IMPORTANCE OF MANAGEMENT:

The importance of management cannot be overstated, as it is a fundamental element

that influences the success and effectiveness of organizations, regardless of their size,
type, or industry. Here's a detailed explanation of the importance of management:

1. Achieving Organizational Goals: Management is crucial for defining and setting clear
organizational goals and objectives. Without effective management, organizations may
lack direction and a roadmap for achieving their mission. Management ensures that
everyone in the organization understands their role in working toward common goals.

2. Optimal Resource Utilization: Management is responsible for efficiently allocating and

utilizing various resources, including financial, human, technological, and physical
assets. This resource optimization is essential for minimizing waste, reducing costs, and
maximizing productivity and profitability.

3. Decision-Making: Managers make critical decisions that impact an organization's

success. These decisions range from strategic choices, like market entry and product
development, to operational decisions, such as resource allocation and daily scheduling.
Effective management ensures that decisions are well-informed, timely, and aligned
with the organization's objectives.

4. Adaptation to Change: In today's dynamic business environment, change is constant.

Management helps organizations adapt to external changes, whether they are
technological advancements, shifts in customer preferences, or regulatory updates. It
fosters a culture of flexibility and innovation, enabling organizations to stay
competitive.

5. Efficiency and Productivity: Management practices like planning, organizing, and

controlling are designed to improve efficiency and productivity. Through these
functions, managers can streamline processes, eliminate redundancies, and optimize
workflows. This leads to cost savings and enhanced competitiveness.

6. Coordination and Integration: Management ensures that different parts of an

organization work together cohesively. It coordinates activities, aligns efforts, and
integrates functions, departments, and teams to achieve common objectives. Without
effective management, there can be conflicts, duplication of efforts, and inefficiencies.

7. Motivation and Employee Satisfaction: Effective management recognizes the

importance of a motivated and satisfied workforce. It involves leadership,
communication, and HR practices that promote employee engagement, job satisfaction,
and a positive organizational culture. Satisfied employees tend to be more productive
and committed to the organization's success.

8. Risk Management: Managers are responsible for identifying, assessing, and managing
risks that can affect the organization's operations and goals. Effective risk management
helps organizations anticipate and mitigate potential threats, ensuring their long-term
sustainability.

9. Innovation and Growth: Management fosters innovation by creating an environment

that encourages creativity and experimentation. It involves identifying opportunities for
growth, diversification, and expansion, which can lead to the development of new
products, services, and markets.

10. Ethical and Social Responsibility: Good management practices include ethical
considerations and social responsibility. Managers must make decisions that align with
ethical standards and address the needs and concerns of stakeholders, including
employees, customers, and the broader community.

11. Global Perspective: In an interconnected world, management takes on a global

perspective. It involves understanding international markets, managing global supply
chains, and navigating cross-cultural challenges. Effective management enables
organizations to operate effectively in a global context.

12. Public Administration: In government and public administration, management is

essential for efficient public service delivery, policy implementation, and resource
allocation. It ensures that taxpayer resources are used effectively and that public
institutions meet their intended objectives.

FUNCTIONS OF MANAGEMENT:

Management involves a set of interrelated functions that are essential for achieving
organizational goals and objectives. These functions provide a framework for how
managers plan, organize, lead, and control resources to ensure the effective and efficient
operation of an organization. The four primary functions of management are:

1. Planning:
 Setting Goals: Planning begins with setting clear and specific organizational
goals and objectives. These goals provide a sense of direction and purpose for
the organization.
 Developing Strategies: Once goals are defined, managers must develop
strategies and action plans to achieve them. This involves analyzing the current
situation, identifying opportunities and threats, and formulating plans to
capitalize on strengths and mitigate weaknesses.
 Allocating Resources: In the planning phase, managers determine the resources
(financial, human, and material) required to implement the strategies. Efficient
resource allocation is crucial for achieving objectives within budget constraints.
 Setting Priorities: Managers must prioritize activities and allocate resources to
those that align most closely with the organization's strategic goals. This helps in
avoiding scattered efforts and focusing on what matters most.
  Establishing Metrics: Planning also involves setting key performance indicators
(KPIs) and benchmarks to measure progress and success. These metrics provide
a basis for evaluating the effectiveness of the plans and strategies.

2. Organizing:
 Structuring the Organization: Organizing involves designing the organizational
structure, which includes defining roles, responsibilities, and reporting
relationships. It determines how people and resources are arranged and
coordinated to achieve the organization's goals.  Staffing: Managers are
responsible for recruiting, selecting, and training employees to fill various roles
within the organization. Effective staffing ensures that the right people with the
necessary skills and competencies are in the right positions.
 Delegating Authority: Managers delegate authority and responsibility to
employees at various levels of the organization. Delegation empowers employees
to make decisions within their areas of responsibility, which can improve
efficiency and responsiveness.
 Establishing Communication Channels: Organizing also includes creating
communication channels and systems that facilitate the flow of information
within the organization. Clear communication is crucial for coordination and
decision-making.

3. Leading (or Directing):

 Motivating Employees: Leadership involves inspiring and motivating
employees to work toward common goals. This includes recognizing and
rewarding achievements, providing feedback, and addressing concerns.
 Guiding Teams: Managers guide and supervise teams and individuals to ensure
that they are working effectively and efficiently. Effective leadership fosters
collaboration, teamwork, and a positive work culture.
 Conflict Resolution: Leaders are responsible for managing conflicts and
disputes that may arise within the organization. Conflict resolution skills are
essential for maintaining a harmonious work environment.
 Decision-Making: Leadership often involves making difficult decisions,
including those related to resource allocation, problem-solving, and strategy
execution. Effective leaders use sound judgment and decision-making processes.

4. Controlling:
 Performance Monitoring: Controlling involves monitoring and measuring
actual performance against the established goals and standards. Managers use
KPIs and other metrics to assess progress.
 Comparing Results: Managers compare actual performance with the planned
performance to identify discrepancies or deviations. They analyze the reasons
for these discrepancies and take corrective action as needed.
  Taking Corrective Action: When discrepancies are identified, managers take
corrective actions to bring performance back on track. This may involve revising
plans, reallocating resources, or implementing process improvements.
 Feedback and Continuous Improvement: The controlling function provides
valuable feedback that informs the planning and organizing phases. It enables
organizations to learn from past experiences and make adjustments for future
success

LEVELS OF MANAGEMENT

The term “Levels of Management” refers to a line of demarcation between various

managerial positions in an organization. The number of levels in management increases
when the size of the business and work force increases and vice versa.

The level of management determines a chain of command, the amount of authority &
status enjoyed by any managerial position.

The levels of management can be classified in three broad categories:

1. Top level/Administrative level

2. Middle level/Executory
3. Low level/Supervisory/Operative/First-line managers

Managers at all these levels perform different functions. The role of managers at all the
three levels is discussed below:

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.

MANAGERIAL SKILLS
A good manager has all the skills and can implement those skills for running the
organization properly. 5 managerial skills are technical skills, conceptual skills,
interpersonal and communication skills, decision-making skills.The roles that a
manager plays in the organization require having some skills. These are the skills
or qualities that an organization looks for in a person to assign him as a manager.
Let’s see and try to understand the skills required for managing.

5 Managerial Skills are;

Technical Skill.
Conceptual Skill.
Interpersonal and Communication Skills.
Decision-Making Skills
Diagnostic & Analytical Skills

Technical Skill
Technical skill is knowledge of and proficiency in activities involving methods,
processes, and procedures.Thus it involves working with tools and specific
techniques. Technical skill is the ability to use the specialized knowledge,
procedures, and techniques of a field of activities.Accountants, engineers,
surgeons all have their technical skills necessary for their respective professions.
Most managers, especially at the lower and middle levels, need technical skills
for effective task performance.
Conceptual Skill
Conceptual skill is the ability to see the “big picture,” to recognize significant
elements in a situation and to understand the relationships among the
elements.Conceptual skill is the ability to coordinate and integrates all of an
organization’s interests and activities.It requires having the ability to visualize
the enterprise as a whole, to envision all the functions involved in a given
situation or circumstance, to understand how its parts depend on one another
and anticipate how a change in any of its parts will affect the whole.A manager’s
ability to think in the abstract and to view the organization holistically is
important.Suggesting a new product line for a company, introducing computer
technology to the organization’s operations, or entering the international
market; for deciding this magnitude, a manager requires conceptual skill is his
personality.

Interpersonal and Communication Skills

Communication skill for a manager is a must. The manager must be able to
convey ideas and information to others and receive information and ideas from
others effectively. A manager’s job is to control the subordinates and gives high-
level managers or administrators information about what’s going on.
Communication skill enables a manager to perform them properly. Most of his
time, a manager’s job is to interact with people inside and outside of the
organization. Manager’s ability to communication with individuals and groups,
controlling and motivation they are what Interpersonal and Communication skill
are. A manager requires having an effective Interpersonal and communication
skill to keep the responsibilities given to him

Decision-Making Skill
In simple words, a manager’s job is to make decisions that will lead the
organization to the attainment of is goals.Decision making skill is the skill that
makes a manager able to recognize opportunities and threat and then select an
appropriate course of action to tackle them efficiently so that the organization
can benefit them.Managers are not always going to make the best decision.But a
good manager most often makes a good decision and learns from the bad ones.
Decision making is a skill that improves as managers gain more
experience.Training or educating is also a good method to develop the Decision
making the skill of a manager.

Diagnostic and Analytical Skills

A good manager has Diagnostic and Analytical skills in his bags. Diagnostic skill
refers to the ability to visualize the best response to a situation.
 Analytical skill means, the ability to identify the key variables in a situation.
Manager diagnostic skill and Analytical skill helps him to identify possible
approaches to a situation.After that is also helps a manager to visualize the result
or outcomes of these approaches. This skill sounds similar to the decision
making skill, but it is the skill required to make the decision.

ADMINISTRATIVE MANAGEMENT

A French mining engineer, Henri Fayol is well-renowned as the 'Father of

Modern Management Theory'. Fayol worked at the French mining company
Commentry-Fourchambault and Decazeville, where he started as an engineer but
worked his way up to become the general manager and then the organization's
director from 1888 to 1918. When Foyal took on the managerial role at the
mining company, he chose to rely not on his technical skills but on his ability as
an organizer and his skills at handling people. Henri Foyal developed the 14
principles of management towards the tail end of the industrial revolution.

1. Division of Work

The first Henry Fayol principle of management is based on the theory that if an
employee is given a specific task to do, they will become more efficient and skilled in it.
This is opposed to a multi-tasking culture where an employee is given so many tasks to
do at once. In order to implement this principle effectively, look at the current skill sets
of each employee and assign them a task that they can become proficient at. This will
help them to become more productive, skilled, and efficient in the long run.

2. Authority

This henry fayol principle of management states that a manager needs to have the
necessary authority in order to ensure that his instructions are carried out by the
employees. If managers did not have any authority, then they would lack the ability to
get any work done. However, this authority should come along with responsibility.
According to Henri Fayol, there should be a balance between authority and
responsibility. If there is more authority than responsibility, the employees will get
frustrated. If there is more responsibility than authority, the manager will feel
frustrated.

3. Discipline

This principle states that discipline is required for any organization to run effectively. In
order to have disciplined employees, managers need to build a culture of mutual
respect. There should be a set of organizational rules, philosophies, and structures in
place that should be met by everyone. Bending rules or slacking should not be allowed
in any organization. In order to achieve this, there is a need for good supervision and
impartial judgment.
4. Unity of Command

This principle states that that should be a clear chain of command in the organization.
The employees should be clear on whose instructions to follow. According to Fayol, an
employee should receive orders from only one manager. If an employee works under
two or more managers, then authority, discipline, and stability are threatened.
Moreover, this will cause a breakdown in management structure and cause employees
to burn out.

5. Unity of Direction

This henry fayol principle of management states that the work to be done should be
organized in such a way that employees work in harmony towards the same objective,
using one plan, under the direction of one manager. For example, if you have a range
of marketing activities such as advertising, budgeting, sales promotion, etc., there
should be one manager using one plan for all the marketing activities. The different
activities can be broken down for different sub-managers, but they should all work
towards a common goal under the direction of one main person in charge of the whole
thing.

6. Collective Interest Over Individual Interest

This principle states that the overall interest of the team should take precedence over
personal ones. The interest of the organization should not be sabotaged by the interest
of an individual. If anyone goes rogue, the organization will collapse.

7. Remuneration

This henry fayol principle of management states that employees should be paid fair
wages for the work that they carry out. Any organization that underpays its workers
will struggle to motivate and keep quality workers. This remuneration should include
both financial and non-financial incentives. Also, there should be a structure in place
to reward good performance to motivate employees.

8. Centralization

Centralization refers to the concentration of power in the hands of the authority and
following a top-bottom approach to management. In decentralization, this authority is
distributed to all levels of management. In a modern context, no organization can be
completely centralized or decentralized. Complete centralization means that people at
the bottom have no authority over their responsibilities. Similarly, complete
decentralization means that there will be no superior authority to control the
organization. To use this effectively today, there should be a balance of centralization
and decentralization. The degree to which this balance is achieved will differ from
organization to organization.
9. Scalar Chain

A scalar chain refers to a clear chain of communication between employees and their
superiors. Employees should know where they stand in the hierarchy of the
organization and who to go to in a chain of command. To implement this in the
workplace, Fayol suggests that there should be an organizational chart drawn out for
employees to see this structure clearly.

10. Order

This principle states that there should be an orderly placement of resources

(manpower, money, materials, etc.) in the right place at the right time. This ensures the
proper use of resources in a structured fashion. Misplacement of any of these resources
will lead to misuse and disorder in the organization.

11. Equity

Equity is a combination of kindness and justice. This principle states that managers
should use kindliness and justice towards everyone they manage. This creates loyalty
and devotion among the employees towards the organization they work for.

12. Stability of Tenure of Personnel

This principle states that an organization should work to minimize staff turnover and
maximize efficiency. Any new employee cannot be expected to get used to the culture of
an organization right away. They need to be given enough time to settle into their jobs
to become efficient. Both old and new employees should also be ensured job security
because instability can lead to inefficiency. There should also be a clear and effective
method to handle vacancies when they arise because it takes time and expense to train
new ones.

13. Initiative

This principle states that all employees should be encouraged to show initiative. When
employees have a say as to how best they can do their job, they feel motivated and
respected. Organizations should listen to the concerns of their employees and
encourage them to develop and carry out plans for improvement.

14. Esprit de Corps

Esprit de Corps means “Team Spirit”. This henry fayol principle of management states
that the management should strive to create unity, morale, and co-operation among the
employees. Team spirit is a great source of strength in the organization. Happy and
motivated employees are more likely to be productive and efficient.
HAWTHORNE STUDIES:

The Hawthorne Studies were a series of social science experiments and investigations
conducted at the Western Electric Hawthorne Works in Chicago between 1924 and
1933. These studies were initiated by a group of researchers led by Elton Mayo, a
professor of industrial management at Harvard University, and were primarily focused
on understanding the relationship between productivity and work conditions, employee
morale, and social factors within the workplace. The Hawthorne Studies are considered
a pivotal point in the development of organizational behavior and management theory.
They highlighted the importance of social and psychological factors in the workplace
and challenged traditional notions of employee motivation and productivity.

The Hawthorne Studies consisted of several phases, each with its own specific focus and
methodology:

1. Illumination Studies (1924-1927):

 The initial phase of the Hawthorne Studies aimed to investigate the relationship
between lighting conditions and worker productivity.

 Researchers manipulated lighting levels to determine how they affected worker

output.

 Surprisingly, no matter whether the lighting was increased or decreased, worker

productivity improved. This phenomenon was later termed the "Hawthorne Effect" or
"observer effect," which suggested that people change their behavior when they know
they are being observed or when they believe that changes are being made to improve
their work conditions.

2. Relay Assembly Test Room Studies (1927-1930):

 This phase of the studies involved a group of female workers who were assigned to
a relay assembly test room to assemble telephone relays.

 The researchers introduced changes in various work conditions, such as rest

breaks, work hours, and piece-rate pay.

 Productivity consistently increased during this period, leading the researchers to

conclude that the social dynamics and attention workers received in the
experimental environment played a significant role in improving performance. They
also discovered that the employees formed informal social groups that influenced
their behavior and productivity.
3. Bank Wiring Room Studies (1931-1932):

 The Bank Wiring Room Studies focused on a group of male workers in the bank
wiring department.

 Researchers introduced a piece-rate incentive system, which led to increased

competition among workers.

 However, the researchers discovered that the informal social norms and peer
pressure within the group had a more significant influence on output than the
financial incentives.

 This phase further reinforced the importance of social factors in the workplace.

4. Interviewing Program (1933):

 In the final phase, researchers conducted interviews and surveys with workers
to understand their attitudes, feelings, and social relationships in the workplace.

 It was found that employees' satisfaction, morale, and social interactions

significantly affected their performance.

Key Findings and Implications of the Hawthorne Studies:

1. The Hawthorne Effect: The studies highlighted that workers' productivity can
be influenced by factors beyond physical conditions and financial incentives. The
mere act of being observed and the perception of improved working conditions
can lead to increased motivation and productivity.

2. Social Dynamics: Informal social groups and relationships within the

workplace had a strong influence on employee behavior and satisfaction. The
studies emphasized the significance of group norms, peer pressure, and social
interactions.

3. Human Relations and Management: The Hawthorne Studies had a profound

impact on the field of management and organizational behavior. They led to the
development of the human relations movement, which emphasized the
importance of understanding and addressing the social and psychological needs
of employees. This, in turn, contributed to the development of more employee-
centered management practices.

4. Shift from Taylorism: The Hawthorne Studies challenged the scientific

management principles proposed by Frederick W. Taylor, which focused
primarily on optimizing work processes and using financial incentives to
 motivate employees. Instead, the studies suggested that attention to the social
aspects of work was equally important. In summary, the Hawthorne Studies
brought to light the role of social and psychological factors in the workplace and
contributed to a shift in management thinking towards a more human-centered
approach to managing employees. These studies continue to be influential in the
fields of organizational behavior and industrial psychology.

SYSTEMS APPROACH IN MANAGEMENT:

The systems approach to management is a holistic and interdisciplinary

framework that views organizations as complex, interrelated systems. This
approach emphasizes that organizations are not isolated entities but rather are
influenced by and have an impact on their internal and external environments.
The systems approach recognizes the interdependencies of various parts of an
organization and how changes in one part can affect the entire system. Here's a
detailed explanation of the systems approach to management theory:

1. System Definition:

 In the systems approach, a system is defined as a set of interrelated and

interdependent components working together to achieve a common goal or
purpose. This system can be an organization, a department within an
organization, or even an individual.

. Types of Systems:

 Open Systems: Organizations are typically open systems, meaning they interact with
their environment. They receive inputs from the environment, transform them through
internal processes, and produce outputs that go back into the environment. Open
systems need to adapt to changes in their environment to survive and thrive.

 Closed Systems: Closed systems are isolated from their environment and do not
exchange information or resources with it. This is a theoretical concept, as most
organizations are open systems.

Components of a System:

 Inputs: These are the resources and information that an organization takes from its
environment. Inputs can include raw materials, labor, technology, financial resources,
and information.

 Processes: These are the internal activities and operations that transform inputs into
outputs. Processes include decision-making, communication, production, and
coordination.  Outputs: These are the products, services, or results that the
organization produces and delivers to its environment.
 Feedback: Feedback is information about the system's performance that is used to
make adjustments and improvements. It is an essential component of the systems
approach.

5. Subsystems: Larger organizations can be broken down into smaller subsystems. Each
subsystem is a system in itself, with its own inputs, processes, outputs, and feedback
mechanisms. For example, within a corporation, there can be marketing, production,
and human resources subsystems.

6. Synergy: The systems approach highlights the potential for synergy, which occurs
when the combined efforts of the parts of a system result in a greater overall outcome
than the sum of the individual efforts. Synergy is a central concept in this approach and
can lead to improved performance and efficiency.

7. Boundary Spanning: Organizations exist within an environment, and they have

boundaries that separate them from the external environment. Boundary spanning is
the process of managing and maintaining relationships with the external environment.
Organizations must adapt to changes in the environment and respond to feedback from
it.

8. Applications: The systems approach to management theory has applications in

various fields, including management, engineering, biology, and sociology. It is often
used to analyze and improve organizational processes, as well as to understand
complex phenomena in different domains.

MANAGEMENT BY OBJECTIVES:

Management by Objectives (MBO) is a management framework and philosophy that was

popularized by management theorist Peter Drucker in his 1954 book "The Practice of
Management." MBO is a systematic and collaborative approach to setting and achieving
organizational and individual goals. It is designed to align an organization's objectives
with the goals of its employees, ensuring that everyone is working towards common
objectives. Here's a detailed explanation of MBO, along with its advantages and
disadvantages:

Key Principles of Management by Objectives (MBO):

1. Goal Setting: MBO starts with the process of setting clear, specific, and measurable
objectives or goals for the organization, departments, and individuals. These objectives
should be achievable and time-bound.

2. Participation: MBO encourages active participation from both managers and

employees in the goal-setting process. It emphasizes involving employees at various
levels in defining their own objectives, creating a sense of ownership and commitment.
3. Specificity and Clarity: Objectives should be specific, concrete, and well-defined,
leaving no room for ambiguity. This ensures that everyone understands what is
expected of them.

4. Feedback and Measurement: Regular feedback and progress tracking are essential
components of MBO. Managers and employees should regularly assess performance
against the established objectives.

5. Alignment: The objectives set at different levels of the organization should be aligned
so that the accomplishment of individual goals contributes to the achievement of
higher-level organizational goals.

6. Participation in Decision-Making: MBO promotes decentralization and empowers

employees by involving them in decision-making processes, especially those that relate
to their work and objectives.

Advantages of Management by Objectives:

1. Improved Focus and Clarity: MBO provides clarity about what needs to be achieved,
helping employees understand their roles and responsibilities.

2. Alignment with Organizational Goals: MBO ensures that individual and departmental
goals are in line with the broader organizational objectives, which can improve overall
performance.

3. Enhanced Motivation: Employees who participate in setting their own objectives tend
to be more motivated, as they have a personal stake in achieving those goals.

4. Better Communication: Regular feedback and communication between managers and

employees foster a more open and transparent working environment.

5. Efficient Resource Allocation: MBO can help identify and allocate resources more
effectively, ensuring that resources are directed toward high-priority goals.

6. Continuous Improvement: Regular assessment and adaptation of objectives promote

a culture of continuous improvement within the organization.

Disadvantages of Management by Objectives:

1. Time-Consuming: The MBO process can be time-consuming, as it requires careful

planning, monitoring, and evaluation.

2. Rigidity: In some cases, MBO may lead to inflexibility if objectives are set in a way that
does not account for changing circumstances or unforeseen challenges.
3. Risk of Goal Distortion: There is a risk that employees may focus too narrowly on
achieving their objectives, neglecting other important aspects of their roles.

4. Resistance to Change: Some employees and managers may resist MBO due to a
perceived loss of control or fear of increased accountability.

5. Subjectivity in Evaluation: Assessing performance against objectives can be subjective

and may lead to bias or conflicts if not done impartially.

6. Overemphasis on Short-Term Goals: MBO may encourage the pursuit of short-term

objectives at the expense of long-term strategic goals.

Meaning of Planning

Planning is ascertaining prior to what to do and how to do. It is one of the primary
managerial duties. Before doing something, the manager must form an opinion on how
to work on a specific job. Hence, planning is firmly correlated with discovery and
creativity. But the manager would first have to set goals. Planning is an essential step
what managers at all levels take. It requires making decisions since it includes selecting
a choice from alternative ways of performance.

Planning Process

As planning is an activity, there are certain reasonable measures for every manager to
follow:

(1) Setting Objectives

 This is the primary step in the process of planning which specifies the objective
of an organisation, i.e. what an organisation wants to achieve.
 The planning process begins with the setting of objectives.
 Objectives are end results which the management wants to achieve by its
operations.
 Objectives are specific and are measurable in terms of units.
 Objectives are set for the organisation as a whole for all departments, and then
departments set their own objectives within the framework of organisational
objectives.

(2) Developing Planning Premises

 Planning is essentially focused on the future, and there are certain events which
are expected to affect the policy formation.
  Such events are external in nature and affect the planning adversely if ignored.
 Their understanding and fair assessment are necessary for effective planning.
 Such events are the assumptions on the basis of which plans are drawn and are
known as planning premises.

(3) Identifying Alternative Courses of Action

 Once objectives are set, assumptions are made.

 Then the next step is to act upon them.
 There may be many ways to act and achieve objectives.
 All the alternative courses of action should be identified.

(4) Evaluating Alternative Course of Action

 In this step, the positive and negative aspects of each alternative need to be
evaluated in the light of objectives to be achieved.
 Every alternative is evaluated in terms of lower cost, lower risks, and higher
returns, within the planning premises and within the availability of capital.

(5) Selecting One Best Alternative

 The best plan, which is the most profitable plan and with minimum negative
effects, is adopted and implemented.
 In such cases, the manager’s experience and judgement play an important role in
selecting the best alternative.
(6) Implementing the Plan

 This is the step where other managerial functions come into the picture.
 This step is concerned with “DOING WHAT IS REQUIRED”.
 In this step, managers communicate the plan to the employees clearly to help
convert the plans into action.
 This step involves allocating the resources, organising for labour and purchase of
machinery.
(7) Follow Up Action

 Monitoring the plan constantly and taking feedback at regular intervals is called
follow-up.
 Monitoring of plans is very important to ensure that the plans are being
implemented according to the schedule.
  Regular checks and comparisons of the results with set standards are done to
ensure that objectives are achieved.

NATURE OF PLANNING

A plan is a predetermined course of action. It is a blue print for goal achievement.

Simply stated, it is setting goals and deciding how to achieve them. Planning is deciding
in advance what to do, how to do it, when to do it and who is to do it. It bridges the gap
from where we are to where we want to go Planning has a number of characteristics:

 Planning is goal-oriented: All plans arise from objectives. Objectives provide the basic
guidelines for planning activities. Planning has no meaning unless it contributes in some
positive manner to the achievement of predetermined goals.
 Planning is a primary function: Planning is the foundation of management. It is a
parent exercise in management process. It is a preface to business activities.
 Planning is all-pervasive: Planning is a function of all managers. It is needed and
practiced at all managerial levels. Planning is inherent in everything a manager does.
 Planning is a mental exercise: Planning is a mental process involving imagination,
foresight and sound judgment. Planning compels managers to abandon guesswork and
wishful thinking. It makes them think in a logical and systematic manner.
 Planning is a continuous process: Planning is continuous. It is a never-ending activity.
It is an ongoing process of adjustment to change. There is always need for a new plan to
be drawn on the basis of new demands and changes in the circumstances.
 Planning involves choice: Planning essentially involves choice among various
alternative courses of action. If there is one way of doing something, there is no need for
planning. The need for planning arises only when alternatives are available.
 Planning is forward looking: Planning means looking ahead and preparing for the
future. It means peeping into the future, analyzing it and preparing for it. Managers plan
today with a view to flourish tomorrow. Without planning, business becomes random in
nature and decisions would become meaningless, ad hoc choices.
 Planning is flexible: Planning is based on a forecast of future events. Since future is
uncertain, plans should be reasonably flexible. When market conditions change,
planners have to make necessary changes in the existing plans.
 Planning is an integrated process: Plans are structured in a logical way wherein every
lower-level plan serves as a means to accomplish higher level plans. They are highly
interdependent and mutually supportive.
 Planning includes efficiency and effectiveness dimensions: Plans aim at deploying
resources economically and efficiently. They also try to accomplish what has been
actually targeted. The effectiveness of plans is usually dependent on how much it can
contribute to the predetermined objectives.

2. Importance of Planning

Planning helps an organisation in the following ways:

 Planning provides direction: Planning provides direction and a sense of purpose for
the organisation. Without plans and goals, organisations merely react to daily
occurrences without considering what will happen in the long-run. Plans avoid this drift
situation and ensure that short-range efforts will support and harmonize with future
 goals. It helps an organisation decide what to do and when to do it. It reduces aimless
activity and makes action more meaningful.
 Planning provides a unifying framework: A plan helps people to set priorities and
put effort accordingly. A plan tells everyone what the organisation hopes to achieve and
what the contribution of each department must be, and who is to utilize resources to
achieve the goals. Plans help in coordinating effort at various levels. In the absence of a
plan, the organisation would be pulled in different directions, creating confusion and
misunderstanding at various levels.
 Planning is economical: Effective plans coordinate organisational work and eliminate
unproductive effort. Guess work is banished. Facilities are employed to the best
advantage. Waste motions and idle facilities are removed By focusing attention on what
is to be done, how and when it is to be done, plans help an organisation to economically
utilize the physical and financial resources. This, ultimately, improves efficiency of
operations.
 Planning reduces the risks of uncertainty: Planning helps an organisation to cope
with an uncertain future. It helps management to anticipate the future and prepare for
the risks by making necessary provisions to meet the unexpected turn of events.
Planning minimizes the chances of mistakes and unpleasant surprises because
objectives, policies and strategies are formulated after a careful scrutiny of internal as
well as external environment. Planning, thus, seeks to minimize risk while taking
advantage of opportunities.
 Planning facilitates decision making: Decision-making involves searching of various
alternative courses of action, evaluating them and selecting the best one. Planned
targets serve as the criteria for the evaluation of different alternatives so that the best
one may be chosen. If there are no plans for the future, there are few guidelines for
making current decisions. For example, decisions have to be made in present for a
product to be introduced three years in the future. When future plans exist, decisions
consistent with the future plans are made. Further, without plans, people will make
decisions according to their own preference rather than those of the organisation.
 Planning encourages innovation and creativity: Planning involves looking ahead and
preparing for the future. The process of looking ahead, forces an organisation to be alert
of opportunities and threats in the environment. It forces managers to find out new and
improved ways of doing things in order to remain competitive and avoid the threats in
the environment. It compels the managers to be creative and innovative all the time.
Planning helps managers to visualize problems early and take suitable remedial steps. It
helps them exploit opportunities and come out as ‘winners’ in a competitive world.
 Planning improves morale: Once members know what is expected of them, they can
contribute better. When goals are properly defined, work assignments can be fixed and
everyone can begin to contribute to the achievement of these goals. This produces
improvements in morale. Further, planning permits employees to participate in the
thinking process. This helps them develop a broad mentality. Also, when the plan is
actually translated into action, they feel that it is their own plan. Positive attributes are,
thus, developed.
 Planning facilities control: Planning and controlling functions are said to be ‘Siamese
twins’ (inseparable twins). There is nothing to control without planning and without
proper control, planning proves to be a wasteful and an unproductive exercise. Plans
serve as yardsticks for measuring performance. They help in channelizing behaviour in
the right direction. They help in preventing mistakes, oversights and deviations.
 3. Limitations/Criticisms

The limitations of planning can be examined under the following headings:

 Rigidity: Plans put the activities of an enterprise in a rigid framework. Everything is

spelt out in detail and deviations are not permitted. New opportunities are often
ignored or rejected because of the commitment to existing plans. Events may change,
but plans may remain fixed. Managers, too, would be reluctant to reorient their plans
suitably, because it involves serious mental work to put everything in black and white
change the same all over again.
 Costly and time consuming: Planning is costly. It is expensive in terms of time spent to
formulate the plans, the manpower required to do the planning and resources needed to
execute the plan. The collection of information, evaluation of alternatives, selection of a
suitable course of action, etc., may consume lot of executive time and organisational
resources.
 Employee resistance: For any plan to succeed, you need operating people to
understand it, embrace it, and make it happen. One of the frequent complaints made
against the planning process is that it is done by specialists who are not in touch with
operations. As a result, operating people who are not involved in planning tend to resist
the planning process. Planning ‘imposed from above’ often leads to resentment and
resistance from those forced to execute.
 False sense of security: Elaborate planning may create a false sense of security in the
organisation. Managers may begin to feel that everything is well taken care of. They
begin to assume that as long as plans are adhered to, there will not be any problems. As
a result, they fail to take note of environmental changes and the need to review,
restructure and reorient the old plans in an appropriate way.