and with stakeholders. Also, organizational culture may influence how much
employees identify with their organization (Schrodt, 2002).
Characteristics of organizational culture are;
Innovation (Risk Orientation)
Companies with cultures that place a high value on innovation encourage their employees to take
risks and innovate in the performance of their jobs.
Companies with cultures that place a low value on innovation expect their employees to do their
jobs the same way they have been trained, without looking for ways to improve their
performance.
Attention to Detail (Precision Orientation)
This characteristic of organizational culture dictates the degree to which employees are expected
to be accurate in their work.
A culture that places a high value on attention to detail expects its employees to perform their
work with precision, and a culture that places a low value on this characteristic does not.
Emphasis on Outcome (Achievement Orientation)
Companies that focus on results but not on how the results are achieved emphasize this value of
organizational culture.
A company that instructs its sales force to do whatever it takes to get sales orders has a culture
that places a high value on the emphasis on outcome characteristics.
Emphasis on People (Fairness Orientation)
Companies that place a high value on this characteristic of organizational culture place great
importance on how their decisions will affect the people in their organizations.
For these companies, it is important to treat their employees with respect and dignity.‟
Teamwork (Collaboration Orientation)
Companies that organize work activities around teams instead of individuals place a high value
on this characteristic of the organizational culture.
People who work for these types of companies tend to have a positive relationship with their
coworkers and managers.
Aggressiveness (Competitive Orientation)
This characteristic of organizational culture dictates whether group members are expected to be
assertive or easygoing when dealing with companies they compete with within the marketplace.
Companies with an aggressive culture place a high value on competitiveness and outperform the
competition at all costs.
Stability (Rule Orientation)
A company whose culture places a high value on stability is rule-oriented, predictable, and
bureaucratic in nature. These types of companies typically provide consistent and predictable
levels of output and operate best in non-changing market conditions.
These are the seven characteristics that are common in the context of organizational culture.
Of course, it is true that the characteristics are not the same in all times and spheres.
Nowadays, most businesses are going global, and it is not likely to change anytime soon. The
success of these companies depends on the workforce and the value they bring. This reason
makes cultural diversity a top priority for most organizations.
People from different backgrounds come together to contribute to organizational success.
Interacting with people from various ethnic and cultural groups creates a positive work
environment.
Embracing cultural diversity in the workplace is essential for every business to establish its brand
value.
This is why many organizations have implemented diversity and inclusion programs.
Before we look into the importance, let‟s understand what we mean by the word cultural
diversity?
What is cultural diversity in the workplace?
Cultural diversity in the workplace refers to hiring employees from different backgrounds,
regardless of race, gender, and culture.
Hiring a diverse pool of talent is beneficial for the company and the employees.
The human race comprises diverse people with distinct experiences and skills. Disregarding
someone because of who and what they are can make you lose out on great talent.

Types of cultural diversity in the workplace

Diversity amongst workers refers to a diverse group who have experienced
discrimination. Diversity and inclusion program helps these employees overcome such barriers
a work.
Diversity can mean a lot of things. Here are some of the different types of diversity in the
workplace.
 Race- Racial identification is one of the first things when we talk about diversity. Race
defines people based on skin color, genetic inheritance, and geographical origin. Workers
of color often face challenges, such as hiring obstacles and discrimination by peers
 Ethnicity- Refers to people belonging to a social group with a common national or
cultural tradition. With companies going global, diverse races and ethnicities might bring
language barriers. Creating a clash in a diversity of thoughts while carrying out
operations.
 Gender- As per the World Economic Forum data, It will take 208 years for the U.S to
reach gender equality. Gender is a pivotal part of cultural diversity in the workplace. And
to remind you, gender is what people identify as irrespective of the gender assigned at
birth.
 Religion- Cultural diversity is vital to promote religious equality in the office. It
promotes tolerance and diligence. It impacts workers‟ dress, dietary requirements, and
religious holidays.
 Sexual Orientation- The LGBTQIA+ community has faced immense discrimination
throughout. They represent different sexualities and gender identities and thus have
unique needs. Companies need to address LGBTQIA issues and create a safe space for
 these employees. The Supreme Court of the United States also ruled that the Civil Rights
Act of 1964, applies to discrimination against LGBT folks as well.
 People with disabilities- Diverse companies must give equal opportunities to workers
with disabilities. Whether impairments from vision, learning, or mental health. Diversity
and inclusion programs will do wonders to ensure diligence towards such workers.

Benefits of Cultural Diversity in the Workplace

Many companies are working towards creating a diverse work culture. We must remember the
protesters who fought for the justice of George Floyd, who was killed for being black.
Employers must show empathy and compassion towards every employee to promote diversity in
the workplace.
Employers must not show cultural insensitivity towards any employee in the workplace. They
must know the benefits of a successful cultural diversity process.
Let‟s take a look at the benefits that cultural diversity brings to the workplace.
 Higher Team Performance
Cultural diversity in the workplace helps to increase productivity at work. Diversity is a
combination of beliefs, values, and norms for people to work on a common goal. Promoting
cultural diversity in the workplace enhances team performance because:
 It allows employees to learn and grow by sharing each other‟s experiences.
 Employees from different backgrounds engage with each other.
 It enables them to come up with fresh ideas.
 It allows them to think out of the box and increase productivity.
A diverse workplace includes employees from different backgrounds, races, and ethnicities.
And when they work together, it breeds a positive work environment.
 Creativity
The second benefit of cultural diversity is enhancing creativity in the team.
When different groups of people with diverse ideas come together and work. One can find a
solution. Every individual has their way of thinking, operating, decision-making, and problem-
solving skills.
By promoting diversity in the workplace employers can:
o Inspire their workforce to perform their best
 o Increase employee engagement
o Foster creativity and innovation amongst team members
 Increases profits
Many studies have found- a diverse work culture increases profits for the company.
As per the 2013 survey of the Centre for Talent Innovation, 48 percent of organizations in the
US with a diverse workforce showed improvement in their market share compared to the
previous year.
For a global company, language diversity can be an excellent strategy to bring in new clients.
For example, companies dealing with India‟s businesses hire people fluent in major Indian
languages. It increases their reputation in the Indian communities. Such strategies can increase
sales resulting in improved profits.
 Inspires trust and respect
The best way to learn about various cultures and ethnicities is from coworkers who come from
different backgrounds.
While your workers are on a lunch break with their colleagues, conversations happen. Promoting
a diverse work culture is all about employees:
 Getting to know their culture and lifestyle
 Communicating about life experiences
 Discussing their festivals and foods
 Building trust and respect.
This increases employee engagement and motivates them. Which is an achievement for the
company.
 Employer Branding
Cultural diversity in the workplace reflects positively on company reputation. Hiring people
from different backgrounds enhances employer branding.
A diversity-based company is generally considered to be on par with the times. As a result, top
talents, investors, and clients are a shoo-in.
A diverse pool of skill sets and experiences allows a company to:
 Provide genuine service to customers globally
 Bring a stellar and personalized customer experience to their client base
  Wide range of skills
With a diverse workforce comes diverse skills. When companies hire people from all sorts of
backgrounds, they bring in specific talents and abilities.
Companies often enjoy a versatile range of products and services to offer their respective
markets a more comprehensive range of skills and knowledge. It won‟t be wrong to say diversity
in work culture means diversity in skills.
 Reduces discrimination and harassment
Often people suffer different types of workplace harassment and discrimination (like sexual,
verbal, racial, etc.). And implementing a diverse work culture can reduce unwarranted activities
in the company.
Companies must implement a diversity and inclusion program to:
 eradicate negative emotions
 racism
 homophobia
 sexism, etc.
Cultural diversity builds respect amongst employees. It helps them to accept their differences,
and make work fun and engaging.

Creating a Multicultural Organisation The creation of a multicultural organisation is essential for

the effective management of diversity. A multicultural organisation is one where employees of
mixed backgrounds, experiences and cultures can contribute and achieve their fullest potential to
benefit both themselves and the organisation. A multicultural organisation is one which:
• Reflects the contributions and interests of diverse cultural and social groups in its
mission, operations and product or service
• Acts on a commitment to eradicate social oppression in all forms within the organisation
• Includes the members of diverse cultural and social groups as full participants especially
in decisions that shape the organisation.
• Follows through on broader external social responsibilities including support of other
institutional efforts to eliminate all forms of social oppression.
Multicultural Organisation as A Competitive Advantage
There are a few general reasons for the emergence and growth of multicultural organisations:
 Some organisations grow very rapidly and hence, are required to hire more and more
people, which make it obligatory for them to hire people from different backgrounds and
learn to manage them better.
 Some organisations want to recruit the best talent from the market regardless of
background or age to give the best quality employees.
 Some organisations need to develop and sell products in diverse markets. In this
situation, it makes more sense for them to recruit and manage employees who represent
their different markets in order to obtain a better understanding of the market.
 There are six main ways in which a diverse workforce can bestow competitive advantage
on an organisation. This is shown in the following table:

Advantage Contribution
Cost Managing diversity well can trim the sots of integrating diverse workers
Resource Companies that have the best reputation for diversity will have the best
Acquisition chance of hiring the most talented workers from the market
Marketing Diverse organisations gain a better insight into their markets and
cultural sensitivity will improve the development and marketing of
products and services to different segments of the population
Creativity Diversity of perspectives will improve levels of creativity throughout
the organisation
Problem Solving Problem solving and decision making will improve through groups with
more diverse perspectives
System Flexibility Tolerance and valuing of diverse perspectives throughout the
organisation will make the organisation more fluid, flexible and more
responsive to environmental changes.

Therefore, developing multicultural organisational practices is essential for any organisation

for its long term benefit
 MODULE-III

PLANNING
When management is reviewed as a process, planning is the first function performed by a
manager. The work of a manager begins with the setting of objectives of the organization and
goals in each area of the business.
Planning is a tool in the hands of a manager who wants to face problems created by change.

Successful managers deal with foreseen problems and unsuccessful managers struggle with
unforeseen problems. The difference lies in planning. Every enterprise which strives to survive
and grow must place heavy emphasis upon planning. A planner foresees opportunities and
devises ways and means to take advantage from them. There may be cases where little bit of
planning helps in achieving objectives. This may happen in favourable situations. In a
competitive business world a manager cannot wait for favourable circumstances, he has to decide
in the face of uncertainties. There is no place for guesswork or chance. The need is for proper
planning.

Planning means looking ahead. It is deciding in advance what is to be done. Planning helps in
determining the course of action to be followed for achieving various organisational objectives.
It is a decision in advance; what to do, when to do, how to do and who will do a particular task.

Planning is a process which involves 'thinking before doing. 'It is concerned with a mental state
of the manager. He thinks before undertaking a work. Other functions of management like
organising, controlling and directing are also undertaken after proper planning.

In the past four decades every type of enterprise has shown a tremendous interest in planning. In
the present economic, technological, political and social set up planning is essential for the
survival of an enterprise. The change and growth bring new opportunities but they also bring
more risks. The task of planning is to minimise risk while taking advantage of opportunities.
DEFINITIONS
• George Terry. "Planning is the selecting and relating of facts and the making an
using of assumptions regarding the future in the visualization and formulation of
proposed activities believed necessary to achieve desired results.'‘
• Koontz and O'Donnell. "The selection from among alternatives for future courses o
action for the enterprise as a whole and each department with it.“
• Hart. "The determination in advance of a line of action by which certain results are
to be achieved." Planning is the deciding of a course required for reaching
organisational goals.
NATURE OF PLANNING
1. Planning is goal-oriented: Every plan must contribute in some positive way towards the
accomplishment of group objectives. Planning has no meaning without being related to goals.
2. Primacy of Planning: Planning is the first of the managerial functions. It precedes all other
management functions.
3. Pervasiveness of Planning: Planning is found at all levels of management. Top management
looks after strategic planning. Middle management is in charge of administrative planning.
Lower management has to concentrate on operational planning.
4. Efficiency, Economy and Accuracy: Efficiency of plan is measured by its contribution to the
objectives as economically as possible. Planning also focuses on accurate forecasts.
5. Co-ordination: Planning co-ordinates the what, who, how, where and why of planning.
Without co-ordination of all activities, we cannot have united efforts.
6. Limiting Factors: A planner must recognise the limiting factors (money, manpower etc.) and
formulate plans in the light of these critical factors.
7. Flexibility: The process of planning should be adaptable to changing environmental -
conditions.
8. Planning is an intellectual process: The quality of planning will vary according to the quality
of the mind of the manager.
ADVANTAGES OF PLANNING

• All efforts are directed towards desired objectives or results. Unproductive work and
waste of resources can be minimized.
• Planning enables a company to remain competitive with other rivals in the industry.
• Through careful planning, crisis can be anticipated and mistakes or delays avoided.
• Planning can point out the need for future change and the enterprise can manage the
change effectively.
• Planning enables the systematic and thorough investigation of alternative methods or
alternative solutions to a problem.
• Planning maximises the utilisation of available resources and ensures optimum
productivity and profits.
• Planning provides the ground work for laying down control standards.
• Planning enables management to relate the whole enterprise to its complex environment
profitably.
DISADVANTAGES
• Environmental factors are uncontrollable and unpredictable to a large extent. Therefore
planning cannot give perfect insurance against uncertainty.
• Planning is many times very costly.
• Tendency towards inflexibility to change is another limitation of planning.
• Planning delays action.
• Planning encourages a false sense of security against risk or uncertainty.
PLANNING PROCESS (Steps Involved)

1. Analysis of External Environment: The external environment covers uncontrollable and

unpredictable factors such as technology, market, socio-economic climate, political conditions
etc., within which our plans will have to operate.

2. Analysis of Internal Environment: The internal environment covers relatively controllable

factors such as personnel resources, finance, facilities etc., at the disposal of the firm. Such an
analysis will give an exact idea about the strengths and weakness of the enterprise.
3. Determination of Mission: The "mission" should describe the fundamental reason for the
existence of an organisation. It will give firm direction and make out activities meaningful and
interesting.

4. Determination of Objectives: The organisational objectives must be spelled out in key areas
of operations and should be divided according to various departments and sections. The
objectives must be clearly specified and measurable as far as possible. Every member of the
organisation should be familiar with its objectives.

5. Forecasting: Forecasting is a systematic attempt to probe into the future by inference from
known facts relating to the past and the present. Intelligent forecasting is essential for planning.
The management should have no stone unturned in reducing the element of guesswork in
preparing forecasts by collecting relevant data using the scientific techniques of analysis and
inference.

6. Determining Alternative course of Action: It is a common experience of all thinkers that an

action can be performed in several ways, but there is a particular way which is the most suitable
for the organisation. The management should try to find out these alternatives and examine them
carefully in the light of planning premises.

7. Evaluating Alternative Courses: Having sought out alternative courses and examined their
strong and weak points, the next step is to evaluate them by weighing the various factors.

8. Selecting the Best: The next step - selecting the course of action is the point at which the plan
is adopted. It is the real point of decision-making.

9. Establishing the sequence of activities: After the best programme is decided upon, the next
task is to work out its details and formulate the steps in full sequences.
10. Formulation of Action Programmes: There are three important constituents of an action
plan:
 The time-limit of performance.
 The allocation of tasks to individual employees.
 The time-table or schedule of work so that the functional objectives are achieved within
the predetermined period.
11. Reviewing the planning process: Through feedback mechanism, an attempt is made to
secure that which was originally planned. To do this we have to compare the actual performance
with the plan and then we have to take necessary corrective action to ensure that actual
performance is as per the plan.

Learning Organization
“The learning organisation may be defined as one in which everyone is engaged in identifying
and solving problems, enabling the organisation to continuously experiment, change and
improve—thus increasing its capacity to grow, learn and achieve its purpose”.
According to Peter Senge, adapting to environmental changes is not enough to survive and
flourish in the economic jungle. Organisations have to anticipate and learn from change.

The focus of such learning organisations must be on continuous experimentation, finding new
ways of creating products and services and serve customers better than rivals double-loop,
generative learning.
PLANNING PREMISES
Planning premises are those basic assumptions upon which the process of planning proceeds.
Planning involves making a choice of action on the basis of assumptions of what is likely to
happen in the future which is totally uncertain. These assumptions or premises are the postulates.
A manager tries to make assumptions on the basis of likely happenings in future and bases his
present decisions on those. In case the assumptions or premises happen as assumed earlier then
decisions will be proper, in case the premises change then plans will have to be modified. Such
premises constitute the ground on which plans stand.
Classification of Planning Premises
Planning premises provide the bedrock upon which the plans are based. Planning premises may
be classified as follows:
(i) Internal and External Premises: Internal premises arc those factors which exist within the
firm or which belong to the firm's own climate. These premises are commitments for resources,
sources of raw materials and other equipment, sales forecasts, basic policies and programmes,
availability and competence of management and other personnel. All these factors are known and
fully controllable.

External planning premises pertain to the outside environment of the firm. These relate to
general business environment, conditions which influence the demand for business products and
resources available to the organisation. Like, the political philosophy of national and state
governments, fiscal and monetary policies, trends in population growth, education, national
income etc. All these external factors have great impact on the planning of a business unit.

(ii) Controllable and Uncontrollable Premises: There are some factors which are within the
control of management. These factors include managerial policies, programmes and rules etc.

There are certain factors over which management has no control. Such factors include strikes,
wars, natural calamities, new inventions etc. All these factors have a bearing on the planning of
an organisation. There are some factors over which management has some control, these are
called semi-controllable factors. Such factors may be efficiency of workers, pricing policy,
marketing, programmes etc. Management does not have full control over these factors.
All these premises are important for preparing plans. Any changes in these premises necessitate
modifications of plans.

(iii) Tangible and Intangible Premises: Tangible premises are those which can be expressed in
quantity or arc quantifiable. Intangible premises are just assumed and cannot be expressed in
quantities, for example, reputation of a concern. All these premises have greater influence on the
decision-making process.
All the planning premises discussed above have great impact on planning premises. Though
future is always uncertain but still certain assumptions are made to base the plans. The premises
are helpful guidelines for taking planning decisions.

TYPES OF PLANNING
1. On the basis of coverage of activities
(i) Corporate planning
(ii) Functional planning
2. On the basis of Importance of Contents.
(i) Strategic Planning.
(ii) Operational Planning
3. On the basis of time period involved.
(i) Long term planning.
(ii) Short-term Planning
1. Corporate Planning and Functional Planning: We have seen earlier that planning activity is
pervasive and can be undertaken at various levels of an organization. It may be for the
organization as a whole or for its different functions. Thus, based on the coverage of activities,
there may be planning for the organization as a whole, known as corporate planning or for its
different functions, known as functional planning

(a) Corporate Planning: Corporate planning is undertaken at the top level, also known as
corporate level, and covers the entire organizational activities. It is of integrative nature and
integrates entire planning process of the organization. The basic focus of corporate planning is to
determine the long-term objectives of the organization as a whole and to generate plans to
achieve these objectives bearing in mind the probable changes in the environment. Corporate
planning, generally, has long-term orientation and provides basis for functional planning.

(b) Functional Planning: Functional planning is of segmental nature and is undertaken for each
major function of the organization like production/operations, marketing, finance, human
resource, etc. At the second level, functional planning is undertaken for subfunctions within each
major function. For example, marketing planning is undertaken at the level of marketing
department and to put marketing plan in action, planning at subfunctions of marketing like sales,
product promotion, marketing research, etc. is undertaken. A basic feature of functional planning
is that it is derived out of corporate planning and, therefore, it should contribute to the latter. This
contribution is achieved by integrating and coordinating functional planning with corporate
planning.

2. Strategic Planning and Operational Planning: On the basis of importance of contents,

planning may be divided into strategic planning and operational planning.

(a) Strategic Planning: Strategic planning involves setting long-term direction of the
organization in which it wants to proceed in future. It is the process of deciding long-term
objectives of the organization and defining where the organizational resources and efforts should
be put to achieve organizational objectives. Strategic planning deals with strategic issues like
type of business to be undertaken, diversification of business into new lines, type of products to
be offered, and so on. This way, strategic planning encompasses all the functional areas of
business and is effected within the existing and long-term framework of environmental factors.
Strategic planning also involves rigorous analysis of various environmental factors to relate the
organization relates to its environment.

(b) Operational Planning: Operational planning, also known as tactical planning, is the process
of deciding the most effective use of the resources already allocated through strategic planning
and to develop a control mechanism to ensure effective implementation of the actions so that
organizational objectives are achieved. Usually operational planning covers one year or so. It
aims at sustaining the organization in its production/generation and distribution of current
products (goods and services) to the existing markets. Operational planning answers the
questions about a particular action as follows

3. Planning is concerned with future course of action. This may be of long term or short term.
Thus, there are long-term planning and short term planning.
(a) Long-term Planning:
 • Long-term planning is of strategic nature and involves more than one year period, usually
3-5 years
• Long-term planning usually covers all the functional areas of the business and is
undertaken within the existing and long-term future environmental scenario.
• Here, high emphasis is placed on analysis of environmental factors.
(b) Short-term Planning:
• Short-term planning usually covers one year. This aims at making effective use of
organizational resources — financial, physical, and human resources.
• Short-term planning directly and immediately affects functional areas — production,
marketing, finance, etc..

Learning organisations, typically, have the following Characteristics:

(i) Creative Problem Solving:

The essential idea is problem solving, as against the traditional organisation designed for
efficiency. In a learning organisation all employees look for problems, such as understanding the
unique requirements of customers. Employees also solve problems, by finding novel, innovative
and creative ways to meet the demands of customers.
(ii) Disciplined Thinking:
In a learning organisation people engage in disciplined thinking. They do not rely on guesswork
or assumptions. They develop a critical eye for detail and based their decisions on factual
information.
(iii) Learn from Anything and Everything:
They constantly look for new knowledge and ways to apply it. They look for expanding horizons
or opportunities rather than finding quick fixes to current problems. They carefully review both
successes and failures. The intent is to look for lessons and learn from mistakes.
(iv) Emulate the Best Practices:
Learning organisations, typically, identify and implement the best business practices of other—
excellently run—organisations. Of course, they steal ideas shamelessly. They make sure that new
ideas are acted upon and knowledge is shared throughout the organisation without any
reservations.
A learning organisation has both the drive and the capabilities to improve its performance
continuously based on experience. It tries to add value to customers by identifying new needs
and then developing innovative ways to satisfy those needs. In fact, it learns from past
experiences, it learns from customers, it learns from various parts of the company and it learns
from other companies.

MANAGEMENT BY OBJECTIVES (MBO)

MBO provides for a regular review of performance. The objectives of MBO provide guidelines
for appropriate system and procedures. MBO is one of the techniques by which executives can
improve organizational performance and effectiveness. The idea of MBO was contributed by
Donaldson Brown and Alfred Sloan in 1920s and Edward Hagenin in 1930s. (Peter Drucker,
known as father of MBO technique, coined this term in 19543 Some other authorities on the
subject are Charles L. Hughes, Goal Setting (American Management Association, 1965) ; Dale
D.
Me Conkey, How to Manage by Results (American Management Association, 1967) ; George S.
Ordiornc, Management by Objectives (Pitman, 1965) ; W.J. Reddin, Effective Management by
Objectives (Me Graw-Hill, 1971).
Advantages
• employees taking pride in their work with goals that they know they can achieve.
• It also aligns employees with their strengths, skills, and educational experiences.
• MBO also leads to increased communication between management and employees.
• Assigning tailored goals brings a sense of importance to employees, bringing loyalty to
the firm.
• And lastly, management can create goals that lead to the success of the company.

MBO is used to plan goals for the employees through their own participation. The goals will
act as motivational factor and help in increasing employee efficiency The setting of goals is
not a simple thing. It requires lot of thinking and planning. The setting of objectives requires
following steps:
1. Setting Objectives at the Top: The first step in MBO process is to analyse the purpose or
mission of the organisation. This exercise is undertaken at the top level. The mission of the
organisation will be converted into goals for a given period, it may be for a quarter, half year, a
year, 5 years or more In many cases objectives are set to coincide with the completion of a
project or with an annual budget. This may not be desirable. Some goals may be set for a short
period while some may be for a longer period. Generally as we go downward in the hierarchy the
period for objective setting is short. At the operative level the objectives may be for a week or a
month. The goals set at the top level are only preliminary in nature. These goals are set by taking
into account company's strengths and weaknesses and opportunities available. These goals may
be modified while discussing them with the subordinates. The objectives should not be forced on
the subordinates rather their viewpoint should be given weightage while fixing objectives. It will
bring commitment from subordinates. The subordinates may suggest the problems which they
will face in implementing the plans. The goals should be verifiable or other criteria for goal
accomplishment should be established beforehand.
2. Clarifying Organisational Roles: Sometimes organisational roles are not properly clarified
and specific responsibility for attaining the objectives is not fixed. There should be clear cut
assignment of tasks and fixation of responsibilities. In some cases the responsibility of one
person for a particular task may not be fixed) For example, the development of a new product
may be the responsibility of research, production and marketing managers. Such activities can be
put under the overall command of a particular person, say product manager. In the absence of
such a command specific responsibilities for taking up separate tasks be given to concerned
managers. S organizational roles should be clearly spelt out.
3. Setting Subordinates Objectives: The subordinate managers should be informed of general
objectives, planning premises and strategies of the company. The superior should then discuss
with the subordinate about the objectives which he can accomplish, time frame for them and the
resources required. The feasibility of such goals for the company is also discussed. The superior
has to play an important role while interacting with the subordinate. He should ask questions like
what will be his contribution to the organisational goals? How can he improve his performance?
What are the hurdles he faces in reaching has objectives? What changes he expects from
superiors? How can the superior help him in his task. The answers to such questions can help in
deciding the specific objectives of subordinates. The goals should be such which are practicable,
realistic or achievable. Superiors are generally in the habit of fixing high objectives for their
subordinates thinking that higher objectives will help them in increasing their efficiency
4. Recycling Objectives: Recycling of objectives denotes a joint and interactive process.
Objectives cannot be set I isolation. Neither can they scl at the top and communicate to the lower
levels nor can they be set at the bottom and communicated upwards. There should beproper
consultalions and interactions at various levels before deciding about the objectives. The
objectives set by an individual department may be higher than the expectations of higher
management but still they may not reconcile with the objectives of other departments. The
objectives of marketing department, for example, should reconcile with those of manufacturing
and finance departments. So recycling of objectives helps in their easy achievement.

Management By Exception (MBE)

• Management by Exception, shortly called as MBE is a management style or philosophy
that empowers the manager to concentrate on the exceptionally important or critical
matters and taking important decisions while facilitating the front line workers to
complete the day to day activities.
• It aims at keeping the focus of the management on extremely important tasks and
problems or areas in need of action.

MBE follows the following steps

• Identifying and describing Key Result Areas (KRA).
• Establishing standards and determining an acceptable level of deviations.
• Making Comparison of actual result with that of the expected or the standard result.
• Ascertaining variance.
• Analysing the causes of such variance (deviation).
• Strategizing and taking necessary actions wherever required and possible.
Advantages
• Effective utilization of manager‟s time, by driving their attention to those areas that need
managerial experience and action.
• Timely identification of discrepancies and its causes
• Prompt decision making and a suitable flow of action.
 • Assists the firm in growing and improving its output.
• Optimum utilization of the organization‟s resources.
• Better delegation of authority
• Identification of crises
• Enhances degree of communication

DECISION MAKING

The word decision has been derived from the Latin work "decider" which means "cutting off".
Thus, decision involves cutting off of alternatives between those that are desirable and those that
are not desirable. A decision is the selection from among alternatives. It is a solution selected
after examining several alternatives and decisive because the decider foresees that the course of
action he selects will be more than the others to further his goals and will be accompanied by the
fewest possible objectionable consequences. Decision is a kind of choice of a desirable
alternative.
A few Definitions of decision making are given below: In the words of Ray A Killian, "A
decision in its simplest form is a selection of alternatives".

Dr. T.G. Glover defines decision "as a choice of calculated alternatives based on judgment".

In the words of George R. Terry, "Decision making is the selection based on some criteria from
two or more possible alternatives".

CHARACTERISTICS

• The decision-maker has freedom to choose an alternative.

• Decision-making may not be completely rational but may be judgmental and emotional.
• Decision-making is goal-oriented.
• Decision-making is a mental or intellectual process because the final decision is made by
the decision-maker.
 • A decision may be expressed in words or may be implied from behaviour.
• Choosing from among the alternative courses of operation implies uncertainty about the
final result of each possible course of operation.
• Decision making is rational. It is taken only after a thorough analysis and reasoning and
weighing the consequences of the various alternatives.

DECISION MAKING PROCESS

Identify the Decison: A problem is a felt need, a question which needs a solution. In the words
of Joseph L Massie "A good decision is dependent upon the recognition of the right problem".
The objective of problem identification is that if the problem is precisely and specifically
identified, it will provide a clue in finding a possible solution. A problem can be identified
clearly, if managers go through diagnosis and analysis of the problem.
Gather Information / Diagnosis: Diagnosis is the process of identifying a problem from its signs
and symptoms.
A symptom is a condition or set of conditions that indicates the existence of a problem.
Diagnosing the real problem implies knowing the gap between what is and what ought to be,
identifying the reasons for the gap and understanding the problem in relation to higher objectives
of the organization.
Diagnosis gives rise to analysis. Analysis of a problem requires:
(a) Who would make decision?
(b) What information would be needed?
(c) From where the information is available?
Analysis helps managers to gain an insight into the problem.

Search for Alternatives: A problem can be solved in several ways; however, all the ways cannot
be equally satisfying. Therefore, the decision maker must try to find out the various alternatives
available in order to get the most satisfactory result of a decision. A decision maker can use
several sources for identifying alternatives:
(a) His own past experiences
(b) Practices followed by others and
(c) Using creative techniques

Evaluation of Alternatives/ or Weigh the evidence : After the various alternatives are identified,
the next step is to evaluate them and select the one that will meet the choice criteria, the decision
maker must check proposed alternatives against limits, and if an alternative does not meet them,
he can discard it. Having narrowed down the alternatives which require serious consideration,
the decision maker will go for evaluating how each alternative may contribute towards the
objective supposed to be achieved by implementing the decision.

Choice of Alternative: The evaluation of various alternatives presents a clear picture as to how
each one of them contribute to the objectives under question. A comparison is made among the
likely outcomes of various alternatives and the best one is chosen.
Action: Once the alternative is selected, it is put into action. The actual process of decision
making ends with the choice of an alternative through which the objectives can be achieved.

Result/ Review your Decision: When the decision is put into action, it brings certain results.
These results must correspond with objectives, the starting point of decision process, if good
decision has been made and implemented properly. Thus, results provide indication whether
decision making and its implementation is proper.

CHARACTERISTICS OF EFFECTIVE DECISIONS

1. Action Orientation: Decisions are action-oriented and are directed towards relevant and
controllable aspects of the environment. Decisions should ultimately find their utility in
implementation.
2. Goal Direction: Decision making should be goal-directed to enable the organization to
meet its objectives.
3. Effective in Implementation: Decision making should take into account all the possible
factors not only in terms of external context but also in internal context so that a decision
can be implemented properly.

TYPES OF DECISIONS

Herbert Simon has grouped organizational decisions into two categories based on the procedure
followed. They are:
Programmed decisions:
• Programmed decisions are routine and repetitive and are made within the framework of
organizational policies and rules.
• These policies and rules are established well in advance to solve recurring problems in
the organization
• Generally, taken at the lower level of management
Non-programmed Decisions:
• Non-programmed decisions are decisions taken to meet non-repetitive problems.
 • Non-programmed decisions are relevant for solving unique/ unusual problems in which
various alternatives cannot be decided in advance.
• Non-programmed decisions are novel and non-recurring and therefore, readymade
solutions are not available
Organizational decisions may also be classified as strategic or tactical.
Strategic Decisions:
• Basic decisions or strategic decisions are decisions which are of crucial importance.
• Strategic decisions a major choice of actions concerning allocation of resources and
contribution to the achievement of organizational objectives.
• Decisions like plant location, product diversification, entering into new markets, selection
of channels of distribution, capital expenditure etc. are examples of basic or strategic
decisions
Tactical Decisions:
• Routine decisions or tactical decisions are decisions which are routine and repetitive.
They are derived out of strategic decisions
• Tactical decision relates to day-to-day operation of the organization and has to be taken
very frequently.
• Tactical decision is mostly a programmed one & short-term in nature.

DECISION-MAKING UNDER RISK

• There are times when you need to make decisions even when you don‟t have adequate or
credible information or when the information obtained from different sources doesn‟t
match up.
• This happens when you don‟t know for sure how each of the alternatives will pan out and
whether you will be able to achieve the goal by taking a particular decision.
• However, you have enough understanding to know how likely each option is to be
successful.
• It is this likelihood or probability of each of the options that a manager needs to take into
account and apply experience, expertise, and gut feeling to the process of decision-
making.
DECISION-MAKING UNDER UNCERTAINTY

• Despite all the data crunching and predictive technology, businesses these days have to
deal with a lot of uncertainty and the „what if‟ scenarios.
• For instance the recent pandemic outbreak has dramatically altered the business
landscape globally
• decisions under uncertainty are different from decision-making under risk.
• In case of uncertainty , you are not even aware of all the options you have, the risks that
each alternative poses, and the outcomes of all of these options. In fact, you are not even
aware of the probabilities when you opt for decision-making under risk.
• It becomes imperative for managers to use their experience and make assumptions about
the situation and the outcomes while making decisions under uncertainty.
However, they have to rely less on their individual judgment while indulging in decision making
under risk

Decision Tree

• A decision tree is a branched flowchart showing multiple pathways for potential

decisions and outcomes.
• The tree starts with what is called a decision node, which signifies that a decision must be
made.
• From the decision node, a branch is created for each of the alternative choices under
consideration.
• The initial decision might lead to another decision, in which case a new decision node is
created and new branches are added to show each alternative pathway for the new
decision.
• The result is a series of decision pathways. The flowchart might include only one or two
decisions with only one or two alternatives, or it can become a complex sequence of
many decisions with many alternatives at each node.
CONTROLLING

Controlling is an important function of management. It is the process that measures current

performance and guides it towards some predetermined objectives. Under primitive
management, control was undertaken only when something went wrong and the objectives of
control was to reprimand the person responsible for these events and take action against him. The
modern concept of control envisages a system that not only provides a historical record of what
has happened to the business as a whole but also pinpoints the reasons why it has happened and
provides data that enable the manager to take corrective steps, if he finds he is on the wrong
track. Therefore, there is no intention to punish the person for wrongdoing, but to find out the
deviations between the actual performance and the standard performance and to take steps to
prevent such variances in future.

The concept of control is often confused with lack of freedom. The opposite of control is not
freedom but chaos or anarchy. Control is fully consistent with freedom. In fact, they are
interdependent. Without control, freedom cannot be sustained for long. Without 'freedom,
control becomes ineffective. Both freedom and accountability are embedded in the concept of
control.

DEFINITIONS
• According to Robert N Anthony - "Management control is the process by which
managers assure that resources are obtained and used effectively and efficiently.“
• In the words of Henry Fayol - "Control consists in verifying whether everything
occurs in conformity with the plan adopted, the instructions issued and the
principles established. Its object is to find out the weakness and errors in order to
rectify them and prevent recurrence. It operates on everything, i.e., things, people
and actions".

STEPS IN CONTROL PROCESS

There are three basic steps in a control process:
o Establishing standards.
o B. Measuring and comparing actual results against standards.
o Taking corrective action.
Establishing Standards
The first step in the control process is to establish standards against which results can be
measured. The standards the managers desire to obtain in each key area should be defined as far
as possible in quantitative terms. Standards expressed in general terms should be avoided.
Standards need to be flexible in order to adapt to changing conditions. The standard should
emphasis the achievement of results more man the conformity to rules and methods. If they do
not do so, then people will start giving more importance to rules and methods than to the final
results.
While setting the standards, the following points have to be borne in mind:
 The standards must be clear and intelligible. If the standards are clear and are understood
by the persons concerned, they themselves will be able to check their performance.
 Standards should be accurate, precise, acceptable and workable.
  Standards are used as the criteria or benchmarks by which performance is measured in
the control process. It should not be either too high or too low. They should be realistic
and attainable.
 Standards should be flexible i.e., capable of being changed when the circumstances
require so.

Measuring and Comparing actual Results against Standards

The second step in the control process is to measure the performance and compare it with the
predetermined standards. Measurement of performance can be done by personal observation, by
reports, charts and statements. If the control system is well organised, quick comparison of these
with the standard figure is quite possible. This will reveal variations. After the measurement of
the actual performance, the actual performance should be compared with the standards fixed
quickly. A quick comparison of actual performance with the standard performance is possible, if
the control system is well organised. While comparing the actual performance with the standards
fixed, the manager has to find out not only the extent of variations but also the causes of
variations. This is necessary, because some of the variations may be unimportant, while others
may be important and need immediate corrective action by the manager.

Taking Corrective Action

After comparing the actual performance with the prescribed standards and finding the deviations,
the next step that should be taken by the manager is to correct these deviations. Corrective action
should be taken without wasting of time so that the normal position can be restored quickly. The
manager should also determine the correct cause for deviation.
Taking corrective action can be achieved in the following way:
(a) The manager should try to influence environmental conditions and external situations in such
a way as to facilitate the achievement of goals.
(b) He should review with his subordinates the instructions given earlier so that he may be able
to give clear, complete and reasonable instructions in future.
(c) There are many external forces which cannot be adjusted by the manager. They have to be
accepted as the facts of the situation, and the executives should revise their plans in the light of
these changing forces.
TYPES OF CONTROLLING

Most control methods can be grouped into one of the two basic types:
1. Future oriented control and
2. Past-oriented controls.
Future-oriented Controls
These are also known as steering controls or feed-forward controls and are designed to measure
results during the process so that action can be taken before the job is done or the period is over.
They serve as warning-posts principally to direct attention rather than to evaluate e.g.: Cash flow
analysis, funds flow analysis, network planning etc.
Past-oriented Controls
These are also known as post-action controls and measure results after the process. They
examine what has happened in a particular period in the past. These controls can be used to plan
future behaviour in the light of past errors or successes.

TYPES OF CONTROL TECHNIQUES

Traditional Control Techniques

i. Budgeting and Budgetary Control
ii. Cost Control
iii. Inventory Control
iv. Break Even Analysis
v. Profit and Loss Control

Modern Control Techniques

(i) Return on Investment Control
(ii) Programme Evaluation and Review Technique (PERT)
(iii) Management Information System (MIS)
(iv) Management Audit
Budgeting: A budget is a statement of anticipated results during a designating period expressed
in financial and non-financial terms. A budget is the monetary or/and quantitative expansion of
business plans and policies to be pursued in the future period of time. The term budgeting is used
for preparing budgets and other procedures for planning, co-ordination and control of business
enterprise. So a budget is a pre-determined statement of management policy during a given
period which provides a standard for comparison with the results actually achieved.

Budgetary Control
Budgetary control is the process of determining various budgeted figures for the enterprise for
the future period and then comparing the budgeted figures with the actual performance for
calculating variances, if any. First of all, budgets are prepared and then actual results are
recorded. The comparison of Budgeted and actual figures will enable the management to. find
out discrepancies and take remedial measures at a proper time. The budgetary control is a
continuous process which helps in planning and co-ordination. It provides a method. of control
too. A budget is a means and budgetary control is the end-result.

Cost Control
Cost control is a control of all the costs of an enterprise in order to achieve cost effectiveness in
business operations. Cost can be classified as: fixed cost, variable cost, semi-variable cost. The
fixed costs are incurred over a period over a period of time and are not directly related to
production. These costs remain the same even if there is an increase or decrease in production.

Variable costs; on the other hand, change in the proportion of output. Semi-variable costs are
fixed as well as variable in nature. Some costs may "be incurred continuously, others now and
then and still others only deemed to be incurred (depreciation).

There may be different methods of recording cost for various products. In each method,
classification, recording and allocation of expenses may be done differently. In each method
there will be a system where deviations in standard or budgeted costs and actual costs will be
reported to the concerned officials for taking corrective measures. The cost standards are fixed
for each product or activity and actual cost records are also sent to the incharge of the product or
activity. In case of any deviation in cost, immediate remedial measures are taken up.
Inventory Control
Inventory control or materials management connotes controlling the kind, amount, location and
timing of various commodities used in and produced by the industrial enterprises. It is the control
of materials in such a manner that it ensures maximum return on working capital.
Inventory control is necessary for the smooth and uninterrupted functioning of production
department. It's main purpose is to maintain an adequate supply of correct material at the lowest
total cost. Inventory control is exercised at three stages. (i) purchasing of materials (ii) storing of
materials (iii) issuing of materials.

Break-even Point: It is a level of production at which revenue and costs (fixed and variable) are
the same, at this point there is neither profit nor loss. Every concern tries to reach this level of
production at the earliest and profit starts only when production increases beyond this level.

Profit and Loss Control

Profit and loss control is a simple and commonly used overall control device to find out the
immediate revenue or cost factors responsible for either the success of an enterprise. As a control
device it is regarded very effective in certain respects because it enab1es the management to
influence in advance revenues, expenses and consequently even profits.
The sales, expenses and profit of different departments or for different products are compared
with that of other departments or products. The department or product becomes a cost centre.
The in charge of the department is responsible for its performance. Even historical comparison is
done to assess the performance. In case there are deviations in performance then immediate steps
are taken to rectify them.

Return On Investment Control (ROI): Profits are the measure of overall efficiency of a
business. Profit earned in relation to the capital employed in a business is an important control
device. If the rate of return on investment (shareholder‟s funds) is quite satisfactory, it will be
taken as a yard-stick of good performance. The return on investment can be compared over a
present performance in relation to earlier periods and also the level of achievement of the
concern in comparison to other concerns. The return on investment is computed by dividing the
operating net profit (before interest and tax) by the capital employed in the concern. The
following formula is used for this purpose:

Programme Evaluation and Review Technique (PERT): Programme evaluation and review
technique (PERT) was first developed as a management tool for coordination and early
completion of Polaris Ballistic Missile Project in USA resulting in a reduction of 30 per cent
time in project execution. A contemporary of PERT is CPM (Critical Path Method) and was
developed in connection with maintenance and construction work.
PERT is useful at several stages of project management starling from early planning stages when
various alternative programmes are being considered to the scheduling phase, when time and
resources schedules are laid out, to final stage in operation, when used as control device to
measure actual versus planned progress. PERT uses 'network' as the basic tool of project
management and is helpful in completing a project on schedule by co-ordinating different jobs
involved in its completion.

Management Information System (MIS): Management information system (MIS) is an

approach of providing timely, adequate and accurate information to the right person in the
organisation which helps in taking right decisions. So MIS is a planned and organized approach
to the transferring of intelligence within an organisation for better management. The information
is furnished into useful quantums of knowledge in the form of reports. An effective system of
MIS collects data from all possible sources. The information is properly processed and stored for
use in future.
MIS is of two types: (i) Management operating system meant for meeting the information needs
of lower and middle level management. The information supplied generally relates to operations
of the business, (ii) Management reporting system which supplies information to top level
management for decision-making. The information is presented in a way which enables
management to take quick decisions.

Management Audit: Management audit is an investigation by an independent organization to

find out whether the management is carried out most effectively or not. In case there are
drawbacks at any level then recommendations should be given to improve managerial efficiency.
In the words of Leslie R. Howard, "Management audit is an investigation of a business from the
highest level downward in order to ascertain whether sound management prevails throughout,
thus facilitating the most effective relationship with the outside world and the most efficient
organisation and smooth running internally:'

COORDINATION
Coordination is concerned with harmonious and unified action directed toward a common
objective. It ensures that all groups and persons work efficiently, economically and in harmony.
Coordination requires effective channels of communication. Person to person communication is
most effective for co-ordination. Co-ordination is undertaken at every level of management

• According to Henry Fayol, “To Coordinate is to harmonise all the activities of a person in
order to facilitate its working and its success”.
• According to Neoman, “Co-ordination is a part of all phases of administration and that it
is not a separate and definite activity”.
NATURE
• Co-ordination is to harmonise various activities of the enterprise to ensure smooth
working.
• It is an effort to ensure the objections of the business with minimum friction and
maximum coordination among various segments of the business.
• Co-ordination is an effort to reach business goals by means of planning, organising,
actuating and controlling various activities.
• It is not a separate managerial function.
• The exercise of each managerial function involves co-ordination.
PRINCIPLES OF COORDINATION
Mary Parker Follett, in her discussion, has stated the following important principles of
coordination:

1. Principle of Direct Contract: Miss Follett believes that co-ordination can be achieved more
easily by direct interpersonal horizontal relationships and direct personal communications, which
bring out agreement on methods, actions, and ultimate achievement. The possibilities of conflict
and misunderstanding always remain. These can be removed or sorted out by direct contact and
proper communication among various persons. Direct contact even helps in creating mutual
goodwill which may help in proper co-ordination.

2. Principle of Early Beginning: Co-ordination can be achieved more readily in the early stages
of planning and policy-making. If the policies are in execution stage then co-ordination may
become difficult. If the plans are executed without proper co-ordination then results may be
disastrous. "If the head of the production department, while he is forming his policy, meets and
discusses with the other heads, the question involved a successful co-ordination is far more likely
to be achieved, that is, you cannot, with the greatest degree of success for your undertaking,
make policy forming and policy adjusting two separate processes." Achieving co-ordination in
the early stages of planning and policy making is essential.

3. Principle of Reciprocal Relationship: All the factors in a situation are reciprocally related.
The work of one person is dependent on that of the other, who in turn, may be dependent on
some other. For instance,
A works with B and he in turn works with C and D. The relationship of all the four will be
reciprocal. In the absence of co-ordination among them the work of everyone will suffer.
Similarly, other factors like materials, finance, sales, production will be dependent upon one
another. When members in an organisation realise that all factors are reciprocally related then
co¬ ordination becomes easy.

4. Principle of Continuity: As the fourth principle of co-ordination, Mary Follert states that
coordination is a continuing process and something which must go on all the time. It is a
managerial process which is exercised every time so that the working is smooth and
uninterrupted. It is not like reconciling conflicts as and when they arise. Co-ordination cannot be
left to a sheer chance but management should make constant efforts to achieve it. There is a
constant need for co-ordination in a business.
Change Management

• A central idea of all change management theories is that no change ever happens in
isolation.
• In one way or another, change impacts the whole organization and all of the people in it.
But with good change management, you can encourage everyone to adapt to and embrace
your new way of working.
Four Principles of Change Management
Successful change management relies on four core principles:
– Understand Change.
– Plan Change.
– Implement Change.
– Communicate Change.

Change Management Models

1. Lewin’s change management model
This model is named after its originator, Kurt Lewin, who developed it in the 1950s. It‟s divides
the change process into three steps:
• Unfreeze This is the preparation stage. Analyze how things work now, so you accurately
understand what needs to change to get the intended results. In this stage, you also make
your case to employees and communicate what to expect so everyone impacted is
prepared.
• Change This is the implementation phase. Put the change into practice, and keep
communicating and providing support for all employees involved.
• Refreeze To avoid falling back into the old way of doing things, develop a strategy to
check in and make sure the change sticks. Review how the new processes work and
measure how well you‟ve reached your goals.
2. Kotter’s change management theory
Harvard professor and change management expert John Kotter created a theory focused
primarily on the people involved in a change process and their psychology. He divides it into
eight steps:
 • Create a sense of urgency to motivate people
• Build your change team with leaders and change agents of various skills and departments
• Define your strategic vision for what you want to accomplish
• Communicate with everyone involved in the change management process to get them on
board and make sure they know their role
• Identify roadblocks and address anything causing friction
• Create short-term goals to break your change management plan into achievable steps
• Keep up the momentum throughout the process of implementation
• Maintain the changes after the initial project is completed.
3. ADKAR change management model
The ADKAR model, developed by Jeff Hiatt, the founder of Prosci, formulates five main goals
to base your change management process on.
• Awareness Ensure everyone in your organization understands the need for change
• Desire Make your case so that everyone involved wants the change
• Knowledge Provide the information each person needs on how to accomplish their part
of the change process
• Ability Make sure all employees have the skills and training they need to successfully do
their part
• Reinforcement Continue to work with employees and stakeholders after the change is
accomplished, to make sure they stay on top of doing things the new way